Republic of India v India Steamship Co Ltd (No 2) (“The Indian Endurance”) [1998] AC 878

The Indian Government obtained a small judgment in Cochin for short delivery of munitions, then pursued a larger cargo damage claim via an Admiralty action in rem in England. The House of Lords held section 34 of the Civil Jurisdiction and Judgments Act 1982 barred the English action, rejecting the fiction that an action in rem is against the ship rather than its owners.

Facts

In June 1987, the respondents’ vessel Indian Grace loaded a cargo of munitions in Sweden for carriage to Cochin, India, for delivery to the Indian Government. A fire occurred in No.3 hold en route; the crew extinguished it with water and jettisoned 51 artillery shells and 10 charges. The vessel discharged the remaining cargo at Cochin in September 1987.

The Indian Government notified two claims: a small claim for the jettisoned cargo, and a much larger claim (approximately £2.6m) for damage to the entire cargo in No.3 hold allegedly rendered worthless by radiant heat. On 1 September 1988, the Indian Government issued a Plaint in Cochin seeking damages for the jettisoned shells and charges only. Judgment was obtained in December 1989 for approximately £7,200 sterling equivalent.

Before the Cochin judgment, on 25 August 1989, the Indian Government issued a writ in rem in the English Admiralty Court. The writ was served on 4 May 1990 on the Indian Endurance, a sister ship, at Tees Dock. The owners submitted to English jurisdiction and provided a Letter of Undertaking. The owners then pleaded section 34 of the Civil Jurisdiction and Judgments Act 1982 as a bar.

The matter had previously been before the House of Lords, which held section 34 operated as a bar rather than as an exclusion of jurisdiction and could be defeated by agreement, waiver or estoppel. The matter was remitted for determination of estoppel and of whether the action in rem was between the same parties as the Cochin action in personam.

Issues

The principal issues were:

• Whether an English Admiralty action in rem was brought between “the same parties, or their privies” as a foreign judgment in personam against the shipowners, within the meaning of section 34 of the 1982 Act.
• Whether the owners were estopped (by convention or acquiescence) from relying upon section 34.
• Whether the proceedings in rem were “brought” within section 34 given they had been commenced before the foreign judgment was handed down.

Arguments

The Indian Government (appellants)

The appellants argued that an action in rem is historically an action against the ship itself, relying on Fletcher Moulton LJ in The Burns [1907] P 137 and on Hobhouse J’s analysis in The Nordglimt [1988] QB 183. On that basis the parties in the Cochin action and the Admiralty action differed, so section 34 did not apply. They also contended that the owners were estopped by convention and acquiescence from relying on section 34, given the way the Cochin proceedings had been conducted and exchanges between the parties’ representatives. Finally, they argued that the action in rem had been “brought” before the foreign judgment so was not caught by section 34.

The shipowners (respondents)

The owners relied on the modern procedural theory that an action in rem, once the owners submit, is in substance an action against the owners. They submitted that section 34 operated as a bar and that there was insufficient evidence to support either form of estoppel. They further argued that the word “brought” in section 34 extended to the continuation of proceedings.

Judgment

Nature of an action in rem

Lord Steyn (with whom Lord Browne-Wilkinson, Lord Hoffmann, Lord Cooke and Lord Hope agreed) undertook a detailed historical review of the action in rem. He explained that the personification theory – treating the ship itself as defendant – had developed before the Judicature Acts as a means of defending and extending Admiralty jurisdiction against common law writs of prohibition. After the Judicature Acts, actions in rem were extended to new categories not involving maritime liens, the writ form was changed to name the owners as defendants, and the personification theory fell into decline.

Lord Steyn traced the emergence of the procedural theory from The Dictator [1892] P 304, endorsed by The Gemma [1899] P 285, The Tervaete [1922] P 259, The Jupiter [1924] P 236 and The Cristina [1938] AC 485. He observed that the sovereign immunity cases (The Parlement Belge, The Cristina, The Arantzazu Mendi) conclusively establish that a foreign sovereign whose ship is served is directly impleaded as defendant, which necessarily means the owner is a party to an action in rem.

He cited Lord Brandon in The August 8 [1983] 2 AC 450:

By the law of England, once a defendant in an Admiralty action in rem has entered an appearance in such action, he has submitted himself personally to the jurisdiction of the English Admiralty Court, and the result of that is that, from then on, the action continues against him not only as an action in rem but also as an action in personam.

He also relied on Sir Denys Buckley in The Deichland [1990] 1 QB 361:

In reality, distinguished from formal aspects, the instant action is, in my judgment, as much a suit against Deich as would be an action in personam.

The European Court of Justice’s decision in The Maciej Rataj/The Tatry under Article 21 of the Brussels Convention (which shares strikingly similar language with section 34) held that actions in rem and in personam involve the same cause of action and the same parties, reinforcing the domestic conclusion. The Nordglimt was held no longer to be good law.

Lord Steyn concluded that the purpose of section 34 – to address the anomaly that the doctrine of merger does not apply to foreign judgments, and to prevent unjust relitigation between the same parties – militated strongly against permitting an action in rem to proceed after a foreign in personam judgment. Using the metaphor that fictions are like scaffolding in construction, he considered that the fiction that a ship can be a defendant had served its purpose and could now be discarded. For the purposes of section 34, an action in rem is an action against the owners from the moment the Admiralty Court is seised of jurisdiction.

Meaning of “brought”

Lord Steyn rejected the argument that, because the writ in rem was issued before the Cochin judgment, the action was not “brought” within section 34. Proceedings that are continued can naturally be described as “brought”, a construction supported by Milor SRL v British Airways plc [1996] QB 702 on Article 28 of the Warsaw Convention.

Estoppel by convention

While an estoppel by convention does not require a concluded agreement, the appellants had to show that the owners, by conduct, had manifested assent to the basis that no plea or defence founded on the Cochin judgment would be raised in future proceedings, whatever the outcome. The telephone conversation of 14 August 1989 between Captain Singh and Mr Wilson showed only that English proceedings would be issued. The conduct of the Cochin proceedings showed only that there was a larger claim to be pursued elsewhere. Neither established the requisite common assumption. The Court of Appeal was entitled to reverse Clarke J on this point.

Estoppel by acquiescence

Applying the test derived from Lord Wilberforce’s dissent in Moorgate Mercantile Co Ltd v Twitchings [1977] AC 890, Lord Steyn found that until after the Cochin judgment was handed down, neither side had considered its implications. No special circumstances required the owners to warn the appellants of the risk, and nothing in the owners’ conduct or silence could have led the appellants to believe they could safely obtain the Cochin judgment without consequence. The estoppel by acquiescence claim therefore failed.

Henderson v Henderson

Given the disposal on section 34, it was unnecessary to decide whether the principle in Henderson v Henderson (1843) 3 Hare 100 applied.

Disposal

The appeal was dismissed.

Implications

The decision definitively establishes, for the purposes of section 34 of the Civil Jurisdiction and Judgments Act 1982, that an Admiralty action in rem is to be regarded as an action against the shipowners from the moment the Admiralty Court is seised of jurisdiction. The long-standing fiction that a ship is itself the defendant has, at least in this context, been discarded in favour of the procedural theory.

The judgment aligns the domestic interpretation of “the same parties” under section 34 with the European Court of Justice’s interpretation of Article 21 of the Brussels Convention, promoting coherence between domestic and Convention regimes given the similarity of their language.

Practically, the decision matters to cargo interests, shipowners and P&I clubs. A claimant who obtains a foreign judgment in personam on a cause of action against shipowners cannot thereafter circumvent section 34 by pursuing an Admiralty action in rem against the same ship (or a sister ship) in England. This reinforces the bar against relitigation and encourages claimants to bring the whole of their claim in a single forum.

The House expressly left open certain related questions, including the construction of section 21(4) of the Supreme Court Act 1981 as an independent bar where personal liability cannot be re-established, whether section 34 has abolished the old rule that a judgment in personam is no bar to an action in rem (and vice versa), and the application of Henderson v Henderson. The decision is also qualified in that maritime liens (which can bind purchasers and may accrue independently of personal liability) were expressly put to one side, leaving scope for different analysis in that distinct field.

On estoppel, the decision clarifies that estoppel by convention does not require a concluded agreement, but does require that the common assumption – manifested between the parties – extend to the matter sought to be precluded; vague awareness that further proceedings might follow is insufficient. Estoppel by acquiescence remains conceptually distinct, and the twin doctrines should not be conflated under a single overarching principle at the cost of blurring their separate requirements.

Verdict: Appeal dismissed. Section 34 of the Civil Jurisdiction and Judgments Act 1982 operated as a bar to the English Admiralty action in rem, because an action in rem is, for these purposes, an action between the same parties as an in personam action against the shipowners. Neither estoppel by convention nor estoppel by acquiescence was established.

Source: Republic of India v India Steamship Co Ltd (No 2) ("The Indian Endurance") [1998] AC 878