R.M. Supplies v. Ems-trans Schiffahrisges Mbh & Company & Anor [2002] ScotCS 287 (06 November 2002)
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OUTER HOUSE, COURT OF SESSION
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A29/00
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OPINION OF LORD DAWSON
in the cause
R M SUPPLIES (INVERKEITHING) LIMITED
Pursuers;
against
EMS-TRANS SCHIFFAHRISGES MBH & COMPANY, ms ISARTAL
Defenders:
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Pursuers: Glennie, Q.C.; HBM Sayers
Defenders: Howie, Q.C.; Henderson Boyd Jackson, W.S.
6 November 2002
- The pursuers in this case seek payment from the defenders of the sum of £162,779.43 with interest from 22 January 1999, in respect of an alleged breach of contract. The sum represented the payment price of a contract in which the pursuers agreed to sell a quantity of scrap metal to a company Ferro Commodities (Espana) SA. That quantity of metal was to be transhipped from Inverkeithing in Scotland to Santander in Spain. The defenders were at the time the owners of a ship named "Isartal" upon which the metal was to be transhipped. The contract of carriage was contained in, or evidenced by, a Bill of Lading dated Inverkeithing, 15 January 1999. The said Bill was signed by the Master of the Ship, allegedly on behalf of the defenders, acknowledging the shipment of said scrap metal on board the vessel.
- The action came before me for procedure roll discussion in respect of preliminary pleas on behalf of both the defenders and the pursuers. The defenders' sixth plea-in-law was in these terms:
"Esto the pursuer is a party to a contract of affreightment with the defender as condescended upon, (which is denied), the defender having been discharged of all liability in respect of said cargo and all rights formerly effeiring to the pursuer thereanent having prescribed virtute Article III, Rule 6 of the Hague-Visby Rules as applied to said contract, the defender should be assoilzied from the conclusions of the summons."
The pursuers have three preliminary pleas, namely, No. 4 in these terms:
"The defenders' averments being irrelevant et separatim lacking in specification, they should not be admitted to probation."
Their fifth plea-in-law was in these terms:
"The defenders' averments anent not being party to the contract of affreightment being irrelevant et separatim unfounded in fact their fourth plea-in-law should be repelled."
Their sixth plea-in-law alleged:
"The pursuers' having brought suit within the period of one year provided for by Article III, Rule 6 of the Hague-Visby Rules the defenders' sixth plea-in-law should be repelled."
- On 10 January 2000 the vessel concerned was arrested ad fundandam jurisdictionem and on the dependence of the action. A copy of the summons was placed in a plastic folder and attached to the mast of the vessel. The master found the copy summons there. He transmitted it to agents of the charterers who in turn notified the defenders of it. The defenders' P & I Club, British Marine Managers Limited, put up a Letter of Undertaking to procure the release of the vessel. A copy of said Letter of Undertaking was produced in the action. The vessel was duly released from arrest. Thereafter attempts were made to effect service on the defenders in Germany. Those attempts were ineffective. Subsequently, on about 10 March 2000, pursuant to their undertaking in their Letter of Undertaking, the defenders' P & I Club appointed Messrs Henderson Boyd Jackson, W.S., to accept service of the summons. Service was accepted on 13 March 2000.
- These facts were referred to by Mr Howie on behalf of the defenders, who then went on to refer me to the statutory provisions which, in his submission, had relevance to the case. In the first place, he referred to the Carriage of Goods by Sea Act 1971, Chapter 19. In terms of that statute the carriage of the relevant cargo was subject to the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading signed at Brussels on 25 August 1924 as amended by the Protocol signed at Brussels on 23 February 1969 (the "Hague-Visby Rules"). The application of those Rules was not in dispute. By Article III, Rule 6 of the said Rules, it is provided inter alia that:
"The carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods unless suit is brought within one year of their delivery or of the date when they should have been delivered."
He then referred me to the Prescription and Limitation (Scotland) Act 1973, section 6 of which is in the following terms:
"(1) If after the appropriate date an obligation to which this section applies has subsisted for a continuous period of five years -
(a) without any relevant claim having been made in relation to the obligation and
(b) without the subsistence of the obligation having been relevantly acknowledged,
then as from the expiration of that period the obligation shall be extinguished."
Reference was also made to section 9 of that Act, which provides as follows:
"(1) In sections 6, 7 and 8A of this Act the expression 'relevant claim' in relation to an obligation means a claim made by or on behalf of the creditor for implement or part implement of the obligation being a claim made -
(a) in appropriate proceedings or.....
and for the purposes of the said sections 6, 7 and 8A the execution by or on behalf of the creditor in an obligation of any form of diligence directed to the enforcement of the obligation shall be deemed to be a relevant claim in relation to the obligation.
(2) In section 8 of this Act the expression 'relevant claim' in relation to a right means a claim made in appropriate proceedings by or on behalf of the creditor to establish the right or to contest any claim to a right inconsistent therewith.
(3) Where a claim which, in accordance with the foregoing provisions of this section, is a relevant claim for the purposes of sections 6, 7 or 8A of this Act is made in an arbitration, and the nature of the claim has been stated in a preliminary notice related to that arbitration, the date when the notice was served shall be taken for those purposes to be the date of the making of the claim.
(4) In this section the expression 'appropriate proceedings' and in relation to arbitration the expression 'preliminary notice' shall have the same meanings as in section 4 of this Act."
It was also pointed out by Mr Howie that Schedules 4 and 5 of the 1973 Act which deal respectively with enactments amended and repeals, make no mention of the Carriage by Sea Act 1971. Mr Howie also made reference to the Carriage of Goods by Sea Act 1992 which he said had no relevance to the present case. Next, the Debtors (Scotland) Act 1838 provides in section 17 as follows:
"By virtue of such warrant of arrestment and also by virtue of letters of arrestment raised upon any libelled summons according to the present practice, it shall be competent before executing the warrant of citation to arrest the moveables, debts and money belonging or owing to the defender until caution be found as aforesaid and such arrestment shall be effectual provided the warrant of citation shall be executed against the defender within 20 days after the date of the execution of the arrestment and the summons called in court within 20 days after the diet of compearance or where the expiry of the said period of 20 days after the diet of compearance falls within the vacation or previous to the first calling day in the session next ensuing provided the summons be called on the first calling day next thereafter and if the warrant of citation shall not be executed and the summons called in manner above directed, the arrestment shall be null without prejudice to the validity of any subsequent arrestment duly executed in virtue of the said warrant."
Mr Howie contended that the import of section 17 above was that any arrestment would fall if a summons pursuant thereon were not served within 20 days of the date thereof. In this case he claimed the relevant period was between 10 January and 13 March which was clearly more than 20 days.
- Mr Howie then went on to deal with his submissions in the case. In the first place he suggested that the pursuers' case involved the acceptance of a number of factors. Firstly, that the Hague-Visby Rules did in fact apply. Secondly, that the date from which any prescriptive period was to run was 22 January 1999. Thirdly, that but for the contention regarding the one year period specified in Rule 6 constituting a time bar, the rights available to the pursuers in this action had in fact prescribed. Thereafter, Mr Howie submitted that the action had in fact time barred and that any rights available to the pursuers had in fact prescribed. He therefore invited me to sustain the defenders' first and sixth pleas in law and dismiss the action. Further, he submitted, that neither diligence ad fundandam jurisdictionem or on the dependence of the action, constituted "bringing of suit" for the purpose of Rule 6. In this context he suggested that the proper interpretation of Article 3 of the Rules was an interest in knowing how suit was brought for the purposes of the court in which it was brought. Further, he suggested that the rules themselves contained no independent concept of "suit brought". Therefore he suggested that the question was the same as in any domestic action. He suggested that the word "brought" meant the same as "commenced". He suggested that this was sensible since where the forum in which one chose to sue would be the appropriate one since the advisers of those suing would be familiar with what to do in order to commence an action. Therefore, he suggested, the Scottish Domestic Rules as to the commencement of actions should apply and that the Hague-Visby Rules were not special for this purpose. In this claim, Mr Howie referred to a number of authorities. In the first place he referred to a work entitled Time Barred Actions, 2nd Edition by Francesco Berlingieri 1993, page 79; Marine Cargo Claims, 3rd Edition by William Tetley; Thyssen Inc. v Calypso Shipping Corporation S.A. 2000 Lloyd's L.R. p.243 and the "Havhelt" 1993 Lloyd's L.R. p.523. In light of these authorities I entirely agree with Mr Howie that the question of when suit is brought for the purpose of the Hague-Visby Rules must be determined in this case, according to the law of Scotland.
- Mr Howie suggested that the relevant question was when in Scotland does an action commence? He submitted, as it was well settled that an action so commenced at the date of service of the summons. In support of that proposition he quoted Rule of Court 13.4.4; Smith v Stewart & Company 1960 S.C. 329; Erskine 3.6.3; Alston v MacDougall 15 R. p.78; Canada Trust Company 2000 3 WLR 1376; Walls Trustees v Drynon 15 R. 359. Mr Howie suggested that the principles contained in those cases were quite inconsistent with any notion that arrestment ad fundandam jurisdictionem could commence an action at any time earlier than service of the summons. Mr Howie also referred to the cases of North v Stewart 1870 17 R. (House of Lords) p.60; Graham Stewart on Diligence p.273; Craig v Brunsgaard Kjosternd & Company 1896 23 R. p.500. I entirely agreed with the submissions of Mr Howie that in Scotland an action was only commenced at the date of service of the summons. It seemed to me to follow from that entirely that any prior proceedings such as by way of either arrestment ad fundandam jurisdictionem or arrestment on the dependence, were simply preliminary requirements in order that an action could be served and suit could be brought at a later date. By themselves, they did not seem to me to commence an action without service of a summons later having been effected. The pursuers' pleadings in this regard were therefore irrelevant since it was accepted that service was not effected until 13 March.
- Mr Glennie for the pursuers accepted at the outset that the Hague-Visby Rules did apply to this particular contract. He further accepted that service of the summons had been made outside the one year period for which those rules prescribed. He therefore had to content himself with saying that to prevent prescription having barred his claim, he needed to rely on the arrestment ad fundandam jurisdictionem and on the dependence which was effected on 10 January as having commenced the action in terms of "bringing the suit", the phrase used in the rules. In this context he relied on the Prescription and Limitation (Scotland) Act 1973. He did not contend that section 6 and section 9 of that Act by their terms applied directly to this claim. He recognised that the shorter one year period provided by the Hague-Visby Rules would prevail as that had not been either expressly or impliedly repealed by the 1973 Act. What he did say was that section 9 of the Act of 1973 did apply "by analogy". He said that in considering the question as to whether "suit was brought" the appropriate reference point was to look at the provisions in domestic law, including section 9. What I understood Mr Glennie to mean by this was that in giving meaning to a term such as "bringing suit", which was not a term of art in Scots law, it was appropriate to look at in particular section 9 of the 1973 Act to see how Parliament had applied the rules relating to commencement of proceedings in situations other than Court of Session actions in order to give proper meaning to what Parliament had accepted as part of the law of Scotland in the 1971 Act. In particular, he was referring to that part of section 9, sub-section (1) of the 1973 Act, which he called the tail-piece, that is the four lines occurring after paragraph D of sub-section (1) which provided as follows:
"...and for the purposes of the said sections 6, 7 and 8A the execution by or on behalf of the creditor in an obligation of any form of diligence directed to the enforcement of the obligation shall be deemed to be a relevant claim in relation to the obligation."
Thus, said Mr Glennie, these "deeming provisions" could and should be looked at for this purpose. In my view that was to say the least a tenuous argument. "Deeming provisions" are only necessary when no firm rule of law exists and something has to be put in place to fill such a lacuna. Mr Glennie then referred to a number of cases in which he suggested that a similar approach to that which he was recommending was adopted by the courts in England. Many of these cases were referred to simply with the name of the ship involved. The first was "The Merak" 1965 P. 223; then there was "The Nea Grex" 1976 Q.B. Division 933; Thyssen Inc. v Calypso Shipping Company S.A., above referred to; "The Havhelt", above referred to; "The Brede" 1974 1 Q.B.233. While these cases, and the dicta referred to by Mr Glennie, were no doubt interesting, it did seem to me, however, that all of them are related to situations where no clear and unequivocal rule as to the way in which "suit was brought" existed. For example, some of them related to arbitrations where "deeming provisions" might well have application. As Mr Howie later said, none of these cases referred to situations such as the bringing of an action in the Court of Session, where there were clear legal rules as to when such an action commenced. I agreed entirely with that distinction.
- Mr Glennie went on to make submissions in respect of his fifth plea-in-law to the effect that
"the defenders' averments anent not being party to the contract of affreightment being irrelevant et separatim, unfounded in fact, their fourth plea-in-law should be repelled."
However, as Mr Howie later pointed out, such submissions did require an answer if his point in relation to prescription was correct. Mr Howie therefore declined to reply to these, and for the same reasons I do not require to deal with then in this Opinion.
- There seems no doubt to me that the law of Scotland provides that an action is commenced, that is to say "started" or even "brought" when a summons is served on a defender. "Suit", the word used in the Hague-Visby Rules is, in my view, synonymous with "action". The process of arrestment serves quite a different purpose and has quite different legal consequences. Arrestment ad fundandam jurisdictionem is a preliminary process which, when properly effected, can allow a pursuer to serve a summons and make any service of summons effective to force a defender to answer his claims in the Scottish courts. Arrestment on the dependence, while it may be effected at the same time, merely permits a pursuer to create a nexus over certain funds belonging to a defender in the event that an action is commenced, succeeds and a decree is eventually pronounced in the pursuers' favour. Neither of these processes have any effect in getting legal proceedings by way of civil suit underway.
- Mr Glennie's argument, ingenious as it was, does not effect such basic principles and in any event was in my view somewhat strained.
- In my opinion, the clear and proper interpretation of the Hague-Visby Rules is in Scotland that an action must be commenced within one year of the relevant date. That is to say, to comply with the rules a summons must be served within that period. That being the test it is not disputed that the pursuers have failed it. I therefore sustain the first and sixth pleas-in-law for the defenders and dismiss the action.
