Claim No: DWT-0001-2017
In the name of His Highness Sheikh Mohammad Bin Rashid Al Maktoum, Ruler of Dubai
IN THE SPECIAL TRIBUNAL RELATING TO DUBAl WORLD TRIBUNAL
BEFORE SIR ANTHONY EVANS, SIR JOHN CHADWICK AND SIR DAVID STEEL
(1) ALIZE 1996
(2) CMA CGM SA
(1) DP WORLD UAE REGION FZE
(2) DP WORLD LIMITED
(3)ALL OTHER PERSONS CLAIMING OR BEING ENTITLED TO CLAIM DAMAGES FOR THE INCIDENT
Hearing: 11 October 2017
Counsel: Mr Tom Montagu-Smith QC with Mr Brian Boahene, Mr Mohamed El Hawawy, Ms Natalie Jensen and Ms Monika Humphreys-Davies of Ince & Co Middle East LLP (Dubai Branch) for the Claimants, Alize 1996 and CMA CGM SA
Mr Robert Thomas QC with Mr Robert Lawrence and Mr Leonard Soulagar of Clyde & Co LLP for the Defendants, DP World UAE Region FZE and DP World Limited
Judgment: 15 January 2018
- The first named claimant, Alize 1996, is the owner of the container vessel M/V CMA CGM Centaurus (“the Vessel”). The second named claimant, CMA CGM SA, is (or was at the material time) the bareboat charterer of the Vessel. The first named defendant, DP World UAE Region FZE, is the operator of Jebel Ali Container Terminal 1 (“the Port”). It is the wholly owned subsidiary of the second named defendant, DP World Limited. The first and second defendants (together “the DP World defendants”) are subsidiaries of Dubai World; and so are within the meaning of the “Corporation” for the purposes of Decree No (57) for 2009. On 4 May 2017, while attempting to berth at the Port, the Vessel was in collision (or, more strictly, “allision”) with the quay wall and with cranes numbered 20 and 21. It is that collision (the “Incident”) which has given rise to these proceedings before the Dubai World Tribunal (“the DWT” or “the Tribunal”).
- These proceedings were commenced on 29 May 2017 by the issue on behalf of the claimants (together “the Shipowners”) of a claim form to which DP World UAE Region FZE was the sole defendant. The claim form was amended on 1 June 2017 to add DP World Limited as the second defendant and “All other persons claiming or being entitled to claim damages for the Incident” as third defendants. As amended (and further amended at the hearing before the Tribunal on 11 October 2017), the claim form sought, first, damages arising from the negligence and breach of duty of the DP World defendants in the berthing of the Vessel at the Port on 4 May 2017 and a declaration that the Shipowners were entitled to an indemnity from the DP World defendants in respect of any liability which they (the Shipowners) may have to third parties arising out of the Incident; and, second, declarations in respect of the Shipowners’ entitlement to limit their liability for damage to property pursuant to the Convention on Limitation of Liability for Maritime Claims 1976 (“the Convention”) as ratified by the United Arab Emirates. In conjunction with those latter declarations, the Shipowners seek directions for the purposes of ascertaining the persons (if any) who may have claims for such damage and any consequent loss arising out of the Incident; and the establishment of a limitation fund pursuant to the Convention. On 18 June 2017 the DP World defendants acknowledged service of the claim form; but indicated that they intended to contest the jurisdiction of the Tribunal. So far as the Tribunal is aware, none of the persons named as the third defendants – that is to say “All other persons claiming or being entitled to claim damages for the Incident” (“the third party defendants”) – have yet taken any part in the proceedings.
Other proceedings arising out of the Incident
- On 11 May 2017 – that is to say, before the Shipowners had issued their claim form in the DWT proceedings – the DP World defendants (and their insurers, Emirates Insurance Co PSC and Chubb Insurance Australia Limited) issued an in rem claim form in the High Court in London against the owners and demise charterers of the Vessel and other CMA CGM vessels. In those proceedings (“the London proceedings”) the DP World defendants and their insurers claim in respect of damage to the quay wall and the cranes at the Port (and associated loss) arising out of the Incident. On 22 May 2017 – also before the issue of the claim form in the DWT proceedings – the DP World defendants and Chubb Insurance Australia Limited commenced proceedings in the Hong Kong courts (“the Hong Kong proceedings”).
- It is said on behalf of the Shipowners that, at the time that they commenced the DWT proceedings, they were unaware of the London proceedings. But it is accepted that they were then aware of the Hong Kong proceedings: indeed, it was the issue of the Hong Kong proceedings and the perceived threat of the imminent arrest of a CMA CGM vessel in Hong Kong that prompted the issue of the claim form in the DWT proceedings.
- The Tribunal was told that neither the London proceedings nor the Hong Kong proceedings have yet been served; that the DP World defendants do not now intend to pursue the Hong Kong proceedings; but that it was the intention of the DP World defendants (and the intention of their insurers) to pursue their claims for damages against the Shipowners in the London proceedings and not in Dubai (or elsewhere in the UAE).
Limitation of liability under the Convention
- The Convention on Limitation of Liability for Maritime Claims 1976 was signed in London on 19 November 1976. It has been ratified by the UAE and implemented by Federal Decree No (118) of 1997; and so has effect in the Emirate of Dubai. Article 1 of the Convention provides that shipowners (which includes both owners and charterers) may limit their liability for claims set out in Article 2 in accordance with the Rules of the Convention. Those claims include (at Article 2.1(a)) claims in respect of damage to property (including damage to harbour works) occurring in direct connection with the operation of the ship and consequential loss resulting therefrom. Such claims are subject to limitation of liability under the Convention “even if brought by way of recourse or for indemnity under a contract or otherwise”: Article 2.2. The limits of liability under the Convention are set out in Chapter II: in particular, the general limits in respect of claims other than for loss of life or personal injury for a ship having a tonnage in excess of 500 tons are set out at Article 6.1(b)(ii). Given that the gross tonnage of the Vessel was 131,332 tons, it is said on behalf of the Shipowners that the relevant limit of liability applicable in the present case was 15,184,056 Special Drawing Units; an amount equivalent to USD 20.785 million or thereabouts. In that context it is pertinent to have in mind that, although the Convention was amended by a Protocol of 1996 – the effect of which (so far as material) was to increase the limits of liability set out in Article 6.1(b) – the UAE has not adopted the 1996 Protocol.
- Article 9, in Chapter II of the Convention, provides that the limits of liability determined in accordance with Article 6 shall apply to the aggregate of all claims which arise on any distinct occasion against a shipowner. It is said on behalf of the DP World defendants that the total losses (including losses suffered by third parties in respect of containers and cargo) arising from the Incident are estimated to be between USD 27.5 million and USD 30 million. If that were to be the case, then (if the Shipowners’ liability for such loss is limited to USD 20.785 million or thereabouts) there will be a shortfall: the aggregate of the claims against the Shipowners will exceed the (limited) amount available to meet those claims.
- It is to meet a situation in which the aggregate of the claims exceeds (or may exceed) the limit on the shipowners’ liability under the Convention that Chapter III provides for the constitution of a limitation fund against with claims can be made. Article 11 (“Constitution of the fund”) is in these terms (so far as material):
“1. Any person alleged to be liable may constitute a fund with the Court or other competent authority in any State Party in which legal proceedings are instituted in respect of claims subject to limitation. The fund shall be constituted in the sum of such of the amounts set out in [Article 6] as are applicable to claims for which that person may be liable, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund. Any fund thus constituted shall be available only for the payment of claims in respect of which limitation of liability can be invoked.
- A fund may be constituted, either by depositing the sum, or by producing a guarantee acceptable under the legislation of the State Party where the fund is constituted and considered to be acceptable by the Court or other competent authority.
- . . .”
The Dubai World Tribunal and the Dubai International Financial Centre Court
- The Tribunal (“the DWT”) was established by Decree No (57) of 2009 (“Decree 57” or “the Decree”) issued on 13 December 2009 in circumstances that (as has since been acknowledged) the Government of Dubai was under severe financial pressure as a result of the world financial crisis that had begun in 2008 in the United States of America; and that that financial pressure could affect the financial stability of the government-owned Dubai World group of companies.
- Decree 57 provided that in the event of insolvency proceedings relating to the Corporation (that is to say, to Dubai World or any of its subsidiaries), those proceedings would be governed by the insolvency law provisions scheduled to the Decree. Those provisions were derived from (although with amendments) the provisions in the Insolvency Laws of the Dubai International Financial Centre (“the DIFC”). Those provisions were, themselves, based on provisions in the insolvency legislation of the United Kingdom and the USA. The effect was that the provisions that would be applicable in insolvency proceedings relating to the Corporation differed in many respects from the provisions that would otherwise have been applicable in the UAE and other local models.
- More pertinently in the present context, Decree 57 (as amended by Decree No (11) of 2010) provided that “all claims and demands by and against the Corporation [meaning Dubai World or any of its subsidiaries]”, as well as any proceedings relating to insolvency, were to be brought before the DWT: and that the jurisdiction of the Dubai Courts was expressly excluded (Article (9)). As we have said, the DP World defendants are Dubai World subsidiaries for the purposes of the Decree: under the laws in force in the Emirate of Dubai, therefore, all claims “by or against” them are required to be brought before the Tribunal.
- Decree 57 expressly provided for the relationship between the newly constituted DWT and the existing DIFC Courts, which had been established pursuant to Law No (12) of 2004. Until 2011 proceedings before the DWT were regulated by the DIFC Court Rules (Article (4) of Decree 57, read with DIFC Law No (10) of 2004). Since 2011, when the DWT published its own Rules, proceedings before the DWT are regulated by the Dubai World Tribunal Rules (“the RDWT 2011”). The RDWT 2011 are based upon (although not identical with) the DIFC Court Rules. When Article (4) of Decree 57 is read with DIFC Law No (10) of 2004, the DIFC Court Rules and the RDWT 2011, it is clear that the DWT was authorised and intended to regulate its proceedings under rules which enable the grant of interim and injunctive relief. The DWT has been ready and willing to exercise this power: for example, in Bank guarantee cases.
The applications before the Tribunal
- There are two applications before the Tribunal. The first, in time, (Application DWT-0001-2017/1) was issued by the Shipowners on 22 June 2017. By that application, the Shipowners seek a final (or, in the alternative, an interim) declaration that they are entitled to constitute a limitation fund under Article 11 of the Convention by producing a guarantee in the form of a letter of undertaking from a P&I Club, Sveriges Ǻngfartygs Förening (“The Swedish Club”), which is in substantially in the form attached to the proposed order; or, in the alternative, directions as to how such a fund should be constituted. The second (Application DWT-0001-2017/2) was issued by the DP World defendants on 6 July 2017. By that application the DP World defendants seek an order (i) setting aside the amended claim form on the ground that the Tribunal has no jurisdiction to entertain the claims made in these proceedings; or in the alternative, (ii), staying those claims and declaring that (if, contrary to the DP World defendants’ primary contention), the Tribunal does have jurisdiction to entertain the claims, it will not exercise that jurisdiction.
- Given that Application 0001-2017/2 raises issues of jurisdiction, it is appropriate to address that application before considering Application 0001-2017/1.
- In support of Application 0001-2017/2 the DP World defendants filed a witness statement made by Mr Robert Lawrence, a partner in the firm of Clyde & Co (their legal representatives) and dated 3 July 2017. In response to that witness statement the Shipowners rely on a witness statement made by Mr Brian Boahene (his second witness statement) and dated 3 August 2017. That, in turn, prompted a further witness statement of Mr Lawrence (his third witness statement) made on 17 August 2017. The submissions made by Mr Lawrence in his witness statements were developed in a skeleton argument served on behalf of the DP World defendants and dated 8 October 2017; and developed further before the Tribunal at the oral hearing of the application.
- It was confirmed at the oral hearing that (although the application, as issued, might suggest otherwise) there is no jurisdictional challenge in respect of the damages claims which the Shipowners seek to bring against the DP World defendants in these (DWT) proceedings. The contentions advanced on behalf of the DP World defendants were that the Tribunal had no jurisdiction to establish a limitation fund or to make a limitation decree under the Convention in these proceedings; and, in any event, had no jurisdiction over third parties who were neither bringing nor answering a claim against Dubai World or one of its subsidiaries. On the basis of those contentions, it was said (i) that the claims to be entitled to establish a limitation fund and to a limitation decree under the Convention (and the claims to relief which relate to those claims) should be struck out and (ii) that the third party defendants – that is to say “All other persons claiming or being entitled to claim damages for the Incident” – and all claims against them should be struck out. In the alternative, it was said that (if, contrary to those contentions, the Tribunal did have jurisdiction to establish a limitation fund and to make a limitation decree, or to entertain claims by or against the third party defendants) the Tribunal should refuse to exercise that jurisdiction.
The jurisdictional challenge
- On behalf of the DP World defendants, Mr Thomas QC advanced the threshold submission that Decree 57 was not intended to confer jurisdiction on the DWT to hear the kind of issues raised in the present case. That, he submitted, is because these proceedings, specifically the limitation application, raise issues of maritime law with international implications; the rulings effectively are in rem and they affect “the whole world”. We found this a surprising submission. First, DP World represented a significant part of the business of Dubai World (and, in particular, a large part of its international business) and the purpose of Decree 57 was to safeguard Dubai World from the effects of the financial crisis then affecting the world economy. If DP World was intended to be excluded from the scope of the Decree, we would have expected to find an express provision to that effect. Second, much of the business of Dubai World was concerned with Dubai real estate and, in such cases, DWT Rulings effectively are in rem with consequences for “the whole world”. We reject that threshold submission as to the scope of the Decree. We note that Mr Thomas submitted, also, that the proceedings require specialist legal expertise; but, in the circumstances that he acknowledged that such expertise can be found in the Tribunal as constituted, we do not find it necessary to address that submission.
- The DP World defendants point out (correctly) that the jurisdiction of the DWT is conferred, and defined, by Decree 57. Article (3).a of the Decree, as amended by Decree No (11) of 2010 provides that the Tribunal has jurisdiction to “1. Hear and decide any demand or claim submitted by or against the Corporation . . .”. It is not in dispute that, generally, the DWT has an in personam jurisdiction over the DP World defendants, as subsidiaries of Dubai World: indeed, the DWT is the only authority in the Emirate of Dubai which does have jurisdiction to entertain claims against them. But it is submitted on their behalf the DWT does not have what Mr Justice Hoffmann in his judgment in the High Court of England and Wales in Mackinnon v Donaldson, Lufkin and Jenrette  Ch 482 at 493 described as “subject matter jurisdiction”: that is to say jurisdiction to regulate their affairs on a world-wide basis. Such jurisdiction must be found in the 1976 Convention which, as we have said, has been ratified by the UAE and implemented by Federal Decree No (118) of 1997.
- We have explained that the Convention enables shipowners to limit their liability in respect of claims in respect of loss of or damage to property occurring in connection with the operation of the ship (Articles 1.1 and 2.1). Article 10.1 provides that limitation of liability may be invoked notwithstanding that a limitation fund has not been constituted pursuant to Article 11.1. Conflicting views have been expressed by judges and text book writers on the question whether a party can invoke limitation of liability under the Convention in pre-emptive proceedings commenced in a jurisdiction of its own choice; or whether it can only do so responsively in proceedings which have been commenced against it by the party who claims to have suffered loss. Those conflicting views were identified and analysed by the Court of Appeal of England and Wales in The “Western Regent”; Seismic Shipping Inc v Total E & P UK Plc  EWCA Civ 985: see, in particular, paragraphs 12, 24, 30 to 32, 34 to 38 and 40 in the judgment of Lord Justice Clarke and 64 and 65 in the judgment of Lord Justice Rix. After reviewing the authorities, the Court of Appeal – upholding the decision of the judge below and approving the reasoning of Mr Justice David Steel in The “Denise”  EWHC 3305 (Admlty) – rejected the contention that limitation of liability under the Convention could only be invoked responsively in proceedings which had been brought by the party who claimed to have suffered the loss.
- As Lord Justice Clarke pointed out in his judgment in The “Western Regent”, the question turns on the wording of the 1976 Convention. The right to limit liability, conferred by Articles 1 and 2, can be invoked under Article 10, without first having constituted a limitation fund under Article 11. There is no general jurisdiction provision in the Convention stating where the right of limitation must be invoked: on its face the Convention permits a party to seek to limit its liability in any Contracting State which has personal jurisdiction over the defendant. If there is a restriction as to the manner in which the right to limit may be invoked, it must be found by implication. But there is nothing in the Convention to warrant the implication of such a restriction. And there is no consideration of policy which requires that the manner in which the right to limit can be invoked should be restricted. At paragraph 40 of his judgment in The “Western Regent” Lord Justice Clarke referred to the observation of Mr Justice Rix in Caspian Basin v Bouygues (No 4)  2 Lloyd’s Rep 507 at 525 that:
“There can be nothing surprising or inappropriate about a limitation action being commenced in the same forum as a claimant’s action to establish liability; but equally there is nothing unusual about a limitation action taking place in a different forum from that in which liability is being litigated.”
And he went on to say this:
“I entirely agree. I would accept [counsel for the shipowner]’s submission that, if the claimants had not admitted liability, there would have been nothing to stop them from starting proceedings in England seeking a declaration that they were not liable and, in the alternative for a declaration (or decree) that, if they were liable they were entitled to limit their liability. I see nothing in the Convention to prohibit such an approach”.
- We find the reasoning of the Court of Appeal in The Western Regent compelling; and we are satisfied that it should be followed in the DWT. In our view the Shipowners were entitled, in the present case, to commence these proceedings seeking limitation under the Convention of their liability (if any) to the DP World defendants in respect of loss suffered by reason of the Incident, notwithstanding that no claim in respect of that loss had been made against them in this forum.
- Further, we would hold that the Shipowners are entitled, in these proceedings, to seek an order for the constitution of a limitation fund pursuant to Article 11.1 of the Convention. As we have said, the article provides that:
“Any person alleged to be liable may constitute a fund with . . . [a] competent authority in any State Party in which legal proceedings are instituted in respect of claims subject to limitation. . . .”
In our view, the proceedings commenced by the issue on 29 May 2017 of claim DWT-0001-2017 are proceedings “instituted in respect of claims subject to limitation” within the meaning of that article. Given that, as we have held, the Shipowners are entitled, pursuant to Article 10.1 of the Convention, to invoke their right to limitation in proceedings commenced before the DWT for that purpose – and notwithstanding that the claims in respect of which they seek limitation of liability were not brought in this forum – it would be bizarre if the phrase “proceedings . . . instituted in respect of claims subject to limitation” was given a meaning which excluded the proceedings in which limitation of liability had been invoked and so denied the party seeking (and obtaining) a decree of limitation the protection from other actions provided by Article 13 of the Convention.
- Our conclusion that the Shipowners are entitled, in these proceedings, to invoke their right to limitation of their liability to the DP World defendants – and to seek the constitution of a limitation fund – does not, of itself, lead to the further conclusion that they are entitled, in these proceedings, to limit their liability to those (other than the DP World defendants) who have suffered loss by reason of the Incident. Given that (as the DP World defendants point out) the jurisdiction of the DWT is conferred, and defined, by Article (3).a of the Decree, as amended by Decree No (11) of 2010, it is submitted that the Tribunal has no jurisdiction to hear or determine claims made against the Shipowners by the third party defendants – that is to say, by persons (other than the DP World defendants) claiming or being entitled to claim damages arising from the Incident – or to make any other order (in particular, any order limiting liability in respect of those claims or for the establishment of a limitation fund) in relation to such claims. In addressing that submission we ignore the possibility (which has not been suggested by either the Shipowners or the DP World defendants) that, amongst those who were entitled to claim damages for the Incident, there might be persons (other than the DP World defendants) who were subsidiaries of Dubai World: it is sufficient for the purposes of the submission that it can be expected that the third party defendants will include (if not exclusively comprise) persons who are not subsidiaries of Dubai World.
- In our view the submission that the Tribunal has no jurisdiction to hear or determine claims made as between the Shipowners and the third party defendants – or to make any other order in relation to such claims – is not well-founded. The submission fails to take account of the provisions in Articles (3).a.3 and (4).3 of the Decree (as amended); and fails to take account of relevant provisions in the RDWT 2011 (which, pursuant to Article (4).3 of the Decree and Articles 1 and 3 in section 3 of the Schedule to the Decree, govern the practice and procedure of the Tribunal).
- Article (3).a.3 of the Decree provides that the Tribunal has ancillary jurisdiction to issue interim and interlocutory orders and decisions, including injunctions to any person to act or not to act, “or other order as the Tribunal deems appropriate”. Article (4).3 provides that, subject to the provisions of the Decree, the Tribunal shall decide the demands and claims submitted to it by virtue of DIFC Law No 10 of 2004 (the DIFC Court Law) “according to the amendments stated in the Schedule hereto”. Article 1 in section 3 of the Schedule to the Decree provides that Part 7 of the DIFC Court Law shall govern the practice and procedure of the Tribunal subject to the amendments and modifications set out in that schedule. Chapter 1 (“Practice and Procedure”) in Part 7 of the DIFC Court Law provides for the making of Rules of Court in relation to any proceedings before the DIFC Court. Article 3 in section 3 of the Schedule to the Decree provides that references to Rules of Court in Part 7 of the DIFC Court Law shall be taken to be references to the rules applied by the Tribunal; and that the “Rules applied by the Tribunal” (the RDWT) shall be the Rules of the DIFC Court as may be amended by the Tribunal.
- RDWT 20.1 and 20.2 provide that any number of claimants or defendants may be joined as parties to a claim; and may be added in existing proceedings either on the Tribunal’s own initiative or on the application of an existing party or a person who wishes to become a party. There is nothing in the provisions of RDWT Part 20 which requires that the only persons who can be joined in, or added to, proceedings in which there are claims between the other parties which fall within Article (3).a.1 of the Decree must be persons whose claims (or the claims to which they are subject) are also within that Article. But the power to join or add a party is subject to control by the Tribunal. In particular RDWT 20.8 provides that the Tribunal may order any person to cease to be a party “if it is not desirable for that person to be a party to the proceedings”; RDWT 20.11 provides that the Tribunal’s permission is required to add a party (unless the claim form has not been served); and RDWT 20.7 provides that the Tribunal may order a person to be added as a new party if: “(1) it is desirable to add the new party so that the Tribunal can resolve all the matters in dispute in the proceedings; or (2) there is an issue involving the new party and an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the Tribunal can resolve that issue”. In our view, the provisions of RDWT Part 20 are to be construed and applied with its obvious purpose in mind: to enable the Tribunal to do effective justice by resolving all matters in dispute, including issues involving persons who would not otherwise be parties which are so connected to existing issues between those who are parties by reason of Article (3).a.1 that it is desirable to resolve them in the same proceedings. That that is the correct approach is, we think, underlined by the provisions as to Group litigation in section III of Part 20; which would otherwise be substantially frustrated. We should add that any suggestion that the Tribunal is seeking (by reliance on rules which it has made under a devolved power) to confer upon itself jurisdiction which it would not otherwise have had under the Decree would be ill-founded. RDWT Part 20 is based on Part 20 in the Rules of the DIFC Court; and so derives its authority from Article 1 in section 3 of the Schedule to the Decree.
- Accordingly, we reject the submission that the Tribunal has no jurisdiction to hear or determine claims in relation to the establishment of a limitation fund; or claims made or to be made as between the owners and the third party defendants, or to make any other order in relation to such claims. We decline to strike out the third party defendants, the claims against the third party defendants or those parts of the claim to be entitled to establish a limitation fund and to seek a decree under the Convention (or relief which relates to the claim) on the grounds that there is no jurisdiction to entertain such claims.
- If, contrary to the submission of the DP World defendants, the Tribunal were to hold that it has no jurisdiction to entertain claims by or against the third party defendants or in respect to the establishment of a limitation fund or the making of a limitation decree, it is said that on their behalf that the Tribunal should declare that it will refuse to exercise that jurisdiction. Although such a declaration is sought under Application 0001-2017/2, it is, in effect, relied upon as a defence to the orders sought by the Shipowners under Application 0001-2017/1; and is more appropriately addressed in that context. If that defence succeeds, Application 0001-2017/1 will fail and there will be no need for the declarations sought in Application 0001-2017/2.
The damages claims
- As we have said, no jurisdictional challenge was advanced in relation to the damages claims against the DP World defendants. In relation to those claims it was said (i) that they should be struck out as having no real prospect of success; or, in the alternative, (ii) that they should be stayed in favour of the London proceedings.
- In support of the application for an order that the claims against the DP World defendants for damages for negligence and/or breach of duty should be struck out as having no real prospect of success, it is submitted, first, that (as appears from paragraph 46 of Mr Boahene’s second witness statement) the Shipowners’ case is that, at the time of the Incident, the Vessel was under the control of the pilot for whose actions (or failure to act) the DP World defendants (or one or other of them) were responsible and that it was the pilot’s actions (or failure to act) that caused the Incident; that the provisions of Article 307 of the UAE Maritime Code (which would be applicable in such a case) require that it be established that “the pilot was guilty of a gross error in the performance of his pilotage operation”; and that that is a hurdle which (it is said) the Shipowners have no prospect of surmounting. The Article is in these terms:
“307(1) The operator of the vessel shall be responsible for the damage suffered by third parties by reason of errors committed by the pilot in the carrying out of his pilotage duties, and it shall be permissible for the operator to have recourse against the pilot to the amount of the damage arising out of the error from which the loss arose.
(2) The pilot shall not be responsible for losses sustained by the ship which he is piloting unless the operator proves that the pilot was guilty of a gross error in the performance of his pilotage operation.”
- The Tribunal recognises that generally – and, more particularly, having regard to the requirement in Article 307(2) – a shipowner who seeks to rely on pilot error in order to found a claim against a port operator has a difficult evidential hurdle to surmount. But the claimants point to the existence of factors in the present case which, they say, will enable them to establish that the pilot was guilty of gross error. Those factors include (i) that the Vessel collided with stationary objects when (it is said) it was under the control of the pilot, (ii) that (it is said) the Master warned the pilot that the Vessel was travelling too fast and (iii) that (it is said) the pilot departed from standard practice by proceeding directly into the container basin (rather than turning the Vessel outside the basin). There is no material before the Tribunal upon which it could form a view as to the evidential force, or otherwise, of those factors. The Tribunal cannot hold that the Shipowners would be more or less likely to succeed in their claim against the DP World defendants as operators of the Port and/or as employers of the pilot: more pertinently in the present context, the Tribunal cannot hold that that claim is bound to fail.
- As a second ground in support of their application for an order that the claims against them for damages should be struck out as having no real prospect of success, it is submitted on behalf of the DP World defendants that, under the terms of the berthing contract made between the first defendant, DP World UAE Region FZE, and the second claimant, CMA CGM SA (which, at clause 7 incorporates the first defendant’s published tariff including, in particular, condition 205 of that tariff) the second claimant agreed to “indemnify and hold harmless” the first defendant, as Port Operator, from and against “all losses, claims, demands, and suits for damages . . . for . . . property damage . . . as a consequence of services at the Port”. It is said to follow that the Shipowners’ claim for damages (even if otherwise well-founded) would be bound to fail for circularity. In response, it is submitted on behalf of the Shipowners that, if condition 205 of the first defendant’s tariff would have the effect for which the DP World defendants contend, it would infringe the provisions of Article 296 of the UAE Civil Code – which requires that any condition of a contract which purports to provide exemption from responsibility for a harmful act shall be void – and so cannot be relied upon as a defence to a claim in tort. There is obvious force in that response: at the least, it cannot be dismissed without full argument and, perhaps, the support of expert evidence as to the effect of Article 296 under UAE law. The Tribunal cannot reach the conclusion, on the material which has been put before it by the DP World defendants, that the Shipowners’ claim for damages is bound to fail for circularity. And, in any event, as the Shipowners point out, neither the first claimant, Alize 1996, nor the second defendant, DP World Limited, were parties to the contract on which the DP World defendants seek to rely.
- For those reasons we decline to strike out the claims against the DP World defendants for damages for negligence and/or breach of duty.
- In support of the application that, in the alternative to an order striking out the claims against them for damages for negligence and/or breach of duty, the Tribunal should order that those claims should be stayed in favour of the London proceedings, the DP World defendants submit that the Tribunal should follow the approach of the DIFC Court of Appeal in Protiviti Member Firm (Middle East) Limited v Al Mojil and another  DIFC CA 003 and apply the principles set out in the judgment of Lord Goff of Chieveley in Spiliada Maritime Corporation Ltd v Cansulex Ltd  1 AC 460. Those principles, it is said, should lead the Tribunal to order a stay of the proceedings before it on grounds of forum non conveniens where it is satisfied that there is another court of competent jurisdiction (“the natural forum”) which is clearly or distinctly more appropriate for the trial of the action than the forum chosen by the claimants (“the chosen forum”) – that is to say, in this case, clearly or distinctly more appropriate for the trial than the Tribunal itself – and is not satisfied that, nevertheless, justice requires that the proceedings should continue in the chosen forum. It is for the party seeking the stay (in this case, the DP World defendants) to satisfy the Tribunal as to the natural forum; that is to say, that there exists a forum (other than Dubai) which, judged by reference to the factors connecting it to the parties, has the most real and substantial connection with the proceedings. If a natural forum distinct from the chosen forum is established, there will be a presumption in favour of a stay; and then -and only then – does the burden of displacing that presumption, by satisfying the Tribunal that justice does require that the proceedings continue in the chosen forum, fall on the party resisting the stay (in this case, the Shipowners).
- It is submitted on behalf of the DP World defendants that England and Wales is clearly and distinctly the most appropriate forum for the trial of the damages claim: that is to say, that England and Wales is the natural forum. In advancing that submission, the DP World defendants rely on the following factors:
- The Vessel flies the flag of the United Kingdom. It is said that, on any view, this is a significant connection to England and Wales (as part of the United Kingdom).
- The Marine Accident Investigation Board, a United Kingdom government agency, has already commenced an investigation, interviewed the relevant witnesses and reviewed the Voyage Data Recorder (“VDR”). It is said that this is a further substantial connection with England and Wales.
- The DP World defendants are parties with a significant and immediate claim for damages; and (it is said) are the natural claimants. London is their chosen forum; and, by commencing the London proceedings, they have already taken steps to give effect to that choice. It is said that, “but for what appears to be a change in the vessel scheduling following discovery of the London proceedings by the Claimants”, the English proceedings would have been well underway by now.
- The London proceedings will give “the Claimants” (which we understand to mean, in that context, the DP World defendants) and their insurers the right to pursue their claims in the United Kingdom. It is said, first, that the DP World defendants and their insurers have no current intention to pursue claims before the Tribunal; and, second, that the London proceedings will not be susceptible to an application for a stay, given that the Shipowners are domiciled in France. In support of that latter proposition the DP World defendants seek to rely on the decision of the European Court of Justice in The Tatry (Owners of Cargo Lately Laden on Board the Ship Tatry v Owners of the Ship Maciej Rataj (Case C-406/92)  E.C.R. I-5439;  Ll Rep 302. In those circumstances, it is said to be highly likely (if not inevitable) that, if the proceedings before the Tribunal are not stayed, there will be two sets of proceedings.
- In addition, the English Court will (unlike, it is said, the Tribunal) be able to issue a limitation decree so as to bind all those parties which the Shipowners seek to bring into these proceedings as the third party defendants.
- The Commercial Court in London is experienced in litigation of this nature and has specially adapted procedures for such cases. These include provisions relating to the early disclosure and evaluation of VDR and the use of a fast track procedure.
- The Tribunal is entitled to take into account the fact (as the DP World defendants allege) that the claims brought by the Shipowners in the UAE are “plainly no more than a jurisdictional hook” used in an attempt to secure the benefit of the UAE limitation provisions in circumstances where (a) the Shipowners are unlikely to achieve that same benefit before the Dubai Courts and (b) the claim has no real prospect of success, or (at best) is very weak on the merits.
- In response to the application made (in the alternative) on behalf of the DP World defendants for an order staying the claims against them for damages for negligence and/or breach of duty in favour of the London proceedings, the Shipowners submit that, if (as is common ground) the Tribunal has jurisdiction to entertain those claims, it is far from clear that it could refuse to exercise that jurisdiction on forum non conveniens It is said that, generally, the Courts of Dubai do not recognise a power to stay proceedings on those grounds: where they have jurisdiction, the Dubai Courts are bound to exercise it. In support of that proposition the Shipowners rely on the observation in the judgment of the Dubai Court of Cassation in Case 480/2012: “The Dubai Courts must act within its jurisdiction both positively and negatively”.
- In any event, it is said, application of the principles adopted by the DIFC Court of Appeal in the Protiviti case should lead the Tribunal to refuse a stay. In considering whether there is a “natural forum” other than Dubai the Tribunal should have in mind “the shape of the trial and the issues which are likely to arise”: VTB Capital v Nutritek  2 AC 337, 399 at . In relation to the claims for damages, the principal issues would be whose fault led to the Incident; and in what amount was loss suffered as a result of the Incident. In the present case it is important for the Tribunal to have in mind that all of the relevant events took place in Dubai; that the applicable law for the purposes of determining liability is likely to be the law of the UAE (wherever proceedings are tried); and that the witnesses of fact are likely to be based in the UAE. In particular, it is said:
- The Incident has been the subject of investigations by numerous bodies, including the MAIB. Any report issued by MAIB could be relied on equally in either jurisdiction; and it is unlikely that MAIB personnel would be required to give evidence, in that the purpose of an MAIB Report is to report on safety considerations, not to attribute blame. All other investigations (necessarily) took place in Dubai. Should oral evidence from those who carried out such investigations be needed, the witnesses are likely to be in or near Dubai.
- Dubai is also likely to be a far more convenient venue for other witnesses of fact, in that: (i) it is understood that the pilot lives and works in Dubai; (ii) the crew of the Vessel, although not based in Dubai (or London) pass through Dubai (with the Vessel) approximately every six weeks; all of the individuals injured as a result of the Incident were employed by Dubai companies, work in the Port, and so are very likely to live nearby; and (iii) a site view would give rise to little delay or expense if the proceedings were in Dubai, but would be expensive and probably impracticable if the proceedings were in London.
Further, it is said that enforcement of any judgment will be straightforward if the claim is heard in Dubai, but not if it is heard in London. In particular:
- Any money judgment issued by the Tribunal against the DP World defendants would be capable of enforcement directly: Decree 57, Article 6.
- Any money judgment issued by the Tribunal against the Shipowners would be enforceable against the Limitation Fund.
- A judgment in the London proceedings against the DP World defendants would be unlikely to be enforceable in Dubai, in that: (i) direct enforcement of foreign judgments is not available where a UAE Court would have had jurisdiction over the underlying dispute (article 235 of the UAE Civil Procedures Law); and (ii) conduit enforcement through the DIFC Courts under Article 24 of the DIFC Court Law is not available.
- As we have said, if the principles as to forum non conveniens adopted by the DIFC Court of Appeal in the Protiviti case are applicable in proceedings before the DWT, the first question for the Tribunal is whether the courts of England and Wales – and, in particular, the High Court in London – is clearly and distinctly more appropriate for the trial of the action than the Tribunal itself. In our view, the answer to the question is plainly “No”. It follows that we find it unnecessary to decide whether or not it is open to the Tribunal to stay proceedings on the grounds of forum non conveniens. If it were open to the Tribunal to grant a stay on those grounds, we would not think it appropriate to do so in this case.
- In reaching that conclusion, we give particular weight to the following factors (on which the Shipowners rely): (i) that all of the relevant events took place in Dubai, (ii) that the applicable law for the purposes of determining liability is likely to be the law of the UAE, (iii) that, if expert evidence as to the relevant provisions of the law of the UAE is needed, the experts who can give that evidence are likely to be based in the UAE, (iv) that the witnesses of fact are likely to be based in the UAE and (v) that a judgment obtained in London is unlikely to be enforceable in Dubai. In relation to the last of those factors, we have in mind that Decree 57 is not merely permissive: it requires that claims against DP World companies are brought before the Tribunal to the exclusion of all other Courts in the Emirate of Dubai. That, as it seems to us, would provide a very substantial obstacle to the enforcement of a foreign judgment by the Dubai Courts (or by the DIFC Court, so far as relevant) against the DP World defendants. In our view, not only is England and Wales not the “natural forum” for the damages claims, the natural forum is that which the Shipowners have chosen: that is to say, the natural forum is Dubai.
- We have not been persuaded by the submissions advanced on behalf of the DP World defendants that the conclusion that the Commercial Court in London is not clearly and distinctly more appropriate for the trial of the action than the Tribunal itself is wrong. In particular, as the Shipowners point out: (i) the nationality of the Vessel is of little or no relevance in the circumstances that the Vessel (we were told) has not visited the United Kingdom since March 2013 and (in any event) the United Nations Convention on the Law of the Sea has not been ratified in the UAE, (ii) the VDR evidence – and, so far as relevant, the review of that evidence in the MAIB Report – can be relied upon in proceedings before the Tribunal without the need for the direct evidence of those who conducted that review, (iii) there is no evidence to support the suggestion that the London proceedings have been held up by a deliberate change in the scheduling of vessels owned by the first claimant and no other reason has been advanced to explain why those proceedings have not progressed, (iv) we have rejected (earlier in this judgment) the submission that the Tribunal would be unable to make a limitation decree which will bind the third party defendants, (v) while recognising the experience and expertise of the Commercial Court in London in litigation of this nature, we do not accept that the Tribunal would not be able, effectively and efficiently, to determine the issues which would be raised in the proceedings before it, (vi) we reject the submission that the Shipowners have commenced proceedings for damages in the Tribunal as “a jurisdictional hook” on which to hang an application for a limitation decree based on the unrevised provisions of the Convention – we accept the Shipowners’ contention that no such “jurisdictional hook” is required – and (vii) while noting the implied threat that, if the proceedings before the Tribunal are not stayed, the DP World defendants will (nonetheless) seek to pursue the London proceedings with the consequence that it is highly likely (if not inevitable) that there will be two sets of proceedings with the (obviously undesirable) risk of inconsistent decisions, we do not find any merit in the submission that the DP World defendants can rely on their own decision to pursue proceedings in another forum (in which, as they assert, no application for a stay on forum non conveniens grounds could be entertained in the circumstances of this case) in order to displace, on the grounds of that self-induced potential inconsistency, our conclusion that Dubai would otherwise be the natural forum.
- For those reasons we decline to stay the claims against the DP World defendants for damages for negligence and/or breach of duty.
- It follows that that we do not think it appropriate to make any of the orders sought by the DP World defendants in their application DWT-0001-2017/2 issued on 6 July 2017; and we dismiss that application.
- As we have said, by their application (Application DWT-0001-2017/1) issued on 22 June 2017, the Shipowners seek a final (or, in the alternative, an interim) declaration that they are entitled to constitute a limitation fund under Article 11 of the Convention by producing a guarantee in the form of a letter of undertaking from The Swedish Club which is in substantially in the form attached to the proposed order; or, in the alternative, directions as to how such a fund should be constituted.
- In support of Application 0001-2017/1 the Shipowners filed a witness statement made by Mr Boahene (his first witness statement) and dated 22 June 2017. In response to that witness statement the DP World defendants rely on a witness statement made by Mr Lawrence (his second witness statement) and dated 25 July 2017. The submissions made on behalf of the Shipowners were developed in a skeleton argument dated 8 October 2017; and developed further before the Tribunal at the oral hearing of the Application.
- In opposing the relief sought by the Shipowners under Application 0001- 2017/1 the DP World defendants’ principal contention is that, if (as we have held) the Tribunal does have jurisdiction to entertain claims by or against the third party defendants or in respect to the establishment of a limitation fund or the making of a limitation decree, we should refuse to exercise that jurisdiction. In support of that contention it is said that “the uncertain position surrounding the establishment of limitation funds and the granting of limitation decrees as a matter of UAE law, means that (even if the Tribunal considers it has the power) it should nevertheless decline to exercise that power”. Two propositions are advanced: (i) that there is an established practice in the Dubai Courts that, although they will, in principle, acknowledge the right to limit liability as a defensive (or responsive) act, they will not allow (pre-emptive) limitation as an offensive act in circumstances where the party seeking to establish a limitation fund and obtain a limitation decree is not defendant to any claim brought against it; and (ii) that, given that (it is said) UAE law provides no mechanism for the establishment of a limitation fund and no provisions as to who can manage or represent such a fund in the UAE, the Tribunal should not run the “very real risk” of granting relief that would set an unwelcome precedent. No evidence to support either of those propositions has been put before the Tribunal.
- In his second witness statement, dated 25 July 2017 and expressed to be made in response to Application 0001-2017/1, Mr Lawrence states (at paragraph 9) that:
“In the Dubai Court of Cassation judgment no. 262/2005 Commercial, the highest court of appeal for the Emirate of Dubai rejected the establishment of a limitation fund. The Court of Cassation concluded that the Urgent Matters Judge did not have jurisdiction to hear applications to constitute a limitation fund in accordance with the Convention, because to do so would have involved addressing the substance of the rights in dispute”.
There is nothing in the witness statements made by Mr Lawrence in support of Application 0001-2017/2 – that is to say, in his first witness statement of 3 July 2017 or in his third witness statement of 17 August 2017 – which provides any further assistance on this point.
- In our view there is nothing in the judgment of the Court of Cassation to which Mr Lawrence refers which supports the first of the two propositions (established practice) advanced on behalf of the DP World defendants. The issue under consideration by the Court of Cassation in Petition No 262 of 2005 was whether the President of the Court of First Instance, acting as the urgent matters judge under Articles 140, 141 and 142 of the UAE Civil Procedure Law, exceeded his jurisdiction under those provisions in making an order allowing service on the creditor of an offer made by the debtor pursuant to Articles 189, 191, 192(1) and 193 of that Law and the deposit of the offered amount in limitation its liability under the Convention without reviewing the terms of the Convention and its applicability. The Court accepted that the President was correct, in the circumstances, not to review the terms of the Convention and its applicability (because he could not do that “without touching on the substance of the right in dispute”, which as urgent matters judge he was not permitted to do); but that, without reviewing the terms of the Convention and its applicability, he had no jurisdiction to make the order that he did. As the Court of Cassation explained:
“The President of the Court of First Instance and the court reviewing the objection against his order can not allow such prayer without reviewing the terms of the said treaty and the extent of their applicability on the rights and obligations of the Applicants and the Respondents against each other. This will lead to touching on the substance of the rights in dispute. It is not within the jurisdiction of the ordering President of the Court nor within the jurisdiction of the Objection Court.”
The decision of the Court of Cassation is not to the effect that the Dubai Courts have no jurisdiction to constitute a limitation fund under the Convention on the application of a debtor (or potential debtor); the decision was limited to the procedural question whether such an application can be made under the provisions of Articles 140, 141 and 142 of the Civil Code. That is not a question which arises in these proceedings before the Tribunal. As we have explained, the Tribunal’s powers to grant interim or injunctive relief are found in the Decree and the Rules made under the Decree: they are not found in Articles 140, 141 and 142 of the Civil Code. Nor is there anything in the judgment of the Court of Cassation which supports the second of the two propositions (risk of unwelcome precedent) advanced on behalf of the DP World defendants.
- Mr Lawrence states, at paragraph 6 of his second witness statement that he is unaware of any case in the UAE in which a limitation fund has been established, “although I am aware of cases in which a UAE Court has rejected the establishment of a limitation fund”. Other than the reference to Petition 262 of 2005, he does not identify those cases. He goes on to submit (at paragraph 7 of that witness statement) that “it is exactly this established practice that has led to the Claimants seeking to claim against the Defendants before the Tribunal, as they would have been aware that their chances of establishing a limitation fund before the UAE Courts would have been negligible”; and expresses his belief (at paragraph 12) that “the Claimants have brought these proceedings before the Tribunal rather than before an ‘onshore’ UAE Court, despite the jurisdictional issues I have referred to in my first witness statement with the aim of getting a result different from the one that they would get if their claims and requests were made before an ‘onshore’ UAE Court.” In our view these speculative assertions as to the Shipowners’ motives in seeking relief from the Tribunal – rather than from an “onshore” UAE Court – are without substance. Given the mandatory provisions of the Decree – to which we have referred – it was not open to the Shipowners to seek relief in what the DP World defendants describe as an ‘onshore’ UAE Court. The Decree requires that claims against the DP World defendants are brought before the Tribunal: other courts in the Emirate do not have jurisdiction over such claims.
- Given that, as we have held, the Tribunal has jurisdiction under the Decree to entertain the claims by or against the third party defendants and the claims to the establishment of a limitation fund or the making of a limitation decree – and that that jurisdiction has been invoked by the Shipowners – we can see no basis upon which the Tribunal should refuse to exercise that jurisdiction. We reject the submission that we should refuse to do so on the grounds that the question whether or not Courts in the UAE can or will give effect to treaty obligations assumed under the Convention is “uncertain”. We are not persuaded that such procedural difficulties (if any) as may exist in the “onshore” courts, should lead the Tribunal to refuse to do what it properly can do under the RDWT in order to give effect to those treaty obligations.
- The Shipowners seek a declaration that they are entitled to constitute a limitation fund under Article 11 of the Convention by producing a guarantee in the form of a letter of undertaking from The Swedish Club. Article 11.1 provides that: “Any person alleged to be liable may constitute a fund with . . . [a] competent authority in any State Party in which legal proceedings are instituted in respect of claims subject to limitation”. We are satisfied that that the Shipowners are persons alleged to be liable in respect of claims for loss of or damage to property arising from the Incident; and that those claims are subject to limitation of liability within Article 2.1 of the Convention. Article 11.1 goes on to provide that (in the circumstances of the present case) the fund shall be constituted in the sum of “such of the amounts in set out in [Article 6] as are applicable to the claims for which [the Shipowners] may be liable, together with interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund”. It is not in dispute that the sum of the amounts applicable to the claims for which Shipowners may be liable is USD 20,785,757.94; to which interest from the date of the Incident (4 May 2017) until the date on which the fund is constituted must be added. Article 11.2 provides that the fund may be constituted, either by depositing the sum, or “by producing a guarantee acceptable under the legislation of the State Party where the fund is constituted and considered to be adequate by the Court or other competent authority”.
- It is said on behalf of the DP World defendants that it would be inappropriate for the Tribunal to permit, or direct, that the limitation fund to be constituted by a P&I Club guarantee: the proper course, if the Tribunal is satisfied that the Shipowners are entitled to establish a limitation fund, is to direct that the fund be established by cash or a local bank guarantee “which is in accordance with UAE law and practice of the onshore courts”. In support of that proposition the DP World defendants rely on an assertion in paragraph 27 of Mr Lawrence’s second witness statement as to “the practice in the UAE Courts as to what security is considered acceptable in relation to the release of a vessel from ship arrest”. It is said that such security should be by way of cash or local bank guarantee; and that “a P&I Club LoU is not accepted by ‘onshore’ UAE Courts”. But that bare assertion is not supported by reference to any decision of the UAE Courts to that effect; and must be read with Mr Lawrence’s evidence, in paragraph 6 of the same witness statement, that he is “unaware of any case in the UAE in which a limitation fund has been established”. The position of the Shipowners is that they do not know whether the assertion is correct. They submit that there is nothing in the legislation of the Emirate of Dubai (or, more generally, in the legislation of the UAE) which prohibits the acceptance of a P&I Letter of Undertaking by way of guarantee; and they point out, correctly, that in those circumstances, Article 11.2 of the Convention requires only that the guarantee is “considered to be adequate” by the relevant authority (which, in this case, is the Tribunal).
- If we were satisfied that there was a settled practice in the Dubai Courts as to the nature and form of the guarantee considered appropriate for the purpose of constituting a limitation fund under Article 11.2 of the Convention, we would think it appropriate to follow that practice. But the evidence (such as it is) does not satisfy us that there is any such settled practice; in particular, the evidence does not satisfy us that the Dubai Courts would reject a P&I Club guarantee as adequate for that purpose. In our view, subject to further consideration of its terms (which must, we think, provide for payment not only of interest from 4 May 2017 until the date upon which the fund is constituted but also for payment a further sum equal to interest from the constitution of the fund until the date of payment), a Letter of Undertaking from The Swedish Club would be adequate and could be accepted. We will adjourn Application 0001-2017/1 for further consideration of the terms of the proposed Letter of Undertaking.
- On Application 0001-2017/1 we declare that the Shipowners are entitled to constitute a limitation fund pursuant to Article 11 of the Convention by producing a Letter of Undertaking from The Swedish Club guaranteeing payment on the order of the Tribunal of the sum of USD 20,785,757.94 together with interest thereon from 4 May 2017 until the constitution of the fund and further interest on that aggregate amount from the date of the constitution of the fund until payment. We adjourn the application for further consideration (in the absence of agreement) of the terms of the proposed Letter of Undertaking.
- We dismiss Application 0001-2017/2.
- Subject to any further representations which may be made to the Tribunal, we direct (i) that there shall be no order as to the costs of Application 0001-2017/1; (ii) that the costs of Application 0001-2017/2 shall be paid by the DP World defendants; and (iii) that that the costs of the hearing of the two applications (in so far as those costs have not been separately incurred) shall be allocated as to 25% to Application 0001-2017/1 and 75% to Application 0001-2017/2. Such further representations (if any) are to be made in writing within 14 days after the delivery of this judgment.
Sir Anthony Evans
Sir John Chadwick
Sir David Steel
Date of Issue: 15 January 2018