GRIFFIN UNDERWRITING LTD V VAROUXAKIS (THE "FREE GODDESS")

[2018] EWHC 3259 (Comm), Queen's Bench Division, Commercial Court, Mr Justice Males, 28 November 2018

Jurisdiction - Challenge to jurisdiction - Whether in time - Relief from sanctions - Matters relating to insurance - Civil Procedure Rules, r 11(5)

The defendant, V, was sued for inducing breaches of contract by companies under his control and of which he was the sole director. The claimant insurer, a Guernsey-based company, had insured M/V Free Goddess under a kidnap and ransom insurance policy for a 30-day round trip voyage involving passing through the Gulf of Aden. In February 2012, while carrying a cargo of rolled steel coils from Egypt to Thailand under bills of lading issued in January 2012, the vessel was seized by pirates and taken to Somalia. She was eventually released and taken to Oman, arriving in October 2012. General average was declared. The claimant had paid out under the insurance policy as a result of the hijacking and would in the ordinary course have had a claim for general average contribution against the bill of lading holders and under average guarantees issued by cargo insurers prior to the delivery of the cargo at the discharge port. However, the vessel was abandoned by the owners in Oman, to the extent that the seafarers on board were left reliant on humanitarian aid. A settlement agreement concluded between the claimant and the shipowners and managers of the vessel subrogated claimants to the rights of the latter in general average or at common law. However, this presupposed performance of the bills of lading contracts and the delivery of the cargo never took place due, the claimant argued, to the breaches induced by the defendant. Instead, the vessel was sold and bareboat-chartered back, destroying the shipowner's possessory lien over the cargo for general average. An arbitration in London between the bill of lading holders and the shipowner resulted in various orders against the shipowner, which were not complied with. When the present action for inducing or procuring breaches of the settlement agreement was commenced, V acknowledged service but indicated an intention to contest jurisdiction. There was an agreed moratorium on the action, terminable on 48 hours' notice. On 24 October 2017, the claimant wrote to V in terms that the agreement to the stay would be withdrawn. Judgment in default was sought on 1 May 2018, whereupon the jurisdiction of the court was challenged. An argument arose as to the timeliness of that challenge, the defendant arguing that an automatic stay came into effect pursuant to CPR 15.11(1).