A recent judgment handed down by the Admiralty Court in London, The Styliani Z [2015] EWHC 2153 (Admlty), has highlighted the importance of using the correct claim form when issuing an in rem claim in the English courts.
English law draws a distinction between claims against a person, company or legal entity (known as an in personam claim) and claims against property, e.g. a vessel (referred to as in rem claims). The types of claims which may be brought in rem against a vessel or other property are set out in s. 20 of the Senior Courts Act 1981, and include (amongst others) any claims arising out of an agreement relating to the carriage of goods in a ship, or out of a charter party. In such claims the claimant can choose to either pursue a claim in rem or in personam.
In the Styliani Z, cargo owners wished to pursue vessel owners for claims arising out of water damage sustained by a cargo of bagged rice during loading operations at Lake Charles, Louisiana. The claimants' solicitors issued proceedings in the Admiralty Court in London in the amount of US$1.3 million. But an error in the particular claim form used led to problems when they came to serve the claim on the vessel owners.
The claimants' solicitors intended to issue an in rem claim form. However, they downloaded and drafted the claim form using ADM 1A, which is the general form for claims in the Admiralty Court used for in personam claims. They should have used form ADM 1, which is the appropriate claim form for actions in rem.
Once an in personam claim form is issued, the claimants have four months to serve it on the defendants. The rules for service of an in rem claim form are different, so that the claimants have one year to serve it.
The claimants' solicitors only noticed that the wrong claim form had been used after the four-month time limit for serving the in personam claim form had expired. By that time, it was too late to re-issue proceedings on the correct claim form as the cargo claim was itself subject to a one-year time bar due to the application of the US Carriage of Goods by Sea Act, which had also expired.
In the circumstances, the claimants' solicitors tried to amend the issued claim form so as to correct their mistake, and proceeded to formally serve it on the defendants within the one-year limit for in rem claim forms. The defendants asked the Court to reject jurisdiction.
The Court agreed with the defendants and declined jurisdiction. The claim form issued was one made in personam which the claimants failed to serve in time. The Court found that the claimants were not entitled to make amendments to the claim form after it had lapsed, and rejected the claimants' argument that "substance" should not be allowed to triumph over "form". The Court noted that there were good reasons for maintaining the distinction between in personam and in rem claims in the Admiralty Court and why the distinction should not become blurred. Although the claimants' solicitors had intended to issue an in rem claim form it was, considered objectively, an in personam claim form. The fact that the claimants' solicitors made a mistake was not a good enough reason to treat the claim as having been made in rem when in fact it was not.
This serves as a useful reminder that although fairness is at the heart of the English courts' Civil Procedure Rules, in appropriate cases the letter of the Rules will be applied strictly, even if that has serious consequences for the unfortunate party who has made an innocent mistake.
The judgment is under appeal and this is due to be heard in October 2015.
The Association is grateful to Campbell Johnston Clark for their contribution to this advisory.