[QUEEN'S BENCH DIVISION]

I CONGRESO DEL PARTIDO

[1975 Folio Nos. 544, 644 and 752]

Conflict of Laws - Sovereign immunity - Government-owned ship - Commercial transaction for supply of sugar from one state to another - Non-delivery of sugar on government orders following severance of relations between states - Whether writ in rem to be set aside on ground that foreign sovereign being impleaded

Admiralty - Jurisdiction - Action in rem - Operators and managers of ship with no legal or equitable interest therein - Whether ship beneficially owned as respects all the shares therein - Administration of Justice Act 1956 (4 & 5 Eliz. 2, c. 46), s. 3 (4)

Ships Names - Congreso del Partido

In August 1973, pursuant to a contract for the sale of sugar by Cubazucar, a Cuban state enterprise, to the plaintiffs, a Chilean company, cargoes of sugar were dispatched to Chile on the vessels Playa Larga and Marble Islands. The vessels were under voyage charters to Cubazucar from Mambisa, another Cuban state enterprise, who were in possession of the vessels as owners in the case of the Playa Larga and as demise charterers in the case of the Marble Islands. On September 11, 1973, following a revolution in Chile, the government of the Republic of Cuba decided to have no further commercial dealings with Chile and diplomatic relations between the two states were severed. At that time the Playa Larga, having discharged part of her cargo, was lying at anchor in a Chilean harbour and the Marble Islands was still at sea. On orders from the Cuban government, the Playa Larga weighed anchor and met the Marble Islands at sea. Eventually, the remaining cargo from the Playa Larga was returned to Cuba and the cargo from the Marble Islands was discharged in Vietnam. On September 5, 1975, Mambisa, acting on behalf of the Republic of Cuba, took delivery in Sunderland of a new vessel, the Congreso, which was an ordinary trading vessel registered in the name of the Republic of Cuba. On September 9, 1975, the plaintiffs brought an action in rem against the owners of the Congreso, claiming that Mambisa would be liable to them in an action in personam for, inter alia, the return of the cargo shipped in the Marble Islands or its value, and alleging that Mambisa were beneficial owners of the Congreso pursuant to section 3 (4) of the Administration of Justice Act 1956.¹ The Congreso was arrested at Sunderland on September 12, 1975. Following a notice of motion

1 Administration of Justice Act 1956, s. 3: "(4) In the case of any such claim as is mentioned in paragraphs (d) to (r) of subsection (1) of section 1 of this Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of or in possession or in control of, the ship, the Admiralty jurisdiction of the High Court ... may (whether the claim

by the Republic of Cuba alleging that the Congreso was its property and invoking sovereign immunity, the plaintiffs commenced a second action in rem against the owners of the Congreso similar to the first action but alleging that the Republic of Cuba would be liable to them in an action in personam. In December 1975 a third action in rem against the owners of the Congreso was started by the plaintiffs in respect of the cargo on board the Playa Larga, alleging a claim in personam against either Mambisa or the Republic of Cuba.

On motions by the Republic of Cuba to set aside the writs and subsequent proceedings in all three actions as impleading a foreign sovereign, and by Mambisa in the first and third actions on the ground that the Congreso was not "beneficially owned as respects all the shares therein" by Mambisa within the meaning of section 3 (4) of the Act of 1956:-

Held, granting relief on all the motions, (1) that, on the evidence, the Republic of Cuba was at all material times the owner of the Congreso (post, p. 522D); and that, no claim in personam having been alleged against the Republic of Cuba in the first action, the plaintiffs were not entitled in that action to implead the Republic of Cuba by an action in rem against its ship (post, p. 524F-G).

Per curiam. A foreign sovereign invoking sovereign immunity on the ground that it is indirectly impleaded because its interest in property would be affected by the judgment need only satisfy the court that its claim is not merely illusory, nor founded on a title manifestly defective, whether the immunity invoked is absolute or restricted (post, pp. 519G,520B).

Juan Ysmael & Co. Inc. v. Government of the Republic of Indonesia [1955] A.C. 72, P.C. applied.

(2) That under international law, which by incorporation formed part of English law unless in conflict with an Act of Parliament, in an action in rem against a state-owned ordinary trading ship the owner was entitled to invoke sovereign immunity where the act as a result of which the claim arose was of its own character a governmental act even though the act complained of took place in the context of a commercial transaction (post, pp. 518D, 529H - 530B); that the act from which the present claims arose, namely, the diversion and disposal of the cargoes away from Chile, was essentially an act of foreign policy and, as such, a governmental act (post, p. 533D-E); and that, accordingly, the Republic of Cuba, as owner of the Congreso, was entitled to invoke sovereign immunity in all three actions (post, p. 533E).

The Philippine Admiral [1977] A.C. 373 P.C. and Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529, C.A. applied.

The Porto Alexandre [1920] P. 30, C.A. not followed.

Per curiam. It is difficult to accept that, in an appropriate case, the English courts should not assert jurisdiction by an action in rem against a state-owned ordinary trading ship even though the claim has no connection with the territorial jurisdiction of the English courts, for example, in the case of a

gives rise to a maritime lien on the ship or not) be invoked by an action in rem against - (a) that ship, if at the time when the action is brought it is beneficially owned as respects all the shares therein by that person; or (b) any other ship which, at the time when the action is brought, is beneficially owned as aforesaid."

claim arising from a collision with another foreign ship on the high seas or, in a case concerned with the carriage of cargo under a contract of carriage which had no connection with this country (post, p. 534F-G).

(3) That "beneficially owned as respects all the shares therein" in section 3 (4) of the Administration of Justice Act 1956 referred only to equitable ownership, whether or not accompanied by legal ownership, and did not include possession and control, however complete, without such ownership (post, p. 538E); that on the evidence Mambisa were not the owners in law or in equity of the Congreso but were simply in possession of her as operators and managers; and that, accordingly, the plaintiffs were not entitled to invoke the Admiralty jurisdiction by an action in rem against the Congreso in which Mambisa were identified as defendants under section 3 (4) (post, pp. 537C-D, 538G-H, 542H - 543B).

The Andrea Ursula [1973] Q.B. 265 not followed.

The following cases are referred to in the judgment:

Andrea Ursula, The [1973] Q.B. 265; [1971] 2 W.L.R. 681; [1971] 1 All E.R. 821.

Atlantic Star, The [1974] A.C. 436; [1973] 2 W.L.R. 795; [1973] 2 All E.R. 175, H.L.(E.).

Banco de Bilbao v. Sancha [1938] 2 K.B. 176; [1938] 2 All E.R. 253, C.A.

Baumwoll Manufactur von Carl Scheibler v. Furness [1893] A.C. 8, H.L.(E.).

Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) [1967] 1 A.C. 853; [1966] 3 W.L.R. 125; [1966] 2 All E.R. 536, H.L.(E.).

Charente, The [1942] Nytt Jurisdisk Arkiv 1, Supreme Court of Sweden.

Claim against the Empire of Iran Case (1963) 45 International Law Reports 57.

Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485; [1938] 1 All E.R. 719, H.L.(E.).

Consorzio Agrario di Tripolitania v. Federazione Italiana Consorzi Agrari, December 5, 1966, n. 2830; [1967] Guistizier Civile 1972.

Czarnikow (C.) Ltd. v. Centrala Handlu Zagranicznego Rolimpex (unreported), December 13, 1976, Kerr J.

Ditta Campione v. Ditta Peti Nitrogenmuveh, Stato Ungherese, November 14, 1972, n. 3368, 1st session.

Dunhill (Alfred) of London Inc. v. Republic of Cuba (1976) 96 S.C. 1854.

Eschersheim, The [1976] 1 W.L.R. 430; [1976] 1 All E.R. 920, H.L.(E.).

Frazer v. Marsh (1811) 13 East 238.

Jackson (Sir John) Ltd. v. Steamship Blanche (Owners) (The Hopper No. 66) [1908] A.C. 126, H.L.(E.).

Jupiter (No. 2), The [1925] P. 69, C.A.

Jupiter (No. 3), The [1927] P. 122.

Lemington, The (1874) 2 Asp.M.L.C. 475.

Modern Building Wales Ltd. v. Limmer & Trinidad Co. Ltd. [1975] 1 W.L.R. 1281; [1975] 2 All E.R. 549, C.A.

Overseas Tankship (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon Mound) [1961] A.C. 388; [1961] 2 W.L.R. 126; [1961] 1 All E.R. 404, P.C.

Parlement Belge, The (1880) 5 P.D. 197, C.A.

Philippine Admiral, The [1977] A.C. 373; [1976] 2 W.L.R. 214; [1976] 1 All E.R. 78, P.C.

Polemis & Furness, Withy and Co. Ltd., In re [1921] 3 K.B. 560, C.A.

Porto Alexandre, The [1920] P. 30, C.A.

Post Office v. Estuary Radio Ltd. [1968] 2 Q.B. 740; [1967] 1 W.L.R. 1396; [1967] 3 All E.R. 663, C.A.

Rahimtoola v. Nizam of Hyderabad [1958] A.C. 379; [1957] 3 W.L.R. 884; [1957] 3 All E.R. 441, H.L.(E.).

Republic of Mexico v. Hoffman (1945) 324 U.S. 30.

Ruby Queen, The (1861) Lush. 266.

Russian Commercial and Industrial Bank v. Comptoir d'Escompte de Mulhouse [1925] A.C. 112, H.L.(E.).

St. Elefterio, The [1957] P. 179; [1957] 2 W.L.R. 935; [1957] 2 All E.R. 374.

St. Merriel, The [1963] P. 247; [1963] 2 W.L.R. 488; [1963] 1 All E.R. 537.

Salomon v. Customs and Excise Commissioners [1967] 2 Q.B. 116; [1966] 3 W.L.R. 1223; [1966] 3 All E.R. 871, C.A.

Sandeman v. Scurr (1866) L.R. 2 Q.B. 86.

Schooner Exchange, The v. M'Faddon (1812) 7 Cranch. 116.

Sea and Land Securities Ltd. v. William Dickinson and Co. Ltd. [1942] 2 K.B. 65; [1942] 1 All E.R. 503, C.A.

Smith v. Leech Brain & Co. Ltd. [1962] 2 Q.B. 405; [1962] 2 W.L.R. 148; [1961] 3 All E.R. 1159.

Swiss Israel Trade Bank v. Government of Salta [1972] 1 Lloyd's Rep. 497.

Tasmania, The (1888) 13 P.D. 110.

Thai-Europe Tapioca Service Ltd. v. Government of Pakistan, Directorate of Agricultural Supplies [1975] 1 W.L.R. 1485; [1975] 3 All E.R. 961, C.A.

Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529; [1977] 2 W.L.R. 356; [1977] 1 All E.R. 881, C.A.

United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. and Bank of England [1952] A.C. 582; [1952] 1 All E.R. 572, H.L.(E.).

Victory Transport Inc. v. Comisaria General de Abastecimientos y Transportes (1964) 336 F. 2d 354.

Vitkovice Horni A Hutni Tezirstvo v. Korner [1951] A.C. 869; [1951] 2 All E.R. 334, H.L.(E.).

Y.M.N. Establishment v. Central Bank of Nigeria, December 2, 1975, Provincial Court of Frankfurt, 8th Chamber for Commercial Matters. Sub nom. Nada Trust v. Central Bank of Nigeria (1976) Die Aktiengesellschaft (A.G.) 47.

Ysmael (Juan) & Co. Inc. v. Government of the Republic of Indonesia [1955] A.C. 72; [1954] 3 W.L.R. 531; [1954] 3 All E.R. 236, P.C.

The following additional cases were cited in argument:

Annette, The; The Dora [1919] P. 105.

Baccus S.R.L. v. Servicio Nacional del Trigo [1957] 1 Q.B. 438; [1956] 3 W.L.R. 948; [1956] 3 All E.R. 715, C.A.

Bank voor Handel en Scheepvaart N.V. v. Slatford [1953] 1 Q.B. 248; [1952] 1 All E.R. 314; [1952] 2 All E.R. 956, Devlin J. and C.A.

Briggs v. Light Boats (1865) 11 Allen 157 (Mass.).

Broadmayne, The [1916] P. 64, C.A.

Crimdon, The (1918) 35 T.L.R. 81.

Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797, H.L.(E.).

Gagara, The [1919] P. 95, C.A.

Jassy, The [1906] P. 270.

Kahan v. Pakistan Federation [1951] 2 K.B. 1003, C.A.

McQuaker v. Goddard [1940] 1 K.B. 687; [1940] 1 All E.R. 471, C.A.

Mighell v. Sultan of Johore [1894] 1 Q.B. 149, C.A.

Morelle Ltd. v. Wakeling [1955] 2 Q.B. 379; [1955] 2 W.L.R. 672; [1955] 1 All E.R. 708, C.A.

Planche v. Colburn (1831) 8 Bing. 14.

Ripon City, The [1897] P. 226.

Sultan of Johore v. Abubakar Tunku Aris Bendahar [1952] A.C. 318; [1952] 1 All E.R. 1261, P.C.

Tasmania, The (1890) 15 App.Cas. 223, H.L.(E.).

Ticonderoga, The (1857) Swab. 215.

Twycross v. Dreyfus (1877) 5 Ch.D. 605, C.A.

Vavasseur v. Krupp (1878) 9 Ch.D. 351, C.A.

Victoria (S.S.) (Owners) v. S.S. Quillwark (Owners), 1922 S.L.T. 68.

Young v. Bristol Aeroplane Co. Ltd. [1944] K.B. 718; [1944] 2 All E.R. 293, C.A.

Young v. S.S. Scotia [1903] A.C. 501, P.C.

ADMIRALTY MOTIONS

On September 9, 1975, the plaintiffs, Industria Azucarera Nacional S.A., a Chilean company, as the plaintiffs, owners of cargo lately laden on board the ship Marble Islands, brought an action in rem (1975 Folio 544) against the owners of the Cuban ship I Congreso del Partido ("Congreso"). The writ claimed the return of a consignment of sugar shipped on the Marble Islands or its value and damages for its detention, alternatively, damages for its wrongful conversion, and/or damages for breach of duty and/or contract in respect of non-delivery of the consignment. An affidavit by the plaintiffs of the same date identified the defendants as Empresa Navagacion Mambisa ("Mambisa"), a Cuban state enterprise, stated that the action was brought pursuant to section 3 (4) of the Administration of Justice Act 1956 and claimed that the defendants were at the time the cause of action arose the disponent owners or charterers or in possession or in control of the Marble Islandsand would be liable to the plaintiffs in an action in personam and that the defendants were the beneficial owners of the Congreso as respects all the shares therein. The Congreso was arrested at Sunderland on September 12, 1975. On September 25, 1975, the Republic of Cuba issued a notice of motion asking for an order that the writ and all subsequent proceedings in the action be set aside on the ground that the Congreso was the property of the Republic of Cuba, a recognised foreign independent state, and that the government of the Republic of Cuba declined to sanction the institution of proceedings in the Admiralty Court. The defendants, Mambisa, issued a notice of motion on the same date asking for the writ and all subsequent proceedings to be set aside on the ground that the Congreso was not at the time the action was brought beneficially owned by Mambisa as respects all the shares therein.

On October 30, 1975, leave was given to the plaintiffs to issue a writ in a second action in rem (1975 Folio 644) and to arrest the Congreso claiming, inter alia, damages for non-delivery of the consignment

of sugar on the Marble Islands and alleging that the Republic of Cuba was liable to the plaintiffs in an action in personam. On November 6, 1975, the Republic of Cuba issued a notice of motion in the second action in identical terms to their motion in the first action.

On December 12, 1975, a third action in rem (1975 Folio 752) was commenced against the owners of the Congreso by the plaintiffs as owners of cargo lately laden on the Cuban ship Playa Larga. By their writ they claimed, inter alia, the return of the balance of cargo carried on board the ship or its value and damages for its detention, or, alternatively, damages for the wrongful conversion thereof, and/or damages for breach of duty and/or breach of contract in respect of the non-delivery and/or misdelivery of the balance of the cargo. It was claimed that Mambisa or the Republic of Cuba were the owners or charterers or in possession or control of the Playa Larga in respect of the voyage and it was further claimed that, by reason of the vessel sailing away with the balance of the plaintiffs' cargo, the plaintiffs had a claim for the loss of such cargo in detinue, conversion or other breach of duty or, alternatively, for breach of contract under the bills of lading. On January 5, 1976, notices of motion were issued by the Republic of Cuba and by Mambisa in the third action raising the same issues as their motions in the other actions.

The facts are stated in the judgment.

T. H. Bingham Q.C. and Brian Davenport for the Republic of Cuba.

Brian Davenport for Mambisa.

Robert Alexander Q.C., Bernard Rix and Rosalyn Higgins for the plaintiffs.

The submissions of counsel are indicated in the judgment (post, pp. 514G - 515E, 516G - 517B, 519F - 520A, 521F - 522A, 525C-F, 526H - 527B, 528F - 529B, 530G - 531H, 532E-G, 533B, E - 534A, 535C-E, 536C - 537C).

January 28, 1977. ROBERT GOFF J. read the following judgment. I have before me motions to set aside the writs and all subsequent proceedings in three actions in rem, all brought against the ship or vessel I Congreso del Partido (which I shall refer as to the Congreso). In all three actions the Republic of Cuba asks for the writ and subsequent proceedings to be set aside on the ground that the Congresois the property of the Republic of Cuba, a recognised foreign independent state, and that the government of the republic declines to sanction the institution of these proceedings in this court. In two of the actions Empresa Navagacion Mambisa (which I shall refer to as "Mambisa"), which is identified as defendant in these proceedings, asks for the writ and subsequent proceedings to be set aside on the ground that the Congreso was not at the time when these actions were brought beneficially owned by Mambisa as respects all the shares therein.

These motions raise issues of some importance and complexity, and the proceedings have taken a somewhat unusual course. This judgment will inevitably be of some length. I propose to deal with the matter as follows. I shall first set out the background facts which are prima

facie established by the affidavit evidence before me. I shall next describe the nature of the proceedings and the course which they have taken, then consider the status of the decision of the Court of Appeal in The Porto Alexandre [1920] P. 30, and make my findings with regard to the ownership, possession and control of the Congreso. I shall then consider the motions of the Republic of Cuba; and finally I shall consider the motions of Mambisa.

The background facts

In February 1973, when the government of President Allende was still in power in Chile, a contract was entered into between Empresa Exportadora de Azucar ("Cubazucar"), a Cuban state enterprise for the export of sugar, and Industria Azucarera Nacional S.A. ("IANSA"), a Chilean company in which a majority of the shares are held by a Chilean state trading corporation known as CORFO, for the sale of Cuban sugar by Cubazucar to IANSA. The contract was dated February 28, 1973, and under it Cubazucar agreed to sell to IANSA 128,395 metric tons of Cuban raw sugar, 5 per cent. more or less at seller's option, at a price of U.S. $176.53 per metric ton c. & f. free out Chilean port. Payment was to be made in U.S. dollars, under a letter of credit. The contract incorporated the Rules of the Sugar Association of London. By virtue of those rules, the contract contained a London arbitration clause, submitting disputes to the Sugar Association of London for solution in accordance with the arbitration rules of the association. The arbitration rules provided that, for the purpose of all proceedings in arbitration, the contract should be deemed to have been made in England, England should be regarded as the place of performance, and all disputes should be settled according to English law.

The contract provided for monthly shipments between January and October 1973. Following a number of earlier shipments, two shipments were made in August 1973. The first of these shipments, of about 10,500 metric tons, was made on the Playa Larga which sailed from Cuba on some unspecified date in August; the second shipment, of about 11,000 metric tons, was made on the Marble Islands which sailed from Cuba on August 30, 1973. The Playa Larga flew the Cuban flag and was chartered to Cubazucar under a voyage charter in the Havana Cuba Sugar form by Mambisa, another Cuban state enterprise, described in the charterparty as the owners of the vessel. In fact, the vessel was probably owned by the Republic of Cuba, but was in the possession of and operated by Mambisa. The Marble Islands at the time of the shipment flew the Somali flag and was owned by Blue Seas Shipping Co. Ltd., a Liechtenstein corporation. She was under demise charter to Mambisa and Mambisa as disponent owners had sub-chartered her to Empresa Cubana de Fletes (yet another Cuban state enterprise) on behalf of Cubazucar, under a voyage charter again in the Havana Cuba Sugar form. Both voyage charters were typical commercial contracts of this type, making provision for the voyage, for freight and for demurrage, and incorporating the United States clause paramount. Although both charters were in the English language and provided for payment of freight and demurrage

in sterling, neither was governed by English law; indeed both charters contained a Cuban arbitration clause and, by English choice of law rules, were probably governed by Cuban law.

Bills of lading were issued in respect of both shipments. They were in Mambisa's standard form, but were in each case signed by the master and contained the following provision:

"This contract of carriage is entered into between the shipper designated above and the owner of the above-named ship. The carrying vessel and her owner are referred to in this bill of lading ac the carrier."

Mambisa were however in possession of both ships. They were in possession of the Playa Larga as operators and managers; but the master may have had authority from the Cuban government, the owners of the ship, to sign bills of lading on behalf of the government, in which event the bill of lading contracts in respect of the cargo on that ship could have taken effect as contracts with the government. In the case of the Marble Islands, however, Mambisa were in possession as demise charterers, and it is highly unlikely that the master had the authority of the Liechtenstein owners to sign the bills of lading on their behalf, so that the bill of lading contracts in respect of the cargo on that ship probably took effect as contracts with Mambisa as disponent owners. The bills are in the English language and are typical bills of lading, incorporating the United States Carriage of Goods by Sea Act 1936, and limitations and exceptions derived from the law of the United States. The bills of lading are not governed by English law; by English choice of law rules the governing law was probably the law of Cuba. The bills each contained, in clause 2, a deviation clause in very wide terms and, in clause 8, a lien clause.

The bills of lading were negotiated to IANSA, payment of the price being made (as I shall describe hereafter) under letters of credit which had previously been established under the sale contract. IANSA in turn sold both shipments on to Compania de Refineria de Azucar de Vina del Mar ("CRAV"), a Chilean private stock company in which the shares are held by individual stockholders. On September 11, 1973, a revolution took place in Chile. The government of President Allende was overthrown, and was replaced by a new government formed by President Pinochet. At the time when the revolution took place, the Playa Larga was in the course of discharging her cargo at the Chilean port of Valparaiso; rather more than 2,500 metric tons of her cargo had already been discharged. The Marble Islands was on the high seas, on her way to Chile. The government of President Allende had been on friendly terms with the Cuban government. At the time of the revolution some shooting took place in the vicinity of the Cuban Embassy at Santiago; on the affidavit evidence before me there was a dispute (which I am unable to resolve) whether this shooting was initiated by persons within the Cuban Embassy or by members of the Chilean armed forces. At all events, the Cuban ambassador and all members of his embassy staff left Chile at the ambassador's request. They (together with other Cuban nationals in Chile and certain other

persons) proceeded to Santiago airport on the evening of September 12, 1973, in a convoy, escorted by Chilean military personnel, and left for Peru in a Soviet aircraft early in the morning of September 13, 1973. Diplomatic and consular relations between the two countries were severed. There was a dispute on the affidavit evidence (which again I am unable to resolve) as to the precise circumstances in which the severance of relations took place, it being stated by a Chilean witness that the departure of the Cuban mission marked the close of relations between Cuba and Chile as was recognised by a formal note from the new Chilean government which was handed to the Cuban ambassador at the airport before his departure, whereas it was stated by the Cuban ambassador that he made his decision to depart in consequence of a public announcement on September 11, 1973, by the new Chilean government that it had severed diplomatic relations with Cuba.

Although shooting took place in Santiago on September 11, 1973, the situation at Valparaiso remained calm, the new government having established control early that morning without being challenged. Throughout the period from September 11, 1973, onwards, ships from eastern European countries continued to arrive, discharge their cargoes at, and sail from Chilean ports without trouble. Five such ships which had arrived at Chilean ports (including three at Valparaiso) before September 11 remained there and sailed on dates between September 12 and 20; twelve such ships arrived at Chilean ports (including five at Valparaiso) during the remaining days of September after the revolution. On September 11 the Playa Larga was lying at anchor in the harbour at Valparaiso, having been shifted from her discharging berth on the previous day to make way for a priority cargo of raw material to be discharged from a United States merchant ship. There was some dispute on the affidavit evidence as to the events which then occurred.

The following account is taken from the affidavit evidence of the Chilean witnesses. Early in the morning of September 11 the harbour patrol took back to the Playa Larga three members of her crew, who had stayed on shore the night before. At about 11 a.m. a harbour pilot boarded the Playa Larga to shift her to a new anchorage within the harbour; this operation was duly carried out. When the pilot went on board he was accompanied by another pilot and by an officer of the maritime administration, Lieutenant Vidal, who informed the master that she should remain at her anchorage until further orders, but that she would be returning shortly to her berth to complete her discharge. On the same occasion another member of the crew, who had failed to return in time after shore leave the previous evening. was returned to the ship. At about 16.30 hours, Lieutenant Vidal again visited the ship to check how much cargo remained to be unloaded and to repeat the order that the vessel was not to leave her anchorage pending return to her berth to complete her discharge. No guard was placed on board the ship. Nevertheless later that evening, at about 18.00 hours, in defiance of such orders and contrary to Chilean law (which like other ports in the world required port clearance before departure of a ship), and ignoring repeated radio telephone warnings to stop, the Playa Larga

weighed anchor and sailed from the port. She was pursued by a helicopter and by a destroyer, which attempted to bring the vessel back to port by firing warning shots. However, she persisted in her course, and the destroyer returned to port, permitting her to proceed on her way. Those on board the destroyer did not think that she had suffered any damage; if she did, it was accidental. If the destroyer had wished to stop the vessel by disabling her, she could easily have done so. All the events occurred within the limits of Chile's maritime jurisdiction, which extends for 200 miles from her coast.

The affidavit evidence of the Cuban witnesses concerning these events was to the following effect. On September 11, 1973, it was learned in Havana that a right-wing coup had started in Chile, in which the Cuban Embassy and Cuban nationals had come under attack. The Ministry of Merchant Marine and Ports became concerned about the safety of the Playa Larga, which was then discharging her cargo at Valparaiso; a decision was taken that for her safety she should leave Chilean waters, and this decision was communicated to Mambisa. There was no evidence of any prior communication with the vessel, about the state of affairs at Valparaiso or at all, before this decision was taken.

The ship's log, which was verified by the master on affidavit, recorded that at 16.30 hours that day the ship received a cable from Mambisa ordering the ship to proceed with her exit from Valparaiso. The ship's log went on to record that, at a meeting of the ship's officers held half an hour later, the officers unanimously approved the decision and order to leave the port immediately "for lack of security for the ship and for the crew, and for the country is in civil war and for the local authorities do not have total control of the situation." The decision was recorded as having been taken "in consideration of the fact that the naval authorities have detained and mistreated on land the Chief only because he is Cuban and also because they have expressed a deep hatred for our country and our government." No prior entry in the log refers to any disorder in the port, nor is there any prior entry relating to the return of any member of the crew to the ship, nor to any member of the crew having been in any way mistreated. The ship weighed anchor at 17.35 hours and sailed soon after. No reference is made in the log to any warning not to leave. There follows a series of entries, describing numerous attacks on the ship by aircraft and by a Chilean warship (the destroyer) with planes flying by, one of which fired at the ship with a machine-gun; helicopters firing bullets and depth charges very close to the ship, one depth charge exploding in the prow; the warship firing at the ship at various times between 20.43 and 22.33 hours, the ship being hit on four occasions; the warship trying to collide with the ship, but failing to do so; finally, other moves having failed, the warship withdrawing towards the Chilean coast. On the following day, inspection of the ship revealed holes in hold No. 1. The Cuban Ministry of Marine decided that the Marble Islands, which was nearby, should escort the Playa Larga to Peru where an appreciation of the situation could be made in safety, and where emergency repairs could be carried out to the Playa Larga.

At all events, the Playa Larga met the Marble Islands at sea at 22.00 hours on September 12, 1973, They proceeded together to the Peruvian port of Callao, which they reached on the afternoon of September 15. Meanwhile the Chilean Embassy in Lima received instructions to have the cargoes on both vessels discharged at Callao together with certain unloading equipment belonging to CRAV which was still on board the Playa Larga. Captain Alarcon, the Chilean naval attaché in Peru. was given the task of seeing that this was done. The Peruvian authorities declined to assist, because they had not then recognised the new Chilean government. However the Swiss ambassador, at the request of the Chilean chargé d'affaires, approached the Cuban ambassador in Lima; after meeting him, the Swiss ambassador informed the Chilean embassy that the Cuban embassy had told him that under no circumstances would the Cuban ships unload the Chilean cargo in Callao, both captains having categorically refused to do so. There were ample facilities for discharging the cargo at Callao.

On September 20, 1973, the Playa Larga left Callao with the remainder of her cargo and the unloading equipment still on board. Before she sailed a Lloyd's surveyor examined the ship, and discovered two shell holes in her shell plating, one on the port side and one on the starboard side, with some damage also to her lower 'tween deck and upper 'tween deck plating, and to her central longitudinal bulkhead. Temporary repairs were carried out at a cost of U.S.$2,200 to enable her to proceed to Cuba. She returned to Cuba, presumably via the Panama Canal, and discharged her cargo there on October 5, 1973. Subsequently, on October 1, 1974, a director of Mambisa, purporting to act on behalf of the lawful owners of the cargo, sold the cargo to the Cuban Directorate of Cereals and Flour for domestic consumption, claiming that he was acting in accordance with the Cuban Commercial Code and clauses 2 and 8 of the bills of lading.

On September 27, 1973, the Marble Islands left Callao bound for Balbao in Panama, on her way to Cuba. She reached Balbao; but following an attempted arrest of the ship there, she abandoned her attempt to pass through the Panama Canal and headed for North Vietnam. She reached Haiphong on November 6, 1973. On arrival there, her cargo was discharged. By a sale contract dated November 22, 1973, the master of the Marble Islands, acting on behalf of Mambisa, sold the cargo to another Cuban state enterprise known as Alimport. The cargo was then presented by Alimport to the people of Vietnam as a gift. The master, in discharging the cargo at Haiphong and in selling the cargo to Alimport, claimed that he was acting in accordance with the Cuban Commercial Code and clauses 2 and 8 of the bills of lading. On October 13, 1973, while the Marble Islands was on her way to Haiphong, she was purchased from her Liechtenstein owners by the Republic of Cuba.

I am satisfied, on the evidence before me, that the balance of the cargo on the Playa Larga and the cargo on the Marble Islands could in fact have been discharged without any difficulty at either Valparaiso or at Callao. I am further satisfied that the failure or refusal of the

masters of the ships to discharge the cargo at Callao was the result of a political decision taken by the Cuban government. So far as the events at Valparaiso are concerned, I am to some extent faced with conflicting affidavit evidence. Clearly, however, the decision that the Playa Larga should sail from Valparaiso without completing her discharge was a decision taken by the Cuban government, as was the decision that the Marble Islands should proceed to Callao without calling at Valparaiso. My conclusion is that the decision by the government that the Playa Larga should leave Valparaiso was taken out of concern for the safety of the ship, in the uncertain state of affairs following reports of the revolution and of the events in Santiago; and that the government's decision that the Marble Islands should not enter Valparaiso was taken on the same ground with the additional factor that reports may by then have been received in Havana of the action taken by the Chilean destroyer when the Playa Larga left the port. On the other hand, I am satisfied that the decision not to discharge the cargoes at Callao and to return them to Cuba was, despite assertions in the documents that the cargoes were subsequently discharged and disposed of in accordance with clauses 2 and 8 of the bills of lading, taken on political grounds, viz. that the Cuban government refused to have any further commercial dealings with Chile under a regime which it found politically repugnant. Dr. Amat, who at the relevant time held the office of Director in Charge of the Department of Regional Policy IV (Latin America) in the Cuban Foreign Ministry, stated in his affidavit that by virtue of the new Chilean regime deciding to terminate its diplomatic and consular relations with the Cuban government (which decision was taken at latest on September 12, 1973) the diplomatic, consular and commercial relations between both countries were broken off in fact and in law; and that

"by virtue and as a consequence of the breaking off de jure and de facto of diplomatic, consular and commercial relations imposed by the Chilean military junta ... the diplomatic, consular and commercial blockade, and also the interruption of maritime transport between Chile and Cuba were introduced."

Furthermore, on September 27, 1973, there was enacted in Cuba Law No. 1256, which was expressed to take effect as from September 11, 1973. The law recited the events in Chile, referring to the events of September 11, 1973, as a "coup of a fascist and pro-imperialist character which, through violence, exerted with merciless cruelty, has prevented the continuity of the legitimate government of that nation" and referring to the new Chilean government as a "military junta which pretends to set itself up as government of the Republic of Chile [but] lacks the legitimate title to do so." The law then recited the resolution of the Cuban government not to recognise the "military junta" or any other body which succeeded it in the future as a "mere substitute thereof," and the need to freeze certain property until a legitimate government, acknowledgeable as such, emerged in Chile. The law further recited the damage suffered by the Cuban embassy and embassy personnel and by the Playa Larga, and that the property so frozen should constitute

collateral for the compensation for such damage. Articles 1 and 2 of the law then provided as follows:

"1. All property is declared frozen, including the credits, deposits, bank balances, cash funds and assets of any kind, stocks or rights, located or enforceable in Cuban territory which may be wholly or partly owned, demandable or claimable by Chilean official and semi-official agencies or by juridical persons, whichever form these may adopt, including the stock companies in which the Chilean state itself or through official and semi-official agencies has participation or social shares of any sort, or in which it had a direct or indirect interest whatever it may be.

2. Property frozen by mandate of this Law will remain blocked until the establishment of a government whose legitimacy may be acknowledgeable and accepted by the revolutionary government of Cuba and without impairment to the claims the Chilean state should liquidate to the Cuban state, on account of the damage and losses caused to its property and to that of Cuban organisations, enterprises or citizens as from September 11, 1973, on."

Although this law was not passed until September 27, 1973, the Playa Larga sailed from Callao bound for Cuba on September 20, 1973, and the Marble Islands sailed for the same destination on September 27, 1973. The decision to refuse discharge at Callao and to return the cargoes to Cuba must therefore have been taken before Law No. 1256 was passed; but I am satisfied that such refusal was due to a direction by the Cuban government, made as a result of a decision of policy, arising from their detestation of the new Chilean regime, to have no further commercial dealings with Chile until a new government more acceptable to the Cuban government came into power in Chile. The same policy is reflected in Law No. 1256; though on a strict construction there may be some doubt whether that law, concerned as it is with the freezing of assets located or enforceable in Cuban territory in which the Chilean state was directly or indirectly interested, could have been effective to authorise the refusal to discharge the cargoes at Callao and the decision then taken to return them to Cuba, having regard to the facts that (1) neither of the cargoes was in Cuban territory unless a Cuban ship is to be regarded as such; (2) the Marble Islands was not then a Cuban ship; and (3) the property in the cargoes may have passed from IANSA to CRAV, a company which was owned by private stockholders.

The proceeds of sale of both cargoes were credited to accounts at the National Bank of Cuba in favour of IANSA or whoever might be the lawful owners of the cargoes, but with express reservations on behalf of Mambisa in respect of expenses, freight or other amounts which might be due. Presumably this deposit was intended to be made in pursuance of the provisions of Law No. 1256. Both the cargo on the Playa Larga and the cargo on the Marble Islands had been paid for by the Chilean purchasers, Cubazucar having drawn on letters of credit opened with the Banco Central de Chile under the sale contract of February 1973. The price for the Playa Larga cargo was apparently

paid before September 11, 1973, since discharge of the cargo began before that date. So far as the Marble Islands cargo was concerned, it appears from documentary evidence before me that it was actually on September 11, 1973, that Cubazucar through the Banco Nacional de Cuba drew on the letter of credit; and that it was on September 14, 1973, that the Banco Nacional de Cuba was credited with and accepted payment of the price for the cargo, which was £883,168.69. At least by the time the shipping documents had been released, the property in the goods must have passed to the buyers. The price paid for both cargoes has been retained by Cubazucar.

In November 1974, IANSA commenced arbitration proceedings against Cubazucar before the Sugar Association in London. In these proceedings IANSA is claiming damages in respect of the non-delivery of the cargo on the Marble Islands and of the balance of the cargo on the Playa Larga, and in respect of the undelivered balance of sugar due for shipment under the sale contract of February 1973.

On June 24, 1975, a new ship was launched at the yard of Austin & Pickersgill Ltd. in Sunderland. She bore the yard number 450, and was being built under a building contract dated April 14, 1973. The building contract was originally between Austin & Pickersgill Ltd. and Centa Shipping Ltd. of Monrovia, Liberia; but by an agreement dated May 20, 1974, a novation took place and the rights and obligations of Centa Shipping Ltd. under the building contract became vested in Mambisa. On September 5, 1975, Mambisa took delivery of the ship which had at first been called Maisi but was by then called I Congreso del Partido. According to affidavit evidence before me Mambisa, both in entering into the novation agreement dated May 20, 1974, and in taking delivery of the Congreso, were acting on behalf of the Republic of Cuba; and on the day of her delivery, September 5, 1975, she was entered in the Cuban Registry in the name of the Republic of Cuba as owners. Later in this judgment I shall consider in more detail the evidence relating to the ownership, possession and control of the Congreso.

The proceedings

On September 9, 1975, proceedings were commenced by an action in rem brought by the owners of cargo lately laden on board the Marble Islands against the owners of the Congreso. The writ claimed the return of the consignment of sugar shipped on the Marble Islandsor its value and damages for its detention, alternatively damages for its wrongful conversion, and/or damages for breach of duty and/or contract in respect of the non-delivery of the consignment. The affidavit to lead the warrant of arrest of the Congreso, sworn on the same day the writ was issued, identified the defendants as Mambisa and, stating that the action was brought by the plaintiffs pursuant to section 3 (4) of the Administration of Justice Act 1956, claimed that the defendants were at the time when the cause of action arose the disponent owners or charterers or in possession or in control of the Marble Islands and would be liable to the plaintiffs in an action in personam, and that the

defendants were also, at the date of the issue of the writ, the beneficial owners of the Congreso as respects all the shares therein. The Congresowas arrested at Sunderland on September 12, 1975.

On September 25, 1975, two notices of motion were issued asking for an order that the writ and all subsequent proceedings in that action be set aside. The first notice of motion was issued by the Republic of Cuba, the ground of the application being that the Congreso was the property of the Republic of Cuba, a recognised foreign independent state, and that the government of the Republic of Cuba declined to sanction the institution of the proceedings in this court. The second notice of motion was issued by Mambisa, the ground of the application being that the Congreso was not, at the time when the action was brought, beneficially owned by Mambisa as respects all the shares therein.

The hearing of these two motions began on October 29, 1975. On the second day of the hearing, leave was given to the owners of the cargo lately laden on the Marble Islands to issue a writ in a second action in rem against the owners of the Congreso, and to arrest the Congreso. The principal difference between the claims in the two actions was that, whereas in the first action it had been alleged that Mambisa would be liable to the plaintiffs in an action in personam, in the second action it was alleged that the Republic of Cuba would be so liable; furthermore, in the indorsement on the writ, there was no claim for breach of contract, the claim being for the return of the consignment on the Marble Islands or its value and damages for its detention, alternatively, damages for the wrongful conversion thereof, and/or for damages for breach of duty with respect thereto. The second action was no doubt begun because of the Republic of Cuba's assertion of title to the Congreso in the first action. The second action was mentioned to me on October 30, 1975, and I was informed that it was the intention of the Republic of Cuba to issue a notice of motion in this action asking for an order that the writ and all subsequent proceedings be set aside on the same ground as in the first action. I was told that such a notice of motion would be issued and served as soon as possible; and it was agreed between all parties that, as the contentions of the parties were substantially the same in the Republic of Cuba's motions in both actions, I should deal with the motion in the second action without further argument. The Congreso having been re-arrested, the Republic of Cuba's notice of motion in the second action was issued on November 6, 1975.

The submissions advanced on behalf of the Republic of Cuba in support of their motions in both actions were as follows. First, it was submitted on the facts that, on the affidavit evidence before me, it was established with a sufficient degree of probability for present purposes that, at the date of the assertion of sovereign immunity, the Republic of Cuba was the owner of the Congreso, was in possession of her or had the right to possess her, and was in control of her; and further that she was destined for uses regarded by the Cuban government as public. Secondly, it was submitted on the law (1) that the English courts will not, as a general rule, implead a foreign sovereign; (2) that

a foreign government is impleaded by an action in rem against its property, a fortiori if it is in possession of, or has a right to possess, or is in control of, its property; (3) that, if, contrary to the Cuban government's submission, the Congreso was to be regarded as an ordinary trading ship, there was no exception to the general rule in respect of trading ships, reliance being placed on The Porto Alexandre [1920] P. 30; and (4) that in any event the English courts will not assume jurisdiction where an action in rem does not arise out of services rendered to the res here, and does not arise out of a straightforward commercial dispute properly within the territorial jurisdiction of the English courts, and has no real connection with England. On this basis it was submitted that the writs and all subsequent proceedings in both actions should be set aside as impleading a foreign sovereign. Later in this judgment I shall set out the submissions advanced on behalf of Mambisa. The argument on these submissions was completed on October 31, 1975. The lynchpin in the argument of the Republic of Cuba was the decision of the Court of Appeal in The Porto Alexandre [1920] P. 30. The plaintiffs sought to escape the consequences of that decision by arguing that the Republic of Cuba had not sufficiently established its title to the Congreso, or, alternatively, could not rely upon the decision because they were not in possession of her, nor in control of her, nor had they the immediate right to possess her. In the alternative, they argued that The Porto Alexandre [1920] P. 30 was decided per incuriam, and that I was not bound to follow the decision and should decline to do so. It became obvious in the course of argument that the plaintiffs, who did not then have the benefit of the decision of the Court of Appeal in Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529, faced formidable difficulties on both of these submissions.

At the close of the argument I reserved my judgment. Five days later, on November 5, 1975, the advice of the Privy Council was delivered in The Philippine Admiral [1977] A.C. 373. In that case, which was concerned with an appeal from the full court of the Supreme Court to Hong Kong, the Privy Council after full argument on the point decided not to follow The Porto Alexandre [1920] P. 30. It became clear that further argument was necessary on the motions before me; and counsel for the Republic of Cuba asked that in the circumstances he should have leave to call further evidence in order to develop his fourth submission. I indicated that, in order to ensure that the matter was properly dealt with on all facts likely to be relevant in the new circumstances which had arisen, I was minded to admit such evidence; but that I was unwilling to allow any further delay for this purpose unless the Republic of Cuba was prepared to co-operate in allowing the Congreso to be released from arrest by providing appropriate security. Orders to this effect were made on November 11, 1975, and December 16, 1975, and shortly before Christmas 1975, security having been provided, the Congreso was released. That step removed the urgency from the matter; and in the outcome the motions were not restored for hearing before me until December 14, 1976.

There are, however, two other events which I must mention, one

of which occurred before the release of the Congreso from arrest and the other after her release. First, on December 12, 1975, a third action in rem was started against the owners of the Congreso. The plaintiffs were the owners of the cargo lately laden on the Playa Larga; and their claim, as endorsed on the writ, was for the return of the balance of the consignment of sugar carried on board the ship or its value and damages for its detention, or alternatively damages for the wrongful conversion thereof, and/or for damages for breach of duty and/or breach of contract in respect of the non-delivery and/or misdelivery of the said balance of the said consignment. In the affidavit sworn to lead the warrant of arrest it was claimed that Mambisa or the Republic of Cuba were the owners or charterers or in possession or control of the Playa Larga in respect of the voyage; and it was further claimed that, by reason of the vessel sailing away with the balance of the plaintiff's cargo due for delivery in Chile, the plaintiffs had a claim for the loss of such cargo by detinue, conversion or other breach of duty or alternatively for breach of contract under the bills of lading. The Congreso was re-arrested in that action before her release; after her release, on January 5, 1976, notices of motion were issued in the third action by the Republic of Cuba and by Mambisa in the same form as in the earlier actions. The notices of motion raise substantially the same issues as in the other actions, with the difference that the claim relates to the balance of the cargo on the Playa Larga rather than to the cargo on the Marble Islands.

Secondly, on July 19, 1976, an application was made to me regarding the admissibility of evidence of foreign law in relation to the Republic of Cuba's claim to sovereign immunity. I shall refer later in this judgment to the order which I made on this application.

Fresh affidavit evidence having been filed in the Republic of Cuba's motions in all three actions, both by the plaintiffs and by the Republic of Cuba, the hearing of the motions was resumed on December 14, 1976. There was no real change in the submissions on Mambisa's motion in the first action, though the plaintiffs did develop their argument on that motion in one respect which I shall refer to later. So far as Mambisa's motion in the third action was concerned, the arguments were treated as identical to those on their motion in the first action. However, the arguments on the Republic of Cuba's motions in all three actions were radically different from those originally advanced as a result of the decision of the Privy Council in The Philippine Admiral [1977] A.C. 373.

On behalf of the Republic of Cuba it was conceded on the renewed hearing that the Congreso should, for the purposes of the motions before me, be regarded as an ordinary trading vessel. Furthermore, Mr. Bingham, for the Republic of Cuba, joined forces with Mr. Alexander, for the plaintiffs, in urging me to hold that, following the decision of the Privy Council, I was no longer bound by the decision of the Court of Appeal in The Porto Alexandre [1920] P. 30. Mr. Bingham submitted that even so I should set aside the writs in all three actions on the ground that the Republic of Cuba was thereby impleaded. His submission was that

an English court will not implead a foreign sovereign by permitting the arrest of an ordinary trading vessel in his ownership where the claim on which the arrest is based either (1) arises from an exercise of sovereign or public or governmental power, prerogative or right (actus iure imperii), or (2) has no substantial connection with the territorial jurisdiction of the English court. He further submitted that the claims of the plaintiffs in all three actions arose from an actus iure imperii of the Republic of Cuba, namely, the decision taken by the Government of Cuba to have no further commercial dealings with Chile following the revolution of September 11, 1973, and in any event had no substantial connection with the territorial jurisdiction of the English court. On either ground, therefore, he asked for the writs in all three actions to be set aside as impleading a foreign sovereign.

The status of The Porto Alexandre

Since it must affect the whole nature of my judgment on the Republic of Cuba's motions, I propose to deal immediately with the question whether I am still bound to follow the decision of the Court of Appeal in The Porto Alexandre [1920] P. 30. In that case the ship, which was Portuguese, ran aground at the entrance to the river Mersey and salvage services were rendered to her by three Liverpool tugs. A writ in rem was issued in respect of these services against the owners of the ship, her cargo and freight. A notice of motion was issued to set aside the writ and all subsequent proceedings as against the owners and freight on the ground that the ship and freight "were and are the public national property of and/or requisitioned by and in possession and public use and service of the Portuguese government." Hill J. concluded that it had been established that the ship was the property of the Portuguese government at the time of her arrest, and was still their property; and, although he was prepared to find, if necessary, that The Porto Alexandre was being used in ordinary commerce, he concluded (though with the greatest reluctance) that he was bound, on the principle established in The Parlement Belge (1880) 5 P.D. 197, to accede to the application of the Portuguese government no matter how the property was being employed. His decision was affirmed by the Court of Appeal, each one of the members of the court concluding that the case was covered by the decision in The Parlement Belge (1880) 5 P.D. 197, irrespective of the use to which the ship was being put.

The decision of the Court of Appeal in The Porto Alexandre [1920] P. 30 has been subjected to a growing body of criticism; and this has culminated in the advice delivered by the Judicial Committee of the Privy Council in The Philippine Admiral [1977] A.C. 373. In that case the Judicial Committee, accepting the analysis of The Parlement Belge (1880) 5 P.D. 197 made by MacKenna J. in Swiss Israel Trade Bank v. Government of Salta [1972] 1 Lloyd's Rep. 497, concluded that The Parlement Belge decided only (a) that a foreign sovereign cannot be sued in personam and (b) that an action in rem cannot be brought against his ship if that ship is being used substantially for public purposes. On this analysis the Court of Appeal were not bound by

The Parlement Belge to reach the conclusion which they reached in The Porto Alexandre [1920] P. 30. Furthermore, the Judicial Committee decided that they would not follow the decision in The Porto Alexandre; in doing so, they emphasised [1977] A.C. 373, 402 that

"the trend of opinion in the world outside the Commonwealth since the last war has been increasingly against the application of the doctrine of sovereign immunity to ordinary trading transactions."

In the argument on the resumed hearing the question canvassed before me was whether, after The Philippine Admiral, I was bound to follow The Porto Alexandre [1920] P. 30. However, these proceedings have been fated to be overtaken, between argument and judgment, by decisions of the appellate courts; and after completion of the argument on the resumed hearing the Court of Appeal gave judgment in Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529. The case was concerned with a claim under a letter of credit issued by the defendant bank. The bank claimed sovereign immunity, but their claim was rejected by the Court of Appeal. One of the two rationes decidendi of that case is that international law forms part of English law. by virtue of the doctrine of incorporation, that doctrine being preferred to the doctrine of transformation. Under the doctrine of incorporation "the rules of international law are incorporated into English law automatically and considered to be part of English law unless they are in conflict with an Act of Parliament:" see per Lord Denning M.R. at p. 364. Applying the doctrine of incorporation both Lord Denning M.R. and Shaw L.J. rejected the absolute doctrine of sovereign immunity and gave effect to the restricted doctrine, although the case involved an action in personam. I am bound by that decision; and I must in the present case likewise give effect to the rules of international law, irrespective of any previous English decision to the contrary. The Philippine Admiral [1977] A.C. 373 provides me with the clearest guidance that in an action in rem against an ordinary trading ship the rules of international law require me to give effect to the restricted doctrine of sovereign immunity. I must therefore give effect to that doctrine in the present case, disregarding the decision of the Court of Appeal in The Porto Alexandre [1920] P. 30.

I should add that before Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529 had been reported I had already concluded that I was not bound to follow The Porto Alexandre [1920] P. 30 and should not do so. I need not now set out my reasons in any detail. It is enough for me to say that I would have adopted the reasoning of Lord Parker C.J. in Smith v. Leech Brain & Co. Ltd. [1962] 2 Q.B. 405, 415-416, concerning the status of In re Polemis & Furness, Withy and Co. Ltd. [1921] 3 K.B. 560. In Overseas Tankskip (U.K.) Ltd. v. Morts Dock & Engineering Co. Ltd. (The Wagon Mound) [1961] A.C. 388, on an appeal from New South Wales, the Judicial Committee of the Privy Council, after full argument, had expressly declined to follow In re Polemis. So far as I have been able to discover In re Polemis has never been overruled by the House of

Lords; yet since The Wagon Mound the legal profession has acted on the basis that the law was as stated in that case and that In re Polemis was no longer good law. In Smith v. Leech Brain & Co. Ltd. [1962] 2 Q.B. 405 Lord Parker C.J., sitting as a judge of first instance, stated obiter that he would if necessary follow The Wagon Mound [1961] A.C. 388 rather than In re Polemis [1921] 3 K.B. 560. He said, at p. 415:

"... I should say, in case the matter goes further, that I would follow, sitting as a trial judge, the decision in the Wagon Mound case; or rather, more accurately, I would treat myself, in the light of the arguments in that case, as able to follow other decisions of the Court of Appeal prior to the Polemis case, rather than the Polemis case itself. As I have said, that case has been criticised by individual members of the House of Lords, although followed by the Court of Appeal in Thorogood v. Van Den Berghs & Jurgens Ltd. [1951] 2 K.B. 537. I should treat myself as at liberty to do that, and for my part I would do so the more readily because I think it is important that the common law, and the development of the common law, should be homogeneous in the various sections of the Commonwealth. I think it would be lamentable if a court sitting here had to say that while the common law in the Commonwealth and Scotland had developed in a particular way, yet we in this country, and sitting in these courts, are going to proceed in a different way."

I respectfully agree with every word in that passage from Lord Parker C.J.'s judgment which, in my judgment, is equally applicable to the present status of The Porto Alexandre [1920] P. 30; and for the reasons stated by Lord Parker C.J. I would, in any event, have felt myself at liberty to disregard the decision in The Porto Alexandre.

I therefore proceed to consider the remaining issues on the Republic of Cuba's motions on the basis that The Porto Alexandre is not binding upon me and that, for the reasons given in The Philippine Admiral [1977] A.C. 373 I should not follow it.

Ownership, possession and control of the Congreso

The next matter I have to consider is whether, for the purposes of their claim to sovereign immunity, the Republic of Cuba has established a sufficient title to the Congreso. In Juan Ysmael & Co. Inc. v. Government of the Republic of Indonesia [1955] A.C. 72 it was established that a foreign sovereign invoking sovereign immunity on the ground that it was indirectly impleaded because its interest in property would be affected by the judgment need not prove its title to the property but need only produce evidence to satisfy the court that its claim was not merely illusory, nor founded on a title manifestly defective. It was submitted by Mr. Alexander that this principle had no application in the present case; he submitted that the principle was developed in the context of a doctrine of absolute immunity and did not apply where, as in the case of an arrest of an ordinary trading ship, the doctrine of sovereign immunity was restricted. I cannot accept this submission.

I can find no indication in the speech of Earl Jowitt, who delivered the only speech in the Juan Ysmael case, that the principle established in that case was dependent on the sovereign invoking a doctrine of absolute immunity. On the contrary, it derived from the practical difficulty that "if the foreign government is required as a condition of obtaining immunity to prove its title to the property in question the immunity ceases to be of any practical effect:" see p. 87. In my judgment, exactly the same applies where the immunity invoked is not absolute but restricted; and, accordingly, the test which has to be fulfilled by the Republic of Cuba in the motions before me is the test laid down in the Juan Ysmael case. With this test in mind, I turn to the facts which have prima facie been established on the affidavit evidence before me on the questions of ownership and possession.

As I have already stated, the Congreso was built by Austin & Pickersgill Ltd. under a building contract dated July 14, 1973, with Centa Shipping Ltd., but by the novation agreement dated May 20, 1974, the rights and obligations of Centa Shipping Ltd. became vested in Mambisa. Since clause 10 of the building contract provides that "The vessel ... shall immediately after payment of the first instalment become the property of the purchaser" and the first instalment of the purchase price had already been paid, it followed that the rights acquired under the novation agreement included the property in the vessel as then so far constructed, and in all goods and materials thereafter incorporated into the vessel. Mr. Manfugas, Chairman of Anglo-Caribbean Shipping Co. Ltd., the London agents of Mambisa, stated in his affidavit that by agreement - presumably the novation agreement - the Republic of Cuba, through Mambisa, took over the building contract. There is nothing in the novation agreement to indicate that in so doing Mambisa was in fact acting on behalf of the Republic of Cuba, and no document was produced authorising Mambisa to enter into the novation agreement on behalf of the Republic. Nevertheless, subsequent events provide ample confirmation for Mr. Manfugas' statement. First, Resolution No. 28/75 of the Cuban Minister of Mercantile Marine and Ports dated August 14, 1975, which appointed Mambisa operator and manager of certain vessels under construction at Austin & Pickersgill Ltd.'s yard (including new building No. 450, later to be called the Congreso), referred to the vessels as being "under construction for the Cuban state." The first four paragraphs of the resolution provide as follows:

"(1) To appoint the Empresa de Navagacion Mambisa as operator and manager of the vessels which are under construction for the Cuban state at the shipyard of Austin & Pickersgill Ltd., Sunderland, Scotland, Great Britain, having the newbuilding Nos. 450, 451, 452 and 453 of that shipyard. (2) The Empresa de Navagacion Mambisa will carry out its functions as operator and manager of the said vessels, the property of the Cuban state, on the terms and conditions indicated to it in the directives and instructions issuing from this ministry for the operation and management of the vessels designated to it. (3) To give authority expressly to the Empresa de Navagacion Mambisa for the supervision, receipt and registration

at the relevant consulate of the Republic of Cuba, of the said vessels, the property of the Cuban state making, for these purposes, the relevant petitions and requests, making such declarations as should be necessary. (4) To authorise the Empresa de Navagacion Mambisa to proceed at the relevant time to carry out the necessary registrations in the name of the Cuban state at the harbourmaster's offices and at the Registry of Ships of the Republic of Cuba and wherever else necessary."

Mr. Manfugas further stated that, acting under the authority of this resolution, he took delivery of the Congreso from Austin & Pickersgill Ltd. on September 5, 1975, and that, in so doing, he was acting on behalf of Mambisa who were acting for the Republic of Cuba. The delivery certificate of that date states only that Mr. Manfugas was acting on behalf of Mambisa; but having regard to the terms of Resolution No. 28/75 there is ample evidence that Mambisa were acting on behalf of the Republic of Cuba. Further confirmation is provided by the fact that, on the application of Mr. Manfugas made the previous day, provisional registration of the Congreso as a Cuban vessel was granted by the Cuban embassy in London on September 5, 1975, in a decree which recited that Mr. Manfugas "by a sworn declaration asserts that no one apart from the Cuban state has the least share in the ownership of the vessel;" on the same day, September 5, 1975, the vessel was entered in the registry of the harbourmaster's office at Havana in Cuba, the owner's name being entered as "Republic of Cuba to be operated by Empresa Navagacion Mambisa." Furthermore, by Resolution No. 29/75 dated September 4, 1975, (whereby the Cuban Minister of Mercantile Marine and Ports appointed the master, first officer and chief engineer of the Congreso), the vessel was again described as being "owned by the Cuban state." That Mambisa should have been acting on behalf of the Republic of Cuba in taking delivery of the Congresois also consistent with the fact that, as stated by Mr. Soto, the Cuban ambassador to Great Britain, and by Dr. Balmaseda, a Cuban lawyer, in their affidavits, the Republic of Cuba is by Cuban law the owner of all cargo vessels registered in Cuba.

It was argued by Mr. Alexander on behalf of the plaintiffs that I should not, on the evidence, hold that the Republic of Cuba was the owner of the Congreso or even had a more than illusory title to her. The steps in his argument were as follows: (1) The building contract and the novation agreement were both governed by English law, and the res was at all times situated in this country: accordingly the law governing the transfer was English law. (2) Under English law, having regard to the terms of the building contract and the novation agreement, the property in the Congreso vested in Mambisa, and was in Mambisa on the date of her delivery, September 5, 1975. (3) Mr. Manfugas' statement that Mambisa was acting on behalf of the Republic of Cuba in entering into the novation agreement was a bare assertion unsupported by any document, and was moreover inconsistent with the terms of the novation agreement. (4) Resolution No. 28/75 and the subsequent provisional registration of the Congreso in London and

registration in Havana were made on an assumption, erroneous in English law, that the Congreso was the property of the Republic of Cuba.

I cannot accept this argument. This case is not concerned with a question whether the property passed from Austin & Pickersgill Ltd. to a Cuban entity; indeed, it is not concerned with conflicting claims at all, since, not surprisingly, Mambisa and the Cuban government are at one that, at all material times, the latter was the owner. By English law, the property in the ship was effectively passed to Mambisa; and if, as the evidence shows, Mambisa was at the material times acting as agent for the Republic of Cuba, even if the latter was an undisclosed principal so far as Austin & Pickersgill Ltd. were concerned, I can see no reason why the property should not have passed through Mambisa to the Republic of Cuba. I can see nothing in the novation agreement inconsistent with this; so far as it is relevant the agreement was concerned only to preserve the personal rights of Austin & Pickersgill Ltd. against Mambisa and their possessory lien over the ship. In any event there is overwhelming evidence that, once the ship had been delivered, both Mambisa and the Cuban government regarded the Congreso as the property of the latter, and this common intention cannot be vitiated by any error as to English law as now alleged. I accordingly conclude not merely that the Republic of Cuba has asserted a claim to the ownership of the Congreso which is not illusory or manifestly defective but that the evidence before me indicates that the Republic of Cuba was at all material times her owner.

I turn next to the question of possession and control. Mambisa, which by Resolution No. 28/75 was appointed operator and manager of the Congreso, is a Cuban state enterprise, which was brought into existence by Ministerial Resolution No. AEE-85 of June 27, 1961. Its object, as stated in the first paragraph of the resolution, is:

"... the provision of the public service of marine and river transport, both for coastal and transshipment traffic and long distance shipping in the international sphere, in accordance with the agreements to which the Cuban state or the undertakings whose assets will be designated to it by this resolution may be or may have been parties; and in general those functions inherent in the provision of the marine shipping service and such other functions which this corporation [the National Transport Corporation] may designate to it."

Mambisa has a corporate personality of its own, and is capable of suing, being sued, contracting and otherwise acting in its own name. As a state enterprise in a socialist state, Mambisa operates within the framework of the Cuban national economic plan as promulgated each year by the highest authorities in the state; the task allotted to Mambisa under that plan is of course obligatory upon it. Furthermore, Mambisa is subject in every respect to the direction and control of the Cuban Minister of Merchant Marine and Ports, in the sense that the minister, through his ministry, has the power to give directions regarding anything that Mambisa does; and in particular the minister personally appoints the senior personnel of Mambisa and the senior officers of all Cuban owned vessels operated by Mambisa. Examples of the direction and

control exercised by the minister are (1) the ministry has laid down detailed provisions relating to the running of Cuban owned vessels operated by Mambisa, including maintenance, classification and surveys which are not day-to-day maintenance (Mr. Manfugas stated that the carrying out of all such matters must be referred to the ministry in advance for approval); and (2) every intended use of the Cuban owned vessels by Mambisa, and every cargo to be carried on them, is subject to the advance approval of the ministry: apparently, operating schedules prepared by Mambisa are regularly submitted to the ministry for approval.

Mambisa is a self-supporting state enterprise, in the sense that it is intended to make a profit. Even so, all funds needed for its operation are provided by the Cuban government through the Banco Nacional de Cuba, any income received by Mambisa being paid into a separate income account and automatically credited to the account of the national budget. If at the end of each calendar year there exists any balance of the funds made available by the Banco Nacional de Cuba for the operation of Mambisa, such balance is cancelled by the bank. However, subject to these limits, it appears that the management and administration of Mambisa are the responsibility of the director of Mambisa, who as one of the senior personnel is appointed by the minister (and can be removed by him). On the evidence before me, I have no reason to believe that, within the limits imposed by the national economic plan and such directions as the minister may choose to give, the director and his staff do not have a reasonably free hand in the day-to-day management and administration of the enterprise, including the operation and management of Cuban-owned ships which are designated to Mambisa. Furthermore, although the senior officers - master, first officer and chief engineer - of such ships are appointed by the minister, and although I had no clear evidence on the matter, I infer that the remainder of the crew of such ships are appointed by Mambisa and that all the officers and crew are paid by Mambisa (no doubt out of the funds made available by the Cuban government) and are, so far as the day-to-day running of the ships is concerned, subject to the orders of Mambisa.

In the light of the foregoing evidence I conclude that the Congreso, as a Cuban-owned vessel operated and managed by Mambisa, was after her delivery on September 5, 1975, in the possession of Mambisa, though the Cuban government could at any time repossess themselves of her simply by passing the appropriate ministerial resolution. So far as control is concerned, she was subject to control by the Cuban government in the sense that she could only be operated by Mambisa within the framework of its obligations under the national economic plan and on such voyages and carrying such cargoes as the minister might approve, and subject to such future directions as the minister might choose to give, and had to be maintained in accordance with the directions given by the minister; but within these limits, the ship was in the control of Mambisa.

The Republic of Cuba's motions

I turn now to the substance of the Republic of Cuba's motions, and

to Mr. Bingham's new submissions on those motions. It was common ground between the parties that, where a plaintiff proceeds by way of an action in rem against an ordinary trading ship, then even though such vessel is the property of a foreign sovereign, he cannot have the writ set aside on the ground of sovereign immunity where the claim arises out of the ordinary operations of the vessel as a trading vessel. This proposition is derived from the decision of the Privy Council in The Philippine Admiral [1977] A.C. 373; and that case provides examples of claims arising out of ordinary trading operations, namely, claims for payment for goods supplied to and disbursements made for the ship, and an ordinary claim for damages for breach of a charterparty. It must also follow (and I did not understand it to be seriously contested) that the position would be the same if the vessel arrested was an ordinary trading vessel in the ownership of a foreign sovereign and that vessel was the sister ship of another ordinary trading vessel in the same ownership out of whose ordinary trading operations the claim arose. Of course, in a sister ship case both ships must be ordinary trading ships; for example, a warship cannot be arrested for a damage to cargo claim against an ordinary trading ship, nor an ordinary trading ship for a collision claim against a warship. But the question which arises in the present case, and did not arise in The Philippine Admiral, is this. What if the claim, in respect of which an ordinary trading vessel belonging to a foreign sovereign is arrested, arises as a result of a governmental act of that sovereign? In those circumstances should the English court set aside the proceedings on the ground that the foreign sovereign is impleaded?

Before I consider that question, I can quickly dispose of the Republic of Cuba's motion in the first action. In that action it is not alleged that the Republic of Cuba is liable to the plaintiffs in an action in personam; on the contrary, the defendants are identified as Mambisa, and the allegation is that Mambisa, who indeed were, at the time when the alleged cause of action arose, charterers and in possession of the Marble Islands, were liable in an action in personam and were also, at the time when the action was brought, beneficial owners of all the shares in the Congreso. Since I have held that the Republic of Cuba has not merely established a sufficient title to the Congreso for the purpose of a claim to sovereign immunity, but has established on the evidence that it was when the action was brought the owner of the Congreso, and since no claim in personam is advanced against the Republic of Cuba in that action, it follows that the Republic should be entitled to succeed on its motion in that action. It cannot be right that a plaintiff should be able to implead a foreign sovereign by an action in rem against his ship, even an ordinary trading ship, without alleging against him any cause of action in personam at all.

The second action is, of course, different. That action was brought for the very reason that the Republic of Cuba was claiming to be the owner of the Congreso and no cause of action in personam had been alleged against the Republic of Cuba in the first action. In the second action, which was brought by the owners of the cargo on the Marble

Islands, the cause of action in personam alleged is in tort, being for the return of the cargo or its value, and damages for detention, or, alternatively, damages for conversion or breach of duty. In the third action, brought by the owners of the cargo on the Playa Larga, the defendants are identified as either Mambisa or the Republic of Cuba, and the alleged causes of action in personam are in contract and in tort, the alleged torts being of the same nature as in the second action and the alleged breach of contract being apparently breach of the contracts contained in or evidenced by the bills of lading. In the second action the claim is presumably intended to fall within section 1 (1) (g) of the Administration of Justice Act 1956; and in the third action within section 1 (1) (g) or (h).

Mr. Bingham submits that in these actions too the English court should set aside the proceedings because the alleged tort or breach of contract in both cases arose as a result of a governmental act of the Republic of Cuba. A government act is, he submits, an actus jure imperii. The mere fact that it may result in a breach of a trading contract will not deprive it of that status; the English court will never allow a foreign sovereign to be impleaded in respect of such an act.

Mr. Alexander, for the plaintiffs, submits that even in such a case the proceedings should not be set aside. He puts his case in two ways. First, he submits that once the ship arrested has been categorised as an ordinary trading ship there can be no plea of sovereign immunity in respect of an action in rem against that ship, provided the claim arose in respect of that ship or in respect of a sister ship which is also an ordinary trading ship. Secondly, he submits that, where the act complained of takes place in the context of a commercial transaction, for example, if it is a claim for damages for breach of an ordinary trading contract, then it matters not that the purpose or motive for the act complained of was a matter of state policy; an action in rem against an ordinary trading ship will not in such circumstances be set aside on the ground of sovereign immunity. It will be observed that the basis of Mr. Alexander's two submissions is really the same. As he put it, once the sovereign has descended into the market place he can no longer invoke sovereign immunity.

Counsel were unable to find any relevant English authority directly bearing on these points. The reason is not far to seek: it is that until The Philippine Admiral [1977] A.C. 373, English law was committed to the absolute doctrine of sovereign immunity. Furthermore, so far as I have been able to discover, the point was not taken in Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529. I have therefore, to consider the point as one of first impression. Indeed, since the resolution of the point depends on how the principle of sovereign immunity is to be applied in actions in rem in the new situation which has arisen following The Philippine Admiral [1977] A.C. 373 the arguments of counsel tended to take the form quite simply of contrary assertions as to the form which that principle should now take.

Obviously, my first task is to look to The Philippine Admiral itself for guidance. I have to recognise, however, that the point does not appear to have been considered, even indirectly, in that case. Furthermore, the very nature of the decision in that case presents a particular difficulty.

The decision was concerned only with an action in rem, recognising an exception to the principle of sovereign immunity in the case of ordinary trading ships. The Privy Council in no way sought to suggest any departure from the absolute doctrine of sovereign immunity in the case of actions in personam; on the contrary, they considered it unlikely that the House of Lords would depart from the absolute doctrine in such cases: see p. 403. In reaching this conclusion the Privy Council recognised that the resulting decision might be somewhat anomalous. This is indeed the case because actions in rem and actions in personam cannot be conveniently segregated into separate compartments. Invocation of the Admiralty jurisdiction by an action in rem presupposes the existence of a claim in personam against the person, who, at the time when the action is brought, is the owner of the ship: see section 3 (4) of the Act of 1956. If the owner of the ship is a foreign sovereign, he is inevitably impleaded by the action in rem because he must either fight the case or surrender his ship. "To implead an independent sovereign in such a way is to call upon him to sacrifice either his property or his independence": see The Parlement Belge, 5 P.D. 197, 219. If he chooses not to surrender his ship, he will effectively be fighting the claim in personam, though in addition his property will be at stake. The practical effect of the decision in The Philippine Admiral is therefore that in cases concerned with ordinary trading ships foreign sovereigns may be forced to contest claims in personam in this country, though only where the claim falls within the Admiralty jurisdiction as defined by section 1 of the Act of 1956, and in respect of which an action in rem can be commenced in accordance with section 3 of the Act.

The result of the decision in The Philippine Admiral appears, therefore, to have been that the law was committed to two irreconcilable propositions. The first proposition was that in the case of actions in personam a foreign sovereign is absolutely entitled to invoke the doctrine of sovereign immunity. The second proposition was that in the case of actions in rem against an ordinary trading ship a foreign sovereign who owns the ship may, through execution on his property, effectively be held liable on a claim in personam.

The anomaly can only be entirely avoided in one of two ways; either, as in English law before The Philippine Admiral, by adopting the absolute doctrine of sovereign immunity in respect of both actions in personam and actions in rem; or, as in most foreign jurisdictions (many of which, though they distinguish between rights in rem and rights in personam, do not have separate categories of actions in rem and actions in personam), by applying the restrictive doctrine to all actions, limiting sovereign immunity to the case of an actus jure imperii as opposed to an actus jure gestionis. The effect of Trendtex Trading Corporation v. Central Bank of Nigeria is that, subject to any appeal to the House of Lords, the restrictive doctrine of sovereign immunity is now applicable in all cases, and so the anomaly has been removed.

In actions in rem, therefore. the position now is that a foreign sovereign may be impleaded in respect of certain claims in personam, namely, those which fall within paragraphs (d) to (r) inclusive as listed in section 1 (1) of the Act of 1956, provided these proceedings can be brought by an

action in rem against an ordinary trading ship. Mr. Alexander sought to justify an absolute exclusion of sovereign immunity in such a case as follows. He submitted that once the sovereign has descended from his throne and entered the market place he has divested himself of his sovereign status and is therefore no longer immune to the domestic jurisdiction of the courts of other countries; and that one way in which a sovereign may take this step is by permitting a ship in his ownership to proceed on the high seas as an ordinary trading ship.

I find Mr. Alexander's justification difficult to accept. As a statement of principle, it is at once too narrow and too broad. In the first place (which may be irrelevant for the purposes of the present case) it is too narrow, because it is possible to conceive of circumstances in which a sovereign may equally be regarded as having divested himself of his sovereign status, and yet not have entered the market place; the principle, if it applies at all, should apply to all circumstances, commercial or otherwise, in which a sovereign acts as any private citizen may act. There are many statements of principle in foreign authorities to this effect; for a particularly clear statement see the decision of the Italian Corte di Cassazione in Ditta Campione v. Ditta Peti Nitrogenmuveh, Stato Ungherese, November 14, 1972, n. 3368. The expression actus jure gestionis, though useful as a label, can sometimes be misleading. Secondly, and more important, it is too broad because, even where a sovereign acts in a private capacity, he does not cease to be a sovereign. His action as a private citizen does not detract from his status, and he may thereafter find it necessary to act in a public capacity. A sovereign may, as a private citizen can, sell wheat, charter a ship, or promise to marry; he may thereafter, as a private citizen cannot, decide as sovereign that he should not deliver the wheat, for example, because his own subjects are in desperate need of wheat, or take delivery of the ship, for example, because the shipowner is a citizen of a state with which he has severed all relations, or marry, for example, because his own council of state has forbidden the marriage.

I find it difficult to accept that the exercise by a foreign court of jurisdiction over such acts is consistent with the principle upon which the doctrine of sovereign immunity is based; to adopt the words of Marshall C.J. in The Schooner Exchange v. M'Faddon (1812) 7 Cranch. 116, 144 "such interference cannot take place without affecting [the] power and [the] dignity" of the foreign sovereign. In The Parlement Belge, the doctrine was stated to be "a consequence of the absolute independence of every sovereign authority, and of the international comity which induces every sovereign state to respect the independence and dignity of every other sovereign state." That principle requires, in my judgment, that even where a sovereign, as Mr. Alexander puts it, "descends into the market place" by permitting one of his ships to sail as an ordinary trading ship his sovereign acts in relation to that ship should be afforded the respect due to his independence and dignity as sovereign. It is not enough to say that he can, if necessary, plead act of state by way of defence. Such a plea will in any event depend upon the extent to which the defence is recognised in the relevant jurisdiction; but, more important, the whole purpose of the doctrine of sovereign immunity is that the

domestic courts of a foreign state should not even take cognisance of a dispute in which a foreign sovereign is impleaded.

In the second action the claim against the Republic of Cuba is framed purely in tort. No question of the character of the transaction arises in such a case. It must be unusual for a foreign sovereign to be unable to invoke sovereign immunity in an action in personam where the claim is so framed. It is understandable that, where an ordinary trading ship is involved in a collision on the high seas, the sovereign owner should usually be unable to invoke immunity, because he is then acting as a private citizen can act. But, to take a rather extreme hypothetical example, suppose that the sovereign should, for reasons of state, order one of his trading ships to intercept some other ship on the high seas and a collision should result. It would be very surprising if in such circumstances immunity could not be claimed in respect of a claim arising out of the collision. Let me take another example, a little closer to the facts of this case. Suppose that a foreign sovereign, whose country is threatened with invasion, seizes strategic materials which are being carried on some of his ordinary trading ships. Again, it is difficult to believe that the sovereign could not claim immunity in respect of a claim for conversion of the goods; indeed, even if the sovereign was a party to the contracts of affreightment under which the goods were being carried on his ships, and such contracts could be characterised as jure gestionis, he should surely be entitled to immunity. To assert jurisdiction in the case of such claims would be inconsistent with the power and dignity of the sovereign. The claims would be more appropriately dealt with through diplomatic channels than through the courts of another country. Such an act is an actus jure imperii; it is not just that the purpose or motive of the act is to serve the purposes of the state, but that the act is of its own character a governmental act, as opposed to an act which any private citizen can perform.

Mr. Alexander sought to justify his submission on the ground that the exception which permits a foreign court to exercise jurisdiction over a sovereign in respect of an actus jure gestionis has been established to give contracting parties the same certainty in commercial transactions as they have when contracting with private citizens; from that he inferred that, once a sovereign had entered the market place, he was bound to perform his contract and could not escape the consequences by a plea of sovereign immunity. To this proposition there are, in my judgment, two answers. First, it provides no answer in the case where there is no commercial transaction; still less does it do so where there is no transaction at all, as for example where a sovereign's ordinary trading ship is involved in a collision at sea, or is rendered salvage services in an emergency without request. Second, and more fundamentally, certainty in commercial transactions is not, in my judgment, the true reason why in certain circumstances the doctrine of sovereign immunity is restricted. The true reason is that it is restricted where the foreign sovereign does not act as such, that is, where he acts as any private citizen may act. I should add that, in so far as the introduction into international law of the restrictive doctrine of sovereign immunity is due to a desire that contracting parties should not be deprived of their reasonable business expectations

in commercial transactions, it would not be inconsistent with recognition of such expectations to qualify the doctrine by permitting the sovereign to invoke immunity where the alleged breach of contract arose from an actus jure imperii, for example an act performed as a matter of national defence or of foreign policy, especially when it is borne in mind that a sovereign cannot ordinarily plead force majeure, as other parties can, in respect of governmental intervention, when it is itself the government which has intervened.

In the course of the argument before me, I was referred to a considerable number of foreign authorities. It is clear that, in a case such as the present, which is concerned with a doctrine of public international law, it was proper that I should be so referred: Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C. 485, 497, perLord Macmillan. I have before me not only judicial decisions of foreign courts but affidavits sworn by a number of distinguished foreign lawyers. On a summons on July 19, 1976, I was invited by the plaintiffs to rule such affidavit evidence inadmissible. I did not feel able to do so, for three reasons; first, because if decisions of foreign courts were to be cited by English counsel I feared that, particularly where they were decisions of courts outside common law jurisdictions, I might, without the guidance of a qualified lawyer, form an erroneous view of such decisions; second, because the sources of law in foreign jurisdictions are not necessarily restricted, as they are in this country, to statutes and judicial decisions; and third, because I must also have regard to practice in foreign jurisdictions. Of course, the opinion of a foreign lawyer as to the way in which the present case would be decided in accordance with his own system of law is not something to which I could have regard as such. In fact, I have found this affidavit evidence of considerable assistance when evaluating the authorities cited to me. But in the end these authorities provided no direct guidance on the central issue which I have to decide.

It is clear that in most jurisdictions no distinction is drawn between actions in rem and actions in personam as is drawn in this country; but it is also clear that in most jurisdictions a restrictive doctrine of sovereign immunity is applied in all actions, the doctrine being applicable in the case of an actus jure imperii but not in the case of an actus jure gestionis. Indeed, the evidence before me reveals only too clearly the isolated position which was until very recently occupied by this country in adhering to the absolute doctrine of sovereign immunity in the case of actions in personam. However, there appears to be no consensus as to where the dividing line should be drawn between the two categories of actus jure imperii and actus jure gestionis. Differences of opinion were revealed in relation to contracts for public purposes. In a case of that kind, courts generally look to the nature of the contract rather than to its purpose in deciding whether or not the contract is to be characterised as jure gestionis or jure imperii; and Mr. Alexander relied on these cases in support of his submission that, once the sovereign has entered the market place, he cannot invoke sovereign immunity in

respect of a breach of contract even where such breach arises from a governmental act.

But, in my judgment, the cases only demonstrate that in the case of a contractual claim the nature of the contract will be relevant, not that it will necessarily be decisive of the question whether or not the case is concerned with an actus jure imperii. If the nature of the contract is such that it is itself an actus jure imperii, then any claim under it may be the subject of sovereign immunity. If it is itself an actus jure gestionis, then an ordinary breach of the contract cannot be the subject of a claim to immunity, but the character of the contract cannot necessarily preclude a breach from being held to result from an actus jure imperii. in which event sovereign immunity may be claimed in respect of such breach.

Although I have found no direct guidance on this question in the foreign authorities cited to me, there are statements of principle to be found in those authorities which are consistent with the view that regard must be had, not only to the nature of the transaction, if any, between the parties, but also to the nature of the act complained of. For example, in the Claim against the Empire of Iran Case (1963) 45 International Law Reports 57 the Federal Constitutional Court of the Federal Republic of Germany stated, at p. 80:

"As a means for determining the distinction between acts jure imperii and jure gestionis one should rather refer to the nature of the state transaction or the resulting legal relationships, and not to the motive or purpose of the state activity. It thus depends on whether the foreign state has acted in exercise of its sovereign authority, that is in public law, or like a private person, that is in private law."

Similarly, in the Italian case of Consorzio Agrario di Tripolitania v. Federazione Italiana Consorzi Agrari, December 5, 1966, n. 2830 the question was said by the Italian Corte di Cazzazione to depend on whether "the act in respect of which the controversy has arisen has been enacted in the exercise of sovereign powers." In the present case the act complained of, namely, the diversion of the two cargoes from Valparaiso to Cuba and Vietnam and their disposal there, was essentially an act of foreign policy. Such an act must surely be characterised as an actus jure imperii: see, for example, Victory Transport Inc. v. Comisaria General de Abastecimientos y Transportes (1964) 336 F. 2d 354, 360 where "acts concerning diplomatic activity" are listed among those acts in respect of which sovereign immunity may be invoked.

There are, however, two matters on which Mr. Alexander particularly relied and to which I must refer. First, he submitted that section III of the opinion of the Supreme Court of the United States in Alfred Dunhill of London Inc. v. Republic of Cuba (1976) 96 S.C. 1854 supported his submission that, once a sovereign has entered into a commercial transaction which is to be categorised as an actus jure gestionis, he cannot invoke sovereign immunity in respect of any breach of that transaction. I do not think that it would be right to burden this already long judgment with an analysis of that case; it is enough for me to record that I do not accept Mr. Alexander's interpretation of section III

(which in any event contained the views of only four out of the nine members of the court).

Second, Mr. Alexander relied upon the provisions of the International Convention for the Unification of Certain Rules concerning the Immunity of State-Owned Ships signed at Brussels on April 10, 1926 (the Brussels Convention of 1926), and in particular on articles 1, 2 and 3 of the Convention. Mr. Alexander submitted that the effect of those provisions was that the immunity of state-owned ships depended solely on the nature of the ship or the use to which it was being put, and that in the case of ships falling outside those specified in article 3 a sovereign could not invoke sovereign immunity, even where the act complained of either was, or arose by reason of, a governmental act. It is, however, to be observed that article 1, which, subject to article 3, permits claims in respect of state-owned ships and cargoes, and cargoes and passengers carried on state-owned ships, applies only to "claims in respect of the operation of such ships or in respect of the carriage of such cargoes" and the article is therefore open to the interpretation that it excludes claims where the act complained of arises from a governmental act. On the evidence before me relating to the laws of countries which have ratified the Convention, which this country has not, there is certainly no consensus as to the interpretation favoured by Mr. Alexander. On the contrary, the Supreme Court of Sweden, a country which has ratified the Convention and enacted it into Swedish law, expressed the opinion in the leading case of The Charente [1942] Nytt Jurisdisk Arkiv 1 that article 1 of the Convention, as enacted into Swedish law, had no application in the case of an actus jure imperii; and the travaux préparatoires of the Convention, if regard is to be had to them, provide considerable support for this view. I do not therefore consider that the plaintiffs can derive much support for their argument from the Convention.

For the above reasons, I reject the plaintiffs' main submissions on the law on this aspect of the case. However, before reaching any conclusion on the Republic of Cuba's notices of motion, there are certain subsidiary submissions advanced by the plaintiffs which I must deal with. The first of these submissions is that since, by invoking the doctrine of sovereign immunity, the Republic of Cuba is claiming to invoke a principle of international law it should not be allowed to do so in respect of acts which offend against other principles of international law. It is further submitted that in the present case the acts in respect of which the Republic of Cuba is invoking sovereign immunity offend against international law in two respects: first, because they are contrary to international good faith, and, second, because they are discriminatory. They are said to be contrary to good faith because the Cubans were or are at the same time taking the benefit of a trading contract (by drawing on the letters of credit) and failing to discharge the burden of that contract (by refusing to deliver the goods). They are said to be discriminatory because they are directed against the citizens of a particular country, Chile.

I am unable to accept either of these submissions. They cannot of course be rejected on the ground of novelty, because the acceptance until

so recently in this country of the absolute doctrine of sovereign immunity has hitherto precluded ventilation of matters of this kind in the English courts. But the suggestion that sovereign immunity may not be invoked in cases where there is a breach of international good faith is certainly not supported, on the material before me, by any evidence of consensus among the laws of other nations, the only authority cited being the judgment of the Provincial Court of Frankfurt in Y.M.N. Establishment v. Central Bank of Nigeria, December 2, 1975. Moreover, the submission appears to run contrary to the whole principle of sovereign immunity; the sovereign is immune from process precisely because the domestic court will not adjudicate upon his actions.

Furthermore, on the facts of the present case, the submission appears to confuse the actions of Cubazucar and the actions of the Republic of Cuba. It was Cubazucar which drew upon the letters of credit, while it is the Republic of Cuba which is invoking sovereign immunity. True, Cubazucar is a state enterprise; but it appears to have the same status as Mambisa. No sovereign immunity is claimed in respect of Mambisa; and, on the evidence before me, Mambisa appears to be an independent state enterprise, of which examples exist both in Western countries as well as in Socialist countries: compare the recent decision of Kerr J. in C. Czarnikow Ltd. v. Centrala Handlu Zagranicznego Rolimpex (unreported, December 13, 1976. There is no evidence before me that Cubazucar was drawing on the letters of credit otherwise than in the ordinary course of business. I do not consider that its action in so doing prevents the Republic of Cuba from claiming sovereign immunity in respect of its acts in preventing delivery of the goods to the Chilean buyers.

So far as concerns the submission that the Cuban action was discriminatory, once again I cannot see why, if this was the case, it should prevent the Republic of Cuba from invoking the principle of sovereign immunity; but, in any event, since there is no question of the Republic of Cuba having treated persons in like positions differently, or having treated persons in different positions alike, I do not see how the Cuban action can be described as discriminatory. I therefore reject this submission.

The second of the subsidiary submissions is that, if I should hold, as the plaintiffs submit, that there is a reasonable argument that Mambisa are the owners of the Congreso and that the issue whether Mambisa are the owners should therefore be tried as an issue in any of the actions, I should not in any event accede to the Republic of Cuba's application to strike out such actions, because in respect of the claim against Mambisa, any dictates of the Cuban government are irrelevant. In my judgment, this submission is misconceived. As will appear hereafter, in my judgment, there can be no possibility of the question of Mambisa's title being decided as an issue in any of the actions; it must be decided now, on Mambisa's motions, which raise a question of jurisdiction which falls to be decided before it can be known whether the actions can proceed at all against Mambisa. But, further, once the Republic of Cuba has established, on the principle in Juan Ysmael & Co. Inc. v. Government of the Republic of Indonesia [1955] A.C. 72, a not illusory

title to the Congreso the Republic of Cuba has been impleaded by the action in rem against that vessel; and if there is no valid objection to a claim of sovereign immunity by the republic, the action in rem against that ship must be struck out.

The third of the subsidiary submissions is that the Republic of Cuba was not in possession of the Congreso at the time when the actions were brought, nor did the republic then have an immediate right to possess the ship; and that possession, or at least an immediate right of possession, is a prerequisite to a claim of sovereign immunity in the case of an action in rem against the ship. It is true that, on the evidence before me, the Republic of Cuba was not when the actions were brought in possession of the ship; it was Mambisa which was in possession. But, although a different view has been taken in the United States (see Republic of Mexico v. Hoffman (1945) 324 U.S. 30) on the English authorities possession is not a prerequisite to a claim of sovereign immunity in an action in rem; see The Philippine Admiral [1977] A.C. 373, 404, applying United States of America and Republic of France v. Dollfus Mieg et Cie. S.A. and Bank of England [1952] A.C. 582. On the evidence before me, the Republic of Cuba has, in my judgment, established an immediate right to possession of the Congreso at the time when the actions were brought; accordingly, if such a right is a prerequisite to a claim to sovereign immunity, it has been satisfied.

I have already reached the conclusion, on the evidence before me, that the Republic of Cuba has established a sufficient title to the Congresoand that the claims of the plaintiffs which are the subject matter of the three actions arise from governmental acts of the Republic of Cuba in preventing, on grounds of foreign policy, the delivery to the plaintiffs of the cargo on the Marble Islands and the balance of the cargo on the Playa Larga. Both claims, therefore, arise from an actus jure imperii of the Republic of Cuba; accordingly, for the reasons I have given, the Republic of Cuba is entitled to invoke the principle of sovereign immunity in all three actions.

I now turn to Mr. Bingham's alternative submission, namely, that the Republic of Cuba can, despite the fact that the Congreso was an ordinary trading vessel, invoke the doctrine of sovereign immunity because the claim on which the arrest is based has no substantial connection with the territorial jurisdiction of the English court. Although it is not necessary for my decision in this case to reach any conclusion on this second point, I feel that I should deal with it, albeit briefly, because the point was argued before me and the case may well go further.

In support of his submission Mr. Bingham relied upon passages in judgments of Lord Denning in Rahimtoola v. Nizam of Hyderabad [1958] A.C. 379, 418, 422 and Thai-Europe Tapioca Service Ltd. v. Government of Pakistan [1975] 1 W.L.R. 1485. In the latter case Lord Denning M.R. said, at p. 1492:

"I would stress particularly the necessity that the dispute should 'arise properly within the territorial jurisdiction of our courts.' By this I do not mean merely that it can be brought within the rules

for service out of the jurisdiction under R.S.C., Ord. 11, r. 1. I mean that the dispute should be concerned with property actually situate within the jurisdiction of our courts or with commercial transactions having a most close connection with England, such that, by the presence of parties or the nature of the dispute, it is more properly cognisable here than elsewhere."

In the present case the claims do not (apart from the arrest of the Congreso in this country) arise within the territorial jurisdiction of our courts. The claims are concerned with the conversion of goods on board foreign ships on the high seas or in foreign countries, and with non-delivery under contracts of affreightment which are not governed by English law. If the principle stated by Lord Denning M.R. in the above cases is applicable in the present case this too would be a good ground for declining jurisdiction. I should observe, in parenthesis, that on the evidence before me there appears to be no international consensus on the requirement of territorial connection; for an example of the opposite view, see the decision of the Frankfurt Provincial Court in Y.M.N. Establishment v. Central Bank of Nigeria.

However, in neither the Rahimtoola case [1958] A.C. 379 nor the Thai-Europe case [1975] 1 W.L.R. 1485 was the court directly concerned with an assertion of jurisdiction arising out of the arrest of an ordinary trading ship. The arrest of ships is a procedure widely recognised throughout the world, though the court may thereafter decline to proceed with the case on the ground that there exists elsewhere a more appropriate forum for the trial of the dispute or on some other more limited principle of a similar kind: see, for example, The Atlantic Star [1974] A.C. 436. The possibility of arrest of state-owned ships is expressly recognised by the Brussels Convention of 1926: claims arising from the operation of such ships are within article 1 of the Convention, which presumably include claims arising from collisions on the high seas. I find it difficult to accept that, in an appropriate case, the English courts should not assert jurisdiction by an action in rem against a state-owned ordinary trading ship in a case arising from a collision with another foreign ship on the high seas. Furthermore, article 1 of the Convention contemplates the possibility of arrest in a case concerned with carriage of cargo; once again, I find it difficult to accept that the English courts should not be able to assert jurisdiction in an action in rem against a foreign state-owned trading ship in such a case, even though the contract of carriage had no connection with the territorial jurisdiction of the English court.

Jurisdiction asserted by means of an arrest of a ship is not an exorbitant jurisdiction. By allowing his ships to trade a foreign sovereign must be taken to have exposed his ships to the possibility of arrest, a procedure which is widely accepted among maritime nations and which is regulated to some extent by international convention, in the case of state-owned ships by the Brussels Convention of 1926, and in the case of other sea-going ships by the Brussels Convention of 1952. For these reasons, which I have stated very briefly, I would not be prepared to

accept Mr. Bingham's second submission. However, as I have already held, Mr. Bingham is entitled to succeed on his first submission.

Mambisa's motions

I turn next to Mambisa's motions in the first and third actions under which they ask for an order that the writ and all subsequent proceedings should be set aside as against them on the ground that the actions do not fall within section 3 (4) of the Administration of Justice Act 1956, pursuant to which they were brought, because the Congreso was not at the time when the action was brought beneficially owned as respects all the shares therein by Mambisa.

Mambisa's first submission is that, on the evidence before me, they were not the owners, at law or in equity, of the Congreso at the time when the actions were brought. This submission raises the question of the manner in which, on Mambisa's notices of motion, the question of ownership should be decided. It was common ground between Mambisa and the plaintiffs that, since Mambisa are not invoking the doctrine of sovereign immunity, the test established in Juan Ysmael & Co. Inc. v. Government of the Republic of Indonesia [1955] A.C. 72 does not apply.

However, on the resumed hearing of the motions it was submitted by Mr. Alexander on behalf of the plaintiffs that, on the evidence before me, there was at least a reasonably arguable case whether Mambisa or the Republic of Cuba were the owners of the Congreso and that in those circumstances it would be wrong for me to decide the point on affidavit evidence without affording the plaintiffs the opportunity of having the issue tried on oral evidence with cross-examination of witnesses. My proper course, he submitted, was to allow the actions to proceed against Mambisa, but to order the question of Mambisa's title to be tried as an issue in the actions. In this connection, he relied upon The St. Elefterio [1957] P. 179, 185-186 per Willmer J., Vitkovice Horni A Hutni Tezirstvo v. Korner [1951] A.C. 869 and The Jupiter (No. 2) [1925] P. 69.

In my judgment, Mr. Alexander's submission that I should order that the question of Mambisa's title should be tried as an issue in the actions is one to which I cannot accede. The question raised by Mambisa's motions is one of jurisdiction. Jurisdiction in Admiralty actions is statutory, and is defined by the Administration of Justice Act 1956. Section 3 of the Act lays down the circumstances in which an action in rem may be brought; if the case is not within the section then the court has no jurisdiction in respect of an action in rem, and the writ and all subsequent proceedings should be set aside. It follows that if a defendant wishes to have the writ and all subsequent proceedings set aside he must apply to do so before entering an unconditional appearance. Any question of irregularity in the issue of the writ cannot be pleaded as a defence; indeed, by entering an unconditional appearance, a defendant will waive any irregularity in the issue of the writ: see R.S.C., Ord. 2, r. 2 (1) and Ord. 12, r. 8.

It follows as a matter of principle that any question of jurisdiction, such as the question in the present motions, must be dealt with on

the motions and cannot be dealt with as an issue in the actions. Of course, on the hearing of such a motion, evidence will be admitted. Usually that evidence will be in the form of affidavits, though in theory oral evidence, for example, by cross-examination of deponents of affidavits, might be allowed. There has, however, been no application in the present case for any such oral evidence to be admitted. On the evidence so admitted, which in the present case is purely affidavit evidence, the question of jurisdiction has to be decided, and it cannot be right for the decision on that question to be allowed to depend on the decision of some issue to be tried in the actions. If there is no jurisdiction as against Mambisa they should not be troubled with the actions at all; indeed, it cannot be decided whether the actions can be allowed to proceed until the question of jurisdiction has been determined.

The cases cited by Mr. Alexander do not, in my judgment, assist him. In The St. Elefterio [1957] P. 179 on a motion to set aside the writ and all subsequent proceedings in an action in rem the question arose whether the plaintiff was required to prove at the outset that he had a good cause of action in personam. Willmer J. held that he was not. The applicable statutory provision was section 3 (4) of the Act of 1956 which requires, inter alia, that "the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of the ships." Willmer J. pointed out, at p. 186, that the words used were "the person who would be liable," not "the person who is liable," and that they were intended to refer to the person who would be liable on the assumption that the action succeeded. In contrast, the subsection goes on also to require that, for the purposes of an action in rem against a ship, such ship is when the action is brought beneficially owned by that person as respects all the shares therein. This shows clearly, in my judgment, that the question of ownership of the res, if in issue, has to be decided on the motion to set aside the writ in an action in rem.

Again, I do not consider that it assists Mr. Alexander to rely by way of analogy on cases under R.S.C., Ord. 11, because under that order the standard of proof that the case falls within Ord. 11 is expressly provided for in rule 4 (2) of the order, and is that no leave shall be granted unless it shall be made sufficiently to appear to the court that the case is a proper one for service out of the jurisdiction under the order: see, for example, Vitkovice Horni A Hutni Tezirstvo v. Korner [1951] A.C. 869, 883 per Lord Radcliffe.

Nor, in my judgment, does he gain any assistance from those cases where the question is whether the solicitors purporting to act for the plaintiff had authority from him to commence proceedings. In such cases the proper course is for the defendant to issue a summons to strike out, not to raise the matter by way of defence: see Russian Commercial and Industrial Bank v. Comptoir d'Escompte de Mulhouse [1925] A.C. 112. On the application to strike out the parties are the defendant and the plaintiff's solicitors: see Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2) [1967] 1 A.C. 853. Such an issue cannot therefore be decided as an issue in the action; it must be decided on the application to strike out: see Banco de Bilbao v. Sancha [1938] 2 K.B. 176, 192. A

similar issue arose in The Jupiter (No. 2) [1925] P. 69 where the Court of Appeal, although recognising that the point was not a matter of plea but one to be decided on the motion, nevertheless took the unusual course of referring that part of the motion to the Admiralty Court. It apparently took that course because the decision on that part of the motion depended upon the determination of facts which were not then before the court. Certainly Hill J. appears to have treated it as an issue in the motion which had been referred to him: see The Jupiter (No. 3) [1927] P. 122, 124. Indeed, it is difficult to see how, in all the circumstances, such an action can be allowed to proceed until the question of the solicitors' authority to sue has been determined: see the Carl Zeiss case [1967] 1 A.C. 853, 944 per Lord Upjohn. Similarly, on an application for a stay of proceedings under the Arbitration Acts the court has to decide on an application for a stay whether there is an effective arbitration clause: see Modern Building Wales Ltd. v. Limmer & Trinidad Co. Ltd. [1975] 1 W.L.R. 1281.

For these reasons I have come to the conclusion that I have to decide the question of jurisdiction on the evidence before me. For the reasons I have already given, I am satisfied on the evidence before me that Mambisa were not at the time when either the first or third action was brought the owners in law or in equity of the Congreso.

I turn therefore to the main question which arises on Mambisa's motions, which is whether the Congreso, although not owned by Mambisa at law or in equity, was nevertheless to be regarded as "beneficially owned as respects all the shares therein" by Mambisa within the meaning of section 3 (4) (b) of the Act of 1956, on the basis that those words have a wider meaning than equitable ownership and are wide enough to embrace the relationship of Mambisa to the Congreso.

On this point I have the guidance of the decision of Brandon J. in The Andrea Ursula [1973] Q.B. 265. In that case it was held that the plaintiff ship repairers who had carried out repairs to the Andrea Ursulaat the request of demise charterers of that ship, and who claimed the cost of the repairs under section 1 (1) (n) of the Act of 1956, were entitled to proceed by an action in rem against the ship under section 3 (4) (a) of the Act on the basis that at the time when the action was brought the demise charterers were, as such, beneficial owners of the ship as respects all the shares therein. Brandon J. therefore construed the words "beneficially owned as respects all the shares therein" as not being restricted to legal or equitable ownership, but as being wide enough to include such "ownership" as is conferred by a demise charter. The reasoning of Brandon J. which led him to reach this conclusion was as follows: (1) The expression "beneficially owned" in section 3 (4) is capable of more than one meaning: either owned by someone who, whether he is the legal owner or not, is in any case the equitable owner; or beneficially owned by a person who, whether he was the legal or equitable owner or not, lawfully had full possession and control of her, and, by virtue of such possession and control, had all the benefit and use of her which a legal or equitable owner would ordinarily have. An example of the latter would be such "ownership" as was conferred by a demise charter. A demise charterer has, because of the extent of

his possession and control, often been described as the owner pro hac vice or the temporary owner. (2) Since the meaning of the words "beneficially owned" is not clear the court can and should look at the terms of the Brussels Convention of 1952, section 3 of the Act of 1956 being intended to give effect to article 3 of the Convention; and having done so the court should so construe the statute as to give effect, so far as possible, to the presumption that Parliament intended to fulfil, rather than to break, its international obligations. If section 3 (4) of the Act is to give full effect to article 3, the expression "beneficially owned" in the section must be given the second of the two meanings of which it is capable, which embraces not only a demise charterer, but also any other person with similar complete possession and control. (3) Although Hewson J. had reached a different conclusion in The St. Merriel [1963] P. 247, Brandon J. felt justified in declining to follow that decision having regard in particular to two points. First, Hewson J. had not been invited to look at the Brussels Convention, because at that time it was commonly thought that it was not permissible to do so unless the Act contained an express reference to the Convention. Second, the view accepted by Hewson J. in The St. Merriel was no different in principle from one which was discussed and rejected by Lord Atkinson in Sir John Jackson Ltd. v. Steamship Blanche (Owners) (The Hopper No. 66) [1908] A.C. 126, 135-136.

Mr. Davenport, for Mambisa, to whose argument I am much indebted, has however urged me not to follow The Andrea Ursula [1973] Q.B. 265. The decision in that case is not binding upon me and, while of course I have the greatest respect for any decision of Brandon J., I have reconsidered the matter and, having done so, I have reached the conclusion that the words "beneficially owned as respects all the shares therein" refer only to cases of equitable ownership, whether or not accompanied by legal ownership, and are not wide enough to include cases of possession and control without ownership, however full and complete such possession and control may be. Since I have reached a different conclusion to Brandon J., I think it right to point out that I have had the benefit of a full argument by counsel for the defendants in this case, whereas The Andrea Ursula came before Brandon J. on a motion by plaintiffs for judgment in default of appearance, on which the defendants were not represented.

My approach to the case before me is as follows. I start with the statute, and the words with which I am particularly concerned, and which I have to construe in the context of the statute, are "beneficially owned as respects all the shares therein." In my judgment, the natural and ordinary meaning of these words is that they refer only to such ownership as is vested in a person who, whether or not he is the legal owner of the vessel, is in any case the equitable owner, in other words, the first of the two meanings of which Brandon J. thought the words to be capable. Furthermore, on the natural and ordinary meaning of the words, I do not consider them apt to apply to the case of a demise charterer or indeed any other person who has only possession of the ship, however full and complete such possession may be, and however much control over the ship he may have.

Generally speaking, the essential characteristic of a demise charter is that it constitutes a contract of hire of the ship, under which the possession of the ship passes to the charterer, the master of the ship being the servant of the charterer, not of the owner. It is to be compared with the ordinary form of time charter, which is not a contract of hire but a contract of services, under which the possession remains in the owner and the master is the servant of the owner: see Sea and Land Securities Ltd. v. William Dickinson and Co. Ltd. [1942] 2 K.B. 65, 69-70 per Mackinnon L.J. and Scrutton on Charterparties, 18th ed. (1974), articles 24-26. It is true that a demise charterer has in the past been described variously as "owner pro hac vice:" see, for example, Frazer v. Marsh (1811) 13 East 238, 239, per Lord Ellenbrough C.J., The Lemington (1874) 2 Asp.M.L.C. 475, 478, per Sir Robert Phillimore, and The Tasmania (1888) 13 P.D. 110, 118, per Sir James Hannen P.; or as a person who is "for the time the owner of the vessel:" see Sandeman v. Scurr (1866) L.R. 2 Q.B. 86, 96, per Cockburn C.J.; or as a person with "special and temporary ownership:" see The Hopper No. 66 [1908] A.C. 126, 136, per Lord Atkinson. I doubt however if such language is much in use today; and its use should not be allowed to disguise the true legal nature of a demise charter. Furthermore, no case has been drawn to my attention, and I am aware of more, in which a demise charterer has been described as a "beneficial owner," still less as a "beneficial owner as respects all the shares in the vessel." Indeed, any reference in this context to ownership "as respects all the shares in the vessel" is, in my judgment, inapt to describe the possession of a demise charterer; such words are only appropriate when describing ownership in the ordinary sense of the word, and not possession which is concerned with a physical relationship with the vessel founded upon control and has nothing to do with shares in the vessel. A demise charterer has, within limits defined by contract, the beneficial use of the ship; he does not, however, have the beneficial ownership as respects all the shares in the ship.

Furthermore, I can find nothing in the remainder of the statute to cause me to reject the natural and ordinary meaning of the words; certainly, I would not construe other references in the statute to "ownership" - as in section 1 (1) (a) - or "co-owner" - as in section 1 (1) (b) - as referring in any way to demise charterers. Indeed in Part V of the Act, which is concerned with Admiralty jurisdiction and arrestment of ships in Scotland, the equivalent provision, section 47 (1) (b), requires that "all the shares in the ship are owned by the defendant." This provision, to which I can properly have regard: see The Eschersheim [1976] 1 W.L.R. 430, 436 per Lord Diplock, reinforces my conclusion that section 3 (4) of the Act is concerned with title, the word "beneficial" being introduced to allow for the peculiar English institution of the trust.

I, for my part, do not feel persuaded to any different conclusion by the speech of Lord Atkinson in The Hopper No. 66 [1908] A.C. 126, 135-136. In that case, the House of Lords was considering the proper construction of the words "The owner of a British sea-going ship, or any share therein," and the words "The owner of any sea-going ship, or any share therein," as used in sections 502 and 503 respectively of

the Merchant Shipping Act 1894 (which provide for limitation of liability), and concluded that in that context the words "owner of a ... ship" should be read to include a demise charterer. But that construction of those words does not, in my judgment, require a construction to be placed on the different words in section 3 (4) of the Act of 1956, namely, "beneficially owned as respects all the shares therein," which is inconsistent with those words. I note in passing that sections 56, 57 and 58, of the Act of 1894 are the relevant parts of the Act concerned with trusts and equitable rights, and liability of beneficial owner; and that where in these sections reference is made to an equitable interest in a ship or to a person having such an equitable interest the words used are "beneficial interest" and "beneficially interested," and it would be at least consistent to construe the words "beneficially owned" in section 3 (4) of the Act of 1956 in a similar manner.

Accordingly, I do not regard the words "beneficially owned as respects all the shares therein" as being capable of more than one meaning: in the absence of ambiguity this is not, on the principles established by the Court of Appeal in Salomon v. Customs and Excise Commissioners [1967] 2 Q.B. 116, Post Office v. Estuary Radio Ltd. [1968] 2 Q.B. 740 and by the House of Lords in the Convention The Eschersheim [1976] 1 W.L.R. 430, an appropriate case in which to have recourse to the Convention. Even so, out of respect for the views of Brandon J., I propose to examine the Convention. The relevant provisions of article 3 of (the International Convention Relating to the Arrest of Sea-going Ships 1952) are as follows:

"(1) Subject to the provisions of paragraph (4) of this article and of article 10, a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in article 1, (1) (o), (p) or (q). (2) Ships shall be deemed to be in the same ownership when all the shares therein are owned by the same person or persons. ... (4) When in the case of a charter by demise of a ship the charterer and not the registered owner is liable in respect of a maritime claim relating to that ship, the claimant may arrest such ship or any other ship in the ownership of the charterer by demise, subject to the provisions of this Convention, but no other ship in the ownership of the registered owner shall be liable to arrest in respect of such maritime claims. The provisions of this paragraph shall apply to any case in which a person other than the registered owner of a ship is liable in respect of a maritime claim relating to that ship."

As I read the Convention, article 3 (1), which is expressed to be subject to article 3 (4), provides for the arrest of either the particular ship in respect of which the maritime claim arose, or (except in certain specified cases) any other ship which is owned by the person who was, at the time when the maritime claim arose, owner of the particular ship.

Furthermore, despite the argument of Mr. Alexander for the plaintiffs to the contrary, in this context I read the word "owner" as bearing its ordinary meaning, that is, the person with title to the ship; and I am confirmed in this view by the provision relating to ownership in article 3 (2) and by the fact that article 3 (4), to which article 3 (1) is expressed to be subject, makes special provision for the case of the demise charterer and others. It is to be observed that, if one puts article 3 (4) on one side, the draftsman of the Act of 1956 appears to have been seeking to give effect to article 3 (1) and (2) of the Convention, subject to the fact that he appears to have been concerned to extend the word "ownership" by the addition of the adjective "beneficial," very possibly to take account of the special English institution of the trust which may form no part of the domestic laws of other signatories to the Convention.

But the same cannot, I consider, be said of article 3 (4). First, this paragraph makes express provision for the case of a charter by demise. It is very difficult to believe that, had the draftsman of the Act of 1956 intended to give effect to this provision, he would not have done so in far more explicit terms than by use of the expression "beneficial ownership." Second, the paragraph in its last sentence appears to extend the right of arrest in paragraph (4) to "any case in which a person other than the registered owner of a ship is liable in respect of a maritime claim relating to that ship," a provision which is wide enough to include maritime claims against time charterers and even voyage charterers; on no view can the Act of 1956 be said to give effect to this part of the Convention. Third, article 3 (4) makes it plain that, in the case of a claim against a demise chartered ship, no other ship in the ownership of the registered owner shall be liable to arrest; but, if section 3 (4) of the Act of 1956 is construed as the plaintiffs contend, then other ships in the same registered ownership may be liable to arrest if they are demise chartered to the same demise charterer before the action is brought, since on the construction adopted in The Andrea Ursula [1973] Q.B. 265 such ships would be beneficially owned by the demise charterer as respects all the shares therein. Fourth, article 3 (4) provides that, in the case of demise charters, the power of arrest applies to the demise chartered ship "or any other ship in the ownership of the charterer by demise"; section 3 (4), if intended to give effect to article 3 (4), has not done so in this respect because, if the demise charterer before the time when the action is brought demise charters out another ship in his ownership, that ship cannot be arrested under section 3 (4) (b) because it will not then (on the construction contended for by the plaintiffs) be beneficially owned by him. For these reasons, when I place article 3 of the Convention alongside section 3 of the Act, I discern a clear intention on the part of Parliament not to give effect to article 3 (4) of the Convention; and I do not think it would be right to impose some special construction on the words of section 3 (4) of the Act in an attempt to give effect to one part (though not to others) of article 3 (4) of the Convention.

Of course I recognise that, as a matter of policy, it might be desirable to provide for the arrest of a demise chartered ship, or even a time

chartered ship, when, for example, necessaries have been supplied to the ship at the request of the charterer. But the question whether such a policy should be adopted is a matter for Parliament; and, as I read the Act of 1956, Parliament has decided not to adopt that policy. As I read section 3 (4), the intention of Parliament in adding the word "beneficially" before the word "owned" in section 3 (4) was simply to take account of the institution of the trust, thus ensuring that, if a ship was to be operated under the cloak of a trust, those interested in the ship would not thereby be able to avoid the arrest of the ship. A comparable result was achieved by section 58 of the Act of 1894 concerned with the liability of the beneficial owner, to which I have already referred.

I accordingly decide that I should not follow The Andrea Ursula [1973] Q.B. 265; and since, as I have already concluded on the affidavit evidence before me, Mambisa were not in any sense the owners of the Congreso at the time when the first action was brought but were simply in possession of her as her operators and managers, I am prepared on this ground alone to accede to the application of Mambisa.

However, in case this matter should be taken further, and the reasoning of Brandon J. in The Andrea Ursula should be preferred to my own, it is right that I should deal with the second submission advanced on behalf of Mambisa, which is that Mambisa did not at the time when the first action was brought have full possession and control of the Congreso and cannot, therefore, be said, on the principle stated in The Andrea Ursula, to have been at that time beneficial owners of the Congreso as respects all the shares therein. The actual words used by Brandon J., at p. 269, are

"a person who, whether he was the legal or equitable owner or not, lawfully had full possession and control of her, and, by virtue of such possession and control, had all the benefit and use of her which a legal and equitable owner would ordinarily have."

These words are apt to describe the position of a demise charterer - indeed, they appear to derive from the speech of Lord Herschell in Baumwoll Manufactur von Carl Scheibler v. Furness [1893] A.C. 8, 18, a case concerned with a demise charterer - but they are not so easy to apply in other cases where possession has been transferred to another. For example, where a shipowner entrusts his yacht to a yachting agent for sale, and she breaks free through the negligence of the servants of the yachting agent and collides with another ship, it has been held that the owners of the other ship may proceed in rem against the yacht: see The Ruby Queen (1861) Lush. 266; though here the yachting agent has full possession and control but little or no benefit from or use of her.

I find it particularly difficult to apply the words of Brandon J. to the case of Mambisa, a state enterprise in a socialist state which has possession of the Congreso as operator and manager, but her use and maintenance are substantially within the control of the Cuban government. However, doing the best I can, I conclude that the present case does not fall within the principle stated in The Andrea Ursula [1973] Q.B. 265. On the evidence before me, although Mambisa has physical

possession of the Congreso, the limits within which Mambisa exercise control of her are so confined that I do not consider that it can be said that Mambisa has "full possession and control" of her; accordingly, if, contrary to my view, the principles stated in The Andrea Ursula are the applicable principles, I nevertheless conclude that Mambisa were not at the time when the first and third actions were brought the beneficial owners as respects all the shares in the Congreso and that the plaintiffs were not therefore entitled to invoke the Admiralty jurisdiction of the High Court by an action in rem against her, in which Mambisa are identified as the defendants, under section 3 (4) of the Administration of Justice Act 1956.

Solicitors: Coward Chance; Bischoff & Co.

M. B. D.