National Justice Cia Naviera SA v Prudential Assurance Co Ltd (The Ikarian Reefer) (No 2)

The court may determine whether a non-party outside the jurisdiction has a substantial connection with pending English proceedings sufficient to justify a costs order under the Supreme Court Act 1981. The relevant categories of connection are illustrative rather than exhaustive.

A section 51 application in existing proceedings is ancillary and does not ordinarily involve suing the non-party for the purposes of the Brussels Convention. Alternatively, it may fall within Article 6(2) as third-party proceedings. Insurance jurisdiction rules do not prevent the application. Leave to serve the summons out of the jurisdiction was required, but could be granted retrospectively where no prejudice resulted.

Prudential obtained judgment and costs in an insurance action concerning the vessel Ikarian Reefer, after the Court of Appeal held that the vessel had been deliberately run aground and set on fire: [1995] 1 Lloyd's Rep 455, reversing the trial judgment at [1993] 2 Lloyd's Rep 68.

Prudential then sought an order under section 51 of the Supreme Court Act 1981 requiring Mr Constantine Comninos, who was outside the jurisdiction, to pay the unpaid balance of the action's costs. Rix J held that leave was required for service in Greece but granted it retrospectively and dismissed the jurisdictional challenge. The appeal concerned the English court's jurisdiction, service under the old procedural rules, the new CPR, and the effect of the Brussels Convention.

Lord Justice Waller delivered the judgment. Lord Justices Tuckey and Simon Brown agreed.

1. Jurisdiction under section 51. The court had jurisdiction to decide whether a person outside the jurisdiction, who was not named as a party, had a substantial connection with pending proceedings sufficient to make that person liable for costs under the Supreme Court Act 1981. The court could determine an allegation that the non-party was the alter ego of the named party and had effectively submitted to the jurisdiction. The recognised categories of connection were neither rigid nor closed.
2. Procedure under the old rules. The proper course was to issue a summons in the existing action. Service on the non-party abroad required leave under Order 11 rule 9(4). Rule 9(5) required an affidavit under rule 4 so far as applicable, adapted to state the grounds of the application, the applicant's belief in the merits of the costs claim, and the place where the person to be served could be found. An originating summons and Order 11 rule 1 were not required.
3. Brussels Convention. A section 51 application in subsisting proceedings was ancillary to substantive proceedings and did not involve suing the non-party in the sense contemplated by Titles I to III. Alternatively, if it did involve suing, Article 6(2) covered the application as other third-party proceedings in the court seised of the original proceedings, provided the English procedure was followed.
4. Insurance jurisdiction. Article 11 did not apply. The costs application did not relate to insurance matters. If the relevant proceedings were the underlying insurance proceedings, they had already been brought against the insurer in the United Kingdom in compliance with Article 8.
5. Orders. The retrospective grant of leave was a proper exercise of discretion. Mr Comninos had suffered no material disadvantage, and retrospective leave avoided unnecessary delay and expense. There was no basis for a reference to the European Court. The appeal was dismissed with costs to be assessed. The related appeal was dismissed with no order as to costs, and leave to appeal to the House of Lords was refused.

1. Court of Appeal: Appeal from Rix J dismissed. The retrospective grant of leave to serve the section 51 summons out of the jurisdiction was upheld. Leave to appeal to the House of Lords was refused.
2. High Court, Queen's Bench Division (Commercial Court): Rix J held that leave was required for service in Greece, granted leave retrospectively, and dismissed the jurisdictional challenge.