Galaxy Special Maritime Enterprise v Prima Ceylon Ltd MV "Olympic Galaxy"

On an application to serve proceedings out of the jurisdiction, the claimant must show that England is the forum in which the case can most suitably be tried in the interests of the parties and for the ends of justice. An English governing-law factor is relevant but is not necessarily decisive, particularly where the foreign court can apply English law. Proper weight must be given to prior proceedings in a foreign jurisdiction, especially where they concern overlapping factual issues and are likely to continue. If the first-instance discretion proceeded on an erroneous legal basis, the appellate court must exercise the discretion afresh.

Galaxy, the new owners of the vessel Olympic Galaxy, claimed against Prima, the cargo owner, for general average and salvage contributions after the vessel grounded off Trincomalee, Sri Lanka. Ownership had changed during the voyage, and the parties accepted that the only contract between them was a Lloyd’s Average Bond. Galaxy obtained permission to serve proceedings on Prima in Sri Lanka.

Prima had already commenced proceedings in Sri Lanka concerning the grounding, the salvage agreement, security for the cargo and liability for general average. The Commercial Court refused to set aside service, treating English law as governing the disputes and as providing a juridical advantage: [2005] EWHC 3285 (Comm). Prima appealed, arguing that the underlying liability issues might instead be governed by Sri Lankan law and that the Sri Lankan proceedings should receive greater weight.

1. Appeal allowed. The order permitting service out of the jurisdiction was set aside.
2. The judge was entitled to proceed on the basis that the Lloyd’s Average Bond was governed by English law for jurisdictional purposes. However, that did not mean that the underlying rights and liabilities concerning general average, salvage and the grounding would necessarily be determined by English law. There was a substantial argument that those issues might be governed by Sri Lankan law, as the law and practice of the place where the common maritime adventure ended, and might fall to be determined without incorporation of the Hague Rules.
3. Those difficult substantive questions should not be resolved on the interlocutory application. The judge had nevertheless erred by treating English law as necessarily governing all matters in dispute. That error removed the principal basis for continuing the English proceedings.
4. Even if English law governed the substantive disputes, that would be only one factor in the forum assessment. The Sri Lankan courts were accustomed to applying English mercantile law, and no suggestion was made that they could not do so. English law therefore did not provide a decisive juridical advantage available only in England.
5. The judge had also failed to give appropriate weight to the existing Sri Lankan proceedings. They were instituted first, were likely to continue in the absence of a stay, and involved overlapping factual issues, creating a risk of conflicting decisions. Under The Abidin Daver [1984] AC 398, prior foreign proceedings in a natural and appropriate forum require cogent evidence of a personal or juridical advantage available only in England before concurrent proceedings can be justified.
6. On a fresh exercise of discretion, the grounding, salvage agreement, principal witnesses and parties had little or no connection with England. Factors favouring England, including the likely relevance of English law and connections of insurers and the P&I Club with the English market, were insufficient. The balance substantially favoured setting aside the English proceedings and service, leaving the Sri Lankan proceedings to determine the parties’ rights and liabilities.
7. Appeals on forum conveniens are rare, and appellate courts should show great deference to commercial judges. Once an appeal is properly before the court, however, it must correct an exercise of discretion based on wrong principles and exercise the discretion itself.

• Court of Appeal (Civil Division): Appeal allowed. The order permitting service out of the jurisdiction was set aside.
• High Court (Commercial Court): Mr A Marriott QC, sitting as a Deputy Judge, refused Prima’s application to set aside the order permitting service out of the jurisdiction: [2005] EWHC 3285 (Comm).
• High Court: Colman J had made the without-notice order permitting Galaxy to issue and serve the proceedings on Prima pursuant to CPR 6.20(5)(c) and/or CPR 6.20(6).