Dolphin Maritime & Aviation Services Ltd v Sveriges Angartygs Assurans Forening

For jurisdiction under article 5(3) of the Judgments Regulation, harm caused by the non-receipt of money occurs where the money ought to have been received. This differs from consequential financial loss felt at a claimant’s domicile after damage has occurred elsewhere.

A contractual direction that payment be made to an agent on its principal’s behalf does not, without language showing that benefit to the agent was a purpose of the bargain, confer an enforceable right under section 1(1)(b) of the Contracts (Third Parties) Act 1999. An incidental benefit, including security for the agent’s commission, is insufficient.

A cargo recovery agent acted for cargo underwriters following a maritime casualty. The defendant P&I club subsequently negotiated a settlement directly with the underwriters and paid US$8.5 million into their Turkish accounts.

The agent alleged that the direct negotiations and payment breached its terms of appointment. It claimed that the club had induced those breaches and participated in an unlawful means conspiracy. It also claimed a contractual right to enforce a letter of undertaking requiring the club to pay settlement money to the agent or to solicitors appointed by the underwriters.

The club applied to strike out the tort claims for want of jurisdiction under article 5(3) of the Judgments Regulation and sought summary judgment on the contractual claim under the Contracts (Third Parties) Act 1999.

1. The application to strike out the tort claims was refused. Article 5(3) of the Judgments Regulation conferred jurisdiction because the direct harm occurred in England. The agent had a well-arguable case that the underwriters were contractually obliged to procure payment of sums recovered directly into its English bank account. The club’s alleged wrongdoing caused the agent not to receive there the money which it should have received.

2. The place where economic loss is recorded or felt is not automatically the place where damage occurs. The court must identify where the event giving rise to liability directly produced its harmful effects upon the immediate victim. Where the complaint concerns non-receipt of money, the place where payment ought to have been received may be the place of damage. That conclusion was consistent with Handelskwekerij GJ Bier BV v Mines de Potasse d’Alsace SA [1978] 1 QB 708, Dumez France SA v Hashish Landsman [1990] ECR I-49, Marinari v Lloyd’s Bank [1996] QB 217 and Reunion Europeenne SA v Spliethoff’s Bevrachtingskantoor BV [1998] ECR I-6511.

3. On the proper construction of the agent’s standard terms, money obtained through a settlement negotiated directly by the client was not itself a “Recovery” obtained by the agent for clause 6.8. Clause 11.8 nevertheless required money recovered directly by the client, which would otherwise have comprised a Recovery, to be paid initially into the agent’s account.

4. Summary judgment was entered for the club on the contractual claim. A term does not purport to confer a benefit under section 1(1)(b) of the Contracts (Third Parties) Act 1999 merely because its performance improves a third party’s position. The contractual language must show that benefiting the third party was a purpose of the bargain rather than an incidental effect.

5. The letter of undertaking prescribed a means by which the club could discharge its obligation to the underwriters. Payment was to be made to the agent or appointed solicitors on the underwriters’ behalf. The intended beneficiaries were the underwriters, not the possible agent payees. The agent’s ability to deduct commission did not transform the payment direction into a promise intended to benefit it.

6. Alternatively, the commercial context showed for section 1(2) that the parties did not intend the payment provision to be enforceable by the agent. It was unrealistic to suppose that they intended to prevent themselves from agreeing upon direct payment to the underwriters.

not stated in the judgment.