ST Shipping And Transport Pte Ltd & Ors v Space Shipping Ltd & Anor (Rev 1)

A stakeholder claim may proceed under Civil Procedure Rules 1998, Part 86 where the stakeholder faces competing claims to a debt, even though one claim arises from an arbitration award and another is pursued in foreign proceedings. The relevant question is the nature and effect of the asserted attachment, not the forum in which the claim is made. A foreign attachment intended to preserve assets may amount to a competing claim where it operates quasi in rem against the debt. Once that attachment has been vacated and is unenforceable, the court may direct payment to the party with the only existing enforceable claim. The stakeholder and other parties are protected by the order, which may give rise to res judicata or estoppel. Any undisputed judgment debt may be paid first by interim third-party debt order, with the balance paid to the award creditor.

The claimants were time charterers and related stakeholders concerning sums payable under arbitration awards arising from the detention of the vessel CV STEALTH. The defendants were the disponent owners and registered owners. The registered owners had obtained a Rule B attachment order in Connecticut in support of claims against the disponent owners. The order purported to attach debts owed by the charterers to the disponent owners, but it was later vacated and a stay was refused.

The charterers paid approximately US$6.4 million into court and sought stakeholder relief. The issues were whether the claim fell within Civil Procedure Rules 1998, Part 86, whether the registered owners’ attachment constituted a competing claim, whether payment should be withheld pending the foreign appeal, and how registered judgment debts should be dealt with.

1. Stakeholder jurisdiction. The stakeholder claim was properly issued under Civil Procedure Rules 1998, Part 86. Although “claim” ordinarily envisages proceedings before the English court, the context of Part 86 requires a broader construction. Competing claims may be pursued in arbitration or foreign proceedings. Otherwise the rule would contain a lacuna. An arbitration award does not prevent the award creditor from being treated as having a claim where judgment has not been entered.
2. Foreign attachment. The Rule B attachment could constitute a competing claim because its nature and effect were quasi in rem. It purported to attach the debt owed by the charterers to the disponent owners. The analogy with a freezing order was therefore limited. The court relied on the proprietary character of a garnishee or third-party debt order explained in Société Eram Ltd v Cie Internationale de Navigation [2004] 1 A.C. 260 and Kuwait Oil Tanker Co SAK v Qabazard [2004] 1 A.C. 300.
3. Payment from the stakeholder account. The Connecticut attachment had been vacated, no stay had been granted, and it was presently unenforceable. The disponent owners therefore had the only existing enforceable claim to the debt. The court rejected the argument that payment should await the foreign appeal. The registered owners were parties to the stakeholder claim and would be bound by the order; it would be unconscionable for them to pursue the charterers again in respect of the same debt. This supplied the protection contemplated by De La Rue v Hernu, Peron & Stockwell Ltd [1936] 2 K.B. 164.
4. Third-party debt orders. The registered owners’ undisputed registered judgment debts were to be paid from the stakeholder account under an interim third-party debt order pursuant to Part 72.4. The balance was to be paid to the disponent owners, avoiding further costs.