The Power Of In Rem

• Published date: 23 June 2021
• Subject Matter: Insurance, Transport, Marine/ Shipping, Insurance Laws and Products
• Law Firm: Quadrant Chambers
• Author: Tom Bird

OVERVIEW

Tecoil Shipping Ltd v Neptune EHF [2021] EWHC 1582 (Admlty)

This decision considers the effect of an in rem judgment in subsequent in personam proceedings.

The Facts

The proceedings arose out of a collision in July 2018 between two ships, the "POSEIDON" and the "TECOIL POLARIS". The claimant ("Tecoil") was the owner of the "TECOIL POLARIS'. The first defendant ("Neptune") was the owner of the "POSEIDON". The "TECOIL POLARIS" was at berth in Hull when the "POSEIDON" crashed into her. Neptune had never disputed liability for the collision.

After the collision, Neptune's insurers ("the Insurers") issued a letter of undertaking ("the LOU") which provided:

"IN CONSIDERATION of your releasing and/or refraining from arresting or re-arresting at any time hereafter or otherwise detaining the 'POSEIDON' or any other vessel or property in the same or associated ownership, management, possession or control for the purpose of obtaining security in respect of your claim arising out of the above collision we hereby undertake to pay you on demand such sum or sums as may be due to you from the owners of the 'POSEIDON' in respect of your said claim either by agreement between the parties hereto or by the final unappealable judgment of the English Courts, provided always that our total liability hereunder inclusive of interest and costs shall not exceed the sum of US$200,000."

In June 2019 Tecoil commenced in rem proceedings against the "POSEIDON". No acknowledgement of service was filed and Tecoil applied for judgment in default. The application required evidence proving the claim to the satisfaction of the court and a public hearing of the application in open court. The hearing took place before the then Admiralty Registrar, Mr Jervis Kay QC, who gave judgment on 24 February 2020 ([2020] EWHC 393 (Admlty)). He awarded Tecoil EUR124,462 and £119,033 plus costs assessed at £105,584.50 (a grand total of around US$525,000).

The Insurers made it clear that they were not intending to make payment under the LOU on the ground that it did not respond to an in rem judgment. Tecoil issued an in personam collision claim against Neptune seeking substantially the same relief. Tecoil joined the Insurers as defendants to these proceedings.

Tecoil applied for and obtained judgment against Neptune in default of an acknowledgment of service under CPR Part 12 in the same terms as the in rem judgment. It then made a demand under the LOU. The Insurers rejected the demand –...