International Commercial Bank p.l.c. v Insurance Corporation of Ireland p.l.c.

JurisdictionIreland
CourtSupreme Court
Judgment Date15 June 1989
Docket Number[S.C. No. 16 of 1989]
Date15 June 1989
International Commercial Bank plc v. Insurance Corporation of Ireland plc
International Commercial Bank p.l.c.
Plaintiff
and
The Insurance Corporation of Ireland p.l.c., Defendant, and The Meadows Indemnity Company Limited, Third Party
[S.C. No. 16 of 1989]

High Court

Supreme Court

Practice - Procedure - Joinder - Propriety of adding third party - Institution of proceedings - Order granting leave to serve third party out of jurisdiction - Whether court had jurisdiction to make order - Whether principles applicable to service of summons out of jurisdiction apply to service of third party notice out of jurisdiction - Whether third party is a proper party within the meaning of O. 11, r. 1 (h) of the Rules of the Superior Courts, 1986 - Whether provisions of O. 11, r. 1 (h) restricted to person who was a necessary or proper party to the plaintiff's claim - Whether a party domiciled out of jurisdiction can be a proper party if the cause of action arose outside the jurisdiction - Whether third party a proper party if claim against it is not the same as that against defendant - Whether O. 11, r. 11 makes O. 11, r. 1 (h) applicable to third party notices - Whether falling within the rules relating to third party notices is sufficient for third party to be a proper party - Whether existence of pending foreign proceedings relating to the same cause of action should be taken into account - Fair procedures - Interests of justice with regard to third party proceedings.

Practice - Parties outside jurisdiction - Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, 1968, (1968 Convention) - Accession Convention, 1978 - Jurisdiction of courts and Enforcement of Judgments (European Communities) Act, 1988 - Whether Irish court is obliged to decline jurisdiction in third party proceedings because of pre-existing English proceedings - Whether art. 21 of 1968 Convention applies - Whether Court should decline jurisdiction where 1968 Convention is in force in England but not in Ireland at time of institution of Irish proceedings against third party - Whether institution of proceedings is to be defined by forum seized - Whether proceedings instituted by High Court order giving liberty to issue third party proceedings - Whether necessity to obtain liberty to serve out of jurisdiction delays date of institution of proceedings - Factors in deciding whether to grant a discretionary stay of third party proceedings - Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, 1968, arts. 21 and 54 - Accession Convention, 1978, art. 34 - Rules of the Superior Courts, 1986 (S.I. No. 15), O. 11, r. 1 and r. 11, O. 16, r. 1 - Jurisdiction of Courts and Enforcement of Judgments (European Communities) Act, 1988 (Commencement) Order, 1988 (S.I. No. 91) - Rules of the Superior Courts (No. 1), 1989 (S.I. No. 14), paras. 3 and 4 - Jurisdiction of Courts and Enforcement of Judgments (European Communities) Act, 1988 (No. 3).

Order 16, r. 1 (1) of the Rules of the Superior Courts, 1986, provides inter alia that the court may give leave to issue and serve a third party notice where a defendant in an action claims against any person not already a party to the action that he is entitled to a contribution or indemnity. Order 11 of the Rules of the Superior Courts, 1986, sets out the circumstances in which service of a summons out of the jurisdiction may be granted. Order 11, r. 1 (h) provides that leave to issue a summons out of the jurisdiction may be granted when "any person out of the jurisdiction is a necessary or proper party to an action properly brought against some other person duly served within the jurisdiction". Order 11, r. 11 provides that O. 11 shall apply "so far as practicable and applicable, to proceedings whether instituted by originating summons or in some other manner, and to any order or notice in any such proceedings".

The plaintiff lent 11.5 million Swiss francs to a company called Amaxa A.G. and at the same time entered into a "credit guarantee insurance agreement" with the defendant by which the defendant agreed to insure the risk of default by Amaxa in repaying the loan. The defendant entered into a contract of reinsurance in respect of its potential liability to the plaintiff with the third party, which was incorporated in Guernsey. The three contracts were made in London on the 9th February, 1984. When Amaxa defaulted the defendant refused to pay the sum insured to the plaintiff on the grounds inter alia of misrepresentation and non-disclosure by the plaintiff in relation to the security for the risk undertaken. The plaintiff issued a summons on the 1st September, 1987, against the defendant who then claimed a full indemnity as against the third party. The defendant was given liberty by the High Court on the 2nd May, 1988, to issue a third party notice and serve it out of the jurisdiction. It was issued on the 14th June, 1988.

The third party brought a motion seeking to discharge the order of the 2nd May, 1988, on the ground that the court had no jurisdiction to make it under the Rules of the Superior Courts, 1986. It argued that the court had no jurisdiction to give leave to serve a third party notice out of the jurisdiction or to give leave to serve a summons seeking to enforce a contract of indemnity made outside the jurisdiction on a defendant whose registered offices were outside the jurisdiction.

In the alternative, the third party sought an order that the court should decline jurisdiction to hear the third party claim pursuant to the provisions of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, 1968, (the 1968 Convention) and the 1978 Accession Convention (which came into force in Ireland on the 1st June, 1988) on the ground that proceedings were instituted in England in relation to the same cause of action by the third party on the 7th October, 1987. It submitted that the Irish proceedings had been instituted on the 14th June, 1988, the date on which the third party notice had been issued and not on the 2nd May, 1988. The third party sought to rely on art. 21 of the 1968 Convention which provides inter aliathat:—

"Where proceedings involving the same cause of action and the same parties are brought in the courts of different Contracting States, any court other than the court first seised shall of its own motion decline jurisdiction in favour of that court."

The defendant argued that art. 21 of the 1968 Convention did not apply because art. 34 of the 1978 Accession Convention provided that the Convention would apply "to legal proceedings instituted . . . after the entry into force of this Convention in the State of origin . . ."

Held by Costello J., in refusing to discharge the order of the 2nd May, 1988, and in refusing to decline jurisdiction to hear the third party claim, 1, that the principles which apply to the service of an originating summons out of the jurisdiction, namely that (a) it can only be done pursuant to an express order of the court and (b) no service will be permitted unless the case falls within the specified cases set out in a rule of court, applied also to the service of third party notices out of the jurisdiction.

Shipsey v. British and South American Steam Navigation Co. [1936] I.R. 65 considered.

2. That O. 11, r. 1 (h) of the Rules of the Superior Courts, 1986, permitted the service of a summons on a party who was a foreign domiciliary even if the cause of action arose outside the jurisdiction and even if the claim against the foreign domiciliary was not the same as that against the Irish domiciliary provided that the foreign domiciliary could be regarded as a "proper party"to the plaintiff's action against the defendant. Order 11, r. 11 made this rule applicable to third party notices even if the defendant could not have instituted separate proceedings in Ireland against the third party.

McCheane v. Gyles [1902] 1 Ch. 287 distinguished.

3. That, in determining whether a party was a proper party to an action brought by the plaintiff against the defendant in this jurisdiction, it did not suffice to show that the claim against the foreign domiciliary fell within the rules relating to the issue of third party notices but it must be shown that it was proper in all the circumstances of the case to order service out of the jurisdiction of the third party notice.

4. That the existence of pending English proceedings in which the issues raised in the proposed third party proceedings were also to be litigated was an important factor in deciding whether it was proper to order the service of the third party notice on a foreign domiciliary but as the possible disadvantage which the third party might suffer had been self-inflicted (as it must have known when it instituted the English proceedings that it was likely to be sued in pre-existing Irish proceedings between the plaintiff and the defendant) and the possible disadvantage which the defendant might suffer could be very serious and not of its own making, the balance of conflicting interests lay in favour of the defendant.

5. That art. 21 of the 1968 Convention which would have obliged the court to decline jurisdiction did not apply because art. 34 of the 1978 Accession Convention provided that the 1968 Convention did not apply to legal proceedings instituted before it entered into force and as this had occurred in Ireland on the 1st June, 1988, it had not been in force on the 2nd May, 1988, when liberty to issue and serve the third party notice had been given.

6. That the institution of proceedings was to be defined by the law of the forum seised and by Irish law the proceedings had been instituted by the order giving liberty to issue and serve the third party notice on the 2nd May, 1988.

On appeal by the third party it was

Held by the Supreme Court, (Finlay C.J., Griffin and McCarthy JJ.) in dismissing...

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