Tavoulareas v Tsavliris & Anor [2005] EWHC 2140 (Comm)

[2005] EWHC 2140 (Comm)Case No 2001 Folio 12552004 Folio 675
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 12/10/2005
Before
MR JUSTICE ANDREW SMITH
Between
PETER TAVOULAREASClaimant(1) GEORGE TSAVLIRISDefendants(2) ANDREW TSAVLIRISDefendantand between
Between
PETER TAVOULAREASClaimantALEXANDER G. TSAVLIRIS AND SONS MARITIME COMPANYDefendantMR PHILIP SHEPHERD QC (instructed by Messrs. Howe & Keates) for ClaimantMR PETER IRVIN (instructed by Constant & Constant) for DefendantsHearing Hearing dates: 18 May 2005 and 25 July 2005.
JudgmentMr JUSTICE ANDREW SMITH:
[1]I have before me applications in two actions brought by Mr Peter Tavoulareas. The first action is against two brothers, Messrs George and Andrew Tsavliris. Two companies with which they are associated, A G Tsavliris and Sons Maritime Company and Tsavliris Salvage International Limited, are also named as defendants on the claim form in that action, but the proceedings have never been served on the companies. In this action Mr. George Tsavliris, the first defendant, has applied to set aside a judgment entered against him in default of acknowledgment of service on 17 January 2002. (When I simply refer to Mr Tsavliris in this judgment, I am referring to Mr George Tsavliris.) The defendant in the second action is Alexander G Tsavliris and Sons Maritime Company (“AGT Co”), a Greek company. AGT Co have brought an application challenging the jurisdiction of this court over the proceedings.

The factual background

[2]In order conveniently to explain the factual background to the dispute, I set out part of a judgment given by Mr Justice David Steel in the first action on 8 December 2004, [2004] EWCA 3400 (QB). “The background to this dispute is very unusual. The claimant is in the ship owning business, and through a one-ship company called Atlas Marine Maritime Limited, he is effectively the beneficial owner of a tanker called Atlas Pride. The defendants are companies and/or personnel associated with a well-known salvage group, which I will call for short “Tsavliris”. “In August 1991, that is to say some 13 years ago, the Atlas Pride suffered a casualty off the coast of South Africa. I am told that her bow fell off. At the end of the month, a Lloyd’s Open Form Salvage Agreement was concluded between Tsavliris (for the moment I will not distinguish between the various companies within the group) and the shipowners. “Shortly thereafter, what I shall euphemistically call “arrangements” were entered into between the Tsavliris’ interests and the shipowners. The documentation relating to those arrangements are threefold. Firstly, a letter dated 3 September 1991 on Tsavliris’ notepaper addressed to Mr Alexatos, who I understand to be one of the principals in the shipowning company, headed “Atlas Pride – Heavy Weather Damage”, the document reads:
“We confirm that upon receipt of the salvage award or amicable settlement proceeds, we shall pay to you or your nominees the amount of 38% of the amount so received in the same currency, after first deducting relevant legal fees and other expenses and the cost of subcontracting equipment or services, provided the cost will not exceed 25% of the gross amount”
. There is then a further provision allowing for the position where the expenses are greater. That is signed on behalf of Tsavliris by a Mr Constantinides, a Managing Director. “At face value this is a remarkable agreement because it seems to involve the salvors agreeing simply to share the salvage award, and a very substantial proportion of it, with the shipowners. “Associated with this document is another more obscure document. Again it refers to the Atlas Pride, it is on Tsavliris’ notepaper, it is signed by Mr Constantinides, and it reads:
“We confirm the amount of the freight for the Alsama Alabama…” (I understand a vessel into which some of the cargo was transhipped): “…as well as the funds for the repairs, for which there will be the same facility. It shall be paid back to you normally as soon as the money is collected from the award.” “Again, this is an unusual agreement (if it reflects one) in which somehow the freight for the lightening vessel, which perhaps was going to be paid by the shipowners, would be reimbursed out of the salvage award, but also that repair costs would receive the same treatment, repairs presumably to the vessel. Notably, the original document has a notation on it, which I do not believe we have focused on during the course of argument, referring to “Algamin Bank Netherlands NV” and a bank account at that bank held by Tango Investment Holding Corporation, another company in the Tsavliris group. “The third document which emerged in or around this time, is dated 30 September 1991, again on Tsavliris’ notepaper and again apparently signed by Mr Constantinides. It is addressed to the board of directors of McHugh Investments Limited, care of Atlas Maritime, and reads: “We, A G Tsavliris hereby acknowledge we owe you the sum of $748,000 with which you have facilitated us upon our request to meet expenses relating to salvage and transhipment of the Atlas Pride and we confirm we shall repay the money to you, as well as any additional money you may loan us for the same reason immediately and unconditionally out of the salvage award relating to the Atlas Pride”. “It appears that in June 1993, some considerable time after the completion of the salvage services, an assignment was entered into by the claimant in favour of Banque Indosuez in Paris. Notice of that assignment purporting to be under an unidentified loan agreement but certainly relating to advances made in respect of costs incurred in regard to the salvage of the Atlas Pride was given to Tsavliris…. “A month later the salvage award was published. It made an award in favour of Tsavliris of a very substantial sum in excess of US$7 million. Given the nature of the casualty, I would regard it as likely that the vast bulk of the award was against the cargo interests.”

English Proceedings

[3]On 7 November 2001 Mr. Tavoulareas brought what I have referred to as the first action, action 2001/1255, in which he claims US$794,232.24 as the balance outstanding under the loan agreement. (I refer to this as the first action although in February 1998 Mr Tavoulareas had issued proceedings in the Admiralty Court against Mr Tsavliris, his brother Andrew and three companies with which their family is apparently associated, claiming that he was entitled to some US$808,000 in respect of funding the salvage under the arrangements described by Mr Justice David Steel. However, the Admiralty court proceedings were not served and the writ expired.)[4]On the next day, 8 November 2001, Messrs George and Andrew Tsavliris, their brother Mr Nicholas Tsavliris and four companies apparently associated with them issued proceedings in Greece, seeking a declaration that they were not liable to repay money in respect of the Atlas Pride and her salvage.[5]Mr Andrew Tsavliris was served with the first English action on 23 November 2001, and on 21 December 2001 he issued an application challenging the jurisdiction of the English court. Mr. Tsavliris was served on 24 December 2001. He failed to acknowledge service and on 17 January 2002 a default judgment was entered against him. On 15 April 2002 he applied for the judgment to be set aside and also, like his brother, challenged the jurisdiction of the English court.[6]Those applications came before Mr. Justice Tomlinson in January 2003. On 21 March 2003 he delivered his judgment, concluding that the First Instant Court of Piraeus (to which I shall refer as “the Greek court”) was first seised of proceedings involving the same cause of action and between the same parties, and therefore under article 21 of the Brussels Convention he stayed the first action. He also set aside the judgment against Mr Tsavliris.[7]Mr. Tavoulareas appealed against that judgment, and on 5 February 2004 the Court of Appeal reversed the order of Tomlinson J. on the basis that the Greek court was not definitively seised of its proceedings before the English court was. The order of the Court of Appeal was as follows:
“It is hereby declared that the High Court of England and Wales was the court first seized of these proceedings between the claimant and the first and second defendants in respect of the matters in issue in claim 2001/1255 within the meaning of article 21 of the Brussels Convention by service of the claim form in the proceedings on the first defendant on 24 December 2001”
. It was also ordered that the default judgment against Mr Tsavliris be restored without prejudice to his right to apply to set the judgment aside on grounds other than jurisdiction.[8]The Court of Appeal had to consider when, for the purposes of determining priority under the Brussels Convention, the English court and the Greek court were seised of the proceedings before them. The English proceedings were validly served upon Mr Tsavliris on 24 December 2001, and the English court was seised of the first action on that date. As for the Greek proceedings, in light of the decision of the European court in Zelger v Salinitri, (Case 129/83) [1984] ECR 2397, the question when the Greek court was seised depended upon when the requirements for the proceedings to become definitively pending were first fulfilled, and that was to be determined in accordance with the national law of Greece and in light of Council Regulation (EC) No 1348/2000. It was held that the Greek court was not definitively seised until service was effected in accordance with the Regulation, or possibly when Mr Tavoulareas obtained notice of the proceedings in such time as to enable him to defend them. I shall have to consider further the full effect of the judgments of the Court of Appeal, and in particular that of Mance LJ, but it was concluded that the Greek court was not seised until, at the earliest, 31 December 2001, that is to say after the English court was definitively seised.[9]Mr Tavoulareas asked the Court of Appeal to make an anti-suit injunction to restrain the pursuit of the Greek proceedings. The defendants indicated that they had it in mind to petition the House of Lords for leave to appeal, and the Court of Appeal declined to make an injunction, indicating that any application should be made to the Commercial Court. In the event, no petition for leave to appeal was presented, but no application for an anti-suit injunction was made. On 27 April 2004 the European Court of Justice delivered the judgment in Turner v Grovit [2004] Lloyd’s Rep 169, establishing that an anti-suit injunction in respect of proceedings in other member states should not be made.[10]On 16 August 2004 Mr Tavoulareas brought what I have called the second action against AGT Co. The claim is that Mr Tsavliris made an agreement on behalf of himself, Mr Andrew Tsavliris and AGT Co that he and Mr Andrew Tsavliris would repay on demand the funds advanced in respect of the salvage together with interest after the collection of funds under any Lloyd’s Open Form Salvage Agreement, and that US$3,454,490 is due to him thereunder.[11]The second action was served on AGT Co on 18 August 2004. While in their evidence AGT Co initially appeared to challenge the validity of the service, this challenge was fully answered by a witness statement dated 3 November 2004 of Mr A J Keates, Mr Tavoulareas’ solicitor, and this point is not pursued.

The Greek proceedings

[12]On 8 November 2001 proceedings were brought in the Greek court by the claimants to whom I have referred. The named defendants were Mr Tavoulareas and two companies, but in fact the two companies, Kastalia Shipping and Trading Inc and Mercur Investments Limited, had ceased to exist before the Greek proceedings were issued.[13]The document filed with the Greek Court to initiate the proceedings stated that Mr Tavoulareas was resident in London at an address in Regent’s Park which he had left in 1992 (if not earlier). In fact, he was then resident in Florida. However, Mr Tsavliris contends that this is irrelevant to the status of the Greek proceedings because the proceedings were served on the relevant public prosecutor in Greece, apparently on 19 November 2001, in order for him to set in train the steps required to ensure that the proceedings were served upon Mr Tavoulareas. There is no reason to suppose that the proceedings served on the public prosecutor ever reached Mr Tavoulareas (see the judgment of Mance LJ in the Court of Appeal at para 5), but it is not in dispute that he did learn of the existence and nature of the Greek proceedings: his English solicitor became aware of them on 28 December 2001 when he received a copy of an application in the first action to contest the jurisdiction, and Mr Tavoulareas himself became aware of them on 31 December 2001.[14]On 27 December 2002, Mr Tavoulareas served a pleading in the Greek proceeding in which he disputed both the merits of the claim and the jurisdiction of the court. It included a “plea of pendency”, relying upon the first action in this court which he said had been brought against “the plaintiffs” on 7 November 2001 and legally served on “the plaintiffs”. This pleading was served following a hearing in the first action on 25 November 2002 before Gross J when it became clear that the applications of Messrs Tsavliris challenging the court’s jurisdiction could not be heard before 17 January 2003: Gross J directed that the parties take the necessary steps to have the hearing in Greece adjourned, and, as I accept on the evidence before me, in order for the Greek court to entertain such an application, it was necessary for Mr Tavoulareas to present a brief in the Greek proceedings. This was the only occasion upon which Mr Tavoulareas participated in the Greek proceedings: it is his contention that he simply instructed a lawyer to appear at what was effectively a consent hearing for an adjournment.[15]On 17 January 2003 the hearing in the Greek proceedings was therefore adjourned pending the outcome of the applications that were being heard by Tomlinson J. The Tsavliris interests did not bring those proceedings to an end after the Court of Appeal had made their order. Indeed on 25 May 2003 their solicitors wrote (without mentioning that Mr George Tsavliris and Mr Andrew Tsavliris were claimants in the Greek proceedings) that “Our clients have no authority to discontinue the proceedings in Greece. They are not directors neither do they hold controlling shareholding interests in the companies that are the Claimants in those proceedings”.[16]The claim in the Greek proceedings was heard on 28 September 2004. The court was informed that the first action in this court had been “filed” (as it is put in the translation in evidence before me) on 7 November 2001, and that the second action had been filed “Just a short while ago”. In a further pleading dated 28 September 2004 it was asserted that the “objection of “lis pendens” which is put forward by [Mr Tavoulareas] is unfounded and should be rejected, since the requirements provided for by the law are not met for establishing the existence of “lis pendens””. However, the Greek court was not informed of the decision of the Court of Appeal, nor that Mr Andrew Tsavliris had served a defence in the English proceedings and that Mr Tsavliris had applied to set aside the default judgment with a view to defending them.[17]The Greek claimants were represented at the hearing by Mr G Albouras, who is a Greek Attorney at Law. Mr Tavoulareas did not appear and was not represented. It appears from an account of the hearing in evidence before me that Mr Albouras informed the Court that, since the defendants to the Greek proceedings had not filed appearances before the Court, the Claimants did not propose to call oral evidence and relied upon their written pleading. The President of the Court declared that the case “was discussed”.[18]The Court’s decision was published on 22 October 2004, and it was in favour of the Tsavliris claimants. Remarkably, however, according to the evidence of Mr Albouras, they did not come to know of the decision until after the hearing before David Steel J on 8 December 2004. (It is the more remarkable because Mr Peter Irvin, who represents Mr Tsavliris, told David Steel J on 8 December 2004, “They have had the substantive hearing and they are waiting for the judgment. I have taken instructions very recently that that is the position.”)

The applications

[19]By a notice dated 15 September 2004 Mr Tsavliris applied in the first action for an order that the judgment dated 17 January 2002 be set aside. The application is supported by a witness statement made by his solicitor, Mr J W Dickinson, a partner in the firm of Constant & Constant, in which he explains in broad terms the defences to the claim that Mr Tsavliris wishes to advance, and the delay in bringing the application. In his statement Mr Dickinson contends that the judgment was irregular in that the papers served on 24 December 2001 were addressed to Tsavliris Salvage International Limited, the fourth defendant, but that point has not been pursued. It has not been suggested that Mr Tsavliris is entitled to have the judgment set aside ex debito justitiae.[20]In the second action, by a notice dated 4 October 2004, AGT Co have applied for a declaration that the court has no jurisdiction over AGT Co and for an order that the claim form and its service be set aside.

The hearings before David Steel J

[21]These applications came before David Steel J on 8 December 2004. Starting with the application in the first action, he first heard argument about whether the application should be refused regardless of the implications of the decision of the Court of Appeal and the Greek proceedings. He decided in a judgment given on 8 December 2004 that the points raised by Mr. Tsavliris afforded sufficient defence for the judgment to be set aside.[22]Upon the question whether the judgment should be set aside on the condition that security for the claim be provided, David Steel J said this:
“Leaving aside the question of the impact of the Court of Appeal judgment, I have not forgotten that it would be appropriate to give consideration to the additional term which the claimant’s solicitors thought it was appropriate to seek to impose as a condition for setting aside the default judgment, namely the posting of security for the claim by a payment into court. I am not persuaded that delay is the sort of justification for requiring a payment into court. Either the delay is so damaging as to justify refusal of relief, or, if it is not, it does not seem to me to be a justification for imposing a term for payment in if the position is that, so far as the first defendant is concerned, there is and remains a real prospect of successfully defending the claim. Accordingly, I would not impose that condition. Accordingly, and again entirely without prejudice to a review of the outcome in the light of further argument relating to the significance of the Court of Appeal decision and the continuing existence of proceedings as between the same parties in Greece, I would give the first defendant the relief he seeks, namely that this judgment, which was obtained by default, be set aside.”
[23]David Steel J then went on to hear argument about the significance of the Court of Appeal decision and the Greek proceedings. Mr Philip Shepherd QC, who represents Mr Tavoulareas, argued that this Court should ensure that the decision of the Court of Appeal that the English Courts were first seised of the proceedings is not undermined, and should therefore either decline to exercise its discretion to set aside the judgment or decline to do so in the absence of an appropriate undertaking with regard to discontinuing the Greek proceedings.[24]In response to this argument, Mr Irvin on behalf of Mr George Tsavliris made the following submission, as it is summarised in a judgment of David Steel J given on 9 December 2004, [2004] EWHC 3390: first, that Mr Tavoulareas had applied for an anti-suit injunction to the Court of Appeal when the Court handed down their judgment, but, Mr Tsavliris expressing a wish to petition the House of Lords for leave to appeal, the Court declined to consider the application. However, Mr Tavoulareas did not apply for an injunction when no petition was presented. Secondly it was said that Mr Tavoulareas had in fact participated in the Greek proceedings, and it was open to him to deploy the Court of Appeal’s judgment in the Greek proceedings to prevent injustice.[25]These two arguments advanced by Mr Irvin did not, it appears, greatly impress David Steel J, who saw “great force” in the claimant’s submissions on these points. He said that it was understandable that an application for an injunction was not immediately pursued, given Mr Tsavliris’ expressed intention to petition for leave to appeal: in the absence of a successful appeal, it might reasonably have been inferred, the Greek proceedings would be abandoned. As for Mr Tavoulareas participating in the Greek proceedings, David Steel J said that the material before him did not enable him to determine whether he had done so in any significant way, and such material as was before him suggested that “at least he was involved for the purpose of ensuring that the hearing in January 2003 in Greece was adjourned pending the outcome of the jurisdiction application in England”. However, the principal argument that Mr George Tsavliris deployed was based upon the decision of the European Court in Turner v Grovit, [2004] 2 Lloyd’s Reports 169, and I shall refer to this argument later in my judgment.[26]David Steel J was, however, concerned that the Greek court had been in ignorance of the English proceedings, and in particular had not been made aware of the orders of either Tomlinson J or the Court of Appeal, and concluded his judgment in the following terms:
“It is clearly consistent with the principle of mutual trust that the Greek court should be informed of the Court of Appeal judgment as soon as possible. Whilst I am minded … to set aside the judgment on its merits and to do so without the requirement that money be posted in court, what I am proposing at this stage is to make an order that before the default judgment be set aside that there be a stay of that order for two months. In the meantime, the defendant must immediately notify the court by letter in English and Greek of the judgment and of its outcome, the letter to be drafted by counsel and copied to the court. That must be despatched within seven days. Secondly, the first defendant must take steps to obtain a translation of the judgment of the Court of Appeal and its order, again, as I provisionally conclude, for despatch to the Greek court, within 28 days. This matter should be restored before me on 14 January 2005 for further review of the terms of this order in which will be included, if appropriate, considerations as to whether there should be a payment into court as a term of the order setting aside judgment.”
[27]No order was drawn up and signed by David Steel J following the hearing and judgment on 9 December 2004.[28]Before leaving the hearing on 9 December 2004, I should refer to this exchange between David Steel J and Mr Irvin in the course of argument:
“Mr Justice Steel: What is the ballgame here? You are trying to get an issue estoppel out of the Greek proceedings? What are we doing here? You are anxious to defend the claim in England. I understand that. Why are you anxious to pursue the declaration in Greece concurrently with it? Mr Irvin: I suspect because it may have an impact on any judgment, if there ever is to be a judgment in the English proceedings, that the Greek court may take into account… Mr Justice Steel: I am sorry, you will have to say that again. Mr Irvin: It may have an impact on the enforcement of any judgment in Greece. Mr Justice Steel: You will have to explain that. I am not following. Mr Irvin: If there is an English judgment. Mr Justice Steel: Against the first defendant. Mr Irvin: Against the first defendant. Mr Justice Steel: Then what? Mr Irvin: He then has to enforce it. Presumably he can enforce it in England, so the Greek proceedings would have no effect. Mr Justice Steel: Quite. Mr Irvin: But if he is trying to enforce it in Greece, it may have an effect. It is as simple as that. Mr Justice Steel: It is the latter point that I am not following. What is the point of the Greek proceedings vis-à-vis enforcement against the first defendant? Mr Irvin: Because if the Greek court has held that there is in fact no liability, it might well be difficult to enforce a judgment based on liability, although there is going to be a clash between… Mr Justice Steel: That is the point. You want an inconsistent decision. Is that the point? Mr Irvin: That might well be. If the Greek court decides that it does have jurisdiction, it has got Mr Tsavliris’ submissions on that… Mr Justice Steel: We are here on the face of it, as Mr Shepherd says, it looks potentially abusive to try and in a sense flush out some inconsistent decisions by running parallel actions in two different jurisdictions. That indeed appears to be the purpose of the exercise.”
[29]I have set out this exchange at length because Mr Shepherd relied upon it in argument before me as providing evidence, by way of an admission, about why the Greek proceedings were brought. Mr Irvin explained to me that he was addressing Mr Justice Steel by way of submissions about the inference to be drawn about why they were brought and was not speaking on the basis of instructions from his clients. In fairness to Mr Irvin, I should say that this seems to me to be reflected in his phraseology (“I suspect…”; “That might well be”), but in any case I should, of course, have accepted this statement from him. The position remains that there is no specific evidence as to the purpose of the Greek proceedings, and Mr Irvin’s suggestion remains the obvious one.[30]After the hearing on 9 December 2004 there was a little delay before agreement was reached upon the draft of the letter to be sent to the Greek court, and the time for sending it was extended to 20 December 2004. Before it was sent, Mr Tsavliris, or his advisers, learned of the judgment of the Greek Court. On 20 December 2004 the letter and a copy of the Court of Appeal decision in English were left at the Greek court with a porter shortly before 4.00pm, the court office being closed. They were sent to the court by fax on 23 December 2004. Mr Tsavliris declined to obtain a translation of the Court of Appeal judgment despite the order of David Steel J. The reason given for this decision was that since the Greek court would not review its judgment of its own motion, the costs of doing so would be disproportionate.[31]The matter came back before David Steel J on 14 January 2005. It was accepted on behalf of Mr Tsavliris that he had not complied with the orders of December 2004 about supplying the Greek court with a translated copy of the judgment of the Court of Appeal, and that the judgment in default had not been set aside by the rulings already made. David Steel J ordered that Mr Tsavliris use every best endeavour to ensure that the letter of 17 December 2004 and other documents including a translation of the Court of Appeal decision be brought to the attention of the Greek judges, and adjourned the application to set aside the default judgment. The application in the second action was also adjourned.[32]A translation of the judgment of the Court of Appeal was in due course presented to the Greek Court. By a response dated 4 April 2005 the Greek Court stated, in a communication addressed to Messrs Constant & Constant, that the question whether the Court was aware of the Court of Appeal judgment was “legally unacceptable (since the Greek Civil Procedure provides for the way and the consequence of producing documents in the trial) and even more unacceptable is your application for the granting of a confirmation as to whether the Greek Court Judgment would be different if the Court had been aware of the English Court Judgment”.

The hearing on 18 May 2004

[33]When these applications came before me on 18 May 2004, I was unable to complete the hearing of either application. Copies of the judgments of David Steel J on 8 and 9 December 2004 on the first application were not available. As for AGT Co’s application, Mr Tavoulareas’ argument that this court has jurisdiction depends, as I shall explain, upon him being resident in London when the action was brought. This was neither admitted by AGT Co nor the subject to any evidence before the court. However, this question had not emerged as an issue before the hearing, and Mr Tavoulareas had given a London address on the claim form in the second action. I considered that I could not fairly determine the AGT Co’s application without Mr Tavoulareas being given the opportunity to put in further evidence.[34]By a witness statement dated 24 May 2005 Mr Tavoulareas gave evidence that in January 2004 he returned from Florida to live in London in January 2004, where has since lived. Specifically, he was living here when the second action was brought. AGT Co did not wish to cross-examine Mr Tavoulareas about this, and I accept his evidence. Indeed, I do not understand it any longer to be in dispute.

Mr Tsavliris’ application

[35]Mr. Tavoulareas now accepts that the judgment against Mr Tsavliris should be set aside, but he submits that the conduct of Mr. Tsavliris is such that it should be set aside only on condition that Mr Tsavliris provides security for the claim, together with interest and costs, and that, on this basis, the security should be in the sum of some US$ 1.1m or 1.2m.[36]In support of this submission, Mr Tavoulareas criticises the fact that the Tsavliris interests, and in particular Mr Tsavliris, have pursued the Greek proceedings, and the way that they have done so. First, relying on the judgment of the Court of Appeal, Mr Tavoulareas submits that the proceedings were never served upon Mr Tavoulareas, and that the claimants in Greece deliberately gave the Greek court an address for service in London, when they knew that when the Greek proceedings were brought, he had for many years resided in the United States. He relies upon this passage of the judgment of Mance LJ in the Court of Appeal ([2004] 1 Lloyd’s Rep 445 at para 3):
“The claimant resided at all material times in Florida. The document lodged with the Piraeus Court on Nov 8 2001 to initiate the Greek proceedings alleged that the claimant was resident in London, giving a Regent’s Park address where the claimant ceased to reside in 1992. He has lived in the United States since (at least) 1995. The claimant’s case is that the defendants knew that he lived in the USA. The claimant’s solicitor said this in a witness statement dated Mar. 28, 2002: ‘... I am informed by the plaintiff that he had corresponded with the defendants at an earlier time whilst he was resident in the United States and that they were fully aware of his residency there and not in London’. The defendant’s evidence does not deny this statement.”
[37]Secondly, Mr Shepherd refers to the information given (or not given) to the Greek court. He argues not only that the Greek court was misled about Mr Tavoulareas’ address, but also that, by failing to draw the decision of the Court of Appeal to the attention of the Greek court, Mr Tsavliris prevented the Greek court both from reading what Mance LJ had said about Mr Tavoulareas’ address and from learning what the English court decided about jurisdiction under the Brussels Convention.[38]Thirdly, Mr Shepherd emphasises that Mr Tsavliris continued the Greek proceedings despite the decision of the Court of Appeal, and submits that they are an abuse. Although it had been said in correspondence that Messrs George and Andrew Tsavliris had “no authority to discontinue the proceedings in Greece” (a statement which must, in my judgment, be regarded with great scepticism), it is obvious, and Mr Irvin acknowledged, that, whatever the position of the Greek corporate claimants, they could have dropped their own claims in the Greek proceedings. The purpose of Mr Tsavliris and the other claimants in Greece in bringing and pursuing the proceedings there is, Mr Shepherd submits, that which Mr Irvin stated to David Steel J, namely to frustrate the enforcement of any judgment obtained by Mr Tavoulareas in this court.[39]I do not think it necessary to decide on this application whether the wrong address was deliberately stated on the document instituting the Greek proceedings. Even if it was, in fact Mr Tavoulareas learned of the proceedings in good time to participate in them to the extent that he saw fit.[40]It appears from the evidence before me that Mr Shepherd’s second point is true so far as it goes, but I see force in Mr Irvin’s argument that Mr Tavoulareas could himself have drawn the decision of the Court of Appeal to the attention of the Greek court before they gave judgment. I am not convinced that there is any good reason that he did not do so, but I do not consider that the evidence about this is sufficient for this argument of Mr Irvin to be a satisfactory basis for my decision.[41]Mr Shepherd’s argument really, it seems to me, turns on his third point. Mr Tsavliris is asking the court to exercise its discretion to set aside the judgment on the grounds that, in order to do justice between the parties, the dispute should be adjudicated on the merits. I have already said that Mr Irvin’s statement to David Steel J is not itself evidence of the purpose of the Greek proceedings, but I would be prepared to accept in the absence of evidence to the contrary that their purpose was to provide an answer to the claim in these proceedings, by way of either a defence to them or an obstacle to enforcing any judgment obtained in them. Mr Irvin submits that (unless and until there is a successful appeal by Mr Tavoulareas) the Greek judgment is a conclusive answer to the claim in both the first and the second action, and that under EC Regulation 44/2001 articles 33 and 34 this court must recognise it. Mr Shepherd argues that the circumstances in which the Greek judgment was obtained means that articles 34(1) and 34(2) both provide an answer to this submission. It is not for me to decide on this application whether they do so.[42]I do not regard Mr Tsavliris’ purpose in prosecuting the Greek proceedings as the crucial question. The fact is by his conduct Mr Tsavliris has brought it about that it is the less likely that there will be an effective and enforceable judgment on the merits, and the fundamental question, as I see it, is whether in these circumstances it is appropriate for the English court to impose conditions upon setting aside the judgment so as to ensure that, if Mr Tavoulareas nevertheless pursues the litigation and succeeds in obtaining a judgment, the judgment will be met.[43]Mr Irvin argues that Mr. Tsavliris is not to be criticised, and other Tsavliris interests are not to be criticised, for prosecuting the Greek proceedings or for the manner in which they were prosecuted and in any event such criticisms would not be a proper reason for the court to impose conditions upon setting aside judgment. That power, he says, is to be exercised when justified by the merits of the underlying dispute, and not as a vehicle whereby the court expresses its disapproval of a party’s behaviour, or at least (as I understand he would argue) not of behaviour other than the conduct of the proceedings themselves. Moreover, even if, which Mr Tsavliris disputes, criticism were justified, it is submitted that it is not for the English court to assess the conduct of the Greek proceedings and whether it is appropriate: to do so would be contrary to the judgment of the European court in Turner v Grovit.[44]Mr Irvin was right, I think, to emphasise the importance of the decision in Turner v Grovit. The decision in that case was that the Brussels Convention precluded the grant of an injunction prohibiting a party to proceedings before it from commencing or continuing legal proceedings before the courts of another contracting state, even where the party is acting in bad faith with a view to frustrating existing proceedings. In so far as criticism of the conduct of the party involves an assessment that his conduct is abusive and “implies an assessment of the appropriateness of bringing the proceedings before the court of another Member State”, such an assessment would run contrary to the principle of mutual trust that underpins the Convention and should not be made: see para 28 of the Judgment. I therefore accept, despite the fact that the Greek court apparently reached its own decision without knowing about the decision and judgments of the Court of Appeal, that this court should not accede to Mr Tavoulareas’ argument in so far as it rests upon this court taking the view that the pursuit of the Greek proceedings was inappropriate or an abuse. In light of Turner v Grovit, that course could not be justified, even if the reason that it was taken was in order to defend the integrity of these proceedings.[45]This argument, it seems to me, has to be taken a step further because Mr Shepherd’s complaint is directed not only to the fact that the Greek proceedings were pursued, but also to the intention to deploy the Greek judgment in answer to these proceedings. I consider that it would run contrary to the reasoning of the European court to take the view that it would be inappropriate for Mr Tsavliris to deploy the judgment of the Greek court under article 26of the Convention or article 33 of the Regulation, and that this criticism of Mr Tsavliris’ apparent intention justifies the imposition of the condition for which Mr Tavoulareas contends. That too, it seems to me, would be inconsistent with the “mutual trust which has enabled a compulsory system of jurisdiction to be established”, a system that itself provides for the circumstances in which there should not be recognition. Indeed, to criticise the deployment of the judgment in the Greek proceedings in the manner contemplated by the Regulation does, I think, in reality, amount to an assessment that the proceedings themselves were inappropriate.[46]It seems to me that if I were to make my order setting aside the judgment of 17 January 2002 conditional upon the payment into court, I would, given the conclusions reached by David Steel J, implicitly be assessing the appropriateness of the Greek proceedings. In view of the judgment of the European court in Turner v Grovit, I do not consider it right for me to do so. However, quite apart from what was said by the European court, I would not regard the conduct of Mr Tsavliris as providing a proper basis for imposing a condition upon an order allowing Mr Tavoulareas’ claim being considered on its merits. I would accept Mr Irvin’s submission that the imposition of a condition such as that for which Mr Tavoulareas contends would not be justified by disapproval of Mr Tsavliris’ behaviour in the respects in which it is criticised.

AGT Co’s application

[47]AGT Co are a Greek company with a registered office in the Piraeus, and are not domiciled in England. Mr Tavoulareas brings a claim in England in the basis of article 5(1)(a) of the Brussels Regulation. AGT Co dispute the jurisdiction of the English court on two grounds. First, they dispute the English court has jurisdiction under article 5, denying that place of the performance of the obligation to pay is England and submit that it is Greece. Secondly, they say that the Greek proceedings were issued before these proceedings and this court should stay the second action.

Article 5

[48]Article 5 of the Brussels Regulation provides that “A person domiciled in a Member State may, in another Member State, be sued …in matters relating to contracts, in the courtsfor the place of performance of the obligation in question”. Mr Tavoulareas’ contention is that the place of performance of the obligation in question in the second action is England, and that therefore he is entitled to sue AGT Co in this jurisdiction.[49]AGT Co submit that the arrangement upon which Mr Tavoulareas relies is governed by Greek law. It is not suggested that there was express agreement upon the governing law, but they rely upon article 4 of the Rome Convention 1980 (as enacted by the Contracts (Applicable Law) Act 1990) and its provision that the governing law is that of the country with which the contract is most closely connected. It is presumed that the contract is most closely connected with the country where, in respect of a company, the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, its central administration, unless it appears from the circumstances as a whole that the contract is more closely connected with another country. AGT Co say that since they have their own central administration in Greece, the contract is governed by Greek law[50]This conclusion is challenged by Mr Tavoulareas. He says that the arrangement was negotiated and made in England, that the purpose of the money that he provided was to fund the salvage of a vessel under his control, that the salvage was under a Lloyd’s Open Form Salvage Agreement made and negotiated in London and that the salvage award was arbitrated in London. AGT Co themselves brought proceedings in the Admiralty Court in London in relation to the salvage.[51]The place of negotiation and conclusion of the agreements is controversial, and, like Tomlinson J (see para 11 of his judgment) I cannot resolve it on an application of this kind. In any event, however, it seems to me that there is a more fundamental objection to AGT Co’s contention that Greek law governs the agreement. The basis for the contention is that “the performance which is characteristic of the contract” is the repayment under the contract by AGT Co., but this does not properly reflect the pleaded case. Mr Tavoulareas’ pleaded allegation is that the agreement, entered into by AGT Co as well as Messrs George and Andrew Tsavliris, was “that [Messrs George and Andrew Tsavliris] would repay on demand and unconditionally the funds advanced”. This undermines the basis of AGT Co’s argument, which is that they themselves were to effect the re-payment, the performance that is characteristic of the contract. Both brothers, as appears from the evidence before me, have their main residences in England. If it were necessary to form a view about the governing law, I would conclude, for the purposes of determining the application, that it is English law.[52]However, it does not seem to me that the issue about the governing law is of real significance in this case. The statement of Professor Kerameus, who is a Professor of Civil Law (emeritus) and the Director of the Hellenic Institute of International and Foreign Law in Athens and whose evidence was served in support of AGT Co’s application, is that under Greek law “If the performance consists in the payment of money, the debtor is bound to make payment at the residence of the creditor at the time of payment”. If the claim arose in the course of the creditor’s business, his place of business is substituted for his residence. It makes no difference, according to Professor Kerameus, that the creditor is abroad: he said that if Mr Tavoulareas was resident in the United States at the relevant time, or as the case might be his place of business was there, that would be the place of performance. It does not seem to me that there is any significant difference about this between English law and Greek law.[53]Neither party asserts an express agreement about where the funding was to be repaid. Mr Dickinson gave evidence that Ms Adamopoulos of AGT Co informed him that the funding had been repaid in full, not in England but “through ABN-AMRO Bank, Piraeus, Greece and the National Bank of Greece, Piraeus, Greece, to the Chase Manhattan Bank, New York, United States of America”. Mr Keates disputes this, identifying 5 payments made to the account of Mr Tavoulareas’ then solicitors, Messrs Stephenson Harwood, in London and a further small payment to another account in London, but it appears that for the most part payments were made to New York. Whatever the position, I do not accept that the parties’ subsequent conduct affects the terms of the obligation about repayment or where it was to be made.[54]The claim made by Mr Tavoulareas is that AGT Co were liable under a contractual promise that the monies loaned would be repaid on demand. The place of payment depends upon where he, as creditor, resided when repayment was due, that is to say when the demand was made. Mr Tavoulareas’ case is that demand was made by the issue and service of the claim form, when he resided in London. AGT Co complain that there has been a shift in Mr Tavoulreas’ position: that it was previously said that the obligation to repay was unconditional rather than upon demand. However, for the purpose of considering whether there is jurisdiction under the Regulation, the court examines the claim made in the claimant’s pleading and not its merits. I conclude that Mr Tavoulareas has established that the English court has jurisdiction under article 5 of the Regulation.

Article 27

[55]It is therefore necessary to consider whether the proceedings should be stayed under the Regulation. AGT Co contend that the case is governed by article 27 and that this court is obliged to stay the proceedings. Article 27 provides as follows:
“1 Where proceedings involving the same cause of action and between the same parties are brought in the courts of different Member States, any state other than the court first seised shall of its own motion stay its proceedings until such time as the jurisdiction of the court first seised is established. 2. Where the jurisdiction of the court first seised is established, any court other than the court first seised shall decline jurisdiction in favour of that court.”
[56]It is a condition for the application of article 27 that the two proceedings both involve the same cause of action and are between the same parties. I do not understand it to be controversial that those conditions are satisfied. The claim in the second action is that AGT Co were party to a contract for the repayment of monies loaned by Mr Tavoulareas, and remain indebted under that contract. The claim in Greece was for a declaration that there was no outstanding debt. “[A]rticle 27 must be interpreted broadly so as to cover, in principle, all situations of lis pendens before the courts in Contracting States…” ([Overseas Union Insurance Ltd v New Hampshire Insurance Co., [1992] QB 434, 457 para 16), and both proceedings involve the same cause of action. The evidence of Mr Dickinson is that the parties to the two proceedings are the same, and this is not contradicted. Although in the English translation of the Greek proceedings which is in evidence, there is no party with the name “Alexander G Tsavliris and Sons Maritime Company”, I take it that this is simply a matter of translation and that the company is the first claimant, whose name is given as “Alexander G Tsavliris & Sons Shipping Co”.[57]The real question raised by Mr Shepherd in opposition to the application under article 27 is whether the English court is the court first seised. Mr Shepherd’s argument, based upon the judgment of the Court of Appeal, is that it is because the Greek proceedings have never been served. Mr Irvin does not seek to re-open the decision of the Court of Appeal in the first action and contend that the Greek proceedings were served for the purpose of article 21 of the Convention, but he responds to Mr Shepherd’s argument with two points. First, he says that the matter is governed by the Regulation and therefore article 30 of the Regulation applies, and so service of the Greek proceedings is beside the point. Secondly, he submits that even if the question when the Greek court was seised is determined by the Brussels Convention and not by the Regulation, the Greek court was seised before the second action was brought on 16 August 2004.[58]Article 30 of the Regulation provides as follows:
“For the purposes of this Section, a court shall be deemed to be seised: (1) at the time when the document instituting the proceedings or an equivalent document is lodged with the court, provided that the plaintiff has not subsequently failed to take all steps he was required to take to have the service effected on the defendant, or (2) if the document has been served before being lodged with the court, at the time when it is received by the authority responsible for service, provided that the plaintiff has not subsequently failed to take the steps he was required to take to have the document lodged with the court.”
[59]Under this provision, this court was seised of the second action when the claim form was issued on 16 August 2004. The first issue between the parties is whether the question when the Greek court was seised of the Greek proceedings is governed by Regulation 30 or by the Brussels Convention.[60]The Brussels Regulation came into force on 1 March 2002. Article 66 of the Regulation is in Chapter VI, which is headed “Transitional Provisions”. It provides as follows:
“1. This Regulation shall apply only to legal proceedings instituted … after the entry into force thereof ” 2. However, if the proceedings in the Member State of origin were instituted before the entry into force of this Regulation, judgments given after that date shall be recognised and enforced in accordance with Chapter III…”
[61]Mr Shepherd submits that the effect of this provision is that, while for the purposes of applying article 27, the time that the English court was seised is determined in accordance with the Regulation because the English proceedings were instituted after 1 March 2002, the Regulation is irrelevant for determining the time when the Greek court was first seised because the Greek proceedings were started before 1 March 2002. I am unable to accept this submission. The question on this application is whether this court is a “court other than that first seised” for the purposes of article 27, and that question arises in proceedings instituted after the Regulation comes into force. The determination of that application does not directly require the court to decide when the Greek proceedings were “instituted”, but rather when the Greek court was seised of the Greek proceedings (and potentially for that purpose, if article 30 applies, when the document instituting them was lodged with the Greek court). Although the point is, I am told, one upon which there is no authority and I have not found it entirely easy to resolve, it seems to me that the deeming provision in article 30 applies to all questions within proceedings to which the Regulation applies. It follows that the time when the Greek court was seised of the Greek proceedings is to be determined in accordance with article 30 of the Regulation.[62]Article 30 provides that the Greek court is deemed to be seised of the Greek proceedings when they were instituted on 8 November 2001, unless the proviso in article 30(1) applies because the claimants in the Greek proceedings have “subsequently failed to take the steps [they were] required to take to have service effected on” Mr Tavoulareas. The Greek claimants gave the Greek court the wrong address for Mr Tavoulareas, but, even if this is to be characterised as a failure to take steps to have service effected, it cannot be regarded as a failure subsequent to the lodging of the document instituting the proceedings with the court. This cannot bring into play the proviso to article 30(1)[63]Even if I had accepted Mr Shepherd’s submission with regard to the interpretation of article 66, it does not follow that the English court was first seised. Mr Shepherd relied upon the conclusion of the Court of Appeal that the Greek proceedings were not served under Council Regulation (EC) No 1348/2000. The Court of Appeal did indeed so decide, and Mr Irvin does not question that. However, AGT Co rightly say that this application raises a question that was not decided by the Court of Appeal.[64]The Court of Appeal did not decide that service was necessarily required in order for the Greek court to be seised. Mance LJ, with whose judgment Evans-Lombe J agreed, said this (loc cit at para 37):
“I therefore conclude that, for the purpose of deciding whether the Greek courts were definitively seised of the Greek proceedings, the appropriate conclusion, having due regard to both Greek procedural rules and the Regulation, is that they were not definitively seised unless and until either (a) service was effected in accordance with the Regulation or (b) (at the very least) the claimant (the Greek defendant) obtained notice of the Greek proceedings in such time as to enable him to defend them. I have put the alternative introduced by (b) in the most favourable way in which it can be put from the English defendants’ viewpoint. It is unnecessary on this appeal to consider whether, in light of art. 19 of the Regulation, definitive pendency should be regarded as even further postponed.”
[65]The Court therefore did not decide whether the effect of Council Regulation (EC) No 1348/2000 was to prevent the Greek court being seised when Mr Tavoulareas had notice of the Greek proceedings although not served with them. The relevant provisions are articles 19(1) and (2):
“(1) Where a writ of summons or an equivalent document has had to be transmitted to another Member State for the purpose of service, under the provisions of this Regulation, and the defendant has not appeared, judgment shall not be given until it is established that: (a) the document was served by a method prescribed by the internal law of the Member State addressed for the service of documents in domestic actions upon persons who are within its territory; or (b) the document was actually delivered to the defendant or to his residence by another method provided for by this Regulation; and that in either of these cases the service or the delivery was effected in sufficient time for the defendant to defend. (2) Each member state shall be free to make it known, in accordance with Article 23(1), that the judge, notwithstanding the provisions of paragraph 1, may give judgment even if no certificate of service or delivery has been received, if all of the following conditions are fulfilled: (a) the document was transmitted by one of the methods provided for in this Regulation; (b) a period of time of not less than six months, considered adequate by the judgment in the particular case, has elapsed since the date of the transmission of the document; (c) no certificate of any kind has been received, even though every reasonable effort has been made to obtain it through the competent authorities or bodies of the Member State addressed.”
[66]Mance LJ explained why he regarded article 19 as informing the question of when the Greek court was seised in paragraph 35 of his judgment. He said this:
“Article 19(1) prevented the Greek courts from giving judgment until it was established that service had been effected by a method prescribed by English law for persons in England or that the documentation commencing the Greek action was “actually delivered to [Mr Tavoulareas] or to his residence by another method specified in this Regulation”
. Neither condition was ever satisfied in this case. Greece has given notice under art. 23 in terms indicating that its courts may (though not must) give judgment in a case where all the conditions specified in art 19(2) are satisfied (O J C151, May 22, 2001, p.4 et seq.). But under the conditions in art 19(1) [sic] judgment can only be given in the absence of a certificate or delivery under art.19(1) after the expiry of at least six months since the transmission of the document under the Regulation. Here, therefore, the Greek court was throughout the period prior to service of the English action prohibited by art. 19 from giving any judgment against the English claimant. The effect of the provisions of art 19 is in my view to reinforce the conclusion that the Greek court cannot sensibly be regarded as having been “definitively seised” of the Greek proceedings for the purposes of art 21 at any time before the English action was served on both English defendants.”[67]This reasoning, it seems to me, does not provide any support for Mr Tavoulareas’ opposition to a stay of the second action. Even assuming that article 19 postponed definitive pendency of the Greek proceedings beyond the date that Mr Tavoulareas had notice of the Greek proceedings to enable him to defend them, I see no basis for an argument that it postponed them until August 2004. I conclude that the Greek court was definitively seised of the Greek proceedings before this Court was seised of these proceedings. The grounds upon which Mr Tavoulareas opposed a stay are not made out.[68]However, it seems to me that this application raises a further question that I cannot ignore, namely whether article 27 applies where the proceedings in the court first seised have proceeded to judgment. After all, the article is in chapter II section 9 of the Regulation, which is entitled “Lis pendens – related actions”, and in the Overseas Union Insurance Ltd case, the European Court said this of the purpose of article 21 of the Brussels Convention (the predecessor of article 27): “With regard in particular to article 21, the court observed in the judgment in Gubisch Maschinenfabrik KG v Palumbo, (case 144/86) [1977] ECR 4861 that that provision, together with article 22 on related actions, is contained in section 8 of Title II of the Convention, which is intended, in the interests of the proper administration of justice within the Community to prevent parallel proceedings before the courts of different contracting states and to avoid conflicts between decisions which may result therefrom. Those rules are designed to preclude, in so far as possible and from the outset, the possibility of a situation arising such as that referred to in article 27(3), that is to say the non-recognition of a judgment on account of its irreconcilability with a judgment given in proceedings between the same parties in the state in which recognition is sought. It follows that, in order to achieve those aims, article 21 must be interpreted broadly so as to cover, in principle, all situations of lis pendens before courts in contracting states, irrespective of the parties domicile” (para 16).[69]Of course, if the provisions of article 27 do not apply after judgment in the proceedings in the court first seised, the question then will arise whether article 33 provides an answer to the claim and therefore Mr Tavoulareas should be prevented from pursuing it. However, Mr Shepherd objects to AGT Co making an application on this basis because it is not covered by their application notice. (At the time that they made their application, apparently AGT Co did not know that the Greek court had given notice.) It seems to me that there is force in Mr Shepherd’s point and for two reasons it is not an arid procedural technicality. First, Mr Tavoulareas would rely upon article 34 to answer an argument based on article 33 and he has not prepared in order to present his argument that it does. Secondly, it appears likely that a similar question will arise in the first action and if so it is sensible that the point should be considered in the two actions together.[70]Accordingly, I shall invite the parties to make submissions as to whether article 27 engages after and despite the judgment of the Greek court and, if there is an issue between the parties about this, shall determine AGT Co’s application in light of my decision upon that issue.

Cited in 1 later judgment