A recent decision in the Admiralty Court is of interest because it addresses the effect of paragraph C of the standard ASG2 Collision Jurisdiction Agreement (CJA), a copy of which can be found here.
In short, paragraph C provides that parties signing a CJA under which they agree to refer all disputes to the English High Court should each provide security in respect of the other’s claim in a form reasonably satisfactory to the other.
Those interested in the facts can read the case report here, but the key point to note is that Teare J held that, although the test of what was reasonably satisfactory in terms of the security offered is an objective one and was in fact satisfied in this case, on a proper construction of paragraph C a party is not obliged to accept the security offered and could proceed to obtain security by way of arrest if it chose to do so.
This decision is of considerable interest because it begs the question of the point of paragraph C in the CJA. It remains to be seen whether there will be an appeal, but for now parties should proceed on the understanding that signing up to a CJA on the ASG2 form of wording does not remove the risk of arrest. Indeed, the only way to do that it seems is to provide security in an acceptable form that itself contains an undertaking not to arrest. In that sense, see the ASG1 form which is designed to do just that.
Nick Burgess
Partner
Constantin von Hirsch
Trainee
