While Tecoil’s diminutive and decrepit Russian tanker Tecoil Polaris was laid up in the Albert Dock in Hull, the Poseidon, a small survey ship owned by Icelandic company Neptune EHF, ran into her. There was no doubt that the collision was Poseidon’s fault. The case was a fairly minor one, the total damage to Tecoil Polaris eventually turning out to be a bit over US$500,000.

Poseidon’s P&I insurers were RSA, acting through LM. After the casualty, they put up a US$200,000 letter of understanding (LOU) on Tecoil’s demand in order to avoid her arrest, undertaking to pay “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 …”.

Tecoil duly served an in rem claim form on Poseidon. There was no response whatever, which was hardly surprising since by then Neptune were completely insolvent. Tecoil then proceeded to seek judgment in default against Poseidon on providing a formal proof of their case. In proceedings prior to the present ones,2 Registrar Jervis Kay held that they could have it. Although CPR 61.9(2) did not cover the claimants’ situation, because they had not served a collision statement of case, there remained an inherent jurisdiction (and also jurisdiction under CPR 12) to give such judgment in any case where no defendant had taken any part at all in proceedings in rem.

Problems arose when Tecoil asked RSA to satisfy their in rem judgment under the terms of the LOU, at least to the tune of US$200,000. RSA argued (it is suggested slightly implausibly, though the point was never decided) that on a proper interpretation the indemnity would respond only to a judgment against Neptune in personam, and not