Re "Kappa Sea"

HCAJ 101/2015

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 101 OF 2015

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Between:-

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J U D G M E N T

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Introduction

1.This is the Defendant’s application by summons dated 26 September 2016 (“Summons”) for an Order under RHC O 12 r 8(2)(a) and (b), r 8(2A)(a) and inherent jurisdiction that the court shall not exercise any jurisdiction it has in this Action; alternatively, that all further proceedings in this Action be stayed.  In the Summons, it is stated that the grounds for the application are that in all the circumstances of the case considering the best interests and convenience of the parties to the proceedings and the witnesses in the proceedings, the proceedings should be conducted in the District Court of Yangon, Myanmar (“Yangon Court”).

Background Facts

2.The Plaintiffs’ claim is a cargo claim, the cargo being RBD Palm Olein (“Palm Olein”), an edible oil.  The following facts are pleaded in the Statement of Claim.

3.At the material time, the Defendant, Yangtze Navigation (Singapore) Pte Ltd, a Singapore company, was the demise charterer of the vessel “Kappa Sea” (“Vessel”).

4.Golden Agri International Pte Ltd (“1^st Plaintiff”), a Singapore company, was the seller and shipper of 3,200 MT of Palm Olein (“Cargo”).

5.By a Bill of Lading dated 17 August 2014 issued in Singapore, the Defendant acknowledged receipt of the Cargo in good order and condition and agreed to carry the same from Tarjun, Indonesia to Yangon, Myanmar on board the Vessel.  The Hague‑Visby Rules were incorporated into the Bill of Lading by virtue of clause 1(b) the General Paramount Clause and owing to the fact that the Bill of Lading was signed in Singapore.  Alternatively, the Hague Rules were incorporated into the Bill of Lading by virtue of clause 1(a) of the General Paramount Clause by contractual incorporation.

6.Yangon Technical and Trading Co. Ltd (“2^nd Plaintiff”), a Myanmar company, was the buyer of the Cargo and the notify party under the Bill of Lading.  It was also said to be the endorsee and/or the lawful holder of the Bill of Lading.

7.The Vessel together with the Cargo laden thereon departed from Tarjun, Indonesia on or around 17 August 2014.  The Vessel arrived at Yangon, Myanmar on or around 29 August 2014 and began discharging on the same day.  While the Vessel was discharging to the shore tank “J”, contaminants were discovered in the Cargo.  The contaminated Cargo was then moved to a site approximately 20 km from the port for storage.

8.Both the Plaintiffs and the Defendant had appointed their own local surveyors to assess inter alia the particulars of the contaminants and cause of contamination.  The conclusion of the surveyors was that the contamination was from the Vessel’s internal discharge line which contained remains of stearin, being the previous cargo carried by the Vessel.

9.Both surveyors found that 383.86 MT of the Cargo was contaminated.  Out of the 383.86 MT, 345.988 MT were successfully separated from the contaminant (“de‑contaminated Cargo”). A sample of the de‑contaminated Cargo was later certified by the Food and Drugs Administration of Myanmar (“FDA”) as fit for human consumption.  Notwithstanding the certification, it was the Plaintiffs’ case that the de‑contaminated Cargo could not be sold at full market rate because potential buyers knew that they had been contaminated.  The 2^nd Plaintiff eventually sold them at less than their commercial value.

10.Some of the remaining contaminated Cargo was sold for industrial use (“Industrial Use Cargo”) at a much lower price while the remainder was simply disposed of as being unusable.

11.Apart from loss in the value of the Cargo, the Plaintiffs also claim various “salvage costs” eg storage fees, reprocessing charges etc.

12.The Plaintiffs claim the Defendant was negligent, in breach of contract, in breach of duty, in breach of the Hague‑Visby Rules alternatively Hague Rules for inter alia failing to properly handle the Cargo or deliver the Cargo at Yangon, Myanmar in the same good order and condition as when shipped.  The amount of damages claimed is US$143,852.02.

Service of Process

13.While this is an in rem action, the court’s jurisdiction was not founded on the arrest of the Vessel or the service of the Writ on the Vessel in Hong Kong.  Further, since this is an in rem action, there could be no service of the in rem Writ on the Defendant, a Singaporean Company, outside jurisdiction: Hong Kong Civil Procedure 2017 Vol 1 para 11/1/4B, and there was no attempt to seek leave to do so.

14.Under RHC O 75 r 8,

“(1) Subject to paragraph (2), a writ by which an action in rem is begun must be served on the property against which the action is brought…

(2) A writ need not be served or filed as mentioned in paragraph (1) if the writ is deemed to have been duly served on the defendant by virtue of Order 10, rule 1(4) or (5).”

15.RHC O 10 r (1)(4) provides:

“(4) Where a defendant’s solicitor indorses on the writ a statement that he accepts service of the writ on behalf of that defendant, the writ shall be deemed to have been duly served on that defendant and to have been so served on the date on which the indorsement was made.”

16.What happened was that the P & I Club of the Defendant, in order to avoid the arrest of the Vessel, acceded to the Plaintiffs’ request and signed a Letter of Undertaking dated 23 May 2016 which provided inter alia that:

“(2) We undertake that we will, within 14 days of the receipt from you of a request so to do:

(a) instruct solicitors to accept on behalf of the Demise Charterers service at your option of in rem and/or in personam proceedings brought by Cargo Owners and to file an acknowledgment of service thereof…”

17.Thereafter, the amended Writ was served on the Defendant’s Hong Kong solicitors Messrs Tsui & Co who, at the time of accepting service in June 2016, expressly reserved the Defendant’s right to contest the jurisdiction of the Hong Kong Courts and made clear that service would be accepted on that basis only.  Messrs Tsui & Co also made an endorsement on the amended Writ to that effect.

18.This prompted the parties to raise an interesting preliminary argument as to whether or not the court should treat this as a so‑called “as of right” case.

19.Mr Luxton, for the Plaintiffs, argues that the P & I Club had contractually agreed to instruct solicitors to accept service of in rem and/or in personam proceedings, in consideration of the Plaintiffs refraining from arresting the Vessel.  The acceptance of service of the Writ within the jurisdiction under the terms of the Letter of Undertaking was akin to jurisdiction being established by the arrest of the Vessel: PT Krakatau Steel (Persero) v Mount Kerinci LLC [2009] 1 HKLRD 264.  Hence, this is in effect an “as of right” case and the Hong Kong Court’s jurisdiction should not lightly be disturbed: The Kapitan Shvetsov [1997] HKLRD 374; Hong Kong Civil Procedure 2017 Vol 1 para 11/1/10A.  Mr Luxton further submits that the onus is on the Defendant to show that (i) Hong Kong is not the forum conveniens; and (ii) the Myanmar Court is an available forum and is clearly or distinctly more appropriate than Hong Kong.

20.Mr Alder, for the Defendant, submits that service was not “as of right” in the sense that neither the Defendant nor the Vessel was served in Hong Kong to give the court statutory jurisdiction.  Rather, acceptance of the service of the Writ was pursuant to the Letter of Undertaking and, importantly, with an express reservation of the right to challenge jurisdiction.  Thus, this case is unusual in that it is neither a RHC O 11 service outside jurisdiction case where the onus would be on the Plaintiffs to show inter alia that Hong Kong is the natural forum, nor an “as of right” case where the onus would be on the Defendant to show the Yangon Court is the natural forum.  He submits that the present case is closer to the factual situation in New Link Consultants Ltd v Air China [2005] 2 HKC 260.  At [38]–[39], Deputy Judge Poon (as he then was) observed:

“38. Under the Rules of the High Court, service of a writ on a defendant within jurisdiction may be by way of personal service (Order 10, rule 1(1)), registered post at the defendant’s usual and last known address (Order 10, rule 1(2)(a)), insertion through letter box (Order 10, rule 1(2)(b)), indorsement by the defendant’s solicitors on the writ to accept service (Order 10, rule (4)) or in suitable cases, substituted service (Order 65, rule 4). Where the defendant is outside jurisdiction, the writ may be served outside jurisdiction under Order 11.

39. The rules do not prevent the parties from agreeing on how the service of a writ is to be effected. Thus, in cases where a foreign defendant is involved, in order to “short‑circuit” the cumbersome procedure under Order 11 and hence saving costs, solicitors have developed a practice, which is laudable, of agreeing to accept service on behalf of that defendant but reserving at the same time its right to dispute jurisdiction later. (This reservation is important because if the indorsement on the writ by the solicitors is not so qualified, the defendant will be precluded from disputing jurisdiction later: see Hong Kong Civil Procedure, Vol 1, paragraphs 10/1/9 and 11/1/13A at pp 88 and 103). The writ so served on the defendant’s solicitors would then be regarded as if it had been served on the defendant outside jurisdiction under Order 11. The defendant will then be free to dispute jurisdiction in the normal way under Order 12, rule 8. See generally Sphere Drake Insurance Plc & others v. Gunes Sigorta Anonim Sirketi [1988] 1 Lloyd’s LR 139.” (emphasis added)

21.It can be seen from the passage quoted above that where a Writ is served on a foreign defendant’s solicitors in Hong Kong by agreement coupled with a reservation of right to dispute jurisdiction, it will be treated as having been served on the foreign defendant outside jurisdiction ie an RHC O 11 situation.  The defendant is still free to dispute jurisdiction under RHC O 12 r 8 but in such an application, the onus is on the plaintiff to show, inter alia, that Hong Kong is the natural forum.

22.In this court’s view, it is unhelpful and unnecessary to characterise the present case as an “as of right” case or not an “as of right” case.

23.Mr Luxton’s argument has overlooked the important distinction between the present case and PT Krakatau Steel (Persero) v Mount Kerinci LLC ie there was an express reservation of the right to contest jurisdiction in the present case which was absent in PT Krakatau Steel (Persero).  PT Krakatau Steel (Persero) was “an example of defendants which had submitted to the jurisdiction by instructing the solicitors to accept service in Hong Kong”: see the judgment at [41] and that “Service on their solicitors was equivalent to serving the defendants themselves within the jurisdiction, and thus there was no right to challenge the jurisdiction of the court under O 12 r 8”: see the judgment at [42].  At [42] of the judgment, the learned Judge referred to Manta Line Inc v Seraphim Sofianites and Midland Bank Plc [1984] 1 Lloyd’s Rep 14 and to the fact that in Manta Line Inc “there was no evidence of any conditional agreement to accept service in England, and that the defendants’ solicitors had given an unqualified agreement to accept service in that jurisdiction”.  This is important.  If there had been such a conditional agreement in Manta Line Inc, it would have been open to the defendants there to challenge jurisdiction of the English court in the ordinary way: see the observations of Donaldson MR in Manta Line Inc at p 19 and quoted by the learned Judge at [42].

24.On the other hand, Mr Alder’s submission by analogy with New Link Consultants Ltd v Air China is also unsatisfactory. Given that an in rem Writ cannot be served outside jurisdiction as such, the decision of New Link Consultants Ltd v Air China that a Writ served on a foreign defendant’s solicitors in Hong Kong by agreement (coupled with a reservation of right to dispute jurisdiction) would be treated as having been served on that defendant outside jurisdiction is clearly distinguishable from the present case — it does not assist in resolving the dichotomy of “as of right” and “not as of right” or where the onus of proof lies.

25.In this court’s view, the really important question is which party bears the onus of proof in the present application.  To that question, the answer is plain and obvious — the onus must be on the Defendant.

26.Under RHC O 75 r 8 (2), a writ in rem need not be served on the ship if it is deemed to have been duly served on the defendant by virtue of RHC O 10 r 1(4).  Under RHC O 10 r 1(4), a writ is deemed to have been duly served on a defendant by an endorsement on the Writ by its solicitors.  That was what happened in the present case, albeit with an express reservation of the Defendant’s right to contest jurisdiction.  The significance of the express reservation is simply this: without it, the Defendant would be precluded from disputing jurisdiction later: New Link Consultants Ltd v Air China at [39].  But while the Defendant can challenge jurisdiction in the normal way under RHC O 12 r 8, there are limits to the grounds on which such a challenge can be launched, depending on the facts of the case.  One obvious ground not open to the Defendant is that the Order giving leave to serve the writ on the Defendant outside the jurisdiction is invalid because ex hypothesis there was none — this is not an RHC O 11 situation and New Link Consultants Ltd v Air China cannot justifiably be relied upon to deem the present case as such.

27.It follows naturally from the conclusion, and indeed Mr Alder’s concession, that this is not a RHC O 11 situation that the onus cannot fall on the Plaintiffs to show that Hong Kong is the natural forum — there is simply no juridical basis to place the onus on them.  As the only ground set out in the Summons for disputing jurisdiction concerns forum, specifically under RHC O 12 r 8(2A)(a), it is difficult to escape the well‑established principle that a defendant who disputes the Hong Kong Court’s jurisdiction on the ground of forum non conveniens has the onus of proof: Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, 480H–482A.

Deliberation

28.Both parties accept that the principles derived from Spiliada Maritime Corp v Cansulex Ltd and re‑affirmed by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364, are applicable. In SPH v SA at [51], Lord Collins of Mapesbury NPJ stated:

“51. We adopt the re‑statement of the principles…in DGC v SLC (née C) [2005] 3 HKC 293, 297–298, applying Spiliada Maritime Corporation v. Cansulex Limited [1987] 1 AC 460, 477 and Louvet v. Louvet [1990] 1 HKLR 670, 674–675:

“1. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action ie in which the action may be tried more suitably for the interests of all the parties and the ends of justice?

2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3. If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

4.   If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer.  Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.”

29.In The Peng Yan [2009] 1 HKLRD 144, the Court of Appeal also re‑affirmed that the court’s basic approach in admiralty proceedings in determining applications for stay on the ground of forum non conveniens is the same as in any action ie the application of the Spiliada principles: the burden on the applicant for a stay based on forum non conveniens is still to demonstrate there is another jurisdiction that is clearly or distinctly more appropriate than Hong Kong — the legal burden is not on the party suing in Hong Kong to demonstrate the appropriateness of continuing proceedings here.

30.In the 1^st Affidavit of Hung Chi Shing for the Defendant, he explains that there are at least three likely issues in dispute at trial: (1) whether the Plaintiffs have title to sue the Defendant — the issue being  connecting the contaminated Cargo with the Plaintiffs (“1^st Issue”); (2) whether the Defendants have discharged their contractual duty under the Bill of Lading and/or any duty of care in tort in relation to the cleanliness of the internal discharge line (“2^nd Issue”); (3) quantum of damages — whether the Plaintiffs could have sold the de‑contaminated Cargo at market rate, bearing in mind that it was certified by the FDA in Myanmar as fit for human consumption (“3^rd Issue”).  This is said to be a key issue since the Plaintiffs’ sale of the de‑contaminated Cargo at below market rate in Myanmar accounts for a substantial part of their claim for damages.

31.While Mr Luxton submits at length that the Defendant has no arguable defence on liability ie to the 1^st and 2^nd Issues, it is, in my view, inappropriate to make a determination of the two issues at this stage.

32.Firstly, for an application of this nature, the evidential materials are by affidavits and those on the merits are almost invariably incomplete.  It is not the function of the court to try a case on affidavits and it is wholly unsafe to purport to dismiss the Defendant’s defences on liability merely on such incomplete evidence, unless of course the matter was open and shut eg the Defendant’s liability in this case was strict.  Hence, at the hearing, this court asked and Mr Luxton properly accepted that, as far as liability was concerned, the Defendant was not under a strict liability.

33.Secondly, making a determination on the merits in the course of the present application is conceptually unsound.  The whole purpose of a forum non conveniens application is to determine whether there is another forum which is clearly or distinctly more appropriate than Hong Kong to try the action.  By taking upon itself to adjudicate on the merits, this court would be presupposing that Hong Kong is the natural and appropriate forum and that no other forum is clearly or distinctly more appropriate than Hong Kong to try the action.  In any event, even the Plaintiffs accept that quantum is a live and substantial issue. That live issue has to be tried, along with other live issues, at an appropriate forum, the determination of which is the whole point of this application.

34.As stated by Lord Collins in the passage quoted above, the Defendant must first establish that Hong Kong is not the natural or appropriate forum — “appropriate” in the sense that the forum has the most real and substantial connection with the action.  In this regard, Mr Alder submits that neither the Plaintiffs, the Defendant nor the material events have any connection with Hong Kong.  On the facts, the only Hong Kong connections are that the Vessel is Hong Kong‑registered and, for reasons unknown, the Plaintiffs engaged solicitors in Hong Kong to institute and serve proceedings in Hong Kong.

35.In this court’s view, the fact that the Vessel is Hong Kong‑registered is irrelevant. It has no relation to the claim, it is not a material fact and does not have any bearing on the question where this action can most appropriately be tried.  Also irrelevant is the fact that the Plaintiffs elected to institute and serve proceedings in Hong Kong.  To hold otherwise would be an official endorsement of the practice of forum‑shopping since a plaintiff can without undue difficulty institute and serve proceedings in a forum of its choice and use that fact to boost the preferred forum’s connection with the action.  At the risk of stating the obvious, the whole point of this application is to determine whether the Plaintiffs’ choice of forum ie Hong Kong is inappropriate and whether there exists another forum which is more suitable for the trial of the action in the interest of all parties and the ends of justice: The Adhiguna Meranti [1987] HKLR 904, 907–8; Rambas Marketing Co LLC v Chow Kam Fai David  [2001] 3 HKC 250, 253–4.

36.For these reasons, this court agrees with Mr Alder that Hong Kong is evidently not the natural or appropriate forum for the trial of this action.  The real question is whether the Defendant can satisfy the court that there is another available competent forum which is clearly or distinctly more appropriate than Hong Kong.  The Defendant says the Yangon Court is such a forum.

37.To begin with, given the Cargo was discharged in Yangon, Myanmar and the contaminated part of it, ie the de‑contaminated Cargo and the Industrial Use Cargo, was subsequently sold in Myanmar, the Yangon Court has and will accept jurisdiction to hear the Plaintiffs’ claim.  This is supported by the legal opinion of the Defendant’s Myanmar lawyers and not seriously in dispute.  What the Plaintiffs do dispute is that the Yangon Court is clearly or distinctly more appropriate than Hong Kong for the trial of the action.

38.On that question, Mr Alder submits that there are numerous factors which demonstrate the Yangon Court is clearly and distinctly the more appropriate forum:

(1)  Under the Bill of Lading, the Cargo was shipped to and discharged at Yangon, Myanmar.

(2)  The buyer of the Cargo viz the 2^nd Plaintiff is a Myanmar company.

(3)  The process of “de‑contaminating” the contaminated Cargo took place in a facility 20 km away from the discharge port in Yangon.

(4)  Both the Plaintiffs’ surveyor Myanmar Marine Co Ltd and the P & I Club’s surveyor Pandi General Surveyors Co Ltd, who had examined the contaminated Cargo and prepared their respective survey reports, are based in Yangon.

(5)  The Vessel’s officers and crew are of either Chinese or Myanmar nationality. 

(6)  The FDA, which certified the de‑contaminated Cargo as fit for human consumption, is a government department in Myanmar.

(7)  The de‑contaminated Cargo and the Industrial Use Cargo were subsequently sold in the local market in Myanmar.

(8)  All incidental expenses, such as transport and storage charges, were incurred in Myanmar.

39.It can be seen from the list above that the Yangon Court has much more real and substantial connection with the action and is in this sense a more appropriate forum.  In particular, since the de‑contaminated Cargo and the Industrial Use Cargo were sold in the local market and all incidental expenses were incurred in Myanmar, it is highly likely that the trial of the action will require the attendance of Myanmar‑based witnesses.  These will potentially be factual witnesses who conducted the sale and incurred the expenses, the surveyors who had examined the contaminated Cargo and gave the observations and opinions in their reports, as well as experts who are familiar with the local market condition for Palm Olein at the time of the discharge.

40.On the issue of the market condition for Palm Olein at the time of the discharge, the Plaintiffs said they had lined up experts from Hong Kong and Singapore while the Defendant have identified SGS (Myanmar) Limited and OMIC Myanmar Inspection & Surveying Co Ltd who are able to give expert evidence on the quality and value of the de‑contaminated Cargo should the action be tried in the Yangon Court.  Of course, it is up to the parties to appoint expert witnesses of their choice but, as submitted by Mr Alder, the Plaintiffs cannot “pull themselves up by their own bootlaces” by appointing a Hong Kong (or Singapore) expert who does not speak the local language of Myanmar in order to make the point that the Yangon Court is not a clearly or distinctly more appropriate forum.  In any event, the Plaintiffs’ experts can easily travel to Myanmar and, on the evidence, witnesses are allowed to testify in English in Myanmar Courts.  Further, on the evidence, submission of documents in English is also allowed in Myanmar Courts. So the Plaintiffs cannot complain of any serious disadvantage if the action be tried in the Yangon Court even if they adhere to their Hong Kong or Singapore expert.

41.Judging from the 1^st Affidavit of Hung Chi Shing, it is the Defendant’s position that it had exercised due diligence to clean the internal discharge lines so that the Vessel was cargoworthy ie it was fit and safe to carry the Cargo.  Hence, on this issue, it would also likely entail inter alia factual evidence from the Vessel’s officers and crew, some of whom are of Myanmar nationality.  It would obviously be more natural and convenient if they are able to testify in the Myanmar language in the Yangon Court.

42.All in all, this court has no doubt that the Yangon Court is clearly and distinctly the more appropriate forum for the trial of the action than Hong Kong.

43.The next issue is whether the Plaintiffs can show they will be deprived of a legitimate personal or juridical advantage if the action is tried in the Yangon Court rather than in Hong Kong.

44.Before considering in detail the submissions of the parties, it is necessary to go back to basics and set out the true principle underlying the courts’ treatment of “legitimate personal or juridical advantage” and its impact on the question of forum.

45.In Spiliada Maritime Corp v Cansulex Ltd at 482B–F, Lord Goff of Chieveley observed:

“(8) Treatment of “a legitimate personal or juridical advantage”

Clearly, the mere fact that the plaintiff has such an advantage in proceedings in England cannot be decisive.  As Lord Sumner said of the parties in the Société du Gaz case, 1926 S.C. (H.L.) 13, 22:

“I do not see how one can guide oneself profitably by endeavouring to conciliate and promote the interests of both these antagonists, except in that ironical sense, in which one says that it is in the interests of both that the case should be tried in the best way and in the best tribunal, and that the best man should win.”

Indeed, as Oliver L.J. [1985] 2 Lloyd’s Rep 116, 135, pointed out in his judgment in the present case, an advantage to the plaintiff will ordinarily give rise to a comparable disadvantage to the defendant; and simply to give the plaintiff his advantage at the expense of the defendant is not consistent with the objective approach inherent in Lord Kinnear’s statement of principle in Sim v Robinow, 19 R 665, 668.

The key to the solution of this problem lies, in my judgment, in the underlying fundamental principle.  We have to consider where the case may be tried “suitably for the interests of all the parties and for the ends of justice.”  Let me consider the application of that principle in relation to advantages which the plaintiff may derive from invoking the English jurisdiction.  Typical examples are: damages awarded on a higher scale; a more complete procedure of discovery; a power to award interest; a more generous limitation period.  Now, as a general rule, I do not think that the court should be deterred from granting a stay of proceedings, or from exercising its discretion against granting leave under R.S.C. Ord 11, simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum.” (emphasis added)

46.Then, at 483 B–C, Lord Goff continued:

“Then take the scale on which damages are awarded. Suppose that two parties have been involved in a road accident in a foreign country, where both were resident, and where damages are awarded on a scale substantially lower than those awarded in this country. I do not think that an English court would, in ordinary circumstances, hesitate to stay proceedings brought by one of them against the other in this country merely because he would be deprived of a higher award of damages here.”

47.Mr Luxton submits that if this action is tried in Hong Kong, the claim will be subject to the Hague‑Visby Rules whereas if the dispute is adjudicated in the Yangon Court, it will be determined in accordance with the unamended Hague Rules.  This much is not controversial.

48.According to Mr Luxton, the advantages to the Plaintiffs of the Hague‑Visby Rules are two‑fold.

a.  First, under Article III, rule 4 of the Hague‑Visby Rules, if a bill of lading has been issued specifying the good order and condition of the Cargo, it is conclusive evidence if the bill of lading has been passed to a third party acting in good faith, being the buyer or consignee viz 2^nd Plaintiff.  By contrast, under Article III, rule 4 of the unamended Hague Rules, it is not conclusive evidence.  This is important to the Plaintiffs since the Defendant, in its affidavit evidence, says it does not admit any contamination of the Cargo from the residue of stearin in the Vessel’s internal discharge line.

b.  Second, there are different package/unit limits under the Hague‑Visby Rules and the unamended Hague Rules for cargo claims.  Under Article IV rule 5 of the Hague‑Visby Rules, liability is limited to 666.67 SDRs per package or 2 SDRs per kilogram of the Cargo lost or damaged, whichever is the higher.  Under Article IV rule 5 of the unamended Hague Rules, the carrier was entitled to limit his liability for loss or damage to £100 per package or unit.  Given the value of the Cargo ie US$830 per MT and the amount of the claim, limit of liability is not a concern to the Plaintiffs under the Hague‑Visby Rules whereas it is unclear whether the limit of liability of the unamended Hague Rules would be applicable.  Accordingly, there is a risk that the Plaintiffs’ claim would be subject to the package/unit limit if tried in the Yangon Court.  The possibility of a higher award of damages in Hong Kong is a legitimate juridical advantage: The Kapitan Shvetsov [1997] HKLRD 374.

49.This court is not satisfied these are legitimate juridical advantages to the Plaintiffs.  Nor is this court satisfied that substantial justice cannot be obtained in the Yangon Court by reason of its adherence to the unamended Hague Rules as opposed to the Hague‑Visby Rules.  The reasons are these.

50.First, it is inherently dangerous to take one or two provisions in the unamended Hague Rules at their face value and jump to the conclusion that the application of the unamended Hague Rules, in comparison with the Hague‑Visby Rules, is necessarily less advantageous or that it will lead to a denial of justice to the Plaintiffs.

51.As far as the “conclusive evidence” provision in the Hague‑Visby Rules is concerned, it is unlikely to be significant in the present case since the Defendant has never suggested that the Cargo was already contaminated prior to loading — indeed, in the P & I Club’s surveyor report, the surveyor found that the Cargo was contaminated by the residual of the previous cargo carried by the Vessel.  Now that the contaminated Cargo has been sold or otherwise disposed of, it would be far too late for the Defendant to make that suggestion at the trial.

52.Regarding the different package/unit limits under the Hague‑Visby Rules and the unamended Hague Rules, the short answer is that the limit under the unamended Hague Rules has no application to bulk cargo such as grain or liquids in bulk since the word “unit” only referred to a physical unit for shipment: The Aqasia [2016] EWHC 2514 (Comm); [2016] Lloyd’s Rep 510.  Hence, the perceived risk that the Plaintiff’s claim would be subject to the package/unit limit under the unamended Hague Rules if tried in the Yangon Court is more apparent than real.

53.Second, courts should in general be slow, if at all, to pass judgment on two international maritime conventions and decide which one is more conducive to the attainment of substantial justice or objectively more just than the other, unless there is consensus or substantial consensus in the international community on the matter.  That is the point made by the English Court of Appeal in Hercceg Novi v Ming Galaxy [1998] 4 All ER 238 in relation to the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 and the Convention on Limitation of Liability for Maritime Claims 1976.  The former prevailed in Singapore at the time of the decision while the latter, which provided for a higher limit of liability, had the force of law in the United Kingdom.  The Court of Appeal held that the 1976 Convention was not an internationally sanctioned and objective view of where substantial justice lay, but was simply the preference of those states[1] who were signatories to it.

54.It seems to this court that the same can be said of the unamended Hague Rules and the Hague‑Visby Rules.  The Hague Rules, adopted in Brussels in 1924, are a scheme for uniformity of bills of lading[2] representing a compromise between carriers’ interest and cargo owners’ interest.  The Hague‑Visby Rules, adopted in Brussels in 1968, are “simply the Hague Rules with certain amendments which carriers and shipowners describe as clarifying and rectifying certain difficulties which had emerged over 40 years of the Rules.  Cargo interests may, however, see them as being largely in the interests of carriers.”[3]  Presently, there are still countries in the world who have, for one reason or another, declined to ratify the Hague‑Visby Rules and stick with the unamended Hague Rules or some domestic legislative version of them, including the USA and countries in the South America eg Argentina.  In these circumstances, it is extremely difficult to come to an objective conclusion on where, as between the unamended Hague Rules and the Hague‑Visby Rules, substantial justice lies.  As a compromise between carriers’ interest and cargo owners’ interest, one can always point to some aspects of the two sets of Rules which favour the one or the other.

55.Mr Luxton further submits that the Plaintiffs’ claim is now time‑barred in Myanmar by reason of the expiry of the one‑year time limit.  On the other hand, the Writ in the present action was issued in Hong Kong within time and no question of time‑bar arises.  Unless the Plaintiffs have acted unreasonably in failing to commence proceedings in Myanmar within the one‑year limitation period, this Court should not deprive them of the advantage of having sued in Hong Kong within time.

56.On this issue of time‑bar, one must again turn to the speech of Lord Goff in Spiliada Maritime Corp v Cansulex Ltd at 483E‑484A for guidance:

“…Again, take the example of cases concerned with time bars. Let me consider how the principle of forum non conveniens should be applied in a case in which the plaintiff has started proceedings in England where his claim was not time barred, but there is some other jurisdiction which, in the opinion of the court, is clearly more appropriate for the trial of the actions, but where the plaintiff has not commenced proceedings and where his claim is now time barred. Now, to take some extreme examples, suppose that the plaintiff allowed the limitation period to elapse in the appropriate jurisdiction, and came here simply because he wanted to take advantage of a more generous time bar applicable in this country; or suppose that it was obvious that the plaintiff should have commenced proceedings in the appropriate jurisdiction, and yet he did not trouble to issue a protective writ there; in cases such as these, I cannot see that the court should hesitate to stay the proceedings in this country, even though the effect would be that the plaintiff’s claim would inevitably be defeated by a plea of the time bar in the appropriate jurisdiction. Indeed a strong theoretical argument can be advanced for the proposition that, if there is another clearly more appropriate forum for the trial of the action, a stay should generally be granted even though the plaintiff’s action would be time barred there. But, in my opinion, this is a case where practical justice should be done. And practical justice demands that, if the court considers that the plaintiff acted reasonably in commencing proceedings in this country, and that, although it appears that (putting on one side the time bar point) the appropriate forum for the trial of the action is elsewhere than England, the plaintiff did not act unreasonably in failing to commence proceedings (for example, by issuing a protective writ) in that jurisdiction within the limitation period applicable there, it would not, I think, be just to deprive the plaintiff of the benefit of having started proceedings within the limitation period applicable in this country.” (emphasis added)

57.The question for this court is this: have the Plaintiffs acted reasonably in commencing proceedings in Hong Kong and have they acted unreasonably in failing to issue a protective writ in Myanmar within the limitation period applicable there?

58.The only explanation from the Plaintiffs which sheds light on this question consists of a few paragraphs in the affidavit of Mr Horton.  There is an assertion in paragraph 48 thereof that “The Plaintiffs took reasonable steps to protect this claim by issuing protective proceedings in 3 separate forums[4] before the time bar.  The Plaintiffs very sensibly did not commence proceedings in Myanmar…”.

59.In the absence of a clear explanation as to why the Plaintiffs did not commence proceedings in Myanmar to protect the limitation period, this court is unable to be satisfied that they have acted reasonably in failing to do so.  This is not a case where the factors connecting the action to Hong Kong were, rightly or wrongly, thought to be much stronger than Myanmar so that one might perhaps be excused from coming to the view that it is unnecessary to protect the limitation period in Myanmar.  Nor is this a case where the factors connecting the action to Hong Kong and Myanmar are evenly balanced, and owing to the Plaintiffs’ view on the comparative quality of justice in both jurisdictions, they have decided to sue in Hong Kong, instead of Myanmar.  As this court pointed out earlier, the action has no or no relevant connections with Hong Kong at all.

60.In these circumstances, this court must reject the time bar argument as something which weighs against a stay of the present proceedings.  Nor is this court minded to impose as a condition for stay by requiring an undertaking from the Defendant not to plead the time bar defence in the Yangon Court.  This is a case where practical justice demands that the Plaintiffs be deprived of the advantage of having commenced proceedings within time in Hong Kong, a jurisdiction to which the action has no real connection.

61.To conclude, for the reasons set out above, this court is satisfied that the Yangon Court is clearly and distinctly the more appropriate forum for the trial of the action and the present proceedings should be stayed.

Disposition and costs order nisi

62.All further proceedings in this Action are stayed to the Yangon Court.  There shall be an order nisi that costs be to the Defendant, to be taxed if not agreed and paid forthwith, with certificate for counsel.

63.Lastly, this court thanks counsel for their helpful assistance.

Mr Nick Luxton, instructed by Reynolds Porter Chamberlain, for the Plaintiffs

Mr Edward Alder, instructed by Tsui & Co., for the Defendant