Case Document

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CACV000027/1994

IN THE COURT OF APPEAL

1994, No. 27
(Civil)

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	GREENWOOD LIMITED	Plaintiff(Respondent)

	AND

	PEARL RIVER CONTAINER TRANSPORTATION LIMITED	1st Defendant(Appellant)

	CHINA NATIONAL FOREIGN TRADE AND TRANSPORTATION CORPORATION, GUANGZHOU BRANCH (A.K.A. SINOTRANS, GUANGZHOU)	2nd Defendant

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Coram: Hon. Power, V.-P., Nazareth and Litton, JJ.A.

Date of hearing: 25 May 1994

Date of judgment: 25 May 1994

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J U D G M E N T

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Nazareth, J.A.:

1. This is an appeal against the order of Deputy Judge Yam (as he then was) made on 28th January 1994 dismissing the application of the 1st defendant ("Pearl") for the proceedings to be stayed in favour of the courts of the People's Republic of China on the grounds of forum non conveniens.

2. Shortly stated, the facts are that the plaintiff ("Greenwood") sues as owner of the vessel "Leon" which it avers was chartered to Pearl under a charterparty dated 18th September 1992 to carry cargo from Bourgas in Bulgaria to Xingang in the People's Republic of China. Pearl's claim is for damages for failure to provide a cargo. The charterparty was concluded by brokers in London acting for Greenwood on the one hand and for the 2nd defendant ("Sinotrans") on the other hand. Pearl's case is that it approached Sinotrans with the object of chartering a vessel from Sinotrans. It denies that it gave Sinotrans authority to charter a vessel on its behalf. The relevant negotiations took place in China between a Mr He Pei-kai for Pearl and a Mr Qin Wen for Sinotrans.

3. The essence of the dispute is, therefore, whether or not Pearl authorised Sinotrans to charter a vessel. This will depend on what Mr He said to Mr Qin in the course of discussions between 25th August and 18th September 1992 in China.

4. Greenwood is incorporated in the British Virgin Islands and there is no evidence that it has any connection with Hong Kong.

5. Pearl is incorporated in People's Republic of China but is registered in Hong Kong as an overseas company under Part XI of the Companies Ordinance. This enabled Greenwood to serve its writ of summons on Pearl in Hong Kong as of right, and thus to found the jurisdiction of this Court.

6. The position of Sinotrans is not relied upon in this appeal but it is also incorporated in China. It may be noted that the plaintiff applied for and obtained leave under Order 11 to serve the writ on Sinotrans in the People's Republic of China on the ground that Sinotrans is a necessary party to the action commenced against Pearl.

7. Deputy Judge Yam's decision, under O.12 r8, was made in exercise of his discretion. It is well established that as a court of appeal this Court will therefore not interfere with such exercise of discretion except in very limited circumstances. These may conveniently and appositely be taken from the judgment of Lord Brandon in the Abidin Daver [1984] 1 AC 398 at p.420A-C, a case not dissimilar to this. They are:

(i) where the judge had misdirected himself with regard to the principles in accordance with which his discretion had to be exercised;

(ii) whether the judge, in exercising his discretion, had taken into account matters which he ought not to have done or failed to take into account matters which he ought to have done; or

(iii) where his decision is plainly wrong.

For Pearl, Mr Clifford Smith relies upon the circumstances in (i) and (ii).

8. Mr Smith commenced his submission by referring to MacShannon v Rockware Glass [1978] AC 795 in which a number of plaintiffs sued in England for personal injuries sustained by them in the course of employment in Scotland. Although the defendant had its head-office in England, and not merely a branch office as in the case here, and the plaintiffs had properly served the writs in England, the House of Lords nevertheless ordered actions to be stayed to Scotland. Mr Smith stresses that here while the 1st defendant has only a branch office in Hong Kong, its registered and head-office is in China.

9. The relevant principles governing the grant of stay were stated by Lord Goff in Spiliada v Cansulex [1987] 1 AC 460 at 474-478. Those which this appeal is concerned with are:

"(a) The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

(b) ... in general the burden of proof rests on the defendant to persuade the court to exercise its discretion to grant a stay ...

(c) The question being whether there is some other forum which is the appropriate forum for the trial of the action, it is pertinent to ask whether the fact that the plaintiff has, ex hypothesi, founded jurisdiction as of right in accordance with the law of this country, of itself gives the plaintiff an advantage in the sense that the English court [here the Hong Kong court], will not lightly disturb jurisdiction so established .... the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. In this way, proper regard is paid to the fact that jurisdiction has been founded in England as of right.

(d) Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the court will look first to see what factors there are which point in the direction of another forum....

(e) If the court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay ..."

10. Mr Smith submits that it is upon the service of the writ within the jurisdiction as of right, that the third of the foregoing principles is propounded and that therefore service as of right within the jurisdiction is not one of the connecting factors under the fourth principle by which the question whether there exists some other forum which is clearly more appropriate for the trial of the action is to be determined. I think that submission must be accepted as correct not only upon the basis of the foregoing principles, but also in the way that Lord Goff explained them in particular at p.474 of his judgment.

11. Upon that basis Mr Smith then points to the judgment of the deputy judge in particular the following passage at p.6:

"I accept the submission of Mr Shieh for the Plaintiff. It may be a little bit more convenient for the two witnesses to attend proceedings in Guangzhou other than Hong Kong, but it is not a case where I am satisfied by the 1st Defendant that Guangzhou in PRC is clearly or distinctly more appropriate forum for the trial of the dispute between Plaintiff and the 1st Defendant. The 1st Defendant has been properly served with the writ on its branch office in Hong Kong being a Part XI Company under the Companies Ordinance. It has been actively trading in Hong Kong. It would not cause much inconvenience to them if they have to face litigation in Hong Kong by gathering all the necessary witnesses and documents to attend the court in Hong Kong. From all the circumstances of this case, I would not come to the conclusion that Hong Kong is forum non conveniens and that PRC is clearly or distinctly more appropriate than Hong Kong. This application by the 1st Defendant would have to be dismissed."

12. Mr Smith submits that from that passage it can be seen that the judge relied upon three reasons for his conclusion. First, that the 1st defendant has been properly served with the writ on its branch office in Hong Kong Second, that it has been actively trading in Hong Kong, and third that it would not cause much inconvenience to the parties if they have to face litigation in Hong Kong by bringing the necessary witnesses and documents here.

13. For myself, I am not persuaded that the judge, who seems to have listed those three matters together in the way they were mentioned by Mr Shieh, actually took into account the service of the writ upon Pearl on its branch office in Hong Kong as a connecting factor in reaching his conclusion that Hong Kong is not a forum non conveniens. Service as of right would in any case have been mentioned as the basis upon which the connecting factors come to be addressed. I think the judge might have expressed himself more felicitously but I remain unpersuaded that service as of right was an essential link in his chain of reasoning.

14. Having reached that conclusion, the first essential step in Mr Smith's submission, i.e. that the judge misdirected himself, fails. However that may be, I propose to address the second limb of his submission. On the assumption that the judge misdirected himself in principle or took into account matters he ought not to have done, this Court would not only be entitled to set side the decision, but itself to exercise the discretion that the judge should have properly exercised. That would require this Court to decide whether or not there is another available forum which is clearly or distinctly more appropriate than the Hong Kong courts. In the context of the sort of connecting factors raised, e.g. distance and communications between Guangzhou and Hong Kong, and the language of the witnesses and the court, the identity of other forum contemplated assumed special significance. Indeed the solicitors acting for Greenwood enquired of Pearl's solicitors by letter dated 7th December 1993: "What exactly are you applying for a stay in favour of? Are you applying for a stay in favour of a trial before the Chinese court? If so, which court and where exactly?" There was no answer to that pertinent enquiry; nor is there any evidence before this Court. It seems to me therefore that this Court cannot in the particular circumstances begin to satisfy itself that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum. Upon that ground also, I think, that the appeal would fail.

15. For those reasons, I would dismiss the appeal.

Litton, J.A.:

16. I, too, would dismiss this appeal for the following reasons:

(1) This is a case where the 1st defendant has been duly served with the plaintiff's writ seeking damages for breach of a charterparty. Jurisdiction to entertain the plaintiff's claim in the High Court is established. The plaintiff's choice of forum is not something the court would lightly disturb.

(2) The burden is on the 1st defendant to persuade the court to exercise its discretion to grant a stay of proceedings by showing that there is clearly and distinctly another forum which is more appropriate for the trial of the plaintiff's claim.

(3) The 1st defendant, on the material before the judge, failed to show that. The only evidence put forward by the 1st defendant before the judge related to the China Maritime Arbitration Commission being an appropriate forum. But the 1st defendant was unable to rely on that because its case in essence was that there never was a contract with the plaintiff which the plaintiff could enforce. Hence, there was no agreement to refer the dispute to arbitration.

(4) It is in the circumstances of this case plainly not enough for the 1st defendant to assert that "China" or "the PRC" or "the city of Guangzhou" is an appropriate forum. The plaintiff's solicitors specifically asked the solicitors for the 1st defendant in a letter dated 7th December 1993 which court in the PRC would adjudicate on the plaintiff's case if the action were stayed in Hong Kong. This question was never answered.

17. There is perhaps some looseness of language in the judgment appealed against. For instance, the reference to "the PRC" or "Guangzhou" not being an appropriate forum. But the conclusion the judge reached is, in my view, plainly correct. I would likewise dismiss the appeal.

Power, V.-P.:

18. I also would dismiss the appeal. What I wish to add underlines what has been said by both of my Brothers. The summons of this matter was issued on 27th July 1993. It sought a stay. Thereafter, on 7th December 1993, Clyde & Co, the plaintiff's solicitors, asked Ng & Partners, the solicitors of the 1st defendant, to answer the following questions:

"What exactly are you applying for a stay in favour of? Are you applying for a stay in favour of a trial before the Chinese court? If so, which court and where exactly?"

This squarely raised an important issue. No reply was ever sent to that letter, and indeed no reply has ever been given other than to suggest that a forum to which transfer is sought is either the courts in China or the courts in Guangzhou. Given the questions that are raised in this application, questions which it must be said are not unique to the circumstances of this case, that lack of particularity left considerations vital to the defendant's application unanswered. Even had the judge erred, for my part, I would have no hesitation in refusing to exercise the discretion of this Court in favour of the applicant. The appeal is therefore dismissed.

19. The respondent is to have the costs of the appeal to be taxed.