Deltatre S.P.A. v. Hong Kong Sports Industrial Development Ltd (Formerly Known As Letv Sports Culture Develop (Hongkong) Co., Ltd)
Read the full judgment text of HCA 1303/2017 on BabelCite. This High Court CFI judgment was delivered on 24 August 2018.
1. Should the Hong Kong courts refuse to stay a claim brought in breach of an exclusive jurisdiction clause simply because the defendant has shown no credible defence?
Cited by 13 cases · Cites 12 cases
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HCA 1303/2017 [2018] HKCFI 1942 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1303 OF 2017 ________________________
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_________________ DECISION _________________ INTRODUCTION 1.Should the Hong Kong courts refuse to stay a claim brought in breach of an exclusive jurisdiction clause simply because the defendant has shown no credible defence? 2.This is the main question of law the court was asked to decide in this joint hearing of the defendant’s application for a stay of proceedings based on an exclusive jurisdiction clause in favour of the Italian courts in Torino, and the plaintiff’s subsequent cross-application for summary judgment or alternatively interim payment[1]. 3.The parties’ rival contentions on this question centered around two lines of English and Hong Kong authorities among which:-
4.This apparent lack of consistency was in fact highlighted by Professor Adrian Briggs ten years ago in his text, Agreements on Jurisdiction and Choice of Law (2008) where he said (at §6.73):-
5.Before turning to this question and determining which line ought to be followed in the present case, I shall first set out the salient facts. UNDISPUTED BACKGROUND 6.The present dispute arose out of the live streaming of football matches from the UEFA European Championship finals held in France in 2016 (“EURO 2016”). 7.The plaintiff is a company incorporated in Italy with its registered office situated in Torino. It is and was at the material time a provider of digital services to enable broadcasting partners of international sports events to deliver media contents to their own viewers. 8.The defendant is a company incorporated in Hong Kong and a wholly owned subsidiary of Leshi Internet Information & Technology Corp., Beijing, a company listed on the Shenzhen Stock Exchange. The defendant was at the material time a licensed broadcaster of football matches from EURO 2016. As stated in the postscript to this Decision, the defendant was on 4 June 2018 ordered to be wound up. 9.By a written “Booking Order Form” signed by the defendant on 10 May 2016 and by the plaintiff on 19 May 2016, the defendant agreed to purchase and the plaintiff agreed to supply a list of digital broadcasting services in connection with EURO 2016 for a total price of EUR 208,000. The individual service items were taken from a “Rate Card” produced by the plaintiff for the event. 10.The Booking Order Form refers to and incorporates certain “Booking Terms and Conditions” attached thereto. Among those:-
11.After the signing of the Booking Order Form by the defendant, it booked additional digital broadcasting services from the Rate Card for a total price of EUR 11,000. 12.On 31 May 2016, the plaintiff issued its first invoice to the defendant in the sum of EUR 107,500 (“1st Invoice”), stated to be payable within 30 days. 13.EURO 2016 was held from 10 June to 10 July 2016 during which 51 matches were played. The services booked by the defendant related to live streaming of all those matches through the defendant’s internet web and mobile application platforms. 14.In the opening match held on 10 June 2016 between France and Romania (“Opening Match”), long delays were experienced with the live streaming of the match on the defendant’s mobile applications. 15.On 11 June 2016, during the match between Albania and Switzerland (“Match #2”) and that between Wales and Slovakia (“Match #3”), the defendant encountered further technical issues in connection with live streaming on its mobile applications. 16.On 12 and 13 June 2016, the local Chinese press published articles reporting on the issues encountered by the defendant’s subscribers. They all featured adverse titles including:-
17.Despite the aforesaid, no problems were encountered with the remaining matches. 18.In the period from 10 June to 13 July 2016, the parties attempted to resolve the problems encountered and address the aftermath in correspondence. Those included:-
19.On 12 December 2016, the plaintiff issued its second invoice to the defendant in the sum of EUR 111,500 (“2nd Invoice”), which was stated to be due upon receipt. 20.Despite the issuance of the 1st and 2nd Invoices and subsequent reminders, the defendant did not pay the total invoiced sum of EUR 219,000 or any part thereof. 21.Eventually, on 5 June 2017, the plaintiff commenced the present action to recover from the defendant the total sum of EUR 219,000 together with interest. 22.On 13 June 2017, in a without prejudice save as to costs letter[2], the defendant set out its position in response to the commencement of action, stating:-
23.On 21 June 2017, the plaintiff served its statement of claim on the defendant. 24.On 7 August 2017, the defendant filed a summons seeking to stay these proceedings on the basis of the Exclusive Jurisdiction Clause pursuant to RHC O 12 r 8(2A)(b). 25.Two weeks later, the plaintiff filed its own summons seeking summary judgment pursuant to RHC O 14 or alternatively interim payment pursuant to RHC O 29 rr 10 & 12(c). PARTIES’ CONTENTIONS AND ISSUES 26.The defendant’s position on the two summonses may be stated as follows:-
27.On the other hand, the plaintiff’s position is that:-
28.Apart from these substantive contentions, a preliminary procedural argument also surfaced as to the order in which the two summonses should be heard and determined. 29.Mr Chiu, for the defendant, submitted that the stay summons should be determined first. He relied on the judgment of Fuad VP in Hanil Bank & Ors v Societe Generale & Ors [1993] 1 HKLR 308 in which the learned judge said (at pp.317-318):-
30.Mr Allen, for the plaintiff, disagreed. He submitted that Hanil Bank (supra) does not stand for the proposition that a stay application must always be dealt with first. He advocated for the approach taken in Standard Chartered Bank v Pakistan National Shipping Corporation & Ors [1995] 2 Lloyd’s Rep 365 in which Clarke J considered the Order 14 summons before the stay summons therein. He also suggested that the defendant’s stay application was a delaying tactic when it has no defence. 31.On this last point, I do not think there is any material before the court to suggest that the defendant was engaged in delaying tactics. Shortly after the writ was issued and before the statement of claim was served, the defendant wrote to the plaintiff on 13 June 2017 outlining its broad defence (see §22 above). The defendant’s stay summons was also taken out before the plaintiff’s Order 14 summons. Absent any other evidence, it seems to me that the present stay application, which was taken out promptly, is a genuine attempt by the defendant to enforce the parties’ agreement under the Exclusive Jurisdiction Clause. 32.As to the order of the two summonses, it is a matter of the court’s discretion which should be heard and determined first. With an earlier order directing the summonses to be heard together, I indicated at the hearing that I would hear arguments on both together. That said, a stay summons should logically be determined before an Order 14 summons, as held in Hanil Bank (supra). But given the parties’ direct argument over the relevance of the lack of credible defence in the stay application, I would first determine this question of law before turning to all other issues. 33.Taking stock of the above, the broad issues for determination are thus:-
IS THE LACK OF CREDIBLE DEFENCE A “STRONG CAUSE”? 34.It is convenient to first review the relevant law, which provides the important backdrop to the arguments over the instant issue. General principles on O 12 r 8 stay 35.RHC O 12 r 8(1)(ga) empowers the court to order a stay of proceedings when a defendant disputes jurisdiction on various grounds. Rule 8(2) covers the specific situation where a defendant has been properly served but contends that the court should not exercise its jurisdiction in the relevant proceedings. Rule 8(2A) sets out three specified and distinct grounds for the purposes of r 8(2), namely that:-
36.The authorities are clear that the court in deciding whether an action should be stayed based on an exclusive jurisdiction clause should not undertake the same balancing exercise as one performed in a pure case of forum non conveniens. In this regard, Ma CJHC (as the Chief Justice then was) in Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 explained that (at §§37-38):-
37.It follows from such fundamental distinction that principles taken from pure forum non conveniens cases are not necessarily applicable to cases in which a defendant applies for a stay by simply invoking an exclusive jurisdiction clause. Stay based on an exclusive jurisdiction clause 38.The principles governing the court’s approach in deciding whether to stay proceedings based on an exclusive jurisdiction clause are set out in the judgment of Brandon LJ in The El Amria [1981] 2 Lloyd’s Rep 119, applied by the Privy Council on appeal from Hong Kong in The Pioneer Container [1994] 2 AC 324 at p.347E-G. 39.As explained by the learned judge in The El Amria (at pp.123(2)-124(1), with reference to his own first instance decision in The Eleftheria [1970] P 94):-
40.In Donohue v Armco Inc & Ors [2002] CLC 440, Lord Bingham provided further guidance (at §§24-25) as to how that discretion ought to be exercised, emphasizing the importance of respecting the parties’ agreement on jurisdiction:-
What amounts to a “strong cause”? 41.The parties have no dispute over the above general principles. What they disagree is on the precise scope of “strong cause” in the exercise of the court’s discretion, in particular whether the lack of credible defence per se would amount to such a “strong cause”. 42.There can be no doubt that, when addressing this discretionary question, the court is bound to take all circumstances into account. This however does not mean that every circumstance could amount to a “strong cause”, or that every circumstance must be given weight when assessing whether a “strong cause” is shown. 43.Taking for example what Brandon LJ referred to in point (5)(a) in the passage quoted under §39 above. The phrase “In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts” seems to me to carry the flavour of a Spiliada exercise. But in the present context, what is pertinent is not whether the connecting factors point to Hong Kong as distinctly the more convenient forum, but whether they are so strong and go to a matter of justice that the parties’ own jurisdiction agreement should not be enforced (see Chinachem Financial Services Ltd v Century Venture Holdings Ltd (unreported) HCA 410/2013; 8 January 2015 per DHCJ Marlene Ng at §99 in the context of a non-exclusive jurisdiction clause[3]). 44.In Noble Power (supra), the Court of Appeal highlighted the heavy burden a defendant has to meet in seeking to stay proceedings brought in the named jurisdiction of a non-exclusive jurisdictional agreement[4]. This does not simply involve the balancing of different connecting factors as one would in a Spiliada exercise. As explained by Ma CJHC (as he then was) at §§36, 39 and 40 of the judgment:-
45.At §71 of the same judgment, Stone J provided further elucidation on what constitutes a “strong cause” by citing with approval from the decision of Gloster J in Antec International Ltd v Biosafety [2006] EWHC 47 (Comm):-
46.Based on the above authorities, Mr Chiu thus submitted that “strong cause” in the present context must encompass either something unforeseeable at the time of contract, or something so exceptional that goes to the interests of justice. On the strength of the above reasoning of Noble Power (supra) and Chinachem (supra), I respectfully agree. Does the lack of credible defence per se amount to a “strong cause”? 47.Turning now to this key question, Mr Allen submitted that, on the basis of Standard Chartered Bank (supra), the answer is “yes”. In his skeleton, he referred to a number of cases in which Standard Chartered Bank (supra) was cited with approval. He however fairly acknowledged that most of these cases were concerned with forum non conveniens applications. The only cited authorities which followed Standard Chartered Bank (supra) and concerned an exclusive jurisdiction clause situation were Xu Ziming v Ruifeng Petroleum Chemical Holdings Ltd (unreported) HCA 450/2013, 27 August 2014 (main decision) and 29 October 2014 (leave to appeal) and Madison Communications Private Ltd v Le Ecosystem Technology India Private Ltd [2017] 5 HKLRD 284. 48.Mr Chiu took an opposite stance. He invited me to follow the approach of Coulson J in Euromark Ltd v Smash Enterprises Pty Ltd [2013] EWHC 1627 (QB), approved in Hyundai Engineering & Construction Co., Ltd v UBAF (Hong Kong) Ltd (unreported) HCA 175/2012, 25 September 2013 and CH Offshore Ltd v PDV Marina SA [2015] EWHC 595 (Comm). He submitted that this alternative line accorded with first principles as the lack of merits of a defence was a foreseeable matter when the parties entered into the Exclusive Jurisdiction Clause. He asked rhetorically:- even if a defendant may have no defence, why should he be deprived of the benefit of the parties’ contractual bargain for summary proceedings to be brought in the designated forum? 49.Mr Allen sought to undermine the weight of Euromark (supra) by submitting that there was not a single case in the past 17 years in which Standard Chartered Bank (supra) had been criticized or disapproved in the Hong Kong courts. He further drew my attention to the fact that Euromark (supra) had only been approved once locally in Hyundai Engineering (supra), which had not been cited with approval or followed on the instant question. He pointed out that, by contrast, Standard Chartered Bank (supra) had been cited with approval in Hong Kong on three occasions since Hyundai Engineering (supra) was decided. 50.When parties, as here, are advocating opposite lines of first-instance decisions to be followed on a matter of principle, I do not think citation statistics are necessarily conclusive of the matter. Questions of this sort, in my view, are better addressed by examining the justifications that led to the respective conclusions, which line better accords with the first principles and binding authorities and, to the extent necessary and appropriate, which line should be preferred as a matter of policy. 51.Before undertaking that task, I should point out that, apart from the six cases referred to in §§47-48 above, the parties also cited a number of other decisions made in the pure context of forum non conveniens. For the reasons set out in §§36-37 above, I do not regard such other authorities to be of assistance. I would mainly focus below on the six cases decided in the context of an exclusive jurisdiction clause. (a)The Standard Chartered Bank line of authorities 52.In Standard Chartered Bank (supra), the plaintiff, the confirming bank of a letter of credit, paid a sum of over US$1 million to the seller of goods in reliance of documents including a bill of lading. The plaintiff made that payment in the belief that the bill of lading was genuine. It subsequently transpired that the bill in fact contained a fraudulent misrepresentation concerning the loading of goods, and the issuing bank refused to pay the plaintiff for the documents at some stage. 53.The plaintiff bank sued, inter alios, two defendants (one being the carrier) responsible for producing the bill of lading in deceit and sought summary judgment. Those defendants then applied for a stay on the ground that the plaintiff bank was a party to a contract on the terms of the bill of lading which contains an exclusive jurisdiction clause for disputes to be determined at the carrier’s principal place of business, that is Pakistan. It was assumed for the purpose of this issue that the bank was a party to that contract and the dispute fell within the scope of the jurisdiction clause. 54.On the question of stay, Clarke J started (at p.372(1)) by reciting the five principles derived from The Eleftheria (supra) and adopted in The El Amria (supra) (see §39 above). On principle (4) regarding “all the circumstances”, he referred to the fact that, in The El Amria (supra), the plaintiff not only brought an action against the defendant who sought the stay, but also a second action against other parties claiming the same damages. Significantly, the judge then highlighted the undesirability of having multiple proceedings (at pp.372(2)-373(1)) by quoting from Brandon LJ’s decision in that case:-
55.It was in this context concerning multiplicity of proceedings that Clarke J decided to consider the summary judgment application first. As he explained (at p.373(1)):-
56.After reviewing the evidence, and for reasons which do not concern us here, Clarke J took the view that the two defendants had no arguable defence on liability and returned to the issue of stay. At p.377(1), the learned judge started by comparing the situations where a stay were to be granted and where it were to be refused. He concluded that a stay should be refused. As he explained in pp.377(2)-378(1):-
57.It thus seems to me plain that the primary, if not the central, reason why Clarke J refused a stay in Standard Chartered Bank (supra) was to avoid multiplicity of proceedings, which as he pointed out could affect the “interests of all the parties and the ends of justice”. This is wholly consistent with the leading authorities reviewed above. 58.Having come to this conclusion, and then to deal with the defendants’ specific reliance on the exclusive jurisdiction clause, Clarke J turned to the five principles cited by Brandon LJ in The El Amria (supra). The judge’s discussion under principle (1), at p.378(1)-(2) of Standard Chartered Bank (supra) and quoted below, is what Mr Allen placed considerable reliance on in the course of his submissions:-
59.Clarke J’s holding in this part of his decision, it seems to me, was a direct extension of his decision in Adria Services Y.U. v Grey Shipping Co., Ltd (unreported) 30 July 1994 (which did not concern an exclusive jurisdiction clause) to the facts of Standard Chartered Bank (supra) (which did concern such a clause). However, what I find less clear from the decision is the interplay between the lack of credible defence per se and the exclusive jurisdiction clause in the stay application. It is also unclear to me precisely why, in the judge’s brief consideration of this point, the parties’ exclusive jurisdiction agreement can justifiably be overridden because the defendant demonstrates no credible defence. 60.In Hong Kong, Standard Chartered Bank (supra) was cited with approval by DHCJ Wilson Chan (as he then was) in Xu Ziming (supra). 61.In Xu Ziming (supra), the plaintiff sued the defendant for unpaid sums under a promissory note and three cheques. The defendant admitted having issued the note and the cheques, and that it could not pay the relevant sums. It however sought to stay the action in favour of the Chinese courts in Guangzhou based on an exclusive jurisdiction clause under a separate loan repayment agreement, and alternatively, on the basis that the Chinese courts in Guangzhou were the most appropriate forum. 62.The learned deputy judge held, in refusing to stay the action, that:-
63.In its application for leave to appeal, the defendant relied considerably on the exclusive jurisdiction clause under the loan repayment agreement. Apart from re-arguing that the clause covered the dispute in question, it relied on the principles from The El Amria (supra) and contended that the question whether there are triable issues should not be accorded any significant weight, if at all, in considering a stay. 64.With the deputy judge’s main reasoning founded on the loan repayment agreement being inapplicable, his decision concerning the weight of triable issues was strictly obiter. Nevertheless, as can be seen in §§14-16 of his leave to appeal decision (quoted below), the deputy judge was prepared to adopt Standard Chartered Bank (supra) in rejecting the defendant’s argument regarding the irrelevance of triable issues:-
65.The last Hong Kong case that falls in the same line is Madison Communications (supra), a recent decision of DHCJ William Wong SC. 66.In that case, the 1st defendant engaged the 1st plaintiff to provide certain media services under a marketing services agreement. Shortly after the conclusion of that agreement, the 2nd defendant (which was the parent company of the 1st defendant) entered into a separate payment agreement with the plaintiffs in which it undertook to pay for the media services provided to the 1st defendant. Since some of the payments were in default, the plaintiffs commenced action to recover the balance. 67.Upon being served with the action, the 2nd defendant disputed jurisdiction on the basis, inter alia, of there being an exclusive jurisdiction clause under the management services agreement, which provided for all disputes between the parties to be exclusively adjudicated by the courts of Bangalore in India. Under the management services agreement, the governing law was stipulated to be the laws of India. 68.The main issues in that jurisdiction battle was whether, under Indian law, the 2nd defendant was entitled to rely on the exclusive jurisdiction clause and whether the Bangalore courts had jurisdiction over it, being a Hong Kong company with no apparent place of business or substantive operation in Bangalore. On the parties’ expert evidence, the learned deputy judge decided both questions in the negative. 69.The learned deputy judge then went on to consider the position even if the exclusive jurisdiction clause were applicable and binding on the 2nd defendant. As can be seen in §50 of his decision, the deputy judge was of the view that:-
70.At §61 of the decision, the deputy judge further cited with approval Clarke J’s decision in Standard Chartered Bank (supra) that a lack of arguable defence offered a strong reason to refuse a stay based on an exclusive jurisdiction clause. That said, it should however be noted that this point was in fact also conceded, and seems not to have been argued, by counsel for the 2nd defendant in the case (see §53 of the decision). (b)The Euromark line of authorities 71.By contrast with the Standard Chartered Bank line of cases, this alternative line places much less, if any, importance on the lack of substantive merits in the defence per se where an action has been brought in breach of an exclusive jurisdiction clause. 72.The origin of this alternative line was the case of Euromark (supra), where the claimant sued the defendant before the English High Court for wrongful repudiation of an exclusive distribution agreement for the defendant’s products. That agreement provided for Australian law to be the governing law of the contract, and the parties’ agreement to submit to the exclusive jurisdiction of the courts of Australia. 73.Relying on the exclusive jurisdiction clause, the defendant disputed jurisdiction of the English court in favour of the Australian courts. The claimant resisted the stay application by arguing, inter alia, that since the merits of its claim was so strong, it was in the “interest of justice” that the claim on liability be retained in England[5]. 74.Coulson J dismissed this argument. At §19 of the decision, the learned judge held:-
75.As to the significance of merits of the defence in the question of stay, Coulson J was of the firm view that there is very little of it. As he explained (at §35):-
76.This approach was followed in Hong Kong by DHCJ Lok (as he then was) in Hyundai Engineering (supra). In that case the third party bank, relying on an exclusive jurisdiction clause, sought to stay the third party proceedings brought by the defendant in favour of the Luoyang Intermediate People’s Court in Henan, PRC. 77.At §22 of the decision, the learned deputy judge emphasized the need of showing a “strong cause” when an action brought in breach of an exclusive jurisdiction agreement is sought to be stayed, citing Noble Power (supra) and Donohue (supra). At §23, the deputy judge then went on to explain the rationale of this approach:-
78.As to the relevance of merits of the defence, the deputy judge stated (at §41):-
79.The same passage was also cited with approval by Carr J in the case of CH Offshore Ltd (supra) at §64. (c) My view 80.Having considered the parties’ submissions, I am persuaded that the Euromark line of authorities in the one that ought to be followed in the present case. My reasons are as follows. 81.First, as set out in §§54-57 above, the defendants’ lack of an arguable defence was not the main reason why Clarke J refused to stay the proceedings in Standard Chartered Bank (supra). The main reason was to avoid multiplicity of proceedings. It was only during the learned judge’s “brief” consideration of the five principles cited by Brandon LJ in The El Amria (supra) that he sought to extend his decision in Adria Services Y. U. (supra), a case which did not concern an exclusive jurisdiction clause, to one which did concern an exclusive jurisdiction clause. 82.But as pointed out above, it is unclear from the decision why such an extension was justified, either on authority or as a matter of policy. As the dictum of Ma CJHC in Noble Power (supra) demonstrates (see §44 above), the considerations involved in pure cases of forum non conveniens are not the same as those in those concerning exclusive jurisdiction clauses. Absent any reasoning in Clarke J’s brief consideration of the matter, it seems to me that Standard Chartered Bank (supra) (or, for that matter, Xu Ziming (supra) and Madison Communications (supra) which followed it without additional reasoning) should not necessarily be regarded as the last word on the question whether the lack of credible defence per se is a sufficiently “strong cause” for overriding an exclusive jurisdiction clause. 83.Second, even on face value, and as Mr Chiu submitted, I find it difficult to square this part of Standard Chartered Bank (supra) with the more recent and appellate decisions such as Donohue (supra), which emphasized the parties’ contractual bargain, and Noble Power (supra), in which it was held that “strong cause” does not include foreseeable matters, and that strong or overwhelming reasons or exceptional circumstances must be shown. 84.In this connection, I do not consider the lack of a credible defence per se to be an unforeseeable, overwhelming or exceptional matter such that it would constitute a “strong cause”. Parties, commercial ones in particular, must have, or must be taken to have, foreseen situations where one party could have no defence to a straightforward claim. As Coulson J observed, correctly in my view, in Euromark (supra) (at §24):-
85.Absent issues on the interests of justice, the lack of credible defence per se is in my view far from being a “strong cause” for the court to take the drastic step to override an exclusive jurisdiction agreement. 86.Third, there is in any event a strong policy in favour of upholding contractual bargains, including jurisdictional agreements. It is one thing for the courts to hold that a defenseless claim should not be stayed in favour of a foreign jurisdiction when the plaintiff has not committed any breach of contract or wrong. It is wholly another for the courts to hold that a plaintiff may breach an exclusive jurisdiction agreement voluntarily concluded simply because it has a defenseless claim. The latter proposition would in my view require a very strong justification. 87.As highlighted by DHCJ Lok in Hyundai Engineering (supra), predictability, consistency and stability in the resolution of international commercial disputes are critical to international commerce. Parties’ own agreements on how and where they resolve disputes must not be disturbed too readily, if at all. In this connection, I respectfully agree with the comments of Professor Adrian Briggs in Agreements on Jurisdiction and Choice of Law (2008) (at §6.75), cited by Mr Chiu:-
88.In my judgment, the Euromark line of authorities strikes the correct balance between the policy of upholding the parties’ own jurisdiction agreements while retaining a discretion only for the truly exceptional cases. Otherwise, a whole range of unintended consequences could result. For instance, it could encourage plaintiffs to “have a go” and mount an opportunistic summary judgment application by bringing action knowingly in a non-agreed forum. This would defeat the defendant’s contractual entitlement under the jurisdiction clause and deprive it of any benefit to be enjoyed thereunder. It may even potentially cause harm that is irreparable even by a subsequent stay of the action. 89.In conclusion, I do not think that the lack of credible defence per se can be said to be an unforeseeable factor at the time of contract. Neither do I consider this factor as constituting an overwhelming reason, exceptional circumstance, or a “strong cause” for the court to intervene and override the parties’ own exclusive jurisdiction agreement. 90.Accordingly, my answer to the first issue posed in §33(1) above is in the negative. ANY OTHER “STRONG CAUSE” FOR REFUSING A STAY? 91.Having disposed of the first issue, I now turn to the other grounds relied on by the plaintiff to argue against a stay[6]. 92.The plaintiff first relied on the defendant’s “concession” that Italian law is not materially different from Hong Kong law, and that such a “concession” was not foreseeable. The plaintiff submitted that, therefore, there is no better place to resolve the dispute than in the Hong Kong courts. I do not think that this amounts to a “strong cause”. It is a matter of convenience of no material relevance in the present enquiry. 93.The plaintiff then contended that Hong Kong is the defendant’s home jurisdiction, and there cannot be any prejudice for it to litigate in its home court. The plaintiff relied on the fact that the defendant had adduced no evidence on the relative convenience and expense of trial between litigating in Hong Kong and Italy and the location of the evidence or its witnesses. Besides the fact that these are again mere matters of convenience (see Chinachem (supra) at §134), the burden of showing “strong cause” in fact rests on the plaintiff but not on the defendant. The plaintiff incorrectly reversed the burden of proof. 94.The plaintiff next referred to the fact that, if this action were stayed, it would be prejudiced by having to sue in Italy and incur extra time and costs in enforcing an Italian court judgment in Hong Kong by a common law action. It referred to RHC O 1A r 1 and argued that time and costs would be wasted if the matter were to be stayed. Absent any valid issues touching upon interests of justice (and I see none on the evidence), I do not think mere savings in time and costs, being foreseeable matters of convenience, assist the plaintiff in showing “strong cause”. On the contrary, I am inclined to think that any “wastage” of time and costs could fairly be said to be the plaintiff’s own making in bringing this action in breach of the parties’ own Exclusive Jurisdiction Clause. 95.Relying on The Frank Pais [1986] 1 Lloyd’s Rep 529, the plaintiff further submitted that its claim of EUR 219,000 is a small amount, and that the court is entitled to take this into account when exercising its discretion. As pointed out by Mr Chiu, the sum involved in The Frank Pais (supra) was $2,600, which is a small fraction of the plaintiff’s claim herein. Further, as I noted in §31 above, the defendant was not playing delaying tactics but was seeking to enforce a jurisdiction agreement. The defendant is entitled to do so, and did so in a timely fashion. 96.Finally, the plaintiff contended that the defendant’s attempt to shift this dispute away from its home court to the Italian court is “bizarre and counterintuitive”. With respect, this argument is misconceived. All the defendant is doing by seeking a stay is simply to ask the plaintiff to respect the sanctity of contract – pacta sunt servanda. It is also noteworthy that the Exclusive Jurisdiction Clause in favour of Italy was put forward by the plaintiff itself[7]. As Lord Bingham said in Donohue (supra) at §29, the parties’ right under a jurisdiction agreement:-
97.In these circumstances, not only is there nothing “bizarre and counterintuitive” for the defendant to ask the plaintiff to abide by the contract, this contention takes the plaintiff nowhere in showing a “strong cause” to move the court to override the Exclusive Jurisdiction Clause. 98.Accordingly, I am of the firm view that the plaintiff has failed to show any other “strong cause” against a stay. My answer to the second issue posed in §33(2) above is therefore also in the negative. 99.Having reached this conclusion, the third issue posed in §33(3) above as to whether the defendant has shown any credible defence does not strictly arise. But in view of the parties’ detailed submissions made on this point, and even assuming I were wrong on the first issue, I shall now turn briefly to those submissions on substantive merits. HAS A CREDIBLE DEFENCE BEEN SHOWN? Parties’ contentions 100.On the evidence before the court, there can be no dispute that:-
101.In these circumstances, the pertinent question is whether the plaintiff was to blame, at least partly, for these problems, and whether it is liable to compensate the defendant’s loss, if any. 102.The defendant has advanced a two-fold defence in support of its set-off and counterclaim to the plaintiff’s claim. It contended that the plaintiff had breached:-
103.The defendant further deposed that, by reason of the defective services provided by the plaintiff, it has suffered serious, adverse and irreparable reputational damage, as well as monetary loss by having paid compensation to its own customers. 104.On the other hand, the plaintiff referred to the Case Summary (see §18(2) above) and argued that the problem was the fault of the CDN provider, namely Akamai, with whom the defendant was in its own separate contractual relationship[8]. 105.In §§20-24 of the Second Affidavit of Yu Shin Man (of the plaintiff’s solicitors), she provided the following technical explanation on the plaintiff’s behalf as to what the Case Summary meant:-
106.Hence the plaintiff reiterated that it took no responsibility for distribution of the broadcast content, as the defendant had contracted with its own CDN provider, Akamai, to effect distribution of media contents. To further make good this point, the plaintiff pointed to various parts of the Rate Card that contain the following statement:-
107.On quantum, the plaintiff complained that the defendant has failed to provide details on the amount of the loss allegedly suffered as the basis of the set-off and counterclaim, referring to a defendant’s duty to condescend upon particulars and the recent decision of China Life Insurance (Overseas) Company Ltd v Li Xiaoming (unreported) HCA 570/2017; 11 December 2017 in which Lisa Wong J said (at §69):-
108.The plaintiff finally submitted that, even if it were liable to the defendant, its liability should be limited by Clause 20 of the Booking Terms and Conditions to the value of the services provided only in respect of the problematic matches, and that it should not be held liable for any reputational loss as alleged by the defendant. Applicable threshold 109.In deciding whether the defendant has shown a credible defence for the purpose of a stay application (whether based on forum non conveniens or an exclusive jurisdiction clause), the existing authorities are clear that the defendant does not have the same burden to discharge as a defendant who seeks leave to defend in an Order 14 application. 110.In Melvin Waxman & Anr v Li Fei Yu & Anr [2013] 3 HKLRD 711, To J said the following (at §§19 and 21):-
111.In China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd (unreported) HCA 1323/2014; 11 December 2015, Mimmie Chan J similarly held that (at §§14-15):-
112.This approach was also adopted in the exclusive jurisdiction clause context, albeit obiter, by DHCJ William Wong SC in Madison Communications (supra), a case relied on by Mr Allen himself. At §65 of the decision, the learned deputy judge said:-
113.Therefore, it seems to me that the plaintiff’s complaint that the defendant has failed to “condescend upon particulars” is not made out based on the above authorities, even assuming merits were to be relevant. As submitted by Mr Chiu, the furnishing of particulars and evidence is to be done before the foreign court with exclusive jurisdiction over the dispute. Even if merits were to be relevant, all the defendant is required to do would be to identify a defence that is supported by some evidence beyond bare allegations, and that is prima facie sustainable at law. 114.The question then is – has the defendant done so? My view 115.There is no dispute that the plaintiff was under a contractual obligation to provide the defendant with CDN Akamai account integration services, for which the plaintiff charged the defendant EUR 2,500 under the 1st Invoice. This item is included on p.93 of the Rate Card as one of the “professional services” on offer. 116.The evidence also discloses that, in the period from 17 to 27 May 2016 in the run up to the finals, the plaintiff was actively engaged in discussions with both the defendant and Akamai to effect integration of its services with the defendant’s own Akamai account. As revealed by the correspondence, these included technical matters concerning:-
117.According to the Case Summary, the problems the defendant encountered in the Opening Match were caused by certain “case sensitivity problems in two different match conditions regarding live manifests/playlists, resulting in using the VOD domain in the cache key and a TTL of 365d on the child playlists”. As Mr Chiu submitted, it does not actually reveal whether the issue was due to Akamai’s own internal problem or whether it was part of the plaintiff’s Akamai integration process. 118.While the plaintiff attempted to provide an explanation, through its solicitors, that the Case Summary suggests the issue was due to Akamai’s own fault (see §105 above), I am unable to give any weight to this conclusion, which concerned technical matters clearly not within Ms Yu’s capacity to depose[9]. Putting aside the fact that she was a factual and not an expert deponent, there is no evidence to suggest that she possessed the relevant technical knowledge or expertise. If, on the other hand, these matters were deposed to on information from the plaintiff’s legal counsel Ms Elena Cantello[10], there is no evidence to suggest that Ms Cantello possessed the relevant knowledge or expertise either. 119.But even putting all these aside, the fundamental point is that the plaintiff had a contractual duty to integrate its services with the defendant’s Akamai CDN account. This is evidenced by its central role in the pre-broadcast integration and testing on technical matters shown in the above emails. Given the plaintiff’s ability to “fix” the problem after Match #3[11], there is, to say the least, a triable issue as to whether the plaintiff had used its reasonable efforts to minimize the faults or disruptions encountered by the defendant under Clause 22, and whether it has provided such integration service with care and skill under its implied obligation. 120.The quality of the available evidence is not such that the court can brush aside this defence as being totally incredible or a bare assertion. In my view, there are genuine and serious issues to be tried, on both factual and perhaps even expert evidence, before one can properly assess whether the plaintiff had fully discharged its contractual obligation to the defendant, including taking reasonable steps to minimize third party faults. 121.Having come to the view that the defendant has identified a credible defence, it is inappropriate for me to consider in detail the issues of quantum and the enforceability of the limitation of liability provisions. 122.Suffice it to say that, on quantum, there is certainly prima facie evidence that the defendant may have suffered some loss (see the newspaper reports referred to in §16 above, and the plaintiff’s own email mentioned in §18(4) above referring to the defendant’s “brand impact assessment”). Moreover, it is usually impossible or inappropriate to go into a fact-sensitive and controversial question of whether a particular limitation of liability provision satisfy the requirement of reasonableness even in the Order 14 context. 123.For all these reasons, even if (contrary to my above holding) the lack of merits of the defence would constitute a “strong cause”, I would still have held against the plaintiff on the stay application. DISPOSITION 124.In conclusion, I hold that the Euromark line of authorities is more consistent with the relevant leading authorities and the strong policy of respecting the parties’ own jurisdiction agreement. It should be preferred over the Standard Chartered Bank line of authorities in the present case. Given the plaintiff’s failure to show any “strong cause” to persuade the court to override the Exclusive Jurisdiction Clause, the defendant’s stay application succeeds. It follows that the plaintiff’s application for summary judgment or interim payment must be dismissed. 125.On costs, Mr Chiu submitted that in the event the defendant should prevail, costs of both summonses should be ordered against the plaintiff on an indemnity basis. He relied on the following commentary from HKCP (2018) Vol 1, §11/1/12O:-
126.Mr Allen has not disputed this approach, which I also agree. 127.I therefore order as follows:-
128.I thank both Mr Allen and Mr Chiu for their able and succinct submissions. POSTSCRIPT 129.There is only one other matter that I should state for the record. 130.After the issuance of the Notice of Handing Down Decision dated 21 August 2018, the plaintiff’s solicitors wrote to inform the court on 23 August 2018 that the defendant was on 4 June 2018 ordered to be wound up in High Court Companies Winding-up Proceedings No. 66 of 2018. 131.According to the Gazette Notice attached to the letter of the plaintiff’s solicitors, the relevant winding-up petition was presented on 12 March 2018. On the basis of section 186 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32), the plaintiff’s solicitors thus requested the court not to hand down the present Decision. 132.Having considered the plaintiff’s further submissions lodged in the morning of 24 August 2018[12], I do not agree that the mere handing down by the court of this Decision in respect of two applications made and fully heard before the defendant was petitioned and later ordered to be wound up would be caught by section 186 of Cap 32. 133.The three authorities cited by the plaintiff do not support its conclusion. Both In re International Pulp and Paper Co (1876) 3 Ch D 594 and Eastern Holdings Establishment of Vaduz v Singer & Friedlander Ltd [1967] 1 WLR 1017 concern whether a party in an action should be allowed to take furthersteps after a winding-up order is made against its counterparty. The relevant order in Hussain Tanweer v Focus Roller Shutter Ltd (unreported) DCEC 1145/2005; 18 September 2006 made by HHJ Marlene Ng (as she then was) was to direct parties to take further steps in discovery, exchanging witness statements and the fixing of a hearing. None of these concerns the present situation where the court is making known its own decision in respect of applications made and fully heard before the relevant winding-up proceedings even came into existence. 134.In any event, it is a stay of proceedings, as opposed to the taking of further positive steps in this action, which has been ordered. It is also the defendant which stands to benefit from this Decision. 135.In all the circumstances, I do not consider that there is any impediment for the court to hand down this Decision as scheduled.
Mr Charles Allen, of Orrick Herrington & Sutcliffe, for the plaintiff Mr Byron Chiu, instructed by Anthony Siu & Co, for the defendant [1] By the Order of Master Hui dated 11 September 2017, the parties’ applications were ordered to be heard together. [2] No issue as to admissibility of the letter extract has been taken. [3] The considerations for cases where a party sues in the named jurisdiction of a non-exclusive jurisdiction clause are no different from those where a party sues in accordance with an exclusive jurisdiction clause (see Noble Power (supra) per Ma CJHC at §§29 and 37). [4] See footnote 3, above. [5] The parties agreed that disputes over causation and loss would be tried in Australia. [6] §§23-32, Plaintiff’s Skeleton Argument on Stay. [7] §43, Second Affidavit of Yu Shin Man. [8] On the evidence, the contract was made through the defendant’s sole shareholder. [9] The courts have repeatedly held that it is inappropriate for an affidavit to be made by a solicitor on substantive or controversial matters for the reason that it is the party itself, but not the solicitor, who would have first-hand knowledge of those matters (see HKCP (2018) Vol 1, §41/5/4; UES International (HK) Ltd v Maritima Maruba SA (unreported) HCA 632/2011; 19 November 2013 per Anthony Chan J at §§15-17; Beijing Tong Gang Da Sheng Trade Co Ltd v Allen & Overy [2014] 2 HKLRD 86 per DHCJ Le Pichon at §§17-18). [10] §2, Second Affidavit of Yu Shin Man. [11] See email of the plaintiff (Guillaume Perret) dated 17 June 2016 (04:02). [12] The court had also invited the defendant and the Official Receiver’s Office to lodge submissions on the plaintiff’s request. The Official Receiver’s Office informed the court that, as it was not aware of the background and nature of these applications, it had no comment on the plaintiff’s request. The defendant’s solicitors, on the other hand, had not lodged any submissions. | ||||||||||||||||||||
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