Hanwha Total Petrochemical Co., Ltd. and Another v. Changhong Group (HK) Ltd

HCAJ 6/2018

[2019] HKCFI 263

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 6 OF 2018

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D E C I S I O N

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1.This action arose out of a collision which took place between the Defendant’s vessel CF Crystal and MV Sanchi on 6 January 2018. In this action, the 1^st Plaintiff is the consignee of the cargo carried on board MV Sanchi, which was totally lost as a result of the collision, and the 2^nd Plaintiff is the insurer of that cargo. The Plaintiffs’ claim is for the loss of the cargo on the ground that the collision was caused or contributed by the negligence or breach of duty of the Defendant as owner of CF Crystal.

2.This court had recently dealt with a related action which arose out of the same accident.  It was an inter-ship action between the owner of MV Sanchi and the Defendant over the liability for the accident.  By its Decision dated 15 November 2018, [2018] HKCFI 2474 (“Decision”), this court dismissed the Defendant’s application for stay of proceedings on the ground of forum non conveniens.  The material facts concerning the collision were summarised in the Decision.     

3.This is a similar application by the Defendant for stay of these proceedings on the ground of forum non conveniens. Save for the Plaintiffs’ position that their opposition to a stay application is stronger than that of the owner of MV Sanchi, there is no material difference on the consideration required by the court, and the reasoning set out in the Decision applies to this application.  Indeed, the written submissions put before the court by Mr Alder, who appeared for the Defendant, are very similar to those dealt with by the court in the inter-ship action. 

4.The Decision is under appeal by the Defendant. However, I am unable to see any reason why a different outcome is justified in the present application.

5.As regards the submission of Mr Smith SC, who appeared for the Plaintiffs, that there is no relevant on-going proceedings in the Shanghai Maritime Court (“SMC”) between the present parties, and therefore the principle of lis alibi pendens cannot be invoked by the Defendant, I agree with it. 

6.There is only 1 action before the SMC between the Defendant and the 1^st Plaintiff.  It is referred to as a “mis-declaration” claim by the former against, inter alia, the latter. It has yet to be served on the 1^st Plaintiff.  It appears to be a claim based on the allegation that the cargo in question, gas condensate, was highly volatile and dangerous because it was not fit for long distance sea carriage in substantial quantity. 

7.There is evidence before the court adduced by the Plaintiffs to challenge the basis of the allegation.  However, I am inclined to agree with Mr Smith that there is a fundamental question over the relevance of the mis‑declaration claim.  It is very difficult to see how such a claim, which does not depend on the existence of a duty of care owed by the MV Sanchi cargo interest to the owner of CF Crystal, can be brought in Hong Kong by way of a set off or counterclaim by the Defendant in the present action. The claim will not be able to meet the double actionability rule applicable to foreign torts: see Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190 at 198C-D and 199F.

8.In the case of the 2^nd Plaintiff, the registration of its claim (applied on 5 June 2018) against the tonnage limitation fund established by the Defendant was approved by the SMC on 7 August 2018.  However, the matter was not pursued further and the time for making a claim against the fund by the 2^nd Plaintiff had expired.  The registration should be viewed in light of the fact that this action was commenced by the Plaintiffs on 19 January 2018.  There is no reason to doubt that the registration of claim by the 2^nd Plaintiffs was a protective step.  I agree with Mr Smith that the position of the 2^nd Plaintiff is stronger than the plaintiffs in the case of The Peng Yan [2009] 1 HKLRD 144, §33, where the Court of Appeal rejected the argument that the Hong Kong action should be stayed by reason of the fact that the plaintiffs had joined in the limitation action before the Ningbo Maritime Court.  The Court accepted that the step taken by the plaintiffs was a protective measure and that they would most likely withdraw from the limitation action if the Hong Kong proceedings were not stayed.

9.Finally, I would deal with two points advanced by Mr Alder.  Firstly, I do not believe that the Plaintiffs can be criticized as having engaged in forum shopping.  All the parties before the court are commercial entities. Undoubtedly, they acted in accordance with their commercial interest.  The Plaintiffs cannot be criticized for choosing to litigate in Hong Kong where there is a higher tonnage limitation when they did so as of right because the Defendant is a Hong Kong company.  I have little doubt that the Defendant had taken into account the lower limitation in Shanghai when it set up the limitation funds there.

10.Secondly, Mr Alder submitted that the limitation proceedings before the SMC constitute lis alibi pendens between the Defendant and the Plaintiffs.  I am unable to accept such a sweeping proposition.  It would amount to a considerable advantage if not a licence to the Defendant to impose on all who may have a claim against it to litigate in Shanghai.  Such a proposition is not supported by the authorities.       

11.In the premises, I agree that the Plaintiffs are in a stronger position that the owner of MV Sanchi in resisting a stay of proceedings application by the Defendant.  Accordingly, this application is dismissed and I make an order that the costs of and occasioned by this application be to the Plaintiffs, to be taxed if not agreed and paid forthwith.

Mr Clifford Smith SC, instructed by Clyde & Co, for the 1^st to 2^nd Plaintiffs

Mr Edward Alder, instructed by Reed Smith Richards Butler, for the Defendant