Win More Shipping Ltd v. Director of Marine

HCAL 1520/2018

[2019] HKCFI 1137

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST NO 1520 OF 2018

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J U D G M E N T

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INTRODUCTION

1.By this application for judicial review, the Applicant seeks to challenge:

(1)  The alleged decision of the Director of Marine (“the Director”) on 24 May 2018 (“the Decision”) to close the registration of the motor tanker “Lighthouse Winmore” (“the Vessel”); and

(2)  the failure or refusal or delay (“the Inaction”) of the Director to make a request to the United Nations Security Council Sanctions Committee (“the Committee”) for the release of the Vessel from detention pursuant to paragraph 9 of United Nations Security Council Resolution 2397 (2017).

2.For reasons which I shall explain in this judgment, the application for leave to apply for judicial review is dismissed.

BACKGROUND FACTS

3.The Applicant, Win More Shipping Limited, is the registered owner of the Vessel.  The Vessel has been registered with the Hong Kong Shipping Register under the Merchant Shipping (Registration) Ordinance, Cap 415 (“the Ordinance”), since 5 May 2014.  It flies the Hong Kong flag, being the regional flag the HKSAR directly below the national flag of the PRC.

4.Bureau Veritas Marine China Co Ltd (“BV”) is a PRC company with its head office in Shanghai.  It is a “classification society”, and also a “recognized organisation” and an “appointed security organisation” authorized to issue, inter alia:

(1)  Safety Management Certificate (“SMC”) under the Merchant Shipping (Safety) (Safety Management) Regulation, Cap 369AX;

(2)  International Ship Security Certificate (“ISSC”) under the Merchant Shipping (Security of Ships and Port Facilities) Rules, Cap 582A; and

(3)  MLC Statement of Compliance, the equivalent document in Hong Kong of a MLC Certificate issued under the Maritime Labour Convention prior to the coming into force of the Merchant Shipping (Seafarers) (Working and Living Conditions) Regulation, Cap 478AF, on 20 December 2018.

5.At all material times, the Vessel’s class was provided by BV, and its SMC, ISSC and MLC Statement of Compliance (hereinafter collectively referred to as the “Statutory Certificates”) were also issued by BV.  They were due to expire on 30 October 2019 / 4 November 2019, but were cancelled in February 2018 by BV in circumstances more particularly described below.

6.In July 2017, the Applicant chartered the Vessel to a Taiwanese company for a fixed period of 12 months with delivery during the period between 15 and 30 August 2017.

7.On 24 November 2017, the Vessel called at Yeosu Port, South Korea.  While she was at the port, the Yeosu Regional Office, Ministry of Oceans and Fisheries, Republic of Korea (“the Korean Port Authority”) identified various deficiencies concerning the Vessel.  On the same date, the Korean Port Authority sent to the Director (i) a Notification of Detention of Ship, and (ii) a PSC-Inspection Report.  In that report, the Korean Port Authority identified 24 deficiencies, with 8 of them being detainable deficiencies, concerning the Vessel, and stated that it would (i) require a report to be submitted by BV showing the rectification of the deficiencies, and (ii) conduct a re-inspection of the Vessel, before allowing it to depart from the port.  On 28 November 2018, the Director requested Lighthouse Ship Management Limited (“the Ship Manager” of the Vessel) to furnish her with (i) a detailed report from the Master of the Vessel as regards its inspection by the Korean Port Authority, with photos showing the deficiencies and their repairs if available, and (ii) the corrective actions and preventive measures taken or to be taken by the Ship Manager to avoid recurrence of similar deficiencies.

8.In the meantime, various items of repair to the Vessel were carried out.  On 28 November 2017, BV issued a survey report stating that, save in respect of 4 outstanding items to be repaired, or definitively repaired, by 23 January 2018, the rest of the deficiencies as identified by the Korean Port Authority had been rectified.

9.On 4 December 2017, the Korean Port Authority carried out a re-inspection of the Vessel, and released it on the same day.  However, at around the same time, the Korean Port Authority also carried out an investigation into the Vessel’s suspected involvement in illicit ship-to-ship transfers of petroleum products to a North Korean vessel in breach of certain resolution of the United Nations Security Council Resolution (more particularly described below), and thus the Vessel remained impounded at the Yeosu Port.

10.By a letter dated 23 December 2017, the insurer of the Vessel, PICC, informed the Applicant that the hull and liability insurances in respect of the Vessel had been cancelled as from 13 December 2017 due to the United Nations informing the West of England P&I Club that the Vessel was suspected of having violated sanctions imposed on North Korea by ship-to-ship transfer of cargoes from the Vessel to a North Korean vessel.

11.By an email dated 4 January 2018, BV gave notice to the Ship Manager that, in accordance with Article 9.1 of the Marine & Offshore Division General Conditions, the class of the vessel and the Statutory Certificates would be terminated within 30 days from the date of that notice, and the effective date of the termination would be the 3^rd of February 2018.  The said Article 9.1 provides that: “The Parties shall have the right to terminate the Services (and the relevant contract) for convenience after giving the other Party thirty (30) days’ written notice”.

12.On 3 February 2018, BV gave notice to the Applicant (through the Ship Manager) of the withdrawal of the Vessel’s class. By 3 notices of invalidation dated 5 February 2019, BV further informed the Ship Manager that the Statutory Certificates had been invalidated.  In each notice, the reason given for the invalidation of the relevant certificate was stated to be “BV decision”.

13.On 5 February 2018, BV informed the Marine Department that the class of the Vessel had been withdrawn on 3 February 2018, and the Statutory Certificates had been cancelled on 3 February 2018 due to “service termination”.

14.The Applicant alleges that Mr Chan Kit, Vice-President of BV, admitted to Mr Gong (the sole director and shareholder of the Applicant) over the telephone that BV withdrew the Vessel’s class and cancelled the Statutory Certificates due to its concern about the stigma to BV caused by the detention of the Vessel arising from a suspected violation of the United Nations Security Council Resolution and the negative impact on its share price and market value as a result thereof, and further told Mr Gong that after the release of the Vessel from detention, BV would issue the requisite interim statutory certificates so that the Vessel could sail to a dry dock for permanent repairs.

15.By a letter dated 6 February 2018 (“6 February 2018 Letter”), the Director informed the Applicant that, in view of the withdrawal of the Statutory Certificates by BV, she considered that it would be inappropriate for the Vessel to continue to be registered with the Hong Kong Shipping Register pursuant to Section 64(3)(a) and (4) of the Ordinance, and gave notice to the Applicant of her intention to direct that the Vessel’s registration be closed unless she was satisfied that it would be inappropriate to do so by any representation that the Applicant might make within 90 days from the date of service of the notice.

16.On 9 March 2018, the Director received an email from the Commerce and Economic Development Bureau.  Attached to that email was a note issued by the Consulate General of the Republic of Korea, which further enclosed a memo from the Ministry of Oceans and Fisheries, Republic of Korea (“the Ministry”).  In the said memo, the following was stated:

“LIGHTHOUSE WINMORE … a ship flying Hong Kong flag, has been impounded at the ROK Port of Yeosu (arrived on November 24, 2018) suspected of transferring petroleum product to a DPRK vessel through illicit ship-to-ship transfers on the international waters, which is a violation of paragraph 9 of UN Security Council resolution 2397… The ship has 23 crew members (21 Chinese and 2 Myanmarese), reported to be put in a welfare and safety-compromising situation due to depletion of food and fuel. The authorities of Hong Kong is obliged to take appropriate measures to ensure adequate supply of food and the right to be repatriated for the seafarers to their country of origin … The authorities of Hong Kong is kindly recommended to immediately notify the shipowner of the situation so that he or she takes necessary measures, including providing food and fuel, to protect the health and safety of the seafarers.”

17.By an email dated 12 March 2018, the Marine Department informed the Ship Manager that it had received a complaint from the Consulate General of the Republic of Korea that the crew members on board the Vessel were in depletion of food and fuel at Yeosu Port, and required that they be provided with sufficient food, water and fuel immediately.

18.By a letter from the Director to the Applicant dated 24 May 2018 (“May 2018 Letter”), the Director stated as follows:

“Reference to information from the Ship Safety Branch of the Hong Kong Marine Department that the SMC, ISSC and MLC (SoC) have been withdrawn by the Classification Society of the subject ship. Sections 22 & 64 of the [Ordinance], stipulate that the condition relevant to the safety, risk of pollution or health and welfare of persons employed on board of a ship may render the ship inappropriate to continue to be registered.

I hereby write to advise you that I am not satisfied that the ship in question is registrable and according to Section 64(4) of the Ordinance, I intend, after the end of the period of 90 days beginning with the date of service of this notice, to direct the ship’s registration to close unless I am satisfied that it would be inappropriate to do so by any representation made by or on behalf of you within the period.”

19.By a letter dated 29 May 2018, the Ministry informed the Applicant of the following:

“[The Vessel] entered Yeosu Port, Republic of Korea on November 24^th 2017 and has been impounded on charges of letting petroleum flow into North Korea through illicit ship-to-ship transfers in violation of Paragraph 11 of UN Security Council Resolution 2375.

Paragraph 9 of UN Security Council Resolution 2397 decides that vessels shall no longer be frozen (impounded) ‘after six months from the date such vessels were frozen (impounded) … if the committee decides, on a case-by-case basis and upon request of a flag state, that adequate arrangements have been made to prevent the vessel from contributing to future violations of these resolutions.’

The Korean government will remind [the Applicant] that for the Committee to swiftly decide that the UNSC resolution provision shall no longer apply, the flag state (Hong Kong) will have to submit to the Committee plans to prevent the recurrence of such incident, and request that the said vessel be no longer impounded.”

20.On 30 May 2018, the Applicant submitted to the Director certain proposed preventive measures to be adopted in respect of the Vessel (“the Proposed Measures”), and asked the Director to make a request to the Committee for the release of the Vessel (“the Proposed Request”).  Between June and October 2018, the Applicant repeatedly requested to the Director to submit the Proposed Measures and make the Proposed Request to the Committee, while the Director was reviewing the Applicant’s case.

21.On 1 August 2018, the Applicant made the present application for leave to apply for judicial review.

22.On 30 October 2018, the Director wrote to the Applicant’s solicitors setting out her comments on the Proposed Measures and seeking various clarifications, and additional information and materials, in relation to them, and invited the Applicant to respond by 12 November 2018.

23.On 4 December 2018, the Department of Justice on behalf of the Director wrote to the Applicant’s solicitors stating, inter alia, that:

(1)  the Applicant’s challenge to the Decision was premature in that the Director had not yet made a decision to de-register the Vessel; and

(2)  the Applicant’s complaint that the Director had failed or refused to make, or delayed in making, a request to the Committee for the release of the Vessel (ie the Inaction) was misconceived or misplaced in that the HKSAR was not a “Member State” of the United Nations and had no competence to make the Proposed Request, and that the proper and competent authority to make the Proposed Request would be the Central People’s Government of the PRC.

24.At paragraph 15 of that letter, the Department of Justice further stated as follows:

“For reasons mentioned in paragraphs 11 and 12 above, the ultimate determination on whether the Proposed Measures are considered adequate and suitable for making the Proposed Request as well as whether to make the Proposed Request to the Sanctions Committee, and if so, when to make the Proposed Request, are matters all falling with the CPG’s competence. That said, in dealing with the Proposed Request, MD as the flag administration in respect of the Tanker should review comprehensively whether the Proposed Measures are adequate in support of the Proposed Request. In this relation, MD has already provided its feedback on the Proposed Measures and invited further submissions from the Applicant as mentioned in paragraph 14 above, and is prepared to submit the Proposed Measures as confirmed by your client together with the MD’s comments and views to the CPG for consideration.”

25.On 20 December 2018, the Applicant’s solicitors responded to the Director’s letter of 30 October 2018, and put forward certain revisions to the Proposed Measures.  In an email from the Applicant’s solicitors to the Marine Department dated 28 December 2018, the Applicant confirmed that the revisions to the Proposed Measures were “final” (“the Final Proposed Measures”).

26.On 4 February 2019, the Director, through the Office of the Commissioner of the Ministry of Foreign Affairs (“the OCMFA”), submitted to the Central People’s Government, inter alia, the Applicant’s Proposed Measures and Final Proposed Measures together with the Marine Department’s comments (“the Comments”) thereon for consideration by the Central People’s Government.  In the “Conclusion” section of the Comments, the following is stated:

“Based on the above detailed analysis, MD is of the view that the Final Proposed Rectification Measures of the Ship Owner are superficial in general. Most of the proposed Rectification Measures are only the basic responsibilities of the Ship Owner, the ship management company and the master. The proposed additional measures lack specific details and are impracticable. Concrete operation plans and details are also not available for some of the Proposed Measures. These fail to demonstrate the Ship Owner’s ability to effectively implement the proposed Measures and MD finds it hard to be convinced that the Ship Owner is capable of ensuring the Tanker will not violate future UN sanctions. The shirking of the Ship Owner’s responsibility to MD also reflects that the Ship Owner has no intention to take responsibility and actively solve the problem. Therefore, after assessing the Final Proposed Rectification Measures of the Ship Owner, MD finds it hard to be convinced that adequate arrangements can be made by the Ship Owner with these proposed measures to prevent the Tanker from contributing to future violations of the resolutions concerned.”

27.In the 4^th Affirmation of Gong Ruiqiang filed on 7 March 2019, the Applicant has sought to answer the Director’s criticisms of the Final Proposed Measures contained in the Comments.  It is not necessary for me to analyse the validity of the Director’s criticisms of the Applicant’s Final Proposed Rectification Measures, or the Applicant’s answers to the same, in this judgment because, as accepted by Mr Dykes, these are not matters required to be resolved in these proceedings, and would not affect the outcome of the present application for judicial review.  In any event, it forms no part of the Applicant’s case, as advanced in the Form 86, that the Directors’ criticisms are irrational or mistaken or that they were made in a procedurally unfair manner.  As a matter of chronology, the Comments came after the filing of the Form 86 and, in the absence of any application to amend the Form 86 to challenge the Comments, cannot form the subject matter of challenge in this application for judicial review.

THE APPLICATION FOR LEAVE TO APPLY FOR JUDICAL REVIEW

28.As earlier mentioned, the Applicant made the present application for leave to apply for judicial review on 1 August 2018.  In the original Form 86, the Applicant sought (i) an order of certiorari to quash the Decision, (ii) a declaration that the Decision and the Inaction were illegal, and (iii) an order of mandamus to direct the Director to make a request to the Committee for the release of the Vessel from detention.

29.On 9 August 2018, the Applicant applied to amend the Form 86 to, inter alia, join BV as the 2^nd Putative Respondent in order to challenge its decision to withdraw the class of the Vessel and cancel the Statutory Certificates.  The Applicant contended that BV, in issuing the Statutory Certificates, was carrying out the statutory duties of the Director and as such must act in accordance with the relevant statutory provisions, rationally and fairly, but had failed to do so.  The Applicant also sought an extension of time to apply for leave to apply for judicial review against BV.

30.On 10 August 2018, the court ordered a rolled-up hearing of (i) the application to amend the Form 86, (ii) the application for an extension of time to apply for judicial review of the decision of BV to withdraw the class of the Vessel and cancel the Statutory Certificates, (iii) the application for leave to apply for judicial review, and (iv) the substantive application for judicial review.

31.On 22 January 2019, the court granted the Applicant leave to serve the papers filed in these proceedings, as well as various court orders herein, on BV out of the jurisdiction.  On 15 February 2019, the Applicant (through its solicitors) informed the court that it might not proceed with the application against BV in the current proceedings.  As a matter of fact, the Applicant did not effect service of the documents on BV out of the jurisdiction.  The rolled-up hearing took place on 18 and 19 March 2019.  At the hearing, Mr Philip Dykes, SC confirmed that the Applicant had decided not to pursue against BV in these proceedings, or apply for leave to amend the Form 86.  Accordingly, the relevant application before the court remains the original Form 86 dated 1 August 2018.

THE UNITED NATIONS SECURITY COUNCIL RESOLUTIONS

32.On 14 October 2006, the United Nations Security Council (“the Security Council”) adopted Resolution 1718 (2006) (“Resolution 1718”) in response to North Korea’s claim that it had conducted a test of a nuclear weapon on 9 October 2006.  That resolution laid down a framework for imposing sanctions against North Korea for its failure to abide by various United Nations nuclear weapons non-proliferation measures.  In particular, it was decided, inter alia, that:

(1)  All Member States shall prevent the direct or indirect supply, sale or transfer to North Korea, through their territories or by their nationals, or using their flag vessels or aircraft, and whether or not originating in their territories, various specified items, materials, equipment, goods and technology (Paragraph 8).

(2)  A Committee of the Security Council (ie the Committee) consisting of all the members of the Security Council would be established to, inter alia, (i) seek from all States information regarding the actions taken by them to implement effectively the measures imposed by Paragraph 8 and whatever further information it may consider useful in that regard, and (ii) determine additional items, materials, equipment, goods and technology to be specified for the purpose of Paragraph 8 (Paragraph 12(a) and (b) respectively).

33.Since 2006, there have been a series of resolutions adopted by the Security Council imposing further sanctions against North Korea, including the following:

(1)  On 11 September 2017, the Security Council adopted Resolution 2375 (2017) (“Resolution 2375”) in response to the nuclear test by North Korea on 2 September 2017.  By Paragraph 11 of Resolution 2375, it was decided that –

“all Member States shall prohibit their nationals, persons subject to their jurisdiction, entities incorporated in their territory or subject to their jurisdiction, and vessels flying their flag, from facilitating or engaging in ship-to-ship transfers to or from DPRK-flagged vessels of any goods or items that are being supplied, sold or transferred to or from the DPRK.”

(2)  On 22 December 2017, the Security Council adopted Resolution 2397 (2017) (“Resolution 2397”) in response to the ballistic missile launch by North Korea on 28 November 2017.  It was decided, inter alia, as follows:

“9. Notes with great concern that the DPRK is illicitly exporting coal and other prohibited items through deceptive maritime practices and obtaining petroleum illegally through ship-to-ship transfers and decides that Members States shall seize, inspect, and freeze (impound) any vessel in their ports, and may seize, inspect, and freeze (impound) any vessel subject to its jurisdiction in its territorial waters, if the Member State has reasonable grounds to believe that the vessel was involved in activities, or the transport of items, prohibited by resolutions …, encourages Member States to consult with the flag States of relevant vessels once they are seized, inspected, and frozen (impounded), and further decides that, after six months from the date such vessels were frozen (impounded), this provision shall not apply if the Committee decides, on a case-by-case basis and upon request of a flag State, that adequate arrangements have been made to prevent the vessel from contributing to future violations of these resolutions;

12. … decides that each Member State shall de-register any vessels it has reasonable grounds to believe was involved in activities, or the transport of items, prohibited by resolutions … and prohibit its nationals, persons subject to its jurisdiction and entities incorporated in its territory or subject to its jurisdiction from providing classification services to such a vessel except as approved in advance by the Committee on a case-by-case basis, and further decides that Member States shall not register any such vessel that has been de-registered by another Member State pursuant to this paragraph except as approved in advance by the Committee on a case-by-case basis”.

34.In the Guidelines of the Committee for the Conduct of its Work (“the Guidelines”) as revised and adopted by the Committee on 31 December 2014, it is provided, inter alia, that:

(1)  The Committee is assisted by a Panel of Experts.

(2)  The meetings of the Committee will be closed unless the Committee decides otherwise.

(3)  The Committee shall make all decisions by consensus of its Members.

35.As submitted by Mr Dykes, it is clear from the Guidelines that the Committee’s decision-making process and its procedures do not contemplate individual access to the Committee, save in relation to requests for “Delisting” of individuals and entitles subject to travel ban/asset freeze which are not relevant to the present case.

LEGAL EFFECT OF SECURITY COUNCIL’S RESOLUTIONS

36.As a matter of international law, the Charter of the United Nations (“the Charter”) is a “multilateral treaty” giving rise to rights and obligations which are legally binding on the parties to it. Further, the Charter has become the basic legal instrument for the international community, and its principles are increasingly regarded as applicable generally in international relations and have been developed so as to permeate many branches of international law (see Oppenheim’s International Law, 9^th Edn, Vol 1 Peace, §11).

37.The Security Council is established under the Charter.  Under Chapter V of the Charter:

(1)  The Security Council shall consist of eleven Members of the United Nations (Article 23).

(2)  The Members of the United Nations confer on the Security Council primary responsibility for the maintenance of international peace and security, and agree that in carrying out its duties under this responsibility, the Security Council acts on their behalf (Article 24).

(3)  The Members of the United Nations agree to accept and carry out the decisions of the Security Council (Article 25).

(4)  The Security Council may establish such subsidiary organs as it deems necessary for the performance of its functions (Article 29).

38.Further, under Chapter VII of the Charter:

(1)  The Security Council shall determine the existence of any threat to the peace, breach of the peace, or act of aggression and shall make recommendations, or decide what measures shall be taken in accordance with Articles 41 and 42, to maintain or restore international peace and security (Article 39).

(2)  The Security Council may decide what measures not involving the use of armed force are to be employed to give effect to its decisions, and it may call upon the Members of the United Nations to apply such measures.  These may include complete or partial interruption of economic relations and of rail, sea, air, postal, telegraphic, radio, and other means of communication, and the severance of diplomatic relations (Article 41).

(3)  The action required to carry out the decisions of the Security Council for the maintenance of international peace and security shall be taken by all the Members of the United Nations or by some of them, as the Security Council may determine, and such decisions shall be carried out by the Members of the United Nations directly and through their action in the appropriate international agencies of which they are members (Article 48(1) and (2) respectively).

(4)  The Members of the United Nations shall join in affording mutual assistance in carrying out the measures decided upon by the Security Council (Article 49).

39.At the international law level, resolutions made by the Security Council are binding on the Members of the United Nations who are parties to the Charter (see the ICJ’s Advisory Opinion in Legal Consequences for States of the Continued Presence of South Africa in Namibia (South West Africa) Notwithstanding Security Council Resolution 276 (1970) [1971] ICJ Reports 16, at paragraphs 112-116).  However, at the domestic law level, such resolutions do not, by themselves, give rise to legal rights or obligations which are directly enforceable in the domestic court.  This principle is clearly stated in Ubamaka v Secretary for Security (2012) 15 HKCFAR 743, at paragraph 43:

“It has long been established under Hong Kong law (which follows English law in this respect), that international treaties are not self-executing and that, unless and until made part of our domestic law by legislation, they do not confer or impose any rights or obligations on individual citizens. It is a principle of construction that where a domestic statute is ambiguous and is capable of bearing different meanings which may in turn conform or conflict with the treaty, the court will presume that the legislature intended to legislate in accordance with applicable international treaty obligations. But where the statute is clear, the court’s duty is to give effect to it whether or not that would involve breach of a treaty obligation. It is furthermore clear that the courts do not have jurisdiction to adjudicate upon rights and obligations arising out of transactions between sovereign states.”

THE APPLICANT’S CHALLENGE TO THE INACTION

40.I shall first consider the Applicant’s complaint about the Director’s Inaction.  The Applicant’s case in respect of the Inaction is set out in paragraphs 131 to 141 of the Form 86, as follows:

[131] Pursuant to Article 92 of the LOS[1], it is virtually impossible for the Applicant to change the flag of the Tanker to another state when she is being detained in Yeosu, South Korea. Consequently, only the HKSAR as the Flag State and the Director in charge of the Ship Register may make the Request.

[132] When the DOJ issued a letter to the Applicant in the mistaken belief that the Applicant had not settled the Invoice[2], the Applicant had a legitimate substantive and/or procedural expectation that the Director will likewise exercise the duty of the Flag State of the Tanker to make the request to the Committee [pursuant] to paragraph 9 of the Resolution in order to let the Tanker sail to a dry dock to carry out the repairs in compliance with the statutory requirements and be able to freely procure supplies to the crew and the Tanker.

[133] The detention of the Tanker and the welfare of the crew on board clearly fall within the definition of the duties and jurisdiction of the Director “in administrative, technical and social matters over ships flying its flag” under Article 94 of the LOS. The Failure is unreasonable and a breach of the Director’s such duties.

[134] It is unreasonable on the part of the Director to issue the Invoice to the Applicant for the Annual Tonnage Tax for the period from 4 May 2018 to 3 May 2019 which has been paid but fail and/refuse to exercise her duty under Article 94 of the LOS to make a request pursuant to paragraph 9 of the Resolution.

[135] When the [Marine Department] has repeatedly wrote to the Applicant in respect of the welfare of the crew on board the Tanker and the Applicant has paid the Annual Tonnage Tax up to 23 May 2019, the Applicant has a legitimate substantive and/or procedural expectation that the Director should exercise her statutory duty to make a request to the Committee for the timely release of the Tanker pursuant to paragraph 9 of the Resolution.

[136] The Director has a duty to ensure that the Tanker registered with the Ship Register complies with the statutory duties in maintaining the statutory certificates. The Failure has prevented the Tanker from complying with the statutory requirements in order to obtain and maintain the Certificates.

[137] If the Failure is due to any assumption of any violation by the Applicant of any resolutions by the UN which is categorically denied, such assumption would amount to unreasonableness as defined in Associated Provincial Picture Houses Ltd. V Wednesbury Corporation [1948] 1 KB 223 which is followed by the Final Court of Appeal in C & KMF & BF v Director of Immigration for Security and United Nations High Commission for Refugees [2013] 16 HKCFAR 280.

[138] The Failure to make a request to the Committee pursuant to paragraph 9 of the Resolution has undermined the statutory purpose set out under Article 94 of the LOS and has also deprived the Tanker of the opportunity to leave Yeosu, Korea in order to sail to a dry dock for the purpose of complying with the statutory requirements to maintain and/or obtain the statutory certificates, especially when there are 19 crew members on board the Tanker.

[139] If the Director proceeds to close the registration of the Tanker on 22 August 2018 without making a request to the Committee, the Tanker, with the crew on board, will be left with being detained in South Korea indefinitely.

[140] Article 105 of the Hong Kong Basic Law provides that:-

“The Hong Kong Special Administrative Region shall, in accordance with law, protect the right of individuals and legal persons to the acquisition, use, disposal and inheritance of property and their right to compensation for lawful deprivation of their property. Such compensation shall correspond to the real value of the property concerned at the time and shall be freely convertible and paid without undue delay. The ownership of enterprises and the investments from outside the Region shall be protected by law.”

[141] The Failure has deprived the Applicant [of] the right to use the Tanker which is a violation of the Applicant’s right under Article 105 of the Hong Kong Basic Law.

41.It is apparent that the Applicant’s case, as put forth in the Form 86, is based on the premise that the Director has a “statutory” duty under Article 94 of the United Nations Convention on the Law of the Sea (“the Convention”) to make a request to the Committee for the release of the Vessel pursuant to paragraph 9 of Resolution 2397. On this basis, the Applicant seeks an order of mandamus to compel the Director to make a request to the Committee for the release of the Vessel.

42.In my view, the Applicant’s complaint is not sustainable, for the following reasons.

43.First, I do not see how Article 94 of the Convention can be translated into a duty or obligation on a State to make a request for the release of a vessel flying its flag pursuant to paragraph 9 of Resolution 2397.  The following provisions of the Convention are relevant for the present purpose:

“Article 91 (Nationality of ships)

1 Every State shall fix the conditions for the grant of its nationality to ships, for the registration of ships in its territory, and for the right to fly its flag. Ships have the nationality of the State whose flag they are entitled to fly. There must exist a genuine link between the State and the ship.

Article 92 (Status of ships)

1 Ships shall sail under the flag of one State only and, save in exceptional cases expressly provided for in international treaties or in this Convention, shall be subject to its exclusive jurisdiction on the high seas. A ship may not change its flag during a voyage or while in a port of call, save in the case of a real transfer of ownership or change of registry.

Article 94 (Duties of the flag State)

1 Every State shall effectively exercise its jurisdiction and control in administrative, technical and social matters over ships flying its flag.

2 In particular every State shall:

(a) maintain a register of ships containing the names and particulars of ships flying its flag, except those which are excluded from generally accepted international regulations on account of their small size; and

(b) assume jurisdiction under its internal law over each ship flying its flag and its master, officers and crew in respect of administrative, technical and social matters concerning the ship.

3 Every State shall take such measures for ships flying its flag as are necessary to ensure safety at sea with regard, inter alia, to:

(a) the construction, equipment and seaworthiness of ships;

(b) the manning of ships, labour conditions and the training of crews, taking into account the applicable international instruments;

(c)   the use of signals, the maintenance of communications and the prevention of collisions.”

44.It is clear that the duties imposed on the flag State of a ship by Article 94 of the Convention relate to the administrative, technical and social matters over the ship, including matters of marine safety and welfare of the crew, but have nothing to do with matters such as seeking relief from sanctions imposed by resolutions of the Security Council.

45.Second, the Convention is in the nature of an international treaty.  As earlier mentioned, an international treaty does not give rise to any legal rights or obligations which are directly enforceable in the domestic court.

46.Third, paragraph 9 of Resolution 2397 contemplates that a request would be made by a “flag State”.  The HKSAR is not a “State”, or the “flag State” of the Vessel, and has no standing or locus to make any relevant request pursuant to that paragraph.  Such request can properly be made only by the Central People’s Government.

47.Fourth, the making of a request to the Committee pursuant to paragraph 9 of Resolution 2397 is, in my view, a matter of “foreign affairs” relating to the HKSAR and is therefore a matter for which responsibility lies with the Central People’s Government to the exclusion of the HKSAR under Article 13(1) of the Basic Law, unless it is something which the Central People’s Government authorizes the HKSAR to conduct on its own in accordance with the Basic Law under Article 13(4).

48.Under Article 124 of the Basic Law, the HKSAR shall maintain Hong Kong’s previous system of shipping management and shipping regulation, including the system for regulating conditions of seamen (sub-paragraph (1)), and shall, on its own, define its specific functions and responsibilities in respect of shipping (sub-paragraph (2)).  Further, under Article 125 of the Basic Law, the HKSAR is authorized by the Central People’s Government to continue to maintain a shipping register and issue related certificates under its legislation, using the name “Hong Kong, China”. None of these powers enables the HKSAR to make a relevant request to the Committee pursuant to paragraph 9 of Resolution 2397.  Article 13(4) of the Basic Law has no application to the present case.

49.Faced with these difficulties, Mr Dykes advanced a different argument on behalf of the Applicant at the rolled-up hearing, namely, that the Director should transmit the Applicant’s request to the Committee via the Central People’s Government “without comment and accompanied with only factual information about the measures taken in Hong Kong to implement the requirements of R2397”, or in a “neutral way”, and furthermore the Director “should not invite the CPG to express its views on the request” (see paragraphs 8, 9 and 52 of Mr Dykes’ submissions dated 11 March 2019).  The Applicant has not applied to amend the Form 86 to raise this ground of challenge to the Inaction, and accordingly cannot rely on it in the present application for judicial review.  In any event, I do not consider that it can seriously or sensibly be argued that the Director’s role, when forwarding the Applicant’s request to the Central People’s Government with a view to it being submitted to the Committee, is confined to acting effectively as the Applicant’s “mouthpiece” only.  It is, in my view, entirely a matter for the Central People’s Government to decide whether to make a request to the Committee pursuant to Paragraph 9 of Resolution 2397.  In deciding whether to make such a request, a relevant consideration by the Central People’s Government would obviously be whether the request stands any chance of being approved by the Committee.  That depends, in turn, on whether adequate arrangements have been made to prevent the Vessel from contributing to future violations of the relevant resolutions.  In order to form a view on this issue, one would reasonably expect the Central People’s Government to take into account the views of the Director, being the official in Hong Kong responsible for shipping management and regulations generally, who should be in a good position to comment on the adequacy or effectiveness of the Final Proposed Measures to prevent the Vessel from contributing to future violations of the relevant resolutions of the Security Council.  It also stands to reason that the Central People’s Government would expect the Director to have conducted a detailed assessment of the Applicant’s Final Proposed Measures and forward her assessment of those measures to the Central People’s Government for its consideration.  If the Applicant considers the Director’s assessment to be mistaken or incorrect, it is at liberty to put forward its counter arguments to the Central People’s Government.  As a matter of fact, the Applicant did write directly to the Department of Treaty and Law of the Ministry of Foreign Affairs of the PRC on 6 March 2019 making detailed submissions (in a 13-page letter) on the Director’s Comments.  I do not consider the procedure adopted by the Director to be unlawful, irrational, or unfair in the circumstances of the present case.

50.Lastly, it seems to me to be clear that that Director has not done anything which can be described as depriving the Applicant of its right to use the Vessel in contravention of Article 105 of the Basic Law.  The Applicant’s loss of its right to use the Vessel arises from the fact that its charterer had, or is suspected to have, used the vessel in a manner in breach of Resolution 2375.  Whether the Applicant has a good claim against the charterer for the loss and damage which it has suffered in consequence of the detention of the Vessel at Yeosu Port is not an issue which falls for determination in these proceedings, and I express no view on it.

51.In all, I am of the view that the Applicant’s challenge to the Inaction is not reasonably arguable, and has no realistic prospect of success.

THE APPLICANT’S CHALLENGE TO THE DECISION

52.Notwithstanding the Director’s stated intention to close the registration of the Vessel after the period of 90 days from 24 May 2018, as a matter of fact, the Vessel has not yet been de-registered, the Director having been advised that he should not proceed with the de-registration of the Vessel pending the determination of the present application for judicial review.

53.Generally speaking, judicial review does not lie against an “intermediate” or “procedural” decision which does not give rise to any substantive consequence, or against a decision which is not of a “decisive nature” (see Financial Secretary v Wong (2003) 6 HKCFAR 476 at paragraphs 13, and 93 to 95).  This having been said, the court may, in exceptional circumstances, entertain an application for judicial review where the application would otherwise be regarded as being premature, for example, where (i) the challenge involves a “clear and discrete sharp question of law”, or (ii) a “useful purpose” would be served, or “real utility” or “practical advantages” would be achieved, by allowing a challenge to be raised in advance of a final decision (see Birmingham Care Consortium v Birmingham City Council [2011] EWHC 2656 (Admin), at paragraph 31 per Beatson J; R (on the application of The Garden Leisure Group Ltd) v North Somerset Council [2003] EWHC 12605 (Admin), at paragraphs 35 and 56 per Richards J; R (Alconbury Developments Ltd Ltd) v Secretary of State for the Environment, Transport and the Regions [2003] 2 AC 295, at paragraph 171 per Lord Clyde).

54.Also, judicial review is generally a remedy of last resort.  An applicant should normally exhaust all alternative remedies to challenge a decision before applying for judicial review of that decision.

55.In the present case, the 24 May 2018 Letter, which embodied the Decision forming the subject matter of challenge by the Applicant, was issued pursuant to Section 64(4) of the Ordinance.  Section 64(3), (4) and (5), so far as relevant, states as follows:

“(3) Where the Director is satisfied in relation to a registered ship –

(a) that, having regard to the matters mentioned in section 22(3)(a) or (b) or (4), it would be inappropriate for the ship to continue to be registered …

the Director shall serve a notice under subsection (4) on –

(i) the owner …

(4) A notice under this subsection is a notice stating –

(a) that the Director … is satisfied as to the matters specified in subsection (3)(a) …; and

(b) that he intends, after the end of the period of 90 days beginning with the date of service of the notice, to direct that the ship’s registration be closed unless he is satisfied that it would be inappropriate to do so by any representations made to him by or on behalf of the owner or demise charterer within the period.

(5) As soon as practicable after the end of the period referred to in subsection (4), the Director shall direct the Registrar to close the ship’s registration unless he is satisfied that it would be inappropriate to do so by any representations made pursuant to that subsection.”

56.For the purpose of the present discussion, Section 22(3) of the Ordinance is also relevant.  It states as follows:

“Notwithstanding that a ship in respect of which an application for registration has been made is registrable, the Director may direct the Registrar not to register the ship if he is satisfied that, having regard –

(a) to the condition of the ship so far as relevant to its safety or to any risk of pollution; or

(b) to the safety, health and welfare of persons employed or engaged in any capacity on board the ship,

it would be inappropriate for the ship to be registered.”

57.In short, where, in relation to any registered ship, the Director has formed the view that it would be inappropriate for the ship to continue to be registered by reason of concerns arising from the matters mentioned in Section 22(3)(a) or (b) of the Ordinance, she may give notice to the ship owner that she intends to direct the de-registration of the ship unless she is satisfied that it would be inappropriate to do so by representations made to her by or on behalf of the ship owner within the period of 90 days from the date of service of the notice.  Under this statutory scheme, it is clear that the “view” which may be formed by the Director that it would be inappropriate for a registered ship to continue to be registered is a provisional one only.  The purpose of the notice provision in Section 64(4) is to give the ship owner an opportunity to persuade the Director that it would be inappropriate for the ship to be de-registered.  Normally, that would involve satisfying the Director in respect of the matters mentioned in Section 22(3)(a) or (b) of the Ordinance, ie the condition of the ship so far as relevant to its safety or to any risk of pollution, or the safety, health and welfare of persons employed or engaged in any capacity on board the ship, which have given rise to the Director’s concerns as to the appropriateness of the continued registration of the ship.  That being the position, I can see no good, or exceptional, reason, why the Applicant should be permitted to launch an application for judicial review of a mere “intention” by the Director to direct the de-registration of the Vessel before she has made a final decision to de-register the Vessel, or before the Applicant has exhausted the alternative remedy under Section 64(4).  In my view, the present application fails on the ground of “prematurity”, and/or failure to exhaust all alternative remedies.  This conclusion is sufficient to dispose of the Applicant’s challenge to the Decision.  For the sake of completeness, I shall deal with the substance of the Applicant’s complaint briefly.

58.On behalf the Applicant, Mr Dykes argues that:

(1)  BV’s decision to cancel the Statutory Certificates, in particular the ISSC, was defective because (a) the cancellation of an ISSC required reasons to be given under Rule 17(3) of the Merchant Shipping (Security of Ships and Port Facilities) Rules, but no reason was given, and (b) the relevant notice of invalidation did not refer to any matters under those rules which would entitle a decision-maker to cancel the ISSC;

(2)  the Director proceeded to start the de-registration process under Section 64 of the Ordinance on the strength of the invalidation of the Statutory Certificates and for no other reason; and

(3)  it is unreasonable to embark upon the de-registration process under the Ordinance knowing that a delegate (ie BV) had made a predicate decision which was unreasoned and which, on analysis, had no factual basis (see paragraphs 88 to 92 of Mr Dykes’ submissions dated 11 March 2019).

59.This argument is based on the premise that the Director formed the view that it would be inappropriate for the Vessel to continue to be registered by reason only of the invalidation of the Statutory Certificates by BV.  However, as submitted by Mr Clifford Smith, SC, while the earlier 6 February 2018 Letter issued by the Director to the Applicant was based on the invalidation of the Statutory Certificates, in the subsequent 24 May 2018 Letter, the Director relied, or also relied, on Section 22 of the Ordinance which, as earlier noted, provided different or separate bases for the Director to form the provisional view that it would no longer be appropriate for the Vessel to continue to be registered.  That this was so is borne out by the fact that in the letter, the Director expressly stated that “the condition relevant to the safety, risk of pollution or health and welfare of persons employed on board of a ship may render the ship inappropriate to continue to be registered”.  As further pointed out by Mr Smith, the Director did have reasons to be concerned about the safety of the Vessel and welfare of the crew on board the Vessel (see paragraphs 57 to 59 and 63 of the First Affirmation of Cheng Yeung Ming filed on 7 December 2018).  In particular, in an email to the Marine Department dated 16 May 2018, the Applicant stated that it was on the verge of bankruptcy, and could not supply fuel, oil and lubricating oil to the Vessel which seriously affected the safety of the Vessel and the normal life of the crew.  In my view, the Director was entitled to issue the Section 64 notice to the Applicant on 24 May 2018 based on these concerns, regardless of whether BV had good reasons for, or had followed the appropriate procedures prior to, the cancellation or invalidation of the Statutory Certificates.

60.Furthermore, it was a fact that the Vessel’s Statutory Certificates had been cancelled or invalidated by BV in early February 2018.  As at 24 May 2018, the Vessel was a ship that had no valid Statutory Certificates.  In my view, the Director was entitled, in such circumstances, to be concerned about the condition of the Vessel so far as relevant to its safety or to any risk of pollution, or the safety, health and welfare of persons employed or engaged in any capacity on board the Vessel, and could lawfully issue a notice under Section 64(4) of the Ordinance to the Applicant and gave it an opportunity to address those concerns.  If the Applicant’s position was that BV had no good reason to cancel or invalidate the Statutory Certificates, or had failed to follow the appropriate procedures prior to the cancellation or invalidation of the Statutory Certificates, these would be matters which the Applicant could put before the Director for her consideration within the statutory period of 90 days from the date of service of the notice.  In all, I do not consider the Director’s decision to issue the Section 64(4) notice to the Applicant to be unlawful, irrational or procedurally unfair.

61.The Applicant’s challenge to the Decision is not reasonably arguable, and has no realistic prospect of success.

DISPOSITION

62.The application for leave to apply for judicial review is dismissed.  In view of the fact that the Applicant has, effectively, had a hearing on the merits, I further order that the Applicant shall pay the Director’s costs, to be taxed if not agreed, with certificate for 2 counsel.

Mr Philip Dykes, SC, instructed by M/s Brenda Chark & Co., for the Applicant

Mr Clifford Smith, SC and Mr Adrian Lai, instructed by Department of Justice, for the Putative Respondent