Vasilieva Elena Nikolaevna, The Liquidator of Agricultural Productive Cooperative <<Fishing Collective Farm <<Severnaya Zvezda>>>>, A Russian Corporate (in Liquidation) v. Dragon Seafoods Ltd
Read the full judgment text of HCA 1240/2017 on BabelCite. This High Court CFI judgment was delivered on 27 May 2019.
1. By summons of 1 September 2017 (“ the Summons ”), the defendant applied, inter alia , for a stay of this action pending the final determination of the disputes between the parties by the court of the Russian Federation.
Cites 3 cases
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HCA 1240/2017 [2019] HKCFI 1287 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE ACTION NO 1240 OF 2017 _________
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___________________ J U D G M E N T ___________________ A. INTRODUCTION 1.By summons of 1 September 2017 (“the Summons”), the defendant applied, inter alia, for a stay of this action pending the final determination of the disputes between the parties by the court of the Russian Federation. 2.The plaintiff is a Russian company and the supplier of fish products. The defendant is a Hong Kong company and a purchaser of fish products. 3.The parties entered into a “Master Agreement for Fish Supplies”on 17 December 2010 (“the Agreement”), by which the plaintiff agreed to sell, and the defendant agreed to buy, various fish or fish products. The plaintiff claims for outstanding payment and interest under the Agreement in an amount of US$3,387,116.25. B. THE PARTIES’ RESPECTIVE POSITIONS B1. The defendant’s case 4.The defendant’s case is that the proceedings should be stayed in favour of a court of the Russian Federation pursuant to Order 12, rule 8 of the Rules of the High Court, which provides (in material part) as follows:
5.The defendant says that:
B2. The plaintiff’s case 6.The plaintiff says that:
C. THE RELEVANT PRINCIPLES 7.There is no dispute as to the applicable principles. 8.On an application for a stay of proceedings on the grounds that there is an exclusive jurisdiction clause, the Court should exercise its discretion to grant a stay unless strong cause for not doing so is shown: The “El Amria” [1981] 2 Lloyd’s Rep 119 at 123. 9.If a stay is sought not on the basis that there is an exclusive jurisdiction clause, but pursuant to Order 12, rule 8(2A)(a), which is a statutory recognition of the traditional forum non conveniens challenge, the applicable principles are as stated by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at [51] (citing DGC v SLC (née C) [2005] 3 HKC 293):
10.Where jurisdiction is founded in the Hong Kong Court as of right—as in the present case—the party seeking the stay has to establish that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum: SPH at [52]. D. THE DEFENDANT’S GROUNDS FOR SEEKING A STAY OF PROCEEDINGS D1. Whether there is exclusive jurisdiction clause ousting jurisdiction of Hong Kong Courts 11.The defendant relies on clause 5 of the Agreement, which provided as follows:
12.The defendant says that Russian law governs the Agreement. 13.In a judgment of 27 November 2014, the Russian Commercial Court held that the arbitration clause contained in clause 5 was invalid, or void. The defendant had applied to the Russian Commercial Court for voidance of the arbitration clause as the administrator of the plaintiff had a connection with the nominated arbitral tribunal. The court agreed, coming to the conclusion that the agreement to arbitration “ensures no compliance with the principles of legality, independence and fairness”, and that there would be reasonable doubts as to the fairness of any decision pursuant to the arbitration. 14.The defendant’s own expert witness on Russian law, Andrey Shashorin, acknowledged that the Russian Commercial Court had held the arbitration clause to be invalid (although he opined that the parties’ agreement as to the choice of Russian Federation law as the governing law of the Agreement was still valid). 15.Counsel for the defendant, Mr Toby Brown, submitted that even if clause 5 was invalid, it nevertheless showed that the parties had agreed to resolve their disputes in Russia. However, even on its face, clause 5 is not an exclusive jurisdiction clause, since:
16.In the circumstances, I find that there is no exclusive arbitration clause which excludes the jurisdiction of the Hong Kong Court. D2. Whether there is another available forum which is clearly or distinctly more appropriate than Hong Kong 17.The defendant says that Russia, rather than Hong Kong, is clearly the more appropriate forum for the determination of the parties’ disputes, being the forum with which the action has the most real and substantial connection. Mr Brown submitted that that part of clause 5 which contained the parties’ choice of Russian law was not held to be invalid by the Russian Commercial Court, or that even if it was invalid, clause 5 nevertheless evidenced the parties’ intention that Russian law should be the governing law of the Agreement, and that on the facts, the law with the closest connection to the Agreement was Russian law. He further submitted that as a number of the defences relied on by defendant to resist the plaintiff’s claim for payment under the Agreement involved issues of Russian law, it would be appropriate for the dispute to be resolved in the Russian courts. In addition, the relevant witnesses were mostly located in Russia. 18.Counsel for the plaintiff, Mr Barrie Barlow SC, submitted that what the governing law of the Agreement might be, or where the witnesses were located, was of no importance, given that the defendant had to establish that there was another available forum in which the dispute could be determined. In the present case, there was no such forum, the Russian Commercial Court already having ruled that it had no jurisdiction to determine the dispute. 19.It is an unusual feature of this case that the Russian Commercial Court has already ruled as to its jurisdiction. The plaintiff had commenced proceedings in the Russian Commercial Court against the defendant for the outstanding payment and interest due under the Agreement, that is, the very claim being made in the present proceedings. The defendant had claimed that the court had no jurisdiction to hear the claim. In a judgment of 20 April 2016, the Russian Commercial Court held that:
20.The plaintiff’s expert witness on Russian law, Mr Rinat Salyaev, opined that as a result of this judgment (and the earlier judgment of 27 November 2014):
21.The response of the defendant’s expert witness was that whilst the Russian Commercial Court’s judgment was binding on state bodies, local government bodies, other bodies, organisations official bodies and citizens of the whole territory of the Russian Federation, it was not binding on another Russian court, so that another court could come to its own decision as to whether it had jurisdiction over the parties’ dispute. 22.However, the defendant has not identified any other Russian court as having jurisdiction over the parties’ dispute. 23.I therefore find that the defendant has not even established that there is another available forum to determine the dispute, let alone that such a forum is clearly or distinctly more appropriate than Hong Kong. In these circumstances, I agree with Mr Barlow SC that I should not proceed to the next stage of the Spiliada test. As Recorder Geoffrey Ma SC (as he then was) said in Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250 at 253H:
E. CONCLUSION 24.I therefore dismiss the Summons and make an order nisi that the costs of and occasioned by the Summons be to the plaintiff, to be taxed if not agreed.
Mr Barrie Barlow SC, instructed by William K W Leung & Co, for the plaintiff Mr Toby Brown, instructed by Stephenson Harwood, for the defendant | |||||||||||||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCA 1240/2017