Dp World Djibouti Fzco and Others v. China Merchants Port Holdings Co Ltd
Read the full judgment text of CACV 86/2020 on BabelCite. This Court of Appeal judgment was delivered on 14 January 2022 before Hon Kwan VP and Barma JA.
Civil procedure – forum non conveniens – stay of proceedings – whether Djibouti clearly and distinctly more appropriate forum than Hong Kong – connecting factors: location of parties, place of commission of tort, availability of witnesses, governing law, authority to sue – DP World group of companies operated Doraleh container terminal under 2004 and 2006 Concession Agreements and JVA – defendant, China Merchants Port Holdings, separately entered into Strategic Partnership Agreement and acquired 23.5% of Djibouti port authority – Republic of Djibouti took legislative and presidential-decree measures to terminate concessions and transfer 3rd plaintiff's assets to state-owned company – whether judge erred in not treating 3rd plaintiff's authority to sue as decisive factor warranting permanent or temporary stay – whether judge erred in her assessment of place of commission of tort – whether judge erred in her treatment of Djibouti Government officials' alleged reluctance to testify in Hong Kong – whether judge erred in her assessment of Djibouti law as governing law and public policy considerations – whether plaintiffs demonstrated real risk of not obtaining substantial justice in Djibouti. Held, appeal dismissed. Authority to sue is one factor among many and not given decisive or special weight; a new claim for temporary stay was not permissible on appeal. The judge properly applied the SPH v SA two-stage test, finding that the defendant failed to discharge the burden of showing Djibouti is clearly and distinctly more appropriate. The defendant's management decisions and key witnesses are based in Hong Kong or Shenzhen; damage was suffered in Dubai; the 2006 Concession is governed by English law. The judge was entitled to find that the plaintiffs demonstrated a real risk of not obtaining substantial justice in Djibouti based on the Djibouti Court's restrictive interpretation of the arbitration clause in the Invalidity Proceedings, the lack of notice and dismissal of challenges to the appointment of the Administrator, Mr Boreh's well-founded fears for personal safety, and the Republic's pervasive belligerence against the plaintiffs. Court of Appeal will not interfere with the trial judge's exercise of discretion on the weight of factors absent misdirection, taking into account improper matters, or a plainly wrong decision.
Legal issues: Whether the judge erred by not granting a stay based on the 3rd plaintiff's authority to sue · Place of commission of the tort as a connecting factor · Availability of witnesses as a connecting factor · Governing law and public policy considerations as a connecting factor · Real risk that substantial justice cannot be obtained in Djibouti (Stage 2)
Outcome: Defendant's appeal dismissed. The judge below was correct to refuse the defendant's application for a stay of the Hong Kong proceedings on grounds of forum non conveniens in favour of the Djibouti courts.
Cited by 7 cases · Cites 10 cases
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CACV 86/2020 [2022] HKCA 84 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF APPEAL CIVIL APPEAL NO 86 OF 2020 (ON APPEAL FROM HCA NO 1951 OF 2018) ________________________
________________________ Before: Hon Kwan VP and Barma JA in Court Date of Hearing: 22 October 2020 Date of Judgment: 14 January 2022 ________________________ J U D G M E N T ________________________ Hon Kwan VP (giving the Judgment of the Court): 1.This is the defendant’s appeal against the decision of Mimmie Chan J handed down on 20 December 2019 (“the Decision”), by which the judge dismissed the defendant’s application to stay this action on grounds of forum non conveniens in favour of the Civil Chamber of the Court of First Instance in the Republic of Djibouti. The judge dismissed the stay application by reason that (1) the defendant failed to discharge the burden to show that the Djibouti court is clearly and distinctly more appropriate than the Hong Kong court as the forum for the trial of this action; and (2) in any event, the plaintiffs would be deprived of a legitimate personal or juridical advantage if the action were tried in Djibouti, and there is a real risk that the plaintiffs may not obtain substantial justice if the action were tried there. 2.The defendant’s appeal is brought with leave granted by the judge on 23 April 2020, as the judge accepted that the defendant has shown more than just an arguable case on a number of connecting factors with Djibouti: the authority of the 3rd plaintiff to sue; the place of commission of the tort complained of by the plaintiffs; the existence or materiality of public policy considerations. 3.This court owes an unreserved apology to the parties for the time taken in the handing down of our judgment. Background 4.The relevant factual background has been set out in the Decision at §§1 to 41. We have also been assisted by an agreed dramatis personae and chronology helpfully prepared by the parties. We set out below the relevant paragraphs in the Decision and adopt in our judgment the terms and abbreviations in the Decision. (1) The parties and this action
(2) The various agreements 5.In the last 15 years, a new port and free zone complex were built at Doraleh, to the south of Djibouti City. It became a successful and leading port in the region, with one of the largest container terminals[1]. The narrative in the Decision continued as follows:
(3) The defendant’s involvement
(4) The dispute with the Djibouti Government
(5) The claims made in these proceedings and the stay sought
(6) Further evidence on appeal 6.The defendant issued a summons on 6 October 2020 for leave to adduce on appeal further evidence set out in the draft 1st affirmation of Lu Yongxin. At the outset of the hearing of the appeal, we gave leave to the defendant to adduce the evidence in the draft affirmation. Lu’s affirmation exhibited the correspondence between the defendant’s solicitors and the Administrator after the Decision (between 29 July 2020 and 8 September 2020) and the Djibouti court documents in the Invalidity Proceedings and the Administrator Proceedings (mainly the judgment of the Court of First Instance in the Invalidity Proceedings dated 31 December 2019; an extract of the minutes of the review hearing before the Supreme Court dated 27 February 2020 regarding the plaintiffs’ challenge to the appointment of the Administrator; and a summons dated 3 June 2020 of the 1st plaintiff bringing new proceedings on the merits to challenge once again the appointment of the Administrator). 7.The gist of the further evidence may be stated as follows. 8.The defendant’s solicitors wrote to the Administrator on 29 July 2020 enclosing a copy of the Decision and its notice of appeal and asking the Administrator for her views on specific questions, including “whether [the Administrator] agree that whether [she is] prepared to intervene with the Hong Kong Proceedings is irrelevant to the issue of [the 3rd plaintiff’s, i.e. DCT] authority” and if the Administrator has “any plan to take action in [her] capacity as the provisional administrator regarding the 3rd Plaintiff’s … authority to sue in the present Action in Hong Kong”. The Administrator replied on 26 August 2020 stating that DP World must immediately desist from participation in any judicial proceedings as none of the former members of the board is authorised to represent DCT to bring this action in Hong Kong, nor has she given authorisation to do so since her appointment. She stated that as the task entrusted to her is “provisional and interim in nature”, “it is not [her] task to take any decisions which might give rise to considerable costs being incurred by the company”, and “this is the reason why [she is] of the opinion that [her] intervention in the proceedings ongoing before the Hong Kong courts is not desirable” and “it is not in the interests of DCT to participate therein”. 9.The Djibouti court documents provide updates of the Invalidity Proceedings and the challenge to the appointment of the Administrator in the Administrator Proceedings. 10.On 31 December 2019, the Commercial Division of the Court of First Instance handed down its judgment in the Invalidity Proceedings ruling inter alia that the articles in DCT concerning the removal of directors, the appointment and removal of the chairman of the board and the appointment of the chief executive officer, the voting rights of directors and shareholders all breach mandatory provisions of the Commercial Code and hence the articles in question “are deemed unwritten”. Further, the board resolution of 18 February 2018, which authorised the commencement of the Articles Arbitration in the London Court of International Arbitration and this action in Hong Kong, was declared null as having breached mandatory provisions of the Commercial Code. But the court declined to order provisional enforcement of its judgment notwithstanding any appeal. An appeal against this judgment to the Commercial Chamber of the Court of Appeal was brought in September 2020[17]. 11.For the Administrator Proceedings, after DCT’s appeal in cassation was ruled inadmissible by the Preliminary Examination Division of the Djibouti Supreme Court because its further pleadings were filed outside the time limit, DCT lodged an application on 14 October 2019 to reopen proceedings before the Full Court of the Djibouti Supreme Court. By its judgment of 27 February 2020, the Full Court of the Djibouti Supreme Court ruled DCT’s application to reopen proceedings inadmissible. On 3 June 2020, DPWD filed a summons in the Commercial Division of the Court of First Instance to seek the annulment of the appointment of the Administrator on the merits. General applicable principles and the judge’s rulings 12.The applicable legal principles regarding the stay of proceedings for forum non conveniens were stated by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at §51:
13.The matters mentioned in 2 above are stage 1 in this deliberation exercise and those in 3 and 4 are stage 2. 14.The judge considered a number of connecting factors in arriving at the decision in stage 1. They are: the location of the parties; the place of commission of the tort; the availability of witnesses and documents; the governing law; the authority to sue. Her conclusion on the connecting factors was set out in §§104 and 105 of the Decision:
15.Having ruled in favour of the plaintiffs on stage 1, there was no need to deal with stage 2. The judge nevertheless went on to consider stage 2 in case she was in error on stage 1. The question is whether the plaintiffs have demonstrated with cogent evidence there is real risk they cannot obtain substantial justice in Djibouti[18]. The plaintiffs emphasised that in light of their long-standing dispute and litigation with the Republic, that the nature of the disputes is political and sensitive, and that the Republic has countered the dismissal of its claims in various judgments and arbitration awards with legislative acts and presidential decrees to terminate the 2004 and 2006 Concessions and transfer the 3rd plaintiff’s assets and operations to its own entities – objectively, the plaintiffs have cause to be concerned whether the Djibouti Court would be able to try their claims fairly and independently, against the Republic’s declared intentions and interests[19]. 16.The judge had regard to two instances in her assessment of the real risk that the plaintiffs may not obtain substantial justice: the dismissal of the 3rd plaintiff’s challenge to the jurisdiction of the Djibouti Court in the Invalidity Proceedings[20]; and the plaintiffs’ repeated failures to challenge the appointment of the Administrator in the Administrator Proceedings[21]. 17.The judge also had regard to the plaintiffs’ difficulties in finding experienced lawyers to represent them in their claims against the Republic[22] and the fact that Mr Boreh, an important witness for the plaintiffs, will not be able to testify in Djibouti, without whose evidence the plaintiff will be deprived of a juridical advantage to the extent that substantial justice may not be done[23]. She concluded that “these outweigh any advantage that may be served by having Djibouti law and principles of public policy determined by the Djibouti Court, rather than by the Hong Kong Court on expert evidence”[24]. 18.For all the above reasons, the judge ruled in favour of the plaintiffs in stage 2 as well. This appeal and the principles on appeal 19.The defendant contended on appeal that the judge had failed to apply correctly the relevant principles in stage 1 and stage 2 and her conclusion is contrary to principle and evidence as well as wrong in law. 20.Challenge was made to the judge’s assessment of various connecting factors. The forefront of the attack is the 3rd plaintiff’s authority to sue. For the place of commission of the tort, it was submitted that the judge had made errors in law in focussing on the decisions made and instructions given by the defendant’s management outside Djibouti when key matters relating to the alleged commission of the tort all took place in Djibouti and would have to be considered through the law, culture and sentiment of Djibouti. As to the availability of witnesses, the judge failed to take into account the reluctance of the officials of the Djibouti Government to testify for the defendant in Hong Kong. Regarding the importance of the governing law (Article 1391 of the New Code, which involves the consideration of the public policy of Djibouti), the judge erred in holding that the existence of public policy considerations is not a sufficient reason in this instance for the Hong Kong courts to decline jurisdiction. 21.In respect of stage 2, it was contended that the judge wrongly accepted the two instances relied on by the plaintiffs (dismissal of the challenge to jurisdiction in the Invalidity Proceedings; and dismissal of the challenge to the appointment of the Administrator) as sufficient to show that the plaintiffs would suffer juridical disadvantage or that there would be substantial injustice if their claims were to be tried in Djibouti. As for the difficulty in finding experienced lawyers to handle the disputes in Djibouti, the judge should have found if there were such difficulty, it would apply to both sides in these proceedings. 22.The judge’s refusal of a stay of proceedings on forum non conveniens involves an exercise of discretion. The Court of Appeal may only interfere with the exercise of the judge’s discretion in limited circumstances, in accordance with the well-established principles in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at 220B to E (SPH v SA at §65). As stated in Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 at §§5 to 7:
23.The plaintiffs submitted that save for the contention that the judge erred in holding that the existence of public policy considerations in the present case is not a sufficient reason for the Hong Kong courts to decline jurisdiction (which have been refuted in their submission), the defendant has not identified any error of law in the Decision. The grounds of appeal just raised disputes as to the weight placed by the judge on various factors and challenges to the factual conclusions of the judge on the evidence. 24.We turn to consider the individual grounds of appeal in respect of stage 1, followed by those for stage 2. Authority to sue of the 3rd plaintiff 25.In §99 of the Decision, the judge held that the appropriate forum to resolve the issue concerning the 3rd plaintiff’s authority to sue is “one factor which should be considered when the Court analyzes the question of which is the most appropriate forum for the determination of the claims in the action.” She stated her conclusion in §103 in the defendant’s favour in this way:
26.Mr Rimsky Yuen, SC, who appeared for the defendant on appeal and below[26], took these points on appeal:
27.On the last point, Mr Paul Shieh, SC, who appeared for the plaintiffs throughout[27], submitted that the judge should have held that authority to sue is irrelevant and it should not have influenced the court’s determination of the appropriate forum for the resolution of the plaintiffs’ claims. The authority to sue issue has not arisen and may never arise. In Konamaneni and Rambas Marketing, no formal application was necessary because the challenge in those cases concerned the absence of substantive merits rather than the lack of authority of the plaintiff to bring the action. The locus point taken in Rambas Marketing, more accurately described as title to sue rather than authority to sue, was whether the plaintiff was the proper assignee of the debt so as to be able to assert a claim based on it (at 256G). In Konamaneni, the court was concerned with the proper jurisdiction with respect to derivative claims on behalf of a foreign company (at §37). In contrast, the issue here is whether the 3rd plaintiff was and is properly authorised to bring this action in its name. Any challenge to the 3rd plaintiff’s authority to sue cannot be raised by way of defence but must be raised and dealt with at the outset by the proper procedure, namely, an application to strike out the 3rd plaintiff’s name under the inherent jurisdiction of the court (Kammy Town Ltd v Super Glory Corporation Ltd at §12). 28.The Administrator has not made any challenge to the 3rd plaintiff’s authority to sue, and on the further evidence has made clear her opinion that her intervention in the proceedings in Hong Kong is “not desirable”. Nor has the defendant made any application in these proceedings to challenge the 3rd plaintiff’s authority to sue. So all that has transpired is a potential issue which may require determination. There was no extant “necessity of the Court’s substantive determination of the issue of the [3rd plaintiff’s] authority”, as the judge has postulated in §99 of the Decision. Mr Shieh submitted that the court cannot proceed on assumptions or hypothetical bases, and potential developments in future cannot be relevant to the present exercise of the court’s discretion. 29.We do not think the judge was in error to take into consideration the authority to sue issue notwithstanding the absence of any formal application in Hong Kong, in light of the challenges made in the Djibouti Courts as regards the authority of the board of the 3rd plaintiff in the Invalidity Proceedings and the Administrator Proceedings, which were mentioned in §§92 to 96 of the Decision. Subsequent to the Decision, in the further evidence adduced on appeal, the Djibouti Court of First Instance ruled on 31 December 2019 that the board resolution of 18 February 2018, which authorised the bringing of this action, was null. Even though the authority to sue issue may not yet have arisen in the Hong Kong proceedings, it may just be a matter of time for this to be raised under the proper procedure. 30.Mr Shieh has a fall-back position. He submitted that even if authority to sue should be taken into consideration in determining the appropriate forum, it should not be accorded decisive or special status merely because it should be a dispute to be resolved prior to the resolution of the substantive disputes in this action. The authorities cited by Mr Yuen do not bear out the proposition that any such “locus” or “standing” issues should carry decisive or special weight in the forum analysis. In Xinjiang Xingmei Oil-Pipeline Co Ltd v China Petroleum & Chemical Corp, although the plaintiff’s authority to sue was said to be one of the matters in dispute (at §13), this was not treated separately from the other matters in issue or given special weight in the judge’s analysis of the connecting factors (at §§18 to 30). In Ceskoslovenska, the challenge to the claimant’s title to sue as a matter of Czech law (at §§8(1) and 12(5)) was one of the factors considered by the court (albeit an important matter) together with other disputes about the internal management of a Czech company and the transactions attacked as unlawful under Czech law involving Czech intermediaries (at §§12(1), (2), (3), (5)). 31.We are inclined to agree with Mr Shieh there is no error in principle as regards the judge’s evaluation of the authority to sue issue in the overall analysis at §104 of the Decision. 32.As to the weight to be given to this issue in the balancing exercise, the judge had borne in mind at §103 that “even excluding the 3rd plaintiff from these proceedings, the 1st and 2nd plaintiffs have legitimate causes of action to pursue to trial”. Mr Shieh pointed out that the 1st plaintiff’s claims under the 2006 Concession Agreement and the JVA (made between the 1st plaintiff and PAID) overlap with the 3rd plaintiff’s claims[28]. He submitted that the 2nd plaintiff also retained substantial rights under the 2004 Concession Agreement notwithstanding recital C in the 2006 Concession Agreement (by which the Republic and the 2nd plaintiff relinquished all their rights and obligations under the 2004 Concession Agreement in respect of the Terminal and related matters), as recital C was not a complete relinquishment of all the rights under the 2004 agreement. He emphasised that the crux of the dispute lies in the defendant’s overall conduct and course of action in inducing or procuring the Republic’s diverse breaches under the various agreements, which made up the plaintiffs’ and the Republic’s original strategic partnership as a whole. It does not appear to us that the relevance of Mr Boreh’s testimony would be diminished. At the very least, his evidence remains relevant to the 1st plaintiff’s claim on the JVA. 33.Mr Shieh prayed in aid the statements of Lord Briggs JSC in Lungowe v Vedanta Resources plc [2020] AC 1045 at §68, made in the context of a case involving multiple defendants domiciled in different jurisdictions:
34.We are not persuaded there are sufficient grounds to interfere with the judge’s evaluation of the authority to sue factor in the overall analysis and her exercise of discretion to refuse a permanent stay of the entire action, notwithstanding the matters urged upon us by Mr Yuen. 35.As to the alternative of a temporary stay of this action until the final determination by the Djibouti Courts of the dispute over the 3rd plaintiff’s authority to sue, we do not agree with Mr Yuen that this is merely a “matter of legal analysis”. It is a new alternative form of relief for which no evidence has been adduced and was not a point taken before the judge. We have reservations whether it would be appropriate to allow this alternative to be raised on appeal. 36.In any event, although there is now further evidence of a ruling on 31 December 2019 by the Commercial Division of the Court of First Instance in the Invalidity Proceedings (brought by the Republic against DCT and DPWD, the 1st and 3rd plaintiffs in the Hong Kong action) that the board resolution of 18 February 2018 (which authorised the commencement of the Articles Arbitration in the London Court of International Arbitration and this action in Hong Kong) was declared null as having breached provisions of the Commercial Code, we do not think this should have any material impact on this appeal. 37.The Commercial Division of the Court of First Instance has declined to order provisional enforcement of its judgment on 31 December 2019. We were given to understand that an appeal was brought against this judgment in September 2020. Irrespective of the outcome of this appeal and the final determination of the 3rd plaintiff’s authority to sue by the Djibouti Courts (the rulings are not binding as between all the parties in this action in Hong Kong), there are still the legitimate claims of the 1st and 2nd plaintiffs in this action. It does not appear from the judgment of the Court of First Instance on 31 December 2019 that the determination on the validity of the board resolution would have much relevance to resolving the substantive disputes in this action. We do not think much purpose would be served by granting a temporary stay in all the circumstances. 38.For all the above reasons, we reject all the defendant’s grounds of appeal relating to the issue of the 3rd plaintiff’s authority to sue. Place of commission of the tort 39.This relates to the defendant’s contention that the judge should have held that in respect of the place of commission of the tort, the appropriate forum for the trial of this action is the Djibouti Courts. 40.The judge held in §55 (applying the dicta of Lord Mance JSC in VTB Capital plc v Nutritek International Corpn [2013] 2 AC 337 at §51) that in determining the appropriate forum for a tort claim, it is likely to be “over-simplistic” to consider the place of commission of the tort in isolation, and that the significance attaching to the place of commission “may be dwarfed by other countervailing factors”. She also held in §56 (applying the dicta of Tuckey LJ in Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157 at §46) that in determining the place of commission of the tort (when damage has occurred which makes the tort complete), “the right approach is to look back over the series of events constituting it and ask where in substance the cause of action arose”. 41.In concluding at §62 that in respect of the place of commission of the tort, it could not be demonstrated that Djibouti is clearly or distinctly more appropriate than Hong Kong as the forum for trial, the judge had taken into account these matters:
42.Mr Yuen submitted that by focussing on the above four matters, the judge had lost sight of the overall picture and had failed to consider these key issues among others:
43.Mr Yuen argued that had the above key issues been taken into proper consideration, it is apparent that the decisions made and instructions given by the defendant’s management would only constitute one of the various matters that call for determination at the trial. The rest of the matters relevant to the commission of the tort are all connected to Djibouti, not Hong Kong. 44.As to the matters taken into consideration by the judge mentioned above, he contended that the evidence required from the defendant’s management is unlikely to be extensive and whether the defendant was motivated by political influences such as the “One Belt One Road Initiative” is neither here nor there. He drew attention to the defendant’s case that one of the causes of deterioration of the relationship between the Djibouti Government and the DP World group was the plaintiffs’ own unreasonable conduct, and this would need to be explored at trial with the relevant government officials and from the perspectives of the Djibouti Government. He reiterated that the Djibouti Courts are plainly in the best position to understand and consider local culture and sentiment regarding the plaintiffs’ conduct and the reaction of the Djibouti Government. He submitted that the place of the loss is not determinative, citing Base Metal Trading Ltd v Shamurin at §46, not to mention that the evidence required to assess the plaintiffs’ losses (the loss of profits in the operation and management of the Terminal due to traffic lost to competing ports and terminals; the loss of a chance to profit from the competing new ports and free trade zones within Djibouti)[31] are “Djibouti-centric”. 45.It seems to us that Mr Yuen is seeking to attack the weight that the judge has placed upon various matters in §§57 to 61 of the Decision. As we have mentioned earlier, the appeal court should be cautious regarding the weight given by the judge to matters taken into account in the exercise of the discretion. The fact that the appeal court would have given more weight to one or more of the many matters taken into account is not a ground for intervention. 46.We agree with Mr Shieh that the judge has not lost sight of the matters enumerated by Mr Yuen. The point Mr Yuen made about Djibouti law as the governing law will be considered separately in the subsequent part of this judgment. As pointed out by Mr Shieh, the judge has outlined the nature of the proposed defences in §§35 to 39 of the Decision and they largely cover Mr Yuen’s key issues. We are also inclined to agree with him that the issues raised by Mr Yuen do not necessarily point to Djibouti distinctly. The consideration of breach of the 2006 Concession would involve English law as the governing law of that agreement is the laws of the United Kingdom (clause 22.6). And assessing the cause of the Djibouti Government’s breaches would likely involve the plaintiffs’ witnesses based in Dubai or context outside Djibouti as discussed in §§58 to 59 of the Decision. 47.The judge had considered Mr Yuen’s submissions about the understanding of local culture and sentiment regarding the plaintiffs’ conduct and the reaction of the Djibouti Government and came to the view that this is a matter of evidence which the Hong Kong court can receive from witnesses and decide. (at §60) The judge is entitled to come to that view. 48.Overall, we could detect no error in principle in the judge’s ruling. Nor do we think sufficient grounds are made out for us to interfere with the holding that in respect of the place of commission of the tort, it could not be demonstrated that Djibouti is clearly or distinctly more appropriate than Hong Kong as the forum for trial. Availability of witnesses 49.The judge drew a distinction between a party’s own witnesses and third-party witnesses who are truly unrelated to the party intending to call them and whose cooperation to testify is gratuitous (applying Botanic Ltd v China National United Oil Corp, HCA 1852/2005, 25 August 2008, at §51). She attached more weight to third-party witnesses in assessing the availability of witnesses. (§66 of the Decision) 50.Mr Yuen did not take issue with this approach but complained that the judge should have applied the approach consistently to third-party witnesses on both sides. He contended that the judge should have concluded that the officials of the Djibouti Government are third-party witnesses for the defendant, just like Mr Boreh for the plaintiffs, and should have appreciated their reluctance to testify in Hong Kong. He emphasised that the mere existence of a commercial relationship between the defendant and the Djibouti Government does not give rise to any obligation of the government officials to testify on the defendant’s behalf. There is no basis to assume that the officials would assist, contrary to the judge’s thinking. (§67 of the Decision) He also pointed to instances showing that the Djibouti Government had been prepared to sacrifice the defendant’s interest and which had caused the defendant to complain, such as Law 202 (which allowed the Djibouti Government to renegotiate and if necessary terminate all contracts relating to strategic infrastructures deemed contrary to the fundamental interests of the Republic); the 9/9 Ordinance (which effected the transfer of PDSA’s shareholding in the 3rd plaintiff to the Djibouti Government); and compensation claims arising from the nationalisation of the 3rd plaintiff’s shares. 51.Mr Yuen further submitted that if it was appropriate for the judge to scrutinise the reasons for the government officials’ reluctance to testify in Hong Kong, she should also have subjected the alleged fear of Mr Boreh for personal safety in Djibouti to similar scrutiny. He contended that Mr Boreh’s avowed reason mentioned in the Boreh Judgment is not admissible in this action as evidence of the facts and conclusions found in that judgment, citing The Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 at §§15 to 27. 52.The judge noted that although it was suggested by the defendant that the government officials are reluctant to testify in Hong Kong, there was no “further elaboration as to the reason for their alleged reluctance”. (at §65) Taking into consideration that the alleged reluctance was “without further explanation”, she came to the view there is “no credible reason why the Defendant would have difficulty in calling their own employees and witnesses from their collaborates in the Djibouti government, with whom the Defendant has ongoing and a close commercial relationship, to give evidence in Hong Kong.” (at §67) 53.The judge is fully entitled to draw the above factual inference. Her finding on the evidence cannot be said to be perverse or irrational or otherwise without evidential support. It cannot be challenged as an error of law. Mr Shieh also made a valid point there is no evidence that any disputes in the past between the Djibouti Government and the defendant are ongoing. The defendant’s infrastructure projects in Djibouti remain unaffected by the Republic’s legislation and presidential decrees, which have only targeted the plaintiffs. By Law 29 and Decree No 29/AN/18/8eme, the defendant was effectively reinstated with ownership of the Terminal through its ownership of 23.5% of PDSA, after restoration to PDSA of 66.66% of SGTD’s shareholding. It seems to us that the defendant’s case would align with the stance of the Djibouti Government. 54.In summary, there is nothing to suggest that if the action is tried in Hong Kong, the government officials will not come here to testify. Reluctance is not refusal. 55.The judge had contrasted the position of the plaintiffs’ personnel (who had their work permits cancelled and were expelled from Djibouti on 22 February 2018 and have genuine fear for their safety in Djibouti in view of the Republic’s belligerence against the plaintiffs) as well as the plaintiffs’ key witness Mr Boreh. The latter was convicted of terrorism by the Djibouti Court in his absence and has been living in exile since 2012. (at §72) These facts are not challenged by the defendant. 56.On the unchallenged evidence, the judge held that Mr Boreh’s reluctance to travel to Djibouti and his fears for his personal safety are legitimate considerations in the assessment of forum non conveniens. (at §73) There are cogent reasons for his unwillingness or inability to testify in Djibouti. Mr Boreh’s indication that he will not travel to Djibouti for fear of personal safety is set out in an affidavit filed by the plaintiffs[32] and not specifically the Boreh Judgment, which is inadmissible only as to the decisions and findings therein of the UK court. Such inadmissibility, if anything, highlights the relevance and importance of Mr Boreh as a witness in the trial of this action. 57.There is no inconsistency in the judge’s application of the approach regarding third-party witnesses. Nor is there any other basis to interfere with her evaluation as to the availability of witnesses. Governing law 58.In §83 of the Decision, the judge quoted the statements of Recorder Ma SC (as he then was) in Rambas Marketing Co LLC v Chow Kam Fai David at 266F to 267A:
59.There is no dispute that the laws of Djibouti and specifically Article 1391 of the New Code, apply to the claims of inducing/procuring breach of contract and unfair competition[33]. In assessing the weight to be attached to the factor of governing law, the judge took into consideration these matters:
60.The judge concluded that the defendant has not discharged the burden of showing the Djibouti Court to be clearly or distinctly more appropriate as the forum for trial notwithstanding Djibouti law is the governing law of the claims. She explained in §91 the appropriate weight to be given to public policy and interests in this instance:
61.Mr Yuen’s primary contention is that in holding that the existence of public policy considerations in the present case is not a sufficient reason for the Hong Kong courts to decline jurisdiction in favour of the Djibouti Courts, the judge was wrong as a matter of authority and principle. He disputed the need for the defendant to identify any particular public policy in the stay application instead of at the trial, citing as an example New Link Consultants Ltd v Air China [2005] 2 HKC 260 at §75. He cited other authorities showing the importance given to public policy issues of the competing forum in the balancing exercise. (Ceskoslovenska at §12(5); Du Pont v Agnew [1987] 2 Lloyd’s Rep 585 at 594 to 595; GFI Group Private Ltd v Daniel Christopher John Prince, HCA 170/2008, 19 February 2008, at §23, applying Du Pont v Agnew; Pacific Aerosupplies Ltd v Dakota Air Parts, Intl Inc, HCA 1233/2010, 24 June 2011, at §§97 to 98) 62.Mr Yuen further submitted that the judge had over-simplified the issues for determination and did not consider sub-issues that would arise under Djibouti law for which there are conflicting views in the expert reports (as to the meaning of “fault”, whether mere omission is sufficient or a positive act of interference is required; as to “causation”, whether “but for” causation or whether it is sufficient to be one of the causes of the damage). He also contended that the judge was wrong to take into account the clauses providing for English law as the governing law in various agreements. 63.The relevant principles in Rambas Marketing Co LLC v Chow Kam Fai David quoted by the judge are not disputed. It is incumbent on the defendant to show that the issues of foreign law are “substantial or difficult” as contended by the defendant, which the Hong Kong court “will not feel itself confident to deal”. The judge found on the available information that this burden has not been discharged by the defendant. The defendant’s foreign law expert opined that “in tort law matters more than in any other ones, one must always look beyond the general written provisions of a civil code”, “it is not possible to simply rely on the literal resemblance between the Djiboutian Civil Code and the French Civil Code to conclude that Djibouti and French laws are identical with regard to third party’s liability” and that “case law in the respective jurisdictions must be considered”[35]. 64.The judge is entitled to come to the view that although issues pertaining to Article 1391 have not previously been decided in Djibouti, they are not of such complexity or so unique that the Hong Kong court would not be confident to deal with them. As said in the passage quoted in Rambas Marketing, “it is all a question of degree”. We do not think it helpful to pray in aid other cases to see how the factor of governing foreign law was evaluated in rather different contexts and fact situations. 65.We turn to the question whether the judge has erred in law or principle regarding the public policy considerations and whether she was plainly wrong not to hold that the Djibouti Court are obviously in the best position to deal with issues pertaining to Article 1391. As rightly submitted by Mr Shieh, much would depend on the uniqueness and objective of the public policy, the precise disputed issue of foreign law, the extent to which the court “will have to be cognisant of [the] public policy … and to apply such policy as is applicable” (GFI Group Private Ltd v Daniel Christopher John Prince at §23). Liability under Article 1391 requires applying “the test of reasonable man, namely, whether the defendant at the material time acted in such a way or ways that a reasonable man would have acted”[36] and does not appear to involve unique Djiboutian public policy. In contrast, New Link Consultants Ltd v Air China was concerned with restructuring and privatisation of state-owned enterprises, Ceskoslovenska with “the standards of business conduct which ought as a matter of Czech legal policy to prevail in the Czech Republic” (at §18). 66.Nor do we think New Link Consultants Ltd v Air China supports the proposition that there is no need to identify any particular public policy in the stay application and such identification could be left to the trial. In that case, the court had referred to the expert evidence and contractual documents which informed the discussion of state policy. (at §§73, 75) 67.Although the judge did not mention specifically the conflicting views of the parties’ legal experts on French law on the meaning of “fault” and “causation”, or other disputes which might arise on sub-issues of foreign law, she had considered the evidence of the legal experts and failed to see “the alleged difficulty of ascertaining the guiding principles, under Djibouti law, relevant to procuring or inducing breach of contract”. (at §84) She took the view that any difference in opinion on technical legal interpretation within French law, and Djibouti law if different, can be resolved by considering the parties’ expert evidence at trial. (at §84) “The defendant’s expert has not in fact stated that the Djibouti Court will, applying Djibouti law, apply different standards of fairness.” (at §90) There are no sufficient grounds to disturb the judge’s assessment of the appropriate weight to be given to public policy and public interests in this context. 68.As to the weight given by the judge to English law being the governing law in a number of the agreements (the 2006 Concession Agreement, the Management Agreement), we do not think it was improper for the judge to give weight to this factor as it is disputed by the defendant whether the Djibouti Government had acted in breach of the agreements with the plaintiffs. However, the judge was in error in stating that the JVA (between the 1st plaintiff and PAID) did not provide for any express governing law and contained jurisdiction clauses which did not involve the Djibouti Court[37]. That agreement in fact provided that Djibouti law is the governing law and the Djibouti Courts have non-exclusive jurisdiction[38]. This error must be considered in light of other relevant considerations the judge took into account in her evaluation of foreign law as the governing law factor that have been mentioned earlier. Even though the JVA is governed by Djibouti law, the performance of the underlying contract of the JVA, being the 2006 Concession Agreement, is governed by English law. 69.Notwithstanding the above error, we are not persuaded that the judge’s assessment of the factor of governing law should be interfered with. Conclusion on stage 1 analysis 70.Having considered the grounds of appeal relating to the stage 1 analysis, it has not been shown that the judge’s conclusion in the “qualitative exercise” of the consideration of the connecting factors is in error. The defendant has not discharged the burden of showing that the Djibouti Court is clearly and distinctly more appropriate for the trial of this action. 71.Even though it is not strictly necessary to consider the grounds of appeal relating to the stage 2 analysis and the appeal should be dismissed on this basis, we will deal with stage 2 in deference to the arguments addressed to us. Stage 2: whether there would be no juridical disadvantages to the plaintiffs 72.In stage 2, the burden is on the plaintiffs to demonstrate with cogent evidence “real risk” that substantial justice cannot be obtained if the action is tried in Djibouti. They do not have to establish on the balance of probabilities as a matter of fact that the Djibouti Courts were influenced by political considerations or had not otherwise acted independently. This principle is not disputed by the defendant. 73.Mr Yuen emphasised that “comity requires that the court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court” (Altimo Holdings v Kyrgyz Mobile Tel Ltd [2012] 1 WLR 1804 at §97), and that “allegation alone of political interference or of judicial impropriety will not suffice” (Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd & Ors [2009] EWHC 1839 (Ch) at §37). He submitted that the matters relied on by the plaintiffs to show their disputes and litigation with the Djibouti Government are political and sensitive do not concern the Djibouti Courts. It is correct as a matter of fact that the Djibouti Courts were not involved as those disputes were litigated in the UK and the Djibouti Government sought to offset the English judgments and arbitration awards against them by legislative acts and presidential decrees. Mr Yuen also made the point that the Djibouti Government is not a party to the present action and hence there would be no reason to be concerned that the Djibouti Courts would treat the defendant more favourably than the plaintiffs by reason of political considerations. We are inclined to think it would be unrealistic to say that the belligerence of the Djibouti Government against the plaintiffs would have no or little impact on claims to be tried in the Djibouti Courts that may appear to be against the Republic’s declared intentions or interests. 74.Mr Yuen attacked the judge’s analysis of the two instances (the dismissal of the 3rd plaintiff’s challenge to the jurisdiction of the Djibouti Court in the Invalidity Proceedings; and the plaintiffs’ failures to challenge the appointment of the Administrator). He submitted that neither instance is sufficient for an inference to be drawn there will be real risk of judicial impropriety or partiality. 75.The judge criticised the Djibouti Court for having taken an “unduly restrictive” interpretation of the arbitration clause[39] in finding the arbitration agreement manifestly inapplicable such that this falls within the description of “departure from normal judicial practice, or irrational conclusions”, from which an inference of the risk of judicial impropriety or partiality may be made[40]. Mr Yuen pointed out that this reasoning only accounted for two paragraphs in the judgment of the Djibouti Court on 29 January 2019 and was not the primary reason for rejecting the 3rd plaintiff’s jurisdictional challenge in the Invalidity Proceedings. 76.Mr Yuen contended that in rejecting the challenge to the appointment of the Administrator, the Djibouti Courts did not overlook the English Injunction against PDSA and its associates, and the judge should not have inferred from the lack of notice of the hearing to the plaintiffs and the dismissal of the 3rd plaintiff’s appeal to the Supreme Court on a technical ground that the Djibouti Courts may not give adequate consideration to the plaintiffs’ legal and procedural rights. 77.As in the other challenges made by the defendant in this appeal, the above contentions go to the extent to which a piece of evidence was accepted or rejected by the judge and the weight given to such evidence. These are matters for the judge and the appeal court does not interfere with save in accordance with the established principles. In respect of the Invalidity Proceedings, we are inclined to agree with Mr Shieh that irrespective of other reasons for rejecting the 3rd plaintiff’s jurisdictional challenge, the judge was entitled to find that one of the bases for the decision of the Djibouti Court was questionable and to infer therefrom a real risk that substantial justice may not be obtained if this action is tried in Djibouti. 78.Nor do we see any sufficient ground to interfere with the judge’s inference there may be failure to give adequate consideration to the plaintiffs’ rights in rejecting the plaintiffs’ challenge to the appointment of the Administrator[41]. The judge is ultimately concerned with the assessment of risk, and is not required to determine the reason or reasons behind the decisions of the Djibouti Courts in the context of this challenge to forum. 79.The defendant’s submission to counter the plaintiffs’ difficulties in finding experienced lawyers to handle the case for them in Djibouti is of little moment. 80.We reject the grounds of appeal relating to the analysis in stage 2. There is no or no sufficient basis to interfere with the judge’s finding that the plaintiffs would be deprived of a legitimate juridical advantage and there is a real risk that they may not obtain substantial justice if this action were to be tried in Djibouti. Conclusion 81.For the above reasons, we dismiss the defendant’s appeal. Costs of the appeal should follow the event. We make an order nisi that the defendant should pay the plaintiffs’ costs of the appeal, with a certificate for three counsel.
Mr Paul Shieh SC, Ms Sara Tong and Ms Natalie So, instructed by Deacons, for the Plaintiffs (Respondents) Mr Rimsky Yuen SC and Mr Law Man-Chung, instructed by Baker & McKenzie, for the Defendant (Appellant) [1] A detailed account of this was given in the judgment of Flaux J on 2 March 2016 in Republic of Djibouti & Ors v Abdourahman Mohamed Mahmood Boreh & Ors [2016] EWHC 405(Comm), referred to in the Decision as “Boreh Proceedings” and the judgment as “Boreh Judgment”. [2] Port de Djibouti SA [3] The Republic was the Grantor, the 3rd plaintiff the Concessionaire and the 2nd plaintiff a Confirming Party. [4] Also referred to as “DPFZA”. [5] The reference to “2012” in the Decision is a clerical error. [6] Ismail Omar Guelleh, President of the Republic since 1999. [7] The reference to “2012” in the Decision is a clerical error. [8] Société de Gestion du Terminal à Conteneurs de Doraleh [9] The law was passed on 28 October 2018 and published on 7 November 2018, referred to in the chronology as “Law 29”. [10] Also referred to as “Invalidity Proceedings”. [11] The writ was issued on 20 August 2018 but was filed again after a minor amendment to correct the name of the defendant. [12] On 22 May 2019, the Djibouti Court of Appeal rejected the appeal against the judgment of the Court of First Instance dismissing the jurisdictional challenge in the Invalidity Proceedings. On 4 June 2019, an appeal to the Supreme Court was brought against the decision of the Djibouti Court of Appeal. [13] Referred to in the chronology as “Administrator Proceedings”. [14] Madame Chantal Tadoral, (“the Administrator”) [15] On 8 September 2019 [16] The defendant has not filed a defence to the amended statement of claim filed on 3 September 2018 in view of its summons to stay proceedings. The intended lines of defence mentioned in the Decision are taken from the defendant’s case as outlined in the 1st affirmation of Lu Yongxin filed on 13 December 2018 in support of the stay application. [17] According to §24.5 of the affirmation of Lu Yongxin. [18] Decision, §§112, 115 [19] Decision, §§117, 118 [20] Decision, §§120, 121 [21] Decision, §§123, 124 [22] Decision, §125 [23] Decision, §§69 to 73, 127 [24] Decision, §127 [25] [1987] AC 460 [26] With Mr Law Man Chung and Mr Danny Tang [27] With Ms Sara Tong and Ms Natalie So [28] Statement of Claim §§110 to 115 [29] In The Spiliada [30] Statement of Claim §117. The English translation of Article 1391 provides: “Anyone who, through his act, causes damage to another by his fault shall be obliged to compensate for the damage. Everyone is liable for damage caused not only by his own fault but also for damages caused by his own negligence or recklessness.” [31] Statement of Claim §121 [32] 1st affidavit of Suhail Albanna filed on 16 May 2019, §129 [33] Statement of Claim §§117 to 120 [34] The 2004 Concession Agreement provided for arbitration in London and did not have an express governing law clause. The 2006 Concession Agreement provided for arbitration in London and the governing law is the laws of the UK. [35] Expert opinion of Professor Bertrand Fages dated 30 August 2019, §§16 to 17 [36] Expert report of Maitre Fatouma Mahamoud Hassan dated 10 December 2018, §25 [37] Decision, §86 [38] Clauses 27.1 and 27.2 [39] In holding that a dispute between the shareholders and the company must be referred to arbitration, whereas a dispute involving a shareholder which is the State of Djibouti and the company may not be required to be referred to arbitration. [40] Decision, §121 [41] Decision, §§123, 124 |
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