The Owners of Cargo Lately Laden on Board the Ship or Vessel ``K. H. Enterprise'' v. The Owners of the Ship or Vessel ``Pioneer Container''

CACV000079/1991

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Coram: Hon. Sir Derek Cons, V.P., Power, J.A., & Godfrey, J.

Date of hearing: 17th - 20th, 23rd & 24th March 1992

Date of handing down judgment: 10th April 1992

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J U D G M E N T

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Sir Derek Cons, V.P.:

1. These proceedings originate from the loss, off Taiwan on 11th March 1987, of the M.V. "K.H. Enterprise" and the whole of the cargo she was then carrying. Her owners were the Kien Hung Shipping Co. Ltd. ("Kien Hung"), a company whose head office and place of business is in Taiwan and who are the defendants to the action. The K.H. Enterprise was then sailing under the Taiwan flag; she was crewed by Taiwanese officers and men; her classification was Taiwanese and she had last been surveyed and repaired in that jurisdiction.

2. At 3 p.m. on 9th March she left Keelung bound for Hong Kong with 246 containers on board. The following day she picked up a further 25 containers at Kaohsiung, continuing her voyage at 4 o'clock in the afternoon. At about 11 o'clock she ran into fog, and at 4:15 next morning ran into, or was run into by, a very much larger vessel, the "Oriental Faith". Damage to the K.H. Enterprise's bows led to eventual flooding, and she went down in the late afternoon.

3. The cargo interests fall naturally into three categories. Approximately 40% - the actual percentages vary according to whether one judges by the number or the value of the claims - related to goods shipped from Taiwan to Hong Kong, with bills of lading issued in the name of Kien Hung S.A., a company incorporated in Panama. Clause 26 of the bills provides that

"This Bill of Lading contract shall be governed by Chinese Law. Any claim or other dispute arising thereunder shall be determined at Taipei in Taiwan unless the carrier otherwise agrees in writing."

4. The bills were signed on behalf of Kien Hung S.A. by Kien Hung and it is accepted that by Taiwanese law Kien Hung would be liable thereon.

The second and slightly larger group was concerned with cargoes put on board by an enterprise known as Scandutch I/S ("Scandutch"), a consortium of North European and Scandinavian companies. The ultimate destinations were Middle Eastern and European ports, with transhipment to other vessels in Hong Kong. We understand that Scandutch had issued individual bills to each shipper to cover the entire journey. But for the part from Taiwan to Hong Kong the cargoes were carried on a comprehensive single ("feeder") bill issued by Kien Hung in its standard form, i.e. including the choice of jurisdiction clause.

The cargoes in the third group, small but comparatively more valuable, were in the reverse situation, i.e. they had been carried from elsewhere to Taiwan and were being brought to Hong Kong under a similar feeder bill. The original carrier was Hanjin Container Lines Ltd. ("Hanjin"), who presumably had also issued individual through bills.

5. As a result of the collision and loss of cargo various litigation has been commenced, and in some instances concluded, in a number of other jurisdictions. We are concerned with proceedings taken by the cargo interests in this jurisdiction. The writ is dated 10th March 1988, and is laid against the "Pioneer Container", a sister ship of the K.H. Enterprise. Service on the former led in December to a guarantee by the appropriate P & I Club "against the judgment of any competent court or tribunal" in the sum of US$1.6 million. It is to be noted that an earlier, but abortive, attempt had been made in July of the previous year to arrest the "Straits Container", in the mistaken belief that she too was a sister ship of the Hong Kong enterprise.

6. On 8th September the following year, i.e. 1989, the defendants took out a notice of motion that the proceedings be stayed on the grounds that the plaintiffs had agreed to the jurisdiction of the courts at Taipei in Taiwan or alternatively that in all the circumstances such courts were the natural and appropriate forum for the trial. Other issues raised by the notice are no longer pursued.

7. For one reason or another progress in the proceedings below continued to be slow. The motion to stay first came before Sears, J., in September 1990. At an early stage he gave a preliminary ruling, the object of which was, he said:"

"to indicate to the parties whether the submissions which they address to the court later for the purpose of the exercise of my discretion on this application to stay should be based upon the general principles as enunciated in either the case of 'Spiliada' or 'El Amria"',

cases reported respectively at [1987] 1 AC 460 and [1981] 2 Lloyd's LR 119. The distinction is that the latter case, being concerned with instances where parties to a contract have agreed to refer disputes to a foreign court, requires a plaintiff to show strong cause why the agreement should not be enforced, whereas the former deals more generally with the question of forum non conveniens and places a burden on the defendant to show that some other forum is more appropriate.

8. The argument before the judge was that by the law of Taiwan clause 26, the jurisdiction clause, was not valid. However after consideration of expert evidence the judge came to the conclusion that it was; furthermore, that by the application of a principle of law that may conveniently be referred to as "bailment, or sub-bailment, on terms", a principle that the judge accepted as being established in the law, the clause applied equally to those interests whose cargo was carried on the two feeder bills as it did to those who were in direct contractual relationship with Kien Hung on their own individual bills.

9. Further submissions were made to the judge in January and March last year. Then, by a reserved judgment delivered on 14th May, he refused the stay, being satisfied that there was a strong case to do so principally, if not solely, by reason of the fact that by then the plaintiffs were out of time in Taiwan.

10. The approach to the burden imposed upon the plaintiffs by The "El Amria" was set out by Sheen, J., in The "Blue Wave" [1982] 1 Lloyd's LR 151 at 156:

"The approach of the Courts of this country to a time bar has significantly altered in recent years. If it is open to a Court to extend the time limit, the Court will look to see if the defendant has been prejudiced by the delay in commencing proceedings. Such prejudice cannot arise where a claim is brought in time, but not in the correct tribunal. There would be an injustice to a plaintiff, who has suffered a legal wrong and has started proceedings, if he is precluded altogether from pursuing his remedy. The fact that the plaintiff will have no remedy in the foreign Court seems to me to be a powerful factor against a stay. To this approach I would make an exception if on the facts it was clear that the plaintiff had acted unreasonably and that his conduct showed that without good reason he deliberately and advisedly allowed the time limit to expire without instituting alternative proceedings."

11. That approach was swiftly adopted in this jurisdiction: see Nedlloyd Seine [1981] HKLR 64 and Confecciones del Atlantic and Atlantic Shipping Inc. [1982] HKLR 393.

12. In Spiliada Maritime Corporation and Cansulex Ltd. [1987] 1 AC 460 Lord Goff took much the same line (at p. 483) :

"And practical justice demands that, if the court considers that the plaintiff acted reasonably in commencing proceedings in this country, and that, although it appears that (putting on one side the time bar point) the appropriate forum for the trial of the action is elsewhere than England, the plaintiff did not act unreasonably in failing to commence proceedings (for example, by issuing a protective writ) in that jurisdiction within the limitation period applicable there, it would not, I think, be just to deprive the plaintiff of the benefit of having started proceedings within the limitation period applicable in this country. This approach is consistent with that of Sheen J. in The Blue Wave [1982] 1 Lloyd's Rep. 151."

13. The judge below was satisfied that had it not been for the time bar the balance was all one way in favour of the defendants, but having regard to that bar, as a cogent factor, he found that the plaintiffs had established themselves within the Blue Wave exception. He was satisfied that the plaintiffs were not forum shopping and that they had not acted in an unreasonable manner. He therefore refused a stay. Against that refusal the defendants now appeal. By a respondents' notice the plaintiffs question, inter alia, the correctness of the judge's earlier ruling that "sub-bailment on terms'' is a proposition known to the law or that if so, it was correctly applied in the instant circumstances.

14. I am aware of the limited rights of this Court generally to interfere when it is a matter of a judge's discretion, and I am mindful of Lord Templeman's stricture in Spiliada that in these particular matters "the appellate court should be slow to interfere". Nevertheless I am satisfied that this is an occasion when it should.

The basis of the judge's conclusion appears to rest in this passage:

''I consider it reasonable of the plaintiffs not to start an 'in personam' action in Taiwan; there had been an unsuccessful attempt to arrest an alleged sister-ship. Further, before arrest, a percentage of the claim (either 1% or 3%) would have to be put up as advance court costs. If an arrest had been made, then counter security for the full amount of the claim would have to be made.''

15. Mr. Ribeiro, for the plaintiffs, suggests that to appreciate what is behind the first reason we should insert the word ''unsecured'' before the words ''in personam''; the passage then correctly reflects, and shows that the judge clearly accepted, his basic submission, that taken together, the commercially prohibitive costs of initiating proceedings in Taiwan and the uncertainty, until too late, of obtaining security for their claims, were sufficient justification for the plaintiffs deliberately and advisedly to allow the time limit to expire, as he concedes they did. (Indeed it would be difficult, having regard to the affidavit of Mr. Mcfarlane of 9th February 1990, in particular at paragraph 43(6), to contend otherwise.) There has been some argument before us as to when exactly the time did expire, but for my part I do not think it is of any moment. At the latest it was in September 1989; and it would seem that the bar is of a kind that cannot be waived by the party favoured.

16. The evidence is that court costs in Taiwan have to be paid in advance at the time proceedings are initiated. In the instant circumstances they would have amounted to approximately HK$1 million. Furthermore, had the plaintiffs wished to make an arrest, security to the value of their whole claim, i.e. US$3.3 million, would have been necessary, although the same would also have had to be provided by the defendants if they wished to secure the release of any ship thus taken.

17. It seems to me unlikely that, when setting out the appropriate criteria, either Lord Goff in Spiliada or the Court of Appeal in The ''El Amria" had considerations of these kinds in mind. ''Expense'' is mentioned in The ''El Amria" only in paragraph (5)(a) at p. 123:

''In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts.''

18. It was apparently applied in that way at first instance in The "Adolf Warshki" and The "Sniadecki" [1976] 2 Lloyds LR 241: see paragraph 2 of the first holding in the headnote. When it is mentioned in Spiliada by Lord Goff he qualifies it with the phrase ''such as availability of witnesses''. It may, of course, fall within ''all the circumstances'', but even then, it can only be entitled to small weight, for in the absence of evidence to the contrary, it is to be presumed that the monies would be recoverable by the plaintiffs upon the successful conclusion of their litigation, and in any event, in the context of modern commercial litigation, HK$1 million is not a large sum.

19. As to security there is no evidence that the defendants would not be able to satisfy any judgment given against them, or that the plaintiffs would not be able to enforce it in Taiwan, or elsewhere, if the defendants were reluctant to do so. Nor is there any evidence as to what efforts, apart from the abortive attempt upon the Straits Container, were made in the early stages. For my part I find it impossible to accept that the two considerations in Mr. Ribeiro's basic submission, either singly or in combination, amount to ''good reason'', which in the context I take to mean something considerably more than just being commercially favourable to the plaintiffs.

20. It is incumbent then on this Court to approach the question afresh. I turn first to whether or not the Scandutch and Hanjin interests are bound by the exclusive jurisdiction clause, there being no challenge now to the validity of the clause itself.

21. The first hint that a bailee might be affected by terms to which he was not contractually party, is to be found in Elder, Dempster and Co., Ltd. and Others v. Paterson, Zochonis and Co., Ltd. [1924] AC 522 @ 564 where Lord Sumner observed obiter:

''It may be, that in the circumstances of this case the obligations to be inferred from the reception of the cargo for carriage to the United Kingdom amount to a bailment upon terms, which include the exceptions and limitations of liability stipulated in the known and contemplated form of bill of lading.''

22. In his dissenting judgment in Scruttons Ltd. v. Midland Silicones Ltd. [1962] AC 446 @ 489 Lord Denning put it more firmly:

''One special feature of the law of bailment is that the bailee can make a contract in regard to the goods which will bind the owner, although the owner is no party to the contract and cannot sue or be sued upon it. The contract must, no doubt, be of a category which the owner impliedly authorised the bailee to make, such as a contract for repair, storage, loading, unloading or removal; but, provided it is impliedly authorised, the true owner is bound by it. (By ''authorised'' in this context I do not mean authorised so as to make the owner the principal to the contract. I mean only that the owner impliedly consented to the bailee making the contract on his (the bailee's) own behalf.)''

23. Finally in Morris v. C.W. Martin & Sons Ltd. [1966] 1 QB 716, in the Court of Appeal, Lord Denning took it as the ground of his decision:

''The answer to the problem lies, I think, in this: the owner is bound by the conditions if he has expressly or impliedly consented to the bailee making a sub-bailment containing those conditions, but not otherwise.''

24. The other two Lords Justices were content to put their decision on a different ground, although Salmon, L.J., observed that he was ''strongly attracted to the view'' taken by Lord Denning.

25. Since then the principle has been acted upon by Steyn, J., in Singer Co. (U.K.) Ltd. and Another v. Tees and Hartlepool Port Authority [1988] 2 Lloyd's LR 164; and in The ''Captain Gregos" (No.2) [1990] 2 Lloyd's LR 395 the Court of Appeal observed that it "would if it were necessary to decide the question, be strongly attracted to the rule adumbrated by Lord Denning" in Morris v. Martin. On the other hand in this jurisdiction Leonard, J., felt he would ''have had difficulty in accepting it''; Corsina (Far East) Ltd. v. Taipen Yusen Wharf and Godown [1976] HKLR 435, and it was rejected by a dissenting minority of their lordships of the Privy Council in New Zealand Shipping Co. Ltd. v. A.M. Satterthwaite & Co. Ltd. [1975] AC 154.

26. Mr. Ribeiro submits that we should decline to recognise any such rule within the law of Hong Kong, arguing that there is no authority in its favour, that it is contrary to the long established doctrine of privity of contract and that there is no juridical concept into which it may conveniently be fitted. I would not agree. I accept that no superior court has as yet found it necessary authoritatively to grasp the nettle, but significant indications have been given. I am not disturbed by reference to privity of contract. I understand bailment to be a feature of the Common Law distinct from contract. I venture no opinion on its limits as a juridical concept, but merely note that in Dresser (U.K.) Ltd. v. Falcongate Freight Management Ltd. [1992] 2 WLR 319 where Bingham, L.J., assumed, without so deciding, that a sub-bailee could become bound by terms to which he was not a contractual party, Ralph Gibson, L.J., described the proposition as "a pragmatic legal recognition of commercial reality''. I do not see room for further elaboration and would merely agree with Steyn, J., that ''the correctness of Lord Denning's views as expressed in Morris v. Martin is established''. It seems to me also, as it did to him, a sensible and just principle.

27. Clause 4(1) of the standard Scandutch bill of lading provides:

''The Carrier shall be entitled to sub-contract on any terms the whole or any part of the carriage, loading, unloading, storing, warehousing, handling and any and all duties whatsoever undertaken by the Carrier in relation to the Goods.''

28. Part of clause 6 of the Hanjin bill of lading is in almost identical terms. Thus in both instances there is clear consent to sub-bailment. It is suggested that, for the consent to be effective, the plaintiffs must have had knowledge of the particular terms of the sub-bailment that are relevant. For my part I am unable to read such requirement into the words of Lord Denning; nor do I see any reason to do so. It seems to me that such knowledge would be extremely rare in practice and impossible in circumstances where the consent to the sub-bailment was merely implied. In any event, the express consent in the present instance is "to any terms". Questions may arise if the terms are unusual or commercially absurd, but that is not the case here.

29. Clause 4(2) of the same bill provides:

"... Without prejudice to the fore-going (a provision for circular indemnity), every such servant, agent and sub-contractor shall have the benefit of all provisions herein benefiting the Carrier as if such provisions were expressly for their benefit; and, in entering into this contract, the Carrier, to the extent of those provisions, does so not only on this own behalf, but also as agent and trustee for such servants, agents and sub-contractors."

30. Again part of clause 6 of the Hanjin bill is in almost identical terms.

31. Clauses of this kind are designed to take advantage of the suggestion of Lord Reid in Midland Silicones at p. 474. One such clause was successful in New Zealand Shipping v. Satterthwaite. The argument of Mr. Ribeiro is that the express agreement by the shippers to these terms, which in several instances are quite different from those in the Kien Hung bills, leaves no room for implied agreement to the latter. For my part I am unable to accept that argument. Apart from the point raised by Mr. Thomas, who now appears for the defendants, that at no time did the defendants authorise Scandutch or Hanjin to act as agents on their behalf, thereby leaving one of Lord Reid's four conditions unfulfilled, the inclusion of the words "on any terms" in my view indicates consideration of the possibility, or rather probability, that the sub-bailee might impose his own different or extended terms.

32. Finally on this aspect of the appeal Mr. Ribeiro submits that even if the principle be part of our law and applicable in the present instance, its operation is limited to the exemption clauses which appear in the bill; Singer is, an example; the principle cannot be extended to include choice of forum clauses. He seeks to draw an analogy with the operation of liens which depended at Common Law upon possession, a concept that is inherent in the nature of the goods which are subject to the lien. The right to stipulate a forum for trial is, he suggests, a purely personal right which would not, as it were, pass with the goods. He also relies upon comments made both at first instance and by the Court of Appeal in The "Forum Craftsman" [1984] 2 Lloyd's LR 102 and [1985] 1 Lloyd's LR 291.

33. The argument by analogy is perhaps at first blush attractive in the search for a juridical basis. But on consideration I do not think it is sound, for I am myself unable to find any distinction in principle between a defendant's right to limit the amount of any liability which a plaintiff may successfully establish against him and his right to limit the plaintiff as to the jurisdiction in which the plaintiff might seek to do so. If the first is binding on the plaintiff, I can see no reason, other than those which would be considered upon a motion to stay, why the second should not. I respectfully acknowledge the apprehension expressed in The Forum Craftsman, but it may be noted that the situations found there to be surprising were envisaged in the context of bills issued by a charterer who was not, nor ever likely to have been, involved in a dispute of the kind in question; whether the clause should be overridden would thus only arise in a dispute between others.

34. For these reasons I am satisfied that the defendants have made good heir submission based on Martin v. Morris. An alternative approach is that adopted by Donaldson, J., in Johnson Matthey v. Constantine Terminals Ltd. and International Express Co. Ltd. [1976] 2 Lloyd's LR 215, and accepted by the Court of Appeal in The "Captain Gregos", namely, that unless a plaintiff can establish his cause of action without reference to bailment, or as it may be, without reference to the contractual terms of the bailment upon which he sues, he must take the whole of those contractual terms. He cannot rely upon one part of the contract while ignoring the rest.

35. In the present instance the plaintiffs have endorsed their writ for:

"... damages for breach of contract and/or for breach of duty and/or for negligence in and about the loading, handling, stowage, custody and care of the Plaintiffs' cargo and the carriage thereof."

36. They do not now pursue any claim in contract. The rest of their claim is, according to paragraph 9 of the affidavit of Mr. McFarlane:

"... based on the allegation that the vessel was unseaworthy before or at the commencement of the subject voyage and/or that there had been negligence in the care of the cargo after the collision took place."

37. There seems to me to be little, if any, chance that the plaintiffs could succeed in pure negligence upon these allegations, or that they could make them good at trial without any reference whatsoever to the two bills of lading. I am satisfied therefore that by this route also the Scandutch and Hanjin interests become bound by the exclusive jurisdiction clause.

38. As to the exercise of our discretion Mr. Ribeiro has re-opened, as he entitled to do, the suggestion that the defendants have no genuine desire for trial in Taiwan, or indeed for trial anywhere. He has drawn our attention to the inconsistent positions adopted and maintained by the owners in litigation in New York and Seoul, and in an action brought by Scandutch in Taiwan. He observes that the defence is in reality that of the defendants' P & I Club, which has its presence here but not in Taiwan. However it has to be noted that when other plaintiffs did bring proceedings in Taiwan, within the time limit, the defendants did proceed to trial; I find nothing to indicate that they would not have done the same had the present plaintiffs acted likewise.

39. In Spiliada, at p;. 483, Lord Goff observed:

"... suppose that it was obvious that the plaintiff should have commenced proceedings in the appropriate jurisdiction, and yet he did not trouble to issue a protective writ there; in cases such as these, I cannot see that the court should hesitate to stay the proceedings in this country, even though the effect would be that the plaintiff's claim would inevitably be defeated by a plea of the time bar in the appropriate jurisdiction.''

40. In my view the interests under the individual bills fall precisely within those words. They were well aware of clause 26. They decided to proceed here instead, because it was cheaper, at least to begin with. That seems to me, with respect to the judge below, a clear example of forum shopping.

41. The interests under the two feeder bills are in a slightly better position. They did not expressly agree to a forum in Taiwan, but they are, by reason of their normal commercial dealings, as Mr. Thomas put it, "committed to'' that jurisdiction and other than the time bar have no good reason for starting elsewhere. Mr. Ribeiro suggests that the uncertainty of the application of clause 26, a question which has occupied many days of argument in this Court and below, was sufficient excuse. I accept that to be a valid factor for consideration, but there is nothing to indicate that this uncertainty was in fact present to the minds of those representing them at any time prior to the issue of the motion to stay; indeed such indications as there are point the other way.

42. For these reasons I take the view that all the plaintiffs have failed to discharge the burden laid upon them by The ''El Amria". I would allow the appeal and grant a stay of the whole action.

Power, J.A.:

43. I have had the opportunity of reading the judgments of the Vice-President and of my brother Godfrey. I concur with both and have nothing to add.

Godfrey, J.:

44. I agree with the conclusions reached by the Vice-President, but out of respect for the judge, from whom we are differing, I propose to set out my own reasons for doing so.

45. The first two questions with which the judge was concerned were these:-

(1) Did the exclusive jurisdiction clause contained in the Kien Hung bills bind those cargo owners who were parties to those bills (the "Kien Hung'' plaintiffs)?

(2) Did the clause bind those cargo owners (the "Scandutch" and "Hanjin" plaintiffs) who were not party to those bills, but whose goods had been taken on board by the ship owners on the same terms?

46. The judge decided these two questions in favour of the ship owners. The Kien Hung plaintiffs do not appeal from his decision on the first question and, for the reasons given by the Vice-President, with which I agree, the appeal of the Scandutch and Hanjin plaintiffs from the decision of the judge on the second question must be dismissed, leaving all the plaintiffs (if I may be pardoned for saying so) in the same boat. (This seems not unreasonable; from a very early stage in this dispute the plaintiffs have all enjoyed the services of the same master and crew.)

47. So far, then, the judge was quite right; and he was quite right, too, to hold as he did, that in deciding whether or not to grant the stay for which the defendants asked, he had to exercise his discretion in accordance with the guidance given in The ''El Amria" [1981] Lloyd's LR 119 (and in the subsequent authorities which he cited) to judges faced with an application to stay proceedings brought here in defiance of an exclusive jurisdiction clause.

48. But so far as time-bars are concerned, that guidance is none too certain, the reason being that competing considerations inevitably arise.

49. If you want to litigate here, in the face of an exclusive jurisdiction clause, you have a problem. Given that you are bound to refer your dispute with your opponent to the exclusive jurisdiction of another country, the authorities show that proceedings which you take here will be stayed unless you can show, strong cause why they should not be stayed.

50. One strong cause may be the existence of a time-bar in the foreign jurisdiction. After all, if you have brought your action in time but in the wrong place, then, unless your failure to bring your action in the right place has caused substantial prejudice to your opponent, the justice of the matter, on the face of it, requires that you should be allowed to continue with your proceedings here, and that accordingly any application your opponent may make for a stay of your proceedings here ought to be refused; for otherwise the existence of the time-bar in the foreign jurisdiction might result in your being altogether deprived of any remedy anywhere.

51. On the other hand, if you have deliberately let time run out in the foreign jurisdiction without troubling to take proceedings there for the protection of your rights, the justice of the matter, on the face of it, requires that you should not be allowed to continue with your proceedings here, and that your opponent's application for a stay ought to be granted; for otherwise your opponent will be deprived of his accrued defence in the foreign jurisdiction in which you are bound to litigate against him.

52. How is the opposition between these competing considerations to be resolved?

53. Each case will of course depend on its own circumstances and after weighing all the relevant factors mentioned in the authorities it may become clear in any given case that the scales of justice come down heavily one way or the other. But the governing principle remains this; that faced with an application by the defendant for a stay, a plaintiff bound by the provisions of a foreign jurisdiction clause must show good cause why, in the interests of justice, he ought, nevertheless, to be allowed to continue his proceedings here.

54. So far as the present case is concerned, the judge's initial approach to the matter cannot be faulted. He referred to the relevant passages from the judgment of Sheen, J. in The "Blue Wave" [1972] 1 Lloyd's LR 151 at p. 156 and from the speech of Lord Goff in Spiliada [1987] 1 AC 460 at p. 483 (to which the Vice-President has also referred). But thereafter, with all respect to him, the judge went wrong. He said:

"... the first matter which I should scrutinize is whether the plaintiffs deliberately allowed the time-bar to bite by acting in an unreasonable manner. ... I consider it reasonable of the plaintiffs not to start an 'in personam' action in Taiwan; there had been an unsuccessful attempt to arrest an alleged sister ship. Further, before arrest a percentage of the claim ... would have to be put up as advance court costs. If an arrest had been made, then counter security for the full amount of the claim would have to be made."

55. He expressed the opinion that the plaintiffs had not "acted in an unreasonable manner'' and although he reminded himself that he had to exercise his discretion in favour of the defendants unless the plaintiffs had proved that there was strong cause for not so doing, he concluded that the plaintiffs had done this.

56. Here, with regret, I have to part company with the judge, for these reasons.

57. First, the question which the judge appears to have asked himself: "Did these plaintiffs act in a reasonable manner?'' was not really the right question. The right question was whether, in the face of the foreign jurisdiction clause, by which they were bound, the plaintiffs had shown strong cause why the defendants' application for a stay should not be granted.

58. Secondly, this was case in which, on their own evidence, the plaintiffs had indeed ''deliberately and advisedly allowed the time limit to expire without instituting alternative proceedings" (as Sheen, J. puts it in The "Blue Wave", above). What ''good reason'' had the plaintiffs shown for doing so? The judge seems to have thought that the plaintiffs' deliberate decision not to litigate in the jurisdiction in which they were bound to litigate was reasonable, because of the amount of the costs they would have had to incur, and (for the purposes of an arrest) the amount of the security they would have had to put up, if they had done so. I am afraid I cannot go along with this at all. If you find yourself bound to litigate in a forum which is more expensive than the one you would prefer, deliberately to choose the latter rather than the former seems to me (although the judge thought otherwise) to be forum shopping in one of its purest and most undesirable forms. And if in pursuance of your deliberate decision to litigate here instead, you let time run out in the jurisdiction in which you are bound to litigate, without taking the trouble (because of the expense) even to issue a protective writ there, you are not, as I think, acting reasonably at all; you are gambling on the chance of a stay being refused here and you cannot complain if you then lose that gamble. This may seem to you at the time a justifiable commercial risk to take. But that, in the context of the litigation, does not make your decision a reasonable one.

59. For these reasons, I find myself driven to the conclusion that the judge's exercise of his discretion was flawed and that we are entitled, and indeed bound, to review it and to exercise the discretion for ourselves. I agree with the Vice-President, an for the reasons he gives, that we should do so by granting the stay for which the defendants ask. In my judgment, the plaintiffs, who took an informed and deliberate decision not to litigate in Taiwan, have come nowhere near showing strong cause why the defendants' application for a stay of these proceedings ought to be refused. Quite the contrary. The defendants took the plaintiffs' goods on board on the basis of the foreign jurisdiction clause for which the defendants had stipulated, and I can see no good reason at all in the present case for depriving the defendants of the benefits of that stipulation. I agree that this appeal should be allowed.

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Order. Appeal allowed; all proceedings in the action to be stayed; there be an order nisi that the appellants have their costs here and below.

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Representation:

Michael Thomas, Q.C., & Anthony Dicks (M/s. Holman, Fenwick & Willan) for defendants/appellants

Robert Ribeiro, Q.C., & Paul Shieh (M/s. Clyde & Co.) for plaintiffs/respondents