The Owners of the Ship or Vessel "Nedlloyd Seine" v. The Owners of Cargo Lately Laden on Board the Ship or Vessel "Nedlloyd Seine"

CACV000086/1981

Headnote

"Enforcement of foreign jurisdiction Clause in Bill of Lading"

IN THE COURT OF APPEAL

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Coram: Leonard V.P., Cons, Zimmern, JJ.A.

Date of Judgment: 10th November, 1981.

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JUDGMENT

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Cons, J.A. :

1. In July 1979 the Nedlloyd Seine sailed from Hong Kong for Monrovia in Liberia on the coast of Africa. Amongst other goods she carried a cargo of rubber sandals belonging to the Plaintiffs in the Court below. She arrived in Monrovia on the 11th of September and discharged her cargo on the 14th. The Plaintiffs claim that their particular cargo was shortlanded. A survey taken some fifteen days later certified the loss to be 137.2 dozen valued at US$7,177.14.

2. The sandals had originally come from Canton and had been transhipped in Hong Kong under a liberty allowed in the Bill of Lading issued in China. A fresh bill was issued here under the head of "Nedlloyd Line. Incorporated in The Netherlands as Nedlloyd Lijnen B.V. Rotterdam". It is not surprising then to find that the bill contains a Dutch Jurisdiction Clause -

3. Despite that clause the Plaintiffs brought their action against the owners in Hong Kong.

4. The Plaintiffs are of course bound by the jurisdiction clause as part of the bill on which they base their action. The clause, however, is not conclusive of the matter. It is well settled that the Judges of this Colony have a discretion whether or not to stay proceedings which are brought here in breach of such a clause. It is equally well settled that they will exercise that discretion in favour of proceedings here only when strong cause for doing so is shown.

5. The Judge below, endorsing the decision of the Registrar, refused a stay to the owners. He thought there were two strong reasons for doing so.

6. The first is what he calls the owners "dilatoriness" by which they "have caused inordinate delay". I must confess to some difficulty in understanding why the Judge so castigated the owners. The first intimation they were given of the claim against them was not until virtually one year after the discharge of the cargo, that is on the 9th of September, 1980. A protective writ was issued by the Plaintiffs on the 22nd of the same month but it was not served until January of this year when the Plaintiffs arrested a sister ship of the Nedlloyd Seine, the Nedlloyd Korea, which was at that time in port here. Within a week the owners had raised the question of jurisdiction with the Plaintiff and within three weeks their summons to stay was on the Court file. Matters were delayed thereafter but with the consent of both parties.

7. I am unable to imagine what more the Judge expected the owners to have done. Until an action is brought a defendant is not required to do anything. He may be wise to make private preparations but that is a matter for himself. His failure to do so is not something of which the Plaintiff can complain. With every respect to the Judge below that reason was not good.

8. The second reason on which the Judge relied was that the owners had failed "to isolate or formulate any defence on the merits", "not even a pretence of defence".

9. In the Eleftheria (1969), 1 Lloyd's Reports Sec. 237, Brandon J. summarised the established principles with regard to the exercise of discretion in these cases. A Judge ought to take into account all the circumstances of the particular case. Without prejudice to that general precept he listed several particular matters which might properly be regarded. Lack of apparent defence is not expressly one of those matters, but the Judge below obviously felt that it came within what might be termed the mala fides consideration "whether the defendants genuinely desire trial in the foreign court, or are only seeking procedural advantage".

10. As Counsel for the Plaintiffs pointed out this action involves a relatively small sum of money. Considerable expenses have already been incurred here. More would be incurred if the action had to be restarted and heard in Rotterdam. Furthermore there is serious doubt that it could now be commenced there because the time limit has already expired. In that case the Plaintiffs would be left with no remedy against the owners. That is a matter which Lord Merrivale in the "Media" 41 Lloyd's List Law Reports 80 at page 81 thought "would carry great weight in a Court of conscience" although in the circumstances of that particular case it was not weighty enough. In the present instance, and together with the other circumstances I have just enumerated, I think it is. I would therefore not at this stage disturb the order of the Judge below.

11. In September 1980 when the writ was issued, the position was that the action should have been started in Rotterdam and not here. An affidavit filed by a partner in the Plaintiffs solicitors indicates that the decision to sue in Hong Kong rather than Rotterdam was based on two considerations. One was that no attempt to dispute the jurisdiction was made until after the arrest of the Nelloyd Korea. That is not surprising as until then the owners did not know that the Plaintiffs had acted in breach of their agreement. That consideration was not pursued before us.

12. The other was that in the solicitor's view the assertion that the loss was caused by pilferage on board (which he felt had been made by the owners in correspondence) "did not give rise to any defence as to create any dispute of liability".

13. Support for this view is sought in a decision of Sheen J. as recently as February this year, the Banglar Baani which was reported in Lloyd's Maritime Law Newsletter No. 3. The Judge refused a stay based on a foreign jurisdiction clause in the Bill of Lading, one reason being apparently "that the letters and certificates from the defendants showed that there was no dispute between the parties which could have been referred to the Court in Bangladesh". However, in that case the carriers seem to have expressly acknowledged the loss, the Plaintiff cargo insurers who were suing in their own name were parties to an agreement that the litigation should be in England, and the defendant solicitors had accepted service and entered normal appearance thereto. It is not surprising that the Judge added that the main reason for the application had been "to delay the inevitable result".

14. That does not seem to me to have been the situation in the present case in September 1980. The owners had not paid up that is true. They had made an offer which the Plaintiffs had rejected as derisory. There the matter rested. There is nothing to indicate that the owners intended delay in any other way than to wait for due process. An order fourteen summons would have probably brought process to a swift conclusion had the action been properly brought within this jurisdiction. But it was not. The Plaintiffs had promised to go to Rotterdam. No evidence has been brought to our attention to show that the Plaintiffs would have been disadvantaged in any way whatsoever by going there. For all we know, it might be that had they done so they would by now already have had judgment there under some equivalent of our order fourteen proceedings. The burden is on the Plaintiffs to justify their breach of agreement. In my view they have not done so.

15. I accept that at that time the Plaintiff acted on advice given in good faith. In future those who are asked to advise in similar circumstances would do well to note the comments of Sheen J. in yet another case reported in Lloyd's Maritime Law Newsletter issued No. 37 of the 2nd of April 1981 : "The Blue Wave" -

"Mr. Justice Sheen said that the fact that the Plaintiff would have no remedy in the foreign court seemed to him to be a powerful factor in favour of refusing to grant a stay. An exception to that approach would be made 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."

16. For the reasons I gave earlier, I would in the peculiar circumstances of this case dismiss the appeal. Subject to what Counsel may have to say, however, I am inclined to order the Respondent to pay the Appellants costs.

Leonard, V.P. :

17. I agree with the judgment that has just been delivered.

Zimmern, J.A. :

18. I follow the conclusions of the learned Vice-President and brother Cons with some reluctance but the view I take in this matter is not strong enough to dissent.

19. The learned judge came to the conclusions that the defendants had caused inordinate delay and that there had been no serious attempt to discuss settlement or advance any genuine defence. He said that not even a defence had been sought to be presented and there was every indication of a total lack of any genuine desire to go to trial in Netherlands and taking all the circumstances into consideration the defendants' conduct was indeed highly controversial and unconventional. Therefore in his view it would be wrong in such circumstances for his discretion not to exercise in favour of the plaintiffs. With respect to the learned judge there was no evidence whatsoever that the defendants had been guilty of any delay. The real parties both no doubt of high standing and able to look after themselves in their own fields were bargaining at arm's length on a general settlement of problems between ship-owners and cargo insurers on cargo bound for West Africa. They failed to come to agreement whereupon the insurers lodged a specific claim. There was no delay by the defendants in dealing with this claim. The insurers must have known all along of the jurisdiction clause in the Bill of Lading and if they were minded to institute proceedings I cannot see why they did not do so in the Court at Rotterdam, the agreed jurisdiction. Instead they exercised the right of cargo-owners to found jurisdiction in Hong Kong by the arrest of one of the defendants' ships. Just as the plaintiffs have the right of arrest the defendants under the Bill of Lading can apply to the Court to stay the proceedings on the jurisdiction point. The burden is then on the plaintiffs to prove to the Court showing strong cause that the discretion should be exercised by not granting a stay. Counsel for the Respondents relies heavily on the "Vishva Prabha" [1979] 2 Lloyd's Law Reports 286 wherein Sheen J. refused a stay, one of the grounds being that on the evidence there was no dispute between the parties. In that case the jurisdiction clause does not mention "Action" as instant case but "disputes". The plaintiffs say they have on the evidence shown a prima facie case. That may be so but is this the time when the applicant for a stay is bound to divulge his defence? In my view the answer is clearly no. It is a matter entirely for the Counsel. If he does not, in certain cases and under certain circumstances the Court might well be led into thinking that his party does not genuinely desire trial in the foreign country and is only seeking procedural advantages. On the facts of this case the learned judge over-emphasised the importance of divulging a defence and there is no evidence to support his finding that the appellants' conduct was controversial or unconventional. The words of Roskill L.J. in Probatina Shipping v. Sun Insurance Office Ltd. [1974] 1 Q.B. at pp. 650/651 are pertinent. He said :

"Where I most respectfully but emphatically part company with the judge is when he said :

'I therefore consider that counsel for the insurers should always give some sufficient indication to the court of the justifiability of the plea before any question of a prima facie entitlement to an order for ship's papers can arise. Otherwise the court is in the dark as to what may be necessary or expedient in the particular case ........'

At the end of his judgment he said :

'.......... I am satisfied on the general information put before the court that a plea of scuttling is justifiable. I am therefore also satisfied for the reasons already given that it is prima facie expedient in accordance with the practice of the court that the insurers should be entitled to a wider range of discovery than the ordinary discovery afforded by the rules ..........'

I cannot, with great respect, think that it can be right for counsel for underwriters to be obliged as distinct from volunteering to tell the court what his view is about the strength (for that is what it amounts to) of the intended plea of scuttling. For him to be required to do so comes near to infringing the fundamental rules of privilege. Counsel may in the course of his application choose to tell the commercial judge what the factual foundation for the plea of scuttling is in order to make his application for ship's papers or for discovery more attractive to the judge; but that must be a matter for him without becoming in any way obligatory for him to do so."

20. It was then submitted that the sum involved was small, only US$7,000 plus and that there has already been a hearing before a Registrar and an appeal to a judge. With respect, the sum was apparently not so small in the eyes of the plaintiffs when they arrested a ship to found jurisdiction and obtain a security. I find this argument unattractive. At the end of the day it was the time bar factor which saved the plaintiffs.

Representation:

Mr. Geoffrey Ma (Messrs. Richards Butler) for the Appellants

Mr. Parirokh Graham (Robertson, Double & Boase) for the Respondents