Vender Ltd v. P&O Nedlloyd Bv and Another
Read the full judgment text of HCCL 132/1997 on BabelCite. This HCCL judgment was delivered on 24 April 1998.
1. This is an application made by summons dated 13th September 1997 issued on behalf of both Defendants herein. Essentially, although not completely, it is an application for a stay of proceedings in favour of the courts in Rotterdam, the Netherlands. This is the judgment consequent upon that application.
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HCCL000132/1997
IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE COMMERCIAL LIST -----------------
----------------- Coram: The Hon Mr Justice Stone in Chambers Date of Hearing: 26 February 1998 Date of Handing Down Judgment: 24 April 1998 ----------------- JUDGMENT ----------------- 1. This is an application made by summons dated 13th September 1997 issued on behalf of both Defendants herein. Essentially, although not completely, it is an application for a stay of proceedings in favour of the courts in Rotterdam, the Netherlands. This is the judgment consequent upon that application. THE FACTS 2. This is a misdelivery claim. The material facts are in short compass. The Plaintiff herein is a Hong Kong based trader. Its claim against both Defendants arises from the shipment of 325 cartons of travelling bags to be transported to Johannesburg, via Durban, South Africa. The consignment in question was duly shipped from Hong Kong on or about 31st January 1997 upon a vessel owned by the 1st Defendant, the vessel arriving in Durban in February, and thereafter the goods were transported overland from Durban to Johannesburg. However, the Plaintiff alleges that in or around the end of February the consignment, which appears to have been warehoused in Johannesburg, was wrongfully released to an unknown third party without production of the Bill of Lading and without the Plaintiff's authority, with the result that the Plaintiff had suffered loss and damage in the sum of US$114,012.50. 3. The Bill of Lading, issued in Hong Kong on 31st January 1997 for and on behalf of the 1st Defendant (then known as Nedlloyd Lijnen B.V.) as Carrier by the 2nd Defendant (then known as Nedlloyd (HK) Limited) as Agent, contained, at Clause 25 thereof, a Law and Jurisdiction Clause, which reads thus:- "25 LAW AND JURISDICTION
4. It is this jurisdiction clause which is at the heart of the Defendants' submissions in this case. THE ARGUMENTS 5. It is, I think, appropriate broadly to consider the arguments put forward by Mr Davidson, on behalf of the Defendants, in the manner in which they have been itemized upon the face of the Summons; accordingly I take the Defendants in turn. A. 1ST DEFENDANT 6. The 1st Defendant is undoubtedly the carrier who issued the relevant Bill of Lading, which bill contains and/or evidences the contract of carriage between itself and the Plaintiff. It follows that there is no room for doubt that Clause 25 of that Bill 'bites' upon the rights and obligations of the parties, and, unsurprisingly, Mr Davidson founded his submission that the proceedings herein be stayed upon the effect of this clause. Further, it was clear that during the course of argument on this application, both Mr Davidson for the Defendants and Mr Cheung, who appeared on behalf of the Plaintiff, were proceeding on the basis that the effect of this clause was to place the burden upon the Plaintiff to establish why the Court should not exercise its discretion in favour of granting a stay, see in this context the observations of Brandon LJ (as he then was) in The "El Amria" [1981] 2 Lloyd's LR 119 at 123. 7. However, although Mr Cheung appeared to accept that such burden was indeed upon his client, the precise nature of Clause 25 (namely, its exclusivity or otherwise) was not specifically addressed, in oral argument at least, and subsequent to the hearing the Court invited clarification from the parties on the point, at the same time inviting the attention of Counsel to an earlier decision of the Commercial Court in CL 61 of 1997, T & K Electronics Limited v. The Tai Ping Insurance Company Limited, which decision, inter alia, considered the juridical effect of exclusive foreign jurisdiction clauses, and declined to follow Mr Justice Cresswell in "The Rothnie", [1996] 2 Lloyd's LR 206 at 211, wherein in terms of the burden of proof the learned Judge appeared to liken the effect of a non-exclusive jurisdiction clause to that of its exclusive counterpart. 8. As a consequence of the clarification requested, the Court received additional written submissions from both parties. In these submissions the Defendants maintained their stance as to the exclusivity of the clause, although Mr Cheung on behalf of the Plaintiff now argued that the clause should be regarded as non-exclusive; and therefore it presumably followed (although he did not specifically say so) that the burden of proof should not, in fact, be upon the Plaintiff to demonstrate why a stay should not be granted, and that the existence of such a non-exclusive clause was simply one factor to be placed into the normal discretionary 'mix', so to speak. 9. In the face of these subsequent conflicting written submissions, therefore, in my view a primary issue for decision must be a determination as to the nature of the clause in question, given the relevance of such classification in terms of the burden of proof. As the Court expressed the position inT & K Electronics Limited, op.cit, at page 2 :-
10. Accordingly, having considered the additional written submissions by both parties, I have come to the conclusion that Clause 25 is to be construed as an exclusive jurisdiction clause, the absence of the word 'exclusive' notwithstanding. In this regard, I am inclined to agree with the Plaintiff's supplemental written submissions on the point. At the end of the day the issue is essentially one of construction as to whether the clause in question obliges the parties to resort to the relevant jurisdiction - see Sohio Supply Co. v. Gatoil (USA) Inc., [1989] 1 Lloyd's LR 588 at 591, wherein Staughton LJ specifically approved the views expressed by the authors of Dicey and Morris on The Conflict of Laws, who put the matter thus :
11. Moreover, in addition to the particular use of the words 'all claims' and 'shall', I am also attracted by, and accept, the further argument, deriving from an analogous submission which found favour in the English Court of Appeal in Continental Bank v. Aeakos Compania [1994] 1 Lloyd's LR 505, to the effect that the provision that no other court should have jurisdiction unless appealed to or submitted to by the carrier lent support to the argument that the clause should be considered an exclusive jurisdiction clause. As Steyn LJ put it in Continental Bank, op.cit. at 509 :-
12. If this interpretation be correct, the legal position is clear: the Court retains a discretion whether to grant a stay brought in breach of such a clause "but the discretion should be exercised by granting a stay unless strong cause for not doing so is shown". In the circumstances, therefore, it seems to me that Mr Cheung was correct in accepting, during oral argument, that having commenced proceedings in Hong Kong in breach of such contractual term, the burden was indeed upon his client to show why a stay should not be granted. This being the case, the question thus arises as to whether the Plaintiff has so succeeded, on the evidence before the Court, in establishing such 'strong cause' for not granting the stay now sought. 13. On the material which has been placed before the Court, the answer to this rhetorical question must, I think, be 'No'. In my view little of substance is put up by the Plaintiff in the discharge of this burden; and whilst the Court can of course take account of the broad circumstances of the case, little or no attempt has been made, for example, to grapple with the matters itemized by Brandon LJ in The "El Amria" at sub-paragraphs (5)(a) - (e) of his list of relevant principles, which for convenience of reference I set out hereunder:-
14. To the contrary. The affidavit evidence filed on behalf of the Plaintiff comprises three affirmations of Mr Chui Man, of which the second simply clarifies his authority to make the affirmations and reveals that the Plaintiff hired the service of the 2nd Defendant for carriage of goods from Hong Kong to Johannesburg on four occasions, including the present, whilst the third affirmation merely exhibits shipping orders and bills of lading relevant to those four occasions. Whilst Mr Chui's first affirmation, in substance, establishes only that the Plaintiff was never informed that the carrier was other than the 2nd Defendant, or that the 2nd Defendant was the agent, and avers the existence of a strong case by the Plaintiff against both Defendants "being carriers and/or bailees for reward" and having no defence in what is said to be a clear instance of misdelivery. 15. After some reflection, I have come to the view, in light of the evidence placed before it, that the Court should accede to the 1st Defendant's stay application. I confess that in the circumstances that this is a decision which I view with little enthusiasm, given that jurisdiction has been established in Hong Kong as of right, but on the law as it stands, and in light of the evidence filed when taken together with the classification of the clause in question, the Court effectively is left with little room for manoeuvre. This is not a matter in which no defences are raised or deposed to (in which context I note that in this case the issue of the precise ambit of the Hague-Visby Rules again raises its head), and no real attempt, it seems to me, has been made on the evidence to establish the "strong cause" necessary for the discretionary refusal of a stay. Accordingly, insofar as the parties have bound themselves contractually to go to the Netherlands, so be it; and whilst I have received no evidence as to Netherlands' law, no point has been taken that for the purposes of the present application there is any difference between that and Hong Kong law. B. THE 2ND DEFENDANT 16. Mr Davidson similarly asks for a stay of proceedings against the 2nd Defendant, and matches this, also, with an application that the amended Statement of Claim against the 2nd Defendant be struck out as being frivolous, vexatious and an abuse of process. 17. Let me say at the outset that I do not accept that the striking out application is well-founded; in the circumstances, I do not consider that the requisite benchmark has been attained, particularly in light of the allegations of estoppel/course of dealing between the parties. I turn, therefore, to consider the two differing elements of the stay application insofar as it applies to the 2nd Defendant. 18. The first of these is an attempt to invoke the jurisdiction clause in the Bill of Lading against the 2nd Defendant. In this regard Mr Davidson makes two points. He says that the case against the 2nd Defendant qua carrier is risible on the basis of the facts as disclosed both in the evidence and in terms of the relevant documentation - the Bill of Lading in question was clearly issued by the 2nd Defendant as agent for the 1st Defendant - but that since the Plaintiff has pleaded that the 2nd Defendant is the carrier, the 2nd Defendant nevertheless is entitled to proceed on this basis for the purposes of argument. There has been no application to amend; ergo, submitted Mr Davidson, Clause 25 'bites', and like arguments surrounding the jurisdiction clause apply to the 2nd Defendant as to the 1st Defendant. 19. I do not accept this submission, attractively though the point was put. I am far from satisfied that the 2nd Defendant was privy to the contract of carriage, and for present purposes I am disinclined to accept the bald contention that "having pleaded it, they are stuck with it". 20. I turn therefore to Mr Davidson's alternative argument. In this context he relies upon the Himalaya clause in Clause 4.2 of the Bill of Lading. Insofar as relevant this reads:-
21. Mr Davidson submits that the 2nd Defendant is clearly within the terms of this clause. He has a problem, however; the relatively recent case of The "Mahkutai" [1996] 2 Lloyd's Rep.1, a decision of the Privy Council on appeal from the Court of Appeal of Hong Kong, provided, inter alia, that the effect of a Himalaya clause did not serve to include a mutual agreement such as an exclusive jurisdiction clause. Mr Davidson seeks to overcome this difficulty by distinguishing the precise wording of the clause in The "Mahkutai" from that in the present case; in particular, he points out that the instant clause refers also to 'rights' and 'defences', and argues that it is plainly a 'right' to have claims brought against his client in another jurisdiction. However, I do not think that the semantic differences in the respective clauses suffice to get him home. The reasoning of their Lordships - see here the speech of Lord Goff in particular, op.cit. at pp.9-10 - emphasizes the mutuality of the agreement as embodied within an exclusive jurisdiction clause, and contrasts that with the true function of a Himalaya clause, namely, to prevent cargo-owners from avoiding the effect of contractual defences available to the carrier by suing in tort persons who perform contractual services on the carrier's behalf. It is this primary consideration, it seems to me, which underpins the view of their Lordships to the effect that the exclusive jurisdiction clause in that case did not fall within the scope of the Himalaya clause. 22. In terms of the 2nd Defendant, therefore, this leaves outstanding the third string to Mr Davidson's bow; interestingly, an application by the 1st Defendantt that the proceedings against the 2nd Defendant be stayed on the grounds that they are an abuse of process because there is an agreement between the Plaintiff and the 1st Defendant that the claims herein must only be brought against the 1st Defendant, and that the 1st Defendant is obliged to indemnify the 2nd Defendant for liabilities it may have for the claims herein. This agreement also derives from Clause 4.2 of the Bill of Lading, the relevant part of which amounts to a promise by the shipper to the contractual carrier that no claim or allegation :-
23. Mr Davidson submitted that such a clause has recently been upheld in the Court of Appeal in Hong Kong in The Nedlloyd Colombe [1995] 2 HKC 655, and he suggested that the present case is even stronger in that in The Nedlloyd Colombe, wherein the Court of Appeal stayed the proceedings therein at the application of a non-party, Safmarine, which had taken out a summons in that action for an order that leave be granted to intervene for the purpose of seeking a permanent stay of all proceedings brought against the defendants. In the instant case, said Mr Davidson, the 1st Defendant was the contractual carrier under the Bill of Lading, wherein pursuant to Clause 4.2, the cargo-owners undertook to make no claim against any person by whom the carriage was performed, and there is an indemnity from the 1st Defendant to the 2nd Defendant insofar as the 2nd Defendant incurred liabilities. Accordingly, the reasoning goes, there would be circuity of action in that insofar as the Plaintiff succeeded against the 2nd Defendant, the 2nd Defendant would have a remedy against the 1st Defendant, who would in turn be indemnified by the Plaintiff. 24. This point is well made, and it is on this basis that I think that Mr Davidson succeeds in terms of a stay of proceedings against the 2nd Defendant. The Nedlloyd Colombo is highly persuasive, albeit, as Litton V-P stressed in his judgment in that case, the jurisdiction to stay at the instance of another (albeit in this instance not a stranger to the litigation) is sparingly used. However, in his judgment the learned Vice-President quoted with approval an extract from the judgment of Ackner J (as he then was) in The Elbe Maru [1978] 1 Lloyd's Rep 206, wherein in response to the argument advanced that, notwithstanding a promise to bring no claim in terms similar to Clause 4.2 in this case, the action should, as a matter of discretion, be allowed to proceed, Ackner J. observed as follows :-
ORDER 25. It follows from the foregoing that, although not without some real hesitation, in my judgment this application succeeds in terms of a stay of proceedings against both the 1st and the 2nd Defendants. 26. I make also an Order nisi that the costs of and occasioned by the application be to the Defendants, to be taxed if not agreed.
Representation: Mr Y.L. Cheung, inst'd by M/s C.K. Chan & Co., for the Plaintiff Mr Simon Davidson of M/s Holman Fenwick & Willan, for the Defendants |