Antaios Compania Naviera v. The Owners of the Ship "Ledesco Uno" (Philippine Flag)

HCAJ000006/1977

IN THE HIGH COURT OF JUSTICE

ADMIRALTY JURISDICTION

ACTION NO. 6 OF 1977

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Coram: Li, J.

Date of Judgment: 9th February, 1977 at 10.00 a.m.

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JUDGMENT

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1. This is an application for the release of the ship "LEDESCO UNO" and alternatively for a stay of proceedings and the unconditional release of the said ship. The applicant, who is the defendant of the action in rem, is the LEDESMA OVERSEAS SHIPPING CORPORATION of the Philippines and is the registered owner of the "LEDESCO UNO" which arrived within the territorial waters of Hong Kong on the 12th January, 1977.

2. A writ of summons claiming for charterparty freight and other damages was issued by the respondent, the ANTAIOS COMPANIA NAVIERA S.A., against the applicant on the 18th January, 1977, and on the same day the "LEDESCO UNO" was arrested in rem by the respondent. On the 27th January, 1977, the applicant entered a conditional appearance and on the same day applied for the release of the said ship.

3. The facts giving rise to this application are as follows: The respondent is the owner of the ship "ANTAIOS" which was chartered to the applicant by a voyage charter dated the 16th January, 1976. Clause 24 of this charter provides that:

"All disputes arising from time to time out of this contract shall, unless the parties agree forthwith on a single arbitrator, be referred to the final arbitrament of two arbitrators carrying on business in London who shall be members of the Baltic and engaged in the shipping and/or grain trades ....."

A dispute arose as to the freight payable in accordance with the terms of the charterparty in March, 1976. Suffice it to say that the respondent claimed some US$800,000 and the applicant denied liability and put in a counterclaim for approximately US$400,000. I am not directly concerned with the merits and demerits of the claim and the counterclaim which have been referred to arbitration in London. The arbitration proceedings are due to be heard and are pending in London in August this year.

4. In the meantime, the respondent instituted admiralty proceedings in Casablanca to have another of the applicant's ships, "LEDESCO DOS", arrested. On the 25th August, 1976, the court in Casablance ordered the release of the "LEDESCO DOS" on application by the applicant. Since then the applicant instituted proceedings in Casablance claiming damages to the amount of US$1.3 million for the wrongful arrest of the "LEDESCO DOS" and the proceedings in Casablanca are also pending.

5. When the applicant's ship "LEDESCO UNO" arrived in Hong Kong on the 12th January the respondent promptly took out a writ of summons on the same subject matter under reference in London and took steps to have the ship "LEDESCO UNO" arrested in rem, hence this application.

6. The applicant's case is that this court has no jurisdiction to arrest the ship "LEDESCO UNO" in rem on the ground that this court has no jurisdiction to entertain an action in rem in respect of the said ship and also that the proceedings instituted by the respondent should be stayed and the vessel unconditionally released because the subject matter of the action had been referred to arbitration in London, which is now pending.

7. The respondent asserts that the court has jurisdiction and that the proceedings in Hong Kong should not be stayed.

8. The issues between the parties, therefore, are: first, the question of jurisdiction - which is entirely a matter of law -and, secondly, whether there should be a stay of proceedings and have the ship unconditionally released, which is within the court's discretion. Of course such discretion must be judicially exercised.

9. I shall first deal with the question of jurisdiction. The admiralty jurisdiction of this court is founded on the Administration of Justice Act, 1956, which was extended to Hong Kong by an order-in-council, namely, The Admiralty Jurisdiction (Hong Kong) Order in Council, 1962, No.1547 of 1962. By virtue of this order-in-council, the provisions, so far as they are relevant to these proceedings, are practically adapted and adopted from the Administration of Justice Act, 1956, as applicable to Hong Kong. For ease of reference, I shall in the course of this decision refer to the Administration of Justice Act, 1956. Perhaps it is appropriate to mention at this stage that the Administration of Justice Act, 1956, was in turn enacted in England so as to give effect to the international conventions on shipping law and arrest of ships in 1952. Sub-section (1) of section 1 provides, inter alia, the various subject matters which come within the admiralty jurisdiction of this court. It provides that:

"The Admiralty jurisdiction of this court shall be as follows, that is to say, jurisdiction to hear and determine any of the following questions or claims ....."

Then it sets out a list of matters which come within the jurisdiction of this court from paragraph (a) to paragraph (s). Sub-section (4) of section 3 provides that:

"In the case of any such claim as is mentioned in paragraphs (d) to (r) of subsection (1) of section one of this Act, being a claim arising in connection with a ship, where the person who would be liable on the claim in an action in personam was, when the cause of action arose, the owner or charterer of, or in possession or in control of, the ship, the Admiralty Jurisdiction of the High Court."

- which in Hong Kong may be read as the High Court in Hong Kong -

"may (whether the claim gives rise to a maritime lien on the ship or not) be invoked by an action in rem against -

It would be observed that section 1 gives this court admiralty jurisdiction to try issues that are set out therein and section 3, sub-section (4) sets out the circumstances under which the admiralty jurisdiction in rem of this court may be invoked to have ships arrested.

10. Both counsel agree that by virtue of paragraph (h), sub-section (1), of section 1 of the Administration of Justice Act, this court has admiralty jurisdiction to try the respondent's claim founded on the charterparty. It is the applicant's contention, however, that the admiralty jurisdiction in rem of this court in the present circumstances may not be invoked to arrest the "LEDESCO UNO". It is argued that, by virtue of section 3, sub-section (4), paragraph (b), the ship liable to arrest must at the time that the action is brought be a ship wholly owned by the same person who was also the owner or a demised charterer of the vessel which was involved in the subject of the claim when that cause of action arose. The vessel involved in the present case is the "ANTAIOS", of which the applicant was not the owner or the demised charterer (as opposed to a voyage charterer or time charterer) or a person in possession or control at the time the cause of action arose. Putting it in another way, section 3, sub-section (4), paragraph (b), permits a ship other than the ship involved in the admiralty claim to be arrested by the respondent - that is, the plaintiff in the admiralty jurisdiction - only if she is a sister ship of the ship involved in the admiralty action or admiralty claim. The "ANTAIOS" is the vessel involved in the present action. At the time the cause of action arose the respondent was the owner of the "ANTAIOS". The respondent cannot arrest its own ship and, anyway, the "LEDESCO UNO" is not a sister ship of the "ANTAIOS".

11. Counsel for the respondent contends that the words in section 3, sub-section (4), clearly indicate that a ship wholly owned by a party who would be liable to an admiralty action in personam may be arrested. The applicant was the person who would be liable in personam in the admiralty action. It was the charterer of the action at the time the cause of action arose. It was the owner of the "LEDESCO UNO" at the time when the admiralty action was brought. Thus the "LEDESCO UNO" is liable to arrest.

12. There is no dispute that the admiralty action which was brought before this court is an action that this court was jurisdiction to entertain. Nor is there any dispute that the applicant is the party who would be liable if the respondent should succeed in that action.

13. The issue is narrowed down to the question whether the words "any other ship ..... beneficially owned as aforesaid" in section 3, sub-section (4), paragraph (b), means another ship beneficially owned by that person who is the owner, charterer or in possession or in control of the ship involved in the action or simply beneficially owned by the person who would be liable in the action in personam. In short, the success or failure of this application depends on the construction of section 3, sub-section (4).

14. A fair number of authorities have been cited but not all of them are directly on the point, except one, namely, The Permina 108 decided by the Court of Appeal in Singapore in Appeal No. 31 of 1976. I am indebted to counsel for the parties who have argued this case with thoroughness and clarity.

15. I shall start with some of the English cases, which are decided not directly on the point. But some of their dicta provide a guidance.

16. The case of The Banco in 1971, Probate, 137, decided and laid down the principle that only one ship at a time may be arrested and, therefore, it is not a case that is directly in point. However, there are some guidelines provided in that case and the first of which is that if there is any doubt and even if the Act does not refer to the 1952 Conventions, the court is entitled to look at the terms of the Conventions for the interpretation of the provisions of the Act. At page 142 Lane J. said that:

"I am bound to say, reading the subsection, that I do not find it of such sparkling clarity that it can be interpreted without hesitation,"

- where she was referring to section 3, sub-section (4), she said:

"I am bound to say, reading the subsection, that I do not find it of such sparkling clarity that it can be interpreted without hesitation, and I am therefore glad to look, as I am invited to do, at the convention. The most important article, so far as affording assistance is concerned in this case, is article 3. Paragraph 1 thereof reads:

Then at page 151 in the Court of Appeal, Lord Denning, having discussed the history of the admiralty jurisdiction of the High Court in England and reviewed the cases, said:

"Such was the state of the law when Parliament enacted the Administration of Justice Act 1956. But, before I come to it, I would tell of the International Convention which preceded it. It is now fully established that when an Act of Parliament is passed so as to give effect to an International Convention, we can look at the Convention so as to help us to construe the Act: see Salomon v. Commissioners of Customs and Excise (1967) 2 Q.B.116; Post Office v. Estuary Radio Ltd. (1968) 1 Q.B.740, and this is so even though the Act of Parliament does not mention the Convention."

It further contained a dictum that in circumstances under section 3, sub-section (4), the offending ship or another ship in the same ownership may be arrested. At page 144 Lane J. said;

"Fortified by a reading of the convention, I hold that the relevant subsection means that the plaintiffs may arrest one ship of the defendants only, which may be the offending ship or, alternatively, any other ship in like ownership, and that to interpret the word 'or' to mean 'and/or' in this particular context would be to stretch the meaning of that simple word too far, albeit it does undoubtedly bear the wider interpretation in other places in the same Act. Further, I hold that 'any other ship' means 'ship' in the singular and not in the plural."

At page 152, Lord Denning said:

"The important word in that subsection is the word 'or'. It is used to express an alternative as in the phrase 'one or the other'. It means that the Admiralty jurisdiction in rem may be invoked either against the offending ship or against any other ship in the same ownership, but not against both."

Later at page 153 he said:

"Shortly after the statute was passed, Willmer J. in The St. Elefterio (1957) p.179, 185, said that the purpose of the Act is to confer 'the right to arrest either the ship in respect of which the cause of action is alleged to have arisen or any other ship in the same ownership' . That is clearly right. There is no doubt about it."

In The Andrea Ursula, 1973, 1 Q.B. at 265, which it was held that a demise charterer was in the same position as that of the owner. Again certain dicta can be of assistance. In this case Mr. Justice Brandon took the terms of the Convention as a guide for the interpretation of the provisions of the Act. He said:

"As already stated, section 3(4) of the Act of 1956 is apparently intended to give effect to these provisions of article 3 of the Convention. It provides by subsection (2) for jurisdiction in rem against the ship to which the claim relates in respect of claims (a), (b) and (c) in section 1(1), which correspond to claims (o), (p) and (q) in article 1(1) of the Convention. It provides further by subsection (4) for jurisdiction in rem against either the ship to which the claim relates or a sister ship in respect of claims (d) to (r) in section 1(1), which correspond with claims (a) to (n) in article 1(1) of the Convention. If section 3(4) is to give full effect to article 3, including in particular paragraph (4) of that article, the expression 'beneficially owned' must be given the second of the two meanings which I suggested earlier that it was capable of having, and not the first. In other words, 'beneficial owner' must be given a meaning which includes not only a demise charterer, but also any other person with similar complete possession and control who may thereby become liable on a claim within paragraphs (d) to (r) of section 1(1) of the Act."

17. In The Eschersheim the ratio of the case was only to determine whether the plaintiff's claim fell within any of the paragraphs in section 1, sub-section (1), of the Administration of Justice Act, 1956, thus would give the court admiralty jurisdiction. Again there are certain dicta which are of interest. At page 436 (The Eschersheim's reference is 1976, 1 W.L.R. 430) Lord Diplock, having referred to the terms of the Conventions and the provisions in section 3, sub-section (4), of the Administration of Justice Act, said:

"It is clear that to be liable to arrest a ship must not only be the property of the defendant to the action but must also be identifiable as the ship in connection with which the claim made in the action arose (or a sister ship of that ship). The nature of the 'connection' between the ship and the claim must have been intended to be the same as is expressed in the corresponding phrase in the Convention 'the particular ship in respect of which the maritime claim arose'. One must therefore look at the description of each of the maritime claims included in the list in order to identify the particular ship in respect of which a claim of that description could arise."

At page 439, when he was considering the subject matter of section 1, sub-section (1), whether the claim came within the jurisdiction of the court, he made it clearer as far as section 3, sub-section (4), is concerned. He said:

"The cargo owners' claim clearly falls within the description in paragraph (g) which reproduces in terms that are practically identical paragraph (f) of article 1(1) of the Convention: but, as I have already pointed out, the right of arrest conferred by section 3(4) is confined to the ship in connection with which the claim arose (or a sister ship). The claims to which the right of arrest is confined are those mentioned in paragraphs (d) to (r) of section 1(1). With three exceptions, each of those paragraphs contains an express reference to 'a ship'. The ship referred to in each of these paragraphs is the ship in connection with which a claim under that paragraph arises. The three exceptions relate to claims in respect of salvage, general average and bottomry where there can be no doubt as to the ship in connection with which claims of that nature arise. Paragraph (g) therefore permits the arrest of the ship in which the goods which have been lost or damaged were carried, in an action in rem by cargo owners against the owner of the carrying vessel. It does not authorise the arrest of any other ship: authority for that must be found under some other paragraph. So the arrest of the Rotesand as security for the cargo owners' claim was not authorised under paragraph (g) of section 1(1).

Thus, while he was considering the provisions of section 1, sub-section (1), of the Act, he was considering it in connection with the provisions of section 3, sub-section (4), and came to the conclusion that the Rotesand, not being a sister ship, could not be arrested.

18. Finally, I come to The Permina 108 in Appeal No.31 of 1976. This is the case that was decided in Singapore and the case of Eschersheim was cited before the court and was not followed. I should mention that this is a case which is directly on point to the present case. Their Lordships in Singapore considered the judgment of Eschersheim but did not follow it on the ground, first of all, that dicta in that judgment was not the ratio of the case. It further decided that the language of section 4, sub-section (4), of the Singapore Act which is in para materia as in section 3, sub-section (4), of the Administration of Justice Act, 1956, is not ambiguous and, finally, they refused to look at the terms of the 1952 Conventions for the interpretation of the Act because Singapore is not a party-state to those Conventions. For this reason they gave the word "charterer" in section 3, sub-section (4), its literal meaning and held that the admiralty jurisdiction of the court could be invoked to arrest a ship provided that ship was wholly and beneficially owned by the person who would be liable in an action in personam in the admiralty action.

19. Pausing at this stage, I must confess that I respectfully agree with the Court of Appeal in Singapore that the judgment and the passages cited in The Eschersheim are all obiter as far as this case is concerned. However, the clear words, as I have cited, in the judgment of Lord Diplock indicate that the House of Lords did consider some of the effect of the provisions in section 3, sub-section (4).

20. The Appellate Court in Singapore found the words of the section free of ambiguity. In page 4 of the judgment the court has set out the points in issue with clarity. In page 5 their Lordships say:

21. This dictum is repeated on page 8 of the judgment and, finally, in my opinion the Appeal Court in Singapore gave really the basic reason for the difference in decision from that of the dictum in the Eschersheim. At page 9, having repeated the same judgment as to the ship being liable to arrest, their Lordships said this:

"The other contention of Mr. Stone is that the word 'charterer' in Section 4(4) should be limited to mean 'charterer by demise' only. We are unable to accept that contention because such a construction would cut down considerably the ordinary meaning of the word 'charterer'. In our opinion if the legislature had intended to limit the operation of the subsection to, amongst others, the charterer by demise only and not other types of charterers it would have expressly added the words 'by demise' after the word 'charterer'."

That, in my opinion, is the basic reason for the difference. I form this view because, reading the various judgments, I have come to the conclusion that the apparent divergence of opinion between Eschersheim and The Permina 108 is not founded on the difference of approach by either identifying the ship or identifying the person who would be liable in personam. Page 8 of the judgment in The Permina 108 bears this out.

22. As I can see it, both the Court of Appeal and the court below in Singapore arrived at the same conclusion purely and simply because they held that the word "charterer" in section 3, sub-section (4), of the Administration of Justice Act or, in the case in Singapore, section 4, sub-section (4), of the Act in Singapore was not ambiguous and refused to construe the word "charterer" in the light of the terms of the 1952 Conventions. Looking at it in that light, their decision is correct and logical.

23. In the present case had the applicant been a demised charterer of the "ANTAIOS" there would have been no question and no argument on the part of the applicant that the "LEDESCO UNO" was liable to arrest in rem. It is conceded that the respondent's claim is within the provisions of section 1, sub-section (1), paragraph (h). There is no dispute that the applicant is the person who would be liable to the respondent's claim in personam if successful; that the said claim is in connection with the ship "ANTAIOS"; that the applicant was the charterer of the "ANTAIOS" at the time the cause of action arose; that the "LEDESCO UNO" is wholly owned by the applicant at the time when the action was brought. In that sense there can be no question whether the "LEDESCO UNO" is a sister ship of the "ANTAIOS" or not. Once if the applicant were the demised charterer, it would be put in the same position as a person in possession or in control or the owner of the "ANTAIOS" at the time when the cause of action arose.

24. Thus it matters not whether the approach was either to first identify the ship or to identify the person. The learned judges in the Court of Appeal in Singapore came to the same interpretation as far as the provision of section 3, sub-section (4), is concerned, except for the fact that they gave a plain and literal meaning to the word "charterer" and refused to look at the terms of the Conventions. With great respect, I am of the opinion that they have justification to do so in Singapore. However, in Hong Kong I must say the word "charterer" is not, if I may adopt the words of Mr. Justice Lane at page 141 in a different context, "of such sparkling clarity that it can be interpreted without hesitation and I therefore have to look at the Convention".

25. The word "charterer" is a generic term covering demised charterers, time charterers and voyage charterers. I have it in mind to cite Scrutton on Charterparties at page 45, but I don't think I should go into that as it is quite plain that a demised charterer is similar to a lessee who is in a very different position as that of a time charterer or voyage charterer: their position is more similar to a person who is in possession and in control. Further, when the provisions of section 3, sub-section (4), were considered by the English courts in all these cases, the term "sister ship or ships in the same ownership" or "ship in a like ownership" was mentioned in the description of "the other ship" as provided in section 3, sub-section (4), that was liable to arrest. The admiralty jurisdiction was enlarged only by the Administration of Justice Act, 1956, which was enacted to give effect to the 1952 Conventions. The term "charterer" of "sister ship" and "ship in like ownership" or "same ownership" were referred to in The Eschersheim, The Banco, The Andrea Ursula and The Elefterio.

26. In construing the word "charterer", I find that the charterer was put in as a group of persons who would be in possession and in control, that is, namely to a demised charterer only. This will be in accord with the English authorities in the sense that the other ship wholly owned by a demised charterer may be described as a sister ship or a ship in the like or the same ownership as a ship in connection of a claim of an action in personam.

27. In the Andrea Ursula, at page 269, Mr. Justice Brandon, when referring to the charterer, referred to a demised charterer. He said:

"There can be no doubt that the plaintiffs' claim comes within section 1(1)(n). As regards section 3(4) there can be no doubt, first, that the claim arises in connection with the Andrea Ursula and, secondly, that the Anglo-Med, being the persons who would be liable on the claim in an action in personam, were, when the cause of action arose, the charterers of the Andrea Ursula."

Pausing at this stage, it seems that Mr. Justice Brandon was saying that a charterer, when the cause of action arose, was sufficient to make the Andrea Ursula a sister ship. But he went on to say:

That makes it quite clear that he was in fact referring to a demised charterer.

28. In The Banco Lord Denning, having traced the history of the admiralty jurisdiction of the court, adopted the expression "either the ship or the sister ship or in the same ownership".

29. If I should make it clear this view is supported by the provisions of the Conventions. In paragraph (1) of article 3, it provides:

"Subject to the provisions of para.(4)"

- and I shall emphasise paragraph (4) -

"of this Article and of Article 10, a claimant may arrest either the particular ship in respect of which the maritime claim arose, or any other ship which is owned by the person who was, at the time when the maritime claim arose, the owner of the particular ship, even though the ship arrested be ready to sail; but no ship, other than the particular ship in respect of which the claim arose, may be arrested in respect of any of the maritime claims enumerated in Article 1(1)(o), (p) or (q)."

It makes quite clear that either the ship - particular ship in respect of which the maritime claim arose or any other ship which is owned by the person who was at the time when the maritime claim arose the owner of the particular ship could be arrested. But that is subject to the provision of paragraph (4). Paragraph (4) of article 3 provides that:

30. It clearly shows that as far as article 3 is concerned, it supports the view that the word "charterer" meant in sub-section (4) of section 3 of the Administration of Justice Act a demised charterer. Since in the present case the applicant is not a demised charterer of the "ANTAIOS", I am of the opinion that the admiralty jurisdiction in rem of this court may not be invoked to arrest the ship "LEDESCO UNO".

31. That disposes of the question of jurisdiction and possibly the practical effect of this application. However, I have been asked to decide both issues and in case I am wrong on the point of jurisdiction, I now proceed to decide on the question of stay of proceedings.

32. Section 6, sub-section (1), of the Arbitration Ordinance provides that:

""If any party to an arbitration agreement, or any person claiming through or under him, commences any legal proceedings in any court against any other party to the agreement or any person claiming through or under him, in respect of any matter agreed to be referred, any party to those legal proceedings may at any time after appearance, and before delivering any pleadings or taking any other steps in the proceedings, apply to that court to stay the proceedings, and that court or a judge thereof, if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the agreement, and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, may make an order staying the proceedings."

Thus it is quite clear that I have a discretion whether to stay the proceedings or not the burden of proof that the order of staying the proceedings should not be made is on the party opposing it. Page 153 of Russell on Arbitration, 18th Edition, says that:

""Where parties have agreed to refer a dispute to arbitration, and one of them, notwithstanding that agreement, commences an action to have the dispute determined by the court, the prima facie leaning of the court is to stay the action and leave the plaintiff to the tribunal to which he has agreed. 'If parties choose to determine for themselves that they will have a domestic forum instead of resorting to the ordinary courts, then, since that Act of Parliament (Common Law Procedure Act 1854) was passed a prima facie duty is cast upon the courts to act upon such an agreement'. Once the party moving for a stay has shown that the dispute is within a valid and subsisting arbitration clause, the burden of showing cause why effect should not be given to the agreement to submit is upon the party opposing the application to stay."

That statement is cited and the case in support is to be found in Willesford v. Watson report in the Law Reports, 8 Chancery Appeals, 473, in the judgment of Lord Selborne, Lord Chancellor, at page 479. However, the court has a discretion even if the parties agree to arbitration. This, in some measure, found support in the case of The Eleftheria in 1970, Probate, 94. This is a case where the parties agreed to have the action tried in a foreign tribunal but when the defendant's ship arrived within the territorial waters of England a fresh admiralty action was brought. At page 99 Mr. Justice Brandon said:

"The principles established by the authorities can, I think, be summarised as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise may properly be regarded: (a) 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. (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, regligious or other reasons be unlikely to get a fair trial."

33. Then there is the "Soya Margareta" 1961 (1) Weekly Law Reports page 709. This is a case where there was an arbitration clause and the subject matter of the claim was referred to arbitration. An action was brought in Venice and subsequently an action in rem was brought before the High Court in England, all for damages to the cargo, namely. the same subject matter. The Court refused to stay the proceedings because the action in rem was the only means to secure the security for the claim and that there was no such preponderance of inconvenience in favour of the trial in Venice. Then in the "Oriental Falcon" my Brother Leonard refused to stay the action in rem even though the subject matter of claim over-lapped one another. One of the reasons for refusing to stay the proceedings was that it was only by that means that the plaintiff could obtain security for his claim in the action.

34. Finally there is the case of "Moschanthy" in 1971 in the Lloyd's List Law Reports, page 37. At page 43 Mr. Justice Brandon said:

Thus in that case where an action was proceeding in Lebanon for the same course of action and the plaintiff saw fit to bring an action in rem, the learned Judge refused to stay the proceedings but put the plaintiff to election.

35. In this present case I have considered the facts as deposed - in all these affidavits. Adopting the guide-line as provided in The Eleftheria, I find that the evidence of fact would be equally available in Hong Kong or equally easy to be available in Hong Kong as in London, and the convenience of or the expense of trial would be of - relatively the same in Hong Kong as in London. The law and procedure in Hong Kong are very similar to those in England; the parties are equally remote from England as in Hong Kong. The arbitration proceedings will commence in August of this year. There is no advantage one way or the other as far as the law and the procedure are concerned to either party.

36. The Respondent, however, if the matter is to be arbitrated in London, would be deprived of the security for the claim in case I am wrong in matter of jurisdiction. If the proceeding is stayed and the ship released, then the Respondent would lose the security if the Respondent should succeed in his claim in the action. It is true that the Applicant is a Company with substantial assets. But most of its assets, as I understand, are in the three ships which have been mortgaged, and all its other assets are within the Republic of the Philippines. There is also the affidavit of Eduardo R. Ceniza which shows how difficult it is to enforce an arbitration award in the Philippines. Perhaps I may be permitted to take judicial notice that that is a country at the moment under martial law. Obviously there will be various currency restrictions. Even if the Applicant were prepared and willing to honour whatever award is made by arbitration there might be other difficulties in its way in the form of foreign currency restrictions. In view of these, if I have jurisdiction in Admiralty in rem to arrest the ship I would not have stayed the proceedings but rather put the Respondent to election by following the example of the "Moschanthy."

37. The question of release upon terms may also be considered very briefly. This will not arise if the Respondent is put to election to proceed in Hong Kong because it will be given an option that if they proceed with the action in Hong Kong it would have the ship retained here. However, this point can be briefly referred to and dealt with. Should the Respondent elect to proceed in London for arbitration then I am of the opinion that there is no authority for me to keep the ship here in Hong Kong for security pending an award in arbitration.

38. I am of opinion that the case of Nippon Yusen Kaisha v. Karageorgis (1975) 2 Lloyds List 137 cited to me can be distinguished in that it was an action brought in England and the assets was in England. On this basis an injunction was issued to prevent assets in England from being removed so as to rob the plaintiff the fruit of his judgment. The injunction was granted to afford protection to a plaintiff in an English court in respect of assets in England.

39. I am now asked to preserve assets in Hong Kong so as to satisfy a possible arbitration award that might be granted in England. I do not feel it is justifiable. I have to refer to the case of "The Golden Trader" (1975) 1 Q.B. in which Brandon J. held that when an action in rem, in which the property proceeded against had been arrested, was stayed on the ground that the dispute ought properly to be decided by another tribunal the court could not retain the arrested property.

40. Having revealed a long line of authorities the learned judge said at page 357:

"I think that the effect of these authorities can be summarised in this way. The first three cases, The Athenee, 11 L1.L.Rep. 6, Foresta Romana S.A. v. Georges Mabro (Owners), 66 LI.L.Rep. 139 and The Fehmarn (1958) 1 W.L.R. 159, while not deciding that the retention method is not available in English law, nevertheless, suggest strongly that it is not. The fourth case, The Cap Bon (1967) 1 Lloyd's Rep. 543 decides expressly that this method is not available. The last two cases, The Eleftheria (1970) P. 94 and The Atlantic Star (1974) A.C. 436 show that, where a stay is discretionary, as it is in all cases under consideration except protocol arbitration cases, the alternative security method may, if the court thinks fit, properly be used."

I find that it is not justifiable to retain the assets in Hong Kong if the Resp. elects to proceed to arbitration in London since the Resp. has been given a free choice.

41. I also find that in so far as the Arbitration Ordinance is concerned most of the provisions in section 14 and particularly sub-section (6) of section 14 apply to arbitration to be held in Hong Kong only.

42. For these reasons I find that I have no jurisdiction to sanction the arrest of the "Ledesco Uno". If I am wrong in law, I would not have stayed the proceedings. I would require the Respondent to make an election within a certain period of time, say seven days. If the Respondent elects to proceed in Hong Kong obviously the ship will not be released or will be released upon terms. If the Respondent elects to go on with the arbitration in London I do not feel that I have any authority to retain the ship here or any justification to retain the ship here pending awards that are to be made in arbitration in London.

Representation: