The Owners of Cargo Lately Laden on Board the Ship or Vessel "on Tat" v. The Owners of the Ships or Vessels "on Tat" and "on Wo"

HCAJ000042/1982

Admiralty Law - Cargo Claim - Active brought in Hong Kong despite Chinese jurisdictional clause - Application for Stay - The matters in issue were:-

The first matter was resolved in the negative upon the facts.

When determining the second matter the Court held that Chinese law applied and that it made the defendants a party to the contract. When determining the third matter the Court dealt with the relevant "Eleftheria" considerations and held the plaintiffs had not established a strong enough case to justify the refusal of the grant of a stay.

IN THE SUPREME COURT OF HONG KONG

ADMIRALTY JURISDICTION

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Admiralty Action in rem against : The ships or vessel

"ON TAT" and "ON WO"

BETWEEN

Coram: Hon. Power, J.

Date: 22 December 1982

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JUDGMENT

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1. In this matter the defendants who are the owners of the ships "On Tat" and "On Wo" are asking for stay of an action brought against them by the plaintiffs who are the owners of cargo lately laden on board the ship "On Tat". The defendants ask, under the inherent jurisdiction of the Court, for stay of the proceedings brought in Hong Kong on the ground that the action is a dispute arising under and in connection with a said Bill of Lading whereby the plaintiffs and the defendants agreed that all disputes arising under and in connection therewith should be determined in the People Republic of China.

2. The said cargoe consisted of 5,083 tons of bauxite which was being shipped from the port of Zhanjiang by the China Metallurgical Import & Export Corporation to the plaintiffs. It is alleged that the cargo was contaminated at the time when the goods were unloaded and that this was the responsibility of the carrier. The "On Wo", a sister-ship of the "On Tat" came to Hong Kong in February 1982. It was arrested and a writ in this action was issued on the 16th February, 1982.

3. It is common ground that the "On Wo" was on time charter from the defendants, who are a Panamanian Shipping company, to the China Ocean Shipping Company.

4. The Bill of Lading, the vital document in this action, is dated July 31st 1980 at Zhanjiang. It is on the from of the China Ocean Shipping Company (COSCO). It states that the "Shipper" is "China Metallurgical Import & Export Corporation," the "Notify Party" is "Posseh1 Erzkontor G. M. B. H. of Lubeck" and the "Consignee" is "To Order". At the foot of the Sill of Lading, the following words appear, "In witness whereof, the Carrier or his Agents has signed three Bills of Lading all of this tenor and date, one of which being accomplished, the others to stand void." Underneath the words "Dated July 31 1980 at Zhanjiang" and beside the words "For the master" there appears the stamp of the China Ocean Shipping Agency (PENVICO), Zhanjiang Branch. The port of discharge is shown to be Rotterdam. Paragraph 2 of the exceptions and conditions of the Bill of Lading reads as follows: "Jurisdiction all disputes arising under and in connection with this Bill of Lading shall be determined in the People's Republic of China." It is clear that the transaction itself did not in any way involve Hong Kong. The Bill of Lading, it is common ground, is not subject to the Hague Rules but some of the clauses are modelled thereon.

5. On the 15th February 1982 in an "Affidavit to Lead to Arrest" Mr. J.M. Gray stated that the owners of the cargo were Possehl Erzkontor G.M.B.H. whose head office was situated at Luebeck, Germany. It is to be noted that this company was shown on the Bill of Lading as the notify party. Mr. Gray submitted that "The Bill of Lading evidences a contract between the plaintiffs and the owners of the vessel by virtue of the statement to the effect That the Bill of Lading is signed for the master and there is no indication that the vessel was demise chartered to the company or line issuing the bill". Mr. Gray submitted in the alternative that the plaintiffs were entitled to claim in damages for negligence and/or breach of duty as a common carrier and/or as bailees of the plaintiff's goods. This affidavit seemed to accept that the defendants were bound by the Bill of Lading.

6. On the 1st March 1982, Mr. R. S. Peard filed an affidavit on behalf of the defendants in support of their application of the 1st March to stay the proceedings. In this affidavit Mr. Peard made no mention of paragraph 6 of Mr. Gray's affidavit, in which he suggested that the defendants were bound under the Bill of Lading, but commented that, if the defendants pursued their claim on the basis of a bailment, the bailment would have to be on the terms of the Bill of Lading and that the bill would, therefore, govern the legal relations between the plaintiffs and the defendants.

7. On the 19th May 1982 Mr. J.M. Gray filed a further affidavit and para. 2 of this affidavit raised the matters which are now in contention between the parties. In that affidavit he submitted that the Bill of Lading was between the plaintiffs and COSCO. This is, of course, contrary to his earlier apparent acceptance that the defendants were a party to the Bill of Lading. Mr. Gray, while conceding that the proper law of the contract evidenced by the Bill of Lacing was Chinese law, denied the defendants were bound by that contract. Mr. Gray went on to say that his firm had sought the advice of a firm of American attorneys who, at that time, had working with them, a Mr. Zhang Chang Lin of the Legal and Research Department of COSCO. He said that he had asked the American attorneys who had put the question to Mr. Zhang, "whether, at Chinese law, the contract under a COSCO bill would be with shipowners or with COSCO." The answer, which came by telex, a copy of which was exhibited to his affidavit, was as follows. "Mr. Zhang Chang Lin ... indicated that on further investigation you will find that the chartering department of COSCO was the carrier under a long term time charter party with the vessel's owners. Mr. Chang indicated that, although the chartering department is part of the COSCO organiz-ation, it is, in reality, a separate entity. With reference to the proper party against whom suit  is to be brought, jurisdiction in the Chinese Courts will only be available as against the charterer even though the vessel called at Chinese ports and the shipment was from Zhangjiang to Hamburg. Mr. Chant has had past experience with owners who are actually Hong Kong based despite Panamanian affiliation. Chinese Courts have no extraterritorial authority over the Hong Kong owner. Charterers will then seek contribution or indemnification from the owners pursuant to the terms of the relevant a charter party."

8. This reply seems to be saying that the proper party to sue is neither the owner nor COSCO but is the chartering department of COSCO. Mr. Mumford, who appeared for the plaintiffs, sought to rely upon this evidence to establish that, in Chinese law, the defendants would not be a party to the contract. Mr. Ribeiro, who appeared for the defendants, criticized this evidence saying that the question asked, which was whether the contract under the COSCO bills would be with the ship owners or with COSCO, had never been answered. He submitted that Mr. Zhang did not say who tine parties to the contract evidenced by the Bill of Lading were, but indicated who, in his opinion, was the proper party against whom suit should be brought in the Chinese Court. This criticism seems to me to be fully justified. Mr. Zhang has no where directed his mind to the question awed of him. What he has lone is to give, what may well be very sensible advice, as to who should be proceeded against in the Chinese Courts.

9. Mr. Gray went on in this affidavit, to point out that, although the Tai On Shipping Company Incorporated was incorporated in Panama and the "On Tat" was registered in that country, the managing agents were the Yick Fung Shipping & Co. of 6th - 9th floor Ocean Building, 167 Connaught Road West, Hong Kong. He produced a telex from the offices of the Panamanian lawyers which stated that the directors and officers of the company whose names set out therein were, "all domiciled at 4th floor Harbour Commercial Building, 122 Connaught Road Central, Hong Kong". He has also stated that the owners' address reported to the Shipping Bureau in Panama was the Tong Ling Shipping & Enterprises Company, Ltd., 22nd floor Sincere Building, 173 Des Voeux Road Central, Hong Kong. From these farts it was suggested that the defendant company had a very real connection with Hong Kong. The extent of the defendant's connection with Hong Kong was canvassed at length both in further affidavits and in argument. I do rot intend to set cut all that was said in this regard. Suffice to say that I am satisfied that the company is operated from Hong Kong and has a substantial Hong Kong connection. It was at this stage that the contentions of the plaintiffs became clear. They were, contrary to what had been suggested in Mr. Gray's first affidavit, contending that the defendants were not a party to the Bill of Lading and that the stipulation in the Bill of Lading as to the determination of disputes in the People's Republic of China did not, therefore, apply to them. The plaintiffs in the alternative submitted, through Mr. Gray, that -

Mr. Gray referred in his affidavit to a Letter of undertaking given by the Ming An Insurance Co. (H. K.) Ltd. This letter stated, inter alia that upon the "cargo owners refraining from commencing and/or prosecuting legal or arbitration provisions (otherwise than before the court referred to below) against Tai On Shipping Inc., the owners of the above named ship, we hereby undertake to pay to you such sums as may be adjudged by the Hong Kong Supreme Court of Justice or as may be agreed to be said recoverable from the owners of the above-named ship in respect of the said claims, interest and costs of the said cargo owners". Mr. Gray contended that by this letter of undertaking the defendants had expressly agreed to Hong Kong jurisdiction.

10. An affidavit was filed from a Mr. Xu Hegao on 20th September, 1982. Mr. Xu stated himself to he of the Legal Counsel Office of the China Council for the Promotion of International Trade. He said that he was engaged in practice as a lawyer in that office and was called upon to advise both Chinese and foreign corporate clients in connection with commercial transactions governed by the law of the People's Republic of China. He said that he was the head of the Department of International Law in the Institute of Legal Research of the Chinese Academy of Social Sciences, Beijing, and that he was the Secretary General of the Chinese Society of International Law. He said that he had practised and taught international, commercial and maritime law and conflict of laws for more than 30 years. He stated that he had read the two affidavits of Mr. Gray and the affidavit of Mr. Peard and that he had been asked to state his opinion on the questions of Chinese law raised in the second affidavit of Mr. Gray. He said, having cited the facts, as we know them, that in his opinion, "A Chinese Court would hold, as a matter of law, that the master of the vessel signed the said Bill of Lading on behalf of both the owners of the vessel and COSCO". He went on to say that "Under Chinese law the contract of carriage was made between the shipper, on one part, and both the owners and COSCO, on the other part, so that both the owners and COSCO would be regarded as carriers under the Bill of Lading and would be regarded as bound by its terms and conditions". He went on to say that any party to the Bill of Lading "would be entitled to sue either COSCO or the shipowners or both COSCO and the shipowners in a Chinese Court in respect of any claim for loss or damage "to the cargo". He said as regards the mode of trial of a civil action in China that it was not "invariably necessary for oral evidence to be given and such evidence is only required when the documentary evidence is incomplete or unreliable or where a dispute over some fact can only be resolved by oral evidence. Survey reports and other written statements by witnesses can be admitted in evidence without the need for the author of the document to give oral evidence". He went on to say that if oral evidence was required, "it would be possible for a Chinese Court or arbitration tribunal to provide interpreters for any witness who gives evidence in either the English or German Language". It is to be noted that the languages that would be required to be translated could probably be English and Dutch. However, no point was taken as to this as it seemed clear that Mr Xu was intending to convey that there would he no difficulty obtaining inter-preters who would be able to interpret European languages into Chinese.

11. Mr. Gray in his third affidavit criticized the affidavit of Mr. Xu, upon the basis that Mr. Xu did not refer to any records of decided cases. Annexed to this affidavit is a ropy of an article from the South China Morning Post dated 9th March 1982. This article was datelined, Peking, March 8, and was from the Reuter News Agency. The name of the author was not revealed. It indicated that the Chinese legal system was in the process of being rebuilt, that there was a shortage of full time lawyers and that one case had involved "months of wrangling".

12. There was a final affidavit from Mr. Peard on 22nd October, 1982 in which he commented upon the contention of Mr. Gray that the plaintiffs by the Letter of Undertaking had expressly agreed to Hong Kong jurisdiction. Mr. Peard referred to a number of telexes which had come into existence at about the time of the Letter of Undertaking and he said that these quite clearly showed the plaintiffs had never agreed to Hong Kong jurisdiction. I will deal in the detailed way with this matter later in the judgment. Mr. Peard stated he was authorized to say that the Ming An Insurance Company, in the event of the action being stayed, would give security, on equally favourably terms as that already given, in respect of proceedings brought in China and that in the event of Chinese proceedings being brought, the defendants would waive the one year time bar referred to in Clause 10 of the Bill of Lading. In view of these two assurances, I do not need to deal further with any suggestion that a disability might fall upon the plaintiffs if were forced to litigate in China by reason of the fact that they would not have adequate security or that they would be time barred. In this affidavit Mr. Peard said that COSCO both time chartered a number of vessel and also owned and operated a very substantial fleet. He stated that his clients and COSCO were genuinely desirous of having litigation, in respect of maritime claims made against them, concentrated in China so as to avoid having litigation at ports scattered around the world.

13. The issues fell to be determined as follows :

Mr. Mumford contended that the Letter of Undertaking was a complete bar to the defendant's contention that the action should be determined in the Courts of the People's Republic of China. He submitted that by that letter the defendants had submitted themselves to the jurisdiction of the Courts of Hong Kong. Mr. Ribeiro, on the other hand, submitted, on a number of grounds, that the Letter of Undertaking in no way inhibited the defendants. I do not intend to canvass all of the arguments advanced by Mr. Ribeiro as I am satisfied that an examination of the contemporaneous documents clearly establishes that there was no agreement or undertaking by the defendants to submit to Hong Kong jurisdiction.

14. On the 19th February 1982 Mr. Peard, for the defendants, sent Mr. Gray, for the plaintiffs, a telex which read, in part, as follows:-

"We think our clients have already made it clear but we wish to reiterate that we consider that all claims should be brought against our clients by your clients in China in accordance with Clause 2 of the Bill of Lading. You will no doubt bear in mind the necessity to institute proceedings in China to protect your clients in view of the forthcoming expiration of the time or bringing proceedings. Also we would like to make it clear that in providing a quarantee our clients reserve all their rights and defences including their right to argue the Hong Kong Court should not exercise jurisdiction over our clients."

As at the 19th February, then, there was the clearest indication that could possibly be given that the defendants were challenging the jurisdiction. On the 20th February, the following day, Mr. Gray replied to Mr. Peard:-

"Your comments re jurisdiction are noted. We too have made our position clear and that we do not consider our clients to be bound by Clause 2 of Bill of Lading."

This telex went on to state:-

"Await guarantee which we now understand will be for claim amount plus interest and costs."

At this stage, then, the defendants had made it plain that they were challenging the jurisdiction and the plaintiffs had acknowledged that such a challenge was being made.

15. The Letter of Undertaking, which gives rise to the difficulty, is dated the 20th February 1982 and is addressed by The Ming An Insurance Co. (H.K.) Ltd. to Messrs. Clyde & Co. I am informed that the letter was in the standard form for such undertakings and was provided by the plaintiffs' solicitors either to the Ming An Company or to the defendants' solicitors. On the 1st March, some ten days after the letter, the defendants took out their Inter Partes Summons seeking a stay upon the ground that the plaintiffs and defendants had agreed that all disputes arising under the Bill of Lading should be determined in the People's Republic of China. I must say that I am surprised that the plaintiffs would, in these circumstances, seek to argue that the defendants had waived their objection to jurisdiction. On the very date that the Letter of Undertaking was signed, the plaintiffs' solicitors acknowledged that the defendants were challenging the jurisdiction. It is true that the Letter of Undertaking, if read by itself, might be said to contain a waiver of jurisdiction, but, in these circumstances, the letter clearly cannot be read by itself. I am quite satisfied that the telexes of the 19th and 20th February must be read with the letter and that these would have left no doubt in the mind of the plaintiffs' solicitor that at all braes the defendants were reserving their right to challenge the jurisdiction. I am satisfied that the defendants are in no way prevented by reason of the Letter of Undertaking from raising the issue of jurisdiction.

16. I should, perhaps before leaving this point, deal with the case of the "Banglar Baani", an unreported decision of the Admiralty Division of the High Court of Justice decided on the 6th February 1981 which Mr. Mumford submitted was directly in point. In that case Mr. Justice Sheen held that an almost exactly similar agreement bound both sides to litigate in England. I am in respectful agreement with the learned judge's conclusions as to the effect of that Letter of Undertaking, given the facts with which he was dealing in that case. However, as I have indicated above ,I am by no means satisfied that the letter in the present case had the same effect. In the Banglar Baani, there was no reservation by the defendants' solicitors such as we have in the present case. I am satisfied that, if there had been, the decision of the learned judged judge would have been different. Nothing in that decision leaves me in any doubt as to the correctness of the conclusion to which I have come in the present matter.

17. I turn now to consider the second issue, i.e. whether the defendants are a party to the contract evidenced by the Bill of Lading. It was common ground that Chinese law was the proper law of the Bill of Lading. There was, further, no issue between the parties that if Chinese law was not proved, the Court should apply English law. (See Dicey & Morris "The Conflict of Laws" 10th Edition at p.1216). Considerable time was spent in argument with regard to the question as to where the onus, of proving the applicable Chinese law, lay. I am satisfied that I must first turn my mind to the following questions:-

Dicey & Morris Volume II, at 1216, state: -

"The burden of proving foreign law lies on the party who bases his claim or defence on it. If that party adduces no evidence, or insufficient evidence, of the foreign law, the court applies English law."

Both counsel agreed that this was a correct statement of the law and applying it to the situation with which I am dealing, I am satisfied that the border of proving that the defendants are a party to the contract under Chinese law falls upon the defendant, who so allege, and that the burden of proving that the defendants are not a party to the contract under Chinese law falls on the plaintiffs, who so allege.

18. Let me say at the outset that the plaintiffs have, in my view, wholly failed to discharge the burden that lay upon them. The opinion of Mr. Zhang in the telex which was attached to the affidavit of Mr. Rooth did not, I am satisfied, address itself to the matters in issue and was of no real assistance. On the other hand, Mr. Xu was, I am satisfied, a highly qualified lawyer who had addressed himself to the issues before me. Mr. Mumford's criticism of the opinion of Mr. Xu was that, as he was construing a document, he should not have given his opinion but should have simply proved the foreign rules of construction and allowed this Court to determine, in the light of those rules, the meaning of the document. (see Dicey & Morris, Volume II at 1213). Mr. Ribeiro's answer was that Mr. Xu was not construing a document but was giving his opinion as to the liability of the parties under the Law and Agency as it is applied by the Courts of the People's Republic of China. I am satisfied as to the correctness of this submission and I hold that Mr. Xu has established that under Chinese law the defendants were a party to the Bill of Lading.

19. During the course of the hearing Mr. Mumford made an application to have Mr. Xu called for cross-examination. The affidavit of Mr. Xu had been filed on the 10th September 1982, more than 6 weeks before the commencement of the hearing. Mr. Xu, as the parties are well aware, resides in Pelting. Understandably, as the matter stood, the defendants had not investigated if and when he could come to Hong Kong. He certainly was not available to be called forthwith. The plaintiffs had been content to rely upon their own evidence in this regard until its weakness was exposed during the course of the hearing.

20. It seems that, at this stage, it was decided that it would be in the best interests of the plaintiffs to mount an assault, by cross examination, upon the opinion of Mr. Xu until then, the plaintiffs had, as I have said been content to rely upon the evidence which they had laid before the court. These is no evidence to suggest that Mr. Xu is not a properly qualified expert nor is any acceptable evidence to indicate that his opinion is incorrect. I have a discretion in this matter. In all of the circumstances, I consider that it will he properly exercised by refusing the application.

21. In case I should be wrong in the view I have formed that Chinese law has been sufficiently proved, I intend to consider whether the defendants would be a party to the contract under English law. Before so doing, I should perhaps dispose of one point that was raised by Mr. Mumford which was that the defendants had not shown that the chop on the Bill of Lading had been made by an authorised person. It is true that this matter was, to some extent, uncertain when the hearing commenced. However, before the last day of hearing, Mr. Peard filed a further affidavit in which he stated that Tong Ling were the managing agents of the defendants' ship owners in long Kong and that Tong Ling had, by a letter dated 12th March 1970, authorized Penavico to sign in Chinese ports Bills of Lading on behalf of Masters of Vessels owned by the defendants. As I have already indicated the Bill of Lading was chopped with the characters meaning "Penavico" beside the words "For the Master".

22. Mr. Mumford submits that the matter has not been satisfactorily resolved because it has still not been shown whether Penavico was signing on behalf of the defendant company or on behalf of COSCO. I do not consider there is any substance in this submission. It is true that Penavico is the agent both of COSCO and of the defendant company. There can be no dispute that the Master was in control of the vessel as the agent of the carrier. I am satisfied, once it is determined that the carrier was either COSCO or the defendant company, that the only proper inference to draw from the circumstances overall is that Penavico was signing on behalf of whichever body was the carrier. If the defendant company was the carrier, then it seems to me fanciful to suggest that its authorized agent who chopped the document was doing so on behalf of some other person who was not the carrier.

23. I turn now to consider whether the defendants are under English law a party to the Bill of Lading. Mr. Mumford contended that under English law only COSCO would be a party. He cited Hiram Walker & Sons Ltd. v. Dover Navigation Co. Ltd.⁽¹⁾ for the proposition of Mr. Justice Lynskey, at 90, that the identity of the carrier "Is in every case a question of fact depending upon the documents and, of course, any other evidence there may be as to oral conversations, or otherwise, which enable the Court to come to the conclusion that a particular contract is made with a particular person." He then cited Paterson, Zochonis & Co. v. Elder Dempster & Co.⁽²⁾ at p.69 and the Venezuela⁽³⁾ Mr. Mumford contended that both of these cases supported him in his argument that, where a Bill of Lading was on a form provided by an negotiating party which bore its name at the head thereof and contained no indication that the negotiating party was not the carrier, then, all other circumstances being equal, it was proper to conclude that the negotiating party was the carrier. The former case seems to me to be of little assistance to Mr. Mumford because in it the learned judge found that Elder Dempster, "a well known line of ships found it necessary to supplement its fleet by getting in another upon a time charter; and people in the commercial world who use the line know nothing at all about that. They think they are shipping by this line; and unless it is clear to the contrary the contract should be regarded as being made with the line." In that case the learned judge was dealing with "a well known line of ships", and was satisfied, in the circumstances there obtaining, that people in the commercial world had, for reasons which are not, it is true, clear from the judgment, been led to think that they were shipping upon ships owned by the line whose name appeared at the head of the Bill of lading. He was clearly very much impressed by that fact. I find nothing in the present case to establish that there would have been any such misapprehension on the part of the shipper. Certainly no one has put upon affidavit that he was misled in this way. Mr. Peard's penultimate affidavit makes it plain that COSCO are both owners and charterers. There is nothing in the evidence before me which would lead me to believe that anyone was entitled to come to the conclusion that goods being shipped under a COSCO Bill of lading would necessarily be carried by a COSCO owned ship.

24. I do not find the latter case of any assistance as the matter was really determined by looking at the definition of the word "carrier" which appeared in the Bill of Lading. Applying that definition the Court came to the conclusion that a time charterer was the carries. We have no such definition in the present Bill of Lading. In all of the circumstances I am satisfied that the Bill of Lading was a contract between the shipper and the ship owner.

25. I am, therefore, satisfied that both in English lave and in Chinese law the ship owners were a party to the Bill of Lading.

26. I now turn to Mr. Mumford's third contention which was that, even though the ship owner is a party to the Bill of lading, the stay should be refused. In this regard Mr. Ribeiro referred to Dicey & Morris, "The Conflict of Laws",10th Edition, Volume 1 at 255 where it is stated:

"Where a contract provides that all disputes between the parties are to be referred to the exclusive jurisdiction of a foreign tribunal, English courts will stay proceedings instituted in England in breach of such agreement, unless the plaintiff proves that it is just and proper to allow them to continue."

He referred to the comment upon that statement, again at 255 where the learned author stated:-

"The court's power to grant a stay under this Rule is discretionary but, once the contract has been proved, the onus of inducing it not to do so rests on the plaintiff, and not, as in cases under the inherent jurisdiction to prevent injustice, on the defendant. This is because the ground on which the Court grants a stay is that the Court makes people abide by their contracts.

The plaintiff who wishes to invoke the jurisdiction of the English Court despite a contractual submission to the exclusive jurisdiction of a foreign court must show a strong case, more than a balance of convenience, why the English proceedings should not be stayed."

Mr. Mumford accented that the onus was en him to establish a strong case and submitted that when the facts were examined it would be found that he had done so. In this regard both counsel dealt with the considerations suggested by tee Eleftheria (1970) P. 94. I now set out those considerations, which, of course, must be weighed in all of the circumstances of the case, aril the arguments thereunder :

In this regard Mr. Ribeiro submitted that the evidence was available in China at Zhanjiang and in Holland at Rotterdam. He submitted that there would be, almost no difference as regards convenience between a trial in Hong Kong and a trial in China. Mr. Mumford, in this regard, submitted that the evidence of the surveyor was in Rotterdam and that it would he easier to assemble and have such evidence heard in Hong Kong. He submitted that it would be easier to obtain translators capable of translating from Dutch into English in Hong Kong than it would in China. He also submitted that the documents to be discovered by the ships owner such as log books, tally sheets, mate's receipts etc. must all be in Hang Kong. Having considered the submissions of counsel, I am not satisfied that there would be any significant advantage as regards convenience or expense if the trial was held in Hong Kong.

Mr. Ribeiro submitted that it was clear that the contract was governed by Chinese law and that as the Hague Rules do not apply in China, there must clearly be some differences between Chinese law and Hong Kong law in this regard. Mr. Mumford had to concede that foreign law does apply but he submitted that given the availability of expert evidence, the matter could be equally yell heard it Hong Kong. When I Nave regard to the difficulties that can arise in any case where foreign law is being applied, I have no doubt that it is desirable, where ever possible, that the matter be heard in Courts which are applying their own law.

Mr. Ribeiro submitted that, in this regard, the plaintiffs were German and the defendants although they had a connection with Hong Kong were Panamanian registered company. Mr. Mumford on the other hand submitted that all of the known facts indicated that the company was wholly managed from Hong Kong and that its directors and officers were resident in Hong Kong. This may be so, however, the defendants are an international company incorporated in Panama and they seek to have the action heard in the jurisdiction indicated in the contract. They are prepared to waive any benefit that might accrue to them from having the case heard in Hung Kong. The plaintiffs have not indicated any specific advantage that will accrue to them from a hearing in Hong Kong by virtue by the fact that the defendants have a connection thereto other than to point out that documents in possession of the defendants must be in Hong Kong and will be readily accessible if the trial is held here. It had not been shown, indeed it has not been suggested, that the defendant's connection with Hong Kong would in any other way, be pertinent to the place of trial.

27. The defendants says that they desire to have all of the actions that might be brought against them heard in China because it is more convenient for them to have them so heard than to have cases being heard in various jurisdictions around the world. Mr. Ribeiro submitted that his clients had sworn to this in their affidavits and that there was no suggestion in any other affidavit that this was not true. Mr. Mumford conceded that there was no evidence to establish that the defendants were not genuine in seeking a trial in China but he submitted that one could not help to suspect that they did not genuinely desire to have a trial held in the Courts of the People's Republic. He referred to an article in the South China Morning Post which indicated that civil law in China was still in an early stage of development. He said that given the uncertainty as to the development of civil law in China, one must have some doubt that any company with a substantial Hong Kong connection would really wish to have its cases decided in that country. I appreciate that a plaintiff may have a genuine suspicion as to the bona fides of a defendant in circumstances such as this; however, I must be guided by the facts which have been sworn to and those facts, which are unchallenged by other evidence, indicate both that the defendant does wish to have litigation in which it is concerned heard in China and has a logical reason for so doing. I do not consider that there is anything in what has been presented before me sufficient to allow me to impugn the motives of the defendants in this regard.

This matter was not an issue as the defendants have undertaken to provide security and to waive any non compliance with the time bar which might arise against the plaintiffs should they pursue their action in China. Having considered all of the above matters, I am satisfied that the plaintiffs have not established a strong case sufficient to justify my refusing the grant of a stay.

28. While there has been no good case made out to establish that the plaintiffs will have difficulties in pursuing their claim in the Chinese courts, I am nonetheless concerned with this aspect of the matter as this is, to my knowledge, the first time that an application such as this has come before an admiralty court in Hong Kong. I intend, therefore, to grant the stay, in the first instance, for a period of months. The matter will be called on in first week of July 1983. The plaintiffs are to file an affidavit as to progress of the proceedings at that time. The defendants are to be at liberty to file affidavits.

29. Costs reserved.

(1)    (1950) 83 Lloyd's Law Reports 84.

(2)    (1922) Lloyd's List Law Reports.

(3)    (1980) 1 Lloyd's Law Reports 393.

Representation:

Mr. E. C. Mumford (Clyde 2c Co.) for plaintiff /respondent.

Mr. R. Ribeiro (Johnson Stokes & Master} for defendant/ applicant.