The Owners of Cargo Lately Laden on Board of the Ship or Vessel "Adhiguna Maranti" v. The Owners of the Ships or Vessels "Adhiguna Harapan" and Others
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1986 No. 66 H E A D N O T E In November 1981 the “Adhinguna Meranti”, an Indonesian vessel, went aground in Taiwanese territorial waters and became a total loss. Cargo owners from Taiwan, Indonesia and Singapore launched proceedings in rem in Hong Kong and arrested a sister ship. Shipowners sought a stay of these proceedings upon the basis that the Court of Jakarta, Indonesia was the more convenient forum. On appeal from a refusal of Power J. to grant a stay held:
1986 No. 66 in the COURT OF APPEAL [ON APPEAL FROM THE HIGH COURT OF JUSTICE (ADMIRALTY JURISDICTION) FOLIOS 319 AND 321 OF 1982 AND FOLIO 162 OF 1983] _________________________ BETWEEN
_________________________ Coram : Hon. Yang, V.-P. Hunter, J.A. & Nazareth, J. Dates of hearing : 3rd-6th, 9th & 10th of February 1987 Date of delivery of judgment : 24th April 1987
_________________________ J U D G M E N T _________________________ This is the judgment of the Court. 1. In November 1981 the vessel “Adhiguna Meranti” loaded general cargo at Keelung in Taiwan for carriage to Indonesia. On 15th November 1981 shortly after leaving port the vessel ran aground on Chi Lung Island just north of the breakwater of Keelung Harbour in the territorial waters of Taiwan. She was eventually declared a constructive total loss and abandoned. Three actions followed. 2. On 12th November 1982 the plaintiffs issued a writ in the Admiralty jurisdiction (Folio 319 of 1982) as owners of cargo lately laden on board the vessel “Adhiguna Meranti” against the defendants as the owners of “Adhiguna Harapan” and other sister ships of “Adhiguna Meranti”. The claim was for:-
3. The endorsement of the writ gave addresses for 77 plaintiffs, 39 of which were in Taiwan and 38 in Indonesia. On 13th November 1982 a second writ (Folio 321 of 1982) was issued in identical terms. Addresses for 4 plaintiffs were endorsed, one in Taiwan, one in Indonesia and two in Singapore. On 1st June 1982 a third writ in identical terms were issued with two plaintiffs’ addresses endorsed thereon, one in Taiwan and one in Indonesia. 4. At the hearing, we were informed that the plaintiffs’ intent was to name all shippers and receivers of the cargo because until a very careful and prolonged examination of the documents took place, it was not possible to tell in whom any particular property was vested when the casualty occurred.
Applicable principles 5. Since Power, J. gave his decision, these principles had been restated by the House of Lords in Spiliada Maritime Corp. v. Cansulex Ltd.(1) in the speech of Lord. Goff. The court has now to answer a single question namely : “Is there some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e., in which the case may be tried more suitably for the interests of all the parties and the ends of justice” p. 985G. Although this may no longer be necessary, per Slade L.J. in Charm Maritime Inc. v. Kyriakou(2), we still think it convenient for the purposes of analysis to view the problem at three separate stages namely
6. Power, J., not having the benefit of this decision, could not ask himself the single question there put. He founded upon his own formulation in The Palawan(5), which in turn was based upon a combination of the first part of the rule stated by Scott, L.J. in Re St. Pierre(6) (St. Pierre v. South American Stores (Gath & Chaves) Ltd. [1936] 1 K.B. 382, 398) and the second part of this rule as restated by Lord Diplock in MacShannon v. Rockware Glass Ltd.(7) Such formulation does not expressly include any reference to the balancing exercise at what we have called stage III. Although the judge sought to distinguish the decision in The Abidin Daver(3) upon the basis that no other lis existed, he cited Lord Brandon’s reference at p. 419 for the need for the court to perform such balancing exercise. But he does not appear to have done this or to have reached what we have called Stage III. Having put upon the applicants the onus of negativing all personal or juridical advantages at Stage II, he seems to have regarded their failure to achieve this as fatal to the application. In these circumstances, we are unable to see any escape from the conclusion that the judge misdirected himself as to the applicable principles and that this court must reconsider the problem for itself. Stage I: 7. Is Hong Kong not only not the natural or appropriate forum for the trial and is the available forum in Indonesia clearly or distinctly more appropriate? 8. The main cause of action which the plaintiffs wish to pursue is the cause of action in tort against the defendants as the owners of “Adhiguna Meranti” and its sister ships. The plaintiffs are entitled to pursue this claim in this jurisdiction through their claim in rem and by the arrest of a sister ship under the provisions of Section 1 & 3 (iv) of the Administration of Justice Act 1956 applied to Hong Kong by the Admiralty Jurisdiction (Hong Kong) Order in council 1962 S. 1 No. 1547, and: the Fehmarn(8). So much is common ground. But that summary also gives the sum total of the Hong Kong connection with this casualty. 9. Power, J. concluded “that justice could be done between the parties at substantially less inconvenience” in the available Indonesian forum. This was largely because the vessel, the defendants, and some of the plaintiffs were Indonesian; the crew were resident there; most of the witnesses and the documents were probably to be found there; and many of the documents were written in the Indonesian language. Although this conclusion may have been based more upon practical convenience than upon the broader grounds enunciated in Spiliada(1), it was not and cannot seriously be disputed. It is sufficient to say that we accept and agree with it and that it is not necessary at this stage to examine further whether the Indonesian court would be likely to regard the law of Indonesia (the flag) or the law of Taiwan (the lex loci delicti) as the governing law of the tort. The only substantive difference between these two laws which emerged on the evidence related to the limitation of a ship’s liability. We shall consider this in detail hereafter. We therefore answer this first question in the affirmative. Stage II Have the plaintiffs shown the existence in Hong Kong of any personal or juridical advantages which would not be available in the Indonesian forum? 10. This is the heart of the controversy. Both before this court and below, 5 actual or potential advantages were considered, namely:-
11. Of these, (1) was revealed as the real bone of contention between the parties. The remainder were acknowledged to give rise to some potential difficulty or advantage to the plaintiffs, and the debate centred upon their significance (if any) and how far or effectively any significance could be neutralized by the undertakings offered by the defendants to the court. (1) Ship’s limits of liability 12. We are now free to have regard to the realities, per Lord Goff, Spiliada p. 995F. This is that underwriters are dominus litis on both sides. Cargo underwriters, the underlying plaintiffs, have caused the present proceedings to be issued in Hong Kong to obtain the benefit of the Hong Kong limitation upon a ship owner’s liability arising under s. 503 of the Merchant Shipping Act 1894 (“N.S.A.”) extended to Hong Kong by S. 509. Adapting the language of Lord Simon in Atlantic Star (4): they have chosen the forum in which they think their case “can be most favourably presented”. 13. Marine underwriters, the underlying defendants, contend that this Hong Kong limit is unfairly high in relation to a venture which at least in retrospect can be seen to have been basically Taiwanese or Indonesian. Marine underwriters argue first that the Taiwanese limitation should be applied as the lex loci delicti. Alternatively, they argue that the Indonesian connections with this casualty predominate, so that Indonesian limitation should be applied as the proper law of that issue. The application of any other limitation, and especially the Hong Kong limitation, would operate unjustly to them. This they argue is not legitimate forum selection but a blatant case of “forum-shopping”. That is the basis of the application to stay. Hong Kong Law 14. At the outset here, it is necessary to determine what law of limitation the Hong Kong court would apply if the actions continue in this jurisdiction. The plaintiffs assert that this court would apply that M.S.A. limit for two reasons:
(i) Necessity 15. Power, J. was persuaded that the Hong Kong Court would apply the section 503 limit because principally on the authority of Cope v. Doherty(11), The Amalia(12) and The Kronprinz Olav(13), the M.S.A. should be regarded as an overriding statute. Before us this argument was abandoned, as we think rightly. These authorities seem to us to go no further than to hold that the Merchant Shipping Acts constitute the law prima facie applicable to all suitors, Hong Kong and Foreign, in the Hong Kong court, by reason of section 509. In Lord Chelmsford’s words in The Amalia(12), they constitute “the law which the court would be bound to administer”. These words were specifically used in relation to “all suitors having recourse to our courts”. But we can see no difference between those who resort voluntarily and those who are properly brought before the Court and are within its jurisdiction: The Kronprinz Olav(13). The authorities do not directly go to the question whether the terminology of section 503 is such as necessarily to exclude lower substantive foreign limits. We also think that the description “overriding statute” used in Dicey and Morris Conflict of Laws 10th edn. Vol. 1 p. 19 more properly applies to those statutes which restrict or exclude a party’s choice of contractual proper law. The real question here in our judgment is whether, if this action proceeded in the Hong Kong Courts, the defendants could maintain a substantive defence of Indonesian or Taiwanese limits without necessarily becoming involved in Hong Kong procedures. 16. It is common ground that Hong Kong can only apply its own procedural rules : Dicey Rule 209 p. 1175. Both parties also accept Brandon L.J.’s analysis of the position in The Penelope II(14) where he says:-
Can therefore, the defendants sustain a limitation defence without invoking section 504? They assert that they can and that the matter can be tested by claims arising under foreign contracts where the court could readily apply appropriate lower foreign limits. A casualty might for example give rise to three groups of cargo claims namely:
These claims would all have to be assessed by the substantive provisions governing both liability and quantum under their respective proper laws. So much is common ground. It is what follows which is contentious. 17. The plaintiffs contend that the totals of claims (a), (b) and (c) thus assessed on a 100% basis, would have to be related to the total of a single Hong Kong limitation fund so that each claimant would receive his rateable proportion of that fund. In arguing for the application of lower foreign substantive limits, the defendants, in effect, have to contend that the above totalling process has to be performed three times. The total of claims (a), (b) and (c) has first to be related to a total limitation fund calculated in accordance with the proper law of country A, so that (a)’s rateable proportion of that fund is ascertained. The process has then to be repeated in relation to a limitation fund calculated in relation to the proper law of country B in order to ascertain (b)’s rateable proportion of that fund. Finally the same process has to be repeated in relation to (c) and Hong Kong law. There are two inevitable consequences of this. First if only for calculation purposes, at each stage, two of the groups of claims have to be subjected to the provisions of a non-applicable proper law and limitation fund. Secondly, since the limitation provisions in countries A and B are lower, the whole process must throw up a surplus, the application of which is shrouded in mystery. It is self evident that only a rateable apportionment of a single fund will avoid a surplus. 18. We reject the defendants’ submission. First we do not see how the defendants can advance a limitation defence other than under section 503, and escape the provisions of section 504. As Brandon L.J. pointed out in the Penelope II, this is a very special jurisdiction. He said at p. 21:-
This is the essential procedural step. The defendants cannot succeed simply by pleading limitation by way of defence. In order to bring all the claimants together, they would have to launch a separate process or at least try to achieve the same result by counterclaim in and consolidation of the existing proceedings. This in turn seems to us necessarily to invoke the Court’s special powers under section 504. Under this section, the court’s jurisdiction is specifically to determine the amount of the owner’s liability which is “limited under section 503” and to distribute “that amount rateably among several claimants”. 19. Secondly in the absence of clear or any supporting authority or practice, we are not persuaded that any court could or should ever embark upon the sort of multiple limitation calculations above described with their inevitable consequences. We do not regard the dicta of Page Wood v. C. at the end of his judgment in Cope v. Doherty(11) as of assistance to the defendants as they are both obiter and observations in relation to a possible application of identical funds. (ii) Choice of Law 20. The rule stated by Willes, J. in Phillips v. Eyre(9) is:-
21. The plaintiffs argued that this still substantially represents the laws of Hong Kong so that the only relevant limitation defence is that arising under Hong Kong law, namely S. 503. The defendants argue this approach does not sufficiently reflect the decision in Boys v. Chaplin(10). First they contend that the overruling of Machado v. Fontes(15) properly results in the restatement of Rule 172(1)(b) in Dicey p. 935 in terms of double actionability: “actionable according to the law of the foreign country where it was done”. The necessary concommitant of double actionability is double defence : the availability to the defendant of defences arising under both systems. In Lord Pearson’s phrase in Boys p. 405, the plaintiff, they say, “has the worst of both laws”. Since the casualty occurred in Taiwanese territorial waters, this would permit the defendants to rely upon Taiwanese limits. Alternatively the defendants invite the court to follow Lord Wilberforce in Boys and Dicey’s newly formulated, Rule 172(2) p. 936; conclude that the issue of limitation is much more closely connected with Indonesia than with either Hong Kong or Taiwan; and hold that the applicable proper law of such issue is Indonesian law. 22. Having regard to the problem of determining the true ratio of Boys, we think it convenient to consider first how this point would have been dealt with, had it come before the Hong Kong court in 1970. We have little doubt that the court would have applied the “general rule” in Phillips v. Eyre(9) in the practice terms of Willes, J.’s formulation. We think the court would have been persuaded to that conclusion first by the speech of Lord Macnaghten in Carr v. Fracis Times & Co.(16), and more especially by the three decisions of the Privy Council in Canadian Pacific Railway Co. v. Parent(17): Walpole v Canadian Northern Railway(18); and McMillan v. Canadian Northern Railway(19). We think the court might have declined precisely to follow Machado v. Fontes(15)in equating “justifiable” with “innocent”. Viscount Haldane in Parent had declined to endorse this view, p. 205. Further conduct which gives rise to a valid claim for Workmen’s Compensation may be neither “actionable nor punishable” per Viscount Cave in Walpole p. 19, but it can scarcely be described as “innocent”. The court, we think, would have concluded that conduct was “justifiable” by the lex loci delicti if it there gave rise to no cause of action as in Parent(17): or if a complete defence existed in that forum, such as common employment, as in McMillan(19): or contributory negligence at common Law if that can properly be regarded as substantial and not procedural, see Anderson v. Eric Anderson(20), per Windeyer, J. p. 41 and Kolksy v. Mayne Nickles Ltd.(21). But we can see no ground for concluding that the court would have been prepared to re-write the rule by substituting “must not have been partially justifiable” to let in a partial defence under the lex loci delicti which is what limitation is. 23. We next turn to consider the impact of Boys v. Chaplin(10). We cannot fault the analysis of the speeches in Dicey pps. 941-2 or extract from them for ourselves any convincing ratio decidendi. We find it more helpful and profitable to look for majority opinion on particular issues. 24. First we think that a majority emphatically reaffirmed the first part of the rules and the dominance of the lex fori. This most clearly emerges from the speeches of Lord Wilberforce and Lord Pearson: but this conclusion also carries the support of Lord Donovan (who approved Lord Upjohn) p. 383 and Lord Hodson pps. 374-7. Lord Wilberforce particularly considered this aspect and concluded:-
Then having quoted from The Halley(22) he went on : -
25. Lord Pearson concluded his analysis of both rules on p. 398 with these words:-
26. The second part of the Willes, J. rule and particularly the word “justifiable” produced much more basic disagreement, in particular as to the extent to which, and the means by which, greater flexibility ought or might be introduced. But it seems to us here that two majority opinions can be said to emerge. 27. First, Machado v. Fontes(15)was overruled, expressly by Lord Hodson, p. 377 and Lord Wilberforce p. 388, and by necessary inference by Lord Guest p. 381. But the effect of this was to substitute the existence of civil liability for any innocence test. “The broad principle” said Lord Wilberforce p. 389, “Should surely be that a person should not be permitted to claim in England in respect of a matter for which civil liability does not exist or is excluded, under the law of the place where the wrong was committed (emphasis supplied) I would……….restate the basic rule of English law with regard to foreign torts as requiring actionability as a tort according to English law, subject to the condition that civil liability in respect of the foreign claim exists as between the actual parties under the law of the foreign country where the act was done”. 28. This careful formulation does not add materially in its result to the decisions in Parent(17) and McMillan(19). In contrast to Lord Guest’s double actionability test at p. 381, it is not expressed in those terms but in the terms of existence of civil liability. We think that Dicey’s revised formulation of Rule 172 (1)(b) must be seen in this light. 29. We emphasise this because secondly we can see no majority opinion in favour of what might be called a full double actionability test, i.e. one which would introduce all available defences open under both the lex fori and the lex loci delicti. This may have been the intention of Lord Guest and may represent Scot’s law. But Lord Donovan was equally emphatic against, p. 383. So was Lord Pearson : “Double actionability is not required” p. 398. He used the phrase “the worst of both laws” to describe the effect of a possible relaxation of the rule which did not have his approval. We find the quotation of this phrase as apparently representative of his opinion in Cheshire and North Private International Law 10th edition p. 278 somewhat surprising. We also think that Lord Wilberforce was of the same opinion. First, his restatement was in the form we have emphasised not in the form of double actionability. Secondly, the relaxation of the rule he favoured and which would let in partial defences, such as limitation, was special not general : “the general rule must apply unless clear and satisfying grounds are shown” p. 391 : and applies only to particular issues after special enquiry. 30. Upon our reading of the speeches in Boys v. Chaplin(10) therefore in a claim in Hong Kong based upon a tort committed abroad:-
This conclusion, we think, has the support of Goff, L.J. giving the judgment of the Court of Appeal in England in Coupland v. Arabian Gulf Petroleum Co.(23). The case concerned personal injury to the English plaintiff in Libya whilst in the defendant’s employ. Goff, L.J. pointed out that the trial judge had held the claim to be “actionable under the lex loci delicti”. He went on:
31. The defendant’s alternative formulation is based upon the new sub-rule (2) to Dicey’s rule 172. Dicey’s hopes here have not yet been fulfilled. The formulation still has the support only of Lord Wilberforce and has not been adopted since in England. In Australia it was rejected in Kolksy v. Mayne Nickles(21) for reasons which carry conviction with us. We do not think that it can yet be regarded as part of the law of Hong Kong. 32. Finally, we notice that a majority of the Lords in Boys v. Chaplin(10) expressed their concern about “forum-shopping”; the possible encouragement which could be given to it by the English rule; and the need to discourage it as a matter of public policy, Lord Hodson p. 378: Lord Donovan p. 383: and Lord Pearson p. 406. Although we note that in MacShannon v. Rockware Glass(7), Lord Salmon p. 822, Lord Russell p. 823 and Lord Keith p. 833, all denied the relevance of public policy to the exercise of the jurisdiction to stay proceedings, we think that the proper exercise of this jurisdiction does provide a more convenient answer to forum-shopping than some uncertain relaxation of the substantive law. 33. Our answer to the first question posed therefore is that the Hong Kong court would apply the M.S.A. limit both by necessity and by choice. Indonesian Law 34. The next question is what law would the Indonesian courts apply? The only difference which emerged on the evidence between the applicable Taiwanese and Indonesian laws of negligence was that different limitation provisions applied. So the first question here is would the Indonesian court apply Taiwanese or Indonesian substantive law, i.e., limitation? And secondly if it is to be applied, what is the Indonesian limitation? No ready answer to either question emerged from the expert evidence of three Indonesian lawyers placed before Power, J. 35. In two main respects, this expert evidence was consistent, namely in showing that in this field, Indonesian law is developing and very uncertain. The lawyers were discussing concepts of some sophistication, which after several centuries of development in Europe still occasion considerable debate. It is therefore not surprising that there was substantial disagreement between them. We think that a court should approach such evidence with hesitation and within the limits of the possible. It cannot purport to resolve such disputes on affidavit evidence. It can make firm findings only when the evidence is clear. Where it is in conflict, it can do no more than reach such tentative conclusions as are necessary for the exercise of this discretionary jurisdiction, upon the balance of probabilities, making full allowance for the risk that an Indonesian court on very different and much more extensive material might take another view. 36. In relation to applicable law, the conflicting evidence came from a Mr Lubis and a Mr Sumowidjojo. Mr Lubis’ argument proceeded thus:-
37. The judge accepted Lubis and rejected Sumowidjojo upon the basis that the former named authority whereas the latter did not. He thus felt able to find that the Indonesian court would apply Taiwanese law and Taiwanese limitation. We cannot agree with this reading of the affirmations. We do not think that it is a necessary inference from Sumowidjojo’s failure to name authority for his view point that none in fact exists. Having carefully read the evidence as a whole, we think the probabilities point beyond the “very high possibility” spoken of by Lubis to a likelihood of Indonesian law being applied. 38. It is equally difficult upon the evidence to come to any firm conclusion as to what the Indonesian limit of a ship owner’s liability in fact is. Article 474 of the Indonesian civil code goes back to 1848 and in the original Dutch provided for a limitation of a “sum of 50 Guilders per cubic metre net volume of the vessel”. There is no official translation of the code into Indonesian but many translations are used which substitute Rupiahs for Guilders in this article. This would produce a derisory figure of $2,541. Mr Lubis feared that the courts would apply the code so translated. Mr Nugroho disagreed and advanced the view that the court would deal with the matter “on a case by case basis”. But he admitted that he was “not entirely certain how the Indonesian courts would determine these limits”; and beyond adverting to the possibility of the court receiving evidence from the department of the Director General of Sea Communications, gave no indication as to what he meant by case by case basis and what such evidence and the court’s approach would be. 39. Mr Sumowidjojo expressed his general agreement with Mr Nugroho in this regard. But he also relied upon a 1968 decision of the Court of Appeal in Indonesia in a case concerning Garuda Airways where the Court in construing a 1939 Ordinance, admitted evidence from the State Bank as to the relative variations in values of Rupiahs and Dutch Florins between 1939 and the day of trial. This resulted in a conversion rate of 38.12 Rupiahs to 1 Dutch Florin. This was a decision on a different Ordinance in different circumstances. If it had been a regular practice to adjust between 1848 and 1939, or if it had become a regular practice to adjust in some way since 1945, we cannot believe that such practice would have escaped the attention of all the lawyers. 40. The only findings open to the Court on such evidence, which are substantially those made by the judge, are we think:-
41. In summary, therefore, if a stay is granted, the plaintiff would lose the certainty of the Hong Kong limit of $1.27m and face the uncertainty of an unknown limit which could be as low as $2,541 but is more likely to be adjusted upwards from that figure to some unascertainable amount. Other Advantages 42. In relation to these, there was some but much less significant disagreement as to Indonesian law. The position can be summarized as follows:- (2) Time limit 43. It was agreed that article 741 of the Commercial Code imposed a time limit of 1 year. The issue was whether this was mandatory or could effectively be waived by a party. Mr Lubis’ view was that the court “may not and is not obligated” to give effect to any agreement or waiver, citing a case where the court had taken the limitation point of its own motion. Mr Nugroho was of the opinion that the court would uphold an agreement to waive the time bar, citing post-independence Dutch authority in support. On this evidence, it was uncertain whether the Indonesian court would uphold a unilateral waiver and not raise limitation of its own motion. (3) “The Griesheim” 44. In this case, the Hong Kong Court of Appeal in August 1984, upon the basis of the evidence of Japanese law placed before it, concluded that under the Japanese Carriage of Goods by Sea Act ship owners were not parties to bills of lading issued by charterers. It was common ground that the charterer’s bills of lading issued in this case were indistinguishable. It was not seriously disputed before us that this decision accordingly gave the plaintiffs an evidential advantage in relation to this finding on Japanese law under S.59 of the Evidence Ordinance. They would not enjoy this advantage in Indonesia. (4) Interest 45. The general rule in Indonesia is that interest is awarded only from the date of the commencement of proceedings and at a rate of 6% in the absence of express agreement to the contrary. Mr Lubis’ view that interest would be subject to the overall limit of liability under article 474 was not expressly disputed. (5) Costs 46. Apart from court fees, no legal costs are recoverable in Indonesia in the absence of express written agreement, and there are no facilities or procedure for taxation of costs. 47. In these circumstances, a letter in the following terms was addressed by the defendants’ solicitors to the plaintiffs’ solicitors and handed in on the third day of the hearing below:-
48. Undertaking (2) was intended to deal with “the Griesheim” point. When it was pointed out in the course of argument before us such an undertaking would not prevent the defendants from seeking to rely indirectly upon the terms of the bills of lading through the medium of a “bailment upon terms” argument; the defendant orally added an undertaking not to raise any doctrine of Japanese law in relation to “bailment on terms”. Undertakings Generally 49. These undertakings seem to have originated from Lord Diplock’s phraseology in MacShannon v. Rockware Glass(7) that:
50. One reading of this, and it seems to have been that adopted by the judge, is that any deprivation would be fatal. The Spiliada test is more flexible. Expressly, the loss of one advantage is not necessarily fatal, if in balance “substantial justice will still be done” Lord Goff 991. Whilst not seeking to withdraw these undertakings, the defendants stated in argument that since Spiliada they have not needed to offer and would not have offered them. We think there is force in this, and particularly have serious reservations about the utility and appropriateness of these procedures. Our objections arise under 2 heads – comity and splitting the judicial process. 51. “Judicial chauvinism has been replaced by judicial comity” said Lord Diplock in Abidin Daver(3). We seriously question how far comity will be promoted by, and how far a foreign tribunal will tamely accept the consequences of, a Hong Kong court:-
52. We have four observations to make in respect of the spitting of the judicial process which Power, J. rightly criticized, namely:-
53. We take by way of example the undertaking as to costs. Who is to determine whether “the plaintiffs are successful”. The first suggestion in argument was the Indonesian court. But it cannot be expected, and still less required, to exercise an unknown jurisdiction. The Hong Kong court? We do not see how this court could entertain a construction summons on the meaning of an undertaking, or if it could, how and by what criteria it could measure success. The arbitrator? The task would apparently fall to him. But where is this jurisdiction to come from? Arbitration is consensual: there must be a submission : and this undertaking is purely unilateral. This, we think, probably explains why the defendants in reply complained of the plaintiffs’ unreasonable failure to enter into an agreement. An agreement would give the Hong Kong court something to construe. An agreement would give jurisdiction to the arbitrator. But this submission seems to us to run counter to the whole concept of contractual autonomy. 54. The residual means of enforcement relied upon by the defendants is equally uncertain. This was the court’s ability to remove the stay and allow the action again to proceed in Hong Kong. It could well be too late or ineffective. If the proceedings in Indonesia had reached or nearly reached judgment, the Hong Kong court would probably be powerless to prevent an effective judgment being given there, which could neither be set aside nor neutralized by Hong Kong proceedings. We are minded to think that occasions are not difficult to envisage where the court’s power of enforcement of an undertaking as such would be inadequate, and that the most effective means of enforcing the purpose behind the undertaking would be to insist upon a parallel undertaking in damages fortified by security so that in the event of breach, the court would have both the power and the means of awarding damages. 55. In these circumstances, our conclusions upon the undertakings offered by the defendants are as follows: (1) Time Bar 56. The evidence of Indonesian law leaves it quite uncertain whether the Indonesian courts would regard themselves as bound by the defendants’ waiver and not raise limitation for themselves. Equally uncertain in terms of comity is their attitude to an undertaking apparently “extracted” from one party in order to have the case tried in Indonesia at all. We are not satisfied that this undertaking is effective to fulfill its intended purpose. (2) The “Griesheim” 57. We have two problems here. First, the Indonesian court would have the bills of lading in front of it. Will they meekly accept this admission as to the effect of Japanese law: or will they require evidence of Japanese law or perhaps in default apply Indonesian law upon the assumption that it is the same? Will they accept this restriction upon what appears to be their normal inquisitorial role? These questions are not answered on the evidence. 58. Secondly, the “bailment upon terms” concept can best be described as developing in English law. We have no evidence about Japanese law in relation to it, and indeed whether it has any and if so, what meaning in Japan. It seems to us that a Hong Kong judge would have the utmost difficulty hereafter in determining whether any particular argument advanced in Indonesia under Japanese law (or Indonesian if they are treated as the same) did or did not constitute a breach of this undertaking. We therefore do not regard this undertaking as effective or acceptable. (3) Interest 59. This seems to be a typical example of a juridical advantage which would be lost, and the loss of which has to be brought into account in the balancing process. Our doubts as to its effectiveness arise under Indonesian law. Mr Lubis said, without apparent contradictions, that the Indonesian ship owners’ limit covers both capital and interest. Is the Indonesian court going to be happy with a result whereby it gives so many Rupiahs to cover capital and interest, knowing that the defendant has to pay a calculable additional sum in Hong Kong dollars? Or is it going to decline to witness this breach of its own substantive provisions as a result of external pressures, and therefore to make a corresponding reduction in its original award? We do not know. (4) Costs 60. The problems of comprehension and enforcement render this undertaking unacceptable in our judgment. 61. In our judgment therefore, the undertakings offered are all either ineffective or unacceptable and all these procedural advantages must be regarded as lost for the purposes of stage 3. Stage III – the balancing process 62. This case bears no resemblance on its facts to all but one of the recent House of Lords’ decisions. The plaintiffs found upon the court’s Admiralty jurisdiction in respect of which Lord Reid said:
But the Hong Kong connection here is not significantly greater than was the Scottish connection in Societe du Gaz de Paris v. Armateurs francais(24) where the House of Lords had no hesitation in upholding the grant of a stay. 63. The major difference is that a stay would result in the loss to the plaintiffs of the crucial advantage of the Hong Kong ship’s limit, together with the more minor but still significant other procedural advantages. No comparable balancing exercise had to be performed in the recent House of Lord’s cases prior to de Dampierre v. de Dampierre(25). Until then, only in Trendtex Trading Corp. v. Credit Suisse(26) had it been acknowledged that any procedural advantage existed, namely discovery, which was loss by the grant of the stay. 64. It is necessary first to measure the impact of Lord Goff’s emphasis on objectivity : “simply to give the plaintiff his advantage at the expense of the defendant, is not consistent with the objective approach inherent in Lord Kinnear’s statement of principle in Sim v. Robinow 19 R. 665, 668” Spiliada(1). Do these words bring about an important difference in approach, or no more than a shift of emphasis? If the test is not injustice to the plaintiff, but substantive justice to both parties, is the court now required to place the substantive provisions of the rival jurisdictions in the scales of justice, with a view to determining objectively which operates the more justly in the particular circumstances? Or is the court being reminded that when in the balancing process, it is considering injustice to the plaintiff, it must not ignore the other party’s position, and that not all lost advantages necessarily lead to such injustice? For two reasons, we at one time inclined to the latter view. 65. First, precedent and construction seemed to support it. Two of the tests suggested in Abidin Daver(3) appeared to emphasise the need to consider the position of the plaintiff alone. Lord Diplock spoke of :
This view seemed to have the support of Lord Templeman in his speech in Spiliada(1) where he said :
Lord Templeman also agreed with Lord Goff; and both Lord Griffiths and Lord Mackay, agreed with both. 66. Secondly, we are concerned with an Imperial Statute drawn about as widely as it could be. It operates in the United Kingdom, in “the whole of Her Majesty’s Dominions”; and equally in all these locations to foreign ship owners. In the ordinary course, the court has no power to question the fairness of such a piece of legislation; and still less to decline to apply it on the ground that it operates unfairly between particular parties or particular foreigners. We recognize that the Admiralty Jurisdiction of the court “does not affect ……….. the court’s power inherent or statutory to stay proceedings. It leaves the court master of its own procedure” in the words of Lord Wilberforce in Atlantic Star p. 463. But if in the exercise of this procedural jurisdiction, we have objectively to consider the justice of the Hong Kong limit, we would be pronouncing upon the justice of this particular application of Parliament’s intention to these foreigners. We were concerned whether, the direct route being closed, this court could by any procedural path indirectly so pronounce upon a statute, whether such path was labelled “stay and the avoidance of injustice” or “policy and the avoidance of forum-shopping”. 67. The decision in de Dampierre(25) has resolved our doubts. This makes it clear that it is the first view which is correct : that the test is now not injustice to the plaintiff but justice to both parties: and that our jurisdictional doubts were ill-founded. We must consider, per Lord Templeman, whether it is “just” that the plaintiffs “should be allowed to exploit their Hong Kong advantage” and we should “only refuse a stay if it would be unjust to confine the plaintiffs” to their remedies in Indonesia. We must consider, per Lord Goff, “the balance of fairness between the parties”. 68. We have not found this novel task easy. The defendants’ invitation to adopt an off-shore viewpoint seemed somewhat unreal. The plaintiff’s invitation to adopt an international viewpoint, to apply the international standards of the 1957 Brussel’s Convention, the International Convention relating to the limitation of liability of owners of sea-going ships, was somewhat more attractive. But a glance at the list of ratifying countries shows that the Convention has been much more widely adopted in Europe than in this part of the world. This emphasizes the wide differences between conditions and attitudes in Europe and in Southeast Asia, which are perhaps no less than those affecting policy considerations here and in London. 69. Although we recognize the comparatively tenuous connection between Hong Kong and this casualty, we think it would be unjust to the plaintiffs to deprive them of the Hong Kong limit which reflects international public policy, and confine them to the at best uncertain, and at worst derisory, level of the Indonesian limit. Nor ware the other procedural advantages which will be lost in Indonesia trivial matters. Conversely, we see no good reason of policy or otherwise for condemning the plaintiffs’ choice of a Hong Kong forum as “forum-shopping”. 70. For these reasons, we reach the same conclusion as Power, J. and dismiss this appeal. There will be an order nisi that the appellants pay the respondents costs. 71. We cannot part with this case without expressing our profound gratitude to counsel on both sides for their most careful and helpful arguments.
Steward Boyd, Q.C. Charles Sussex (M/s Holman, Fenwick & Willan) for appellants/defendants Richard Aikens, Q.C., Robert Ribeiro (M/s Clyde & Co.) for respondents/ plaintiffs (1) (1986) 3 WLR 972 (2) (1980) 2 Lloyd’s Rep. 17 (3) (1870) LR 6 QB 1 (4) (1971) AC 356 (5) Times Newspaper, 3rd April 1987 (1) [1986] 3 W.L.R 972 (2) English App. 659/86 (3) [1984] A.C. 398, 415 (4) [1974] A.C. 436, 454 (5) [1982] H.K.L.R. 513 para. 516 (6) [1936] 1 K.B. 386, 398 (7) [`1978] A.C. 795, 812 (8) [1957] 1 W.L.R. 815, 818 (9) [1870] L.R. 6 Q.B. 1 (10) [1971] A.C. 356 (11) [1858] 70 E.R. 154 (12) [1863] 15 E.R. 778 (13) [1921] p. 52 (14) [1980] 2 Lloyd’s Rep. 17, 20 (15) [1897] 2 Q.B. 232 (16) [1902] A.C. 176, 182 (17) [1917] A.C. 195 (18) [1923] A.C. 113 (19) [1923] A.C. 120 (20) [1965] 114 C.L.R. 20 (21) [1973] N.S.W.R. 511, 521 (22) L.R. 2 P.C. 193 (23) [1983] 3 All E.R. 226 (24) [1926] S.C. (H.L.) 13 (25) Times Newspaper, 3rd April 1987 (26) [1986] A.C. 679 |