Ever Judger Holding Co Ltd v. Kroman Celik Sanayii Anonim Sirketi
Read the full judgment text of HCCT 6/2015 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 17 April 2015 before Hon G Lam J in Chambers.
Arbitration — Anti-suit injunction — Arbitration clause in bills of lading incorporated from charterparty providing for Hong Kong arbitration — Cargo damage dispute — Turkish court proceedings commenced and ship arrested in Turkey — Shipowners seek interim anti-suit injunction in Hong Kong to restrain Turkish proceedings — Jurisdiction considered under s. 45 Arbitration Ordinance and s. 21L High Court Ordinance — Equitable relief governs injunctions — Defence of unclean hands raised against injunction for alleged fraudulent issuance of clean bills of lading — Allegation not established on interlocutory evidence — Principles from leading UK and Hong Kong authorities including The Angelic Grace, Donohue v Armco Inc, and AES Ust-Kamenogorsk applied — Existence of other proceedings in Turkey involving insurers not sufficient ground to refuse injunction due to risk of parallel inconsistent decisions and absence of single composite trial — Jurisdictional challenge in Turkey and delay in seeking injunction not strong reasons to refuse — Injunction to continue pending arbitration held to be proper enforcement of contractual arbitration agreement — Costs awarded to shipowners.
Legal issues: Jurisdiction to grant anti-suit injunction based on arbitration clause · Equitable defence of unclean hands in anti-suit injunction · Whether strong reasons exist not to grant anti-suit injunction
Outcome: Injunction continued until further order; costs granted to the shipowners.
Cited by 13 cases · Cites 9 cases
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HCCT 6/2015 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 6 OF 2015 ____________
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______________ J U D G M E N T ______________ I. INTRODUCTION 1.The plaintiff is a company incorporated in the British Virgin Islands and the registered owner a Panamax bulk carrier named “MV EVER JUDGER” which is registered in Panama. I shall refer to the vessel as “the ship” and to the plaintiff as “the shipowners”. The defendant, which is a company incorporated in Turkey, is one of the largest producers and traders of semi-finished and finished iron and steel products in the Gebze Osmangazi region of Turkey and the buyers of a cargo of steel wire rods which was eventually carried on board the ship from Mainland China to Turkey. I shall refer to the defendant as “the buyers”. A group company of the buyers is the operator of the Turkish port of discharge in this case. 2.A dispute has arisen relating to the condition of the cargo found upon discharge. The buyers have brought proceedings in a court in Turkey whereas the shipowners have, relying on an arbitration clause incorporated into the bills of lading, served a notice of arbitration in Hong Kong. The shipowners now apply to this court for an interim anti-suit injunction to restrain further conduct of the proceedings in Turkey on the basis of the Hong Kong arbitration clause in the contract of carriage. The principal issues are whether the plaintiff has come to court with clean hands and whether there are strong reasons not to grant an injunction notwithstanding the arbitration clause. II. FACTUAL CONTEXT The sale and purchase of goods 3.In September 2014, the Turkish buyers, through an intermediary Swiss trading house called MT Metals and Minerals Trading AG (“MTI”), decided to acquire 30,500MT of prime hot rolled steel wire rods from a Chinese company, Jiangsu Shagang International Trade Co Ltd (“Jiangsu Shagang”), which was China’s largest private steel mill. The buyers had not traded with Jiangsu Shagang before. 4.A sales contract for this transaction was entered into by the buyers with MTI as sellers on 16 September. Under that contract, payment was to be made by the buyers by irrevocable confirmed letter of credit in favour of MTI for 100% of the price against presentation of, inter alia, a full set of “3/3 original clean on board ocean bills of lading”. The contract also stipulated:
The contract is governed by Swiss law and stipulates that any disputes which the parties fail to resolve amicably shall be referred to and finally resolved by arbitration in Geneva, Switzerland. At around the same time, MTI entered into a back-to-back contract with Xinsha International Pte Ltd, a regular business partner of Jiangsu Shagang, for the sale and purchase of the steel wire rods for on-sale to the buyers. 5.At around the same time, Yucel Boru ve Profil Endustrisi A.S. rihtim Cd (“Yucel”), another Turkish producer and trader of steel products which was apparently related to the buyers, also sourced a cargo of steel coils from Jiangsu Shagang. The carriage of goods 6.During the negotiations, the buyers were told by Jiangsu Shagang that the cargo would be shipped on board a vessel owned by one of its group companies. On 5 October 2014, upon being provided by Jiangsu Shagang with the particulars of the ship, the buyers confirmed that the ship was of the quality to berth to Kroman Port. 7.By a voyage charterparty dated 6 October 2014, the shipowners chartered the ship to Everest Shipping Pte Ltd for a single voyage to carry a cargo of 15,000MT hot rolled coiled steel and 30,500MT wire rods +/–5% MOLCO[1] from Zhangjiagang Haili Port, People’s Republic of China, to Kroman Port, Tavsancil, Turkey. Clause 18 of the charterparty provides as follows:
On the same date, the ship was sub-chartered to Shagang Marine Co Ltd and sub-sub-chartered to Xin Sha International Pte Ltd for the voyage on a back-to-back basis. These charterparties also contain a choice of English law and a Hong Kong arbitration clause. 8.Loading of the cargo commenced at Zhangjiagang Haili Port on 17 October and was completed on 25 October. On the same date, a total of four bills of lading were issued for the carriage of the cargo specified in the charterparties. 9.One of the four bills was for the carriage of 15,145.01MT (being 604 coils) of “prime hot rolled steel coils” from Zhangjiagang Haili Port to Tavsancil Port. The shipper was Jiangsu Shagang, the consignee was to the order of a Swiss bank and the notify party was Yucel. The other three bills were for the carriage of 14,938.20MT (6326 coils), 15,756.419MT (6724 coils) and 189.442MT (83 coils) (totalling 30,884.061MT) “prime hot rolled steel wire rod in coils” from Zhangjiagang Haili Port to Kroman Port. The shipper was the same but the consignee was to the order of Banque de Commerce et de Placements S.A. and the notify party was the buyers (the defendant). In short, the buyers were the notify party in the three bills relating to 30,884.061MT of wire rods and Yucel was the notify party in the one bill relating to 15,145.01MT of steel coils. Where appropriate I shall refer to the buyers and Yucel together as “the receivers”. 10.The bills of lading were prepared in the CONGENBILL (1994 edition) format, being a standard form of bill of lading to be used with charterparties. On the reverse side of the bills, clause 1 of the “Conditions of Carriage” provides:
On the front side of the bills, it is stated:
11.The bills of lading relating to the goods sold to the buyers were presented by Jiangsu Shagang or MTI to the bank for payment under the buyers’ letter of credit. On about 18 November, after payment had been cleared by the bank, the three bills of lading were endorsed to the buyers. The discharge of the cargo 12.On 21 November, the ship arrived at Kroman Port, Turkey. The buyers allege that as the cargo was being discharged, the attending surveyor from the survey company SGS noticed that a large proportion of the cargo was either severely rusted, deformed, dented or otherwise damaged, that the cargo in the holds were not properly lashed and that the dunnage boards were not thick enough and the cargo was stacked too high, damaging the coils stowed on the bottom stack. 13.On 26 November, the buyers issued a letter of protest to the Master of the ship stating the surveyor had found
The Master signed on the letter to state:
14.Meanwhile, on 24 November, the Master had issued a letter of protest stating that he was told by the receivers’ representative not to stop discharging in case of small rain. On 28 November, the Master issued a further letter of protest against the stevedores’ “rough and improper” discharge operations, using crane wire slantingways to pull the coils resulting in some coils being damaged. There is now no dispute that in fact some damage was done during unloading. In early December, the Master also protested that the receivers had intentionally delayed the discharge operation since 27 November. The arrest of the ship 15.The buyers’ first application for the arrest of the ship was made on 3 December to Gebze 1st Civil Court of First Instance in Turkey but was refused by that court on 4 December. On 9 December, the renewed application of the buyers was granted by the Gebze 5th Civil Court of First Instance in Turkey (file no. 2014/88 D.). The ship was arrested on 10 December. 16.On 16 December, the Gebze Execution (Civil) Court in Turkey ordered that the ship post security in the sum of approximately US$3.1 million plus 20% in order for the ship to be released. Eventually the ship was released and sailed from Kroman Port on 19 December upon payment of TRY8.7 million into Gebze 2nd Bailiff’s Office in accordance with the court order for security. The shipowners applied to the Turkish court with an objection against the arrest but the objection was finally rejected on 5 January 2015. The Turkish action, the arbitration and the present proceedings 17.On 8 January 2015, the buyers filed their Points of Claim with the Gebze 1st Civil Court (being docket no. 2015/15 E.), alleging that it was detected during unloading that a total of about 16,700MT (i.e. over 50%) of the cargo had been damaged as a result of irregularities during loading or stowage, and claiming damages approximately in the sum of US$3.93 million. 18.On 16 January, the shipowners’ Hong Kong solicitors wrote to their proposed arbitrator, who indicated that he would be willing to be nominated by the shipowners as arbitrator for all disputes arising out of the four bills of lading between the shipowners and the receivers. By a letter dated 30 January (served on 3 February), the shipowners wrote to the receivers, providing notice of commencement of arbitration with respect to the contracts of carriage evidenced by or contained in the four bills of lading. 19.On 5 February, by a letter to the receivers, the shipowners’ solicitors stated that pursuant to the arbitration clause in the contracts of carriage, all disputes should be referred to arbitration in Hong Kong, and that the buyers had wrongfully commenced substantive proceedings in Turkey against the shipowners on 8 January. They demanded that the receivers “immediately withdraw from and vacate all substantive proceedings in Turkey”. The buyers’ Turkish lawyers responded on the same date, stating that according to Turkish law, the holder of the bill of lading had the right to seek an arrest of the vessel to obtain security, and that “in connection with this, the arresting court gains full competency and Turkish law becomes applicable for the dispute itself”. They denied that the Turkish claim had been wrongfully commenced. 20.On 12 February, the shipowners’ solicitors wrote to the receivers, stating that Hong Kong is the proper and agreed-upon forum for the resolution of disputes arising out of the contracts of carriage. The shipowners also offered that, if the Turkish proceedings were withdrawn, they would be willing for the security held by the Turkish court to be transferred to Hong Kong, pending the result of the arbitration. By a letter dated 26 February, the receivers’ solicitors replied, contending that there was no valid arbitration agreement between the shipowners and either the buyers or Yucel, that the shipowners had submitted to the jurisdiction of the Turkish court, and that the notice of arbitration was defective. The notice was said to be defective because: (i) it purported to commence an arbitration for disputes arising out of four contracts of carriage evidenced by four bills of lading; (ii) there was no dispute between the shipowners and Yucel[2]; and (iii) the parties had not agreed on the number of arbitrators and the shipowners could not stipulate that if the receivers did not appoint their arbitrator within 30 days, the shipowners’ nominee would be appointed as the sole arbitrator. 21.On 27 February, the shipowners caused an originating summons to be issued from the Court of First Instance of Hong Kong against the buyers and applied ex parte, giving less than 3 hours’ notice to the buyers’ solicitors, for, inter alia, an anti-suit injunction against the buyers, in terms which they now seek to continue on an inter partes basis. Mimmie Chan J granted the injunction sought, and directed that the return date for the inter partes application would be 20 March. The judge also granted leave for the originating summons to be issued and served out of the jurisdiction on the buyers pursuant to Order 73 rule 7(1) of the Rules of the High Court (Cap. 4A), on the ground that the arbitration to which the originating summons relates is to be held within the jurisdiction. There is no challenge by the buyers against the issue and service of the originating summons out of the jurisdiction. 22.On 2 March, the shipowners filed their points of defence in the Turkish action together with their objection to jurisdiction. On the same date, they took out an inter partes summons in Hong Kong for the continuation of the ex parte injunction. It is this summons which has come before me for determination. III. JURISDICTION TO GRANT ANTI-SUIT INJUNCTION ON THE BASIS OF AN ARBITRATION CLAUSE 23.The type of injunction sought by the shipowners has been called “anti-suit” injunction, but as Lord Hobhouse said in Turner v. Grovit [2002] 1 WLR 107 at §23, it is a misnomer because the injunction is an order of the Hong Kong court addressed to a party before it, in personam, not an order addressed to or binding upon a foreign court. Its effectiveness depends on the defendant being amenable to the Hong Kong court’s jurisdiction. 24.For the source of the court’s power to grant the injunction sought, Mr Nick Luxton, who appeared on behalf of the shipowners, referred me to s. 45 of the Arbitration Ordinance (Cap. 609), which provides as follows:
25.As provided in s. 45(9), interim measure is defined by reference to art. 17(2) of the UNCITRAL Model Law. This is set out in s. 35(1) of the Arbitration Ordinance, which provides:
26.The Court of First Instance has, of course, as part of its jurisdiction as a superior court of unlimited jurisdiction administering both law and equity (see ss. 3, 12 and 16 of the High Court Ordinance (Cap. 4)), the power to grant equitable relief such as injunction. S. 21L expressly provides:
27.I therefore raised the question at the hearing whether an injunction such as the one sought here is to be granted pursuant to s. 45(2) or s. 21L. So far as injunctions are concerned, there are at least the following differences between the two sources: (i) The power under s. 21L includes the power to grant both final and interlocutory injunction, whereas there is only power under s. 45(2) to grant an interim injunction – with the word “interim” having the meaning specified in art. 17(2) of the UNCITRAL Model Law. (ii) The power under s. 45(2) is exercisable only where there are actual or contemplated arbitral proceedings (since the power is to grant interim measure in relation to arbitral proceedings which “have been or are to be commenced”), whereas the power under s. 21L is not so limited. (iii) In relation to arbitral proceedings outside Hong Kong, the power under s. 45(2) is circumscribed by the conditions set out in s. 45(5), (6) and (7). No such conditions are laid down expressly in s. 21L. (iv) The grant or refusal of an injunction by the Court of First Instance under s. 45(2) is not subject to appeal (see s. 45(10)), whereas an appeal lies against a decision under s. 21L, in the ordinary way (subject potentially to the requirement of leave to appeal), to the Court of Appeal. 28.Mr Luxton submitted that this court has jurisdiction to grant the injunction sought pursuant to s. 45(2) of the Arbitration Ordinance (Cap. 609). On the basis that what was sought was an interim injunction, Ms Frances Lok, who appeared for the buyers, was content to accept that there was jurisdiction under s. 45(2). 29.For my part, while I have no doubt the court has jurisdiction to grant an injunction to restrain one party to an arbitration agreement from taking steps to have a dispute covered by that agreement determined by a foreign court, I am not so sure that the jurisdiction is to be found exclusively, or at all, in s. 45(2). The reasons I say this are, briefly, as follows. 30.First, an arbitration agreement has a positive and a negative aspect. Positively, the parties agree that any dispute within the scope of the agreement will be determined by arbitration as prescribed, and, negatively (and often only implicitly), they undertake to each other that they will not bring such dispute to any other forum: AES Ust-Kamenogorsk Hydropower Plant LLP v Ust- Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889 at §1; Pena Copper Mines Ltd v Rio Tinto Co Ltd (1911) 105 LT 846, 850-851. An anti-suit injunction seeks to enforce the negative aspect of the agreement. It is in form and substance a negative injunction, not concerned with the institution or prosecution of arbitral proceedings as such, but with restraint of the pursuit of other proceedings in breach of contract. It is more accurately described as a measure not in relation to any arbitral proceedings, but in relation to the arbitral agreement. It is therefore not evident to me that an anti-suit injunction in this context is an interim measure “in relation to” actual or contemplated arbitral proceedings, as provided in s. 45(2). In AES Ust-Kamenogorsk Hydropower Plant LLP, supra, at §48, the Supreme Court of the United Kingdom held, albeit in the context of somewhat different statutory language, that an injunction to restrain foreign proceedings brought in breach of an arbitration agreement was not “for the purposes of and in relation to arbitral proceedings” within the meaning of s. 44 of the Arbitration Act 1996, but
See also per Colman J in Sokana Industries Inc v Freyre & Co Inc [1994] 2 Lloyd’s Rep 57, 65. 31.The point is illustrated by the wording of the originating summons in this case, which seeks an injunction to restrain the buyers from prosecuting or continuing the existing Turkish proceedings or commencing any further or other proceedings in Turkey against the shipowners with respect to any claims arising under the contracts of carriage contained in or evidenced by the three bills of lading, except for the purposes of or to enforce an arbitral award under such contracts of carriage. The form of the injunction sought is thus independent of any actual or contemplated arbitral proceedings. The ex parte injunction already granted restrains the buyers “until further order or the return date”. The inter partes summons seeks a continuation of that injunction “until further order”. None of these documents refers to the period of time “prior to the issuance of the award by which the dispute is finally decided”, which is the period specified in Art. 17(2) in the definition of interim measure. It is thus not entirely clear, at any rate from the inter partes summons itself, whether the injunction sought now is an interlocutory injunction pending the hearing of the originating summons for final relief under s. 21L, or an interim measure under s. 45(2) pending the issuance of an award in an existing or contemplated arbitration (which seems to be both counsel’s assumption) and, if the latter, what is to happen to the originating summons itself. 32.Likewise it seems to me that the availability in Hong Kong of an anti-suit injunction to enforce the negative aspect of an arbitration clause does not depend on the existence or prospect of any arbitral proceedings. If no arbitration proceedings “have been or are to be commenced”, as s. 44(2) requires, the jurisdiction to grant the anti-suit injunction sought cannot be derived from s. 44(2), but will, as Mr Luxton accepted, have to founded on s. 21L of the High Court Ordinance. A decision under s. 21L is appealable but a decision under s. 45(2) is not. It seems to me anomalous that an appeal should lie against the grant or refusal of an anti-suit injunction if there are no actual or contemplated arbitral proceedings, but that no appeal would lie otherwise. 33.Further, I have some difficulty in understanding how an anti-suit injunction falls within the meaning of “interim measure”, which is defined in s. 45(9) and Art. 17(2) (as applied by s. 35(1)). Mr Luxton suggested that an anti-suit injunction is an order to a party to “refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself” (Art. 17(2)(b)) but it is not entirely clear to me how foreign proceedings will cause harm or prejudice to the arbitral process itself. Moreover, s. 45(9)(b) provides that a reference in Art. 17(2) to arbitral proceedings should be read as a reference to court proceedings. The phrase “arbitral proceedings” does not actually appear in Art. 17(2). If s. 45(9)(b) is intended to apply to the phrase “arbitral process” in Art. 17(2)(b) which is thereby deemed to be a reference to court proceedings, it is still difficult to see how an anti-suit injunction falls within Art. 17(2)(b) as modified. The purpose of an anti-suit injunction, whether based on an arbitration clause or exclusive jurisdiction clause, is not to protect a local process from harm or prejudice but to enforce a contract breached by the pursuit of foreign proceedings. 34.I note that in Lucky Sun Development Ltd v. Gainsmate International Ltd (HCCT 12/2007; 2 October 2007; CACV 341/2007; 15 November 2007), an application for injunctions including an anti-suit injunction was dealt with under s. 2GC of the previous Arbitration Ordinance (Cap. 341), which had similarities to s. 45 of the current Arbitration Ordinance. However, the question of the source of the jurisdiction was, so far as I can see, not discussed there and was probably immaterial since s. 2GC did not contain a provision equivalent to s. 45(10) that precluded appeals. 35.With all that having been said, in the end, since the source of jurisdiction was not argued by counsel in the present case, both of whom proceeded on the basis that s. 45(2) of the Arbitration Ordinance was the governing provision, the point must be left to another occasion. For present purposes, there is no dispute that the exercise of the jurisdiction, irrespective of its legal foundation, is guided by the same principles, to which I now turn. IV. PRINCIPLES GOVERNING THE EXERCISE OF POWER 36.There is little dispute between counsel on the principles that govern the existence of the discretionary power that the court undoubtedly has to grant an injunction to restrain foreign proceedings brought in breach of an arbitration clause. 37.While the buyers’ solicitors had in their letter dated 26 February alleged that there was no valid arbitration agreement between the shipowners and the buyers, and Mr Luxton had understandably devoted considerable space in his initial comprehensive skeleton argument to the submission that the arbitration clause found in the head charterparty was validly incorporated into the bills of lading[3], for the purposes of the present application Ms Lok was content to proceed on the footing that there was a validly incorporated arbitration agreement, in the form of clause 18 of the head charterparty (as quoted in paragraph 7 above) with the necessary adjustment of its wording to render it applicable to the disputes between the shipowners and the buyers. 38.It is important to remember that the injunction is sought here not on the general ground that the foreign proceedings are vexatious or oppressive (as to which see e.g. Liaoyang Shunfeng Iron and Steel Co Ltd v. Yeung Tsz Wang (CACV 234/2011; 14 June 2012) at §§83-89), but on the ground that they were brought, and are being continued, in breach of contract. As Lord Hobhouse said in Donohue v. Armco Inc [2002] CLC 440; [2002] 1 All ER 749 at §45 (a case involving an exclusive jurisdiction clause the facts of which I shall describe below):
The contractual right is underlined by the fact that it is in principle open to an applicant, where the anti-injunction is refused (and perhaps even where it is granted), to seek damages for breach of contract if he has suffered loss e.g. in being put to greater expense by having to litigate in a different jurisdiction: Donohue v. Armco Inc, supra, at §§36 & 48. 39.The modern starting point of a discussion of the applicable principles to a case of this kind is the seminal decision in Aggeliki Charis Cia Maritime SA v. Pagnan SpA, The Angelic Grace [1995] 1 Lloyd’s Rep 87, 96, where Millett LJ said:
40.In Donohue v. Armco Inc, supra, at §24, Lord Bingham described the approach in a case involving an exclusive jurisdiction clause as follows:
41.In the same case, Lord Scott said at §53:
While Millett LJ referred to “good reason” and Lord Bingham and Lord Scott used the phrase “strong reasons” I do not think there is a material difference between them. 42.In The Front Comor [2007] 1 Lloyd’s Rep 391, Lord Hoffmann said (at §10) that the English courts have regularly granted injunctions to restrain parties to an arbitration agreement from instituting or continuing proceedings in the courts of other countries, and added (at §21):
43.In AES Ust-Kamenogorsk Hydropower Plant LLP, supra, at §§25-28 & 62, while the main point for decision by the House of Lords was whether there was jurisdiction to grant an anti-suit injunction, Lord Mance, in a judgment concurred in by all the other Supreme Court Justices, referred to the above line of authorities with apparent approval, and also upheld the first instance judge’s decision which was based on this approach. 44.More recently, in Compania Sud Americana de Vapores S.A. v. Hin-Pro International Logistics Ltd (CACV 243/2014; 11 March 2015), the Court of Appeal of Hong Kong had the occasion to consider The Angelic Grace. The English High Court had granted anti-suit injunctions at the behest of the plaintiff against the defendant, to restrain the defendant from proceeding with legal actions that it (representing cargo interests) had brought in Mainland China against the plaintiff (as carrier). When the injunctions were ignored by the defendant, the plaintiff obtained from the English court a worldwide freezing order over the defendant’s assets. Based on that order the plaintiff sought under s. 21M of the High Court Ordinance (Cap. 4) a receivership order as well as Mareva injunctions against the defendant in Hong Kong, where it was based, in aid of the English proceedings. The Court of Appeal held that the plaintiff’s applications should be refused, on the ground that the jurisdiction under s. 21M should not be exercised having regard to the conflict between the English courts and the Mainland courts on, inter alia, the effect of the jurisdiction clause in the bills of lading. For present purposes, the following passages in the Court of Appeal’s judgment are significant:
45.It is clear, therefore, as a matter of Hong Kong law that the court in this jurisdiction should ordinarily grant an injunction to restrain the pursuit of foreign proceedings brought in breach of an agreement for Hong Kong arbitration, at any rate where the injunction has been sought without delay and the foreign proceedings are not too far advanced, unless the defendant can demonstrate strong reason to the contrary. In her admirably succinct argument, Ms Lok did not dispute the principle that can be derived from the authorities. She accepted that strong reason has to be shown why the buyers should not be required to adhere to the arbitration clause, and that they have the burden to demonstrate such strong reason. In essence she submitted that the injunction should be refused because the shipowners had not come to court with clean hands, and there was in any event strong reason not to enforce the arbitration clause by injunction, particularly because of the existence of other proceedings in Turkey but also because of the existence of a jurisdictional challenge in Turkey and the delay in the present application. I shall return to the buyers’ contentions for such strong reason after dealing with the discrete, preliminary point of unclean hands. V. UNCLEAN HANDS 46.Like all injunctions, the anti-suit injunction is an equitable remedy and therefore subject to general equitable defences. In opposing the injunction in this case the buyers pray in aid the maxim of equity that “he who comes to equity must come with clean hands”. The defence, however, is not concerned with general depravity on the part of a plaintiff. It has been said that “Equity does not demand that its suitors shall have led blameless lives”: Loughran v. Loughran 292 US 216, 229 (1934) per Brandeis J. The impropriety or misconduct relied upon “must have an immediate and necessary relation to the equity sued for”: Dering v. Earl of Winchelsea (1787) 1 Cox Eq 318, 319; Moody v. Cox [1917] 2 Ch 71; Poon Ka Man Jason v. Cheng Wai Tao (CACV 135/2013; 21 January 2015) at §6.7.2. In other words, the doctrine applies where “the plaintiff seeks to derive advantage from his dishonest conduct in so direct a manner that it is considered to be unjust to grant him relief”: Spry, Principles of Equitable Remedies (9th ed), p. 254. 47.It is not in dispute that the defence of unclean hands is in principle available against an application for anti-suit injunction. An example of the defence being successfully deployed in that context can be found in Royal Bank of Scotland plc v. Highland Financial Partners LP [2013] 1 CLC 596, on which Ms Lok placed considerable reliance. The facts of that case are complex but for present purposes may be summarised as follows. Highland, a capital management group based in the USA, planned to launch a collateralised debt obligation. Loan notes with an aggregate size of €500 million would be issued, secured by a portfolio of loans. RBS was engaged to finance the acquisition of the loans and to market the notes, and held security over the acquired loans via a debenture. After the collapse of Lehman Brothers in September 2008, RBS terminated the mandate and sought to recover its advances. The acquired loans were auctioned and eventually purchased by RBS itself, who claimed there was a shortfall of €30.5 million and brought proceedings in the UK to recover it. Burton J granted summary judgment to RBS on issues of liability. It subsequently transpired during the trial on quantum that before the auction, RBS had, in breach of its duties as mortgagee, transferred 36 of the loans which were “bullet proof, good at par” from its trading book to its banking book so that they were not available for a competitive auction. This was not confessed by RBS during the trial on quantum, whose principal witness (Mr Griffiths) perjured himself by testifying to the contrary. Nevertheless Burton J held that a proper valuation of the loans still left a shortfall and RBS was entitled to judgment in the sum of €21 million. The Highland parties then brought an action in Texas against RBS and two of its employees alleging fraud in relation to the 36 loans. 48.RBS then brought proceedings in the UK to claim an anti-suit injunction on the basis of an exclusive English jurisdiction clause in the contract. The Highland parties counterclaimed an order to set aside the liability judgment for having been obtained by fraud. In this second action, RBS continued to deny that it had suppressed the transfer of the 36 loans and Mr Griffiths again gave false evidence to that effect. Burton J held that RBS had suppressed the fact regarding the transfer of the 36 loans, but that the concealment had not been the result of dishonesty. He declined to set aside the liability judgment. He held that the fact that RBS had unclean hands was a strong reason why the court should not grant an anti-suit injunction in its favour. On appeal the Court of Appeal reversed Burton J’s decision not to set aside the liability judgment and upheld his refusal of the anti-suit injunction. Aikens LJ, with whom Toulson and Maurice Kay LJJ agreed, stated that the defence of unclean hands was distinct from that of there being “strong reason” not to grant an anti-suit injunction (§158). He held that RBS’s misconduct had an immediate and necessary relation to the equity sued for because:
49.The way in which the shipowners in the present case are said to have unclean hands is that the Master had issued clean bills of lading fraudulently, notwithstanding that he must have known, as evidenced by the mate’s receipts, that the goods had been damaged when they were loaded on board the ship. The principal issues raised by this defence as I see it are two-fold: (i) whether the shipowners indeed have unclean hands; and (ii) whether the conduct complained of has an immediate and necessary relation to the equity sued for. 50.There are three mate’s receipts issued in relation to the steel wire rods purchased by the buyers (and two in relation to the steel coils purchased by Yucel). The mate’s receipts relating to the buyers’ cargo contain various remarks such as: “all coils scratched slightly on the surface locally”, “all coils rust stained slightly on the surface locally”, “3560 coils rusty on the surface” and “[5300, 119 and 17] coils each with 5-15 winding twisted slightly locally”. 51.Ms Lok, relying on Brown Jenkinson & Co Ltd v. Percy Dalton (London) Ltd [1957] 2 QB 621, 629-630, submitted that the bills of lading in this case constituted a representation that the steel wire rods were shipped in apparent good condition, free of defects and damage, and that it was a fraudulent misrepresentation having regard to the remarks inserted in the mate’s receipts. The buyers believe that the shipowners had colluded with Jiangsu Shagang to issue clean bills of lading, notwithstanding the cargo was damaged, in order to ensure that MTI and ultimately Jiangsu Shagang would get paid the price under the letter of credit. The difficulty for the buyers however is that, as Ms Lok accepted, the defence of unclean hands cannot be founded on mere allegations of wrongdoing. The court must be satisfied that a plaintiff indeed has grimy hands before it will examine whether the dirt is such as to disqualify him for equitable relief. 52.For his part Mr Luxton did not dispute that the clean bills of lading contained a representation that the goods were in apparent good order and condition, but he argued that the remarks on the mate’s receipts were consistent with the cargo being in good order and condition. He referred to the evidence of the Master (albeit given indirectly via the shipping managers) that that was why he decided not to clause the bills of lading. Mr Luxton relied on the evidence that in the trade of hot rolled steel wire rods, surface rust and some breakage of straps and binding rods are to be expected. He also pointed out that the authorities cited by Ms Lok were decisions after trial in which there were actual findings of fraud. 53.In addition, Mr Luxton submitted that it would make no commercial sense for the shipowners knowingly to ship damaged goods and deceitfully to issue clean bills of lading, for the ship would inevitably be arrested at the port of discharge. Instead, he suggested the buyers had a motive for rejecting the goods because customs taxes applicable to the import of the cargoes in Turkey significantly increased shortly after the sales contract was entered into and before the bills of lading were issued. For present purposes I place little weight on these considerations which are strongly disputed by the buyers. 54.Ultimately however this defence is, in my judgment, not established. This is an interlocutory application argued on the basis of affidavit evidence. I do not consider it appropriate to come to a finding of fraud on the basis of contested affidavit evidence. Where serious allegations of wrongdoing are involved they must be proved by evidence of commensurate cogency, and fraud or serious misconduct can only be inferred where such inferences are compelling: Nina Kung v. Wang Din Shin (2005) 8 HKCFAR 387, §§181-187. In my view, for the following reasons it cannot be inferred for present purposes from the material before me that the Master was necessarily fraudulent in deciding to issue and sign the clean bills.
55.In these circumstances in the absence of a fuller investigation I cannot condemn the Master unheard and accept for the purposes of this application that there was fraud or some deliberate wrongdoing on his part as alleged by the buyers. In my view the factual basis for Ms Lok’s unclean hands argument is not made out which must therefore fail for that reason. 56.The buyers also alleged that the shipowners had fraudulently suppressed the mate’s receipts in the ex parte on notice application for injunction and had produced instead a letter of protest from the Master in which he stated he was not aware of any damage to the cargo (see paragraph 13 above). As I understand Ms Lok’s submissions this complaint is bound up with the alleged fraud in issuing clean bills of lading which I have dealt with above. In any event, until the buyers raised the allegation of fraud in their affirmations in opposition to the injunction (which were filed on 13 March 2015), the mate’s receipts were not so evidently significant that I should infer fraud on the part of the shipowners or even their legal representatives in the presentation of their case, simply because the mate’s receipts had not been mentioned. As Mr Luxton observed, although the buyers had had the mate’s receipts since November 2014, the Points of Claim they filed in the Turkish proceedings in January 2015 only alleged that the cargo was damaged during loading or the carriage without alleging any fraud in the issuance of the clean bills of lading. Nor was the allegation of fraud raised in any of the pre-action correspondence. In these circumstances it seems to me that, again, there is no basis for an inference of fraudulent suppression of the mate’s receipts at the ex parte hearing. I may add that the application was made ex parte on notice to the buyers, who despite having appeared by legal representatives did not refer the court to the mate’s receipts. 57.On this footing the question whether the misconduct in question has an immediate and necessary relation to the equitable relief sought by the shipowners does not arise. I would however add that if there was in fact fraud as alleged on the part of the shipowners in issuing clean bills of lading, then it seems to me the requisite nexus would be present, because it was on the basis of the bills of lading (ex hypothesi fraudulently prepared) that payment was made by the buyers for the goods, resulting in their taking delivery eventually and making a claim against the shipowners as carrier and thereby becoming subject to the terms of the bills of lading[4] including the arbitration clause, which the shipowners now seek to enforce by injunction. VI. REASONS AGAINST GRANT OF INJUNCTION 58.Notwithstanding the prima facie right of the shipowners to enforce the arbitration clause against the buyers, Ms Lok submitted that there are three matters that constitute a strong reason not to grant an injunction in this case. What is a “strong reason” has not been further elaborated in the authorities. In his speech in Donohue v Armco Inc, supra, at §24, Lord Bingham referred to “dilatoriness and other unconscionable conduct”, but added that the question will depend on all the facts and circumstances of the particular case. In my view the answer is not to be found by assessing, under the ordinary principles of forum non conveniens, which jurisdiction is the appropriate forum for the trial of the action, for, as Lord Hobhouse said in Turner v. Grovit, supra, at §25:
Nor in my view can mere complaints of inconvenience suffice. The power is ultimately a discretionary one, to be exercised in the interests of justice, and the factors raised against the injunction must be sufficiently strong to warrant not holding the opposing party to his contract. Existence of other proceedings 59.The first matter relied upon is that there exist related proceedings in Turkey between the buyers and their insurers. According to the buyers, as a result of evidence of pre-voyage damage, their cargo insurers, Zurich Sigorta Anonim Şirketi, have refused cover. Pursuant to the policy, the buyers have, on 16 March 2015, issued proceedings against the insurers in the Istanbul 17th Commercial Court of First Instance as the court where the insurers’ headquarters are located. It is said, though no pleadings have yet been produced, that one of the key issues in those proceedings will be whether the cargo was damaged before loading, during the voyage, or during discharge, and the extent of damage at each stage. 60.The insurers are not party to the bills of lading and therefore not bound by the arbitration clause. The insurance litigation will have to be conducted in Turkey. Ms Lok submitted that the issues in that litigation will overlap with the issues in dispute between the shipowners and the buyers, and that the grant of the injunction sought will cause the dispute involving the shipowners, the buyers and the insurers to fragment and reduplicate at vast cost. 61.In a passage in Donohue v Armco Inc, supra, at §27, heavily relied upon by Ms Lok, Lord Bingham stated:
62.I do not think that Lord Bingham intended to suggest that whenever there is a risk of parallel proceedings and inconsistent decisions an anti-suit injunction will be refused. The exercise of discretion must be based on all relevant circumstances, and the question must therefore depend on the facts of each case. Also, since Ms Lok submitted that the present case is “on all fours” with Donohue v. Armco Inc and the two cases cited by Lord Bingham in the above passage, i.e. The ‘El Amria’ [1981] 2 Lloyd’s Rep 119 and Citi-March Ltd v Neptune Orient Lines Ltd [1996] 1 WLR 1367, I must examine these decisions in some detail. 63.The facts of Donohue v. Armco Inc are complex. In essence the Armco group, which had owned a group of insurance companies, complained that a secret agreement was made between four senior Armco executives in New York in 1991, pursuant to which the Armco group was defrauded into injecting a substantial sum of money into the insurance companies for them to be sold to their management, namely, two of the four senior executives. Various companies were involved in the transaction and the relevant agreements. In 1997, NAIC, the leading company of the insurance group, went into provisional liquidation. Five companies in the Armco group (namely Armco Inc, AFSC, AFSIL, APL and NNIC) then started proceedings in New York against ten defendants, namely, NAIC, the four senior executives D, A, R and S, and R’s and S’s respective companies, namely, ITRS and IROS, as well as Wingfield, CISHL and NPV, alleging an international fraud of immense proportions. (R, S, ITRS, IROS, Wingfield and CISHL were referred to as potential co-claimants, or “PCCs”, in the speech of Lord Bingham.) 64.A settled the claim against him. All the six PCCs moved to dismiss the New York proceedings against them on various grounds but failed in September 1999. D did not take part in the motion but had instead brought proceedings in the UK in March 1999 seeking an anti-suit injunction on the basis of the exclusive English jurisdiction clauses contained in the contractual documentation, and applied to join the PCCs as claimants. 65.It is important to have in mind the existing and likely future shape of the transatlantic litigation when the House of Lords came to determine whether the anti-suit injunction should be granted. Both the judge and the Court of Appeal had held that service of the UK proceedings on APL and NNIC should be set aside, from which there was no further appeal. The House of Lords had further held that four of the six PCCs (namely, R, S, ITRS and IROS) should not be joined in the UK action as they had no procedural or contractual right to an anti-suit injunction. It was also common ground that not all causes of action being pursued in New York were covered by the exclusive jurisdiction clause. The prospect was therefore that the New York proceedings would in any event continue (i) insofar as they were brought by APL and NNIC against all the US defendants, (ii) insofar as they were brought by all five Armco parties against NAIC and NPV and the four PCCs whose joinder in the UK action was rejected, and (iii) insofar as they were brought by all five Armco parties against all the US defendants for claims not covered by the exclusive jurisdiction clauses (see §§30-33). It was against this background that Lord Bingham said:
66.In The El Amria, the cargo which was shipped from Alexandria was found to be in a deteriorated condition upon discharge in Liverpool. The cargo interests brought an action in England against the vessel owners notwithstanding a clause in the bill of lading conferring exclusive jurisdiction on the courts of Egypt. The cargo interests also issued proceedings in England against the Mersey Docks and Harbour Co, which was not bound by the clause, because the vessel owners had alleged that the damage to the cargo was caused by the delay in the process of discharge. The vessel owners sought a stay of the English action against itself on the strength of the exclusive jurisdiction clause in favour of Egypt. The English Court of Appeal, affirming Sheen J albeit for different reasons, refused a stay. 67.In Citi-March Ltd v. Neptune Orient Lines Ltd, when three containers with consignments of clothing shipped from Hong Kong to London were eventually delivered to the plaintiffs’ premises in London and opened, 800 cartons of clothing were found to be missing. As a result the plaintiffs sued the ocean carrier (D1), the road carrier (D2) and also the bonded warehouse (D3 and D4). There was an exclusive jurisdiction clause in favour of Singapore in the ocean bill of lading, which was binding on the plaintiff vis-à-vis D1. The plaintiff had however allowed the limitation period under the Hague-Visby Rules to expire without issuing proceedings in the contractual forum, Singapore. On D1’s application to set aside leave to issue the English writ and serve it out of the jurisdiction, Colman J held that separate trials in England and Singapore would be a potential source of injustice and refused the order sought, notwithstanding the exclusive jurisdiction clause. 68.In examining Ms Lok’s submission based on these authorities and in the exercise of the court’s discretion in this context, it seems to me important to assess what the position in Turkey and Hong Kong will be if the anti-injunction is granted and alternatively if it is refused. 69.As Mr Luxton pointed out, the court seised of the Turkish action brought by the buyers against the shipowners is the Gebze 1st Civil Court, while the action between the buyers and their insurers are pending in the Istanbul 17th Commercial Court of First Instance. They, on the evidence, are “entirely different courts in different provinces of Turkey”. There is no suggestion that the two cases could be consolidated and tried before a single court. If the injunction is refused, there will accordingly be no “single composite trial” involving the shipowners, the buyers, and the buyers’ insurers in a single tribunal in Turkey. Instead, there will be two separate actions, in two separate courts, presumably presided over by two different judges independent of each other, involving the shipowers and the buyers on the one hand and the buyers and their insurers on the other. There is no suggestion that any issue estoppel will apply, obliging one court to follow the decision of the other, given that the parties are different. 70.The shipowners’ evidence indicated that while “there is a possibility of a degree of cooperation between different courts in Turkey”, there will still be a risk of consistent findings between those two actions. The buyers replied that the Turkish courts “have wide powers to ensure consistency in the findings in the two court actions. For example, the Courts will likely order that documents be shared between them.” But sharing documents is not the same as having a composite trial before the same tribunal. I must assume that the Turkish judges are independent-minded jurists who are entitled to reach their own opinion on the basis of the evidence available to them. The shipowners have pointed out that as a matter of Turkish law, any award in the Hong Kong arbitration can be introduced as evidence for the purposes of the proceedings in the Istanbul 17th Commercial Court of First Instance. As I understand Mr Luxton’s position, the shipowners are also content for the award and record of evidence in the arbitration to be made available to the Istanbul court. In any event such consent can be made a condition for the anti-suit injunction. 71.In my view the present case significantly differs in this respect from the position in Donohue v. Armco Inc where there was a single action in New York which could deal with all the issues in a “single composite trial” (§36). Likewise in The El Amria one of the reasons for refusing a stay of the English action was that as a result the claims by the cargo interests against the vessel and against the dock could be “tried together” (p. 128, col. 2; p. 129, col. 1). In City-March also there was a single English action to which all four defendants were parties where the plaintiff could have the benefit of a “composite trial” (see p. 1376E). 72.Turning the focus to Hong Kong, even if the injunction is refused, there may well still be arbitral proceedings in Hong Kong. There is, at least at this stage, no cross-application by the buyers to this court or elsewhere for an order to prevent a Hong Kong arbitration from proceeding. A refusal of the anti-suit injunction sought by the shipowners does not, of course, operate in any way to prevent or affect that arbitration. So assuming the injunction is refused, and assuming the Turkish court rejected the shipowners’ jurisdictional challenge, inasmuch as the buyers can then without restraint sue the shipowners in Turkey, it will in principle be open to the shipowners to continue to progress the Hong Kong arbitration against the buyers. 73.This, again, may be contrasted with the situation in Donohue v Armco Inc, where if no injunction was granted, the proceedings in New York would simply continue and there would be no proceedings, at any rate at that stage, in London (see §44 per Lord Hobhouse). Similarly, in The El Amria, there had apparently been no action brought by anyone in Alexandria despite the exclusive jurisdiction clause in favour of Egypt, even by the time of the appeal which was almost two years after the cause of action accrued. This enabled the Court of Appeal to conclude that by refusing a stay of the English action, the risk inherent in separate trials in Egypt and England would be avoided. The point is even clearer in City-March: since the plaintiff there had not started an action in Singapore within the limitation period, it was time-barred to do so. There was no real risk of parallel proceedings in England and Singapore, whether or not the English action was allowed to continue as against D1. 74.I recognise, of course, that the buyers may yet take steps to apply to the arbitrators or the court for orders that have the effect of staying or preventing the arbitration, but the outcome of such steps, if taken, can at this stage only be speculative. I do not think I should determine the present application on the assumption that the arbitration will somehow be put to a premature end. Ms Lok submitted that there could be no inconsistent decisions as between the arbitration and the Turkish action in the Gebze court, because whichever decision is reached first will give rise to an issue estoppel binding upon the parties which are identical. This, with respect, missed the point: there will still be a risk of the outcome of the arbitration being inconsistent with the decision of the Istanbul court, even if the anti-suit injunction is refused, assuming the arbitration is concluded earlier than the Gebze court action.[5] If the anti-suit injunction is refused, and the Turkish proceedings and the arbitration co-exist, there may simply be an “ugly rush”[6] by the parties to get one set of proceedings decided ahead of the other, or a claim of the kind referred to in Tracomin SA v. Sudan Oil Seeds Co Ltd (No. 1) [1983] 1 WLR 1026, 1036-1037 and by Leggatt LJ in The Angelic Grace, supra, at p 94. 75.For the reasons I have explained, I cannot, with respect, subscribe to Ms Lok’s submission that the position here is “on all fours” with Donohue v Armco Inc, The El Amria or Citi-March. In the respects mentioned above I think the situation here is materially quite different. Refusing the anti-suit injunction sought will not result in a single composite trial involving the parties here and the cargo insurers; even in Turkey there will be two sets of proceedings before two different courts. Nor will it remove the risk of inconsistent decisions between the arbitral process and the insurance litigation. Mere inconvenience to the buyers of having to fight both in Turkey and in Hong Kong is not sufficient. That is a consequence of the differences in the contracts that they have entered into: XL Insurance Ltd v. Owens Corning, supra, at p 543j. It may be noted that the buyers’ contract with MTI provides for Geneva arbitration, though there is nothing to indicate that such arbitration is being contemplated. Jurisdictional challenge in Turkey 76.The second matter relied upon by Ms Lok is that the shipowners had filed a challenge to the jurisdiction of the Turkish court, at the same time when they filed their points of defence on 2 March 2015, after obtaining the anti-suit injunction on an ex parte on notice basis. In circumstances where the shipowners have on their own volition decided to mount that challenge in Turkey, it would, Ms Lok submitted, be inappropriate for the Hong Kong court to “jump the gun” and determine whether the anti-suit injunction should continue. Instead, the Turkish court should be left to decide first whether to decline jurisdiction. 77.For this submission Ms Lok relied principally on the decision of Stone J in The Sumitomo Bank v. Xin Hua Estate Ltd (HCCL 256/1998; 5 February 1999), where his Lordship adjourned the hearing of an application for anti-suit injunction to restrain certain proceedings in the Guangdong Province on the ground that there was pending in the Guangdong court a dispute as to whether that court should decline jurisdiction. It is fair to say that Stone J followed the approach set out by Sopinka J in Amchem Products Inc. v. British Columbia (Workers’ Compensation Board) (1993) 102 DLR (4th) 96 at 118-119 as follows:
78.Whether or not this is the correct approach in cases where an anti-suit injunction is sought on some other basis such as that the foreign proceedings are vexatious or oppressive, I need not comment upon.[7] The proper approach in an application for an anti-suit injunction on the basis of an arbitration clause has been laid down in The Angelic Grace, supra, where Millett LJ said at p. 96:
79.An anti-suit injunction sought on the present basis does not involve any assertion that the Hong Kong court or arbitral tribunal is a superior or better forum either for the resolution of the dispute in question or generally. It seeks simply to uphold the parties’ contract to resolve any dispute within the scope of the clause by arbitration. Had a court action been brought in Hong Kong in breach of the arbitration clause, it would equally readily have been stayed by the Hong Kong court. The considerations of comity that exercised Stone J’s mind in the Sumitomo Bank case do not, in my view, arise in the same way in this kind of case. As Toulson J (as he then was) said in XL Insurance Ltd v. Owens Corning [2001] 1 All ER (Comm) 530 at 544a:
Toulson LJ made a similar statement in Deutsche Bank AG v. Highland Crusader Partners LP [2010] 1 WLR 1023 at 1036F §50 which was quoted with approval by the Court of Appeal in Compania Sud Americana de Vapores S.A. v. Hin-Pro International Logistics Ltd, supra, at §§56-57 (quoted in paragraph 44 above). The Court of Appeal added that the same can be said for a case where a Hong Kong court is asked to enforce an exclusive jurisdiction clause in favour of the Hong Kong forum. 80.In the present case, the shipowners have credibly explained that they put in a jurisdictional challenge because they had to file their points of defence under the Turkish rules of procedure, and had they done so without challenging jurisdiction they could be taken to have submitted to jurisdiction. There has not been any hearing of the jurisdictional challenge or any evidence of any step taken by the Turkish court to determine it. In these circumstances I do not think that the existence of the jurisdictional challenge in Turkey is a strong reason for departing from the general rule. Delay 81.Thirdly, Ms Lok submitted that the shipowners had been guilty of delay in seeking the injunction. I accept the shipowners’ contention that because the arrest proceedings could fairly be regarded as proceedings brought by the buyers to obtain security for their claim rather than to have the substantive dispute determined, they were not a breach of the arbitration clause: Ultisol Transport Contractors Ltd v. Bouygues Offshore SA [1996] 2 Lloyd’s Rep 140, 144-145.[8] The first time there was a breach was when the buyers filed their points of claim in Turkey on 8 January 2015. From then on events had moved fairly swiftly. The shipowners asked the buyers by letter of 5 February to withdraw the Turkish proceedings and applied to the Hong Kong court on 27 February, after receiving the reply the day before. In these circumstances I do not consider that the injunction had been sought with any significant delay, nor had the Turkish proceedings become too far advanced. VII. CONCLUSION 82.As the buyers have not been able to establish the alleged misconduct on the part of the shipowners, the preliminary objection of unclean hands fails. On the established authorities, the shipowners are prima facie entitled to an injunction to restrain the buyers from pursuing legal proceedings in Turkey on the ground that such pursuit constitutes a breach of the implicit negative covenant in the arbitration clause. 83.It is to be recalled that the principle is that parties should generally be held to their contract, and that this is reflected in the requirement that a party must show strong reason before the court will refuse an anti-suit injunction sought against him on the basis of an arbitration clause. The question is not determined simply by a balance of convenience, or by weighing the appropriateness of each forum for the trial of the dispute. For the reasons I have given above neither the existence of proceedings in Turkey between the buyers and their insurers nor the shipowners’ pleaded challenge of the Turkish court’s jurisdiction constitutes a sufficient reason to refuse the injunction. Nor do I think there had been any such delay in the application as to warrant its refusal. 84.I should mention that the shipowners had at the outset offered a transfer of the security from Turkey to Hong Kong if the Turkish action was terminated as a result of the injunction. There was at one stage some concern on the part of the buyers that there would be an unsecured gap during the transfer but the shipowners had apparently been able to devise a proposal to allay such concerns. At the hearing the buyers made no mention of the loss of security as potential prejudice resulting from the grant of the injunction. If necessary the parties should incorporate such mechanism in the draft order for my approval. 85.In addition as mentioned above the issue of the injunction is conditional upon the shipowners’ consent for the record of the evidence given and the award made in the arbitration to be made available to the Istanbul court for the purposes of the proceedings between the buyers and their insurers. 86.Subject to these two matters, there will therefore be an order that the injunction do continue until further order. I also make a costs order nisi that the shipowners have the costs of the summons dated 2 March 2015 and the costs of the ex parte application on 27 February 2015.
Mr Nick Luxton, instructed by Holman Fenwick Willan, for the plaintiff Ms Frances Lok, instructed by Ince & Co, for the defendant [1] “More or less, at charterer’s option” [2] The shipowners have since withdrawn the notice insofar as Yucel is concerned. [3] relying on the line of authorities represented by The Rena K [1979] 1 QB 377 [4] See s. 3 of the (UK) Carriage of Goods by Sea Act 1992; c.f. s. 5 of the (HK) Bills of Lading and Analogous Shipping Documents Ordinance (Cap. 440). [5] If the Gebze court reaches a decision first, there is of course equally the risk of its decision being inconsistent with that of the Istanbul court, which is the point I have already referred to earlier. [6] Per Lord Brandon in The Abidin Daver [1984] 1 AC 398, 423H-424A [7] See, in that connection, Dicey, Morris & Collins, The Conflict of Laws (15th ed), §12-090. [8] This point was not affected by the decision on appeal reported in [1998] 2 Lloyd’s Rep 461. |
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