DELTATRE S.P.A. v. HONG KONG SPORTS INDUSTRIAL DEVELOPMENT LTD (formerly known as LETV SPORTS CULTURE DEVELOP (HONGKONG) CO., LTD)

HCA 1303/2017

[2018] HKCFI 1942

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1303 OF 2017

________________________

________________________

_________________

DECISION

_________________

INTRODUCTION

1.  Should the Hong Kong courts refuse to stay a claim brought in breach of an exclusive jurisdiction clause simply because the defendant has shown no credible defence?

2.  This is the main question of law the court was asked to decide in this joint hearing of the defendant’s application for a stay of proceedings based on an exclusive jurisdiction clause in favour of the Italian courts in Torino, and the plaintiff’s subsequent cross-application for summary judgment or alternatively interim payment[1].

3.  The parties’ rival contentions on this question centered around two lines of English and Hong Kong authorities among which:-

(1)   One line took the position that the lack of a credible defence per se constitutes a sufficiently strong cause to override the parties’ own exclusive jurisdiction agreement, essentially following the approach adopted in pure forum non conveniens cases (see, e.g., Standard Chartered Bank v Pakistan National Shipping Corporation & Ors [1995] 2 Lloyd’s Rep 365; Xu Ziming v Ruifeng Petroleum Chemical Holdings Ltd (unreported) HCA 450/2013, 27 August 2014 and 29 October 2014; Madison Communications Private Ltd v Le Ecosystem Technology India Private Ltd [2017] 5 HKLRD 284); and

(2)   The other took a more hardline approach and strived to uphold the parties’ bargain on jurisdiction irrespective of substantive merits per se (see, e.g., Euromark Ltd v Smash Enterprises Pty Ltd [2013] EWHC 1627 (QB); Hyundai Engineering & Construction Co., Ltd v UBAF (Hong Kong) Ltd (unreported) HCA 175/2012, 25 September 2013; CH Offshore Ltd v PDV Marina SA [2015] EWHC 595 (Comm)).

4.  This apparent lack of consistency was in fact highlighted by Professor Adrian Briggs ten years ago in his text, Agreements on Jurisdiction and Choice of Law (2008) where he said (at §6.73):-

“… in relation to jurisdiction agreements, courts have not followed a clear line when dealing with the contention that a stay should not be granted by way of enforcing a jurisdiction agreement when the defendant had no defence to the claim. Much the same issue arises when the claimant applies for summary judgment and seeks to have his application heard before the court considers the application for a stay.”

5.  Before turning to this question and determining which line ought to be followed in the present case, I shall first set out the salient facts.

UNDISPUTED BACKGROUND

6.  The present dispute arose out of the live streaming of football matches from the UEFA European Championship finals held in France in 2016 (“EURO 2016”).

7.  The plaintiff is a company incorporated in Italy with its registered office situated in Torino.  It is and was at the material time a provider of digital services to enable broadcasting partners of international sports events to deliver media contents to their own viewers. 

8.  The defendant is a company incorporated in Hong Kong and a wholly owned subsidiary of Leshi Internet Information & Technology Corp., Beijing, a company listed on the Shenzhen Stock Exchange.  The defendant was at the material time a licensed broadcaster of football matches from EURO 2016.  As stated in the postscript to this Decision, the defendant was on 4 June 2018 ordered to be wound up.

9.  By a written “Booking Order Form” signed by the defendant on 10 May 2016 and by the plaintiff on 19 May 2016, the defendant agreed to purchase and the plaintiff agreed to supply a list of digital broadcasting services in connection with EURO 2016 for a total price of EUR 208,000.  The individual service items were taken from a “Rate Card” produced by the plaintiff for the event.

10.  The Booking Order Form refers to and incorporates certain “Booking Terms and Conditions” attached thereto.   Among those:-

(1)   Clause 1 provides that the terms and conditions therein are part of the Rate Card;

(2)   Clauses 20 to 24 set out limitation of liability and indemnity provisions; and

(3)   Clause 31 contains an exclusive jurisdiction clause which reads:-

“These Terms shall be governed by and construed in all respects in accordance with the laws of Italy. The parties hereby submit to the exclusive jurisdiction of the courts in Torino.” (“Exclusive Jurisdiction Clause”)

11.  After the signing of the Booking Order Form by the defendant, it booked additional digital broadcasting services from the Rate Card for a total price of EUR 11,000.

12.  On 31 May 2016, the plaintiff issued its first invoice to the defendant in the sum of EUR 107,500 (“1^st Invoice”), stated to be payable within 30 days.

13.  EURO 2016 was held from 10 June to 10 July 2016 during which 51 matches were played. The services booked by the defendant related to live streaming of all those matches through the defendant’s internet web and mobile application platforms.

14.  In the opening match held on 10 June 2016 between France and Romania (“Opening Match”), long delays were experienced with the live streaming of the match on the defendant’s mobile applications.

15.  On 11 June 2016, during the match between Albania and Switzerland (“Match #2”) and that between Wales and Slovakia (“Match #3”), the defendant encountered further technical issues in connection with live streaming on its mobile applications.

16.  On 12 and 13 June 2016, the local Chinese press published articles reporting on the issues encountered by the defendant’s subscribers.  They all featured adverse titles including:-

(1)   “揭幕戰app失靈 次日有畫面無旁述 樂視播歐國杯甩轆” (published in Ta Kung Pao on 12 June 2016);

(2)   “播歐國盃App故障 樂視致歉球迷促回水” (published in Ming Pao Daily News on 12 June 2016);

(3)   “收費播歐國盃 揭幕戰無畫面 樂視睇波app撻Q” (published on the front page of Sing Pao Daily News on 12 June 2016);

(4)   “樂視播歐國盃一衰再衰 畫質差 無旁述 客戶要求賠償” (published in Sing Pao Daily News on 13 June 2016);

(5)   “樂視電視盒子直播同故障 致歉稱遇不可預期異常 球迷:幾平都唔再用” (published in Ming Pao Daily News on 13 June 2016);

(6)   “歐國盃開波「甩轆」 樂視願全數退款” (published in Metro (Hong Kong) on 13 June 2016); and

(7)   “技術供應商故障 歐國杯未能直播 樂視 可退款” (published in Skypost on 13 June 2016).

17.  Despite the aforesaid, no problems were encountered with the remaining matches.

18.  In the period from 10 June to 13 July 2016, the parties attempted to resolve the problems encountered and address the aftermath in correspondence. Those included:-

(1)   An email dated 14 June 2016 (08:17) in which the defendant (David Liu) requested the plaintiff (Antonio Bellissimo and Guillaume Perret) to produce a problem report setting out the technical issues and the solution;

(2)   An email dated 17 June 2016 (12:18) from the plaintiff (Antonio Bellissimo) attaching a “Case Summary” dated 16 June 2016 from Akamai Technologies (“Akamai”), a content delivery network (“CDN”) provider, stating:-

“Problem statement

On the 10^th of June, Deltatre S.p.A reported a playback issue with the HLS stream for LeTV Sports via deltatre_euro_multi.xml configurations on the LETV SPORTS CULTURE DEVELOP (BEIJING), CO., LTD Luna Account. They were experiencing a very long delay on the live video.

An example URL is:

http://livemain-i.euro2016cdn.lesports.com/ch01/079db222-b845-47a0-8bd3-d4c3c9f7f913/b7bf634b-dd40-4633-b5ed-601516c094e0.ism/manifest(format=m3u8-aapl-v3)?hdnea=st=1465586062~exp=1468586062~acl=/*~hmac=90ea37293ee4382cc221efaccbaf20cd47372390852317e40bb1f9a4a2f072ee&hdcore=2.11.3

Solution

An investigation revealed two case sensitivity problems in two different match conditions regarding live manifests/playlists, resulting in using the VOD domain in the cache key and a TTL of 365d on the child playlists. The issue was fixed on Saturday, June 11, 2016.”;

(3) An email from the plaintiff (Guillaume Perret) dated 17 June 2016 (4:02) attaching the Case Summary and stating, inter alia:-

“Allow me to get back to you with the official incident report issued from AKAMAI, copying Joachim for the sake of clarity. Featured are the technical description of the issue, with the way we eventually solved it on Saturday, preventing this specific issue to happen again in the future.

deltatre addressed the issue encountered with the live streaming on LeTV App (iOS and Android) in 2 stages.

For the matches “Albania – Switzerland” (match #2, Saturday 11th June, 3pm CET kick-off) and “Wales – Slovakia” (match #3, Saturday 11th June, 6pm CET kick-off), deltatre in agreement with LeTV decided to temporarily solve the issue by replacing the Unilateral stream by the Multilateral Stream (ambience audio) using directly deltatre AKAMAI account and configuration. The users were able to watch the full matches on both iOS and ANDROID – there was no impact on Web platform streaming, which continued to use the Unilateral stream with LeSports AKAMAI configuration.

With that approach, we were able to test the LeTV AKAMAI new configuration in parallel and validate it quickly. Workflow was back to LeTV standard for Germany-Ukraine match (match #4, Saturday 11th June, 9pm CET kick-off).”; and

(4) An email from the plaintiff (Guillaume Perret) dated 13 July 2016 (06:15 PM), making an offer to the defendant in light of what had happened earlier:-

“Allow me to apologise once again for the delivery of the UEFA Euro 2016 Live Streams for iOS and android on Match 1 on June 10 2016.

As mentioned, we acted and gave full support on behalf of a third-party CDN supplier, AKAMAI, where the issue occurred. Deltatre team has always been in permanent and direct contact with your team to make sure this was addressed and have a smooth delivery until Final match last Sunday.

We are eager to find a solution which you find agreeable, demonstrating our commitment to continue working together. As such, we would like to offer:

• Full reimbursement of match 1 (despite having streaming on web platform fully functional), 50% reimbursement for match 2 + match 3 when temporary solutions had to be implemented … 8,600 euros

• LeTV Sports being broadcaster right-holder for UEFA champions League in China, we would like to extend our proposal and issue a credit note for similar Digital Services for the UCL 2016-2017 season … Value of the “credit note” would be assessed together in good faith … Such solution would benefit your end-users whom got to know and appreciate the benefits of multi-streams, additional data and video content at Euro 2016.

We hope this is in line with [your] strategy and brand impact assessment…”

19.  On 12 December 2016, the plaintiff issued its second invoice to the defendant in the sum of EUR 111,500 (“2^nd Invoice”), which was stated to be due upon receipt. 

20.  Despite the issuance of the 1^st and 2^nd Invoices and subsequent reminders, the defendant did not pay the total invoiced sum of EUR 219,000 or any part thereof.

21.  Eventually, on 5 June 2017, the plaintiff commenced the present action to recover from the defendant the total sum of EUR 219,000 together with interest. 

22.  On 13 June 2017, in a without prejudice save as to costs letter[2], the defendant set out its position in response to the commencement of action, stating:-

“… the quality of the Services was defective, in particular failure to deliver the live streaming of the opening game of the Matches on 10 June 2017 and the other Matches on 11 June 2017 on iOS and Android applications.

As your client may be well aware that the broadcasting of Matches was the first live broadcasting of an important and popular international sports event by us in Hong Kong, the live broadcasting quality of the Matches shall affect not only our business but also our reputation.

By reason of the defective Services, it attracted extensive media coverage making adverse and negative comments on the services provided by us and the quality of our content delivery at the material times which has caused serious, adverse and irreparable damage on our reputation. In addition, we, at the material time, received many customer complaints about the poor content delivery quality. As a result thereof, we have suffered monetary loss by making compensation to our customers who were affected by the defective Services.

Although your client by an email on 13 July 2016 offered the compensation to us arising from the defective Services, we were of the view that the compensation then offered by your client was not sufficient to cover and compensate our loss.”

23.  On 21 June 2017, the plaintiff served its statement of claim on the defendant. 

24.  On 7 August 2017, the defendant filed a summons seeking to stay these proceedings on the basis of the Exclusive Jurisdiction Clause pursuant to RHC O 12 r 8(2A)(b).

25.  Two weeks later, the plaintiff filed its own summons seeking summary judgment pursuant to RHC O 14 or alternatively interim payment pursuant to RHC O 29 rr 10 & 12(c).

PARTIES’ CONTENTIONS AND ISSUES

26.  The defendant’s position on the two summonses may be stated as follows:-

(1)   The plaintiff acted in breach of the Exclusive Jurisdiction Clause by commencing these proceedings in Hong Kong in respect of the 1^st and 2^nd Invoices;

(2)   As a matter of law, the Hong Kong court should exercise its discretion to stay this action unless the plaintiff has shown some “strong cause” for not doing so;

(3)   Foreseeable matters of convenience and merits of the defence are by and large irrelevant in considering whether the plaintiff has discharged that burden;

(4)   In any event, the plaintiff rendered defective services to the defendant during the Opening Match, Match #2 and Match #3.  The ensuing problems attracted extensive and adverse media coverage, negative comments about the defendant and many customer complaints.  The defendant suffered substantial loss that exceeds the plaintiff’s claim, for which the plaintiff should be held liable; and

(5)   There is accordingly a credible defence and a triable issue as to whether the plaintiff had acted in breach of contract in rendering services to the defendant.

27.  On the other hand, the plaintiff’s position is that:-

(1)   The problems encountered by the defendant during the Opening Match, Match #2 and Match #3 were not the plaintiff’s fault but that of Akamai, with which the defendant was in a separate contractual relationship.  Akamai acknowledged its responsibility by way of the Case Summary and promptly resolved the problem;

(2)   The plaintiff is in any event entitled to rely on Clause 20 of the Booking Terms and Conditions to limit its liability to the value of the services provided.  This amounted to EUR 12,882 as problems only occurred in 3 out of the 51 matches;

(3)   The defendant has no defence to the action.  As a matter of law, the lack of a credible defence is a “strong cause” for not staying the proceedings despite the breach of the Exclusive Jurisdiction Clause; and

(4)   Accordingly, the court should refuse to stay these proceedings, and the plaintiff should be granted an order for summary judgment or interim payment.

28.  Apart from these substantive contentions, a preliminary procedural argument also surfaced as to the order in which the two summonses should be heard and determined. 

29.  Mr Chiu, for the defendant, submitted that the stay summons should be determined first.  He relied on the judgment of Fuad VP in Hanil Bank & Ors v Societe Generale & Ors [1993] 1 HKLR 308 in which the learned judge said (at pp.317-318):-

“Where a party applies for a stay on the grounds of forum non conveniens he is inviting the court to make an order that no further proceedings in the action be entertained in that court. If he is successful, then a court in another forum will ultimately determine the issues between the parties, as they stood at the time the stay was granted, whether it turns out that the defence relied upon was strong or weak. It may be that the foreign court will have procedures to enable it to deal summarily with hopeless defences. Whether or not such procedures are available to it (and I note that Robert Goff, J. in Trendex did not regard this as a factor of fundamental importance) the court’s function will be to adjudicate on all the issues and decide in whose favour judgment should be given.

It does not seem right to me, that where an application for a stay is timeously and properly made, a party should be able to pre-empt a consideration of what is the natural or appropriate forum for the resolution of the dispute between the parties by relying on the O.14 procedure with the intent of establishing, in the very court in respect of whose exercise of jurisdiction the stay has been sought, that a trial is not necessary.”

30.  Mr Allen, for the plaintiff, disagreed.  He submitted that Hanil Bank (supra) does not stand for the proposition that a stay application must always be dealt with first.  He advocated for the approach taken in Standard Chartered Bank v Pakistan National Shipping Corporation & Ors [1995] 2 Lloyd’s Rep 365 in which Clarke J considered the Order 14 summons before the stay summons therein.  He also suggested that the defendant’s stay application was a delaying tactic when it has no defence.

31.  On this last point, I do not think there is any material before the court to suggest that the defendant was engaged in delaying tactics.  Shortly after the writ was issued and before the statement of claim was served, the defendant wrote to the plaintiff on 13 June 2017 outlining its broad defence (see §22 above).  The defendant’s stay summons was also taken out before the plaintiff’s Order 14 summons.  Absent any other evidence, it seems to me that the present stay application, which was taken out promptly, is a genuine attempt by the defendant to enforce the parties’ agreement under the Exclusive Jurisdiction Clause.

32.  As to the order of the two summonses, it is a matter of the court’s discretion which should be heard and determined first.  With an earlier order directing the summonses to be heard together, I indicated at the hearing that I would hear arguments on both together.  That said, a stay summons should logically be determined before an Order 14 summons, as held in Hanil Bank (supra).  But given the parties’ direct argument over the relevance of the lack of credible defence in the stay application, I would first determine this question of law before turning to all other issues.

33.  Taking stock of the above, the broad issues for determination are thus:-

(1)   Is the lack of credible defence per se a “strong cause” for refusing a stay of proceedings commenced in breach of an exclusive jurisdiction clause?

(2)   If the answer to the first question is “no”, has the plaintiff discharged its burden of showing any other “strong cause”?

(3)   If the answer to the first question is “yes”, has the defendant shown any credible defence on the evidence?

(4)   Finally, what if any relief should be ordered in the two summonses?

IS THE LACK OF CREDIBLE DEFENCE A “STRONG CAUSE”?

34.  It is convenient to first review the relevant law, which provides the important backdrop to the arguments over the instant issue.

General principles on O 12 r 8 stay

35.  RHC O 12 r 8(1)(ga) empowers the court to order a stay of proceedings when a defendant disputes jurisdiction on various grounds.  Rule 8(2) covers the specific situation where a defendant has been properly served but contends that the court should not exercise its jurisdiction in the relevant proceedings.  Rule 8(2A) sets out three specified and distinct grounds for the purposes of r 8(2), namely that:-

(1)   “considering the best interests and convenience of the parties to the proceedings and the witnesses in the proceedings, the proceedings should be conducted in another court” (r 8(2A)(a)) – this covers the forum non conveniens argument built on the principles from Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460;

(2)   “the defendant is entitled to rely on an agreement to which the plaintiff is a party, excluding the jurisdiction of the Court” (r 8(2A)(b)) – this covers, e.g., where the parties’ agreement contains a non-Hong Kong exclusive jurisdiction clause; and

(3)   “in respect of the same cause of action to which the proceedings relate, there are other proceedings pending between the defendant and the plaintiff in another court” (r 8(2A)(c)) – this covers the lis alibi pendens argument built on the principles from The Abidin Daver [1984] AC 398.

36.  The authorities are clear that the court in deciding whether an action should be stayed based on an exclusive jurisdiction clause should not undertake the same balancing exercise as one performed in a pure case of forum non conveniens.  In this regard, Ma CJHC (as the Chief Justice then was) in Noble Power Investments Ltd v Nissei Stomach Tokyo Co Ltd [2008] 5 HKLRD 631 explained that (at §§37-38):-

“37. … Where an exclusive jurisdiction clause exists, a party who seeks a stay brought in breach of that agreement to refer disputes to a named forum, will have to show strong cause: see The Pioneer Container [1994] 2 AC 324 at p.347E-G; Donohue v Armco Inc & Others [2002] 1 All ER 749 at pp.759e-760c (paras. 24-25).

38. This approach is to be contrasted with the approach of the courts in applications for stay based on forum non conveniens. Where an application is made to stay proceedings on this basis, the test is to enquire whether there exists another available forum which is clearly or distinctly more appropriate than the forum in which the proceedings are sought to be stayed and in which the case may be tried more suitably for the interests of all the parties and for the ends of justice: see Spiliada Maritime Corp v Cansulex Ltd at p.476C-D; Owners of Cargo Lately Laden on Board Ship or Vessel Adhiguna Meranti v Owners of Ships or Vessels Adhiguna Harapan & Others [1987] HKLR 904 at pp.907F-908B. In practice, in such applications for a stay, the parties will produce evidence in support of what they contend to be the appropriate jurisdiction.”

37.  It follows from such fundamental distinction that principles taken from pure forum non conveniens cases are not necessarily applicable to cases in which a defendant applies for a stay by simply invoking an exclusive jurisdiction clause. 

Stay based on an exclusive jurisdiction clause

38.  The principles governing the court’s approach in deciding whether to stay proceedings based on an exclusive jurisdiction clause are set out in the judgment of Brandon LJ in The El Amria [1981] 2 Lloyd’s Rep 119, applied by the Privy Council on appeal from Hong Kong in The Pioneer Container [1994] 2 AC 324 at p.347E-G. 

39.  As explained by the learned judge in The El Amria (at pp.123(2)-124(1), with reference to his own first instance decision in The Eleftheria [1970] P 94):-

“(1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not.

(2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown.

(3) The burden of proving such strong cause is on the plaintiffs.

(4) In exercising its discretion the Court should take into account all the circumstances of the particular case.

(5) In particular, but without prejudice to (4), the following matters, where they arise, may properly be regarded:

(a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts.

(b) Whether the law of the foreign Court applies and if so, whether it differs from English law in any material respects.

(c) With what country either party is connected, and how closely.

(d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.

(e) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.”

40.  In Donohue v Armco Inc & Ors [2002] CLC 440, Lord Bingham provided further guidance (at §§24-25) as to how that discretion ought to be exercised, emphasizing the importance of respecting the parties’ agreement on jurisdiction:-

“24. If contracting parties agree to give a particular court exclusive jurisdiction to rule on claims between those parties, and a claim falling within the scope of the agreement is made in proceedings in a forum other than that which the parties have agreed, the English court will ordinarily exercise its discretion (whether by granting a stay of proceedings in England, or by restraining the prosecution of proceedings in the non-contractual forum abroad, or by such other procedural order as is appropriate in the circumstances) to secure compliance with the contractual bargain, unless the party suing the non-contractual forum (the burden being on him) can show strong reasons for suing in that forum. I use the word ‘ordinarily’ to recognize that where an exercise of discretion is called for there can be no absolute or inflexible rule governing that exercise, and also that a party may lose his claim to equitable relief by dilatoriness or other unconscionable conduct. But the general rule is clear: where parties have bound themselves by an exclusive jurisdiction clause effect should ordinarily be given to that obligation in the absence of strong reasons for departing from it. Whether a party can show strong reasons, sufficient to displace the other party’s prima facie entitlement to enforce the contractual bargain, will depend on all the facts and circumstances of the particular case. In the course of his judgment in The Eleftheria [1970] P 94, at pp. 99-100, Brandon J helpfully listed some of the matters which might properly be regarded by the court when exercising its discretion, and his judgment has been repeatedly cited and applied. Brandon J did not intend his list to be comprehensive, but mentioned a number of matters, including the law governing the contract, which may in some cases be material …

25. Where the dispute is between two contracting parties, A and B, and A sues B in a non-contractual forum, and A’s claims fall within the scope of the exclusive jurisdiction clause in their contract, and the interests of other parties are not involved, effect will in all probability be given to the clause. …”

What amounts to a “strong cause”?

41.  The parties have no dispute over the above general principles.  What they disagree is on the precise scope of “strong cause” in the exercise of the court’s discretion, in particular whether the lack of credible defence per se would amount to such a “strong cause”.

42.  There can be no doubt that, when addressing this discretionary question, the court is bound to take all circumstances into account.  This however does not mean that every circumstance could amount to a “strong cause”, or that every circumstance must be given weight when assessing whether a “strong cause” is shown. 

43.  Taking for example what Brandon LJ referred to in point (5)(a) in the passage quoted under §39 above.  The phrase “In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts” seems to me to carry the flavour of a Spiliada exercise. But in the present context, what is pertinent is not whether the connecting factors point to Hong Kong as distinctly the more convenient forum, but whether they are so strong and go to a matter of justice that the parties’ own jurisdiction agreement should not be enforced (see Chinachem Financial Services Ltd v Century Venture Holdings Ltd (unreported) HCA 410/2013; 8 January 2015 per DHCJ Marlene Ng at §99 in the context of a non-exclusive jurisdiction clause[3]).

44.  In Noble Power (supra), the Court of Appeal highlighted the heavy burden a defendant has to meet in seeking to stay proceedings brought in the named jurisdiction of a non-exclusive jurisdictional agreement[4]. This does not simply involve the balancing of different connecting factors as one would in a Spiliada exercise.  As explained by Ma CJHC (as he then was) at §§36, 39 and 40 of the judgment:-

“36. The extent of the burden can be put in several ways but the following provides a ready guide: strong or overwhelming reasons or exceptional circumstances must be shown, such as the existence of factors not contemplated by the parties at the time the relevant agreement was made. It perhaps matters not exactly which term is preferred, but the main point to bear in mind is that strong reasons must be demonstrated to the court before it allows the parties to be freed from their contractual bargain …

39. The search for connecting factors (for example, the location of relevant witnesses, the residence of the parties, etc) or the lack of connecting factors was exactly the approach adopted by the learned Recorder in the present case. It is fair to say that he regarded the correct approach as being one of weighing up the various factors to arrive at a view on the appropriate forum. In other words, he approached this case on the basis of forum non conveniens. The existence of the non-exclusive jurisdiction clause was regarded merely as one of the factors to be weighed in the scales.

40. With respect, this was not the correct approach when there existed a non-exclusive jurisdiction clause, and proceedings were instituted in the very forum to which the parties had agreed to submit. In such a situation, as earlier emphasized, strong reasons have to be demonstrated as to why that agreement should not be enforced. It is not a matter simply of weighing up the connecting factors as though the court were faced with a stay application based on forum non conveniens. The cases make good this point: see for example British Aerospace Plc v Dee Howard Co at p.376(1)-(2); Marubeni Hong Kong and South China Ltd v Mongolian Government at para.64; BAS Capital Funding Corp & Others v Medfinco Ltd & Others at para.185. Generally, the existence or non-existence of connecting factors will be quite irrelevant, certainly much less powerful, unless it can somehow be shown that these may constitute strong reasons as to why the non-exclusive jurisdiction clause should not be enforced. As the authorities make clear, one is really talking about factors that were not in the reasonable contemplation of the parties at the time the agreement was made. As Rix LJ observed in Ace Insurance SA-NV v Zurich Insurance Co & Another at p.820a:

If a party agrees to submit to the jurisdiction of the courts of a state, it does not easily lie in its mouth to complain that it is inconvenient to conduct its litigation there (ie to assert that the agreed forum is a forum non conveniens).”

45.  At §71 of the same judgment, Stone J provided further elucidation on what constitutes a “strong cause” by citing with approval from the decision of Gloster J in Antec International Ltd v Biosafety [2006] EWHC 47 (Comm):-

“(i) The fact that the parties have freely negotiated a contract providing for the non-exclusive jurisdiction of the English courts and English law, creates a strong prima facie case that the English jurisdiction is the correct one. In such circumstances, it is appropriate to approach the matter as though the Claimant had founded jurisdiction here as of right, even though the clause is non-exclusive…

(ii) Although, in the exercise of its discretion, the court is entitled to have regard to all the circumstances of the case, the general rule is that the parties will be held to their contractual choice of English jurisdiction unless there are overwhelming, or at least very strong, reasons for departing from this rule …

(iii) Such overwhelming or very strong reasons do not include factors of convenience that were foreseeable at the time that the contract was entered into (save in exceptional circumstances involving the interests of justice); and it is not appropriate to embark upon a standard Spiliada balancing exercise. The defendant has to point to some factor which it could not have foreseen at the time the contract was concluded. Even if there is an unforeseeable factor or a party can point to some other reason which, in the interests of justice, points to another forum, this does not automatically lead to the conclusion that the court should exercise its jurisdiction to release a party from its contractual bargain …”

46.  Based on the above authorities, Mr Chiu thus submitted that “strong cause” in the present context must encompass either something unforeseeable at the time of contract, or something so exceptional that goes to the interests of justice.  On the strength of the above reasoning of Noble Power (supra) and Chinachem (supra), I respectfully agree.

Does the lack of credible defence per se amount to a “strong cause”?

47.  Turning now to this key question, Mr Allen submitted that, on the basis of Standard Chartered Bank (supra), the answer is “yes”.  In his skeleton, he referred to a number of cases in which Standard Chartered Bank (supra) was cited with approval.  He however fairly acknowledged that most of these cases were concerned with forum non conveniens applications.  The only cited authorities which followed Standard Chartered Bank (supra) and concerned an exclusive jurisdiction clause situation were Xu Ziming v Ruifeng Petroleum Chemical Holdings Ltd (unreported) HCA 450/2013, 27 August 2014 (main decision) and 29 October 2014 (leave to appeal) and Madison Communications Private Ltd v Le Ecosystem Technology India Private Ltd [2017] 5 HKLRD 284.

48.  Mr Chiu took an opposite stance.  He invited me to follow the approach of Coulson J in Euromark Ltd v Smash Enterprises Pty Ltd [2013] EWHC 1627 (QB), approved in Hyundai Engineering & Construction Co., Ltd v UBAF (Hong Kong) Ltd (unreported) HCA 175/2012, 25 September 2013 and CH Offshore Ltd v PDV Marina SA [2015] EWHC 595 (Comm).  He submitted that this alternative line accorded with first principles as the lack of merits of a defence was a foreseeable matter when the parties entered into the Exclusive Jurisdiction Clause.  He asked rhetorically:- even if a defendant may have no defence, why should he be deprived of the benefit of the parties’ contractual bargain for summary proceedings to be brought in the designated forum?

49.  Mr Allen sought to undermine the weight of Euromark (supra) by submitting that there was not a single case in the past 17 years in which Standard Chartered Bank (supra) had been criticized or disapproved in the Hong Kong courts.  He further drew my attention to the fact that Euromark (supra) had only been approved once locally in Hyundai Engineering (supra), which had not been cited with approval or followed on the instant question.  He pointed out that, by contrast, Standard Chartered Bank (supra) had been cited with approval in Hong Kong on three occasions since Hyundai Engineering (supra) was decided.

50.  When parties, as here, are advocating opposite lines of first-instance decisions to be followed on a matter of principle, I do not think citation statistics are necessarily conclusive of the matter.  Questions of this sort, in my view, are better addressed by examining the justifications that led to the respective conclusions, which line better accords with the first principles and binding authorities and, to the extent necessary and appropriate, which line should be preferred as a matter of policy.

51.  Before undertaking that task, I should point out that, apart from the six cases referred to in §§47-48 above, the parties also cited a number of other decisions made in the pure context of forum non conveniens.  For the reasons set out in §§36-37 above, I do not regard such other authorities to be of assistance.  I would mainly focus below on the six cases decided in the context of an exclusive jurisdiction clause.

(a)The Standard Chartered Bank line of authorities

52.  In Standard Chartered Bank (supra), the plaintiff, the confirming bank of a letter of credit, paid a sum of over US$1 million to the seller of goods in reliance of documents including a bill of lading.  The plaintiff made that payment in the belief that the bill of lading was genuine.  It subsequently transpired that the bill in fact contained a fraudulent misrepresentation concerning the loading of goods, and the issuing bank refused to pay the plaintiff for the documents at some stage. 

53.  The plaintiff bank sued, inter alios, two defendants (one being the carrier) responsible for producing the bill of lading in deceit and sought summary judgment.  Those defendants then applied for a stay on the ground that the plaintiff bank was a party to a contract on the terms of the bill of lading which contains an exclusive jurisdiction clause for disputes to be determined at the carrier’s principal place of business, that is Pakistan.  It was assumed for the purpose of this issue that the bank was a party to that contract and the dispute fell within the scope of the jurisdiction clause.

54.  On the question of stay, Clarke J started (at p.372(1)) by reciting the five principles derived from The Eleftheria (supra) and adopted in The El Amria (supra) (see §39 above).  On principle (4) regarding “all the circumstances”, he referred to the fact that, in The El Amria (supra), the plaintiff not only brought an action against the defendant who sought the stay, but also a second action against other parties claiming the same damages.  Significantly, the judge then highlighted the undesirability of having multiple proceedings (at pp.372(2)-373(1)) by quoting from Brandon LJ’s decision in that case:-

“… I do not regard it merely as convenient that the two actions in which many of the same issues fall to be determined should be tried together, rather that I regard it as a potential disaster from a legal point of view if they were not. Because of the risk inherent in separate trials, one in Egypt and the other in England, that the same issues might be determined differently in the two countries (See as to this Halifax Overseas Freighters Ltd. v. Rasno Export; Technoprominport; and Polskie Linie Oceaniczne P.P.W. (The Pine Hill), [1958] 2 Lloyd’s Rep. 146 and Taunton Collins v. Cromie & Others, [1964] 1 W.L.R. 633.)”

55.  It was in this context concerning multiplicity of proceedings that Clarke J decided to consider the summary judgment application first.  As he explained (at p.373(1)):-

“The importance of avoiding multiplicity of proceedings is one which has often been referred to. (See, for example, The Abidin Daver, [1984] 1 Lloyd’s Rep. 339 at p. 344, col. 1; [1984] A.C. 398, at pp. 411-412 per Lord Diplock.)

Before considering whether SCB has discharged the burden of showing strong cause why its claim against PNSC should not be stayed, I should I think consider whether it would be appropriate to give judgment under O. 14 if the matter were to proceed here. That is because the exercise of the Court’s discretion depends at least in part upon a comparison between what is likely to happen if the action remains for determination in England, and what is likely to happen if it is stayed and subsequently determined in Pakistan.”

56.  After reviewing the evidence, and for reasons which do not concern us here, Clarke J took the view that the two defendants had no arguable defence on liability and returned to the issue of stay.  At p.377(1), the learned judge started by comparing the situations where a stay were to be granted and where it were to be refused.  He concluded that a stay should be refused.  As he explained in pp.377(2)-378(1):-

“… in my judgment it is likely that, whether or not the applications for a stay on the part of PNSC and Seaways succeed, there will be proceedings in England. If the application succeeds there would thus be two sets of proceedings arising out of the same subject matter involving the same or very similar issues in different jurisdictions. Those proceedings include indemnity and contribution proceedings. It is relevant to consider such proceedings in this context. (See Société Nationale Industrielle Aerospatiale v. Lee Kui Jak, [1987] 1 A.C. 871.)

The interests of all the parties and the ends of justice cannot, in my judgment, be served by two sets of proceedings in different jurisdictions since there will almost certainly be proceedings in England in any event. That in my judgment affords a strong reason for refusing a stay.”

57.  It thus seems to me plain that the primary, if not the central, reason why Clarke J refused a stay in Standard Chartered Bank (supra) was to avoid multiplicity of proceedings, which as he pointed out could affect the “interests of all the parties and the ends of justice”.  This is wholly consistent with the leading authorities reviewed above.

58.  Having come to this conclusion, and then to deal with the defendants’ specific reliance on the exclusive jurisdiction clause, Clarke J turned to the five principles cited by Brandon LJ in The El Amria (supra).  The judge’s discussion under principle (1), at p.378(1)-(2) of Standard Chartered Bank (supra) and quoted below, is what Mr Allen placed considerable reliance on in the course of his submissions:-

“… I turn therefore briefly to the particular considerations referred to by Lord Justice Brandon in The El Amria and which is set out above:

(a) In what country the evidence on the issues of fact is situated or more readily available and the effects of that on the relative convenience and expense of trial as between the English and foreign courts.

1. Liability

In Adria Services Y.U. v. Grey Shipping Co. Ltd., (which is unreported) I said this in a passage which has subsequently been cited with apparent approval by Mr. Justice Cresswell in Bank of Credit and Commerce Hong Kong Ltd. (In liquidation) v. Sonali Bank, [1995] 1 Lloyd’s Rep. 227 at p. 238:

If the plaintiffs satisfy me that the defendants have no arguable defence then save in an exceptional case, the right course would be to refuse a stay and to give judgment because there would be no real issues between the parties which should be tried here or elsewhere.

That was said in the context of an application for a stay where there was no exclusive jurisdiction clause …

… It appears to me that in a case where a defendant has no arguable defence on liability and quantum that would be a strong reason to refuse a stay because, as I said in the Adria Services Y.U. case, there would be no real issues between the parties which should be tried either here or elsewhere.”

59.  Clarke J’s holding in this part of his decision, it seems to me, was a direct extension of his decision in Adria Services Y.U. v Grey Shipping Co., Ltd (unreported) 30 July 1994 (which did not concern an exclusive jurisdiction clause) to the facts of Standard Chartered Bank (supra) (which did concern such a clause).  However, what I find less clear from the decision is the interplay between the lack of credible defence per se and the exclusive jurisdiction clause in the stay application.  It is also unclear to me precisely why, in the judge’s brief consideration of this point, the parties’ exclusive jurisdiction agreement can justifiably be overridden because the defendant demonstrates no credible defence.

60.  In Hong Kong, Standard Chartered Bank (supra) was cited with approval by DHCJ Wilson Chan (as he then was) in Xu Ziming (supra).

61.  In Xu Ziming (supra), the plaintiff sued the defendant for unpaid sums under a promissory note and three cheques.  The defendant admitted having issued the note and the cheques, and that it could not pay the relevant sums. It however sought to stay the action in favour of the Chinese courts in Guangzhou based on an exclusive jurisdiction clause under a separate loan repayment agreement, and alternatively, on the basis that the Chinese courts in Guangzhou were the most appropriate forum.

62.  The learned deputy judge held, in refusing to stay the action, that:-

(1)   the loan repayment agreement was irrelevant as the plaintiff was entitled to simply rely on the promissory note and the cheques, which are contracts in their own rights separate from the underlying agreements (§§21-22 of the main decision);

(2)   in any event, the promissory note contained the parties’ non-exclusive jurisdiction agreement for disputes to be submitted to the Hong Kong courts (§§23-24 of the main decision); and

(3)   Given the defendant’s failure to put forward any arguable defence, the court was unable to focus on the appropriateness of the forum from the point of view of the trial of the action (§§19-20 of the main decision).

63.  In its application for leave to appeal, the defendant relied considerably on the exclusive jurisdiction clause under the loan repayment agreement.  Apart from re-arguing that the clause covered the dispute in question, it relied on the principles from The El Amria (supra) and contended that the question whether there are triable issues should not be accorded any significant weight, if at all, in considering a stay.

64.  With the deputy judge’s main reasoning founded on the loan repayment agreement being inapplicable, his decision concerning the weight of triable issues was strictly obiter.  Nevertheless, as can be seen in §§14-16 of his leave to appeal decision (quoted below), the deputy judge was prepared to adopt Standard Chartered Bank (supra) in rejecting the defendant’s argument regarding the irrelevance of triable issues:-

“14. At paragraph 20 of the Decision, I have set out a portion of Stone J’s Judgment in Bayer Polymers Company Limited v Industrial & Commercial Bank of China, Hong Kong Branch [2000] 1 HKC 805, which included the following quoted passage approved by Stone J:

   “…The position here is different because the court has a discretion whether to grant a stay. It appears to me that in a case where a defendant has no arguable defence on liability and quantum that would be a strong reason to refuse a stay because, as I said in the Adria Services YU case, there would be no real issues between the parties which should be tried either here or elsewhere.”

15. It is important to note that the above quoted passage in fact came from the Judgment of Clarke J (as he then was) in Standard Chartered Bank v Pakistan National Shipping Corporation [1995] 2 Lloyd’s Rep 365 (at page 378). In that case, there was indeed an exclusive jurisdiction clause in favour of Pakistan and the plaintiff bank issued proceedings in the English courts. Therefore, the dictum of Clarke J quoted above was dealing with precisely the same situation as in the present case.

16. On this basis, I do not accept the defendant’s argument that the issue of whether there are triable issues should not be accorded any significant weight.”

65.  The last Hong Kong case that falls in the same line is Madison Communications (supra), a recent decision of DHCJ William Wong SC.

66.  In that case, the 1^st defendant engaged the 1^st plaintiff to provide certain media services under a marketing services agreement.  Shortly after the conclusion of that agreement, the 2^nd defendant (which was the parent company of the 1^st defendant) entered into a separate payment agreement with the plaintiffs in which it undertook to pay for the media services provided to the 1^st defendant.  Since some of the payments were in default, the plaintiffs commenced action to recover the balance.

67.  Upon being served with the action, the 2^nd defendant disputed jurisdiction on the basis, inter alia, of there being an exclusive jurisdiction clause under the management services agreement, which provided for all disputes between the parties to be exclusively adjudicated by the courts of Bangalore in India.  Under the management services agreement, the governing law was stipulated to be the laws of India.

68.  The main issues in that jurisdiction battle was whether, under Indian law, the 2^nd defendant was entitled to rely on the exclusive jurisdiction clause and whether the Bangalore courts had jurisdiction over it, being a Hong Kong company with no apparent place of business or substantive operation in Bangalore.   On the parties’ expert evidence, the learned deputy judge decided both questions in the negative.

69.  The learned deputy judge then went on to consider the position even if the exclusive jurisdiction clause were applicable and binding on the 2^nd defendant.  As can be seen in §50 of his decision, the deputy judge was of the view that:-

“50. A lack of credible defence can amount to a ‘strong cause’ or exceptional circumstances to override any exclusive jurisdiction clause applicable to the 2^nd defendant” (citing Hong Kong Civil Procedure 2017, Vol.1, §11/1/12EB and The Frank Pais [1986] 1 Lloyd’s Rep 529 per Sheen J at p.534)

70.  At §61 of the decision, the deputy judge further cited with approval Clarke J’s decision in Standard Chartered Bank (supra) that a lack of arguable defence offered a strong reason to refuse a stay based on an exclusive jurisdiction clause.  That said, it should however be noted that this point was in fact also conceded, and seems not to have been argued, by counsel for the 2^nd defendant in the case (see §53 of the decision). 

(b)The Euromark line of authorities

71.  By contrast with the Standard Chartered Bank line of cases, this alternative line places much less, if any, importance on the lack of substantive merits in the defence per se where an action has been brought in breach of an exclusive jurisdiction clause.

72.  The origin of this alternative line was the case of Euromark (supra), where the claimant sued the defendant before the English High Court for wrongful repudiation of an exclusive distribution agreement for the defendant’s products.  That agreement provided for Australian law to be the governing law of the contract, and the parties’ agreement to submit to the exclusive jurisdiction of the courts of Australia.

73.  Relying on the exclusive jurisdiction clause, the defendant disputed jurisdiction of the English court in favour of the Australian courts.  The claimant resisted the stay application by arguing, inter alia, that since the merits of its claim was so strong, it was in the “interest of justice” that the claim on liability be retained in England[5].

74.  Coulson J dismissed this argument.  At §19 of the decision, the learned judge held:-

“… in my judgment … as a matter of law, this was an incorrect reading of the expression ‘interests of justice’. In my view, this phrase, in the context of an exclusive jurisdiction clause, does not require a broad consideration of the merits of the parties competing positions, but is instead designed to deal with those rare cases where, although there is an exclusive jurisdiction clause, the courts to which such jurisdiction has been given may not afford a fair trial, or may, in some other way, be potentially unreliable or unjust.”

75.  As to the significance of merits of the defence in the question of stay, Coulson J was of the firm view that there is very little of it.  As he explained (at §35):-

“… I ask rhetorically, where does that generally favourable impression on the merits get the claimant on this application? Even if one concludes that the claimant is very likely to win on liability at trial, the issue still remains as to where that trial should take place. There is no basis in law for concluding that a strong case should be heard in England, whilst a more arguable case should be heard in Australia. That would be absurd. Ultimately, for the reasons I have given, it seems to me that the strength of the claimant’s claim on liability is either not a relevant consideration for the purpose of this application or, if it is, it remains a matter of very little significance.”

76.  This approach was followed in Hong Kong by DHCJ Lok (as he then was) in Hyundai Engineering (supra).  In that case the third party bank, relying on an exclusive jurisdiction clause, sought to stay the third party proceedings brought by the defendant in favour of the Luoyang Intermediate People’s Court in Henan, PRC. 

77.  At §22 of the decision, the learned deputy judge emphasized the need of showing a “strong cause” when an action brought in breach of an exclusive jurisdiction agreement is sought to be stayed, citing Noble Power (supra) and Donohue (supra).  At §23, the deputy judge then went on to explain the rationale of this approach:-

“23. … the court will endeavor to make contracting parties abide by their contracts (see Euromark v Smash Enterprises PTY Ltd [2013] EWHC 1627 (QB), per Coulson J at §13). As I see it, this is particularly the case if the dispute involves international commercial entities like the present one. In the commercial world, the parties have, to a great extent, tried to allocate the risks of litigations by their choice of the exclusive forum and the governing law. To reflect the need for predictability, consistency and stability in the resolution of international commercial disputes, the courts should be cautious in interfering with any such arrangements agreed by the parties.”

78.  As to the relevance of merits of the defence, the deputy judge stated (at §41):-

“the Hong Kong court cannot just proceed to hear the claim in defiance of the exclusive jurisdiction clause simply because the claimant has a strong claim”,

drawing support from the passage from Coulson J’s decision in Euromark (supra) quoted under §75 above.

79.  The same passage was also cited with approval by Carr J in the case of CH Offshore Ltd (supra) at §64.

(c)   My view

80.  Having considered the parties’ submissions, I am persuaded that the Euromark line of authorities in the one that ought to be followed in the present case.  My reasons are as follows.

81.  First, as set out in §§54-57 above, the defendants’ lack of an arguable defence was not the main reason why Clarke J refused to stay the proceedings in Standard Chartered Bank (supra).  The main reason was to avoid multiplicity of proceedings.  It was only during the learned judge’s “brief” consideration of the five principles cited by Brandon LJ in The El Amria (supra) that he sought to extend his decision in Adria Services Y. U. (supra), a case which did not concern an exclusive jurisdiction clause, to one which did concern an exclusive jurisdiction clause. 

82.  But as pointed out above, it is unclear from the decision why such an extension was justified, either on authority or as a matter of policy.  As the dictum of Ma CJHC in Noble Power (supra) demonstrates (see §44 above), the considerations involved in pure cases of forum non conveniens are not the same as those in those concerning exclusive jurisdiction clauses.  Absent any reasoning in Clarke J’s brief consideration of the matter, it seems to me that Standard Chartered Bank (supra) (or, for that matter, Xu Ziming (supra) and Madison Communications (supra) which followed it without additional reasoning) should not necessarily be regarded as the last word on the question whether the lack of credible defence per se is a sufficiently “strong cause” for overriding an exclusive jurisdiction clause.

83.  Second, even on face value, and as Mr Chiu submitted, I find it difficult to square this part of Standard Chartered Bank (supra) with the more recent and appellate decisions such as Donohue (supra), which emphasized the parties’ contractual bargain, and Noble Power (supra), in which it was held that “strong cause” does not include foreseeable matters, and that strong or overwhelming reasons or exceptional circumstances must be shown.

84.  In this connection, I do not consider the lack of a credible defence per se to be an unforeseeable, overwhelming or exceptional matter such that it would constitute a “strong cause”.   Parties, commercial ones in particular, must have, or must be taken to have, foreseen situations where one party could have no defence to a straightforward claim.  As Coulson J observed, correctly in my view, in Euromark (supra) (at §24):-

“… parties to a commercial contract will always foresee that the other party may breach those terms in some way or another, hence the agreement of a jurisdiction clause or an arbitration clause in the first place.”

85.  Absent issues on the interests of justice, the lack of credible defence per se is in my view far from being a “strong cause” for the court to take the drastic step to override an exclusive jurisdiction agreement.

86.  Third, there is in any event a strong policy in favour of upholding contractual bargains, including jurisdictional agreements.  It is one thing for the courts to hold that a defenseless claim should not be stayed in favour of a foreign jurisdiction when the plaintiff has not committed any breach of contract or wrong.  It is wholly another for the courts to hold that a plaintiff may breach an exclusive jurisdiction agreement voluntarily concluded simply because it has a defenseless claim.  The latter proposition would in my view require a very strong justification.

87.  As highlighted by DHCJ Lok in Hyundai Engineering (supra), predictability, consistency and stability in the resolution of international commercial disputes are critical to international commerce.  Parties’ own agreements on how and where they resolve disputes must not be disturbed too readily, if at all.  In this connection, I respectfully agree with the comments of Professor Adrian Briggs in Agreements on Jurisdiction and Choice of Law (2008) (at §6.75), cited by Mr Chiu:-

“… The parties may have chosen, and perhaps should be taken to have chosen, the forum for dispute resolution in the light of their understanding of how that court would deal with claims which, in England, might be liable to summary judgment. They may have chosen that jurisdiction because of the comparative secrecy or anonymity which it applies to the names of litigants. It may have been chosen because of the limitation period which that court would apply to disputes litigated there. It may be that they chose it for all manner of reasons; but that they chosen it is a fact, not a conclusion, and the reason is none of our business. If the English approach to jurisdiction agreements may be criticized as being too ready to override them, that criticism will not be answered by a rule that where there is no defence to the claim, the defendant loses his right to enforce the dispute resolution agreement, or loses the benefit of a discretion which would have been exercised in his favour but for the perception that he had no real defence to the claim. … It may also be argued that if the policy which underpins the enforcement of jurisdiction agreements is to encourage parties to make their own arrangements in advance, to allow them to avoid litigating about where to litigate, the greater the opportunity to advance arguments which undermine these agreements, the greater the incentive for parties to seek to undermine these agreements.”

88.  In my judgment, the Euromark line of authorities strikes the correct balance between the policy of upholding the parties’ own jurisdiction agreements while retaining a discretion only for the truly exceptional cases.  Otherwise, a whole range of unintended consequences could result.  For instance, it could encourage plaintiffs to “have a go” and mount an opportunistic summary judgment application by bringing action knowingly in a non-agreed forum.  This would defeat the defendant’s contractual entitlement under the jurisdiction clause and deprive it of any benefit to be enjoyed thereunder.  It may even potentially cause harm that is irreparable even by a subsequent stay of the action.  

89.  In conclusion, I do not think that the lack of credible defence per se can be said to be an unforeseeable factor at the time of contract. Neither do I consider this factor as constituting an overwhelming reason, exceptional circumstance, or a “strong cause” for the court to intervene and override the parties’ own exclusive jurisdiction agreement. 

90.  Accordingly, my answer to the first issue posed in §33(1) above is in the negative.

ANY OTHER “STRONG CAUSE” FOR REFUSING A STAY?

91.  Having disposed of the first issue, I now turn to the other grounds relied on by the plaintiff to argue against a stay[6].

92.  The plaintiff first relied on the defendant’s “concession” that Italian law is not materially different from Hong Kong law, and that such a “concession” was not foreseeable.  The plaintiff submitted that, therefore, there is no better place to resolve the dispute than in the Hong Kong courts.  I do not think that this amounts to a “strong cause”.  It is a matter of convenience of no material relevance in the present enquiry.

93.  The plaintiff then contended that Hong Kong is the defendant’s home jurisdiction, and there cannot be any prejudice for it to litigate in its home court.  The plaintiff relied on the fact that the defendant had adduced no evidence on the relative convenience and expense of trial between litigating in Hong Kong and Italy and the location of the evidence or its witnesses.  Besides the fact that these are again mere matters of convenience (see Chinachem (supra) at §134), the burden of showing “strong cause” in fact rests on the plaintiff but not on the defendant.  The plaintiff incorrectly reversed the burden of proof.

94.  The plaintiff next referred to the fact that, if this action were stayed, it would be prejudiced by having to sue in Italy and incur extra time and costs in enforcing an Italian court judgment in Hong Kong by a common law action.   It referred to RHC O 1A r 1 and argued that time and costs would be wasted if the matter were to be stayed.  Absent any valid issues touching upon interests of justice (and I see none on the evidence), I do not think mere savings in time and costs, being foreseeable matters of convenience, assist the plaintiff in showing “strong cause”.  On the contrary, I am inclined to think that any “wastage” of time and costs could fairly be said to be the plaintiff’s own making in bringing this action in breach of the parties’ own Exclusive Jurisdiction Clause.

95.  Relying on The Frank Pais [1986] 1 Lloyd’s Rep 529, the plaintiff further submitted that its claim of EUR 219,000 is a small amount, and that the court is entitled to take this into account when exercising its discretion.  As pointed out by Mr Chiu, the sum involved in The Frank Pais (supra) was $2,600, which is a small fraction of the plaintiff’s claim herein.  Further, as I noted in §31 above, the defendant was not playing delaying tactics but was seeking to enforce a jurisdiction agreement.  The defendant is entitled to do so, and did so in a timely fashion.

96.  Finally, the plaintiff contended that the defendant’s attempt to shift this dispute away from its home court to the Italian court is “bizarre and counterintuitive”.  With respect, this argument is misconceived.  All the defendant is doing by seeking a stay is simply to ask the plaintiff to respect the sanctity of contract – pacta sunt servanda.  It is also noteworthy that the Exclusive Jurisdiction Clause in favour of Italy was put forward by the plaintiff itself[7]. As Lord Bingham said in Donohue (supra) at §29, the parties’ right under a jurisdiction agreement:-

“… is an important and substantial, and not a formal or technical right.”

97.  In these circumstances, not only is there nothing “bizarre and counterintuitive” for the defendant to ask the plaintiff to abide by the contract, this contention takes the plaintiff nowhere in showing a “strong cause” to move the court to override the Exclusive Jurisdiction Clause.

98.  Accordingly, I am of the firm view that the plaintiff has failed to show any other “strong cause” against a stay.  My answer to the second issue posed in §33(2) above is therefore also in the negative.

99.  Having reached this conclusion, the third issue posed in §33(3) above as to whether the defendant has shown any credible defence does not strictly arise.  But in view of the parties’ detailed submissions made on this point, and even assuming I were wrong on the first issue, I shall now turn briefly to those submissions on substantive merits.

HAS A CREDIBLE DEFENCE BEEN SHOWN?

Parties’ contentions

100.  On the evidence before the court, there can be no dispute that:-

(1)   The defendant encountered serious difficulties with the live streaming of the Opening Match, Match #2 and Match #3;

(2)   The defendant’s live streaming of those matches to its own viewers was done, at least partly, through digital broadcasting services provided by the plaintiff;

(3)   The defendant’s broadcasting of the EURO 2016 matches was its first live broadcasting of a popular international sports event in Hong Kong; and

(4)   The difficulties entered by the defendant aforesaid attracted a range of widespread adverse comments reported in the local Chinese newspapers.

101.  In these circumstances, the pertinent question is whether the plaintiff was to blame, at least partly, for these problems, and whether it is liable to compensate the defendant’s loss, if any.

102.  The defendant has advanced a two-fold defence in support of its set-off and counterclaim to the plaintiff’s claim.  It contended that the plaintiff had breached:-

(1)   Clause 22 of the Booking Terms and Conditions in which it undertook to use its reasonable efforts to minimize incidental failures and disruptions to the availability of the Rate Card items, including those caused by “third party” faults; and

(2)   An implied term pursuant to section 5 of the Supply of Services (Implied Terms) Ordinance (Cap 457) which requires the plaintiff, who acted in the course of a business, to carry out its service with reasonable care and skill.

103.  The defendant further deposed that, by reason of the defective services provided by the plaintiff, it has suffered serious, adverse and irreparable reputational damage, as well as monetary loss by having paid compensation to its own customers.

104.  On the other hand, the plaintiff referred to the Case Summary (see §18(2) above) and argued that the problem was the fault of the CDN provider, namely Akamai, with whom the defendant was in its own separate contractual relationship[8].

105.  In §§20-24 of the Second Affidavit of Yu Shin Man (of the plaintiff’s solicitors), she provided the following technical explanation on the plaintiff’s behalf as to what the Case Summary meant:-

“20. In that case summary it is noted that the Plaintiff had reported a “Playback issue with the HLS stream for LeTV Sports … on the LeTV SPORTS CULTURE DEVELOP (BEIJING), CO., LTD Luna Account”. The summary continues “they were encountering a very long delay on the live video”.

21. “HLS” stands for “HTTP Live Streaming”, which is the streaming protocol used for delivering live-streamed video over the internet, as described above.

22. The “case summary” describes the “Solution” as follows: “An investigation revealed two case sensitivity problems in two different match conditions regarding live manifests/playlists, resulting in using the VOD domain in the cache key and a TTL of 365d on the child playlists. The issue was fixed on Saturday, June 11, 2016”.

23. “VOD” means “video-on-demand”. “TTL” means “time to live”. “365d” means 365 days.

24. In layman’s language therefore the summary says that Akamai made a simple mistake when writing the code, and probably used upper case letters when lower case should have been used, or vice versa. The consequence was that the playlist cache time was set at 365 days, which is consistent with video-on-demand, but not live-streaming. For live-streaming the TTL should have been set at about five seconds. The result was that users were unable to receive delivery of more recent segments of video.”

106.  Hence the plaintiff reiterated that it took no responsibility for distribution of the broadcast content, as the defendant had contracted with its own CDN provider, Akamai, to effect distribution of media contents.  To further make good this point, the plaintiff pointed to various parts of the Rate Card that contain the following statement:-

“The price above excludes actual Egress and distribution via CDN.”

107.  On quantum, the plaintiff complained that the defendant has failed to provide details on the amount of the loss allegedly suffered as the basis of the set-off and counterclaim, referring to a defendant’s duty to condescend upon particulars and the recent decision of China Life Insurance (Overseas) Company Ltd v Li Xiaoming (unreported) HCA 570/2017; 11 December 2017 in which Lisa Wong J said (at §69):-

“[it] behoves a defendant to particularise the amount of his set off or counterclaim or indicate how it is made up or calculated, so that the court has the necessary material on which to make the proper order: Hong Kong Civil Procedure 2018, Volume 1, paragraph 14/4/4 …”

108.  The plaintiff finally submitted that, even if it were liable to the defendant, its liability should be limited by Clause 20 of the Booking Terms and Conditions to the value of the services provided only in respect of the problematic matches, and that it should not be held liable for any reputational loss as alleged by the defendant.

Applicable threshold

109.  In deciding whether the defendant has shown a credible defence for the purpose of a stay application (whether based on forum non conveniens or an exclusive jurisdiction clause), the existing authorities are clear that the defendant does not have the same burden to discharge as a defendant who seeks leave to defend in an Order 14 application.

110.  In Melvin Waxman & Anr v Li Fei Yu & Anr [2013] 3 HKLRD 711, To J said the following (at §§19 and 21):-

“19. Relying on Bayer Polymers Co Ltd v Industrial and Commercial Bank of China, Hong Kong Branch, Ms Chan submits that the application for stay should be dismissed for want of an arguable defence. It would be convenient to deal with this argument first before turning to the parties’ arguments based on the more familiar conventional principles of forum non conveniens …

21. I think the present case is distinguishable from Bayer Polymers Co Ltd. In that case the defendant, who was not able to even identify a defence, sought to argue for a stay on the basis of forum non conveniens. Hence, Stone J held that the application had to be dismissed as there was nothing for trial either in Hong Kong or elsewhere. In the present case, through its employee and through counsel, a defence consisting of a denial based on PRC law has been identified. In the absence of evidence from Frank, I agree with Ms Chan that the defence looks suspect. However, it is permissible for an affirmant to give hearsay evidence provided that the source of the evidence has been identified. There is no proper application to strike out the defence or for summary judgment. Though without such applications, the court will, in an appropriate case, dismiss an application for stay in default of an arguable defence, such jurisdiction will only be exercised in very clear cases. In any application for stay, where a defence has been identified, usually the court will not consider the merit or credibility of that defence and will not lightly dismiss the application for want of a credible defence, without at least alerting the defendant that it is an issue for which proper evidence has to be filed. I would accept the defence at its face value. This is not an appropriate case to dismiss the application for stay based on the lack of an arguable defence or evidence in support of an identified defence.”

111.  In China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd (unreported) HCA 1323/2014; 11 December 2015, Mimmie Chan J similarly held that (at §§14-15):-

“14. Leading Counsel for the Defendant relies on Melvin Waxman & Anr v Li Fei Yu, unreported, HCA 1972/2012, 19 July 2013 to argue that it is sufficient if the Defendant can identify issues for trial. He also referred to Hanil Bank v Societe Generale [1993] 1 HKLR 308, where the Court of Appeal held that if there is an application for stay on grounds of forum non conveniens and at the same time a cross application for summary judgment, the Court should determine the application for stay first. As the Court observed in Hanil Bank:

“Where a party applies for stay on the grounds of forum non conveniens he is inviting the court to make an order that no further proceedings in the action be entertained in that court. … It does not seem right to me, that where an application for stay is timeously and properly made, a party should be able to pre-empt a consideration of what is the natural or appropriate forum for the resolution of the dispute between the parties by relying on the O 14 procedure with the intent of establishing, in the very court in respect of whose exercise of jurisdiction the stay has been sought, that a trial is not necessary. … In my view, as a matter of principle, since it was not suggested that the stay applications were tactical moves to create delay, or otherwise frivolous or vexatious, the defendants were entitled to seek to have their applications heard before the court turned its attention to the O 14 applications …”

15. I have no doubt the above is the correct approach. However, such approach of considering a stay application before an application for summary judgment does not mean that the defendant seeking a stay does not have to identify a defence, or issues requiring a trial. That has to be done, before the Court can be satisfied that there is a trial which has to be stayed to the appropriate forum. So long as there are issues for a defence which can be identified, it may not be possible for appropriate for the Court, in every case, to consider the merits of the defence raised (Melvin Waxman & Anr v Li Fei Yu).”

112.  This approach was also adopted in the exclusive jurisdiction clause context, albeit obiter, by DHCJ William Wong SC in Madison Communications (supra), a case relied on by Mr Allen himself.  At §65 of the decision, the learned deputy judge said:-

“65. I agree with Mr Chang that in assessing whether there is a credible defence or not, the court need not adopt the test of applying for summary judgment and require the defendants to condescend upon particulars. But there must be at least some evidence, in contrast to bare allegations, for the court to assess whether there is a credible defence. In the present case, other than the bare allegations in the without prejudice email, there is no evidence at all …”

113.  Therefore, it seems to me that the plaintiff’s complaint that the defendant has failed to “condescend upon particulars” is not made out based on the above authorities, even assuming merits were to be relevant.  As submitted by Mr Chiu, the furnishing of particulars and evidence is to be done before the foreign court with exclusive jurisdiction over the dispute.  Even if merits were to be relevant, all the defendant is required to do would be to identify a defence that is supported by some evidence beyond bare allegations, and that is prima facie sustainable at law. 

114.  The question then is – has the defendant done so?

My view

115.  There is no dispute that the plaintiff was under a contractual obligation to provide the defendant with CDN Akamai account integration services, for which the plaintiff charged the defendant EUR 2,500 under the 1^st Invoice.  This item is included on p.93 of the Rate Card as one of the “professional services” on offer.

116.  The evidence also discloses that, in the period from 17 to 27 May 2016 in the run up to the finals, the plaintiff was actively engaged in discussions with both the defendant and Akamai to effect integration of its services with the defendant’s own Akamai account.  As revealed by the correspondence, these included technical matters concerning:-

(1)   “Customer domain” and “naming convention for the clips and the streams” (see email from the plaintiff (Antonio Bellissimo) dated 18 May 2016 (22:40));

(2)   “Akamai Account Name configured” (see email from the plaintiff (Antonio Bellissimo) dated 19 May 2016 (12:07));

(3)   “CDN configuration” (see emails from the defendant (Chuan Du) dated 23 May 2016 (14:31) and 24 May 2016 (07:58), and emails from the plaintiff (Antonio Bellissimo) dated 24 May 2016 (15:36 and 16:15));

(4)   “Video Configuration” (see email from Akamai (Leo Cheng) dated 25 May 2016 (10:05) and email from the plaintiff (Antonio Bellissimo) dated 25 May 2016 (17:17));

(5)   “the right path for Wen [Web] configuration” (see email from Akamai (Leo Cheong) dated 25 May 2016 (14:36));

(6)   “configuration … LeSports AKAMAI account” (see email from the plaintiff (Antonio Bellissimo) dated 25 May 2016 (20:44)); and

(7)   “rules to be followed” to “configure the CNAMEs in the DNS of LeSports” (see email from the plaintiff (Antonio Bellissimo) dated 26 May 2016 (17:09).

117.  According to the Case Summary, the problems the defendant encountered in the Opening Match were caused by certain “case sensitivity problems in two different match conditions regarding live manifests/playlists, resulting in using the VOD domain in the cache key and a TTL of 365d on the child playlists”.  As Mr Chiu submitted, it does not actually reveal whether the issue was due to Akamai’s own internal problem or whether it was part of the plaintiff’s Akamai integration process.

118.  While the plaintiff attempted to provide an explanation, through its solicitors, that the Case Summary suggests the issue was due to Akamai’s own fault (see §105 above), I am unable to give any weight to this conclusion, which concerned technical matters clearly not within Ms Yu’s capacity to depose[9]. Putting aside the fact that she was a factual and not an expert deponent, there is no evidence to suggest that she possessed the relevant technical knowledge or expertise.   If, on the other hand, these matters were deposed to on information from the plaintiff’s legal counsel Ms Elena Cantello[10], there is no evidence to suggest that Ms Cantello possessed the relevant knowledge or expertise either.

119.  But even putting all these aside, the fundamental point is that the plaintiff had a contractual duty to integrate its services with the defendant’s Akamai CDN account.  This is evidenced by its central role in the pre-broadcast integration and testing on technical matters shown in the above emails.  Given the plaintiff’s ability to “fix” the problem after Match #3[11], there is, to say the least, a triable issue as to whether the plaintiff had used its reasonable efforts to minimize the faults or disruptions encountered by the defendant under Clause 22, and whether it has provided such integration service with care and skill under its implied obligation.

120.  The quality of the available evidence is not such that the court can brush aside this defence as being totally incredible or a bare assertion.  In my view, there are genuine and serious issues to be tried, on both factual and perhaps even expert evidence, before one can properly assess whether the plaintiff had fully discharged its contractual obligation to the defendant, including taking reasonable steps to minimize third party faults.

121.  Having come to the view that the defendant has identified a credible defence, it is inappropriate for me to consider in detail the issues of quantum and the enforceability of the limitation of liability provisions. 

122.  Suffice it to say that, on quantum, there is certainly prima facie evidence that the defendant may have suffered some loss (see the newspaper reports referred to in §16 above, and the plaintiff’s own email mentioned in §18(4) above referring to the defendant’s “brand impact assessment”).  Moreover, it is usually impossible or inappropriate to go into a fact-sensitive and controversial question of whether a particular limitation of liability provision satisfy the requirement of reasonableness even in the Order 14 context.

123.  For all these reasons, even if (contrary to my above holding) the lack of merits of the defence would constitute a “strong cause”, I would still have held against the plaintiff on the stay application.

DISPOSITION

124.  In conclusion, I hold that the Euromark line of authorities is more consistent with the relevant leading authorities and the strong policy of respecting the parties’ own jurisdiction agreement.  It should be preferred over the Standard Chartered Bank line of authorities in the present case.  Given the plaintiff’s failure to show any “strong cause” to persuade the court to override the Exclusive Jurisdiction Clause, the defendant’s stay application succeeds.  It follows that the plaintiff’s application for summary judgment or interim payment must be dismissed.

125.  On costs, Mr Chiu submitted that in the event the defendant should prevail, costs of both summonses should be ordered against the plaintiff on an indemnity basis.  He relied on the following commentary from HKCP (2018) Vol 1, §11/1/12O:-

“Exclusive jurisdiction clauses: indemnity costs on stay—See para. 11/1/13C. There is English and Hong Kong authority that upon granting a stay upon an exclusive jurisdiction clause or an arbitration agreement costs should be on the indemnity basis: A v. B (Costs) [2007] 1 Llyod’s Rep. 358 and XL Insurance Co SE v. Manley Toys Ltd (unrep., HCA 2233/2013, [2015] H.K.E.C. 1155 [22-25] (anti-suit) …”

126.  Mr Allen has not disputed this approach, which I also agree.

127.  I therefore order as follows:-

(1)   All further proceedings in this action be stayed on the ground that the defendant is entitled to rely on the agreement in a booking order form signed by the plaintiff on 19 May 2016 and by the defendant on 10 May 2016 whereby the parties excluded the jurisdiction of this court and submitted to the exclusive jurisdiction of the courts in Torino, Italy;

(2)   The plaintiff’s application for summary judgment or interim payment be dismissed; and

(3)   On a nisi basis, the costs of the defendant’s stay application and the plaintiff’s application for summary judgment or interim payment, including reserved costs if any, be paid by the plaintiff to the defendant with a certificate for counsel to be taxed forthwith on an indemnity basis if not agreed.  This costs order nisi shall become absolute in the absence of any application to vary the same within 14 days of handing down.

128.  I thank both Mr Allen and Mr Chiu for their able and succinct submissions.

POSTSCRIPT

129.  There is only one other matter that I should state for the record.

130.  After the issuance of the Notice of Handing Down Decision dated 21 August 2018, the plaintiff’s solicitors wrote to inform the court on 23 August 2018 that the defendant was on 4 June 2018 ordered to be wound up in High Court Companies Winding-up Proceedings No. 66 of 2018. 

131.  According to the Gazette Notice attached to the letter of the plaintiff’s solicitors, the relevant winding-up petition was presented on 12 March 2018. On the basis of section 186 of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap 32), the plaintiff’s solicitors thus requested the court not to hand down the present Decision.

132.  Having considered the plaintiff’s further submissions lodged in the morning of 24 August 2018[12], I do not agree that the mere handing down by the court of this Decision in respect of two applications made and fully heard before the defendant was petitioned and later ordered to be wound up would be caught by section 186 of Cap 32. 

133.  The three authorities cited by the plaintiff do not support its conclusion.  Both In re International Pulp and Paper Co (1876) 3 Ch D 594 and Eastern Holdings Establishment of Vaduz v Singer & Friedlander Ltd [1967] 1 WLR 1017 concern whether a party in an action should be allowed to take furthersteps after a winding-up order is made against its counterparty.  The relevant order in Hussain Tanweer v Focus Roller Shutter Ltd (unreported) DCEC 1145/2005; 18 September 2006 made by HHJ Marlene Ng (as she then was) was to direct parties to take further steps in discovery, exchanging witness statements and the fixing of a hearing.  None of these concerns the present situation where the court is making known its own decision in respect of applications made and fully heard before the relevant winding-up proceedings even came into existence.

134.  In any event, it is a stay of proceedings, as opposed to the taking of further positive steps in this action, which has been ordered. It is also the defendant which stands to benefit from this Decision. 

135.  In all the circumstances, I do not consider that there is any impediment for the court to hand down this Decision as scheduled.