THE OWNERS OF CARGO LATELY LADEN ON BOARD THE SHIP OR VESSEL "OCEANIA QUEEN" v. THE OWNERS OF THE SHIP OR VESSEL "OCEANIA QUEEN"

1985 Folio No. AJ276

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

_______________

______________

J U D G M E N T

______________

1. The Defendants are applying for a stay of these proceedings.

2. The grounds put forward in support of the application are that the natural and appropriate forum for the action is the Federated States of Micronesia.

3. This is cargo claim. The facts very briefly are as follows. The Plaintiffs shipped a cargo of 980 drums of emulsified asphalt from Kaohsiung, Taiwan to Kosrae in the Federated States of Micronesia in April 1985,

4. According to affidavit evidence which has been filed some of the drums were damaged when they were loaded at Kaohsiung. It is also possible that further damage occurred in transit as a result of heavy weather.

5. On arrival at Kosrae the Plaintiffs were unable to discharge all of the cargo.

6. Mr. Sussex for the Defendants contended that the main issue in this litigation will be what happened when the Plaintiffs attempted to discharge the cargo and what was the condition of the cargo at that time.

7. One of the consequences of the inability to discharge the cargo was some delay while negotiations with interest parties took place.

8. As these negotiations were not fruitful it was necessary for the Plaintiffs to reload the damaged drums and what remained of their contents and ship them back first to Kaohsiung where again they could not be discharged and then to bring them to Hong Kong where the drums were eventually landed and disposed of.

9. Mr. Clifford Smith for the Plaintiffs did not agree that the main dispute related to what transpired at Kosrae. It was his contention that the main issues would relate to the adequacy of the drums for the required purpose and how the damage occurred and the nature of the measures taken in Hong Kong to dispose of the balance of the cargo. The resolution of these issues would to a large extent be dependent upon the evidence of expert witnesses who would be called upon to give evidence.

10. Mr. Smith opposed the application on other grounds. While falling short of submitting that it would be impossible for justice to be attained if the case was heard at Kosrae, he did refer to considerable practical impediments.

11. In the first place, Kosrae is extremely isolated. It is a small island in the Pacific Ocean. It is not well served by transport facilities. It is remote from large population centres. There is a weekly scheduled flight of a local airline. Also a small aircraft visits the island daily but it can only accomodate 12 passengers and consequently reservation of seats has to be made up to one month in advance.

12. To add to the difficulties, officers of the "Oceania Queen" are Japanese and the crew are mainly from the Philippines. It is unlikely that they would be sufficiently familiar with the English language to give testimony in it. Interpretation facilities at Kosrae were either very limited or non existent in some of the languages spoken by some of the witnesses. For example, if witnesses to the loading of the cargo at Kaohsiung were required to attend, it may be necessary to engage the services of an interpreter familiar with the Mandarin and or Fuhinese dialects of the Chinese language.

13. The final practical matter which I would refer to is the law. According to the Bills of Lading the law applicable would be the laws of the United States of America - in particular the carriage of goods by Sea Act of the United States. Also it would be covered by the Hague Rules.

14. The law applicable in Kosrae is U.S. law. It is apparent from the supporting affidavits that the Chief Justice of the Federated States of Micronesia is a duly qualified United States Attorney. He would be familiar with the relevant law. It is his practice to make periodic visits to Kosrae and I do not think that there would be any insurmountable difficulty in his hearing the case notwithstanding the fact that he has little or no experience in this particular field of the law.

15. I have attempted to outline very briefly what appear to me to be the most important factual matters which may have some hearing on the question of the desirability or otherwise of proceedings being heard at Kosrae.

16. Both Mr. Sussex and Mr. Smith agreed that the law governing applications of this nature has been definitely stated by Lord Goff in his speech in Spiliada Maritime Corp. v. Cansulex Ltd. ⁽¹⁾ from pages 985F to 987G.

17. Rather than extracting all of this in this judgment, I propose to refer to an encapsulated version of it given by Bingham L.J. in Du Pont v. Agnew ⁽2):

"Where a party duly served with proceedings within this jurisdiction seeks to stay them - ..... The basic principle is that a stay will only be granted on the ground of forum non conveniens wherethe Court is satisfied that there is some other forum having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice. (At pp. 10 and 985F).

In general, the burden rests on the defendant to persuade the Court to exercise its discretion to grant a stay (pp. 10 and 985G). But if the Court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country (pp. 10 and 985H). The initial burden on the defendant is not just to show that England is not the natural or appropriate forum for the trial but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum (pp. 11 and 986H). The first step is to see what factors there are which point in the direction of another forum (pp. 11 and 987B) One must look for connecting factors which point towards another forum as that with which the action has the most real and substantial connection (pp. 11 and 987C). Such factors may not only affect convenience or expense (such as availability of witnesses) but may also relate to the law governing the relevant transaction and the places where the parties respectively reside or carry on business (pp. 11 and 987D). If the Court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay (pp. 11 and 987E). If however the Court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted (pp. 11-12 and 987F). If the plaintiff can establish objectively by cogent evidence that he will not obtain justice in the foreign. jurisdiction, that is a very relevant I consideration (pp. 12 and 987G)."

18. I accept that this summary of the law is accurate and applicable to the present application. I also accept that initially a burden is placed upon the Defendants to satisfy me on the criteria referred to that Kosrae is the most appropriate venue for the hearing of this case.

19. Assuming that the Defendant is able to discharge this burden the balance then shifts and the Plaintiff must then establish by cogent evidence that he will not obtain justice if the stay is granted.

20. Both parties agreed that on the facts before me, the only question to be determined was whether the Defendants had succeeded in discharging their burden.

21. Mr. Smith accepted that if they succeeded, he would be unable to put forward sufficient cogent reasons as aforesaid.

22. The most relevant question to ask is which jurisdiction is the most appropriate. I think that the answer to this has to be Kosrae. The residence of the parties is not a conclusive factor.

23. The ship is registered in Panema. It is unlikely that the owners are resident there. It is also unlikely that they have much connection with either Hong Kong or Kosrae. I am told in this connection that the Ships Agents are a Japanese Company.

24. The ultimate consignees apparently are resident in Guam which although physically is not proximate to Kosrae is a lot closer than it is to Hong Kong. The ship plys its trade to both Kosrae and Hong Kong.

25. So far as the claim itself is concerned, I am not really in a position to form any definite view on the material before me.

26. From what I do see and understand of the case, I think it is likely that there would be more Kosrae connection than there would Hong Kong connection.

27. I am inclined to agree with Mr. Sussex's contention that much of the dispute is likely to centre upon what transpired when the ship arrived at Kosrae.

28. I do not think that the convenience of expert witnesses is likely to be of transcending importance. It is possible that at least some of the experts' reports may be agreed by the parties. There may also be some scope for some of the disputed evidence to be taken on commission but I only take a tentative view of this as I am not familiar with the code of procedure in Kosrae.

29. One factor which I do think is of importance is that the law governing the contract of carriage is United States Law. It will undoubtedly facilitate the hearing of the case that the system of law applicable in Kosrae is United States Law.

30. I am by no means persuaded that the various practical difficulties referred to by Mr. Smith are insurmountable. While I accept that there may be a large measure of inconvenience if witnesses have to go to Kosrae, particularly if interpretation is required, I consider that it is by no means impossible that justice can be done to the parties.

31. Balanced against this, it is also apparent that if the case proceeds to a hearing in Hong Kong, it will not be without its difficulties. This is almost inevitable with cases with a substantial international flavour.

32. Adopting the criteria referred to by Lord Goff, I have come to the conclusion that the Defendants have succeeded in discharging the burden of establishing that a stay should be granted. I will accordingly grant the application in its terms. I will hear the parties on costs.

(1)   [1986] 3 WLR 972

(2)   [1987] 2 Lloyds Law Report at P.588