XCHRX THE OWNERS OF THE SHIP OR VESSEL "MING HO" v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIP OR VESSEL "NEW HAILONG"

1993, Folio AJ-56

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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(Admiralty action in rem against:the ship or vessel "NEW HAILONG")

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J U D G M E N T

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1. This is an application by the defendants to stay the action on the ground that the Shanghai Maritime Court in the People's Republic of China is the natural and appropriate forum for trial.

With a view to clarity, I shall refer to the Plaintiffs simply as Ming Ho and to the defendants as NHL.

2. On 27th February 1993, the Ming Ho and NHL collided near Shanghai. The collision was in the territorial waters of the PRC. The Ming Ho was bound for Shanghai from Malaysia. The NHL was proceeding in ballast from Shanghai to Hong Kong, in the course of what appears to have been a regular service between these two ports. The damage to the NHL was not severe. It was subsequently repaired in Hong Kong. After the collision, the Ming Ho declined assistance. It made its way to an anchorage off Shanghai. Seven hours after the collision, however, it capsized and sank.

3. On 4th March 1993, NHL commenced proceedings in the Shanghai Maritime Court in respect of damage occasioned by the collision. On 9th March 1993, Ming Ho commenced this action in rem against NHL in Hong Kong. On 18th March 1993, NHL was arrested in Hong Kong.

4. In Shanghai, with the prompting of the Shanghai Maritime Court, the proceedings have reached the stage where, after a fruitless attempt at mediation by the court, Ming Ho has filed a counter claim with documents in support thereof. Ming Ho has not, at any stage, applied to have the proceedings stayed or made any protest about jurisdiction.

5. In Hong Kong, the proceedings plainly are not so far advanced. They have, however, not entirely followed the usual course. Notice of intention to defend having been given, Ming Ho filed its preliminary act and statement of claim on 14th May 1993. On 25th May, NHL issued a notice of motion to stay the proceedings. On 29th October 1993, the parties reached agreement settling liability between them. The notice of motion was withdrawn on 1st November and the agreement was filed in court on 3rd November. On 10th October 1994, Ming Ho finalised its claim with a full set of supporting vouchers and submitted it to NHL's solicitors. On 19th October, Ming Ho's claim was filed with the court and Ming Ho issued a summons for a reference to the Registrar. On 21st October, NHL issued a summons to stay the proceedings, with which I am now seized together with the summons for reference to the Registrar.

6. The agreement reached between the parties is of importance. It recites the background and the desire of the parties to settle liability amicably but records that they cannot agree a single jurisdiction for the resolution of any disputes which cannot be amicably resolved. It then goes on to record what was agreed and contains the following paragraphs:

"(1) Liability for the collision shall be settled on the basis the "MING HO" was 70% and the "NEW HAILONG" was 30% to blame but no agreement is reached or admission made by either party as to the extent of the loss suffered by the other as a result of the collision."

"(8) This Agreement is subject to and shall be construed in accordance with Hong Kong law and any dispute arising hereunder shall be referred to the exclusive jurisdiction of the Supreme Court of Hong Kong."

7. It is NHL's case that, while liability for the collision has been agreed, the question of whether the collision caused the loss of Ming Ho remains open. NHL contends that a court will have to decide whether Ming Ho was negligent in not accepting salvage assistance which was at hand and whether Ming Ho was itself seaworthy.

8. For Ming Ho, Mr. Smith said that causation is no longer an issue. He said that on the proper construction of paragraph (1) of the agreement, liability for the collision and its consequences has been settled and that there only remains an assessment of damages, that is, an ascertainment of the value of the actual losses which will be apportioned between the parties as agreed. Mr. Smith said that if the construction of paragraph (1) is in dispute, then the dispute is one which has to be resolved in Hong Kong in accordance with paragraph (8) of the agreement.

9. I am prepared to accept that Mr. Smith's construction of paragraph (1) is arguable. The construction is, however, a novel one. It is plain that, until Mr. Smith advanced his argument during the course of the hearing, neither party had any doubt as to what the issues really were. In his affidavit sworn on 16th November 1994 for the purpose of this application, Mr. Hirst, Ming Ho's solicitor, said in paragraph 9,

"Both parties consider that the only outstanding issues still in dispute between them concern the course and extent of the loss and damage they have suffered as a result of the collision."

In paragraph 15 of the same affidavit, Mr. Hirst said,

"Doubt, therefore, arises as to whether the Ming Ho was lost as a direct result of the collision."

10. In paragraph 17, Mr. Hirst explains how Hong Kong surveyors have been appointed to:

"Explain how the contact between the two vessels caused water to enter the Ming Ho and how the ingress of water caused the Ming Ho to subsequently capsize and sink."

11. Ming Ho's lawyer in Shanghai, Mr. Mao Baigin, has made an affirmation for these proceedings. At paragraph 19, he said,

"On 30th May, I formally lodged (Ming Ho's) counter-claim with the Shanghai Maritime Court contesting the allegations made by (NHL) that the Ming Ho sank as a result of her refusal to accept salvage assistance."

12. There is a transcript of proceedings in the Shanghai Court on 20th October 1994. In the somewhat expurgated text, Mr. Mao is recorded as saying,

"The apportionment of blame is 30/70. There was an agreement in Hong Kong. The Court should confirm and accept the figure in respect of the losses. Would the Court please give us a clear-cut time limit for the provision of evidence. The parties should be aware of the consequence."

13. Mr. Smith suggested that, in that passage, Mr. Mao meant that because there had been an agreement, it only remained to be seen how much each party had lost.

What Mr. Mao was saying to the Shanghai Court is far from clear. What is clear, however, is the unequivocal view taken by Mr. Hirst. As Mr. Sussex for NHL suggested, there is a very strong case of estoppel by convention available to NHL. In my judgment, it is far too late now for Ming Ho to take this point.

14. The principles applicable to an application of this nature are now well-known and not in dispute. The burden is on NHL to show not only that Hong Kong is not the natural or appropriate forum for trial but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong. If NHL discharges that burden, a stay will ordinarily be granted unless Ming Po can persuade the Court that there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. The principles are to be found in the Abidin Daver (1984) AC 398, Spiliada Maritime Corporation v. Cansulex Ltd. (1987) AC 460, The Adhiguna Meranti (1987), HKLR 904 and Louvet v. Louvet (1990) HKLR 670.

15. Until the collision, there was no connection with Hong Kong apart from the fact that NHL's managers are a Hong Kong company. After the collision, NHL was arrested in Hong Kong, a port at which it regularly calls, so that jurisdiction was founded as of right. Ming Ho has obtained reports from two surveyors in Hong Kong. These reports, as I have already indicated, can only go to causation. The surveyors are English and speak only English. NHL had earlier instructed two surveyors from Hong Kong. These surveyors were English speaking. They have now been substituted by surveyors from Shanghai.

Ming Ho has been valued by Hong Kong valuers. Again, their language is interest. I doubt, however, whether the value will be very controversial.

16. The crews of the vessels were Chinese. They were a mixture of Taiwanese and Hong Kong citizens. Although some of them apparently speak English, their native language is Chinese, predominantly Putonghua, which is the language of the Shanghai Maritime Court.

17. The reports of Ming Ho's surveyors and many other documents are in English. They will, of course, have to be translated if the dispute proceeds in Shanghai. It appears this may already have been done because Ming Ho's documents in support of its counter-claim there have already been filed. The language of the Shanghai court is Chinese.

18. The collision occurred in the territorial waters of the PRC. The law governing the tort therefore is that of PRC. The salvors who were standing by after the collision and who eventually salvaged the Ming Ho are from Shanghai. Cargo interests are in PRC and indeed have commenced proceedings against the ships. Insurers are from PRC and Taiwan.

19. A crucial factor is the case pending in the Shanghai Maritime Court. Mr. Sussex laid emphasis on the remarks of Lord Diplock in the Abidin Daver where at page 411, he said,

"But where there is already a lis alibi pendens in a foreign jurisdiction which constitutes a natural and appropriate forum for the resolution of the dispute, a plaintiff in an English action, if he wishes to resist a stay upon the ground that even-handed justice may not be done to him in that particular foreign jurisdiction, must assert this candidly and support his allegations with positive and cogent evidence. ......

Where a suit about a particular subject matter between a plaintiff and a defendant is already pending in a foreign court which is a natural and appropriate forum for the resolution of the dispute between them, and the defendant in the foreign suit seeks to institute as plaintiff an action in England about the same matter to which the person who is plaintiff in the foreign suit is made defendant, then the additional inconvenience and expense which must result from allowing two sets of legal proceedings to be pursued concurrently in two different countries where the same facts will be in issue and the testimony of the same witnesses required, can only be justified if the would-be plaintiff can establish objectively by cogent evidence that there is some personal or judicial advantage that would be available to him only in the English action that is of such importance that it would cause injustice to him to deprive him of it."

20. The doctrine of forum non conveniens has, of course, been refined in the subsequent cases which I have referred to. Nonetheless, I think the fact that there is a lis alibi pendens, particularly when it is well advanced, is a very powerful factor for the court to have in mind.

21. There seems to be no dispute that Ming Ho has not in the Shanghai proceedings made any dispute about or protest to the jurisdiction of that court. Certainly there has been no application to that court to stay the proceedings. Ming Ho says, however, that its apparent submission to the jurisdiction of that court should not be held against it because there is in fact no means by which it can object to jurisdiction there. There is expert evidence on this matter from both sides. The position appears to boil down to this. The Maritime Courts in the PRC will entertain an application objecting to their jurisdiction. If, however, the courts see some connection with the locality in which the claim is brought, e.g. that the contract was made there, they will affirm their jurisdiction even if, it seems, the contract contains a foreign law and jurisdiction clause. It is not apparent that the Maritime Courts recognize the doctrine of forum non conveniens or anything akin thereto. Rather, it appears they will assume jurisdiction provided that some connection is shown with the geographical jurisdiction of the court. Relief to a defendant in the Maritime Courts is, therefore, not easily obtainable. This was undoubtedly the advice given by Mr. Mao to Ming Ho and one must have sympathy with that advice. The fact remains, however, that no protest, however formal, has been made at any stage in the Shanghai proceedings.

22. Mr. Sussex also pointed out that, because of the cargo claims which will be heard in Shanghai, the court there will have some familiarity with the causation issues and evidence. He suggested that it is the Cambridgeshire situation, referred to in Spiliada, in reverse. It is certainly a factor, I accept, to be taken into account.

23. In my judgment, the circumstances show that not only is Hong Kong not appropriate for the trial of the dispute between the parties but that Shanghai is overwhelmingly the appropriate forum. I have to consider, therefore, whether there are circumstances which dictate that nonetheless the action should remain in Hong Kong. Primarily, of course, Mr. Smith points to the agreement upon which Ming Ho will apparently rely. It is governed by Hong Kong law. It would be appropriate, he said, for the construction of paragraph (1) to be determined in Hong Kong rather than Shanghai.

Next, Mr. Smith said that the Shanghai court will not necessarily recognize the agreement reached between the parties and proceed to determine liability between them in some other way. I acknowledge that the evidence of Mr. Mao is to that effect. He does not, however, elaborate upon it. In contrast, Mr. Chen Fa Yin, NHL's expert on Chinese law, explained that although an agreement on liability between parties cannot bind the court, the court will not interfere with any agreement made between them. He says that parties in the PRC are free to negotiate a settlement between themselves. There is no reason for the Shanghai Maritime Court to do other than sanction the agreement. That court is aware of the agreement and has not indicated that it will not recognize it.

24. I have to say I find that this suggested juridical disadvantage to Ming Ho is purely speculative. There is not the cogent evidence referred to by Lord Diplock to support it.

25. Then it is suggested that the parties may not be able to call the witnesses that they wish in Shanghai because this is a matter in the total discretion of the court. Mr. Chen, however, explained that the court generally supports a party's application to call its own witnesses if it considers that the witnesses will contribute to the decision making process of the court. Indeed, that court can take the initiative in calling witnesses. It is most improbable that the court would preclude either party from calling witnesses.

26. Again, I have to say that this juridical advantage is purely speculative. I understand Mr. Smith's concern that Ming Ho feels that, in relation to both these two points, certainty has been removed. I find that feeling, however, to be unjustified.

Finally, it is accepted that Ming Ho, if successful, will not be able to recover its costs in Shanghai. To that extent, it will be at a disadvantage there. NHL has, however, led evidence to suggest that the cost to Ming Ho in Shanghai will be in the region of only US$20,000. Mr. Sussex said that in Hong Kong Ming Ho, if successful, would probably find itself out of pocket in excess of that sum after a party and party taxation.

27. In the circumstances, I am unpersuaded that Ming Ho will suffer any serious juridical disadvantage by having to proceed with the pending action in Shanghai. Substantial justice between the parties can undoubtedly be done there. Accordingly, I grant the relief sought by NHL. The action is stayed. I make an order nisi that Ming Ho pay NHL the costs of the action including costs of arrest and release.

(N. J. Barnett)

Judge of the High Court