NEW DELTA TRADING CO., LTD v. SOUTH CHINA DEVELOPMENT (H.K.) LTD

HCA 1492/2023

[2026] HKCFI 2125

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1492 OF 2023

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DECISION

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INTRODUCTION

1.  This is the appeal of New Delta Trading Company Limited, the Plaintiff, against Master MK Liu’s order dated 30 August 2024 (the “Master’s Order”) allowing South China Development (H.K.) Limited, the Defendant’s summons filed on 20 December 2023 (the “Jurisdiction Summons”) to stay this action in favour of Shanghai No. 1 Intermediate People’s Court in Mainland China (the “Shanghai Court”).

2.  The learned Master stayed the present action in favour of the Shanghai Court principally because there is an exclusive jurisdiction clause (“the EJC”) in favour of the Shanghai Court.  Mr Ma for the Plaintiff submits that whilst it is well-established that when an action is brought in breach of an EJC, the Hong Kong Courts should exercise its discretion to grant a stay unless strong cause of not doing so is shown, in the present case, on the facts, it is clear that a fraud was practiced on the Plaintiff to enter into the EJC. Fraud is a strong cause.

3.  Mr Ma for the Plaintiff fairly accepted that fraud is a serious allegation, and the Court requires solid and conclusive evidence to satisfy itself that the ECJ was procured by fraud.

4.  Alternatively, both parties rely on the forum non conveniens ground to support (in the case of the Defendant) and to resist (in the case of the Plaintiff) the learned Master’s Order in favour of a stay. 

BACKGROUND

5.  This dispute concerns three parties (the “Three Parties”):

(1)     The Plaintiff is a company incorporated in Japan in the business of import and export of frozen seafood. It is managed and directed by Mr Takeuchi Kazuo (“Mr Kazuo”). The Plaintiff also provided financing to companies in the seafood business in Dalian, PRC, including Dalian Hualian (defined below).

(2)     The Defendant is a company incorporated in Hong Kong in the import and export business. It is an indirectly wholly owned subsidiary of Bright Food (Group) Co. Ltd (“Bright Food”), a company incorporated in Mainland China. The General Manager of the Defendant were Mr Xia Qing (“Xia”) (12.2014 to 2.2018), Mr Ding Zhen (“Ding”) (2.2018 and 3.2020), and Fu Yifeng (“Fu”) (3.2020 till now).

(3)     Dalian Hualian Food Co. Ltd (“Dalian Hualian”) is a company incorporated in Mainland China in the business of processing frozen seafood, based in Dalian. Its general manager was Mr Qu Zhengguang (“Qu”).

The Plaintiff’s Case

6.  The Plaintiff’s case is founded on ten sets of commercial documents titled “Sales Contract” and “Contract of Sale” entered between the Plaintiff and the Defendant between September 2017 and March 2018 (“Sales Agreements”) for the delivery of frozen raw fish (the “Goods”): Statement of Claim §§7, 27.2.  

7.  The Plaintiff pleads and relies on a number of causes of action:

(1)     Unjust enrichment: The Plaintiff claims that the Defendant has breached the Sales Agreements by failing to deliver the Goods. As such, the consideration for the payment of USD 8,897,046.20 made as the purchase price for the Goods (“Price”) had wholly failed. The Defendant is thus unjustly enriched at the Plaintiff’s expense in the sum of the Price: Statement of Claim §32. 

(2)     Breach of contract: The Defendant is in breach of the Sales Agreements by failing to deliver the Goods: Statement of Claim §34.

(3)     Conspiracy: The Defendant had conspired with Qu of Dalian Hualian to injure the Plaintiff by inflicting economic loss on it. The Defendant had deliberately used the Price paid by the Plaintiff to set off monies that Dalian Hualian owed to the Defendant: Statement of Claim §§36-43.

(4)     Misrepresentation: The Sales Agreements were induced by the Defendant’s misrepresentation, as the Defendant intended to keep the Price while withholding delivery of the Goods: Statement of Claim §§44-46.

The Defendant’s Case

8.  The Defendant’s case is simple and straightforward. Its case is that it did not owe the Plaintiff any obligation to deliver the Goods. Instead, as evidenced by an Entrusted Payment Confirmation (《委託支付確認書》) entered amongst the Three Parties (the “EPC”) on 15 March 2019, the Plaintiff was entrusted by Dalian Hualian to make payments to the Defendant on Dalian Hualian’s behalf. 

9.  More importantly, the Defendant and the Plaintiff have negotiated over these claims in 2019 already and entered a settlement – encapsulated in the EPC. It is thus impermissible for the Plaintiff to reopen these claims, but in any event, they must fall within the scope of the EJC in favour of the Shanghai Court in the EPC.

10.  The EPC provides that:

(1)     Since 2017, Dalian Hualian has entrusted the Plaintiff to make payments to the Defendant on Dalian Hualian’s behalf, totalling USD 7,488,946.20 as of 15 March 2019:

“自2017年起，甲方[Dalian Hualian]委托乙方[the Plaintiff]向丙方[the Defendant]支付货款，截止本确认书签订时，甲方[Dalian Hualian]委托乙方[the Plaintiff]向南华公司[the Defendant]支付款项合计金额为7,488,946.20美元。为明确甲乙双方委托支付情况，三方特于上海市徐汇区签订本确认书。”

(2)     The sum of USD 7,488,946.20 was made by the Plaintiff to the Defendant on behalf of Dalian Hualian in discharge of outstanding debts owed by Dalian Hualian to the Defendant:

“各方确认，上述款项系甲方[Dalian Hualian]应当向丙方[the Defendant]支付的贸易欠款，相关金额真实，准确，上述款项系由甲方[Dalian Hualian]委托乙方[the Plaintiff]向丙方[the Defendant]支付。”

(3)     The Plaintiff confirmed that it had never entered into any sales agreement with the Defendant (or its affiliates). There was no debt relationship between the Plaintiff and the Defendant, and the Plaintiff would not request any payment from or make any claim against the Defendant:

“乙方[the Plaintiff]进一步确认，乙方[the Plaintiff]与丙方[the Defendant]未签署或与任何与丙方[the Defendant]具有关联关系的第三方签署过任何贸易协议（包括但不限于显示卖方合同号为 HL‑20180323，HL-20180117，HL-20180112的Contract of Sale），乙方[the Plaintiff]与丙方[the Defendant]不存在任何交易或债权债务关系，乙方[the Plaintiff]不会以任何理由要求丙方[the Defendant]归还上述款项或主张丙方[the Defendant]应当承担任何义务或债务。”

(4)     The EPC supersedes and takes precedence over any previous agreements entered amongst the parties:

“本确认书构成各方关于附件交易所形成的法律关系和合同中不可分割的一部分，如此前各方签订的任何合同与本确认书有不一致之处，以本确认书约定为主。”

(5)     Any disputes arising out of the EPC and/or any transactions or agreements amongst the parties shall be submitted to the Courts of the place of execution having jurisdiction over the dispute (the “EJC”):

“各方如因本确认书或各方之间的任何交易或合同有争议，应提交本确认书签订地有管辖权的法院管辖。”

(6)     Because the EPC was executed in Xuhui District, the relevant Court in Xuhui District has jurisdiction over such disputes (i.e. the Shanghai Court).

(7)     In any case, the Defendant denies the authenticity of the “Contracts of Sale” adduced by the Plaintiff, which were purportedly entered into amongst the Three Parties, and which appear to bear Ding’s signatures on the Defendant’s behalf:-

(a)     The Defendant received from Mr Kazuo an electronic copy of three of the tripartite Sales Agreements (HL‑20180112, HL-20180117, and HL20180323) around March 2019 via Xia. Xia immediately protested to Mr Kazuo and denied their authenticity. That was why Xia insisted that those three agreements be expressly disclaimed in the EPC.

(b)     Both Ding and Qu (the other two purported signatories) also denied having signed such tripartite sales agreements.

11.  Further on a meeting on 15 March 2019 (the “15 March 2019 Meeting”), a Strategic Cooperation Framework Agreement dated 15 March 2019 (《戰略合作框架協議書》) (“SCFA”) was also entered into amongst the Three Parties, as well as Shanghai Marushi New Delta Foods Sales Co Ltd (“Shanghai New Delta”), the Plaintiff’s affiliate.

12.  The Defendant submits that the SCFA is a high-level agreement:

(1) Clause 3 provides that (i) Dalian Hualian would process frozen seafood; (ii) the Defendant would procure the necessary raw materials and manage the sales of the final products; and (iii) the Plaintiff and Shanghai New Delta would supervise Dalian Hualian’s processing activities and advise the Defendant on its procurement activities.

(2) Clauses 4 and 7(1) provide that the detailed implementation of the cooperation arrangement will be further negotiated, and the parties’ respective rights and obligations will be determined in a future agreement.

(3)     Clause 6 provides for a choice of Mainland law and an exclusive jurisdiction clause in favour of the Court having jurisdiction over the dispute in Xuhui District, Shanghai.

13.  On 28 March 2019, the Plaintiff, the Defendant, and Shanghai New Delta further entered into a Supplemental Strategic Cooperation Framework Agreement《戰略合作框架協議書之附屬備忘錄》 (the “SCFA Memo”)(together with the SCFA, “SCFAs”).

14.  The Defendant submits that the SCFAs are irrelevant to the Jurisdiction Summons, despite the Plaintiff’s reliance on them. They concern transactions which are independent from the Sales Agreement and the EPC.

15.  On 24 November 2020, the Plaintiff sent the Defendant a document entitled Notice of Termination (《解除協議通知書》) (“Termination Notice”), seeking to terminate the EPC and the SCFAs (the “March 2019 Agreements”) on the basis that the March 2019 Agreements had not been performed and that the Defendant had committed fraud.

16.  It is obvious to this Court that whether the EPC and the SCFAs should be terminated and/or vitiated on the grounds of fraud and mistake should be litigated in the Shanghai Court.

17.  In the Termination Notice, the Plaintiff indeed accepted that the parties’ dispute should be governed by Mainland law and be submitted to the relevant Mainland Court by (i) citing the Contract Law of the PRC and (ii) suggesting that the Defendant should commence proceedings within 3 months in the appropriate Mainland court. This makes sense as the EPC was concluded in Shanghai.

18.  There is no dispute that the EPC if valid and not terminated lawfully would have substantially settled the Plaintiff’s claims in the present action or at the very least highly related to the resolution of the Plaintiff’s claims herein.

APPLICABLE LEGAL PRINCIPLES

19.  There are no disputes between the parties about the applicable legal principles in this area of the law. Where an action is brought in breach of an EJC in favour of a foreign Court, the Hong Kong Court should exercise its discretion to grant a stay, unless a “strong cause” for not doing so is shown: Re Guy Kwok-Hung Lam [2022] 4 HKLRD 793 §28 (G Lam JA).

20.  The lack of a credible defence is not in itself an unforeseeable, overwhelming or exceptional matter as to constitute a “strong cause”. There is a strong policy in favour of upholding jurisdictional agreements. This strikes the correct balance between the policy of upholding the parties’ own jurisdiction agreements while retaining a discretion for exceptional cases: Deltatre SpA v Hong Kong Sports Industrial Development Ltd [2018] 4 HKLRD 478 §§39, 84; Re Guy Lam §§83, 90; Shanghai Copher Asset Management Co Ltd v China Base Group Ltd [2022] HKCA 1724 §§30-32 (Barma JA).

21.  It will be a different matter if a party admits that it has no defence to the relief claimed.  In that case, there are no disputes to be resolved in the contractual bargained forum.

22.  For the court to venture into the merits and decide whether there is an arguable defence before giving effect to the EJC is to do precisely what the parties have agreed should be done by the foreign court: Shanghai Copher§31(7).

23.  In challenging jurisdiction, the defendant is entitled to be brief on his substantive defence. The Court would not encourage a defendant to go into great detail as to his case in a long document with many exhibits. In many cases, it may be disproportionate to expect him to incur the costs of setting out his points of defence before it has been decided whether the claim is to proceed at all: VTB Capital plc v Nutritek International Corp [2013] 2 AC 337 §§90-91 (Lord Neuberger). See also §§82-83:

“… hearings concerning the issue of appropriate forum should not involve masses of documents, long witness statements, detailed analysis of the issues, and long argument. It is self‑defeating if, in order to determine whether an action should proceed to trial in this jurisdiction, the parties prepare for and conduct a hearing which approaches the putative trial itself, in terms of effort, time and cost… There is little point in going into much detail: when determining such applications, the court can only form preliminary views on most of the relevant legal issues and cannot be anything like certain about which issues and what evidence will eventuate if the matter proceeds to trial.”

24.  Under the principle of separability, an EJC, like an arbitration clause, is a separate agreement from the main agreement. Hence, disputes about the validity of the underlying agreement must be resolved pursuant to the EJC. It is only if the EJC is itself under some specific attack that a question could arise whether it is right to invoke it: Hiromi Okada v Tomohiro Okada [2018] HKCFI 2310 §§38-47 (Ng J); Techteryx Ltd v Legacy Trust Co Ltd[2025] HKCFI 665 §6.6 (DHCJ Jonathan Wong).

25.  It is not even good enough to say fraud is fundamental, such that the whole contract was itself a sham and an instrument of fraud. The separability principle applies such that the dispute is still resolved under the EJC: Quaestus Capital Ltd v Everton Associates Ltd [2021] 4 HKC 605 §43 (G Lam J, as he then was).

26.  A plausible, but general, allegation of mistake, misrepresentation, illegality, lack of authority, lack of capacity, or even fraud or forgery of the main agreement does not disapply the jurisdiction clause: China National Geological & Mining (HK) Ltd v Tianjin Hopetone Co., Ltd [2020] HKCFI 1338 §52(c) (DHCJ Le Pichon).

27.  At the interlocutory stage, the Court should be very reluctant to accede to allegations of fraud absent cogent evidence: see e.g. Minting Dome Holding LLC v Deng Jie [2024] HKCFI 1558 §66.

ANALYSIS AND DETERMINATION

28.  There is no dispute between the parties that the relevant clause in the EPC is an EJC which covers the Plaintiff’s claims in this Action.  From the list of issues in the Plaintiff’s Skeleton Submissions (§§28-32), the Plaintiff does not dispute that the EJC is sufficiently broad to cover the Plaintiff’s claims in this action (including the tortious claims).

29.  Mr Dawes SC for the Defendant submitted that the Plaintiff has never pleaded the requisite “specific attack” in the Statement of Claim. This omission is manifestly unfair to the Defendant as it is left to speculate as to the precise scope and particulars of the fraud.

30.  Further, the “specific attack” was not even mentioned in the Plaintiff’s affirmations.

31.  Mr Ma for the Defendant submitted that there is no need to set out points of law in the Plaintiff’s affirmations. Whilst it is true that the purpose of affirmation is to set out a party’s factual case, I am of the view that the key is that a factual case of fraud must be set out so that the Defendant knows that it has to deal with a case of fraud. This is particularly so given that it is a serious matter to allege fraud.

32.  There is no plea nor any evidence as to any falserepresentation made by the Defendant in relation to the effect of the EJC (e.g. a representation that the parties’ dispute will be resolved in Hong Kong rather than Shanghai which turned out to be false); and thePlaintiff’s reliance on the said representation.

33.  Mr Ma for the Plaintiff relies on two alleged fraudulent representations in P’s Skel Section D.6(b) (§§63-66) and Section D.6(c) (§§67-75). However, Mr Dawes SC is correct that those paragraphs consist merely of a narrative of the parties’ discussion. It is difficult to decipher what precisely the alleged representations were relied upon.

34.  I also agree that the discussions have nothing to do with the EJC.

35.  Mr Dawes SC also took the point that the reliance on unilateral mistake is particularly objectionable. Apart from being unpleaded and not in the affirmations, it was not even raised before the Master. It is plainly an afterthought engaged only at the appellate stage as an attempt to resist the appeals. Even if this is a re-hearing, it would be wholly unfair for the Plaintiff to raise this now (1 business day before the Defendant is due to file its skeleton): Jadespring Ltd v Rise Top Asset Management Ltd [2025] HKCFI 2310 §§16-18.  Me Dawes SC must be right on this point.

36.  Importantly, on the facts of the present case, I am of the view that it is difficult to establish that the Defendant entered the EJC with any mistake. At §73 of his first affirmation, Mr Kazuo said: “I remember glancing through the [EPC] and the jurisdiction clause was the last sentence of the entire document. My attention was on the factual part of the document that is the part about the untrue state of affairs. I saw the jurisdiction clause but my mind did not focus on it.” (emphasis added).

37.  I agree that this suggests that Mr Kazuo was clearly aware of the EJC and the assertion that he “did not focus on it” contradicts any suggestion that he was labouring under some induced mistake to enter the EJC. It really does not matter that Mr Kazuo was off his guard at the material time.

38.  Mr Kazuo is bound by his signature on behalf of the Plaintiff on the EPC. To disown a signed legal document, facts showing a vitiating factor must be pleaded and proved: Ming Shiu Chung v Ming Shiu Sum (2006) 9 HKCFAR 334 at §87.

39.  I accept that Mr Kazuo could have been more careful and vigilant before signing on to the EPC but that is not enough to establish a unilateral mistake to vitiate the EPC. It really does not matter that the Plaintiff has always been determined to commence proceedings in Hong Kong.

40.  It is also said that the Defendant had always encouraged the Plaintiff to sue in Shanghai. But I agree that this is neither here nor there. Mr Kazuo claimed that at a meeting on 4 November 2019, the Defendant persuaded the Plaintiff to sue in Shanghai instead and quoted the Defendant’s representative as saying “這麼長，上海就比較快了…香港打官司挺慢的”: Kazuo 1 §78. First, this is not necessarily untrue. Secondly, the meeting took place 8 months after the EPC was executed. This cannot possibly amount to an actionable misrepresentation inducing the Defendant to enter the EJC.

41.  Further, I am of the view that the Plaintiff’s reliance on the “unusual features” of the EJC does not advance the Plaintiff's case. First, the Plaintiff attacks the commercial sense of the EPC. However, the EPC was a product of arm’s length negotiation after the parties’ meeting on 15 March 2019. The Plaintiff itself has adduced a lengthy transcript evidencing their extended commercial negotiation. With the benefit of hindsight, it might not be commercially advantageous for the Plaintiff to enter the EPC or the Plaintiff was under commercial pressure to enter the EPC, but that is not enough to vitiate or set aside the EPC.

42.  Secondly, whether the insertion of the EJC in the EPC is artificial or not is irrelevant. The parties agree to it and that is it.

43.  Thirdly, it is said that Shanghai has no role to play in the parties’ dealing. However, the parties had various meetings in Shanghai. Mr Kazuo also knew full well that the Defendant’s management decisions were made by their parent company headquartered in Shanghai.

44.  The parties’ exchanges show they were sophisticated businesspeople who had given careful and specific thought to the most suitable jurisdiction for resolving disputes. Mr Kazuo is a sophisticated businessman who has run businesses in Mainland China for more than two decades. He was originally from Shanghai and had worked there.

45.  As to the Plaintiff’s claim that the “strong cause” is unforeseeable at the time of contracting, I agree that the point is not so much whether the factual mattersin the dispute were foreseeable at the time the parties agreed to the EJC. Rather, the authorities recognise that in agreeing to an EJC, it ought to be foreseeable to the parties that the disputes may arise in different ways: Re Guy Lamat§90(2). Here, it was entirely foreseeable that the parties might need to resolve their disputes pursuant to the EJC in the EPC.

46.  Lastly, I also agree that Credit SuisseFirst Boston (Europe) Ltd v Seagate Trading Co. Ltd [1999] 1 All ER (Comm) 261does not assist the Plaintiff. The Court there was satisfied on the facts that the subsequent document (which contained no exclusive jurisdiction clause) was “fraudulently presented… via their own ‘backroom’ staff, as mere perfunctory confirmation”: at 280e-h. That case propounded no new principles, other than reiterating that an EJC must be specifically impeached.

Defences

47.  I have perused the parties’ respective submissions on the underlying merits of the case. I do not find it appropriate to express a provisional view on the same at this stage as this matter will go before the Shanghai Court in due course. It suffices for me to say that there are serious issues to be tried.

48.  Mr Ma for the Plaintiff submitted that the Plaintiff entered the EPC because of a representation or promise that Bright Food which is the Defendant’s parent company, could provide financial support to the Plaintiff so that it could trade out of its financial dilemma. The question is whether the Plaintiff was specifically misled into signing the EPC which contains the EJC.

49.  It is the Plaintiff’s case that Mr Kazuo repeatedly highlighted the need of the Plaintiff to financially ‘survive’ and requested the Defendant to provide financial support. Xia orally suggested providing finance by way of a letter of credit. The Defendant convinced Mr Kazuo that the Defendant was able to issue a letter of credit to the Plaintiff by circumventing or getting around a prevailing restricting policy. Mr Kazuo confirmed that a letter of credit was a good way to support the Plaintiff and eventually he signed the EPC. Mr Kazuo would not have signed the EPC had it not for the oral promise to provide a letter of credit.

50.  Apparently on 15 March 2019, the Defendant was consciously aware that it could not provide financial support to the Plaintiff which included opening a letter of credit for a third-party buyer to support the third party’s purchase of goods from another seller.

51.  Mr Ma submitted that the SCFA engulfed the consensus reached by the parties after hours of discussion evidencing parties’ intention to enter business cooperation. The SCFA later became an instrument of fraud because it was totally abandoned by the Defendant after the EPC was signed and its sole purpose was to induce Mr Kazuo’s consent to sign the EPC.

52.  There is no explanation to this Court on why an express contractual term on the provision of a letter of credit is not set out in the EPC if it is such a critical factor for Mr Kazuo to sign on the EPC. Mr Ma for the Plaintiff submitted that the SCFA was only a framework agreement which did not require the Defendant to expressly provide financial support by way of letter of credit to the Plaintiff. I find this quite puzzling as both the EPC and the SCFA were signed on the same day and the provision of a letter of credit is of critical importance to the Plaintiff.

53.  The parties met again 10 days later, on 25 March 2019, to discuss how to resolve the Plaintiff’s financial dilemma. The Defendant refused to provide financial support to the Plaintiff as Xia, Wang both denied responsibility on the monies the Defendant received from the Plaintiff. They challenged Mr Kazuo to sue the Defendant in court.

54.  Mr Kazuo pressed for a written promise of a letter of credit otherwise he would demand the return of the original EPC and to have it cancelled or invalidated which Wang agreed. Just one day later, on 26 March 2019, the Defendant called for another meeting and in the meeting, handed the SCFA Memo which agreed to provide the Defendant a USD 10 million letter of credit as financial support. Xia again promised to provide letter of credit to the Plaintiff and further agreed that such letter of creditor to be back-to-back, irrevocable and transferable.  Eventually the SCFA Memo was signed on 28 March 2019 obliging the Defendant to provide to the Plaintiff a USD10 million letter of credit. The effect of this second misrepresentation was to prevent Mr Kazuo’s requested cancellation or return of the EPC.

55.  The Defendant’s case is that both Xia and Ding were clearly aware of the existence of the restricting policy and they knew that giving the Plaintiff a letter of credit would be against the restricting policy, but they still chose to let Mr Kazuo sign the SCFA Memo knowing it would not be honoured.

56.  Thus, when the Defendant proposed to financially assist the Plaintiff by a letter of credit, Xia and Ding could not have honestly believed that such oral promise made on 15 March 2019, nor could they honestly believe that the SCFA Memo signed on 28 March 2019, was workable.  The first fraudulent misrepresentation induced Mr Kazuo to sign the EPC; and the second one prevent Mr Kazuo from destroying or cancelling the EPC.

57.  On 4 November 2019, Xia expressly stated that the SCFA and the SCFA Memo were illusory and non-existent, and giving all sorts of excuses of non-performance such as ‘immature’ or ‘not suitable’.

58.  First, again, I express no definitive view on the Plaintiff’s case in relation to the validity of the EPC at this stage save to state that it is impossible for this Court at this stage to reach a conclusion that the EPC was procured by fraud without a full trial or cross-examination of key witnesses.

59.  Secondly, as mentioned above, under the principle of separability, an EJC, like an arbitration clause, is a separate agreement from the main agreement. Hence, disputes about the validity of the underlying agreement must be resolved pursuant to the EJC. It is only if the EJC is itself under some specific attack that a question could arise whether it is right to invoke it. It is not even good enough to say fraud is fundamental, such that the whole contract was itself a sham and an instrument of fraud. The separability principle applies such that the dispute is still resolved under the EJC: Quaestus Capital Ltd v Everton Associates Ltd [2021] 4 HKC 605 at §43 (per G Lam J, as he then was).

60.  Thirdly, it appears to this Court that all the representations which are invoked to vitiate the EPC happened in Shanghai.

61.  For all the above reasons, I am of the view that the learned Master’s Order is correct, and the present appeal should be dismissed.

FORUM NON CONVENIENS

62.  As a result of my ruling on the EJC issue, there is no need for this Court to deal with the application for stay on the ground of forum non conveniens. However, had my ruling on the EJC issues been found to be wrong, I would have, nonetheless, stayed the present action in favour of the Shanghai Court on the ground of forum non conveniens.

63.  The principles are summarised by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at §51. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e., in which the action may be tried more suitably for the interests of all the parties and the ends of justice:

(1)     First, the applicant has to establish that Hong Kong is not the natural or appropriate forum (“appropriate” here means the forum has the most real and substantial connection with the action) and there is another available forum which is clearly or distinctly more appropriate than Hong Kong.

(2)     Secondly, if the applicant can establish both, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong.

(3)     Thirdly, if the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.

64.  I am of the view that there are a number of connecting factors in favour of the Shanghai Court. First, on the underlying sale and purchase of goods contracts themselves, on the Plaintiff’s own pleaded case, Mainland China was the place of performance. The Goods never passed through Hong Kong. The Sales Agreements provided that the “Port of Loading” is Dutch Harbour, USA; whereas the “Port of Discharge” is Dalian, PRC.  A bill of lading for every shipment is delivered to Dalian Hualian to facilitate collection in the Dalian destination port. Goods are loaded from the Alaska repository onto the vessel, which would set sail to the Dalian destination port. The Plaintiff took delivery of frozen raw fish and inspected them at the Dalian port to ensure that the Goods complied with the descriptions on the bills of lading, before dispatching the same to Dalian Hualian.

65.Secondly, on the misrepresentation claim arose out of the Sales Agreements, Hong Kong law is not the lex loci delicti because the material facts took place predominantly outside of Hong Kong.

(1)     The “Representation by Conduct” pleaded (Statement of Claim at §§36.1-36.2, 44.1) includes (i)theDefendant allegedly through Ding (based in Mainland China) preparing and sending various documents to Dalian Hualian (located in Mainland China); and(ii) Dalian Hualian sending all these documents to the Plaintiff (based in Japan) for payment.

(2)     The inducement pleaded (Statement of Claim at §45) includes (i) Mr Kazuo (based in Japan) executing the said documents and delivering the same to Dalian Hualian by email; and (ii) the Plaintiff arranging for payment by its Japanese bank to the Defendant’s account in Hong Kong.

66. On the Plaintiff’s conspiracy claim, under the double actionability rule, an act done in Jurisdiction A is a tort and actionable as such in Jurisdiction B only if it is both (i) actionable as a tort according to the law of Jurisdiction B, or in other words is an act which, if done in Jurisdiction B, would be a tort; and (ii) actionable according to the law of Jurisdiction A where it was done: Shanghai Reeferco Container Co Ltd v Waggonbau Elze GmbH & Co Besitz KG [2005] 2 HKLRD 711 §47 (DHCJ Poon, as he then was).

67.  The Plaintiff’s conspiracy claims involved overt acts that allegedly took place in Mainland China. However, under Mainland law, conspiracy is not recognized as a separate tortious cause of action. Limb (ii) of the double actionability rule thus fails.

68.  Importantly, insofar as the Plaintiff seeks to vitiate the whole EPC, I am of the view that the factual disputes arising from such disputes should be resolved in the Shanghai Court as they happened in Shanghai. The Plaintiff’s contractual and unjust enrichment claims are closely linked with the issued to be determined on the validity of the EPC.

69.  Finally, as pleaded by the parties, the present case involves substantial and difficult issues of Mainland law on the regulation of state‑owned assets. The Plaintiff relies on the Executive Order “Measures for the Implementation of Accountability Inquiry for Irregular Operations and Investments of Central Enterprises (for Trial Implementation)” (《中央企業違規經營投資責任追究實施辦法(試行)》) implemented in 8.2018 (“2018 Measures”). In the Defendant’s 1^st Mainland Law Report, it is suggested (i) cases involving “融資性貿易” are closely connected with the regulation of SOEs and the preservation of state-owned assets, as well as the financial regulatory regime (§75); (ii) Mainland courts have developed a substantial body of jurisprudence on this (§77); (iii) the applicability of the 2018 Measures to the Defendant is a difficult issue (§78); and (iv) on complex issues, the lower courts in Mainland are entitled to seek the guidance of the Supreme People’s Court, and guiding opinions such as “會議紀要” may be issued (§§79-82). 

70.  Besides the issue of SOE regulations, the experts’ views also diverged on issues such as whether the EPC was effectively terminated pursuant to the Termination Notice and the burden of proof and limitation period of alleging fraud under Mainland law.

71.  In terms of witnesses, it appears that the main witnesses with knowledge about the transactions are based in Mainland China (e.g., Qu, Ding, and Xia). This is also a factor in favour of the Shanghai Court. (See: China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Developments Bank Co Ltd (CACV 14/2016, 3.2.2017) at §7.11 (Cheung JA)).

72.  Further, the SCFA contains an EJC in favour of the Mainland Court which was not affected by the SCFA Memo. The Plaintiff’s expert fairly accepted this.In addition, the SCFAs were expressly stated to be governed by Mainland law.

73.  Finally, I am not persuaded that the Plaintiff will be deprived of any juridical advantage by having the case litigated in the Shanghai Court.

74.  A plaintiff will not ordinarily discharge the burden by showing that he will enjoy procedural advantages, or a higher scale of damages or more generous rules of limitation if he sues in Hong Kong. Generally, he must take a foreign forum as he finds it, even if it is in some respects less advantageous to him than the Hong Kong forum. It is only if the plaintiff can establish that substantial justice will not be done in the appropriate forum that a stay will be refused: Lubbe v Cape [2000] 1 WLR 1545, 1554G‑H (Lord Bingham).

75.  The Plaintiff submits that if the matter is tried in Shanghai, it cannot avail the causes of action of misrepresentation and conspiracy and seek aggravated or exemplary damages under Mainland law. However, the position is the same even if the claims are heard in Hong Kong because the Hong Kong court will still be applying Mainland law.

76.  Where it is alleged that there is a risk that justice will not be obtained in the forum, it is incumbent on that party to assert it candidly and support the allegation with positive and cogent evidence.  In Xinjiang Xingmei Oil-Pipeline Co Ltd v China Petroleum & Chemical Corp (HCCL 6/2004, 18 February 2005), it was held that the pejorative allegations that a Beijing court would be biased in favour of the state-owned defendant, absent compelling evidence, cannot amount to any juridical disadvantage: §45 (per Stone J). Likewise, the asperations cast on the integrity of the Mainland judicial system is wholly unfounded (see: Kazuo’s 1^st Affirmation at §§166-168)

77.  Finally, in relation to the Plaintiff’s contention that any Shanghai judgment will not be enforced in Hong Kong, there are no merits on the said submission.  A Mainland judgment will be made pursuant to a choice of Mainland court agreement made before 29 January 2024. The Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) is available.

78.  Even if the Plaintiff is correct in saying that the EJC is not a proper choice of court agreement, the judgment may still be enforced in Hong Kong at common law.

DISPOSITION

79.  For all the reasons stated above, the Plaintiff’s appeal is hereby dismissed.

80.  I also make a costs order nisi that the Plaintiff is to pay the costs of and occasioned by this appeal to the Defendant, to be taxed on a party‑to‑party basis, if no agreement can be reached between the parties, with a certificate of two counsel. The costs order nisi will be made absolute within 14 days hereof unless an application is taken out to vary the same within the 14-day period.

81.  I am also prepared to assess costs on a summary basis. The parties can seek further directions from this Court for such purpose.

82.  Finally, it remains for this Court to thank counsel for their helpful assistance.