XCHRX KING SHING ENTERPRISES LTD. v. SHUTTLE CARGO INTERNATIONAL (HK) LTD. AND OTHERS

HCAJ 214/1999

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO. 214 OF 1999

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J U D G M E N T

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1. The Plaintiff, which is a Hong Kong company, commenced this action against 3 Defendants. The 1st Defendant was said in the Statement of Claim herein to be also a Hong Kong company, whereas the 2nd Defendant is a company incorporated in Panama.

2. The Plaintiff alleges that the 1st Defendant had agreed in November 1999 to ship the Plaintiff's goods to Dubai, U.A.E. Under the agreement, the goods were only to be delivered against the surrender of an original bill of lading. The Plaintiff avers inter alia that the 1st Defendant breached that term of the agreement.

3. The Plaintiff's case against the 2nd Defendant is that the 2nd Defendant had agreed to ship the Plaintiff's goods to Dubai, U.A.E. on similar terms as those under the agreement with the 1st Defendant. The agreement with the 2nd Defendant is said to be contained in a set of bills of lading issued by the 2nd Defendant but signed by the 1st Defendant as agent for the 2nd Defendant.

4. The Plaintiff discontinued its claim against the 1st Defendant on 23 December 1999.

5. On 10 November 1999, the 2nd Defendant made an application to stay this action on the grounds that: -

(a) the bill of lading provided that the agreement between it and the Plaintiff is subject to English law and jurisdiction;

(b) the Courts of England are clearly and distinctly the more appropriate forum for the trial of this action.

6. The term in the bill of lading giving rise to this application (which has been accepted by all concerned to be a binding contract term at least for the purpose of this application) is Clause 24 which states: -

"24. LAW AND JURISDICTION

Any claim or dispute arising under this bill of lading shall be determined in England according to the laws of England."

7. Mr Shah for the 2nd Defendant contends that this term confers exclusive jurisdiction to the Courts in England. The main thrust of the Plaintiff's argument in answer is that the word "exclusive" does not appear in this term. On the other hand, Mr Shah argues that the term used the phrase "shall be determined in England" and the word "shall" therein means "must".

8. I do not agree that the word "shall" necessarily means "must" in the context of this clause. The word can equally be intended to indicate what may be done in future. There is otherwise no express provision that the jurisdiction conferred on the Courts of England is exclusive. There is also nothing to show why such exclusivity should be implied in this agreement. I therefore agree with the Plaintiff's argument that this is at most a non-exclusive jurisdiction clause.

9. The parties accept that whether there ought to be a stay of the proceedings herein is a matter of the Court's discretion. The wishes of the parties, as shown by a term contained in an agreement between them, is a factor (and sometimes a weighty factor) to be considered. But other factors ought to be considered as well. I agree with the Plaintiff's submissions that the other factors relevant to this application (apart from Clause 24) should also include: -

(a) although the 2nd Defendant was incorporated in Panama, it appears to have a presence in Hong Kong in that its name and logo also appeared at the registered office of the 1st Defendant;

(b) further, the 2 directors of the 2nd Defendant are the same 2 directors of the 1st Defendant and, more importantly, they both used addresses in Hong Kong in the registration documents for the 2nd Defendant;

(c) apart from Clause 24, none of the parties (or matters herein) appears to have any connection with England;

(d) the agreement was made in Hong Kong;

(e) the port of loading was Hong Kong;

(f) prepayment was made at Hong Kong.

10. Bearing in mind all the circumstances, I consider that my discretion should be exercised in refusing the 2nd Defendant's application for a stay.

11. Even if the term should amount to an exclusive jurisdiction clause, I agree with the Plaintiff's submissions that the test laid down in El Amria [1981] Ll.L.R. 119 (affirmed by the Hong Kong Court of Appeal in Thorscan [1988] HKC 536, 542-543) is applicable. Applying the test to the facts in this case (as set out above), I would still have exercised my discretion in the same way because I consider that the Plaintiff has made out a strong case for the refusal of a stay.

12. For the above reasons, this application is dismissed.