PUSAN NEWPORT CO., LTD v. THE OWNERS AND/OR DEMISE CHARTERERS OF THE SHIPS OR VESSELS “MILANO BRIDGE” AND “CMA CGM MUSCA” AND “CMA CGM HYDRA”

CAMP 222/2021

[2022] HKCA 157

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO. 222 OF 2021

(ON AN INTENDED APPEAL FROM HCAJ NO. 31 OF 2020)

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CACV 496/2021

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 496 OF 2021

(ON APPEAL FROM HCAJ NO. 31 OF 2020)

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JUDGMENT

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Hon Chow JA (giving the first judgment at the invitation of G Lam JA):

1.  This is an appeal against the order of Anthony Chan J dated 11 May 2021 (“the Order”) granting a stay of the Plaintiff’s action against the Defendants (“the Admiralty Action”) in favour of the court of South Korea on the grounds of forum non conveniens and/or lis alibi pendens.

BACKGROUND FACTS

2.  The basic facts relevant for the purpose of this appeal are not in dispute.  The following brief summary, taken largely from the decision of the Judge handed down on 11 May 2021 (“the Decision”), should suffice for the present purpose.

3.  The Plaintiff is the Korean operator of a commercial maritime terminal (“the Terminal”) at the port of Busan, South Korea, offering berths for loading and unloading container vessels with large movable gantry cranes.

4.  The Defendants are the joint owners of the vessel “Milano Bridge” (“the Vessel”), owned as to 90% by a Japanese company and 10% by a Panamanian company.  The Vessel is registered in Panama and flies the Panamanian flag.  At the material times, the Vessel was sub-chartered to Ocean Network Express Pte Ltd (“ONE”), a Singaporean company with operations worldwide, including Busan.

5.  The Plaintiff operates on, inter alia, (i) its Standard Terms and Conditions 2019 (“STC”) and (ii) specially negotiated agreements, such as the Terminal Services Agreement dated 1 April 2014 (“TSA”) between the Plaintiff and various liner operators comprising a consortium called The Alliance.  The Plaintiff says that the STC is relevant only to liner operators (not vessel owners) who had executed the requisite agreement.

6.  The Defendants are not party to the TSA, although both the charterer and ONE are contracting parties to the TSA.  The Defendants are also not party to any STC either.  Nevertheless, the Defendants have referred the court to the STC which provides at clauses 18.2 and 19.3 for a contractual limitation of liability of US$15m for both parties.  The TSA similarly provides at clauses 18.2 and 19.3 a contractual limitation of liability of US$20m for both sides.  It appears from the liability clauses (18.1 and 19.1) of the STC that loss or damage arising from negligence or wilful misconduct would generally be covered.  The relevance of these limits of liability will appear later.

7.  On 6 April 2020, an allision occurred between the Vessel and Berth 8 at Pier 2 of the Terminal, involving contact between the Vessel and some of the Plaintiff’s cranes and another vessel (“the Incident”). At the time of the Incident, the Vessel was under the compulsory pilotage of a Korean pilot and was assisted by Korean tugs, one at the bow and one at the stern.  Also, there were maritime works in progress by Korean contractors to remove Todo Islet, a small island at the approach to the berth.  The Defendants say that Todo Islet presented a hazard to ships arriving at the Terminal, which explained the need for its removal.

8.  The Plaintiff claims that the Incident was caused by the negligence of the Defendants, their servants or agents in the navigation and management of the Vessel, and it has suffered loss and damage in terms of:

(1)  physical damage to the cranes with resulting monetary loss in terms of repair and replacement cost, amounting to some US$30.1 million; and

(2)  business interruption, amounting to some US$60.9 million.

The total sum claimed by the Plaintiff against the Defendants thus comes to over US$90 million.

9.  The Plaintiff commenced the Admiralty Action when a sister ship of the Vessel, “CMA CGM Musca”, called at Hong Kong on 24 June 2020 and was arrested.  In addition, the Plaintiff has commenced materially identical proceedings against the Defendants in Japan (“the Japanese Action”).

10.  On the other hand, the Defendants have commenced an action (“the Korean Cross-Action”), which the Judge describes as being essentially a “mirror image” action to the Admiralty Action, against the Plaintiff in South Korea.  The Defendants have also commenced a limitation action (“the Limitation Action”) in South Korea, and deposited a sum of about US$24 million to constitute the limitation fund in that action.  The Plaintiff contends that the Korean Cross-Action can be dealt with in the Limitation Action, and has filed a claim against the limitation fund on a without prejudice basis.  There is, however, no agreement between the parties on whether it is open to the Plaintiff to file a claim on such a basis under Korean law.

11.  On 5 November 2020, the Defendants issued a summons (“the Stay Summons”) seeking a declaration that in the circumstances of this case, the Hong Kong court should not exercise any jurisdiction it may have, further or alternatively the Admiralty Action should be permanently stayed, in each case on the grounds that (i) considering the best interests and convenience of the parties to the proceedings and the witnesses in the proceedings, the action should be conducted in South Korea; and/or (ii) in respect of the same cause of action to which the proceedings relate, there are other proceedings pending between the Defendants and the Plaintiff in South Korea.

12.  The Plaintiff’s position is that it wishes to have the dispute determined in Hong Kong.  The Plaintiff has indicated that if the Hong Kong court declines to stay the Admiralty Action and it is to proceed, it will withdraw the Japanese Action.  On the other hand, if this action is stayed, the Plaintiff will seek to pursue the Japanese Action.

THE DECISION

13.  The Stay Summons came before the Judge on 29 April 2021.  On 11 May 2021, the Judge gave the Decision allowing the Defendants’ application.

14.  In the Decision, the Judge analysed the different tonnage limitations which would be applied by the South Korean court and the Hong Kong court should the Plaintiff’s claim be litigated in South Korea and Hong Kong respectively.  In summary:

(1)  The shipowners’ liability limitation regime in Hong Kong (and Japan) is different from that in South Korea.

(2)  Under Hong Kong law, by virtue of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434, limitation is governed by the Convention on Limitation of Liability for Maritime Claims 1976 (“the 1976 Convention”) as amended by the Protocol of 1996 (“the 1996 Protocol”, effective in Hong Kong on 3 May 2005), including the June 2015 limit increases (effective in Hong Kong on 4 December 2017).  The applicable tonnage limit under Hong Kong law in the present case comes to about US$82.6 million.

(3)  South Korea is not a party to any international convention on shipowners’ limitation of liability.  It has enacted a domestic limitation regime under the Korean Private International Law Act based on the 1976 Convention.  Under the Korean Act, questions of whether a shipowner is entitled to limit liability, and if so in what amount, are to be determined by reference to the law of the flag of the vessel concerned.  In this case, it is the law of Panama.  Panama has not ratified the 1976 Convention, but it has enacted domestic legislation which substantially reproduces its terms.  Thus, the tonnage limitation which would be applied to the Plaintiff’s claim against the Defendants if it is litigated in South Korea would be calculated by reference to the limits originally appearing in the 1976 Convention (without the subsequent increases applicable in Hong Kong), and the limit will come to about US$24 million.

(4)  In other words, the difference in the maximum amount recoverable by the Plaintiff in the two jurisdictions would be about US$58.6 million (US$82.6 million - US$24 million).

15.  Pausing here, it may be noted that the reason why there is such a huge difference between the tonnage limits applicable under Hong Kong law and Panamanian law is because under the original 1976 Convention, the limits of liability were set by reference to the Special Drawing Right (“the SDR”) of the International Monetary Fund, which is based on a basket of international currencies, all of which have been debased over the decades since the adoption of that Convention in 1976.  The International Maritime Organization has twice revised the limits of liability under the 1976 Convention because the previous limits had been significantly eroded by inflation.  When the first revision, via the 1996 Protocol to amend the 1976 Convention was discussed, the UK delegation expressed the following view:

“… the limits of compensation established in the [1976 Convention] were in need of urgent review, bearing in mind that seventeen years of inflation since the Convention was adopted had turned those limits to a small fraction of their 1976 value. As a result the position of the victims had been severely undermined.”[1]

16.  As noted by Kwan VP in Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30:

“[70] … the Hong Kong limits have been increased twice since adopting the 1976 LLMC following the increase of limits by the International Maritime Organization (‘IMO’), via the 1996 Protocol to that convention and an amendment thereto, to reflect the loss of value due to inflation, whereas the limits in the PRC Maritime Code have remained static at a level equivalent to the 1976 computation.

[71] The unit of measurement for monetary liability under the LLMC is the Special Drawing Right, which is an interest-bearing international reserve asset created by the International Monetary Fund based on a basket of international currencies.  The 1996 Protocol was adopted by the IMO as it was found that the limits of liability prescribed by the 1976 LLMC had been eroded by inflation and were no longer adequate to satisfy possible claims (Limitation of Liability in International Maritime Conventions by Norman Gutiérrez (2011 ed), Chapter 3).  As monetary values have further changed since 1996 due to inflation, the IMO announced in 2012 to increase the liability limit.  Hong Kong has enacted legislation to incorporate these increases in the liability limits under the LLMC.”

17.  The Judge next referred to the applicable test for forum non conveniens as set out by the Court of Appeal in DCG v SLC [2005] 3 HKC 293, at 297-298, and approved by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364, at §51:

“1. 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?

2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal.

3. If the applicant is able to establish both of these two matters, 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.

4. 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.”

18.  The Judge went on to consider the questions referred to in sub-paragraphs 2, 3 and 4 above, which the Judge described as:

(1)  Stage 1(a) - “natural or appropriate forum” (§§39 - 41 of the Decision);

(2)  Stage 1(b) - “more appropriate forum” (§§42 - 88 of the Decision);

(3)  Stage 2 - “juridical advantage and forum shopping” (§§89 - 102 of the Decision); and

(4)  Stage 3 (§§103 - 104 of the Decision).

19.  In respect of Stage 1(a), the Judge found, as accepted by the Plaintiff, that the question of natural or appropriate forum should be answered in favour of South Korea; in other words, Hong Kong was not the natural or appropriate forum in respect of the Plaintiff’s claim against the Defendants.

20.  In respect of Stage 1(b), the Judge found that the court of South Korea was clearly or distinctly the more appropriate forum, taking into account the following factors:

(1)  the issues in the trial;

(2)  the witnesses and evidence, including evidence on liability and quantum and expert witnesses;

(3)  the governing law (there being no dispute that the governing law of the Plaintiff’s cause of action in tort against the Defendants is Korean law);

(4)  service of the writ was as of right (in rem action) - the Judge considered that the forum non conveniens principles were not applied differently in such cases, especially where the jurisdiction of the admiralty court was invoked only on the arrest of a sister ship and Hong Kong had no connection to the events giving rise to the Incident;

(5)  forum shopping (a matter which I shall return to later in this judgment); and

(6)  lis alibi pendens, and the Cambridgeshire factor (which the Judge rejected as having no application in this case).

21.  In respect of Stage 2, which (the Judge considered) represented the nub of the dispute before him:

(1)  The Judge observed that it was common ground between the parties that the higher tonnage limit in Hong Kong was a juridical advantage in favour of Plaintiff.

(2)  The Judge did not, however, accept the Plaintiff’s submission that the deprivation of such a juridical advantage would be conclusive such that a stay should be refused.  Instead, the Judge held that the deprivation of the juridical advantage of a higher tonnage limitation “may be a decisive factor in the Stage 2 evaluation”.

(3)  In the present case, neither the Incident nor the parties had anything to do with Hong Kong (save for the calling of a sister ship), and Hong Kong was chosen as a forum primarily on the higher tonnage limit.  The Judge considered the latter aspect to amount to forum shopping by the Plaintiff, being a practice disapproved of by the court.

(4)  Relying on The Adhiguna Meranti[2], the Judge considered the Court of Appeal had taken the view that in dealing with the Stage 3 consideration, “the deprivation of juridical disadvantage would not outweigh a case where proceedings were started in Hong Kong for little more than reason of forum shopping”[3].

22.  In respect of Stage 3, the Judge resolved the balancing exercise in favour of the Defendants.  He expressed his views as follows:

“[103] At the end of the day, there is little to speak for having the dispute resolved in Hong Kong with the exception of the deprivation of a higher tonnage limitation. There can be no serious suggestion that justice will not be done to the parties in the court of South Korea. I am in no doubt that it is for the interests of all the parties and the ends of justice that these proceedings should be stayed notwithstanding the deprivation of juridical advantage to the Plaintiff.

[104] For completeness, I agree with the Defendants that given that the Plaintiff is a South Korean entity operating its business there under the applicable legal regime, it lies ill in its mouth to complain that the tonnage limitation there has not kept up with inflation.  Quite possibly, the Plaintiff had benefited from the lower Korean limit when it was called upon to pay compensation, and from the lower insurance premium which should apply in light of the Korean limit.”

23.  Accordingly, the Judge granted a stay of the Admiralty Action in favour of the court of South Korea.

24.  On 7 June 2021, the Judge refused the Plaintiff’s application for leave to appeal against the Order.

THE PRESENT APPEAL

25.  By a summons to this Court dated 21 June 2021, the Plaintiff renewed its application for leave to apply against the Order.  At the conclusion of the rolled-up hearing on 5 November 2021, this Court granted to the Plaintiff leave to appeal against the Order.

26.  Four grounds of appeal are advanced in the Notice of Appeal filed by the Plaintiff on 8 November 2021, which it is not necessary to set out in this Judgment.  As can be seen from Mr Charles Sussex, SC’s Skeleton Argument for the Plaintiff dated 7 October 2021, the Plaintiff’s complaints against the Decision are that:

(1)  The Judge plainly fell into error by castigating the Plaintiff’s attempt to seek the juridical advantage of the higher tonnage limit available in Hong Kong as “forum shopping”.  The Judge compounded this error by mis-reading the authorities to mean that a deprivation of such an advantage “would not outweigh” a case for a stay if the Plaintiff sued in Hong Kong for “little more than reason of forum shopping”.

(2)  The Judge was bound by authorities to accept that the Plaintiff had discharged its burden at Stage 2 of the Spiliada exercise, ie it had shown that the higher tonnage limit in Hong Kong was a legitimate juridical advantage (The Adhiguna Meranti [1987] HKLR 904; and The Kapitan Shvetsov [1977] HKLRD 374).  Contrary to those authorities, the Judge appears to have disposed of tonnage limitation at Stage 2, and concluded that to commence Hong Kong proceedings in order to get the benefit of the higher limit was “forum shopping” and thus not legitimate.

(3)  In consequence, the Judge ascribed no weight to the higher tonnage limit at Stage 3 of the Spiliada exercise, with the result that his decision was plainly wrong.

(4)  This is a case where the Court of Appeal should exercise its discretion anew to refuse a stay.  Substantial justice cannot be done in South Korea by the award of a sum which has suffered the ravages of 45 years of monetary debasement and inflation.

THE JUDGE ERRED IN HIS TREATMENT OF THE HIGHER TONNAGE LIMITATION FACTOR

27.  Stages 1(a) and 1(b) of the Spiliada exercise are no longer in issue.  Mr Sussex accepts that the court of South Korea is clearly or distinctly the more appropriate forum[4].  The crux of this appeal concerns the Judge’s treatment of the higher tonnage limitation factor.

28.  At §89 of the Decision, the Judge noted that it was common ground that the higher tonnage limit in Hong Kong was a “juridical advantage” in favour of the Plaintiff.  This advantage of higher tonnage limit is conferred by Hong Kong law and (for reasons which I shall explain below) should be regarded as a legitimate juridical advantage.  Accordingly, the Judge should have concluded Stage 2 of the Spiliada exercise in favour of the Plaintiff, and moved on to Stage 3.  The Judge did not do so.  Instead, he went on, as part of the Stage 2 consideration, to find or hold, inter alia, that the Plaintiff’s decision to litigate in Hong Kong, driven as it was by considerations of the higher tonnage limit, was as an exercise of “forum shopping”.

29.  Although the Judge did not expressly state whether he regarded the juridical advantage of a significantly higher tonnage limit as a “legitimate” juridical advantage for the purpose of Stage 2 of the Spiliada exercise, it is plain that the Judge did not view this factor favourably towards the Plaintiff.  Thus, at §73 of the Decision, in his assessment of whether there was another forum (ie South Korea) which was clearly or distinctly more appropriate than Hong Kong for the trial of this action under Stage 1(b), the Judge stated the following: “I am troubled by the evidence of the Plaintiff which suggests that the significantly higher tonnage limitation applicable to Hong Kong was the main driver of the decision to institute proceedings here.  Although I can understand that commercial entities are naturally driven by such consideration, the court has always disapproved of forum shopping for good reasons.”

30.  The Judge repeated his view that the Plaintiff’s decision to litigate in Hong Kong was an exercise of forum shopping at -

(1)  §100 of the Decision: “Whilst I have no difficulty accepting Mr Kat’s suggestion that this case is about economics with the respective insurers behind the parties, this is no licence for forum shopping”; and

(2)  §102 of the Decision: “In The Adhiguna Meranti, 907I-908B, it can be seen that, in dealing with the Stage 3 consideration, the CA took the view that the deprivation of juridical disadvantage would not outweigh a case where proceedings were started in Hong Kong for little more than reason of forum shopping”.

31.  In my view, the Judge’s characterization of the Plaintiff’s conduct of litigating in Hong Kong because of the higher tonnage limit as “forum shopping” is incorrect.  It is clear from the judgment of the Court of Appeal (constituted by Yang VP, Hunter JA and Nazareth J) in The Adhiguna Meranti, at 907I-908B, that the pejorative description of “forum shopping” is a conclusion only to be drawn after the court has performed the entire Spiliada exercise and reached the view that the other forum outside Hong Kong is more suitable for the interests of all the parties and the ends of justice:

“… If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II), Abidin Daver per Lord Brandon at p. 419. Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss ‘substantial justice will be done in the available appropriate forum’ (p.991H). The court must try to be objective (p. 991F). Proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the applicant for the stay. By these means he establishes that on balance the other forum is more suitable ‘for the interests of all the parties and the ends of justice’. This may be another way of saying that the plaintiffs’ choice of forum has been shown to be so inappropriate as to deserve the pejorative description of ‘forum-shopping’ and to be restrained accordingly, cp. Lord Reid in The Atlantic Star [1974] AC 436.” [underlining added]

32.  The Judge has, however, read the above passage in The Adhiguna Meranti as support for the proposition that the Court of Appeal took the view that the deprivation of juridical advantage would not outweigh a case where proceedings were started in Hong Kong for little more than reason of forum shopping (see §102 of the Decision).  It seems to me that the Judge has mis-read the above passage.  What the Court of Appeal was saying was that if, notwithstanding the deprivation of one or more personal or juridical advantages in the plaintiff’s chosen forum (ie Hong Kong), substantial justice will still be done in the available appropriate forum (in other words, on balance the other forum is more suitable for the interests of all the parties and the ends of justice), it would then be appropriate to describe the plaintiff’s choice of forum as “forum-shopping” and restrain the plaintiff’s action accordingly.  There is nothing in that passage which supports the proposition that commencing proceedings in Hong Kong with a view to obtaining the juridical advantage of a higher limit of liability should in itself be regarded or categorised as forum shopping.

33.  To characterise as forum shopping the pursuit of proceedings in a forum with a view to obtaining the advantage of a higher tonnage limit which is available as a matter of law in that forum is problematic.  Each party would naturally, so far as legally permissible, be seeking to litigate in a forum where the limitation regime is more favourable to it (see The Tigr (1998) 4 SA 740, at 744D-G).  In Goliath Portland Cement Co Ltd v Bengtell (1994) 33 NSWLR 414, the issue of forum non conveniens arose as between two States in Australia (New South Wales and Tasmania) where the limitation period for the relevant cause of action would expire in one jurisdiction (Tasmania) but not the other (New South Wales).  In respect of the question of “forum shopping”, Gleeson CJ made the following perceptive observation (at 419E-G) -

“In so far as the respondents can be said to be engaged in forum shopping it is conduct of a kind that is countenanced by the courts. It involves the pursuit of what is sometimes called a legitimate juridical advantage. That does not conclude the issue. The word ‘legitimate’ is, in the context, question-begging. However, it serves to neutralize the opprobrium that accompanies the dyslogistic and equally unhelpful phrase, forum shopping.”

34.  In any event, it is clear that the Hong Kong courts have accepted that the pursuit of proceedings in Hong Kong by reason of the higher tonnage limitation regime applicable in this jurisdiction is a legitimate juridical advantage for the purpose of Stage 2 of the Spiliada exercise:

(1)  In The Adhiguna Meranti, the Court of Appeal held that, notwithstanding the comparatively tenuous connection between Hong Kong and the marine casualty which occurred in the waters near Taiwan, it would be unjust to the plaintiffs to deprive them of the higher ship’s limits of liability applicable in Hong Kong under s 503 of the Merchant Shipping Act, and saw “no good reason of policy or otherwise for condemning the plaintiffs’ choice of a Hong Kong forum as ‘forum-shopping’” (922E-F).

(2)  In The Kapitan Shvetsov, Litton VP (with whom Cheung J agreed) in the Court of Appeal held that the higher tonnage limitation regime under the 1976 Convention in Hong Kong was a “considerable juridical advantage” to the party (the Russian owners) which commenced proceedings in rem in Hong Kong when compared to the lower tonnage limitation regime under the Convention Relating to the Limitation of the Liability of Owners of Sea-Going Ships (Brussels 1957) applicable in Singapore (381B-G and 382F-H).

(3)  In Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2), the Court of Appeal (constituted by Kwan VP and Barma JA) considered that The Adhiguna Meranti and The Kapitan Shvetsov stood as binding authorities for the proposition that a significantly higher limitation figure that applied in Hong Kong as compared to a lower figure in an alternative forum might be, or was capable of being, a “decisive personal juridical advantage” against granting a stay (§§65-68), and Bright Shipping Ltd (the plaintiff which commenced proceedings in Hong Kong) had shown that it would be deprived of a legitimate juridical advantage (namely, the higher tonnage limitation regime under the 1976 Convention as revised upwards via the 1996 Protocol) if the action was tried instead in the Shanghai Maritime Court (where the limits under the applicable PRC Maritime Code had remained static at a level equivalent to the 1976 computation) (§§70-72).

(4)  It may be argued that both The Kapitan Shvetsov and Bright Shipping should be distinguished because in those cases, the proposed alternative forum (Singapore and Shanghai respectively) was found not to be the natural or appropriate forum, or clearly or distinctly more appropriate than Hong Kong, and thus the stay applicant was unable to pass even Stage 1 of the Spiliada exercise.  The same cannot, however, be said in respect of The Adhiguna Meranti, where the Court of Appeal agreed with the finding of Power J (as he then was) that justice could be done between the parties at substantially less inconvenience in Indonesia, and found that not only was Hong Kong not the natural or appropriate forum for the trial, but also that Indonesia was clearly or distinctly more appropriate than Hong Kong (908E-J).  Notwithstanding this finding, the Court of Appeal declined to grant a stay of the Hong Kong proceedings in favour Indonesia because it would be unjust to confine the plaintiffs to the “at best uncertain, and at worst derisory, level of the Indonesian limit”.

(5)  The same result was reached in The Andhika Samyra [1989] 1 HKLR 198, which concerned an application by the owners/demise charterers to stay Hong Kong proceedings in favour of Indonesia. In that case, the owners of some cargoes, part of which were shipped in Taiwan and part in Hong Kong, commenced proceedings in Hong Kong against the owners/demise charterers of the vessel for damage to the cargoes as a result of an extensive fire which occurred in Indonesia.  The relevant bills of lading provided that the governing law was to be Indonesian law[5].  The flag of the vessel was Indonesian, and the owners/demise charterers were also Indonesian.  The argument before Mayo J (as he then was) apparently proceeded on the basis that Indonesia was the natural and appropriate forum for the trial.  Nevertheless, the learned judge declined to stay the Hong Kong proceedings on the ground that the different tonnage limitations applicable in Hong Kong (under Schedule 4 to the Merchant Shipping Act 1979) and Indonesia (under Article 474 of the Indonesian Commercial Code) was of crucial importance to the litigation, and the difference was such that the claimants would be placed at such a juridical disadvantage that a stay should not be granted.

35.  In the Decision, the Judge took the view that the following dictum of Lord Goff in Spiliada [1987] AC 460, at 483B-C, was applicable to the situation in the present case (see §§93-94 of the Decision):

“Then take the scale on which damages are awarded. Suppose that two parties have been involved in a road accident in a foreign country, where both were resident, and where damages are awarded on a scale substantially lower than those awarded in this country. I do not think that an English court would, in ordinary circumstances, hesitate to stay proceedings brought by one of them against the other in this country merely because he would be deprived of a higher award of damages here.”

36.  Notwithstanding this dictum, the Admiralty Court in England does not appear to feel constrained from refusing to stay English proceedings in favour of another forum where only a lower limit of liability would be available on the ground that it would be unjust to deprive a claimant of the advantage of a higher limit of liability in the English court (see The “Vishva Abha” [1990] 2 Lloyd’s Rep 312, at 315 (per Sheen J); Caltex v BP [1996] 1 Lloyd’s Rep 286, at 299 (per Clarke J)).  In those cases, the higher limit of liability was the consequence of the adoption in England of the 1976 Convention in 1986[6] in place of the earlier International Convention relating to the Limitation of Liability of Owners of Sea-going Ships, 1957 (“the 1957 Convention”), which was previously in force in England[7] and was still the governing regime in the alternative available forum (namely, South Africa and Singapore respectively).  It is right to point out that in The “Herceg Novi” [1988] 2 Lloyd’s Rep 454, the English Court of Appeal disapproved the above- mentioned first instance decisions, but that was mainly on the basis that in terms of “abstract justice”, neither Convention was objectively more just than the other (see p 460).  That consideration was, it would seem, not considered to be significant by the Hong Kong Court of Appeal in Bright Shipping Ltd because the contest there was not between the 1976 Convention and the 1957 Convention (see §70), just as it is not in the present case.  It is also of note that in The Andhika Samyra, Mayo J considered that the decision of the House of Lords in de Dampierre v de Dampierre [1987] 2 All ER 1[8] (which, it was submitted, would mean that the courts should now more readily grant a stay where the main reason for deciding to proceed in the English courts is simply to obtain a higher award of damages) did not make any difference to the outcome of the applications before him.

37.  In passing, I should mention that the Judge also considered the aforesaid dictum of Lord Goff to represent a statement of disapproval of forum shopping (see §101 of the Decision).  I am unable to agree with this view.  It seems to me that Lord Goff was saying no more than that the court should not be deterred from granting a stay of proceedings simply because the claimant in the English proceedings would be deprived of some juridical advantages available from invoking the English jurisdiction provided that the court was satisfied that substantial justice would still be done in the available appropriate forum.  That this is the correct way of reading the dictum of Lord Goff is clear from the following passage preceding his discussion of the various types of juridical advantages available in the English courts, including the scale of award of damages in an action arising out of a road traffic accident in a foreign place:

“Clearly, the mere fact that the plaintiff has such an advantage in proceedings in England cannot be decisive…

We have to consider where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice.’ Let me consider the application of that principle in relation to advantages which the plaintiff may derive from invoking the English jurisdiction. Typical examples are: damages awarded on a higher scale; a more complete procedure of discovery; a power to award interest; a more generous limitation period. Now, as a general rule, I do not think that the court should be deterred from granting a stay of proceedings, or from exercising its discretion against granting leave under R.S.C. Ord. 11, simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum.” (482E-F)

38.  In all, I consider that the Judge erred in principle or approach in treating the Plaintiff’s decision to sue the Defendants in Hong Kong in order to benefit from the higher tonnage limitation regime in this jurisdiction as nothing more than forum shopping, and, for this reason, giving this juridical advantage little or no weight when carrying out the balancing exercise under Stage 3.  Having reached this conclusion, the Court of Appeal is entitled to exercise the discretion afresh on whether to grant, or refuse, the stay of proceedings sought by the Defendants.

STAY OF PROCEEDINGS

39.  Given (i) the Plaintiff’s acceptance that Hong Kong is not the natural or appropriate forum, and South Korea is an available forum which is clearly or distinctly more appropriate than Hong Kong, and (ii) the view that I have reached that the Plaintiff will be deprived of the legitimate juridical advantage of a higher tonnage limitation if its claim against the Defendants is tried in South Korea, the remaining question for the court is whether, balancing the advantages of the alternative forum with the disadvantages that the plaintiff may suffer, the Defendants are able to establish that substantial justice will still be done in South Korea.

40.  On behalf of the Plaintiff, Mr Sussex strongly relies on the disparity in the tonnage limits in the two jurisdictions in support of the Plaintiff’s case that substantial justice cannot be done in South Korea.  He refers to the rationale behind the limitation under the 1976 Convention, namely, that “limitation of liability should be permitted only in respect of such excess of liability for which the person liable cannot reasonably be required to carry adequate insurance”[9], and points out that limitation is “not a matter of justice … [but] a rule of public policy which has its origin in history and its justification in convenience”[10].  Mr Sussex argues that although Panama must have accepted the rationale underlying the limits by its adoption of the 1976 Convention, by reason of legislative inaction or oversight it has not amended the limits in line with the 1996 Protocol or the subsequent amendment, and has thereby failed to address the erosion of the currencies that comprise the SDR sought to be rectified by the protocol.  Mr Sussex says that “justice to both parties” clearly does not require that the victim of the Defendants’ tortious act should shoulder the burden of monetary depreciation (amounting to some US$ 58.6 million in this case), and the tortfeasor be rewarded with a corresponding windfall.  Finally, Mr Sussex argues that the 1996 Protocol is the most widely accepted convention on tonnage limitation, having been adopted by 63 contracting states (representing some 69.13% of the world’s merchant fleet).  It would be contrary to international public policy, and most unjust, to deprive the Plaintiff of the advantage of Hong Kong’s higher tonnage limit.

41.  There is no evidence as to why Panama has failed to adopt the 1996 Protocol, and it would, in my view, be speculative to attribute its failure to legislative inaction or oversight.  I am also not satisfied that the 1996 Protocol should be elevated to the status of international public policy.  These having been said, the difference in the maximum amount (of about US$ 58.6 million) recoverable by the Plaintiff in pursuing its claim against the Defendants in Hong Kong and South Korea is plainly an important consideration in the assessment of whether substantial justice can be done in South Korea.

42.  Before the Judge, the Defendants relied on some 13 factors[11] to contend that the balance tipped in favour of a stay as substantial justice could be done in South Korea.  Those factors were repeated before this court, and have been summarized by Mr Clifford Smith, SC (for the Defendants) as follows[12]:

“P, a Korean entity, chooses to operate a maritime terminal business in Korea entailing perennial risk of costly accidents, subject to Korean law, without limiting its services to vessels flagged in jurisdictions such as Hong Kong with higher tonnage limits or requiring all vessels to waive the limitation under Korean law. On the contrary, P voluntarily offers limits of liability in its terms of service which limit liability of calling vessels to figures actually lower (US$20m or US$15m) than the Korean law tonnage limit for this vessel (≈US$24m) (Cl 18.2 & 19.2 of [the TSA and STC]. These contractual limits apply both ways ie to liability attaching to P as well as vessel liability. The Vessel’s head and sub charterers were parties to the TSA. Cl 21.2(a) [of the TSA and STC] requires insurance of the shipping operator’s liability to the Liability Ceiling Amount ie the cl 18.2 amount including P&I Club cover … P’s insurers chose to insure P knowing of the perennial risk of accidents, the Korean law recovery rules and P’s chosen business terms, at a premium they evidently found to be an acceptable commercial reward… P and P’s insurers can have no realistic expectation that the Hong Kong Courts are available solely to save them from the known and acceptable consequences of risk vs reward decisions they have taken with their eyes open.”

43.  Mr Smith has also pointed out, with considerable force, that it is one thing to send a claimant to the natural forum (often its home jurisdiction, as here) which happens in some respect to be less advantageous to it (financially or otherwise) than Hong Kong, and quite another to send a claimant who has commenced an action in Hong Kong to a non-natural forum where it would encounter disadvantages.

44.  Having given careful consideration to the opposing factors in favour of or against the stay of proceedings sought by the Defendants.  I am are ultimately persuaded by (i) the matters referred to by Mr Smith (save that I would place no reliance on the position of P’s insurers or the insurance premium paid or payable by the Plaintiff, a matter referred to and relied upon by the Judge at §104 of the Decision), as well as (ii) the factors which point to South Korea being the natural or appropriate forum, and clearly or distinctly more appropriate than Hong Kong, for the trial of this action, that the Defendants have established that substantial justice will be done in South Korea, notwithstanding the lower limit of liability applicable in that jurisdiction.

45.  For the foregoing reasons, I would dismiss the Plaintiff’s appeal with costs to the Defendants.  The parties have lodged their respective updated costs statements.  I would summarily assess the costs payable by the Plaintiff to the Defendants at HK$750,000.

Hon G Lam JA:

46.  I agree that the plaintiff’s appeal should be dismissed with the costs order proposed by Chow JA.  As explained by Chow JA in his judgment, the Judge erred in regarding the plaintiff as having engaged in reprehensible forum-shopping before balancing the justice of the case under Stage 3 of the requisite analysis.  In fairness to the Judge it should be pointed out that he was faced with a submission by the plaintiff’s counsel below[13] that the court was bound by authorities to hold that depriving a plaintiff of the higher Hong Kong limit would be unjust.  The judge was brief in dealing with Stage 3 perhaps because the plaintiff did not engage with the defendant’s analysis, submitting instead that the stay should be mandatorily refused as a matter of law.

47.  On the footing that the Judge’s exercise of discretion was vitiated, the question that this court must itself deal with is the balancing exercise in the last stage of the 3-stage test that has been applied in Hong Kong since The Adhiguna Meranti [1987] HKLR 904 at 907 and restated in SPH v SA (2014) 17 HKCFAR 364 at §51. Mr Sussex SC has pointed out that, in accepting the forum non conveniens principle expounded in Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 but splitting up the second phase of the analysis into Stages 2 and 3, Hong Kong law places the burden of proof in Stage 3 on the applicant for stay, differing from English law in this respect (see Spiliada at pp 476E-F, 478C-E; Connelly v RTZ Corporation plc [1998] AC 854, 871H-872B).  Ultimately, however, this case does not in my view turn on the burden of proof.

48.  If the trial takes place in the Republic of Korea, by its rules of private international law,[14] the tonnage limit of liability that applies is that under Panamanian law as the law of the place where the vessel is registered.  Panama, and indeed Korea, have not ratified the 1976 Convention or the 1996 Protocol, though they have enacted domestic law providing for limitation at the 1976 Convention level.  It is not clear when they did so but whenever it was, they have not since raised the monetary limits following the 1996 Protocol or otherwise, and their limit based on the tonnage of the Milano Bridge (about US$24m) is therefore substantially lower than the limit under Hong Kong law (US$82.6m).  While the plaintiff’s claim for physical damage (US$30.1m) already exceeds the Panamanian limit, the defendants say that the plaintiff’s claim for US$60.9m for business interruption is significantly exaggerated.  Plainly this is not a matter that the court can resolve at this stage.  We must proceed on the basis that the Hong Kong limit is a considerable advantage that the plaintiff would lose if the action is tried in Korea.

49.  The question at the third stage of whether substantial justice will be done in the foreign forum is one that is to be approached by considering all the circumstances, not just the juridical advantages relied upon.  In this exercise the court faces the conundrum that an advantage to the plaintiff is often the obverse of a disadvantage to the defendant.  The solution offered in Spiliada, retracting from a previous formulation that appeared to give almost decisive emphasis to the loss on the plaintiff’s part of a legitimate juridical or personal advantage,[15] is to state that the question whether there is some other tribunal in which the case may be tried more suitably for the interests of all the parties and for the ends of justice is to be answered objectively, and that simply affording the plaintiff his advantage at the expense of the defendant is not consistent with an objective approach.[16]

50.  It is important to bear in mind that the exercise in Stage 3 presupposes that Hong Kong is not the natural or appropriate forum and that there is another forum which is clearly or distinctly more appropriate than Hong Kong (“appropriate” being a reference to the forum that has the most real and substantial connection with the action).  The general principle is that once a clearly more appropriate foreign forum has been identified, generally speaking the plaintiff will have to take that forum as he finds it, even if it is in certain respects less advantageous to him than the Hong Kong forum – the court will ordinarily not be satisfied that a plaintiff will not obtain justice in the foreign jurisdiction merely because he will enjoy procedural advantages or a higher scale of damages or more generous rules of limitation in Hong Kong: Spiliada at p 482-483; Connelly at p 872F-G; Lubbe v Cape plc [2000] 1 WLR 1545, 1554H.

51.  Mr Sussex has referred to the observation of Lord Denning MR in The Bramley Moore [1964] P 200 at 220 that “limitation of liability is not a matter of justice.  It is a rule of public policy which has its origin in history and its justification in convenience”.  But it does not follow that limitation of liability is inherently unjust.  Systems of limitation of shipowners’ liability are prevalent if not ubiquitous (at least among shipping nations), albeit not uniform.  In practice they represent differing regimes for the allocation of risk and responsibility for the perils of the sea and form the basis for insurance arrangements.  The reality, to which we need not shut our eyes in this kind of case (Spiliada at 486E and Adhiguna Meranti at 909D), is that it is the insurers who are dominus litis on both sides.

52.  Mr Sussex further submits that the 1996 Protocol embodies “international public policy” and that Panama, having enacted domestic legislation that adopted the 1976 Convention tonnage limits, can be inferred to have failed to amend its limits accordingly due to legislative inaction or oversight.  I am unable to accept either proposition.

53.  Although limitation of liability has for almost a century been the subject of international conventions, the search for uniformity in this area has by no means been successful.  As at 1998, only 30 States representing 43% of the world’s tonnage adhered to the 1976 Convention;[17] there are now 56 Contracting States, after some of the former Contracting States denounced it in favour of the 1996 Protocol.  Nor can the 1996 Protocol, which entered into force in 2004 and now admittedly the most widely accepted Convention on tonnage limitation, claim universal acceptance or anything like it, even among the State parties to the 1976 Convention.  63 States are now parties to the 1996 Protocol, representing 69.13% of the gross tonnage of the world’s merchant fleet, but Mr Smith SC says that half of the State parties to the 1976 Convention have not opted to join the 1996 Protocol.  Hong Kong was inclined to adopt it with a view to maintaining its status as an international maritime centre, and accordingly China acceded to the 1996 Protocol for Hong Kong in 2005, but China itself has still not done so for any other part of the country.  Whatever may be the merits of the international unification of limitation regimes, the fact is that there is a complex patchwork around the world consisting of, inter alia, 1976 Convention countries (with variations in terms of reservations), 1996 Protocol countries (of which some have denounced the 1976 Convention and some have not), and countries who have ratified neither, such as China (except for Hong Kong), United States, and, significantly in this case, Korea and Panama, and who may or may not have their own domestic systems of limitation.  If by international public policy is meant some standard common to all civilized nations, plainly it is impossible to regard the 1996 Protocol as such.  Nor in my opinion can the 1996 limit fairly be regarded as so central to our notions of justice that to send a plaintiff away to a foreign forum with a lower limit should be anathema to the public policy of Hong Kong.[18]

54.  It is true that in The Adhiguna Meranti Hunter JA, giving the judgment of the Court of Appeal,[19] stated that the Hong Kong limit reflected international public policy.[20]  I confess I find the statement not easy to reconcile with his Lordship’s observation that the Convention in question was much more widely adopted in Europe than in this part of the world, reflecting the wide differences in conditions and attitudes of the two regions.[21]  But in any event I do not think the statement avails the plaintiff here.  The limit referred to was that prescribed in the Convention Relating to the Limitation of the Liability of Owners of Sea-going Ships (Brussels 1957), applied to Hong Kong via an Imperial Statute, namely, section 503 of the Merchant Shipping Act 1894 (as amended) which “was drawn about as widely as it could be” and had effect in “the whole of Her Majesty’s Dominions”.[22]  With respect I do not think that in this era Hunter JA’s statement can be taken as authority that the 1996 Protocol, to which our own country is not a party (except in respect of Hong Kong), represents international public policy.  Nor do I think the Court of Appeal could have intended to say that whatever Hong Kong has adopted at any particular time should be regarded by her courts as international public policy, for that would be a form of judicial chauvinism wholly inconsistent with the forum non conveniens principle.

55.  Mr Sussex suggests that by enacting domestic law reflecting the 1976 limit, Panama must be taken to have accepted the rationale that “limitation of liability should be permitted only in respect of such excess of liability for which the person liable cannot reasonably be required to carry adequate insurance”,[23] and that the Panamanian limit has failed to be revised as a result of legislative inaction or oversight.  But it is difficult to conceive that such a question would have escaped the attention of a country as prominent in shipping as Panama with its own Code of Maritime Procedure.  The fact that a significant number of State parties to the 1976 Convention have not ratified the 1996 Protocol and certain States with domestic law reflecting the 1976 Convention have not yet increased their limits in line with the 1996 Protocol (including Panama, Korea and China (except in relation to Hong Kong)) suggests that they each have their own reasons for their position, which is prima facie as much a considered stance as that of the ratifying States, with reasons that are as likely to involve socio-economic and political considerations.  It is not for the Hong Kong courts to speculate what those reasons may be, still less for us to pass judgment on whether they are justifiable.  While Mr Sussex has not quite put it in this way, the implicit suggestion that these countries have sleepwalked into an unjust limitation regime cannot be given any countenance by this court.

56.  Stage 3 calls for an evaluative exercise that involves weighing the fairness to the parties.  The process evokes measuring the extent to which the parties deserve the juridical advantages or disadvantages concerned, a question that should take into account the geography of the case.  It can, I think, readily be accepted that the stronger the connections with a jurisdiction, the more deserving the parties are of the juridical consequences, favourable or otherwise, flowing from a trial there.  In this sense the analysis is not completely divorced from the factors relevant in Stage 1.  The idea is captured in the following passage in Sopinka J’s judgment in Amchem Products Inc v (British Columbia) Workers’ Compensation Board [1993] 1 SCR 897, 920, endorsed by Lord Hoffmann (dissenting for other reasons) in Connelly at 876:

“The weight to be given to juridical advantage is very much a function of the parties’ connection to the particular jurisdiction in question. If a party seeks out a jurisdiction simply to gain a juridical advantage rather than by reason of a real and substantial connection of the case to the jurisdiction, that is ordinarily condemned as ‘forum shopping’. On the other hand, a party whose case has a real and substantial connection with a forum has a legitimate claim to the advantages that that forum provides. The legitimacy of this claim is based on a reasonable expectation that in the event of litigation arising out of the transaction in question, those advantages will be available.”

57.  In approaching this it is necessary to guard against condemning an action as forum-shopping before completing the analysis, and also to bear in mind that the parties’ connections to the respective jurisdictions are not the only circumstances relevant in Stage 3, but the passage nevertheless provides a valuable insight into the evaluative process.  In Connelly, Lord Goff, who gave the majority speech, referred to a similar idea, namely, that where a plaintiff has founded jurisdiction against the defendant on what may be described as an extravagant basis, such as by serving proceedings on the defendant who was on a brief visit to the jurisdiction or based on the Scottish doctrine of arrestment of the defendant’s assets within the jurisdiction, the court may not be prepared to assist the plaintiff by refusing a stay to enable him to keep the benefit of an advantage available in the forum.[24]

58.  Now I do not equate the action here with one commenced on an extravagant or exorbitant basis.  Invoking the jurisdiction of the High Court by an action in rem founded on the arrest of a sister ship is a procedure of special value in admiralty cases[25] recognised by international convention.  The plaintiff was entitled to bring the action here when the sister ship of the Milano Bridge called at Hong Kong.  But apart from this, the case has no connection with this jurisdiction.

59.  In contrast, the connections with Korea are overwhelming.  The plaintiff is a Korean company operating a maritime terminal in Korea, with cover from Korean insurers.  The allision took place in Korea, as it was bound to, the liability for which is governed by Korean law.  The third parties against whom the defendants seek recourse are all in Korea: the pilot, the tugs, the Todo Islet contractors and the Korean Government.  It is Korean law that applies the limit in the law of the ship’s port of registry, in this case the Panamanian limit, which happens to be the same as the Korean limit. The defendants are admittedly not Korean, but like the plaintiff they have no connection to Hong Kong whatsoever.

60.  The plaintiff knew of the perennial risk of allision of its terminal by ships of different nationalities with different tonnage limitation laws.  The Milano Bridge itself had visited the Pusan port four times before, each time at the same pier.  The plaintiff criticises Korean law as capable of producing “arbitrary and unfair results” by applying the limit under the law of the ship’s flag.  Yet it has chosen to operate a terminal there without limiting its services to vessels registered in jurisdictions with higher limits or requiring those registered in jurisdictions with lower limits to waive them.  On the contrary its own terms of trade stipulate an even lower limit for calling vessels.

61.  In these circumstances, approaching the matter from principle, it does not seem to me that the plaintiff can have a strong expectation of or claim for the advantage of the higher limit in this jurisdiction, available in this case only because the Milano Bridge happened to have a sister ship that called at Hong Kong.  Generally speaking it is not unjust that the legal consequences of an alleged wrong are adjudicated in the place where it was wholly done and in accordance with the law of that place. The weight generally given to the place of a tort in Stage 1 of the forum non conveniens analysis stems from the notion that it is “manifestly just and reasonable” that a defendant should answer for his wrongdoing in the jurisdiction where the tort was committed.[26]  Limitation of damages is a disadvantage to the plaintiff but an advantage to the defendants. Mr Sussex submits that substantial justice cannot be done by the award of a sum which has suffered the ravages of 45 years of monetary debasement and inflation.  While inflation may objectively be the reason for the difference between the limits, I do not think it gives us any more licence to declare a foreign limit unjust than in a case where that limit, which is far from derisory, has been freshly imposed.  Overall I find it quite difficult to say that justice will not be obtainable in Korea, the natural and clearly more appropriate forum for the action and, indeed, the plaintiff’s home country.  I am satisfied that substantial justice will be done there.  This seems to me to be a case in which Lord Reid’s observation that “as a general rule there is no injustice in telling a plaintiff that he should go back to his own courts” is entirely apt.[27] If this action is allowed to proceed for the reason of the advantage relied on, it will be hard to imagine any case, where limitation has a significant impact, in which the Hong Kong court will not pronounce that justice is not obtainable in the natural and otherwise clearly more appropriate forum simply because that jurisdiction applies the unrevised 1976 Convention limit.  In my opinion that would not be an approach in keeping with comity.

62.  There are a trilogy of Court of Appeal decisions in Hong Kong referred to in the argument where the court had refused to stay an action here in favour of a jurisdiction with a lower tonnage limitation.[28] Mr Sussex is correct not to rely on them as binding decisions on Stage 3, for it is a balancing exercise that depends on the individual facts of each case.  Nevertheless, like the Judge,[29] I would mention the main features that distinguish them from the present case.

63.  The Adhiguna Meranti concerns an action in rem brought by cargo owners against the owners of the carrier.  Although the vessel had run aground in the waters of Taiwan, a stay was sought in favour of the court of Jakarta, Indonesia rather than Taiwan.  The Court of Appeal found that Indonesia was clearly a more appropriate forum than Hong Kong, and that the Indonesian court would apply Indonesian law of limitation.  The Indonesian limit was fixed by a statute that dated from 1848 and was denominated in Dutch guilders.  The Indonesia court might substitute rupiahs for guilders which would produce in that case a limit of only $2,541, or it might perhaps make some adjustment which would still produce a figure very much less than the Hong Kong and Taiwan limits of $1.27m and $0.6m respectively.[30] In the end, despite the tenuous connection with Hong Kong, the Court of Appeal found that it would be unjust to the plaintiffs to deprive them of the Hong Kong limit and confine them to the Indonesian limit.  Limitation might have been “a decisive factor in refusing a stay” in that case,[31] but plainly the court was influenced by (i) their view of the 1957 Convention as reflecting international public policy, which, for reasons explained above, does not apply here; (ii) their finding that the level of the Indonesian limit was “at best uncertain, and at worst derisory”, which cannot be said of the limit applicable under Korean and Panamanian laws;[32] and (iii) the other disadvantages faced by the plaintiffs in Indonesia including, not least, a time-bar which might be mandatory and not capable of being waived by the undertaking offered by the defendants.[33]

64.  In The Kapitan Shvetsov [1997] HKLRD 374,[34] there was a collision between two vessels, the Nanta Bhum and the Kapitan Shvetsov, in a river in Thailand, but neither ship’s owners sued the other in Thailand.  Instead, the Singaporean owners of the Nanta Bhum sued the Russian owners of the Kapitan Shvetsov (by arresting a sister ship) in Singapore where the 1957 Convention applied, and the latter sued the former in Hong Kong (also by arresting a sister ship) where the higher limit under the 1976 Convention was available.[35]  Crucially, the majority of the Court of Appeal[36] considered that neither Singapore nor Hong Kong was the natural forum for the action which was Thailand, nor was Singapore a more appropriate forum than Hong Kong.  Essentially each party had for its own benefit or convenience chosen a forum and preferred its chosen forum.  On this footing the application to stay the Hong Kong action did not get past Stage 1.

65.  The facts in Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 seem to me to be even more strongly against a stay.  There was a collision between two vessels, the CF Crystal and the Sanchi, in the East China Sea outside China’s territorial waters though within the exclusive economic zones of China, Korea and Japan.  The Sanchi flew the Panamanian flag, and its owner, the plaintiff in that case, was a company incorporated in Belize.  The CF Crystal had Hong Kong as its port of registry, flew the Hong Kong flag, had a Chinese crew, and its owner (the defendant in the action) and manager were both Hong Kong companies.  The action in Hong Kong was an in personam action served on the defendant at its registered office in Hong Kong.  In contrast, there was so little real connection with Shanghai, the competing forum, that it was said that if there was any “forum shopping” in that case, it was the defendant’s attempt to litigate in Shanghai that would be more appropriately so described.[37] The defendant’s stay application therefore failed at the first hurdle before the judge and on appeal.  The Court of Appeal[38] went on to say that The Adhiguna Meranti is a binding decision that a significantly higher limitation amount in Hong Kong is “capable of being a decisive factor in refusing a stay”.[39]  But what was said further by the Court of Appeal in doubting that substantial justice could be achieved in Shanghai by the award of a sum significantly eroded by inflation[40] was not only “entirely obiter”[41] but also inevitably coloured by the court’s conclusions in the first stage (see Amchem Products Inc and Connelly above).

66.  In the present case, where the facts are very different from these three cases, I consider that Korea is the preferable forum for securing the ends of justice.  For these reasons I too would dismiss the appeal.

[1] See The Travaux Préparatories of the LLMC Convention, 1976 and of the Protocol of 1996, at §60.

[2] [1987] HKLR 904.

[3] See §102 of the Decision.

[4] See §4 of the Plaintiff’s Skeleton Argument dated 7 October 2021.

[5] The governing law provision was held by Mayo J to be void by reason of Article III, Rule 8 of the Hague Visby Rule.

[6] By the coming into force of s 17 of the Merchant Shipping Act, 1979.

[7] By virtue of s 503 of the Merchant Shipping Act, 1894 as subsequently amended.

[8] A case referred to by the Judge at §92 of the Decision.

[9] See The Travaux Préparatoires of the LLMC Convention, 1976 and of the Protocol of 1996, at §2 (p 5).

[10] See The “Bramley Moore” [1963] 2 Lloyd’s Rep 429, at 437 per Lord Denning MR, and The “Amalia” (1863) 1 Moore NS 471, at 473 per Dr Lushington.

[11] See §§115-116 of the Defendants’ Skeleton Argument dated 19 April 2021 before the Judge.

[12] See §19 of the Defendants’ Skeleton Argument dated 21 October 2021.

[13] not Mr Sussex orMr Yu.

[14]Article 60(4) of the Private International Law Act.

[15]In MacShannon v Rockware Glass Ltd [1978] AC 795, 812B, Lord Diplock said: “In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the court that there is another forum to whose jurisdiction he is amenable in which justice can be done between the parties at substantially less inconvenience or expense, and (b) the stay must not deprive the plaintiff of a legitimate personal or juridical advantage which would be available to him if he invoked the jurisdiction of the English court”, though he subsequently recognized that the mere existence of a legitimate personal or juridical advantage of the plaintiff would not be decisive and that a balance must be struck: The Abidin Daver [1984] AC 398, 410.

[16] Spiliada, at 482D.

[17] The “Herceg Novi” [1998] 2 Lloyd’s Rep 454, 458.

[18]For these two senses of “international public policy”, albeit in a different context, see Hebei Import & Export Corp v Polytek Engineering Co Ltd (1999) 2 HKCFAR 111, 123D, per Bokhary PJ.

[19]Yang VP, Hunter JA and Nazareth J.

[20] at p 922E.

[21] at p 922D.

[22] at p 921H.

[23]The Travaux Préparatoires of the LLMC Convention 1976 and of the Protocol of 1996 (published by CMI), p. 5.

[24]See p 873B.

[25]See e.g. The Peng Yan [2009] 1 HKLRD 144, §23.

[26] The Albaforth [1984] 2 Lloyd’s Rep 91 at 96.

[27]The Atlantic Star [1974] AC 436 at 454C.

[28]There is in addition a first instance decision of Mayo J in The Andhika Samyra [1989] 1 HKLR 198 which also concerned the Indonesian limit which was again found to be “at best uncertain and at worst derisory”.  Mayo J essentially followed The Adhiguna Meranti.

[29]Decision, §§97-99.

[30]See pp 915H-916E.

[31]See Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 at §67.

[32] p 922E.

[33] pp 916G-H, 919G-H, 922F.

[34] Also reported, together with the first instance decision of Waung J, at [1998] 1 Lloyd’s Rep 199.

[35] which had been adopted into Hong Kong law since 1993.

[36]Litton VP and Cheung J, with Liu JA dissenting.

[37]per Fok PJ in [2020] HKCFA 24 at §19, giving the reasons of the Appeal Committee of the Court of Final Appeal for refusing leave to appeal.

[38]Kwan VP and Barma JA.

[39]§§65-67.

[40]§§70-72.

[41]per Kwan VP in the Court of Appeal’s subsequent decision refusing leave to appeal to the Court of Final Appeal: [2020] HKCA 162, §18.