P.T. KRAKATAU STEEL (PERSERO) AND OTHERS v. MOUNT KERINCI LLC AND ANOTHER

HCCL 17/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL ACTION NO. 17 OF 2008

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REASONS  FOR  JUDGMENT

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This application

1. On 5 September 2008 the defendants herein issued a Notice of Motion seeking, inter alia (at paragraph 1), that all further proceedings in this action be stayed on the basis of forum non conveniens in favour of the courts of Japan.

2. A subsequent amendment to that Motion as issued sought to amend and to add to the relief sought to include reference to declaratory relief in the terms following:

“There be a declaration that the court has no jurisdiction over the Defendants in respect of the subject matter of the Plaintiffs’ claim on the ground that there is no basis for the grant of leave to serve the writ on the Defendants under RHC Order 11”.

3. By agreement between the parties, the application was dealt with as if by summons, the respective parties having filed detailed skeleton arguments setting out their respective positions.

4. Having read the skeleton submissions, and having heard supplemental argument, at the hearing this court made the following Order:

“That the application by Motion dated 5 September 2008 be dismissed with costs to the plaintiffs, such costs to be taxed if not agreed.”

5. The court confirmed an earlier direction that the defendants were to have 14 days from the date of this Order to file and serve their Defence.

6. Consequent upon the determination by the court of the application, Mr Wright, who appeared for the plaintiffs, made an immediate oral application that the court order a stay of the foregoing order pending appeal on the substantive issue to the Court of Appeal.

7. This application for a stay also was refused; thus any application for a stay, if seriously desired, now must be made directly to the higher court.

8. At the conclusion of this hearing this court undertook to produce a written judgment outlining its reasons for coming to the view that it did, and which it had expressed in general terms at the hearing.

9. This I now do.

The factual background

10. The facts of this case are in relatively short compass, and, I am told by Mr Wright, involve a procedural situation often faced by litigation solicitors in the area of admiralty practice in instances wherein the arrest of a vessel, or a sister ship, is forestalled by the proffering of a letter of undertaking by the relevant P&I Club with which the vessel is entered.

11. This is a claim by the plaintiffs for damages in respect of alleged breaches by the defendants of the contracts of carriage contained in or evidenced by 3 bills of lading, alternatively the claim is put on the basis of breach by the defendants of their duties as bailees and/or in negligence.

12. The 1^st and 3^rd plaintiffs are companies incorporated in Indonesia; the 2^nd plaintiff is a company incorporated in Japan. 

13. It is alleged that they are entitled to claim in respect of 293 steel coils which were carried on board the M.V. “DEWI PARWATI” from Cigading Port, Indonesia, from which the vessel sailed on or about 26 October 2007, to Omaezai, Japan.

14. On discharge in Japan on or about 7 November 2007, it was noted that there had been seawater ingress into the cargo holds, primarily, it is alleged, through hatch cover No 1.  As a result the cargo of steel coils carried therein had become rusted.

15. A survey was called, which took place whilst the vessel was alongside the wharf, and it is alleged that during this survey the seawater ingress had caused the steel cargo to have become heavily wetted and rusted; silver nitrate tests indicated contact with salt water.

16. The plaintiffs say that the cargo was in good condition when received on board the vessel, and that there was a failure to deliver the cargo in good order and condition; the plaintiffs also aver that in the absence of unseaworthiness and/or uncargoworthiness, such cargo damage would not have occurred, and owners are put to proof as to cargoworthiness and/or seaworthiness of the vessel before and after the commencement of the voyage.

17. The 1^st defendant is sued as owner of the “DEWI PARWATI”, and the 2^nd defendant is sued as contractual carrier under the terms of the relevant bills of lading.

18. The claim as mounted – the Statement of Claim having been indorsed on the writ, which was issued on 2 July 2008 – is for the sum of US$1,086,954.19, together with interest thereon; as to the make-up of this figure, the pleading condescends to considerable particulars, but for present purposes suffice to say that the surveyors of the cargo during discharge categorized the steel damage into 6 groups, namely A to F, Group A reflecting the allegation that 100% of the coil had been affected by rust, down through the gradations to that part of the cargo least affected, Group F, wherein it is said that 7% of the steel coil thus had been affected.

19. As to Groups A, B and C, the surveyors are said to have concluded that the costs of trimming the steel and reconditioning the coils was uneconomic, due to the extent of the damage, whilst for the other groups there is a net adjusted loss to reflect an alleged salvage sale price.

20. For present purposes that is all that needs to be said about the background and constituent elements of the plaintiffs’ claim.

21. The gravamen of this case, however, and that which has spawned the present application for declaratory relief and for a stay of proceedings, is that which was done in terms of the provision of security for the claim by the P&I Club with which the current owners of the vessel are entered, and, in particular, the decision to instruct Hong Kong solicitors to accept service of proceedings by the plaintiffs in Hong Kong.

22. Once more, the details are of no more than background significance.  What happened was this.

23. On or about 16 June 2008, the 2^nd plaintiff obtained what is called a ‘Rule B attachment’ from the US District Court for the Southern District of New York. 

24. This application was brought in respect of the assets of PT Arpeni Pratama Ocean Line TBK, the present owners of the vessel, in addition to the parties named as the 1^st and 2^nd defendants in the Hong Kong writ.

25. As a consequence of obtaining this ‘Rule B attachment’, there was correspondence between the claims’ recovery agents instructed on behalf of the plaintiffs, and the P&I Club of the present owners, Shipowners’ Protection Limited, which was seeking to guard against the future arrest of the vessel.

26. Following these negotiations, on 27 June 2008 the Shipowners’ Protection club issued a Letter of Undertaking, in which they undertook to pay “such sums as may be finally adjudged by any competent court or tribunal or on appeal therefrom…in respect of the said claims, interest and costs.”

27. More important, in the present context, the Letter of Undertaking contained the following provision:

“We further undertake that we will, within 14 days of the receipt from you of a request to do so, instruct solicitors to accept on behalf of Owners [ie the existing defendants and current owners] service of proceedings or notice of arbitration brought by the Cargo Owners [ie the plaintiffs] and to file acknowledgment of service thereof or appoint an arbitrator on behalf of owners as appropriate.”

28. On 30 June 2008 the defendant’s solicitors, Holman Fenwick and Willan (‘HFW’) confirmed that they had instructions to accept service and stated “We are taking instructions on the issue of jurisdiction…and will respond when we are able.”

29. The writ subsequently was served on the offices of HFW, and acknowledgements of service subsequently were filed on behalf of the 1^st and 2^nd defendants.

30. It is against this factual backdrop that the present application for a declaration and a stay of proceedings falls to be evaluated.

The arguments as to the existence of Hong Kong jurisdiction

31. On behalf of the defendants, the central thesis of Mr Colin Wright was that the present application is to be treated in like manner as an inter partes challenge to the ex parte grant of leave under Order 11, and thus the central issue is “whether the court would have granted leave to serve the writ out of the jurisdiction had the plaintiffs made an application under Order 11.” 

32. Following on from this submission, which is an essential building block in the argument, Mr Wright noted, correctly, that applications for service out under Order 11 involve a three-stage evaluation, namely, first, has jurisdiction been sufficiently established under one of the subheads of Order 11, rule 1(1), second, whether there is a serious issue to be tried, so as to enable the court to exercise its discretion to grant leave, and third, the issue of forum conveniens, that is, whether Hong Kong is the proper forum in which the case can be tried in the interests of all parties.

33. Further following this line of argument, Mr Wright then concluded that since it cannot possibly be suggested on the plaintiffs’ behalf that their claim falls within any of the subheads of Order 11, rule 1(1), equally it must follow that had the plaintiffs, in effect, not “short-circuited” the Order 11 procedure, they could not possibly have obtained leave from the Hong Kong court to serve out under Order 11, with the consequence that the defendants’ present (and amended) application – that is, to include the prayer for declaratory relief – must be allowed, and thus it mattered not that the plaintiff also was unable to discharge the burden upon it, under an Order 11 application, of demonstrating that Hong Kong represented the forum conveniens for the trial of this action.

34. Upon this formulation, therefore, and underpinning the amendment seeking declaratory relief that this court had no jurisdiction over the defendants in terms of the plaintiffs’ claim, the forensic gambit thus adopted was to place into direct issue the existence of the primary jurisdiction of the Hong Kong court, and not the secondary issue of whether, on the basis that such jurisdiction undoubtedly exists, in the discretion of the court such jurisdiction in fact should be exercised, which is the purview of the ‘traditional’ fnc/Spiliada stay application.

35. It is worth pointing out at this stage that this approach was adopted notwithstanding that no Order 12, rule 8 application specifically had been mounted by the defendants, so that this declaratory relief, introduced by way of amendment, represented the conceptual underpinning of the attack upon the existence of the jurisdiction of the Hong Kong court.

36. As was made clear during the hearing, upon reading Mr Wrights’ skeleton argument I found difficulty with this analogy with Order 11; in my view such approach was and is misplaced in the circumstances of this case.

37. That Mr Sussex SC, appearing for the plaintiff, shared the same view became apparent when he filed his own skeleton argument in response.

38. Mr Sussex took the position that, contrary to the argument as now sought to be advanced on behalf of the defendants, the defendants validly had been served within this jurisdiction.

39. There could be no doubt as to this, he said, because the defendants (through their solicitors) had been served with process pursuant to a contract contained in the P&I Club letter of undertaking whereby, in consideration of the plaintiffs refraining from arresting the vessel which had carried the cargo of steel coils the subject of the instant cargo claim, or any ‘sister ship’ or ship in associated management, the P&I Club in question unconditionally had undertaken, upon request, to instruct solicitors to accept service of proceedings on behalf of the defendants, and had warranted that it had authority from the defendants so to instruct solicitors.

40. Thus, he continued, following a request from Messrs Richards Butler on behalf of the plaintiffs, Messrs Holman Fenwick Willan had been instructed to accept service of proceedings, and indeed the plaintiffs’ writ duly had been served on that firm.

41. It followed from this, therefore, that the defendants had been properly served within the jurisdiction of Hong Kong, and that no question now arises, or could arise, in terms of the analogy of the grant of leave under the Order 11.  In fact, said Mr Sussex, this was an example of defendants which had submitted to the jurisdiction by instructing the solicitors to accept service in Hong Kong, and by agreeing a contractual mechanism for service within the jurisdiction.

42. Service on their solicitors was equivalent to serving the defendants themselves within the jurisdiction, and thus there was no right to challenge the jurisdiction of the court under Order 12, rule 8: see, for example, Manta Line v Sofianites [1984] 1 Lloyd’s Rep 14, wherein the English Court of Appeal (Sir John Donaldson MR, Ackner and Fox LJJ), in overruling a decision of Neill J who had held that service of the writ in that case would be set aside, had held that, on the facts of that case, there was no evidence of any conditional agreement to accept service in England, and that the defendants’ solicitors had given an unqualified agreement to accept service in that jurisdiction.  In his judgment in that case, Donaldson MR observed (op cit., at 19):

“Mr Gross [appearing for the defendant/applicant under Order 12, rule 8] really advances two arguments in opposition to the appellant’s case.  He says that if you look at the circumstances in which this agreement to accept service was concluded, and in particular take full account of the rush in which it was concluded, the true view is that this was a conditional agreement.  It was an agreement to accept service in England with a view to avoiding the expense of service in Greece, and all that McHales was doing was saying, “Serve the documents on us, and you will be in the same position, and so will our client, as if the document had been served in Greece.”

I entirely accept that you could make such a agreement, and if it were made it would be open to the defendant to challenge the jurisdiction in the ordinary way; but I cannot find any trace in the evidence – and the learned Judge found no trace in the evidence – of any such agreement having been made.  The furthest the evidence goes is that Mr Moore – Mr Thompson’s principal – had slight anxieties on the question of jurisdiction, which he may to some extent or other have communicated to Mr Thompson, who did the talking, and Mr Thompson was told to be circumspect.

Mr Thompson was not circumspect; he gave an unqualified agreement to accept service.  An uncommunicated intention, whether or not accompanied by circumspection, cannot affect the rights of the other parties to the contract…”

43. In this context Mr Sussex took the opportunity also to pray in aid the observation of Lord Haldane in John Russell & Co Ltd v Cayzer, Irvine & Co Ltd [1916] 2 AC 298, at 302:

“Now, my Lords, although, as I have pointed out, the acceptance of service confers jurisdiction, it does not necessarily make it a duty of the Court to decide the case.”

Thus, counsel continued, as with any other case of proper and due service within the jurisdiction, it remained open to the defendants to invite the court to decline to exercise such jurisdiction in favour of some other forum which was said to be the forum conveniens, but it most certainly could not be asserted that there was no jurisdiction in the court in the first place.

44. This latter point led on to a subsidiary, and purely procedural point which also taken by Mr Sussex.  As I understood it, the argument essentially was this.

45. The defendants now wished to amend the Notice of Motion to add the prayer for declaratory relief.  However, this was opposed on solid procedural ground.  The introduction of the prayer for declaratory relief represented an Order 12, rule 8 application now being put forward in and under the guise of the initial fnc stay application, and the time period which was allowed under Order 12, rule 8 of the Rules of the High Court for the defendants to take objection to the fundamental jurisdiction of the court had expired.  In fact, that which had happened was that the Notice of Motion, in the original (and restricted) terms, had been filed, the consequence of which was that such Notice of Motion – wherein the court was asked to refrain from exercising the jurisdiction which it then implicitly was recognized to possess – itself constituted a ‘step in the action’, and thus was in itself a submission to the jurisdiction, and in the circumstances the Motion could not now be reconstituted to object to the existence of jurisdiction per se, as opposed to the exercise of such jurisdiction.

Decision upon the primary jurisdictional argument

46. I considered that in the circumstances of this case Mr Wright’s argument did not get off the ground, and at the hearing it was rejected in short order.

47. The short and ineluctable point is that the defendants had been served within the jurisdiction of Hong Kong, not by virtue of the exercise of any ex parte discretion by the Hong Kong court pursuant to the provisions of Order 11, but by reason of a binding contractual commitment in the terms emanating from the P&I Club.

48. I do not accept the analogy as drawn with Order 11: in my view this argument is flawed.

49. Service of originating process was effect by contractual consent, and Hong Kong jurisdiction over the defendants thereby was established.

50. I reject the notion that because no reference was made to forum within the P&I Club undertaking that this thereby opened the door to an attack upon the primary jurisdiction of the Hong Kong court.  It did not.

51. The absence of any specification as to jurisdiction within the undertaking in my view sounded not to the existence of Hong Kong jurisdiction, as thus established by the undertaking in terms of acceptance of service in Hong Kong by the defendants’ solicitors, but to the separate and distinct issue of whether, in the exercise of its discretion, the Hong Kong court could be persuaded that such jurisdiction, as thus clearly established, should not be exercised, and thus should be declined on the basis of the ‘usual’ fnc/Spiliada arguments which are deployed on such applications for a stay of proceedings: for examples of which see United Phosphorus Ltd v China Merchants (unrep), HCCL 81 of 1997, judgment dated 24 March 1999; The “Messiniaki Tolmi” [1984] 1 Lloyd’s Rep 266, at 270.

52. For present purposes, however, in my judgment in the present circumstances the ‘bedrock’ jurisdiction of the Hong Kong courts to referee this claim for cargo damage had been clearly established, and that no issue of Order 11 – with its associated considerations – thereby arose.

53. I took the view that in the particular circumstances of this case that any Order 11 argument amounted to no more than a forensic ‘red herring’; the defendants validly were served within the jurisdiction.  It was always open to the defendants and their P&I Club to decline to instruct solicitors to accept service in Hong Kong, indeed, they could have instructed lawyers to accept service elsewhere, but they did not.  Equally, it was always open to the Club to have couched the letter of undertaking is different, and specifically qualified terms regarding jurisdiction, but once again they did not.

54. In this context, I was unpersuaded by, and did not accept the ambitious submission of Mr Wright that the facts of present case are “materially identical” to the case of Sphere Drake Insurance Plc and ors v Gunes Sigorta Anonim Sirketi [1988] 1 Lloyd’s LR 139, wherein the English Court of Appeal (Kerr and Neill LJJ) was considering a case wherein seven insurance companies were claiming against an insurance company incorporated in Turkey with no presence in England, and in which the plaintiffs claimed sums alleged to be balances outstanding by the defendants in respect of reinsurance by the defendants of some of the plaintiffs’ business.  In that case the defendants’ English solicitors had acknowledged service of the writ, but specifically stated that their right was reserved to contest the jurisdiction of the English courts, and subsequently applied to set aside the writ on the basis of the absence of any such jurisdiction.

55. On appeal from the decision of Leggatt J dismissing the defendants’ application, the Court of Appeal took the view that the terms of the letter of the defendants’ solicitors agreeing to accept service resulted in an agreement between the parties which clearly did reserve the right of the defendants to contest the jurisdiction of the English court, and that acceptance of service by the solicitors was on this basis only; in the course of his judgment, Neill LJ observed (op cit., at 143):

“…at an earlier stage in my judgment I referred to the fact that, if some other kind of service is to be effected other than personal service (and leaving aside questions of substituted service), it is a matter of agreement; and, as I read the letter of July 10, what the defendants’ solicitors were agreeing to on behalf of their clients was to accept service, but to accept service only on the basis that the defendants would be free to contest the jurisdiction of the English court in precisely the same way as they would have been able todo if the matter had been dealt with in the ordinary, though much longer, method of obtaining leave and then effecting service abroad….In their letter of July 18 they said that they were effecting service –

    ‘……purely on the basis that we were only to accept service with a view to avoiding the cost of obtaining leave to serve out of the jurisdiction and expressly on the basis that our client reserved all rights to contest jurisdiction if so advised.

In my judgment…there was an agreement between the parties which did reserve the right to the defendants to contest the jurisdiction of the English Court, and acceptance by the solicitors was on that basis and on that basis alone.’

This case demonstrates that, if solicitors with the wholly laudable intention to save the costs and time involved in the full O.11 procedure wish to reach arrangements which obviate the need for ex parte orders being obtained with all the consequential costs of effecting service abroad through diplomatic channels or otherwise, it is most important that the arrangements which are come to are clear and set out with particularity and precision.  I have come to the conclusion on the facts of this case that the agreement was sufficiently clear to make plain what the defendants’ solicitors were offering to do in their letter of July 10; but the matter has been debated keenly before us and it is plainly most important that in cases of this kind solicitors should spell out very precisely what they are intending to do….”(emphasis added)

56. It seems to me, therefore, that the defendants and their P&I Club had, and have, no option but to live with the consequences of their decision to issue the letter of undertaking in the form in which they did.  I fail to see how on the one hand it is agreed to accept service – as occurred pursuant to the terms of the unqualified contractual undertaking – and on the other then seek to set it aside, and in my judgment it is not open to the defendants, or their solicitors, Messrs Holman Fenwick Willan, now to seek to impose a qualification upon the pre-existing unconditional contractual promise.

57. In the course of his submission Mr Sussex was minded to go further. 

58. He also argued – and whilst for the purposes of this case I do not need to decide this point I am inclined to agree with this submission – that in light of the nature of this claim, and given the particular wording of the P&I Club letter of undertaking, in these circumstances the plaintiffs could have chosen to serve a writ in rem upon the defendants’ solicitors, who would have been obliged to accept service thereof, and thus no question of leave under Order 11 possibly could have arisen: see The “Juntha Rajprueck” [2003] 2 Lloyd’s Rep 107, wherein the English Court of Appeal were considering the terms of a P&I Club Letter of Undertaking, which their Lordships held obliged the Club to instruct English solicitors to accept service of an Admiralty claim form in rem, and to file an acknowledgement of service in respect of it; in that case Lord Phillips MR emphasized (op cit., at 110) that the Club’s undertaking in that case, which was given in consideration of cargo interests refraining from arresting the vessel, envisaged that jurisdiction would be established by acceptance of service, and not before.

59. Accordingly, I rejected the application for declaratory relief which has found its way into the (undated) Amended Notice of Motion, and which amendment I considered de bene esse.

60. In so far as it be relevant, however, I also took the view that such amendment, which in the form of the proposed declaratory relief sought to attack the jurisdiction of the Hong Kong court, should not be permitted, for the reason(s) adumbrated by Mr Sussex.

61. The end result, therefore, is that the defendants’ argument attacking the existence of jurisdiction of the Hong Kong court was and is rejected upon two bases, the first substantive, and the second representing the procedural offshoot in terms of the ‘amendment objection’, which must represent one of the very few instances in the Commercial Court in which any objection to any application to amend at any time has been successful. 

62. Accordingly, having elaborated on that reasons underlying rejection of Mr Wright’s argument contesting Hong Kong jurisdiction, I turn now to consider the manner in which this interlocutory dispute first saw the light of day, which was pursuant to the terms of the defendants’ original Notice of Motion, dated 5 September 2008, which placed the debate squarely within the context of an fnc argument; paragraph 1 of this original Notice reading thus:

“All further proceedings in this Action be stayed on the grounds of forum non conveniens in favour of the Courts of Japan”.

The argument upon the issue of an fnc discretionary stay

63. Whilst the Notice of Motion does not condescend to particulars, it appears from the subsequent written submission of Mr Wright that the Japanese court which the defendants had in mind to request this court to send this dispute for resolution is the Osaka District Court, which under this rubric is said to be “a more appropriate forum for the determination of the matter than Hong Kong.”

64. In his written submission Mr Wright rehearsed the applicable legal principles relevant to such an application, which are set out in Spiliada [1987] AC 460, as incorporated in the leading Hong Kong judgment of The ‘Adhiguna Meranti’ [1987] HKLR 904 and The ‘Lanka Muditha’ [1991] 1 HKLR 741, principles which, as Mr Wright recognized, have been the subject of many judgments of this court over the past dozen years; accordingly, for present purposes I will not again rehearse them in detail.

65. In this context Mr Wright’s argument proceeded thus: the 2^nd plaintiff was the receiver of the cargo and is from Japan, and the port of discharge was in Japan, which also was the place wherein the surveys on the condition of the cargo were conducted.  Thus he submitted that Japan has a distinct advantage over Hong Kong in terms of the convenience of witnesses, in particular the cargo surveyors.

66. Mr Wright further noted that the bills of lading do not contain any jurisdiction or choice of law clause, and thus the intention of the parties is to be inferred from the terms and nature of the contract and from the general circumstances of the case, and that such inferred intention will determine the proper law of the contract; however, when the intention of the parties is not expressed, and cannot be inferred from the circumstances, the contract is governed by the law of the country with which it is most closely connected: see Dicey and Morris, The Conflict of Laws, p 1580.

67. Moreover, he continued, in the case of a contract for the carriage of goods by sea, the place to which the goods are to be shipped is an important circumstance in determining the proper law of the contract: see The ‘Dong Do’, HCAJ 95 of 1998, judgment dated 4 June 1991; The ‘President Polk’, HCAJ 311 of 1991, judgment dated 12 May 1992.

68. Thus, Mr Wright argued, in the present case the country with which the contract is most closely connected is Japan, the country to which the cargo was shipped, and thus the proper law of the contracts of carriage evidenced by the bills of lading is Japanese law.

69. His contention thus was that the ‘connecting factors’ all pointed towards the courts of Japan as being the natural forum with which the matter had its most real and substantial connection, and that there was and is no other forum which comes close to Japan as a suitable alternative forum; in different circumstances, he said, it may have been possible for the plaintiffs to have argued that there was no distinct advantage of Japan over Indonesia, but in the present case, as the correspondence prior to the letter of undertaking correspondence demonstrated, this was not an option because of the plaintiffs’ Indonesian lawyers’ own advice.

70. Accordingly, Mr Wright concluded, even if the burden lay on the defendants in this case (which he disputed), that burden had been discharged as the court of Japan are clearly and distinctly more appropriate for the trial of this case.  Nor had the plaintiffs attempted to suggest that they would suffer any legitimate personal or juridical disadvantage in the event that this claim was to be stayed to the Osaka District Court.

71. For the plaintiffs/respondents to this stay application, Mr Sussex noted at the outset that, jurisdiction having been validly established in Hong Kong by virtue of the defendants’ solicitors acceptance of proceedings in the manner as had occurred, it followed that in the circumstances such jurisdiction was, in effect, established ‘as of right’, and that as a matter of policy this “cannot lightly be disturbed”: see Litton VP in The “Kapitan Shvetsov” [1998] 1 Lloyd’s Rep 199, at 217, 219.

72. He also noted that the classic rubric for the grant of a discretionary stay is that the court must be satisfied “that there is another forum to whose jurisdiction [the defendants are] amenable in which justice can be done between the parties at substantially less inconvenience or expense” (see Spiliada, op cit, at 475E), and that the burden is on the applicant for a stay not just to show that the forum in which jurisdiction is established [in this instance, Hong Kong] “is not the natural and appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate” (see Spiliada, op cit., at 477E).

73. In the present case, submitted Mr Sussex, there was no “natural forum” for the trial of the matter because it was clear that this litigation had an international character, and thus, to revert again to the Spiliada rubric (op cit., at 478C) there was no forum which properly could be characterised as “that with which the action had the most real and substantial connection”.

74. Certainly, he said, this could not be said to be Japan (and as for Indonesia, which at first blush may have constituted a more promising candidate, this had been eschewed as a potential forum by the applicants and was not even in the frame.)

75. In fact, Mr Sussex observed, the sole factors connecting Japan with this action were that the vessel discharged in Japan, and that there were two Japanese surveyors who attended the vessel upon discharge – although realistically there was little likelihood of their evidence being required at trial to corroborate their written reports, since there was unlikely to be any significant differences in their findings as to the condition of the cargo.

76. Moreover, he said, whilst the evidence as filed by the defendants suggested the application of Japanese law as the governing law in respect of the contract of carriage, there was no correlative suggestion that in terms of the present claim there was any difference with Hong Kong law.

Decision on the forum non conveniens application

77. I formed a like view of the fnc application as was the case with the defendants’ belated attack upon the primary jurisdiction of the Hong Kong court, and duly said so at the hearing.

78. It seemed to me to be tolerably clear that Japan was not “clearly more appropriate” for the trial of this action, which is the appropriate Spiliada benchmark (op cit., at 478C), and that which the applicant is required to hit in order to get home on this type of application.  In fact, this probably is one of those cases – not uncommon in the international commercial world – wherein there is no obvious or pre-eminent ‘natural forum’ in theSpiliada sense, not least since Indonesia specifically is disavowed.

79. No evidence was led as to any peculiarity of Japanese law in terms of such a claim – which in the circumstances therefore must be presumed to be no different from Hong Kong law in this situation – and the fact that Japanese surveyors were involved in evaluating the cargo damage seems to me to represent slight basis indeed as an underpinning for the stay argument.

80. As Mr Sussex suggested, not only is it unlikely that there will be any material difference in the surveyors’ views, so that the probabilities are that on any quantum assessment (if such proves to be necessary) an agreed report can be utilized, but if and in so far as there is going to be a trial of this claim in Hong Kong (which for my part I should have thought was unlikely), the fact that these gentlemen may have to travel to Hong Kong is relatively unimportant in the litigation scheme of things, given the emergence of what nowadays is referred to as the ‘global marketplace’; accordingly, when weighed in the scales this is no more than a very minor consideration.

81. Nor have the defendants thus far have condescended to any detail in terms of a potential defence – it seems, for example, unlikely that sea conditions/wind at or around Beaufort scale 7 appropriately could be categorized as a ‘peril of the sea’ – and in all the circumstances I confess that I came early to the conclusion that this application was but the final throw of the forensic dice prior to sensible settlement negotiation; it is self-evident that if this case now could be put off to Japan, with concomitant delay and expense, this would add very considerable leverage to any such negotiated settlement. 

82. As matters transpired this was the view subsequently adumbrated by Mr Sussex in his written submission, wherein he characterised this application as no more than a ‘tactical ploy’.  In this context he drew the court’s attention to the case of The “Frank Pais” [1986] 1 Lloyd’s LR 529, a case of short delivery and water and oil damage to a cargo of Cuban sugar carried from Cuba to Japan aboard a sister ship, “Guisa”, wherein the defendants P&I Club gave an undertaking to pay whatever sum might be finally adjudged due to the plaintiffs from the owners of the “Guisa” by a court of competent jurisdiction, and wherein Mr Justice Sheen was faced with an application for a stay under a foreign jurisdiction clause in favour of Cuba, and yet observed on the evidence before him (op cit., at 534-535):

“The whole tenor of all correspondence or telex messages emanating from the defendants or their agents leaves me with a very clear picture of defendants who do not genuinely desire trial in any country but are only seeking to delay the processing of this claim.  The impression to which I have just referred is strengthened by the tenor of the affidavits…All the circumstances of this case make it clear to me that I should refuse to stay this action…

The defendants move the Court for a stay on the alternative grounds of ‘forum non conveniens’.  The matters which have to be considered by the Court when exercising its discretion whether to give effect to an agreement to refer disputes to a foreign court include those matters which are relevant to an application to stay on this alternative ground of forum non conveniens.  As the plaintiffs have discharged the burden of showing strong grounds why I should not grant a stay of this action despite the agreement that any dispute should be decided in Cuba, it follows that the defendants would be unable to discharge the burden upon them of showing that, in the absence of such an agreement, this action ought to be stayed…”

83. In common with Mr Justice Sheen, I too was left with the very real impression that this was no more than a forensic tactic to delay the inevitable, and indeed the present case is a fortiori, given that the decision of Sheen J not to grant a stay was made in face of a foreign jurisdiction clause, wherein the plaintiff bears the burden – see the judgment of Brandon LJ in The “El Amria” [1981] 2 Lloyd’s Rep 119 – of demonstrating why the contractual agreement as to jurisdiction ought not in the circumstances to be honoured, whereas, to the contrary in the instant case, the application for a stay in favour of Japan is based solely upon the usual fnc/Spiliada principles, with the burden squarely upon the applicant(s).

84. At the end of the day, in my judgment these defendants/applicants wholly failed to discharge the burden upon them of persuading the court that the action should now be stayed in favour of the District Court of Osaka, Japan.  In fact, in my view this application (or applications) had little merit. 

85. Moreover, whilst in resolving this application I have accorded the issue little importance, I cannot help but note that, during the negotiations for the letter of undertaking as ultimately issued by the P&I Club, adverse and negative sentiment was expressed against any Japanese forum on the grounds of excessive expense, and yet now an application apparently seriously was mounted by the defendants with a view to sending this action to the very forum initially discussed and expressly discarded as a potential candidate; indeed, in the circumstances it struck me as a bit rich for Mr Wright to lay emphasis upon the advice of the plaintiff’s Indonesian lawyers as to an apparent a lack of jurisdiction of the Indonesian court, but in the same breath to invoke Japan as the allegedly forum conveniens for the trial of this action.

86. Be that as it may.  All that this does, I suppose, is to add grist to the conclusion, which even on the papers appeared tolerably clear as a matter of commercial reality, that there was no genuine desire on the part of the defendants to take this action to Japan, and that the game plan underlying these applications was simply delay with an eye to securing a more favourable bargaining position.

87. For my own part, whilst naturally I do not prejudge the issue, on the available material I suspect that there may be no viable defence to this cargo damage claim, which on its face appears relatively straightforward, and certainly nothing prayed in aid by the defendants was in my view sufficiently weighty to persuade this court to exercise its discretion to grant the stay as sought.

88. Accordingly, it was for these reasons that the application for a stay on the basis of forum non conveniens also was dismissed.

89. Absent any appeal from this judgment, I trust that the parties will agree all consequential procedural directions for the future conduct of this action, at least up to and including discovery, at which point it may be convenient to hold a Summons for Directions in order to review the progress of this case.