HCCL000132/1997
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
COMMERCIAL LIST
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BETWEEN
VANDER LIMITED
Plaintiff
AND
P&O NEDLLOYD B.V. (formerly known as NEDLLOYD LIJNEN B.V.)
1st Defendant
P&O NEDLLOYD (HK) LIMITED (formerly known as NEDLLOYD (HK) LIMITED)
2nd Defendant
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Coram: The Hon Mr Justice Stone in Chambers
Date of Hearing: 26 February 1998
Date of Handing Down Judgment: 24 April 1998
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JUDGMENT
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1. This is an application made by summons dated 13th September 1997 issued on behalf of both Defendants herein. Essentially, although not completely, it is an application for a stay of proceedings in favour of the courts in Rotterdam, the Netherlands. This is the judgment consequent upon that application.
THE FACTS
2. This is a misdelivery claim. The material facts are in short compass. The Plaintiff herein is a Hong Kong based trader. Its claim against both Defendants arises from the shipment of 325 cartons of travelling bags to be transported to Johannesburg, via Durban, South Africa. The consignment in question was duly shipped from Hong Kong on or about 31st January 1997 upon a vessel owned by the 1st Defendant, the vessel arriving in Durban in February, and thereafter the goods were transported overland from Durban to Johannesburg. However, the Plaintiff alleges that in or around the end of February the consignment, which appears to have been warehoused in Johannesburg, was wrongfully released to an unknown third party without production of the Bill of Lading and without the Plaintiff's authority, with the result that the Plaintiff had suffered loss and damage in the sum of US$114,012.50.
3. The Bill of Lading, issued in Hong Kong on 31st January 1997 for and on behalf of the 1st Defendant (then known as Nedlloyd Lijnen B.V.) as Carrier by the 2nd Defendant (then known as Nedlloyd (HK) Limited) as Agent, contained, at Clause 25 thereof, a Law and Jurisdiction Clause, which reads thus:-
"25 LAW AND JURISDICTION
(1)
Law of application
Insofar as anything has not been dealt with by the terms and conditions of the Bill of Lading the Law of the Netherlands shall apply.
(2)
Jurisdiction
All actions under the contract of carriage evidenced by this Bill of Lading shall be brought before the Court at Rotterdam and no other court shall have jurisdiction with regard to any such action, unless the Carrier appeals to another jurisdiction or voluntarily submits himself thereto."
4. It is this jurisdiction clause which is at the heart of the Defendants' submissions in this case.
THE ARGUMENTS
5. It is, I think, appropriate broadly to consider the arguments put forward by Mr Davidson, on behalf of the Defendants, in the manner in which they have been itemized upon the face of the Summons; accordingly I take the Defendants in turn.
A. 1ST DEFENDANT
6. The 1st Defendant is undoubtedly the carrier who issued the relevant Bill of Lading, which bill contains and/or evidences the contract of carriage between itself and the Plaintiff. It follows that there is no room for doubt that Clause 25 of that Bill 'bites' upon the rights and obligations of the parties, and, unsurprisingly, Mr Davidson founded his submission that the proceedings herein be stayed upon the effect of this clause. Further, it was clear that during the course of argument on this application, both Mr Davidson for the Defendants and Mr Cheung, who appeared on behalf of the Plaintiff, were proceeding on the basis that the effect of this clause was to place the burden upon the Plaintiff to establish why the Court should not exercise its discretion in favour of granting a stay, see in this context the observations of Brandon LJ (as he then was) in The "El Amria
7. However, although Mr Cheung appeared to accept that such burden was indeed upon his client, the precise nature of Clause 25 (namely, its exclusivity or otherwise) was not specifically addressed, in oral argument at least, and subsequent to the hearing the Court invited clarification from the parties on the point, at the same time inviting the attention of Counsel to an earlier decision of the Commercial Court in CL 61 of 1997, T & K Electronics Limited v. The Tai Ping Insurance Company Limited ,The Rothnie
8. As a consequence of the clarification requested, the Court received additional written submissions from both parties. In these submissions the Defendants maintained their stance as to the exclusivity of the clause, although Mr Cheung on behalf of the Plaintiff now argued that the clause should be regarded as non-exclusive; and therefore it presumably followed (although he did not specifically say so) that the burden of proof should not, in fact, be upon the Plaintiff to demonstrate why a stay should not be granted, and that the existence of such a non-exclusive clause was simply one factor to be placed into the normal discretionary 'mix', so to speak.
9. In the face of these subsequent conflicting written submissions, therefore, in my view a primary issue for decision must be a determination as to the nature of the clause in question, given the relevance of such classification in terms of the burden of proof. As the Court expressed the position inT & K Electronics Limited op.cit , at page 2 :-
"The existence in a contract of an exclusive foreign jurisdiction clause is of considerable significance in arguments as to whether jurisdiction, which otherwise plainly exists as of right, should be exercised over a civil dispute; in instances where such an exclusive jurisdiction clause exists, the Court retains a discretion whether to grant a stay of proceedings brought in breach of such clause, 'but the discretion should be exercised by granting a stay unless strong cause for not doing so is shown': per Lord Goff in The Pioneer Container ,
10. Accordingly, having considered the additional written submissions by both parties, I have come to the conclusion that Clause 25 is to be construed as an exclusive jurisdiction clause, the absence of the word 'exclusive' notwithstanding. In this regard, I am inclined to agree with the Plaintiff's supplemental written submissions on the point. At the end of the day the issue is essentially one of construction as to whether the clause in question obliges the parties to resort to the relevant jurisdiction - see Sohio Supply Co. v. Gatoil (USA) Inc .,Dicey and Morris on The Conflict of Laws
"It is a question of interpretation, governed by the law applicable to the contract, or more accurately, the law governing the jurisdiction agreement, whether a jurisdiction clause is exclusive or non-exclusive, ..."
11. Moreover, in addition to the particular use of the words 'all claims' and 'shall', I am also attracted by, and accept, the further argument, deriving from an analogous submission which found favour in the English Court of Appeal in Continental Bank v. Aeakos Compania Continental Bank , op.cit
"The juxtaposition of a submission by the appellants to the jurisdiction of the English Courts and the option reserved in favour of the bank to sue elsewhere brings into play the expressio unius exclusio alterius canon of construction. It suggests that a similar option in favour of the appellants was deliberately omitted. In our judgment the language of cl. 21.02 evinces a clear intention that the appellants, but not the bank, would be obliged to submit disputes in connection with the loan facility to the English Courts. ...."
12. If this interpretation be correct, the legal position is clear: the Court retains a discretion whether to grant a stay brought in breach of such a clause "but the discretion should be exercised by granting a stay unless strong cause for not doing so is shown ". In the circumstances, therefore, it seems to me that Mr Cheung was correct in accepting, during oral argument, that having commenced proceedings in Hong Kong in breach of such contractual term, the burden was indeed upon his client to show why a stay should not be granted. This being the case, the question thus arises as to whether the Plaintiff has so succeeded, on the evidence before the Court, in establishing such 'strong cause' for not granting the stay now sought.
13. On the material which has been placed before the Court, the answer to this rhetorical question must, I think, be 'No'. In my view little of substance is put up by the Plaintiff in the discharge of this burden; and whilst the Court can of course take account of the broad circumstances of the case, little or no attempt has been made, for example, to grapple with the matters itemized by Brandon LJ in The "El Amria"
" (5) In particular, but without prejudice to (4), [the Court in its discretion to take into account all the circumstances of this case] the following matters, where they arise, may properly be regarded:
(a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts.
(b) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects.
(c) With what country either party is connected, and how closely.
(d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.
(e) Whether the Plaintiffs would be prejudiced by having to sue in the foreign Court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial."
14. To the contrary. The affidavit evidence filed on behalf of the Plaintiff comprises three affirmations of Mr Chui Man, of which the second simply clarifies his authority to make the affirmations and reveals that the Plaintiff hired the service of the 2nd Defendant for carriage of goods from Hong Kong to Johannesburg on four occasions, including the present, whilst the third affirmation merely exhibits shipping orders and bills of lading relevant to those four occasions. Whilst Mr Chui's first affirmation, in substance, establishes only that the Plaintiff was never informed that the carrier was other than the 2nd Defendant, or that the 2nd Defendant was the agent, and avers the existence of a strong case by the Plaintiff against both Defendants "being carriers and/or bailees for reward" and having no defence in what is said to be a clear instance of misdelivery.
15. After some reflection, I have come to the view, in light of the evidence placed before it, that the Court should accede to the 1st Defendant's stay application. I confess that in the circumstances that this is a decision which I view with little enthusiasm, given that jurisdiction has been established in Hong Kong as of right, but on the law as it stands, and in light of the evidence filed when taken together with the classification of the clause in question, the Court effectively is left with little room for manoeuvre. This is not a matter in which no defences are raised or deposed to (in which context I note that in this case the issue of the precise ambit of the Hague-Visby Rules again raises its head), and no real attempt, it seems to me, has been made on the evidence to establish the "strong cause" necessary for the discretionary refusal of a stay. Accordingly, insofar as the parties have bound themselves contractually to go to the Netherlands, so be it; and whilst I have received no evidence as to Netherlands' law, no point has been taken that for the purposes of the present application there is any difference between that and Hong Kong law.
B. THE 2ND DEFENDANT
16. Mr Davidson similarly asks for a stay of proceedings against the 2nd Defendant, and matches this, also, with an application that the amended Statement of Claim against the 2nd Defendant be struck out as being frivolous, vexatious and an abuse of process.
17. Let me say at the outset that I do not accept that the striking out application is well-founded; in the circumstances, I do not consider that the requisite benchmark has been attained, particularly in light of the allegations of estoppel/course of dealing between the parties. I turn, therefore, to consider the two differing elements of the stay application insofar as it applies to the 2nd Defendant.
18. The first of these is an attempt to invoke the jurisdiction clause in the Bill of Lading against the 2nd Defendant. In this regard Mr Davidson makes two points. He says that the case against the 2nd Defendant qua carrier is risible on the basis of the facts as disclosed both in the evidence and in terms of the relevant documentation - the Bill of Lading in question was clearly issued by the 2nd Defendant as agent for the 1st Defendant - but that since the Plaintiff has pleaded that the 2nd Defendant is the carrier, the 2nd Defendant nevertheless is entitled to proceed on this basis for the purposes of argument. There has been no application to amend; ergo, submitted Mr Davidson, Clause 25 'bites', and like arguments surrounding the jurisdiction clause apply to the 2nd Defendant as to the 1st Defendant.
19. I do not accept this submission, attractively though the point was put. I am far from satisfied that the 2nd Defendant was privy to the contract of carriage, and for present purposes I am disinclined to accept the bald contention that "having pleaded it, they are stuck with it".
20. I turn therefore to Mr Davidson's alternative argument. In this context he relies upon the Himalaya clause in Clause 4.2 of the Bill of Lading. Insofar as relevant this reads:-
"... every such Person shall have the benefit of every right, defence, limitation and liberty of whatsoever nature herein contained or otherwise available to the Carrier as if such provision were expressly for his benefit, and in entering into this contract the Carrier, to the extent of these provisions, does not only do so on his own behalf but also as agent and trustee for such Persons."
21. Mr Davidson submits that the 2nd Defendant is clearly within the terms of this clause. He has a problem, however; the relatively recent case of The "Mahkutai" inter alia , that the effect of a Himalaya clause did not serve to include a mutual agreement such as an exclusive jurisdiction clause. Mr Davidson seeks to overcome this difficulty by distinguishing the precise wording of the clause in The "Mahkutai "op.cit. at pp.9-10 - emphasizes the mutuality of the agreement as embodied within an exclusive jurisdiction clause, and contrasts that with the true function of a Himalaya clause, namely, to prevent cargo-owners from avoiding the effect of contractual defences available to the carrier by suing in tort persons who perform contractual services on the carrier's behalf. It is this primary consideration, it seems to me, which underpins the view of their Lordships to the effect that the exclusive jurisdiction clause in that case did not fall within the scope of the Himalaya clause.
22. In terms of the 2nd Defendant, therefore, this leaves outstanding the third string to Mr Davidson's bow; interestingly, an application by the 1st Defendantt that the proceedings against the 2nd Defendant be stayed on the grounds that they are an abuse of process because there is an agreement between the Plaintiff and the 1st Defendant that the claims herein must only be brought against the 1st Defendant, and that the 1st Defendant is obliged to indemnify the 2nd Defendant for liabilities it may have for the claims herein. This agreement also derives from Clause 4.2 of the Bill of Lading, the relevant part of which amounts to a promise by the shipper to the contractual carrier that no claim or allegation :-
"shall be made against any Person whomsoever (including all Sub-contractors of the Carrier) by whom the Carriage is performed or undertaken, other than the Carrier, which imposes or attempts to impose upon any such Person ... any liability whatsoever in respect of the Goods, or the Carriage of the Goods whether or not arising from the negligence on the part of such Person and, if such claim or allegation should nevertheless be made to indemnify the Carrier against all consequences thereof."
23. Mr Davidson submitted that such a clause has recently been upheld in the Court of Appeal in Hong Kong in The Nedlloyd Colombe The Nedlloyd Colombe ,st Defendant was the contractual carrier under the Bill of Lading, wherein pursuant to Clause 4.2, the cargo-owners undertook to make no claim against any person by whom the carriage was performed, and there is an indemnity from the 1st Defendant to the 2nd Defendant insofar as the 2nd Defendant incurred liabilities. Accordingly, the reasoning goes, there would be circuity of action in that insofar as the Plaintiff succeeded against the 2nd Defendant, the 2nd Defendant would have a remedy against the 1st Defendant, who would in turn be indemnified by the Plaintiff.
24. This point is well made, and it is on this basis that I think that Mr Davidson succeeds in terms of a stay of proceedings against the 2nd Defendant. The Nedlloyd Colombo The Elbe Maru
"... the suggestion that the court should not exercise its discretion but should allow the action to proceed, then to be followed by a claim against the applicants and then to be followed by the applicants claiming against the respondent seems to me to ignore the well established proposition ... that there should be an end of useless litigation. If the action ought not to be brought, then the court should intervene and stop it rather than allow a series of circuitous actions which ultimately end up achieving exactly what the stay sought would achieve, apart from the disbursement of a quite unnecessary amount of costs."
ORDER
25. It follows from the foregoing that, although not without some real hesitation, in my judgment this application succeeds in terms of a stay of proceedings against both the 1st and the 2nd Defendants.
26. I make also an Order nisi that the costs of and occasioned by the application be to the Defendants, to be taxed if not agreed.
(William Stone)
Judge of the Court of First Instance
Representation:
Mr Y.L. Cheung, inst'd by M/s C.K. Chan & Co., for the Plaintiff
Mr Simon Davidson of M/s Holman Fenwick & Willan, for the Defendants