DP WORLD DJIBOUTI FZCO AND OTHERS v. CHINA MERCHANTS PORT HOLDINGS CO LTD

CACV 86/2020

[2022] HKCA 84

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 86 OF 2020

(ON APPEAL FROM HCA NO 1951 OF 2018)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  This is the defendant’s appeal against the decision of Mimmie Chan J handed down on 20 December 2019 (“the Decision”), by which the judge dismissed the defendant’s application to stay this action on grounds of forum non conveniens in favour of the Civil Chamber of the Court of First Instance in the Republic of Djibouti. The judge dismissed the stay application by reason that (1) the defendant failed to discharge the burden to show that the Djibouti court is clearly and distinctly more appropriate than the Hong Kong court as the forum for the trial of this action; and (2) in any event, the plaintiffs would be deprived of a legitimate personal or juridical advantage if the action were tried in Djibouti, and there is a real risk that the plaintiffs may not obtain substantial justice if the action were tried there.

2.  The defendant’s appeal is brought with leave granted by the judge on 23 April 2020, as the judge accepted that the defendant has shown more than just an arguable case on a number of connecting factors with Djibouti: the authority of the 3^rd plaintiff to sue; the place of commission of the tort complained of by the plaintiffs; the existence or materiality of public policy considerations.

3.  This court owes an unreserved apology to the parties for the time taken in the handing down of our judgment.

Background

4.  The relevant factual background has been set out in the Decision at §§1 to 41. We have also been assisted by an agreed dramatis personae and chronology helpfully prepared by the parties. We set out below the relevant paragraphs in the Decision and adopt in our judgment the terms and abbreviations in the Decision.

(1) The parties and this action

“1.  These proceedings are commenced by the 3 Plaintiffs against the Defendant, whereby claims are made in respect of the Defendant’s alleged interference with the performance of the Plaintiffs’ contract for the operation of a container terminal at Doraleh, and the Defendant’s acts of allegedly inducing and/or procuring the breach of various contracts and unfair competition under the Djibouti Civil Code.

2.  The 1^st Plaintiff (“DPWD”) and the 2^nd Plaintiff (“DID”) are wholly owned subsidiaries of DP World Limited (“DP World”). DP World is one of the largest port operators in the world, and is listed on the NASDAQ Dubai Stock Exchange. DPWD, DID and DP World are all incorporated and based in the United Arab Emirates.

3.  The Defendant (“China Merchants”) is incorporated in Hong Kong, and listed on the Hong Kong Stock Exchange. It is a global public port developer and investor, and can fairly be said to be a competitor of DP World.

4.  There have been different court and arbitration proceedings, between the DP World group of companies including DPWD and DID on the one part, and the Republic of Djibouti (“Republic”) and the Djibouti port entities on the other part, in London and Djibouti, relating to the dispute between the DP World group and the Djibouti Republic and authorities over the rights to the operation and development of the ports and container terminals in the Djibouti free trade zone.”

(2) The various agreements

5.  In the last 15 years, a new port and free zone complex were built at Doraleh, to the south of Djibouti City. It became a successful and leading port in the region, with one of the largest container terminals[1]. The narrative in the Decision continued as follows:

“7.  … Mr Boreh was instrumental, if not the key character, in bringing together the President of the Republic and DP World in the development and management of the port of Djibouti (“Port”) since 1999. Through Mr Boreh’s negotiations, various agreements were signed between the Republic and DP World.

8.  In brief, a Management Agreement was signed in May 2000, whereby Dubai Ports International FZE took over the management of the Old Port of Djibouti. In February 2004, a Concession Agreement was made between the Republic and the 2^nd Plaintiff (“2004 Concession”), whereby the Republic granted to the 2^nd Plaintiff the full and exclusive right to establish, develop and operate a new port and container terminal at the Doraleh site. The 2004 Concession agreement was to remain effective for 30 years, renewable for an additional two 10 year periods. The Republic agreed not to grant another concession for any other port or free zone facilities within the Republic for the duration of the term of the 2004 Concession agreement, without the prior written consent of the 2^nd Plaintiff.

9.  DP World was able to obtain funding from a consortium of banks to build a new international container terminal at Doraleh (“Terminal”), on the condition that DP World was to manage and operate the Terminal. By a law enacted by the Djibouti Parliament on 21 June 2006, the 3^rd Plaintiff was set up as a joint venture company between the Djibouti Government and DP World, for the purpose of building, developing and operating the Terminal. The 1^st Plaintiff held the minority 33.34% share interest in the 3^rd Plaintiff but had corporate control thereof. The majority 66.66% of the shares of the 3^rd Plaintiff was held by Port Autonome International de Djibouti (“PAID”, now known as “PDSA”[2]), the public entity which has jurisdiction over the operation of ports in Djibouti, for the Djibouti Government.

10.  On 30 October 2006, a further concession agreement (“2006 Concession”) was made between the Republic, the 3^rd Plaintiff and the 2^nd Plaintiff[3], whereby the Republic granted to the 3^rd Plaintiff the sole and exclusive right to develop the Terminal, and to undertake the activities relating to the operation, maintenance and repair of the Terminal, for 30 years. The Republic agreed not to cause PAID to operate or commission any facilities within Djibouti for handling containers, without the 3^rd Plaintiff’s prior written consent (Article 3.6.2). The Republic further agreed, under Article 3.6.3 of the 2006 Concession, to first offer the 3^rd Plaintiff the right to develop such additional container handling facilities as the relevant Djibouti authority should decide to develop; and in the event that any other port or container facility is developed in Djibouti by the Republic or other third party, and more favourable treatment or privileges than those offered to the Terminal and/or the 3^rd Plaintiff should be received, equivalent favourable treatment or privileges shall be offered or extended to the Terminal and/or the 3^rd Plaintiff (Article 3.6.4).

11.  A Joint Venture Agreement (“JVA”) was made between the 1^st Plaintiff and PAID on 22 May 2007 in relation to the corporate affairs of the 3^rd Plaintiff. The shareholders of the 3^rd Plaintiff agreed under the JVA to cause the 3^rd Plaintiff to enter into and fulfill its obligations under its Management Services Agreement with the 1^st Plaintiff as Manager. The Djibouti Government as shareholder of the 3^rd Plaintiff covenant under the JVA that the Republic would comply with Article 3.6 of the 2006 Concession.

12.  A Management Services Agreement dated 6 December 2007 was then entered into between the 1^st Plaintiff and the 3^rd Plaintiff. Under this agreement, the 1^st Plaintiff was appointed as the Manager of the Terminal.

13.  The Terminal became operational in December 2008, and gradually became the leading port in the region.”

(3) The defendant’s involvement

“14.  On its part, the Defendant began to play a role in Djibouti from 2012. The full extent of the Defendant’s involvement is hotly disputed, but the Defendant does not dispute the following.

15.  On 29 December 2012, the Defendant signed a Strategic Partnership Agreement with the Djibouti Ports and Free Zones Authority (the statutory authority of the Republic in charge of ports and free zones) (“Port Authority”[4]), pursuant to which the Doraleh Multipurpose Port (“Multipurpose Port”) was developed. Under a Share Purchase Agreement dated 29 December 2012 (“SPA”), the Defendant acquired 23.5% of the shares in PAID, thereby becoming an indirect shareholder of the 3^rd Plaintiff.

16.  On 5 February 2013, the Defendant and its subsidiary entered into a Shareholders Agreement with the Port Authority and the Government of the Republic (“Shareholders Agreement”). Following the Defendant’s involvement in Djibouti, the Port Authority then entered into an investment agreement with a consortium of Mainland investors in November 2016, for the development of the Djibouti International Free Trade Zone (“Free Trade Zone”).”

(4) The dispute with the Djibouti Government

“17.  The Plaintiffs claim that the Republic’s transactions with the Defendant were entered into without any prior consultation with the Plaintiffs, and without their consent. They claim that the Republic had acted in breach of the provisions in the 2004 and 2006 Concession Agreements, and in breach of the JVA. In particular, they claim that the Republic was in breach of Clause 5.02 of the 2004 Concession agreement, and/or Clauses 3.6.2 and 3.6.3 of the 2006 Concession Agreement, by granting concessions and entering into agreements with the Defendant for the construction, development and/or operation of new ports and free trade zones within Djibouti, without the Plaintiffs’ prior written agreement, and without offering the 2^nd Plaintiff and the 3^rd Plaintiff the right of first refusal of these rights. As PAID had participated in and co-funded the construction and development of the Multipurpose Port with the Defendant, the Plaintiffs further claim that there was breach of Article 3.6 of the 2006 Concession Agreement and Clause 17.1 of the JVA.

18.  The relationship between the Djibouti Government and the DP World group turned sour. According to the Plaintiffs, the Republic had sought to renegotiate its contracts and terms of dealings with the Plaintiffs as early as 2012, evidenced by the Republic’s letter of 7 August 2012. In October 2012, the Republic commenced proceedings in the United Kingdom against Mr Boreh, alleging that he had taken bribes from the 1^st Plaintiff in return for negotiating “soft terms” between the 3^rd Plaintiff, the 1^st Plaintiff and the Republic (“Boreh Proceedings”). In July 2014[5], the Republic (together with PAID and the Port Authority) initiated arbitration proceedings against the Plaintiffs in the London Court of [International] Arbitration, alleging that the Republic was entitled to rescind the 2006 Concession Agreement (“Rescission Arbitration”) as it was tainted by the 1^st Plaintiff’s alleged bribery of Mr Boreh.

19.  It is not disputed, that the claims made by the Republic against Mr Boreh, and against the Plaintiffs in the Rescission Arbitration, were all dismissed.

20.  In his judgment in the Boreh Proceedings (“Boreh Judgment”), Flaux J held that the overall deal negotiated by Mr Boreh was advantageous to the Republic, and that the most likely explanation for the conduct of the Republic against Mr Boreh was that it was all politically motivated and designed to ruin Mr Boreh. The English Court of Appeal dismissed the Republic’s application for leave to appeal.

21.  The Republic’s claims of rescission and/or termination of the 2006 Concession agreement, as made in the Rescission Arbitration, were likewise dismissed in the Award dated 20 February 2017 (“Rescission Award”). The tribunal held that the President of the Republic[6], his advisers and the Council of Ministers all knew of and approved the terms of the Concession Agreement, and that none of the impugned transactions constituted a bribe, and they were all legitimate.

22.  The Plaintiffs’ complaint is that notwithstanding the unsuccessful attempts to rescind the 2006 Concession agreement by way of legal proceedings and the Rescission Arbitration, the Republic continued its efforts to terminate the 2006 Concession through legislative acts. The Law No 202/AN/17/7^th L on Strategic Infrastructure Contracts (“Law 202”) was propagated on 8 November 2017. This allowed the Government of the Republic to renegotiate and (if necessary) to terminate all contracts relating to strategic infrastructures which are deemed to be contrary to the fundamental interests of the Republic. Pursuant to Law 202, the Government of the Republic demanded renegotiation of the 2006 Concession with the 3^rd Plaintiff from December 2017[7]. The Plaintiffs did not consider that it was in the best interests of the 3^rd Plaintiff to renegotiate the 2006 Concession, and on 20 February 2018, the 1^st Plaintiff and the 3^rd Plaintiff initiated a second arbitration at the London Court of International Arbitration (“Termination Arbitration”) on the validity of the 2006 Concession Agreement. In the Termination Arbitration, the Plaintiffs sought a declaration that the 2006 Concession remained in full force and effect.

23.  Two days after the commencement of the Termination Arbitration, the Government of the Republic issued a series of Presidential Decrees (“Decrees”), which declared the 2004 and 2006 Concessions to terminate with immediate effect. Public officials took physical control of the Terminal and the oil jetty, and transferred the 3^rd Plaintiff’s assets, operations and personnel to a state-owned company (“SGTD”[8]) which was appointed to be the operator of the Terminal in place of the 3^rd Plaintiff, as well as the manager in place of the 1^st Plaintiff.

24.  The Government of the Republic did not take part in the Termination Arbitration, and on 31 July 2018, the tribunal handed down its award, finding that the 2006 Concession remained valid and binding notwithstanding Law 202 and the Decrees (“Termination Award”).

25.  On 28 July 2018, PDSA notified the 1^st Plaintiff that it had decided to terminate the JVA. The reasons given were that the 3^rd Plaintiff, which was controlled by the 1^st Plaintiff, had failed to renegotiate the 2006 Concession with the Government of the Republic, notwithstanding Law 202, and the 1^st Plaintiff had instead used its controlling powers over the 3^rd Plaintiff to commence the Termination Arbitration. As this had prompted the Republic to enact the Decrees, which had the effect of terminating the 2006 Concession agreement and transferring the 3^rd Plaintiff’s assets to SGTD, PDSA claimed that the 1^st Plaintiff had failed to act in the best interests of the 3^rd Plaintiff, as required under the JVA.

26.  PDSA called for an extraordinary general meeting of the 3^rd Plaintiff’s shareholders on 9 September 2018, to replace the 1^st Plaintiff’s nominated directors with PDSA’s own nominees. The 1^st Plaintiff then applied for and obtained from the English Court on 31 August 2018 an injunction to prevent PDSA from passing a resolution to remove the 1^st Plaintiff’s nominated directors (“English Injunction”). The 1^st Plaintiff commenced a further arbitration against PDSA in the London Court of International Arbitration (“Articles Arbitration”), claiming that PDSA was acting in breach of the JVA and the Articles of the 3^rd Plaintiff.

27.  Notwithstanding the English Injunction, the Republic issued a Presidential Ordinance on 9 September 2018 (“9/9 Ordinance”), which sought to transfer PDSA’s shareholding in the 3^rd Plaintiff to the Government of the Republic.

28.  The English Injunction was continued on 14 September 2018, to restrain PDSA from (inter alia) taking any steps to effect a transfer of its shares in the 3^rd Plaintiff to any transferee who is not already a party to the agreement contained in the Articles. The English Injunction was also extended to any “Affiliates” of PDSA, as defined in the JVA, which will include any person which is directly or indirectly in control of or in common control with PDSA, as well as any person to which shares in the joint venture company, the 3^rd Plaintiff, are issued or transferred in accordance with the JVA.

29.  On 28 October 2018, the Republic promulgated another law[9], stating that the 9/9 Ordinance purporting to nationalize PDSA’s shares had been ratified by the Parliament of the Republic, and that PDSA would be compensated by shares in SGTD, which had taken over the operation of the Terminal. A further Decree (No 29/AN/18/8eme) was issued by the Government of the Republic on 5 May 2019, purporting to transfer to PDSA 66.66% of SGTD’s shareholding, free of charge, as compensation.

30.  The Republic also commenced proceedings before the Djibouti Court on 20 September 2018, to invalidate the 3^rd Plaintiff’s Articles (“Djibouti Invalidity Proceedings”)[10] and its board resolution passed on 18 February 2018, which authorized the commencement of the Articles Arbitration and these proceedings (which were commenced by the Plaintiffs against the Defendant in Hong Kong on 3 September 2018[11]). The basis of the Djibouti Invalidity Proceedings is that the relevant Articles and resolution were contrary to Djibouti public policy.

31.  The 3^rd Plaintiff challenged the jurisdiction of the Djibouti Court, on the basis that the Articles of the 3^rd Plaintiff and the JVA both contain arbitration clauses. This jurisdictional challenge was dismissed by the Djibouti Court on 29 January 2019, which decision was the subject of an appeal by the 3^rd Plaintiff[12].

32.  On 26 September 2018, after the English Injunction had been extended and continued to restrain PDSA from causing the 3^rd Plaintiff to act in breach of the Articles, the Republic applied to the Djibouti Court[13] to appoint an Administrator[14] over the 3^rd Plaintiff, in place of the board, which appointment was made on 27 September 2018. Neither the 1^st nor the 3^rd Plaintiff were notified of the hearing of the application. The board of the 3^rd Plaintiff launched a challenge to the Djibouti Court with regard to the appointment of the Administrator, which the Plaintiffs maintain was contrary to the express provisions of the English Injunction, and was a matter which required the 1^st Plaintiff’s consent under the JVA. The Plaintiffs’ challenge was dismissed by the Djibouti Court on 15 November 2018. The board appealed against such dismissal, but the appeal was also dismissed by the Court of Appeal on 3 January 2019. The board appealed to the Supreme Court of Djibouti, but the Supreme Court dismissed the board’s challenge[15], on the ground that the pleadings were filed out of time - which is denied by the board. The board is seeking a review of the Supreme Court decision.”

(5) The claims made in these proceedings and the stay sought

“34.  This action was brought by the Plaintiffs against the Defendant in Hong Kong on 20 August 2018. In essence, they contend that the steps taken by the Government of the Republic in its negotiations and dealings with the Defendant for the development of the Terminal and the Port/Free Trade Zone, and the agreements made between the Republic and the Defendant for such purposes, amounted to wrongful breaches of the 2004 and 2006 Concession agreements and of the JVA. The Plaintiffs claim that the Defendant had knowledge of the terms of the Concession Agreements and the JVA, and had intended to, and did, induce or procure the breaches of the Djibouti Government. In addition, the Plaintiffs claim in their pleadings that under Djibouti law, the Defendant would be liable for breach of Article 1391 of the Djibouti New Civil Code (“New Code”), and alternatively, for unfair competition.

35.  The Defendant’s intended defence[16] to the claims made is that, first, there was no breach of the Concession Agreements, which were invalid. On the Defendant’s case, the 2004 Concession agreement was not passed through the necessary legislative procedure at the time of its execution, and its terms were harmful to the public or national interest of Djibouti.

36.  The 2006 Concession agreement and the JVA are also claimed to be invalid, in that they were procured by the Plaintiffs through Mr Boreh’s bribery.

37.  The Defendant denies that it had knowledge of the Boreh Proceedings and the Rescission Arbitration, but claims that it was not a party to either of these proceedings, and is not bound by their outcome.

38.  Further, the Defendant denies that the development of the Multipurpose Port constitutes breach of Clause 3.6.3 of the 2006 Concession agreement, and that in any event, the Plaintiffs had waived any breach. It also denies that it was engaged in the development of the Terminal or other ports as alleged by the Plaintiffs, and further denies that it had any intention to induce or procure any breach by the Djibouti Government. The Defendant claims that the Djibouti Government’s conduct towards the 3^rd Plaintiff could not have been what the Defendant intended, as it also had a stake in the 3rd Plaintiff through PDSA. According to the Defendant, some of the Decrees had potential ramification on its interests in the Republic, as illustrated by various complaints that the Defendant had raised with the Djibouti Government.

39.  Finally, the Defendant denies that any breach of the Concession Agreements and the JVA was caused by any alleged procurement on its part. It claims that the Republic would have breached or terminated the Concession Agreements and the JVA in any event, since the relationship between the Republic and the 1st Plaintiff had deteriorated by virtue of many complicated political and commercial reasons.

40.  In addition, the Defendant claims that it is entitled to rely on an indemnity from the Port Authority dated 28 August 2017 (“Indemnity”), whereby the Port Authority had warranted that the development of the Free Trade Zone was not in breach of the 2004 Concession Agreement, and that it would indemnify the Defendant for any claim made by the 2^nd Plaintiff. The proceedings to enforce the Indemnity would, according to the Defendant, be commenced in the Republic.

41.  On 13 December 2018, the Defendant applied for these proceedings to be stayed in favour of the Civil Chamber of the Court of 1^st Instance in the Republic (“Djibouti Court”). It claims that the dispute has no real connection with Hong Kong, and should not be tried before the Hong Kong courts.”

(6) Further evidence on appeal

6.  The defendant issued a summons on 6 October 2020 for leave to adduce on appeal further evidence set out in the draft 1^st affirmation of Lu Yongxin. At the outset of the hearing of the appeal, we gave leave to the defendant to adduce the evidence in the draft affirmation. Lu’s affirmation exhibited the correspondence between the defendant’s solicitors and the Administrator after the Decision (between 29 July 2020 and 8 September 2020) and the Djibouti court documents in the Invalidity Proceedings and the Administrator Proceedings (mainly the judgment of the Court of First Instance in the Invalidity Proceedings dated 31 December 2019; an extract of the minutes of the review hearing before the Supreme Court dated 27 February 2020 regarding the plaintiffs’ challenge to the appointment of the Administrator; and a summons dated 3 June 2020 of the 1^st plaintiff bringing new proceedings on the merits to challenge once again the appointment of the Administrator).

7.  The gist of the further evidence may be stated as follows.

8.  The defendant’s solicitors wrote to the Administrator on 29 July 2020 enclosing a copy of the Decision and its notice of appeal and asking the Administrator for her views on specific questions, including “whether [the Administrator] agree that whether [she is] prepared to intervene with the Hong Kong Proceedings is irrelevant to the issue of [the 3^rd plaintiff’s, i.e. DCT] authority” and if the Administrator has “any plan to take action in [her] capacity as the provisional administrator regarding the 3^rd Plaintiff’s … authority to sue in the present Action in Hong Kong”. The Administrator replied on 26 August 2020 stating that DP World must immediately desist from participation in any judicial proceedings as none of the former members of the board is authorised to represent DCT to bring this action in Hong Kong, nor has she given authorisation to do so since her appointment. She stated that as the task entrusted to her is “provisional and interim in nature”, “it is not [her] task to take any decisions which might give rise to considerable costs being incurred by the company”, and “this is the reason why [she is] of the opinion that [her] intervention in the proceedings ongoing before the Hong Kong courts is not desirable” and “it is not in the interests of DCT to participate therein”.

9.  The Djibouti court documents provide updates of the Invalidity Proceedings and the challenge to the appointment of the Administrator in the Administrator Proceedings.

10.  On 31 December 2019, the Commercial Division of the Court of First Instance handed down its judgment in the Invalidity Proceedings ruling inter alia that the articles in DCT concerning the removal of directors, the appointment and removal of the chairman of the board and the appointment of the chief executive officer, the voting rights of directors and shareholders all breach mandatory provisions of the Commercial Code and hence the articles in question “are deemed unwritten”. Further, the board resolution of 18 February 2018, which authorised the commencement of the Articles Arbitration in the London Court of International Arbitration and this action in Hong Kong, was declared null as having breached mandatory provisions of the Commercial Code. But the court declined to order provisional enforcement of its judgment notwithstanding any appeal. An appeal against this judgment to the Commercial Chamber of the Court of Appeal was brought in September 2020[17].

11.  For the Administrator Proceedings, after DCT’s appeal in cassation was ruled inadmissible by the Preliminary Examination Division of the Djibouti Supreme Court because its further pleadings were filed outside the time limit, DCT lodged an application on 14 October 2019 to reopen proceedings before the Full Court of the Djibouti Supreme Court. By its judgment of 27 February 2020, the Full Court of the Djibouti Supreme Court ruled DCT’s application to reopen proceedings inadmissible. On 3 June 2020, DPWD filed a summons in the Commercial Division of the Court of First Instance to seek the annulment of the appointment of the Administrator on the merits.

General applicable principles and the judge’s rulings

12.  The applicable legal principles regarding the stay of proceedings for forum non conveniens were stated 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.”

13.  The matters mentioned in 2 above are stage 1 in this deliberation exercise and those in 3 and 4 are stage 2.

14.  The judge considered a number of connecting factors in arriving at the decision in stage 1. They are: the location of the parties; the place of commission of the tort; the availability of witnesses and documents; the governing law; the authority to sue. Her conclusion on the connecting factors was set out in §§104 and 105 of the Decision:

“104.  Overall, in the “qualitative exercise” of the consideration of all the factors relevant to the determination of the issues for trial of this action, I am not persuaded that Hong Kong is not the natural forum with the most real and substantial connection with the action. Far from the Defendant’s suggestion, that all the connecting factors point to Djibouti, the only factors which do have any connection with the Djibouti Court is the relevance of public policy and the objectives of the New Civil Code, and the fact that one of the issues to be decided may be the validity of the appointment of the Administrator and the consequential authority of the 3^rd Plaintiff to continue these proceedings. All the other factors point to Hong Kong as the forum which has the most real and substantial connection with the action. As Leading Counsel for the Plaintiffs have emphasized, the burden is on the Defendant to discharge the burden of showing that the Djibouti Court is clearly and distinctly the more appropriate forum, and if the factors pointing to the Hong Kong Court and the Djibouti Court as the appropriate forum are equal, the Defendant has not discharged its burden of proof.

105.  The starting point is that the Hong Kong Court already has jurisdiction over these proceedings which were properly served on the Defendant in Hong Kong, as of right. The issue is why this Court should not exercise that jurisdiction, and whether there is a forum which is more appropriate. Even after giving due consideration to the relevance of public policies and the relevance of the law of Djibouti, and balancing these against the other relevant factors, I am inclined to agree with the Plaintiffs that the Defendant has failed to discharge its burden to show that the Djibouti Court is clearly or distinctly more appropriate than Hong Kong as the forum for trial of the action.”

15.  Having ruled in favour of the plaintiffs on stage 1, there was no need to deal with stage 2. The judge nevertheless went on to consider stage 2 in case she was in error on stage 1. The question is whether the plaintiffs have demonstrated with cogent evidence there is real risk they cannot obtain substantial justice in Djibouti[18]. The plaintiffs emphasised that in light of their long-standing dispute and litigation with the Republic, that the nature of the disputes is political and sensitive, and that the Republic has countered the dismissal of its claims in various judgments and arbitration awards with legislative acts and presidential decrees to terminate the 2004 and 2006 Concessions and transfer the 3^rd plaintiff’s assets and operations to its own entities – objectively, the plaintiffs have cause to be concerned whether the Djibouti Court would be able to try their claims fairly and independently, against the Republic’s declared intentions and interests[19].

16.  The judge had regard to two instances in her assessment of the real risk that the plaintiffs may not obtain substantial justice: the dismissal of the 3^rd plaintiff’s challenge to the jurisdiction of the Djibouti Court in the Invalidity Proceedings[20]; and the plaintiffs’ repeated failures to challenge the appointment of the Administrator in the Administrator Proceedings[21].

17.  The judge also had regard to the plaintiffs’ difficulties in finding experienced lawyers to represent them in their claims against the Republic[22] and the fact that Mr Boreh, an important witness for the plaintiffs, will not be able to testify in Djibouti, without whose evidence the plaintiff will be deprived of a juridical advantage to the extent that substantial justice may not be done[23]. She concluded that “these outweigh any advantage that may be served by having Djibouti law and principles of public policy determined by the Djibouti Court, rather than by the Hong Kong Court on expert evidence”[24].

18.  For all the above reasons, the judge ruled in favour of the plaintiffs in stage 2 as well.

This appeal and the principles on appeal

19.  The defendant contended on appeal that the judge had failed to apply correctly the relevant principles in stage 1 and stage 2 and her conclusion is contrary to principle and evidence as well as wrong in law.

20.  Challenge was made to the judge’s assessment of various connecting factors. The forefront of the attack is the 3^rd plaintiff’s authority to sue. For the place of commission of the tort, it was submitted that the judge had made errors in law in focussing on the decisions made and instructions given by the defendant’s management outside Djibouti when key matters relating to the alleged commission of the tort all took place in Djibouti and would have to be considered through the law, culture and sentiment of Djibouti. As to the availability of witnesses, the judge failed to take into account the reluctance of the officials of the Djibouti Government to testify for the defendant in Hong Kong. Regarding the importance of the governing law (Article 1391 of the New Code, which involves the consideration of the public policy of Djibouti), the judge erred in holding that the existence of public policy considerations is not a sufficient reason in this instance for the Hong Kong courts to decline jurisdiction.

21.  In respect of stage 2, it was contended that the judge wrongly accepted the two instances relied on by the plaintiffs (dismissal of the challenge to jurisdiction in the Invalidity Proceedings; and dismissal of the challenge to the appointment of the Administrator) as sufficient to show that the plaintiffs would suffer juridical disadvantage or that there would be substantial injustice if their claims were to be tried in Djibouti. As for the difficulty in finding experienced lawyers to handle the disputes in Djibouti, the judge should have found if there were such difficulty, it would apply to both sides in these proceedings.

22.  The judge’s refusal of a stay of proceedings on forum non conveniens involves an exercise of discretion. The Court of Appeal may only interfere with the exercise of the judge’s discretion in limited circumstances, in accordance with the well-established principles in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at 220B to E (SPH v SA at §65). As stated in Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 at §§5 to 7:

“5.  Hence, the grounds on which an appellate court is entitled to interfere with this exercise of discretion are limited and it cannot interfere merely because it would have reached a different conclusion had it been hearing the application at first instance. It can only interfere in three cases: (1) where the judge has misdirected himself with regard to the principles in accordance with which his discretion had to be exercised; (2) where the judge, in exercising his discretion, has taken into account matters which he ought not to have done or failed to take into account matters which he ought to have done; or (3) where his decision is plainly wrong. See The Abidin Daver [1984] AC 398, 420B–C, per Lord Brandon of Oakbrook, which has been followed in a number of cases in Hong Kong, such as China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd (CACV 14/2016, [2017] HKEC 171, 3 February 2017) at §7.13.

6.  An appellate court should adopt a cautious approach regarding the weight given by the judge to facts taken into account when exercising the discretion. The fact that the appellate court would have given more weight than the judge to one of the many factors to be taken into account in exercising the discretion is not a ground for interfering with the exercise of his discretion, for as stated by Lord Templeman in The Spiliada[25] at 465C, “the factors which the court is entitled is entitled to take into account in considering whether one forum is more appropriate are legion” (Berezovsky v Michaels [2000] 1 WLR 1004, 1021E–F, per Lord Hoffmann).

7.  Further, as noted in two decisions of the Court of Appeal (China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd at §7.15, per Cheung JA; and Melvin Waxman v Li Fei Yu (CACV 157/2014, [2016] HKEC 956, 20 April 2016) at §17.2, per Yuen JA), it is appropriate to bear in mind these words of caution of Lord Bingham of Cornhill in Lubbe v Cape Plc [2000] 1 WLR 1545, 1556E–F:

“This is a field in which different conclusions can be reached by different tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.” ”

23.  The plaintiffs submitted that save for the contention that the judge erred in holding that the existence of public policy considerations in the present case is not a sufficient reason for the Hong Kong courts to decline jurisdiction (which have been refuted in their submission), the defendant has not identified any error of law in the Decision. The grounds of appeal just raised disputes as to the weight placed by the judge on various factors and challenges to the factual conclusions of the judge on the evidence.

24.  We turn to consider the individual grounds of appeal in respect of stage 1, followed by those for stage 2.

Authority to sue of the 3^rd plaintiff

25.  In §99 of the Decision, the judge held that the appropriate forum to resolve the issue concerning the 3^rd plaintiff’s authority to sue is “one factor which should be considered when the Court analyzes the question of which is the most appropriate forum for the determination of the claims in the action.” She stated her conclusion in §103 in the defendant’s favour in this way:

“On the issue of the 3^rd Plaintiff’s authority to sue, although the related matters in dispute could be decided by the Hong Kong Court as questions of fact on expert evidence, I would agree on balance that they may be more appropriately decided by the Djibouti courts, as to whether the Djibouti Court has jurisdiction under the Code of Civil Procedure to make the order, and whether the appointment was lawful. The issue of the 3^rd Plaintiff’s authority to sue and the validity and effect of the appointment of the Administrator points to Djibouti as arguably the more appropriate forum. However, in the balancing exercise, I have borne in mind that even excluding the 3^rd Plaintiff from these proceedings, the 1^st and 2^nd Plaintiffs have legitimate causes of action to pursue to trial.”

26.  Mr Rimsky Yuen, SC, who appeared for the defendant on appeal and below[26], took these points on appeal:

(1)  The judge was wrong to treat the dispute over the 3^rd plaintiff’s authority to sue as just one of the factors in the balancing exercise in considering which is the appropriate forum for determining the claims in this action. A dispute over authority to sue is not the same as other connecting factors because, as a matter of principle, a dispute of this kind should be resolved before substantive disputes in the action are resolved, as the lack of authority to sue cannot be raised by way of defence and ought to be dealt with before trial and soonest possible (Kammy Town Ltd v Super Glory Corporation Ltd, HCA 3524/2003, 14 January 2005, at §11, which applied Airways Ltd v Bowen [1985] BCLC 355 at 359a to d). It should be dealt with separately from the connecting factors and Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250 was cited as an example.

(2)  Once the judge had concluded that the dispute over the 3^rd plaintiff’s authority to sue would be more appropriately decided by the Djibouti Courts, it would be wholly undesirable to allow the 1^st and 2^nd plaintiffs to proceed with their claims in this action in parallel to the resolution of the dispute in Djibouti over the 3^rd plaintiff’s authority to sue. This course would be contrary to principle as explained in (1) and might give rise to inconsistent findings. Some of the issues concerning the 3^rd plaintiff’s authority to sue overlap with some of the substantive disputes.

(3)  The correct course is to stay the entire action permanently so that the issue of authority to sue with all the substantive disputes could be resolved by the Djibouti Courts, taking into account these matters: the overlapping of issues as mentioned above; a substantial part of the disputes concerned the 2006 Concession Agreement and only the 3^rd plaintiff can assert claims under that agreement; if the 3^rd plaintiff had no authority to sue, the scope of the disputes and the connecting factors with Hong Kong would be significantly reduced, such as the relevance of Mr Boreh’s evidence in that he would not be required to counter the defendant’s allegation that the 2006 Concession Agreement was procured by the plaintiffs through his bribery.

(4)  At the very least, the judge should have stayed this action temporarily until the final determination by the Djibouti Courts of the dispute over the 3^rd plaintiff’s authority to sue, citing examples of temporary stay in Caltex Singapore Pte Ltd v BP Shipping Ltd [1996] l Lloyd’s Rep 286 at 299 to 300; China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd at §§9.1 to 9.2; and Hong Kong Civil Procedure 2022, vol 1, §11/1/217. Even though this alternative was not canvassed before the judge, it can be considered on appeal as this is ultimately a matter of legal analysis and would not have affected the conduct of the case at the hearing below.

(5)  Contrary to the plaintiffs’ contention in the respondent’s notice, the absence of any challenge by the Administrator against the 3^rd plaintiff’s authority to pursue the claims in this action and any formal application by the defendant to challenge the 3^rd plaintiff’s authority to sue is irrelevant. The issue of authority to sue is a relevant consideration notwithstanding the absence of a formal application, citing Konamaneni & Ors v Rolls Royce Industrial Power (India) Ltd & Ors [2002] 1 WLR 1269; Rambas Marketing Co LLC v Chow Kam Fai David; Ceskoslovenska Obchodni Banka AS v Nomura International Plc [2003] ILPr 20 at §12(5); and Xinjiang Xingmei Oil-Pipeline Co Ltd v China Petroleum & Chemical Corp [2005] 2 HKC 202 at §13.

27.  On the last point, Mr Paul Shieh, SC, who appeared for the plaintiffs throughout[27], submitted that the judge should have held that authority to sue is irrelevant and it should not have influenced the court’s determination of the appropriate forum for the resolution of the plaintiffs’ claims. The authority to sue issue has not arisen and may never arise. In Konamaneni and Rambas Marketing, no formal application was necessary because the challenge in those cases concerned the absence of substantive merits rather than the lack of authority of the plaintiff to bring the action. The locus point taken in Rambas Marketing, more accurately described as title to sue rather than authority to sue, was whether the plaintiff was the proper assignee of the debt so as to be able to assert a claim based on it (at 256G). In Konamaneni, the court was concerned with the proper jurisdiction with respect to derivative claims on behalf of a foreign company (at §37). In contrast, the issue here is whether the 3^rd plaintiff was and is properly authorised to bring this action in its name. Any challenge to the 3^rd plaintiff’s authority to sue cannot be raised by way of defence but must be raised and dealt with at the outset by the proper procedure, namely, an application to strike out the 3^rd plaintiff’s name under the inherent jurisdiction of the court (Kammy Town Ltd v Super Glory Corporation Ltd at §12).

28.  The Administrator has not made any challenge to the 3^rd plaintiff’s authority to sue, and on the further evidence has made clear her opinion that her intervention in the proceedings in Hong Kong is “not desirable”. Nor has the defendant made any application in these proceedings to challenge the 3^rd plaintiff’s authority to sue. So all that has transpired is a potential issue which may require determination. There was no extant “necessity of the Court’s substantive determination of the issue of the [3^rd plaintiff’s] authority”, as the judge has postulated in §99 of the Decision. Mr Shieh submitted that the court cannot proceed on assumptions or hypothetical bases, and potential developments in future cannot be relevant to the present exercise of the court’s discretion.

29.  We do not think the judge was in error to take into consideration the authority to sue issue notwithstanding the absence of any formal application in Hong Kong, in light of the challenges made in the Djibouti Courts as regards the authority of the board of the 3^rd plaintiff in the Invalidity Proceedings and the Administrator Proceedings, which were mentioned in §§92 to 96 of the Decision. Subsequent to the Decision, in the further evidence adduced on appeal, the Djibouti Court of First Instance ruled on 31 December 2019 that the board resolution of 18 February 2018, which authorised the bringing of this action, was null. Even though the authority to sue issue may not yet have arisen in the Hong Kong proceedings, it may just be a matter of time for this to be raised under the proper procedure.

30.  Mr Shieh has a fall-back position. He submitted that even if authority to sue should be taken into consideration in determining the appropriate forum, it should not be accorded decisive or special status merely because it should be a dispute to be resolved prior to the resolution of the substantive disputes in this action. The authorities cited by Mr Yuen do not bear out the proposition that any such “locus” or “standing” issues should carry decisive or special weight in the forum analysis. In Xinjiang Xingmei Oil-Pipeline Co Ltd v China Petroleum & Chemical Corp, although the plaintiff’s authority to sue was said to be one of the matters in dispute (at §13), this was not treated separately from the other matters in issue or given special weight in the judge’s analysis of the connecting factors (at §§18 to 30). In Ceskoslovenska, the challenge to the claimant’s title to sue as a matter of Czech law (at §§8(1) and 12(5)) was one of the factors considered by the court (albeit an important matter) together with other disputes about the internal management of a Czech company and the transactions attacked as unlawful under Czech law involving Czech intermediaries (at §§12(1), (2), (3), (5)).

31.  We are inclined to agree with Mr Shieh there is no error in principle as regards the judge’s evaluation of the authority to sue issue in the overall analysis at §104 of the Decision.

32.  As to the weight to be given to this issue in the balancing exercise, the judge had borne in mind at §103 that “even excluding the 3^rd plaintiff from these proceedings, the 1^st and 2^nd plaintiffs have legitimate causes of action to pursue to trial”. Mr Shieh pointed out that the 1^st plaintiff’s claims under the 2006 Concession Agreement and the JVA (made between the 1^st plaintiff and PAID) overlap with the 3^rd plaintiff’s claims[28]. He submitted that the 2^nd plaintiff also retained substantial rights under the 2004 Concession Agreement notwithstanding recital C in the 2006 Concession Agreement (by which the Republic and the 2^nd plaintiff relinquished all their rights and obligations under the 2004 Concession Agreement in respect of the Terminal and related matters), as recital C was not a complete relinquishment of all the rights under the 2004 agreement. He emphasised that the crux of the dispute lies in the defendant’s overall conduct and course of action in inducing or procuring the Republic’s diverse breaches under the various agreements, which made up the plaintiffs’ and the Republic’s original strategic partnership as a whole. It does not appear to us that the relevance of Mr Boreh’s testimony would be diminished. At the very least, his evidence remains relevant to the 1^st plaintiff’s claim on the JVA.

33.  Mr Shieh prayed in aid the statements of Lord Briggs JSC in Lungowe v Vedanta Resources plc [2020] AC 1045 at §68, made in the context of a case involving multiple defendants domiciled in different jurisdictions:

“There can be no doubt that, when Lord Goff originally formulated the concept quoted above[29], he would have regarded the phrase “in which the case can be suitably tried for the interests of all the parties” as referring to the case as a whole, and therefore as including the anchor defendant among the parties. Although the persuasive burden was reversed, as between permission to serve out against the foreign defendant and the stay of proceedings against the anchor defendant, the court was addressing a single piece of multi-defendant litigation and seeking to decide where it should, as a whole, be tried. The concept behind the phrases “the forum” and “the proper place” is that the court is looking for a single jurisdiction in which the claims against all the defendants may most suitably be tried. …”

34.  We are not persuaded there are sufficient grounds to interfere with the judge’s evaluation of the authority to sue factor in the overall analysis and her exercise of discretion to refuse a permanent stay of the entire action, notwithstanding the matters urged upon us by Mr Yuen.

35.  As to the alternative of a temporary stay of this action until the final determination by the Djibouti Courts of the dispute over the 3^rd plaintiff’s authority to sue, we do not agree with Mr Yuen that this is merely a “matter of legal analysis”. It is a new alternative form of relief for which no evidence has been adduced and was not a point taken before the judge. We have reservations whether it would be appropriate to allow this alternative to be raised on appeal.

36.  In any event, although there is now further evidence of a ruling on 31 December 2019 by the Commercial Division of the Court of First Instance in the Invalidity Proceedings (brought by the Republic against DCT and DPWD, the 1^st and 3^rd plaintiffs in the Hong Kong action) that the board resolution of 18 February 2018 (which authorised the commencement of the Articles Arbitration in the London Court of International Arbitration and this action in Hong Kong) was declared null as having breached provisions of the Commercial Code, we do not think this should have any material impact on this appeal.

37.  The Commercial Division of the Court of First Instance has declined to order provisional enforcement of its judgment on 31 December 2019. We were given to understand that an appeal was brought against this judgment in September 2020. Irrespective of the outcome of this appeal and the final determination of the 3^rd plaintiff’s authority to sue by the Djibouti Courts (the rulings are not binding as between all the parties in this action in Hong Kong), there are still the legitimate claims of the 1^st and 2^nd plaintiffs in this action. It does not appear from the judgment of the Court of First Instance on 31 December 2019 that the determination on the validity of the board resolution would have much relevance to resolving the substantive disputes in this action. We do not think much purpose would be served by granting a temporary stay in all the circumstances.

38.  For all the above reasons, we reject all the defendant’s grounds of appeal relating to the issue of the 3^rd plaintiff’s authority to sue.

Place of commission of the tort

39.  This relates to the defendant’s contention that the judge should have held that in respect of the place of commission of the tort, the appropriate forum for the trial of this action is the Djibouti Courts.

40.  The judge held in §55 (applying the dicta of Lord Mance JSC in VTB Capital plc v Nutritek International Corpn [2013] 2 AC 337 at §51) that in determining the appropriate forum for a tort claim, it is likely to be “over-simplistic” to consider the place of commission of the tort in isolation, and that the significance attaching to the place of commission “may be dwarfed by other countervailing factors”. She also held in §56 (applying the dicta of Tuckey LJ in Base Metal Trading Ltd v Shamurin [2005] 1 WLR 1157 at §46) that in determining the place of commission of the tort (when damage has occurred which makes the tort complete), “the right approach is to look back over the series of events constituting it and ask where in substance the cause of action arose”.

41.  In concluding at §62 that in respect of the place of commission of the tort, it could not be demonstrated that Djibouti is clearly or distinctly more appropriate than Hong Kong as the forum for trial, the judge had taken into account these matters:

(1)  An important and material issue for trial is whether the defendant had knowledge of the relevant contractual obligations between the plaintiffs and the Republic, and had knowingly procured the breaches of such contracts. This involves looking at the decisions made, and instructions given, by the defendant’s management, which was based in Hong Kong or Shenzhen. (at §57)

(2)  The plaintiffs have claimed that the defendant’s acts of interference in their contracts were motivated by political decisions or influences being part of the “One Belt One Road Initiative”. Witnesses of the defendant who will have to be cross-examined would be those who were dealing with matters of overall strategy, policies and decision making of the defendant, rather than its employees involved in the day-to-day operation in Djibouti. (at §58)

(3)  Also in issue are the causes of deterioration of the relationship between the Djibouti Government and the DP World group. It is envisaged that the witnesses to be examined at trial would include key officers of the 1^st plaintiff, who are based in Dubai. (at §§59 to 60)

(4)  The damage suffered by the plaintiffs was in Dubai, where DP World, the 1^st and 2^nd plaintiffs are located. (at §61)

42.  Mr Yuen submitted that by focussing on the above four matters, the judge had lost sight of the overall picture and had failed to consider these key issues among others:

(1)  Whether there were breaches of the 2004 Concession and/or the 2006 Concession by the Djibouti Government? If there were, such breaches took place in Djibouti.

(2)  What caused such breaches on the part of the Djibouti Government? It was submitted that the defendant’s knowledge of the relevant contractual obligations between the plaintiffs and the Republic, together with the deterioration of the relationship between the Djibouti Government and the DP World group (which took place in Djibouti), might be “partly relevant”.

(3)  Did the defendant contribute to or cause the Djibouti Government’s conduct which constituted breaches of the 2004 Concession and/or the 2006 Concession? It was acknowledged that the defendant’s knowledge and decision making, together with other matters, might be “partly relevant”.

(4)  Whether the defendant’s conduct (if it contributed to or caused the Djibouti Government to act in breach) was contrary to the relevant law of Djibouti as alleged by the plaintiffs (being Article 1391 of the New Code)[30]? This is a matter of Djibouti law and has no connection to Hong Kong.

43.  Mr Yuen argued that had the above key issues been taken into proper consideration, it is apparent that the decisions made and instructions given by the defendant’s management would only constitute one of the various matters that call for determination at the trial. The rest of the matters relevant to the commission of the tort are all connected to Djibouti, not Hong Kong.

44.  As to the matters taken into consideration by the judge mentioned above, he contended that the evidence required from the defendant’s management is unlikely to be extensive and whether the defendant was motivated by political influences such as the “One Belt One Road Initiative” is neither here nor there. He drew attention to the defendant’s case that one of the causes of deterioration of the relationship between the Djibouti Government and the DP World group was the plaintiffs’ own unreasonable conduct, and this would need to be explored at trial with the relevant government officials and from the perspectives of the Djibouti Government. He reiterated that the Djibouti Courts are plainly in the best position to understand and consider local culture and sentiment regarding the plaintiffs’ conduct and the reaction of the Djibouti Government. He submitted that the place of the loss is not determinative, citing Base Metal Trading Ltd v Shamurin at §46, not to mention that the evidence required to assess the plaintiffs’ losses (the loss of profits in the operation and management of the Terminal due to traffic lost to competing ports and terminals; the loss of a chance to profit from the competing new ports and free trade zones within Djibouti)[31] are “Djibouti-centric”.

45.  It seems to us that Mr Yuen is seeking to attack the weight that the judge has placed upon various matters in §§57 to 61 of the Decision. As we have mentioned earlier, the appeal court should be cautious regarding the weight given by the judge to matters taken into account in the exercise of the discretion. The fact that the appeal court would have given more weight to one or more of the many matters taken into account is not a ground for intervention.

46.  We agree with Mr Shieh that the judge has not lost sight of the matters enumerated by Mr Yuen. The point Mr Yuen made about Djibouti law as the governing law will be considered separately in the subsequent part of this judgment. As pointed out by Mr Shieh, the judge has outlined the nature of the proposed defences in §§35 to 39 of the Decision and they largely cover Mr Yuen’s key issues. We are also inclined to agree with him that the issues raised by Mr Yuen do not necessarily point to Djibouti distinctly. The consideration of breach of the 2006 Concession would involve English law as the governing law of that agreement is the laws of the United Kingdom (clause 22.6). And assessing the cause of the Djibouti Government’s breaches would likely involve the plaintiffs’ witnesses based in Dubai or context outside Djibouti as discussed in §§58 to 59 of the Decision.

47.  The judge had considered Mr Yuen’s submissions about the understanding of local culture and sentiment regarding the plaintiffs’ conduct and the reaction of the Djibouti Government and came to the view that this is a matter of evidence which the Hong Kong court can receive from witnesses and decide. (at §60) The judge is entitled to come to that view.

48.  Overall, we could detect no error in principle in the judge’s ruling. Nor do we think sufficient grounds are made out for us to interfere with the holding that in respect of the place of commission of the tort, it could not be demonstrated that Djibouti is clearly or distinctly more appropriate than Hong Kong as the forum for trial.

Availability of witnesses

49.  The judge drew a distinction between a party’s own witnesses and third-party witnesses who are truly unrelated to the party intending to call them and whose cooperation to testify is gratuitous (applying Botanic Ltd v China National United Oil Corp, HCA 1852/2005, 25 August 2008, at §51). She attached more weight to third-party witnesses in assessing the availability of witnesses. (§66 of the Decision)

50.  Mr Yuen did not take issue with this approach but complained that the judge should have applied the approach consistently to third-party witnesses on both sides. He contended that the judge should have concluded that the officials of the Djibouti Government are third-party witnesses for the defendant, just like Mr Boreh for the plaintiffs, and should have appreciated their reluctance to testify in Hong Kong. He emphasised that the mere existence of a commercial relationship between the defendant and the Djibouti Government does not give rise to any obligation of the government officials to testify on the defendant’s behalf. There is no basis to assume that the officials would assist, contrary to the judge’s thinking. (§67 of the Decision) He also pointed to instances showing that the Djibouti Government had been prepared to sacrifice the defendant’s interest and which had caused the defendant to complain, such as Law 202 (which allowed the Djibouti Government to renegotiate and if necessary terminate all contracts relating to strategic infrastructures deemed contrary to the fundamental interests of the Republic); the 9/9 Ordinance (which effected the transfer of PDSA’s shareholding in the 3^rd plaintiff to the Djibouti Government); and compensation claims arising from the nationalisation of the 3^rd plaintiff’s shares.

51.  Mr Yuen further submitted that if it was appropriate for the judge to scrutinise the reasons for the government officials’ reluctance to testify in Hong Kong, she should also have subjected the alleged fear of Mr Boreh for personal safety in Djibouti to similar scrutiny. He contended that Mr Boreh’s avowed reason mentioned in the Boreh Judgment is not admissible in this action as evidence of the facts and conclusions found in that judgment, citing The Secretary of State for Trade and Industry v Bairstow [2004] Ch 1 at §§15 to 27.

52.  The judge noted that although it was suggested by the defendant that the government officials are reluctant to testify in Hong Kong, there was no “further elaboration as to the reason for their alleged reluctance”. (at §65) Taking into consideration that the alleged reluctance was “without further explanation”, she came to the view there is “no credible reason why the Defendant would have difficulty in calling their own employees and witnesses from their collaborates in the Djibouti government, with whom the Defendant has ongoing and a close commercial relationship, to give evidence in Hong Kong.” (at §67)

53.  The judge is fully entitled to draw the above factual inference. Her finding on the evidence cannot be said to be perverse or irrational or otherwise without evidential support. It cannot be challenged as an error of law. Mr Shieh also made a valid point there is no evidence that any disputes in the past between the Djibouti Government and the defendant are ongoing. The defendant’s infrastructure projects in Djibouti remain unaffected by the Republic’s legislation and presidential decrees, which have only targeted the plaintiffs. By Law 29 and Decree No 29/AN/18/8eme, the defendant was effectively reinstated with ownership of the Terminal through its ownership of 23.5% of PDSA, after restoration to PDSA of 66.66% of SGTD’s shareholding. It seems to us that the defendant’s case would align with the stance of the Djibouti Government.

54.  In summary, there is nothing to suggest that if the action is tried in Hong Kong, the government officials will not come here to testify. Reluctance is not refusal.

55.  The judge had contrasted the position of the plaintiffs’ personnel (who had their work permits cancelled and were expelled from Djibouti on 22 February 2018 and have genuine fear for their safety in Djibouti in view of the Republic’s belligerence against the plaintiffs) as well as the plaintiffs’ key witness Mr Boreh. The latter was convicted of terrorism by the Djibouti Court in his absence and has been living in exile since 2012. (at §72) These facts are not challenged by the defendant.

56.  On the unchallenged evidence, the judge held that Mr Boreh’s reluctance to travel to Djibouti and his fears for his personal safety are legitimate considerations in the assessment of forum non conveniens. (at §73) There are cogent reasons for his unwillingness or inability to testify in Djibouti. Mr Boreh’s indication that he will not travel to Djibouti for fear of personal safety is set out in an affidavit filed by the plaintiffs[32] and not specifically the Boreh Judgment, which is inadmissible only as to the decisions and findings therein of the UK court. Such inadmissibility, if anything, highlights the relevance and importance of Mr Boreh as a witness in the trial of this action.

57.  There is no inconsistency in the judge’s application of the approach regarding third-party witnesses. Nor is there any other basis to interfere with her evaluation as to the availability of witnesses.

Governing law

58.  In §83 of the Decision, the judge quoted the statements of Recorder Ma SC (as he then was) in Rambas Marketing Co LLC v Chow Kam Fai David at 266F to 267A:

“In cases where substantial and difficult issues of foreign law are involved, the court may well be compelled to stay the proceedings where there is an appreciable risk that justice will not be done. This risk may in certain circumstances be attributable to factors such as expense, but in the usual case would arise where the court was somehow concerned with the possibility that it might reach a wrong conclusion on an important aspect of foreign law. … The courts in Hong Kong (particularly the Commercial Court and the Admiralty Court), given the international identity and nature of the type of commercial litigation and litigants here, are often accustomed to dealing with aspects of foreign law. It does not therefore follow at all that once it is shown that issues of foreign law arise, that this will necessarily be a powerful, much less a decisive, factor in favour of a stay. On the other hand, however, it is unrealistic not to acknowledge the fact that complicated issues of foreign law may arise with which the Hong Kong courts will not feel itself confident to deal. It is all a question of degree …”

(Emphases as added by the judge)

59.  There is no dispute that the laws of Djibouti and specifically Article 1391 of the New Code, apply to the claims of inducing/procuring breach of contract and unfair competition[33]. In assessing the weight to be attached to the factor of governing law, the judge took into consideration these matters:

(1)  The liability of a party under Article 1391 for inducing/procuring breach of contract is a novel point under Djibouti law. Although the genesis of this provision lies in Article 1382 of the French Civil Code, and there is ample French case law on procuring and inducing breach of contract and lawyers in Djibouti make regular reference to French law, French jurisprudence is not binding on the Djibouti Courts. (at §§79, 81)

(2)  There does not appear to be serious dispute that for the tort complained of under the New Code, the relevant issues for determination are: whether there were breaches of the Concession Agreements (if valid); whether there was an act of interference by the defendant with the performance of the agreements with knowledge of the underlying obligations; whether there was causal link between the fault of the defendant and the damage sustained. In relation to the claim for unfair competition, the issues for determination are: whether there was conduct amounting to unfair competition; the loss incurred; and causal link between the unfair act and loss. (at §80)

(3)  It is incumbent on the defendant to establish whether any disputed issue of foreign law is so substantial or difficult as to compel a stay of proceedings on the basis there is an appreciable risk that the Hong Kong court might reach a wrong conclusion on an aspect of foreign law. It has not been explained how, under French or Djibouti law, the relevant issues for determination may substantially differ from the Hong Kong court’s perception and understanding of the relevant principles, as may be assisted by expert evidence on French law and Djibouti law. (at §85)

(4)  English law is relevant to the determination at trial of important issues relating to the Concession Agreements and the alleged breach thereof, as it is the expressed governing law of the Concession Agreements[34] and other relevant agreements. The Hong Kong courts are more familiar with English law than the Djibouti Courts. It cannot be shown that the Djibouti Court is clearly more appropriate as a forum to decide issues relating to the alleged breaches of the Concession Agreements. (at §86)

(5)  In determining third party liability for procuring or inducing breach of contract and whether there was unfair competition, the court would have to consider the rationale behind such liability under French/Djibouti law and the public policy or interest of the forum. There was suggestion by the defendant’s foreign law expert that the Djibouti Courts may decline to follow French case law as “less developed countries may adopt a less robust approach” to establishing third party liability, to avoid being “too intrusive upon freedom of trade and competition”. Further, under French law, the approach to third party liability required consideration of all relevant elements including public interests and national sovereignty. The Port installations are strategic infrastructures and would trigger the public law regime. (at §§87, 88)

(6)  However, the defendant’s expert did not identify the particular socio-economic conditions in Djibouti which may create or call for a difference in the decision of the court in determining the relevant issues on the facts of this case, to justify departure from French law. Nor has he stated that the Djibouti Court will apply different standards of fairness in applying Djibouti law. (at §90)

60.  The judge concluded that the defendant has not discharged the burden of showing the Djibouti Court to be clearly or distinctly more appropriate as the forum for trial notwithstanding Djibouti law is the governing law of the claims. She explained in §91 the appropriate weight to be given to public policy and interests in this instance:

“The need to consider public policy and public interests is one of the factors which the Court will include in its assessment of the relative appropriateness of the Hong Kong Court and the Djibouti Court. However, the existence of public policy considerations does not by itself mean that the Hong Kong Court would inevitably decline jurisdiction in favour of the foreign forum. Much will depend on the uniqueness of the policy consideration or the objective identified, and the complexities and circumstances of the case. The Defendant has had the opportunity to adduce elaborate expert evidence on the relevant issues. If such expert advocates any particular principle of Djibouti public policy, or the objective of any particular Djibouti statute/Code, the expert may identify this clearly in the report, and it is open to the Court to apply such public policy principle or objective to the facts and on the evidence available at trial. The principles so far outlined in the defendant’s expert evidence do not appear to be so unique, or too difficult to be correctly appreciated and applied by any competent court. Having said that, this Court would in its overall balancing exercise give due consideration to the relevance of public policy principles, and the fact that the Djibouti Court may be more familiar with the application of these policies.”

61.  Mr Yuen’s primary contention is that in holding that the existence of public policy considerations in the present case is not a sufficient reason for the Hong Kong courts to decline jurisdiction in favour of the Djibouti Courts, the judge was wrong as a matter of authority and principle. He disputed the need for the defendant to identify any particular public policy in the stay application instead of at the trial, citing as an example New Link Consultants Ltd v Air China [2005] 2 HKC 260 at §75. He cited other authorities showing the importance given to public policy issues of the competing forum in the balancing exercise. (Ceskoslovenska at §12(5); Du Pont v Agnew [1987] 2 Lloyd’s Rep 585 at 594 to 595; GFI Group Private Ltd v Daniel Christopher John Prince, HCA 170/2008, 19 February 2008, at §23, applying Du Pont v Agnew; Pacific Aerosupplies Ltd v Dakota Air Parts, Intl Inc, HCA 1233/2010, 24 June 2011, at §§97 to 98)

62.  Mr Yuen further submitted that the judge had over-simplified the issues for determination and did not consider sub-issues that would arise under Djibouti law for which there are conflicting views in the expert reports (as to the meaning of “fault”, whether mere omission is sufficient or a positive act of interference is required; as to “causation”, whether “but for” causation or whether it is sufficient to be one of the causes of the damage). He also contended that the judge was wrong to take into account the clauses providing for English law as the governing law in various agreements.

63.  The relevant principles in Rambas Marketing Co LLC v Chow Kam Fai David quoted by the judge are not disputed. It is incumbent on the defendant to show that the issues of foreign law are “substantial or difficult” as contended by the defendant, which the Hong Kong court “will not feel itself confident to deal”. The judge found on the available information that this burden has not been discharged by the defendant. The defendant’s foreign law expert opined that “in tort law matters more than in any other ones, one must always look beyond the general written provisions of a civil code”, “it is not possible to simply rely on the literal resemblance between the Djiboutian Civil Code and the French Civil Code to conclude that Djibouti and French laws are identical with regard to third party’s liability” and that “case law in the respective jurisdictions must be considered”[35].

64.  The judge is entitled to come to the view that although issues pertaining to Article 1391 have not previously been decided in Djibouti, they are not of such complexity or so unique that the Hong Kong court would not be confident to deal with them. As said in the passage quoted in Rambas Marketing, “it is all a question of degree”. We do not think it helpful to pray in aid other cases to see how the factor of governing foreign law was evaluated in rather different contexts and fact situations.

65.  We turn to the question whether the judge has erred in law or principle regarding the public policy considerations and whether she was plainly wrong not to hold that the Djibouti Court are obviously in the best position to deal with issues pertaining to Article 1391. As rightly submitted by Mr Shieh, much would depend on the uniqueness and objective of the public policy, the precise disputed issue of foreign law, the extent to which the court “will have to be cognisant of [the] public policy … and to apply such policy as is applicable” (GFI Group Private Ltd v Daniel Christopher John Prince at §23). Liability under Article 1391 requires applying “the test of reasonable man, namely, whether the defendant at the material time acted in such a way or ways that a reasonable man would have acted”[36] and does not appear to involve unique Djiboutian public policy. In contrast, New Link Consultants Ltd v Air China was concerned with restructuring and privatisation of state-owned enterprises, Ceskoslovenska with “the standards of business conduct which ought as a matter of Czech legal policy to prevail in the Czech Republic” (at §18).

66.  Nor do we think New Link Consultants Ltd v Air China supports the proposition that there is no need to identify any particular public policy in the stay application and such identification could be left to the trial. In that case, the court had referred to the expert evidence and contractual documents which informed the discussion of state policy. (at §§73, 75)

67.  Although the judge did not mention specifically the conflicting views of the parties’ legal experts on French law on the meaning of “fault” and “causation”, or other disputes which might arise on sub-issues of foreign law, she had considered the evidence of the legal experts and failed to see “the alleged difficulty of ascertaining the guiding principles, under Djibouti law, relevant to procuring or inducing breach of contract”. (at §84) She took the view that any difference in opinion on technical legal interpretation within French law, and Djibouti law if different, can be resolved by considering the parties’ expert evidence at trial. (at §84) “The defendant’s expert has not in fact stated that the Djibouti Court will, applying Djibouti law, apply different standards of fairness.” (at §90) There are no sufficient grounds to disturb the judge’s assessment of the appropriate weight to be given to public policy and public interests in this context.

68.  As to the weight given by the judge to English law being the governing law in a number of the agreements (the 2006 Concession Agreement, the Management Agreement), we do not think it was improper for the judge to give weight to this factor as it is disputed by the defendant whether the Djibouti Government had acted in breach of the agreements with the plaintiffs. However, the judge was in error in stating that the JVA (between the 1^st plaintiff and PAID) did not provide for any express governing law and contained jurisdiction clauses which did not involve the Djibouti Court[37]. That agreement in fact provided that Djibouti law is the governing law and the Djibouti Courts have non-exclusive jurisdiction[38]. This error must be considered in light of other relevant considerations the judge took into account in her evaluation of foreign law as the governing law factor that have been mentioned earlier. Even though the JVA is governed by Djibouti law, the performance of the underlying contract of the JVA, being the 2006 Concession Agreement, is governed by English law.

69.  Notwithstanding the above error, we are not persuaded that the judge’s assessment of the factor of governing law should be interfered with.

Conclusion on stage 1 analysis

70.  Having considered the grounds of appeal relating to the stage 1 analysis, it has not been shown that the judge’s conclusion in the “qualitative exercise” of the consideration of the connecting factors is in error. The defendant has not discharged the burden of showing that the Djibouti Court is clearly and distinctly more appropriate for the trial of this action.

71.  Even though it is not strictly necessary to consider the grounds of appeal relating to the stage 2 analysis and the appeal should be dismissed on this basis, we will deal with stage 2 in deference to the arguments addressed to us.

Stage 2: whether there would be no juridical disadvantages to the plaintiffs

72.  In stage 2, the burden is on the plaintiffs to demonstrate with cogent evidence “real risk” that substantial justice cannot be obtained if the action is tried in Djibouti. They do not have to establish on the balance of probabilities as a matter of fact that the Djibouti Courts were influenced by political considerations or had not otherwise acted independently. This principle is not disputed by the defendant.

73.  Mr Yuen emphasised that “comity requires that the court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court” (Altimo Holdings v Kyrgyz Mobile Tel Ltd [2012] 1 WLR 1804 at §97), and that “allegation alone of political interference or of judicial impropriety will not suffice” (Pacific International Sports Clubs Ltd v Soccer Marketing International Ltd & Ors [2009] EWHC 1839 (Ch) at §37). He submitted that the matters relied on by the plaintiffs to show their disputes and litigation with the Djibouti Government are political and sensitive do not concern the Djibouti Courts. It is correct as a matter of fact that the Djibouti Courts were not involved as those disputes were litigated in the UK and the Djibouti Government sought to offset the English judgments and arbitration awards against them by legislative acts and presidential decrees. Mr Yuen also made the point that the Djibouti Government is not a party to the present action and hence there would be no reason to be concerned that the Djibouti Courts would treat the defendant more favourably than the plaintiffs by reason of political considerations. We are inclined to think it would be unrealistic to say that the belligerence of the Djibouti Government against the plaintiffs would have no or little impact on claims to be tried in the Djibouti Courts that may appear to be against the Republic’s declared intentions or interests.

74.  Mr Yuen attacked the judge’s analysis of the two instances (the dismissal of the 3^rd plaintiff’s challenge to the jurisdiction of the Djibouti Court in the Invalidity Proceedings; and the plaintiffs’ failures to challenge the appointment of the Administrator). He submitted that neither instance is sufficient for an inference to be drawn there will be real risk of judicial impropriety or partiality.

75.  The judge criticised the Djibouti Court for having taken an “unduly restrictive” interpretation of the arbitration clause[39] in finding the arbitration agreement manifestly inapplicable such that this falls within the description of “departure from normal judicial practice, or irrational conclusions”, from which an inference of the risk of judicial impropriety or partiality may be made[40]. Mr Yuen pointed out that this reasoning only accounted for two paragraphs in the judgment of the Djibouti Court on 29 January 2019 and was not the primary reason for rejecting the 3^rd plaintiff’s jurisdictional challenge in the Invalidity Proceedings.

76.  Mr Yuen contended that in rejecting the challenge to the appointment of the Administrator, the Djibouti Courts did not overlook the English Injunction against PDSA and its associates, and the judge should not have inferred from the lack of notice of the hearing to the plaintiffs and the dismissal of the 3^rd plaintiff’s appeal to the Supreme Court on a technical ground that the Djibouti Courts may not give adequate consideration to the plaintiffs’ legal and procedural rights.

77.  As in the other challenges made by the defendant in this appeal, the above contentions go to the extent to which a piece of evidence was accepted or rejected by the judge and the weight given to such evidence. These are matters for the judge and the appeal court does not interfere with save in accordance with the established principles. In respect of the Invalidity Proceedings, we are inclined to agree with Mr Shieh that irrespective of other reasons for rejecting the 3^rd plaintiff’s jurisdictional challenge, the judge was entitled to find that one of the bases for the decision of the Djibouti Court was questionable and to infer therefrom a real risk that substantial justice may not be obtained if this action is tried in Djibouti.

78.  Nor do we see any sufficient ground to interfere with the judge’s inference there may be failure to give adequate consideration to the plaintiffs’ rights in rejecting the plaintiffs’ challenge to the appointment of the Administrator[41]. The judge is ultimately concerned with the assessment of risk, and is not required to determine the reason or reasons behind the decisions of the Djibouti Courts in the context of this challenge to forum.

79.  The defendant’s submission to counter the plaintiffs’ difficulties in finding experienced lawyers to handle the case for them in Djibouti is of little moment.

80.  We reject the grounds of appeal relating to the analysis in stage 2. There is no or no sufficient basis to interfere with the judge’s finding that the plaintiffs would be deprived of a legitimate juridical advantage and there is a real risk that they may not obtain substantial justice if this action were to be tried in Djibouti.

Conclusion

81.  For the above reasons, we dismiss the defendant’s appeal. Costs of the appeal should follow the event. We make an order nisi that the defendant should pay the plaintiffs’ costs of the appeal, with a certificate for three counsel.