LUCKY DAYS INDUSTRIAL CO LTD v. TRANSLINK SHIPPING (HONG KONG) LTD

DCCJ2120/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 2120 OF 2006

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Decision

1.  This is the Defendant’s application to stay all further proceedings in this action under O. 12 r. 8 of the Rules of the District Court and/or the inherent jurisdiction on the grounds that:-

(1)    the parties have agreed to submit to the exclusive jurisdiction of the Federal Courts of the United States under the Bills of Lading; and/or

(2)    Forum non conveniens in favour of the Federal Courts of the United States, which is a more appropriate forum for the trial of the Plaintiff’s claim than the Hong Kong court.

The Statement of Claim

2.  The part of the Statement of Claim relevant to this application reads:-

‘1.	(a)	The Plaintiff is a company incorporated in Hong Kong with limited liability, ……
	(b)	At all material times, the Plaintiff is carrying on its business as supplier of office accessories and other items to overseas buyers.
2.	(a)	On the 20th March 2005, the Plaintiff as owner and shipper of cargoes of office accessories, engaged the Defendant as its shipping agent in Hong Kong to ship and deliver the cargoes contained in a container no. FSCU4322350 to Imperial Chair Components of 29800 Agoura Road, Suite 2210, Agoura Hills, CA 91301 (“Imperial”) on the term that the cargoes only be released and delivered upon the surrender of the original order Bill of Lading properly endorsed by the Plaintiff……
	(b)	…….
3.	(a)	On the 6th April 2005, the Plaintiff as owner and shipper of cargoes of office accessories, engaged the Defendant as its shipping agent in Hong Kong to ship and deliver the cargoes contained in a container no. HJCU9029986 to Imperial on the term that the cargoes only be released and delivered upon the surrender of the original order Bill of Lading properly endorsed by the Plaintiff……
	(b)	……
4.	Soon after the above cargoes arrived their respective destinations in the United States, in breach of its duty not to deliver the cargoes without proper endorsement of the Bill of Lading, and without any prior knowledge and approval of the Plaintiff, the cargoes were unlawfully delivered by the Defendant’s associated agent in the United States, Translink Shipping Inc. in Chicago to Imperial or its nominated parties.
5.	……
6.	……
7.	The said act of deliver of cargoes by the Defendant’s associated agent in the United States aforesaid amounts to unlawful conversion of the Plaintiff’s cargoes and the Defendant was liable vicariously for the said act of its agent.’

Background

3.  The Plaintiff had been selling office accessories to Imperial since 1994.  Imperial was responsible for arranging shipment for the required goods and it engaged Translink Shipping Line (“TSL”) as the carrier to ship the goods.

4.  The Defendant alleges that TSL carries the Non-Vessel Operating Common Carrier (“NVOCC”) license issued by the US Federal Maritime Commission.  For the shipments emanating from Hong Kong, Imperial instructed its suppliers such as the Plaintiff to contact the Defendant so that the Defendant could arrange for the outbound shipment with TSL.  The Defendant was/is not a NVOCC as it did not have such a licence.  Therefore the Defendant could not carry on as a carrier of goods by sea to or from the US, and could only act as an agent.  The Defendant submits that it was a mere agent and not the actual carrier.

5.  The Defendant submits that Clause 3 and Clause 34 in the Bills of Lading are relevant.  Clause 3 provides:-

“It is understood and agreed that other than the said Carrier no person whatsoever (including …… all servants, agents … and other independent contractors whatsoever) is or shall be deemed to be liable with respect to the goods as carrier bailee or otherwise howsoever in contract or in tort.  If, however, it should be adjudged that any other than said carrier is under any responsibility with respect to the goods all limitations of and exonerations from liability provided by law or by the terms hereof shall be available to such other person as herein described in contracting for the foregoing exemptions, limitations and exonerations from liability, the Carrier is acting as agents and trustee for and on behalf of all persons described above, all of whom shall be this extent be deemed to be a party to this contract evidenced by this Bill of Lading, it being always understood that the said beneficiaries are not entitled to any greater or further exemptions limitations or exonerations from liability than those that the Carrier has under this Bill of Lading in any given situation.”

(Underlines provided)

Clause 34 reads:-

“Nothing in this Bill of Lading shall operate to deprive the Carrier of any statutory protection or exemption from, or limitation of liability, contained the laws of the United States, or in the laws of any other country which may be applicable.  This Bill of Lading shall be construed according to the laws of the United States and the Merchant agrees that any suits against the Carrier shall be brought in the Federal Courts of the United States ……”

6.  The Defendant submits that the effects of the above two clauses are as follows:-

(a)   US laws will be used in this hearing in construing the 2 bills of lading in question: clause 34.

(b)   Clause 34 contains an exclusive clause, which imposed an obligation on the Plaintiff to bring any suit against TSL in the Federal Courts of the US.

(c)    Notwithstanding that the exclusive jurisdiction clause binds the Plaintiff and TSL (the Defendant not a party to it), by virtue of Clause 3, the Defendant thereby enjoys the same protection of TSL.

7.  The Defendant avers that Clause 34 contains an exclusive jurisdiction clause which imposed an obligation on the Plaintiff to bring any suit against the TSL in the Federal Courts.  In my judgment no issue on this can arise because this is not an action against TSL.

8.  The Defendant avers that notwithstanding that the exclusive jurisdiction clause binds P and TSL, by virtue of Clause 34, the Defendant equally enjoys the same protection as TSL.  In my judgment the protection provided by Clause 3 is subject to the occurrence of the pre-condition that “If, however, it shall be adjudged that any other than said carrier is under any responsibility with respect to the goods ……”  However, there is no such adjudication, and so Clause 3 has not been invoked.  As a result Clause 3 does not apply to the present case. 

9.  The burden is on the Defendant to prove that the parties intended not only to confer jurisdiction on the foreign court, but to exclude all other jurisdictions for the resolution of disputes.  There is nothing in Clause 34 to show that that clause confers exclusive jurisdiction on the Federal Courts of the United States.  It does not even say that any suits against the Carrier shall be brought exclusively in the Federal Courts of the United States.

10.  The Bills of Lading are evidence of the contract for carriage of goods which was reached after negotiation between the parties.  There is no evidence to show that the Plaintiff intended that the Bills of Lading are to be construed according to the laws of the United States.  This is because it was not involved in the negotiation of the Bills of Ladings.

11.  By virtue of the reasons aforesaid the Defendant’s submission that this Court has to apply the US laws must fail.

Forum non conveniens

12.  The Defendant alleges that the following issues are in dispute and therefore require determination in the forthcoming trial:-

(a)   The Plaintiff alleges that Imperial required the Plaintiff to enter carriage contract with the Defendant.  On the other hand TSL admit that the carriage contract was between TSL and Imperial.  On this issue alone, the most relevant party is Imperial, which is a US company.  Of course, TSL is also a US company which give evidence on this issue.  As such, US Court is clearly a more appropriate forum.

(b)   The Plaintiff alleges that soon after the cargo for both the 1^st Order and the 2^nd Order arrived in the US, the Plaintiff had received a conference telephone call from a Mr. Nelson Tsiao of TSL and a Mr. Mark Nelson of Imperial on 21 May 2005 and was informed that the Defendant had wrongfully released the cargos to Imperial without presentation of any original bills of lading.  Mr. Nelson Tsiao of TSL affirmed that in that conference telephone call, the Plaintiff again acknowledged release the shipments at issue in this case without presentation of original bills of lading along with four other shipments, and that the Defendant was not included in the conversation or in any decision to release the cargo due to the fact that the Defendant was not the NVOCC but merely the agent of TSI.  On this issue alone, there is a dispute as to what was said in that conference call.  Therefore, the persons involved in that conference call were Mr. Nelson Tsiao and Mr. Mark Nelson, both live in the US.  Again, clearly, US Court is the best court to hear this issue.   

(c)    Stemming from the issue aforesaid, it is also TSL’s case that the other 4 shipments which were released to Imperial without presentation of original bills of lading and that Imperial paid the Plaintiff for those shipments, the Plaintiff are not raising any complaints about those 4 shipments, the relevant documents would be in the US.  Again, this factor is also in favour of the US Court.

(d)    The goods in question were released in the US.  As to how and under what circumstances the goods were released, the US Court is clearly the appropriate forum to try this issue.

(e)    Imperial claims that they are entitled to refuse to pay the Plaintiff for the 2 shipments in question due to the fact that Imperial claims to have valid set-offs against the Plaintiff for defective products tendered by the Plaintiff on prior shipments.  If Imperial had valid set-offs against the Plaintiff, then the Plaintiff would have suffered no damages in the present claim.  All those issues should be tried in the US.

(f)    There are disputes between TSL/Imperial and the Plaintiff as to the value of the goods alleged to have been misdelivered.  Again the witnesses and the goods are all in the US.

(g)    As the Defendant was only a mere agent and the Defendant has not incurred any personal liability, there is in substance no issues involving the Defendant in the trial.

(h)    The governing law of the bills of lading is US laws.  Hence, US courts is the best court to try this matter.

Issue (a)

13.  There is nothing to show that Imperial is the “most relevant” party.  The Defendant has failed to show that the Plaintiff is a “less relevant” party in this regard.

Issue (b)

14.  In stating that the persons a (Mr. Nelson Tsiao and a Mr. Mark Nelson) involved in the conference call both live in the US, the Defendant has ignored the residence of the Plaintiff’s witness(es) involved in the conference call.  The Defendant’s submission is therefore only partially correct.

Issue (c)

15.  The Defendant has not shown that the Plaintiff has no copies of the documents in question.  The location of the original documents would not be a problem for the Hong Kong court to try this case.

Issue (d)

16.  I simply do not agree with the Defendant on its submission.  The Hong Kong court is competent to try issues involving facts which took place outside Hong Kong. 

Issue (e)

17.  This is a hypothetical issue.  There is no evidence that Imperial has lodged an action against the Plaintiff for set-offs for defective products tendered by the Plaintiff on prior shipments.

Issue (f)

18.  The submission is not correct.  The Defendant has failed to mention that the Plaintiff’s witness(es) are entitled to give evidence on the value of the goods.

Issue (g)

19.  This submission touches on the merit of the case; it is not relevant to the issue on whether or not the Hong Kong court is an appropriate forum to try this case.

Issue (h)

20.  As shown above, this submission cannot succeed.

21.  The Defendant puts up the following two juridical disadvantages it will face if this action is to take place in Hong Kong:-

(a). The Defendant will not be able to subpoena Imperial’s officers to give evidence or compel production of any documents from Imperial if the trial of this action shall take place in Hong Kong.

(b). If the action herein is allowed to proceed and the Defendant is adjudged liable as alleged, the Defendant will be forced to commence an indemnity action in US against TSI and Imperial.  This will result in multiple proceedings in different courts, and there is a risk of inconsistent finding of facts.

These are problems for the Defendant to solve.  They are not factors relevant to the issue as to whether or not the Hong Kong court is the appropriate forum to try this case. 

22.  The Defendant submits that the main evidence of the issue involved in the trial is “all in the U.S.”.  This submission is not correct.  Part of the relevant evidence comes from the Plaintiff, which is a company in Hong Kong.

23.  By reason of the matters above-said, I dismiss the Defendant’s application. 

Costs

24.  I make an order nisi, to be made absolute in 14 days’ time, that the Defendant is to pay costs of this action to the Plaintiff, to be taxed if not agreed, with certificate for Counsel.