YUYAO FOREIGN TRADE CO LTD v. PREFORD LTD

DCCJ 376/2006

IN THE DISTRICT COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

CIVIL ACTION NO. 376 OF 2006

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D E C I S I O N

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Introduction

1. This is an application for summary judgment by the plaintiff.  The plaintiff seeks to enforce in Hong Kong a judgment obtained against the defendant in Ningbo, PRC.  The defendant alleges that the contract had provided for exclusive jurisdiction in Hong Kong, and in any event, the defendant had never submitted to the Ningbo court’s jurisdiction. 

The law

2.  In a summary judgment application, the Court should only give judgment if it is satisfied that the defences are not arguable at all or bound to fail (para 14/4/8 – 14/4/12 Hong Kong Civil Procedure 2006).

3.  In Korea Data Systems, Co. Ltd. v Jay Tien Chiang [2001] 3 HKC 239, at 245, Dep. J. Jeremy Poon considered the authorities and regarded it well-established that a foreign judgment for a monetary sum may be enforced at common law in Hong Kong if:

(1) The foreign court granting the judgment has the requisite jurisdiction to adjudicate upon the cause or matter that gave rise to the judgment;

(2) The judgment is final and conclusive; and

(3) The judgment is not impeachable according to the rules on conflict of laws in Hong Kong.

4. The defendant contends that the Ningbo court did not have the requisite jurisdiction to adjudicate upon the plaintiff’s cause or matter that gave rise to the judgment.  

The plaintiff’s allegations

5. The facts are not in dispute.  The plaintiff is a supplier of electronic goods.  It is resident in Zhejiang Province, PRC.  The defendant is a carrier.  The plaintiff and the defendant entered into a contract as evidenced by 5 Bills of Lading [p. 143 – 153] to carry goods.  The plaintiff alleged that the defendant was in breach of contract by improperly releasing goods to third parties.   On 28 March 2002, the Ningbo court adjudged that the defendant should pay damages to the plaintiff [p. 85 – 90].  On 9 January 2006, the plaintiff’s solicitors wrote to demand for payment from the defendant [p. 108 – 109].  On 21 January 2001, the plaintiff filed a Writ of Summons to enforce the judgment [p. 2 – 4].  On 8 March 2006, the plaintiff took out the present summons.    

The defendant’s allegations and the plaintiff’s counter-allegations

Exclusive jurisdiction

6. The defendant alleges that the contract had provided for exclusive jurisdiction in Hong Kong.  In this regard, the defendant refers to Clause L of the Bills of Lading [p. 153] as follows:

L. Law and Jurisdiction

Disputes arising under this document shall be determined by the courts ... in accordance with the laws of Hong Kong. No proceedings may be brought before other courts unless the parties expressly agree on both the choice of another court or arbitration tribunal and the law to be that applicable.    The [defendant] shall be entitled, however, to bring actions against the [plaintiff], at its option, also at the place of residence or business of the [plaintiff] or at the place where property of the [plaintiff] is located or in the court which has jurisdiction at the port of loading the port of discharge or any intermediate port.  (my emphasis)

7. The plaintiff’s counsel relies on the cases of T & K Electronics Ltd v Tai Ping Insurance Co Ltd [1998] 1 HKLRD172, and Yu Lap Man v Good First Investment Ltd [1999] 1 HKC 622.  He submits that the relevant clauses in the 2 cases were similar to the one in the present case.  They were all permissive jurisdiction clauses.  I accept that insofar as the first sentence of Clause L is concerned, the jurisdiction of the Hong Kong court is only permissive. 

8.  However, there are altogether 3 sentences in this Clause.  The plaintiff’s counsel argues that as the first sentence had used the plural form of “court”, the entire clause would necessarily mean non-Hong Kong courts.  Based on this construction, the second sentence should be regarded as otiose.  (I have not asked about, and he has not addressed me specifically on, the third sentence.  But it is apparent that his argument would have to include the third sentence as likewise otiose.)  The true meaning, he submits, was that a party might have the disputes adjudged in any non-Hong Kong courts without the other party’s concurrence.  At the present juncture, I see no reason why the first sentence (with its plural form of “court”) would necessarily make the second and the third sentences otiose, and not vice versa.  I find it perfectly arguable that the second and third sentences had conferred exclusive jurisdiction on the Hong Kong court.     

The defendant’s presence in PRC

9. The defendant also alleges that it had not been present in PRC or in any way submitted to the Ningbo court’s jurisdiction.  The plaintiff indicates that it does not pray in aid any other form of submitting to the Ningbo court’s jurisdiction other than the defendant’s being present in PRC at the time of the legal proceedings. 

10. In this regard, the plaintiff says that the presence of the defendant’s agent, who was resident in PRC, could be ascribed to the defendant.  The plaintiff refers to the Affirmation of Chan Ngan Kevin.  He was a partner of the solicitors’ firm acting for the defendant.  The defendant’s agent in PRC in turn was as follows:

(1)  Bondex from 2000 to 2002;

(2)  World Asia Shanghai from 2002 to 2003;

(3)  Wekey from 2003 to 2003 to 2004 [p. 140 – 142].

In general, each agent carried out the same duties, namely to contact manufacturer for further arrangements including release and collection of containers [para 4 – 6].   

11. It appears that no agency agreement between the defendant and Bondex or World Asia is included in the hearing bundle.  I assume in favour of the plaintiff that the agreement between the defendant and Wekey bore the same terms governing the agent’s duties, which can be summarized as follows:

(1)   Clause I: The period is from 1 March 2003 to 29 February 2004;

(2)   Clause II 1: The defendant may use the agent’s office premises;

(3)   Clause II 2: Each party shall keep business information confidential.

(4)   Clause II 3: The agent shall support the defendant’s development of work and maintain the defendant’s reputation.

(5)   Clause II 4: The agent shall provide the defendant with the updated freight, shipping schedules, etc, and to answer customers’ enquiries of freight.

(6)   Clause II 5:  After providing the agent with a letter of assignment, the defendant may reserve shipping spaces through the agent, and the agent shall provide all information of space allotment to the defendant.

(7)   Clause II 6: Whether before or after the signing of this agreement, the agent shall not be responsible for any debt incurred by the defendant.

(8)   Clause II 7: The agent shall not be responsible for any of the defendant’s business operations which are not conducted through the agent.

(9)   Clause III 1: The defendant shall comply with the law of PRC in its business activities.

(10)  Clause III 2: The defendant, not the agent, shall be responsible for bills of lading issued by the defendant itself. 

(11)  Clause III 3: The defendant, not the agent, shall be responsible for contracts signed by the defendant itself.

12. According to Dicey & Morris, The Conflicts of Laws (14th ed), vol I, para 14-059:

The basic principle is that a trading corporation will be regarded as present within the jurisdiction of the courts of a foreign country if (a) it has established and maintained a fixed place of business and for more than a minimal time has carried on its own business there, or (b) its representative has for more than a minimal period of time been carrying on the corporation’s business in that country at or from some fixed place of business.  In the latter case it will be necessary to consider a number of factors (already mentioned in connection with the jurisdiction of the English court) to determine whether the business being carried on is that of the corporation or its representative.  In deciding whether a company is present in a foreign country as a result of the acts of a subsidiary present there, the court must consider whether the subsidiary was acting as agent, and if so, on what terms; it may also treat the subsidiary as the alter ego of the parent if special circumstances exist which indicate that there is a “mere facade concealing the true facts”.  If the local agent has authority to enter into contracts on behalf of the corporation without seeking the prior approval of the corporation, this is a powerful indicator that the corporation; if the agent does not have this authority, this fact points powerfully in the opposite direction.

13. The defendant’s agent was to carry out very limited clerical tasks for the defendant.  It had no authority to enter into any contract or make decision on behalf of the defendant without the defendant’s prior approval on any matters.  I find it perfectly arguable that the agent’s presence in PRC could not be ascribed to the defendant. 

The orders to be made

14. Before taking out the present summons, the plaintiff was aware that the defendant had been contending in the Ningbo court by the same defence of exclusive jurisdiction of the Hong Kong court.  The defendant filed the same contention with supportive evidence and a draft defence in opposition to the present summons.  I think it apparent that the defendant would be entitled to unconditional leave to defence.  Notwithstanding its knowledge of the same, the plaintiff still proceeds with the present summons.  I shall dismiss the present summons (para 14/7/3 Hong Kong Civil Procedure 2006).  I order costs nisi to the defendant, with a certificate for counsel.  This costs order shall become absolute 14 days from today.    

Dated 22 September 2006