KARA MARA SHIPPING CO LTD v. WORLD TANKER CARRIERS CORPORATION AND ANOTHER

1995, No. AJ-37

HEADNOTE

Collision at international waters between 2 ships of different nationalities - no one country can be identified to be the natural and appropriate forum for the claims of various parties : shipowners, cargo owners, injured and dead crew members - Court decided that New Orleans became the clearly and distinctly more appropriate forum to resolve the disputes among all the parties in one set of consolidated proceedings - the Plaintiff's reliance on more beneficial limitation in Hong Kong than in New Orleans is only illusionary as the issue of Plaintiff's limitation will not arise unless the Defendants are counterclaiming against them but they will not - proceedings in Hong Kong stayed - anti-suit injunction sought by the Plaintiff is refused.

1995 No. AJ-37

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

ADMIRALTY JURISDICTION

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D E C I S I O N

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1. In the early hours of 21 December 1994, a collision occurred in international waters in the Atlantic Ocean some 200 miles south-west of the coast of Portugal between the "Ya Mawlaya" and the "New World".

The Parties

2. The "Ya Mawlaya" is a Cyprus registered bulk carrier. The Plaintiff "Kara Mara", a Cyprus registered company, were the bareboat charterers (the effective owners). The vessel was managed by SNP Shipping Services Private Limited of Bombay who had sub-contracted a large part of the management function to Holbud Ship Management Limited, an English company registered in London. The vessel was crewed by Indians. The Plaintiff, SNP and Holbud are all parts of a commodity trading group owned and controlled by an Indian family called Merali.

3. The "New World" is a Hong Kong registered tanker. It is flying the Hong Kong flag. Its owner is the 1st Defendant ("WTCC") who are a Liberia registered company and registered in Hong Kong as an overseas corporation under Parts XI of the Companies Ordinance. "WTCC"'s principal place of business was Monte Carlo, and the vessel was managed and operated from Monte Carlo and Canada. "New World" has never called the Hong Kong port and Hong Kong is not a principal place of business for the 1st Defendant, although they have an office of about 700 square feet here which is owned by the 2nd Defendant.

4. The 2nd Defendant ("Expedo") are a Hong Kong company which had contracted with the 1st Defendant to manage the "New World". However, the 2nd Defendant had sub-contracted that function on back-to-back terms to one Expedo Shipmanagement (Canada) Limited. The "New World" was crewed by a mix of Chinese, Taiwanese and Filipinos.

5. Before the collision, the "Ya Mawlaya" left New Orleans, Louisiana on 7 December 1994 with the full cargo of soya beans which had been loaded there for carriage to Italy for delivery to an Italian company called Cereol SA.

6. On the other hand, the "New World" left Gabon bound for Dunquerque on 11 December 1994 with a cargo of crude oil for the account of a French company, Total Raffiriage et Distribution S.A. of France ("Total").

The Circumstances of the collision

7. The circumstances of the collision was gathered by Mr Roger Best, solicitor for the 1st and 2nd Defendants from the sworn deposition of the Second Mate of the "New World", Mr Dela Cruz and the sworn deposition of the Second Mate of the "Berge Stavanger", (one Antonio Aaron), a Norwegian vessel passing by at the time of the collision which could also hear the conversations between the two ships over the VHF communication. I shall take the unusual course of setting out in details the circumstances of the collision herein below as deposed to by Mr Best because they have a lot of bearing on my decision herein.

8. Mr Best said in his affidavit of 24 May 1995 as follows :-

"19. Mr Dela Cruz and Able Bodied Seaman Zosimo Barberan assumed the bridge watch of 'New World' at approximately 0000 hours on December 21, 1994 while the vessel was steaming north on a course of 018° true at a speed of approximately 13½ knots. At this time the 'New World' was approximately 200 nautical miles south west of Cape St Vincent, Portugal in the international waters of the Atlantic Ocean. Visibility was greater than 10 miles in unremarkable weather conditions.

20. As the watch progressed, Mr Dela Cruz observed the eastbound 'Ya Mawlaya' about 4 to 5 points on the 'New World''s port bow at a recollected distance of at least 7 to 8 miles and may be 10 to 12 miles off.

21. I understand from the Complaints filed against 'Ya Mawlaya' and 'Ya Mawlaya''s interests in the New Orleans Court [Exhibit RSMB-3 P1-8, 249-256] that 'Ya Mawlaya' had sailed from New Orleans, Louisiana on 7 December 1994 having loaded a cargo of soya beans at the Bunge Facility at Destrehan Louisiana on the Mississippi River.

22. According to Mr Aaron, on 21 December 1994 the 'Ya Mawlaya' was proceeding in an easterly direction (i.e. from the US Gulf towards the Straits of Gibraltar).

23. I understand from Mr Strarer that Captain Anderson of Brooeks Bell & Co, a surveyor who has subsequently been on board the 'Ya Mawlaya', reported that her crew are from India.

24. Mr Dela Cruz identified the 'Ya Mawlaya' to be the give-way vessel in a crossing situation governed by Rules 15 and 17 of the International Regulation for Preventing Collisions at Sea ('COLREGS').

'Rule 15

Crossing situation

When two power-driven vessels are crossing so as to involve risk of collision, the vessel which has the other on her own starboard side shall keep out of the way and shall, if the circumstances of the case admit, avoid crossing ahead of the other vessel.

Rule 17

Action by stand-on vessel

(a)	(i) Where one of two vessels is to keep out of the way the other shall keep her course and speed.
	(ii) The latter vessel may however take action to avoid collision by her manoeuvre alone, as soon as it becomes apparent to her that the vessel required to keep out of the way is not taking appropriate action in compliance with these Rules.
(b)	When, from any cause, the vessel required to keep her course and speed finds herself so close that collision cannot be avoided by the action of the give-way vessel alone, she shall take such action as will best aid to avoid collision.
(c)	A power-driven vessel which takes action in a crossing situation in accordance with sub-paragraph (a)(ii) of this Rule to avoid collision with another power-driven vessel shall, if the circumstances of the case admit, not alter course to port for a vessel on her own port side.
(d)	This Rule does not relieve the give-way vessel of her obligation to keep out of the way.'

25. As Mr Dela Cruz continued monitoring the 'Ya Mawlaya' visually, he noted that her relative bearing was changing very little, closing slightly on the 'New World''s bow as the range between the vessel decreased. The 'Ya Mawlaya' gave no indication, visually or by radar, of a course or speed change, and Mr Dela Cruz determined that a close quarters situation was developing. Mr Dela Cruz made several attempts to raise the 'Ya Mawlaya' on VHF to determine her intentions, but 'Ya Mawlaya' failed to response.

26. Receiving no response from the 'Ya Mawlaya' to his second effort to raise her on VHF, Mr Dela Cruz sent a visual signal consisting of at least two or three groups of five or more short flashes on the 'New World''s masthead blinker light. Although no immediate response was forthcoming, when the vessels were approximately three to four miles apart the 'Ya Mawlaya' called the 'New World' (referring to her as 'the vessel on my starboard bow') on VHF Channel 16 and, in an Indian-accented voice, 'ordered' the 'New World' to alter course to port to pass astern of the 'Ya Mawlaya'. Mr Dela Cruz responded that the 'New World' was the stand-on vessel and that the 'Ya Mawlaya' was the give-way vessel and the latter should therefore, alter her course to starboard to pass astern of the northbound 'New World'. By way of explanation, throughout, 'New World' was on 'Ya Mawlaya''s starboard side.

27. Mr Dela Cruz believed that contact between the vessels had been established, and expected then that the 'Ya Mawlaya' would then comply with COLREGS Rule 15 requirements by manoeuvring to avoid collision, and particularly would do so by avoiding passing ahead of the 'New World'. He continued monitoring the approach of the 'Ya Mawlaya' on radar and by visual bearings. When he determined she still was not taking action, he attempted again to raise her on VHF Channel 16, inquiring as to her intentions. He then heard the same Indian voice as before on Channel 16 cursing the 'New World'.

28. As the vessels closed, Mr Dela Cruz ordered the 'New World''s rudder hard to starboard. Just as the 'New World' began responding to the helm order, the 'Ya Mawlaya' struck her port side in the proximity of No.1 port ballast tank. Mr Dela Cruz testified that just before collision he realised the 'Ya Mawlaya' was also altering her course to starboard, so that she was actually turning into a collision with the 'New World'.

29. The collision opened 'New World''s nos.1 and 2 port wing tanks, spilling some 10,000 tons of cargo onto her deck and into the water around her. A fire and explosions followed quickly engulfing the 'New World'.

30. The 'New World' crew went to the vessel's bridge, where those who made it were trapped until the heat cleared sufficiently on the starboard side for the Captain to give the order to abandon ship. Nineteen crewmen abandoned in the starboard lifeboat while the Chief Mate and the Second Engineer remained behind to fight the fire. Eight crewmen have not been found and are presumed dead.

31. Another cargo vessel, the 'Captademetris', in answer the distress call from the 'New World', came to the scene of collision and rescued some of the 'New World' crew members from the lifeboat. An associated vessel of the 'New World', the 'New Wisdom', came to the scene of collision shortly after and offered the 'New World' crew members on board the 'Captademetris' a transfer to the 'new Wisdom'. Subsequently, volunteers from the 'New World' crew and 'New Wisdom' crew went on board the 'New World' to assist in the firefighting effort and to search for missing crew members. They also operated and tested propulsion machinery and other ship systems. When the situation stabilised other 'New World' crew members returned to their vessel which was then manned by a combination of 'New World' and 'New Wisdom' personnel.

32. Mr Dela Cruz and Mr Aaron have testified that after the collision, the 'Ya Mawlaya' did not make any attempts to contact the 'New World', by VHF radio or otherwise, to inquire or determine the scope of damage or injuries or deaths on the 'New World' or offer any assistance to the search for survivors in any way or participate in the rescue efforts organised by the Lisbon Rescue Coordination Centre. This was notwithstanding the requirements of Article 8 of the International Convention for the Unification of Certain Rules of Law with Respect to Collision Between Vessels, signed at Brussels September 23, 1910 (the 'Brussels Convention') which provides :-

'After a collision, the master of each of the vessels, in collision is bound, so far as he can do so without serious danger to his vessel, her crew and her passengers, to render assistance to the other vessel, her crew and her passengers..

He is likewise bound so far as possible to make known to the other vessel the name of his vessel and the port to which she belongs, and also the names of the ports from which she comes and to which she is bound.

A breach of the above provisions does not of itself impose any liability on the owner of a vessel.'

33. Mr Aaron testified that approximately one hour after the collision, he observed the 'Ya Mawlaya' laying idle at a location two miles north of the collision position. 'Ya Mawlaya' reported bow damage but no injuries to her crew.

34. As is apparent from the Hong Kong proceedings and the claim filed by 'Ya Mawlaya''s cargo in the New Orleans Court to which I shall refer at paragraph 103 below, the 'Ya Mawlaya' and her cargo of soya beans were also damaged. The extent of damage was only made apparent to 'New World' interests by inspections recently ordered by the New Orleans Court to which I refer at paragraphs 78,89 and 90 below."

Liability

9. It is not for me to decide on liability at this stage. However, the Plaintiff has not put forward another version of the collision which contradicted the Defendants' version in basic material facts. The Defendants therefore submitted that it is objectively plain that the prime responsibility for the collision lay with the "Ya Mawlaya". It is most probably that the "Ya Mawlaya" will be the paying party. I accept their submission from the papers before me.

10. The collision caused considerable loss and gave rise to a number of potential claims against the Plaintiff as follows :-

1. the damage to the "New World";

2. the loss of part of the "New World"'s cargo, owned by Total;

3. the loss of and damage to part of the "Ya Mawlaya"'s cargo, owned by Cereol;

4. the deaths of eight of the "New World"'s crew and the injuries caused to a number of others.

The 1st Defendant estimated their own loss at about US$16 million.

Proceedings in Different Jurisdictions

11. There are quite a number of actions taken in different jurisdictions, namely :-

(1) On 30 December 1994, the 1st Defendant commenced proceedings in the federal court in New Orleans against the "Ya Mawlaya" in rem and against the Plaintiff, inter alia, in personam.

(2) On 3 January 1995, the Plaintiff applied to the Maritime Court of Lisbon for the arrest of the "New World" which had put into Portugal for repairs. The vessel was released against a letter of undertaking provided by the vessel's P&I Club, the Britannia, on 18 January 1995.

(3) On 17 and 20 January 1995, the 1st Defendant started proceedings in Georgia and California respectively, against, inter alios, the Plaintiff, and sought the attachment of two vessels, the "Ya Latif" and the "Ya Jaleel" which the 1st Defendant believed were in the same beneficial ownership as the "Ya Mawlaya". On 25 January 1995, the "Ya Mawlaya"'s P&I Club, the Newcastle, gave a letter of undertaking in the sum of US$20 million in order to procure the release of the "Ya Latif" and the "Ya Jaleel" and to prevent the arrest of the "Ya Mawlaya".

(4) On 28 January 1995, the Plaintiff commenced a limitation action in Hong Kong against, inter alios, the 1st Defendant. This writ has never been served.

(5) On 8 February 1995, the Plaintiff issued an in personam writ against the 1st Defendant in the courts of Hong Kong. This writ has never been served.

(6) On 14 February 1995, the Plaintiff issued the present writ which has been served.

(7) On 2 February 1995, the Second Mate of the "New World", Mr Dela Cruz, started proceedings in the federal court in New Orleans for personal injuries against, inter alios, both the Plaintiff and the 1st Defendant.

(8) On 12 April 1995, the personal representatives of five of the eight crew members of the "New World" who died as a result of the collision as well as two injured crew members also started proceedings in the federal court in New Orleans against, inter alios, both the Plaintiff and the 1st Defendant.

(9) On 10 February 1995, Cereol started proceedings in the federal court at New Orleans against, inter alios, the Plaintiff and the 1st Defendant.

(10) On 12 May 1995, SNP and the Holbud companies started an action in Bombay against, inter alios, the Plaintiff and the 1st Defendant in which they claimed:

1. to be entitled to limit any liability they might have as a result of the collision;

2. an injunction against the 1st Defendant to prevent the prosecution of proceedings in New Orleans.

(11) On 5 June 1995, before the 1st Defendant had received any notification in any form of the existence of the Bombay proceedings, the Bombay court issued an ex parte injunction against the 1st Defendant prohibiting the prosecution of the New Orleans proceedings against the Bombay Plaintiffs.

(12) On 5 June 1995, the Plaintiff started proceedings in England against Cereol seeking to compel arbitration in London of any claims made by Cereol against the Plaintiff.

The Hearing in New Orleans

12. It can be seen from the aforesaid multiplicity of actions and proceedings, nearly all parties are in the Court in New Orleans. However, the Plaintiff has at all times contended that they are not subjected to the jurisdiction of the New Orleans Court. Alternatively they said that the action brought against them in the New Orleans Court should be stayed by that Court on the ground of forum non conveniens.

13. The New Orleans Court has ruled that the Plaintiff's challenge to the jurisdiction should be heard first and the hearing on that issue is scheduled to take place on 20 September 1995. If there is jurisdiction, the Plaintiff's motion to stay on the ground of forum non conveniens would be heard thereafter.

The summonses before this Court

14. There are now two summonses before me namely:-

1. the Defendants' application to stay these proceedings on the ground of forum non conveniens;

2. the Plaintiff 's application for an anti-suit injunction to prevent the 1st Defendant from pursuing the New Orleans action against them.

15. For the purposes of this hearing, Barnett, J. has ordered on 1 June 1995, as a preliminary point, that this hearing should proceed on the assumption that the New Orleans Court would have jurisdiction.

Forum non conveniens

16. The general principles upon which the court will exercise its discretion to stay proceedings on the ground of forum non conveniens are well established and well known and I shall not repeat them here - see The Spiliata [1987] AC 460; The Adhiguna Meranti [1987] HKLR 904; and Dicey and Morris: The Conflict of Laws (12th edition) p.395-413.

17. If a collision occurred in territorial waters, it may be possible to identify the territorial waters state as providing the only appropriate forum for any subsequent litigation - see for example, The Abidin Daver [1984] AC 398. However, disputes which arise out of collisions at international water raise particular problems in relation to the forum non conveniens doctrine. Where two vessels of differing nationalities collide in international waters, it is usually the case that no one forum can be identified as the natural and appropriate forum for subsequent litigation - see for example The Coral Isis [1986]1 Lloyd's Rep.413; The Lanka Muditha (Civil Appeal No.101 of 1990; 7th March 1991 at p.13 per Kempster, J.A.).

18. In the case before me, it would not be possible to identify any one jurisdiction as the natural and appropriate forum for claim by the "New World" against the "Ya Mawlaya". There are a number of potential jurisdictions. All of which could be regarded as having some "connections" with the parties. They are as follows :-

1. Louisiana in New Orleans, from whence the "Ya Mawlaya" had sailed;

2. Cyprus, where the Plaintiff were incorporated;

3. Hong Kong - where the 1st Defendant were incorporated and the "New World" was registered.

4. Portugal or Spain, where it was expected that the "Ya Mawlaya" would seek refuse;

5. Any other jurisdiction in which the "Ya Mawlaya" might be found or in which property in the same beneficial ownership could be attached.

19. In these circumstances, there is a natural tendency for any potential plaintiff to choose a jurisdiction which will maximise his prospects of a satisfactory recovery for the wrong which he has suffered.

20. The 1st Defendant were naturally anxious to obtain full recovery from the Plaintiff. The way in which the collision occurred and the behaviour of those aboard the "Ya Mawlaya", according to the 1st Defendant's version, raise substantial doubts as to the competence of the latter's crew and the seaworthiness of her equipments. If the 1st Defendant were to have any realistic prospect of recovering the full loss which they had suffered, it was natural that the Plaintiff would have to be denied the right to limit their liability.

21. I was told that under federal U.S. law, a shipowner's right to limit his liability is lost if the collision was caused by matters which lay within the "actual fault or privity" of the shipowner. In other jurisdictions, although the limitation fund was higher, the right to limit would only be lost if the shipowner had acted recklessly, when the owner personally knew or ought to have known such unseaworthiness and incompetence of the crew.

22. For the aforesaid reason, the 1st Defendants were therefore advised and commenced proceedings in the federal court in New Orleans on the grounds that :-

1. the court was both experienced and sophisticated in maritime matters; and

2. the 1st Defendant had the better chance of obtaining recompense for their full loss in that court than elsewhere.

23. It is for the same reason that the Plaintiff are anxious that their liability should be assessed in virtually any jurisdiction other than an US federal jurisdiction.

24. Prior to 30 December 1994, there is no jurisdiction anywhere in the world including the federal court at New Orleans which could be characterised as the natural and appropriate forum for the resolution of the disputes between the Plaintiff and the 1st Defendant. However, since 30 December, there are quite a number of actions filed in the federal court in New Orleans and the situation became so compelling that the New Orleans Court is, in my view, now clearly and distinctly the more appropriate forum for the following reasons :-

1. Since the institution of proceedings by the 1st Defendant in New Orleans against the Plaintiff, a number of other actions have been brought by other parties who suffered injury and loss. Consequently, the New Orleans Court provides the forum in which the large majority of claims and issues arising out of this collision can be resolved in one set of consolidated proceedings.

2. The present action in Hong Kong, although not in form a claim for a negative declaration, has some of the same characteristics, i.e. it is designed primarily to bring into existence an alternative forum to that foreign forum which the Plaintiffs regard as uncongenial to them. As Kerr LJ said in The Volvox Hollandia [1988]2 Lloyd's Report 361 at p.371, claims for negative declarations should be looked at with great caution in all situations involving possible conflicts of jurisdictions.

3. It is undesirable to have competing fora and different findings of facts and decisions in law in different fora. It is more desirable to have dispute arising out of the same incident to be decided by the same forum.

25. Further the apparent juridical advantage to the Plaintiff in Hong Kong in terms of limitation is only illusionary.

26. The Plaintiff submitted that by defending the action in New Orleans, they would have lost their juridical advantage in terms of limitation. However, the 1st and 2nd Defendants in the case in Hong Kong will not counterclaim against the Plaintiff. If Plaintiff herein cannot raise the question of limitation at all in Hong Kong. If the case here is to proceed on the action of the Plaintiff alone, the sole question is whether the Defendants are liable or not liable to the Plaintiff. The parties are still going ahead in the New Orleans actions.

27. The Plaintiff further raised the question that no costs would be awarded in the United States. In the circumstances of the case, the more likely result of the action in the States would be the "Ya Mawlaya" will be adjudged to be liable to the "New World". In such event, the "Ya Mawlaya" would not have to pay the costs of the "New World". In this respect, it is therefore all the more beneficial to the Plaintiff herein to stay the action in Hong Kong from going any further.

Anti-suit Injunction

28. The Plaintiffs herein have filed motions in the federal court of New Orleans both challenging the jurisdiction of that court and invoking the doctrine of forum non conveniens as it is applied in the federal courts. If either of those applications proves to be well founded, the present application is entirely unnecessary. Much of the evidence adduced by the Plaintiff is directed for the proposition that the Plaintiff are not in fact subject to the jurisdiction of the federal court of the New Orleans. These materials are not relevant to the forum non conveniens application because as I have said, by a previous ruling of Barnett, J. on 1 June 1995, the application before me is to proceed on the basis that such jurisdiction does exist.

29. The Hong Kong court should not entertain an application for injunction to restrain foreign proceedings until the foreign court has ruled upon both jurisdiction and any issue of forum non conveniens. This approach appears to be implicit in the case of SNIAS v. Lee Kui Jak [1987] AC 871 and was expressly adopted by the Supreme Court of Canada in Amchem Products Inc. v. Workers Compensation Board (1993)102 DLR (4d) 96.

30. If such an approach is not adopted, the court is faced with two alternative courses of action: either it must embark upon a trial of the foreign court's jurisdiction or it must assume that the foreign court is properly seised of the proceedings.

31. The former course gives rise to enormous practical difficulties and is entirely inconsistent with any concept of comity or judicial restraint: see the case of Du Pont v. Agnew (No.2) [1988] 2 Lloyd's Report 240 in which Dillon LJ at p.244 decided to the effect that an English court could not arrogate to itself the power to override foreign court's decision to the effect that the foreign court was an appropriate forum. Consequently, if the Plaintiff's application for an injunction is to be entertained at all, it can only be dealt with on the basis that the New Orleans Court decided that they have jurisdiction over the Plaintiff and will exercise that jurisdiction.

32. From the authority cited to this court and in particular the case of SNIAS v. Lee Kui Jak (supra), it is quite clear that the jurisdiction to grant an anti-suit injunction is only to be exercised in extreme and rare circumstances. It would be necessary for the Plaintiff to establish that the initiation or the continuance of the New Orleans proceedings amounted to oppression by the 1st Defendant.

33. It was submitted by the Plaintiff herein that the procedure of discovery in Louisiana is oppressive. However, from the chronological events of the discovery procedure, the Plaintiff at first agreed to discovery of certain documents before 1 January 1995. They made no attempt to argue the scope of discovery sought was wrong. They later on moved to review or to reverse the Magistrate-Judge's decision. It was fully argued with the ruling delivered against them. Their appeal to the Judge was dismissed with reasons given. No reason was put forward in the U.S. court nor before me as to why they have not complied with the discovery order. I cannot see any case near oppression as developed by the Plaintiff herein.

34. The federal jurisdiction in the United States in admiralty matters provides, as submitted by the 1st Defendant and accepted by me, a civilised and sophisticated system of law. There is not and could not possibly be any suggestion that the trial before the admiralty judge in New Orleans will be anything other than wholly fair and reasonable to both parities.

35. As I have decided that clearly the more appropriate and convenient forum now to resolve all the disputes among various parties arising out of this collision is New Orleans, the Plaintiff's application for an anti-suit injunction against the 1st Defendant's proceedings in New Orleans must be dismissed.

Conclusion

36. I accept from the papers before me that in this unique case, New Orleans is clearly a more appropriate forum to dispose of the matter in a consolidated action involving disputes among a number of parties arising out of the same incident. Accordingly, the 1st and 2nd Defendants' application for a stay of the proceedings in Hong Kong is granted and the Plaintiff's application for an anti-suit injunction against the 1st Defendant is refused.

37. Lastly, I must thank counsel on both sides of the enormous assistance they have given me and the number of authorities they have cited. The fact that I did not cite the bulk of authorities made available to me is by no means a disrespect to the industry exerted by counsel. The principles involved in deciding the issue of forum non conveniens and anti-suit injunction are quite clearly defined. It is a matter of applying those principles in an unique case as this one involving collision at international waters at the time of the collision.