SHENZHEN FUTAIHONG PRECISION INDUSTRY CO., LTD AND ANOTHER v. BYD CO LTD AND OTHERS

HCA 2114 / 2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 2114 OF 2007

------------------------

------------------------

------------------------

DECISION

------------------------

I.       Introduction

1.  By way of these proceedings issued as of right in Hong Kong, the Plaintiffs allege that the 1^st and 2^nd Defendants (and the other Defendants) had through the Plaintiffs’ former employees misappropriated and exploited the Plaintiffs’ confidential information and trade secrets.  The Plaintiffs seek various reliefs against the Defendants.

2.  This is the 1^st and 2^nd Defendants’ application to stay or dismiss the present proceedings on the ground that the Intermediate People’s Court in Shenzhen (“the Shenzhen Court”) in the Mainland is the forum conveniens for the resolution of the dispute between the parties.

3.  In order to better understand the arguments made by the parties, it is necessary for me to first set out below the relevant background.

II.      Background

The dispute

4.  The Plaintiffs and the 1^st and 2^nd Defendants are business rivals, engaging in the business of, inter alia, producing handset components and related products.   

5.  The 1^st and 2^nd Plaintiffs are incorporated in the PRC, and are the indirect wholly owned subsidiaries of Foxconn International Holdings Ltd, a listed company in Hong Kong.   

6.  Over the years, the Plaintiffs have maintained substantial production and manufacturing facilities in the Mainland.  It is the Plaintiffs’ case that, for their business purposes, the Foxconn Group of companies (including the Plaintiffs) has developed a set of confidential information (“Confidential Information”) consisting trade secrets and operation manuals accumulated through years of operations, experience and investments into research and development.

7.  The Confidential Information is for the Plaintiffs’ internal use only.  Under their respective employment contracts and the Plaintiffs’ internal rules, their employees have express duties to keep the information confidential.

8.  The 1^st Defendant is also incorporated in the PRC but listed in Hong Kong.  For that purpose and as required by the listing rules, it is also registered in Hong Kong under Part XI of the Companies Ordinance (Cap 32). 

9.  The 2^nd Defendant is a Hong Kong incorporated company, and is wholly owned by the 1^st Defendant. 

10.  In May 2005, the 1^st Defendant recruited one Liu Xiang Jun (“Jun”)  (the then handset production quality control engineer and chief operating officer of the 1^st Plaintiff) to join the 1^st Defendant as one of its staff.

11.  In July 2005, one Si Shao Qing (“Si”) (then an officer of the Engineering Standards Department of the 1^st Plaintiff) joined the 1^st Defendant as its Manager of System Management Office.

12.  In April or May 2006, Zhang Jian (“Zhang”) left the 1^st Plaintiff and joined the 1^st Defendant as one of its staff.

13.  It is the Plaintiffs’ case that, Jun, Si and Zhang had divulged parts of the Confidential Information to some of the Defendants, and had procured other employees then still working for the Plaintiffs to pass on some other parts of the Confidential Information to the Defendants.  These other employees included Wang Wei (“Wang”) and Yang Na Na.

14.  The Plaintiffs further allege that, benefiting from the wrongful use of the Confidential Information so “stolen” from the Plaintiffs, the Defendants have since managed to expand their handset components manufacturing and related production business rapidly.  This is reflected by the significant and rapid increase in their revenue generated through these parts of the business, and demonstrated by the facts that the turnover relating to the handset business of the Defendants’ Group recorded a yearly increase of more than 100% per year for 2005, 2006 and 2007.  In monetary terms, these represent accrued profits to the 1^st Defendant in the tunes of hundreds of millions of dollars.  

15.  The Plaintiffs say that, in relation to the above wrongful acts:

(1)  In April 2007, Wang pleaded guilty and was convicted by the Shenzhen court of infringing the Plaintiffs’ business secrets.

(2)  In July 2007, the Shenzhen court also convicted Zhang of infringing the Plaintiffs’ business secrets.

(3)  In March 2008, Si was similarly convicted of infringing the Plaintiffs’ business secrets

The present proceedings commenced in Hong Kong

16.  The Plaintiffs issued the present proceedings against the Defendants on 5 October 2007.  Generally based on the above alleged wrongful acts of misappropriation of the Confidential Information, the Plaintiffs claim against the Defendants for:

(1)  Breach of confidence.

(2)  Inducing, and dishonestly assisting, the breach of contractual and fiduciary duties by the Plaintiffs’ former employees.

(3)  Conspiracy to injure.

17.  The Plaintiffs seek the following remedies:

(1)  Damages (including exemplary damages) to be assessed.

(2)  Declaration of constructive trusteeship over the profits made by the Defendants through the use and misappropriation of the Confidential Information, an account of such profits, to be aided by the necessary inquiries and tracing.

(3)  Injunction to (a) restrain the Defendants from continuing and repeating the wrongful conducts, and (b) require the Defendant to deliver up all infringing materials.

18.  By way of the Affirmation of E Weiqun filed herein to support the present applications, the 1^st and 2^nd Defendants effectively deny all the Plaintiffs’ allegations.

Various proceedings in the PRC and in Hong Kong

19.  Other than the present proceedings issued in Hong Kong, there are the following various proceedings that had been issued in Hong Kong and the Mainland, which are said by the 1^st and 2^nd Defendants to be relevant to this stay application.

20.  In January 2005, several subsidiaries of the Foxconn Group, including the 2^nd Plaintiff herein, brought civil proceedings against the 1^st Defendant in the Shenzhen Court (“the 2005 PRC Action”).

21.  In the 2005 PRC Action, it was claimed that the 1^st Defendant had misappropriated trade secrets from the Foxconn companies, and damages in the sum of RMB 500,000 were claimed.  In April 2007, the Shenzhen Court dismissed the claim.  In the judgment dismissing the claim, it is stated that the Shenzhen Court by then was only dealing with the claim as an unfair competition dispute, but not a business secrets dispute.  It further stated that the business secrets dispute should be resolved through other legal means.  In February 2008, the plaintiffs withdrew the appeal lodged against that decision.

22.  In June 2006, the Plaintiffs instituted a civil action against the 1^st Defendant, Jun and Si in the Shenzhen Court (“the 2006 PRC Action”).  The 2006 PRC Action was based on Article 10 (“Article 10”) of the Law of the People’s Republic of China Against Unfair Competition. 

23.  Article 10 effectively makes it a civil wrong in the PRC of a business operator to obtain, use or disclose another’s business secrets, and regards such a wrongful act as an infringement of business secrets.  Article 10 further defines business secrets as any technology information or business information which is unknown to the public, and which can bring about economic benefits to its owner, who has adopted measures to keep it confidential. 

24.  Under the 2006 PRC Action, pursuant to an ex parte order made by the Shenzhen Court, the Court seized as evidence documents (“the Seized Evidence”) contained in two hard discs of the computers used by Jun and Si. 

25.  With the Seized Evidence, and after complaints were made by the Plaintiffs to the Public Security Bureau:

(1)  Criminal prosecutions were brought against Jun, Wang and Si.  As mentioned above, they were eventually convicted for the offence of infringement of business secrets.

(2)  In about March 2008, criminal investigation was commenced against the 1^st Defendant for infringement of business secrets.  No criminal prosecution has yet been brought.

26.  On 11 June 2007, the Plaintiffs commenced HCA 1246 of 2007 (“the 1^st Hong Kong Action”) in Hong Kong against the same Defendants herein.  The complaints made, and reliefs asked for, under the 1^st Hong Kong Action were similar to those made in the present proceedings. 

27.  On 5 October 2007, the Plaintiffs discontinued the 1^st Hong Kong Action. On the same day, they commenced the present proceedings.  The Plaintiffs’ evidence (which is not challenged) is that they decided to withdraw the 1^st Hong Kong Action and to issue the present action at the same time, as they did not want to waste further time to pursue their application to amend the statement of claim of the 1^st Hong Kong Action, which was opposed by the 1^st and 2^nd Defendants.  

III.    The relevant legal principles

28.  Both parties agree that the overriding principles governing whether or not to stay the proceedings on the ground of forum non conveniens are those stated in Spiliada Maritime Corp v Cansulex Ltd [1987] 1 AC 460 at 467C.  That is: whether the court is satisfied that there is an alternative forum in which the case can be tried more suitably for the interests of the parties and for the ends of justice.

29.  In adopting and following Spiliada, the Hong Kong Court Appeal in The Adhiguna Meranti [1987] HKLR 904 at 907F-908B further developed the principles into the well-known 3-stage test as follows:

“	(I)	Is it shown that Hong Kong is not only not the natural and appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than Hong Kong (p. 986H).  The evidential burden is here upon the applicant.  The emphasis is upon ‘appropriate’ rather than ‘convenient’ because this is not simply a matter of practical convenience.  The purpose is to identify the forum ‘with which the action has the most real and substantial connection’ per Lord Keith in the Abidin Daver [1984] AC 398.  The principal factors are enumerated at p. 987D.  Failure by the applicant at this stage is normally fatal.
	(II)	If the answer to (I) is yes, will a trial at the other forum deprive the plaintiff of any ‘legitimate personal or juridical advantages’? (pp. 987F, 991-3).  The evidential burden here lies on the plaintiff (pp. 986A and 987G).
	(III)	If the answer to (II) is yes, a court has to balance the advantages of (I) against the disadvantages of (II) … Deprivation of one or more personal or juridical advantages will not necessarily be fatal to the applicant provided that the court is satisfied that notwithstanding such loss ‘substantial justice will be done in the available appropriate forum’ … Proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the applicant for the stay.  By these means he establishes that on balance the other forum is more suitable ‘for the interests of all the parties and ends of justice’.  This may be another way of saying that the plaintiffs’ choice of forum has been shown to be so inappropriate as to deserve the pejorative description of  ‘forum shopping’ and to be retrained accordingly …’ (emphasis added)

30.  Further, under Stage I of the test:

(1)  The burden is on the applicant for a stay to show that there are factors and reasons that make the alternative forum clearly or distinctly the more appropriate forum than the local forum to try the action for the interests of the parties to obtain justice.   The focus is therefore on the trial of the action.  It is insufficient to demonstrate merely some factors pointing to better convenience for the parties to conduct the trial in the alternative forum.  See: Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250, 255A-F per Recorder Ma, SC (as he then was).

(2)  In considering whether the factors raised by the defendant can show that the alternative forum is clearly or distinctly a more appropriate forum, the Court should bear in mind that the plaintiff has found his action as of right in this jurisdiction, and such a right should not be lightly disturbed: Pei Zheng Middle School, supra, para 19; Yu Lam Man v Good Investment Ltd [1998] 1 HKC 726, 734B-E, following the Court of Appeal’s decision in The Kapitan Shvetsov [1997] 1 HKC 485 at 491G-H; Banco Atlantico v BBME [1990] 2 LLR 504, 508 per Bingham LJ (as he then was).

(3)  The mere fact that there are concurrent proceedings in the alternative forum alone is generally not a relevant factor to be considered.  The rationale is that a plaintiff is entitled to choose the forum he has found as of right in which he prefers to litigate the matter: Pei Zheng Middle School v China Pui Ching Education Foundation Ltd (unrep., CACV 262/2005, Cheung and Yeung JJA, 21 February 2006), para 25; Nan Tung Bank Ltd v Wangfoong Transportation Ltd [1999] 2 HKC 606, 610 per Liu JA, adopting The Abidin Daver [1984] 1 AC 398 at 409B per Lord Diplock.  However, the existence of such proceedings may, depending on the circumstances, be relevant to the inquiry:  de Dampierre v de Dampierre [1988] 1 AC 92, 108B-E per Lord Goff.

31.  Under Stage II, legitimate personal or juridical advantages could include any significant causes of action, substantive remedies or procedures that would not be available in the other forum.  However, the mere existence of such juridical advantages in the local forum does not necessary lead to a refusal to stay.  Whether a stay will be a granted or not depends on the balancing exercise under Stage III:  Spiliada, supra, 482B-D per Lord Goff.

32.  Under Stage III, each case must be looked at individually as to whether the deprivation of any or certain of the juridical advantages would result in rendering the plaintiff not having been able to obtain substantial justice in the other forum.  There is no hard and fast rule in it, and the Court should look at all the circumstances to come to a view, sometimes an instinctive one, as to whether substantive justice would not be obtained in the foreign forum:  de Dampiere, supra, 101E-F per Lord Templeman; The Atlantic Star [1974] AC 436, 468F-H per Lord Wilberforce; The Adhiguna Meranti, supra, 147G-H; Spiliada, supra, 483C-D per Lord Goff.

IV.    Applying the test to the present case

33.  Before I start, I think it is useful for me to first set out what I regard as the principal issues arising in the present proceedings, by reference to the Statement of Claim and the 1^st and 2^nd Defendants’ general denial.  These are:

(1) Whether the Confidential Information amounts to information of confidence and would be protected by the law of confidence.

(2) Whether the identified former employees of the Plaintiffs owed to the Plaintiffs at the material times contractual and/or fiduciary duty of confidence.

(3) Whether the complained acts of these former employees of the Plaintiffs did occur, and if so, whether they were carried out in breach of their fiduciary and/or contractual duty of confidence.

(4) Whether the Defendants (including the 1^st and 2^nd Defendants) had induced or were fully aware of these alleged wrongful acts of these former employees of the Plaintiffs, and if so, whether the Defendants are liable for breach of confidence, the tort of inducement of breach of contract and/or fiduciary duty, and conspiracy to injure.

(5) If so, whether by reason of the above alleged wrongful acts, the Defendants have obtained profits, and/or whether the Plaintiffs have suffered loss and damage.  If so, what is the respective quantum of profits and/or damages.

(6) If so, as a matter of remedies:

(a) whether prohibitory and/or mandatory injunctions should be granted against the Defendants to respectively (a) restrain them from continuing and repeating the wrongful conducts, and (b) require the Defendant to deliver up all infringing materials.

(b) whether constructive trust should be imposed on the Defendants’ assets or profits derived from their wrongful acts in favour of the Plaintiffs;

(c) whether the Defendants should be ordered to account for the profits;

(d) whether the Defendants should be subject to tracing inquiries.

(e) whether the Defendants are liable for damages, including exemplary damages.

34.  Bearing these issues in mind, I will now go into the 3-stage test.

Stage I

35.  Mr Pe for the 1^st and 2^nd Defendants submits that the Shenzhen Court is clearly or distinctly the more appropriate forum than the Hong Kong Court to try the action, as the following factors show that the dispute and its issues are overwhelmingly connected to Shenzhen:

(1)  The Plaintiffs and the 1^st Defendant are companies incorporated in the PRC and run their businesses there.

(2)  All persons potentially related to the case (meaning the senior executive management personnel of the parties and their employees), and the potential witnesses, including the Plaintiffs’ former employees who are alleged to have been in breach of their duties, are located in Shenzhen or elsewhere in the Mainland.

(3)  All the related documents are located in Shenzhen or elsewhere in the Mainland.

(4)  The substance of the torts complained of by the Plaintiffs were committed in Shenzhen, and as such the jurisdiction in which the torts were committed (i.e., Shenzhen) is prima facie the natural forum for the determination of the dispute: The Albaforth [1984] 2 Lloyd’s Rep 91 at 94 per Ackner LJ; Esquel Enterprises Ltd v TAL Apparel Ltd [2006] 2 HKLRD 363, paras 13, 28 (pp. 369E, 371C-D) per Tang JA.

(5)  It is likely that the substantive law governing the majority if not all of the issues in the present claims is PRC law.  This is so because (a) the employees were employed by PRC companies, and their employment contracts were governed by PRC law, and (b) the Plaintiffs have pleaded Article 10 in the present proceedings.  

36.  Notwithstanding the above submissions, I do not accept that the 1^st and 2^nd Defendants have discharged their burden to show that the Shenzhen Court is clearly or distinctly the more appropriate forum to try the dispute.  My reasons are as follows.

Place of incorporation of the parties and their businesses

37.  In my view, the facts that PRC is the place of incorporation of the Plaintiffs and the 1^st Defendant, and that their main businesses are carried on in the Mainland, have nothing to do with the trial of any of the issues in the present case.  This would not have any impact, one way or the other, on whether justice could be obtained by the parties if the trial of the above listed issues is to be held in the Hong Kong Court or the Shenzhen Court. 

38.  I thus regard this factor is at most neutral to the question of whether the Shenzhen Court is clearly or distinctly a more appropriate forum.

Location of the witnesses and senior management personnel

39.  I also reject that this is a factor which shows clearly or distinctly that the Shenzhen Court is the more appropriate forum.

40.  In this respect, it is perhaps helpful for me to first repeat below Mr Recorder Geoffrey Ma’s observation[1] on the relevance of the location of potential witnesses as a factor in considering where is the more appropriate forum:

“In application for a stay based on forum non conveniens, it is often desirable for the parties first to identify the relevant witnesses who will be required to give evidence at trial, the number involved and then state the reasons why in any particular jurisdiction it would be more convenient for such witnesses to give evidence.  It is important to make a distinction between those witnesses who will more likely be required to give disputed evidence and whose testimony is not likely to cause controversy.  In the case of the latter, unless there is shown a likelihood that their attendance at trial is required, the fact that they are resident in any particular country will not normally be of any significance.  Thus, while the court is not at this stage concerned about the merits of the action, it is nevertheless incumbent on the parties to set out their respective cases in sufficient detail so as to identify those issues likely to be in controversy at trial.  Only then would the location and convenience of witnesses be seen in its proper context.”

41.  Further, in Yu Lap Man, supra, it is also observed by Cheung J (as he then was) that in a stay application, it is insufficient for the applicant for a stay to show mere practical convenience for a potential witness to attend trial in the foreign forum.  His Lordship explains at 734B-C as follows:

“…Regarding the connecting factors with China and the availability of witness in China, Mr Wu has merely shown that the courts in PRC are equally appropriate as the Hong Kong courts to deal with this case.  There certainly is no evidence that the witnesses could not come to Hong Kong.  The burden on the defendant is not to show mere practical inconvenience, but whether there is another available forum which is clearly or distinctly more appropriate than the one chosen by the plaintiff…”

42.  In the present case, the 1^st and 2^nd Defendants have failed to identify in their evidence as to which of these senior management personnel would likely to be called as witnesses at trial, and the prima facie relevance their evidence to any of the identified issues. 

43.  Further and in any event, even if any of these personnel are to be witnesses at the trial, the evidence is that most of them are located in Shenzhen and that they could come to Hong Kong with a 45 minutes’ journey.  There is no suggestion that there is a risk that they could not attend the trial if it is to be held in Hong Kong. 

44.  In the premises, I accept the submissions of Mr Poon, SC, leading Mr Godfrey Lam SC and Ms Elizabeth Cheung for the Plaintiffs, that the 1^st and 2^nd Defendants only show that it may be practically more convenient for the potential witnesses to attend a trial in Shenzhen.   As such, and applying the principles set out above at paragraphs 40 and 41 above, this does not show that the Shenzhen Court is the more appropriate forum in which the case can be tried more suitably for the interests of the parties and for the ends of justice. 

45.  Although it is not in the evidence, Mr Pe then submits that, as a matter of common sense, it is unlikely that those former employees of the Plaintiffs, who the Defendants intend to call as witnesses, would be willing to come to Hong Kong to give evidence, as they have been convicted in Shenzhen.  Therefore, if the case is to be tried in Hong Kong, serious prejudice would be caused to the 1^st and 2^nd Defendants if these witnesses refuse to come to Hong Kong.

46.  I am unable to accept Mr Pe’s above submissions:

(1)  I accept Mr Poon’s submissions that, as a matter of common sense, it is more likely than not that these former employees will be less willing to give any evidence in Shenzhen than in Hong Kong, if the evidence they are to give is to contradict their convictions.  Thus, a trial in Hong Kong would in fact provide a better chance to secure their attendance, if ever needed, than if it is to be conducted in Shenzhen.  No injustice therefore is likely to be caused to the 1^st and 2^nd Defendants as submitted.

(2)     Further, I have read the witness statements of these employees, which have led to their conviction.  I also note that Wang’s conviction was in fact made on her guilty plea.

(3)     Given this present state of the evidence, it is difficult for me to see at this stage what would be the likely controversy over the evidence of these convicted employees (if they are to be called as witnesses) in relation to what they had done vis-à-vis the Confidential Information.  I note that the Plaintiffs’ averments against them in Statement of Claim are substantially based on the matters stated in their statements.   In the circumstances, the 1^st and 2^nd Defendants have also failed to satisfy me how the attendance of these employees at trial is likely to be of significance. See: Recorder Ma’s observation quoted at paragraph 40 above.

47.  In the premises, I do not find that the location of the 1^st and 2^nd Defendants’ senior management personnel and the Plaintiffs’ former employees, constitutes a factor to support that the Shenzhen Court is clearly or distinctly the more appropriate forum to try the present action.

The location of the documents

48.  Again, as in the case of the location of witnesses, generally the mere fact of the foreign location of the relevant documents is not necessarily supportive of the proposition that the foreign court is the more appropriate forum to try the case.  The applicant for a stay should further show that, for example, there is at least a risk that some of these document may not be made available if the trial is to be conducted locally.  See:  Rambas, supra, 264B-C.  

49.  In the present case, although the unchallenged evidence is that the purported related documents are likely to be located in Shenzhen at the 1^st and 2^nd Defendants’ factories and offices, there is no evidence to suggest that if the trial is to be conducted in Hong Kong, there is a risk that some of these documents may not be made available in Hong Kong.

50.  In these circumstances, and given the relatively short journey between Hong Kong and Shenzhen, I similarly do not accept that this is a factor which shows that the Shenzhen Court is clearly or distinctly the more appropriate forum. 

The substance of the alleged torts were committed in Shenzhen

51.  The 1^st and 2^nd Defendant rely heavily on the case of The Albaforth, supra, to support the proposition that as a general rule, the forum in which the substance tort was committed is the prima facie natural forum to try the dispute. 

52.  In Albaforth, the shipowners was initially granted an ex parte leave to serve out of jurisdiction a writ on a bank in New York and Connecticut, to claim damages for negligent misstatement.  The ex parte leave was later set aside by the Court.   The shipowners appealed that decision to the Court of Appeal, which allowed the appeal.  Ackner LJ expressed at p 94 the view that the jurisdiction in which a tort had been committed was prima facie the natural forum for the determination of that dispute.  Robert Goff LJ also said at p 96 as follows:

“…If the substance of an alleged tort is committed within a certain jurisdiction, it is not easy to imagine what other facts could displace the conclusion that the Courts of that jurisdiction are the natural forum.” 

53.  In Esquel Enterprises, supra, the Court of Appeal in Hong Kong adopted the above observations in The Albaforth, and confirmed at paras 13 and 28 the first instance judge’s conclusion that the foreign jurisdiction where the publication of the alleged defamatory material was made, was the prima facie natural forum for the determination of the claim.

54.  Relying on these authorities, Mr Pe for the 1^st and 2^nd Defendants submits that as the alleged wrongs complained by the Plaintiffs in this action are tortuous in nature, and were indisputably committed in Shenzhen, it is clear that the Shenzhen Court is clearly or distinctly the more appropriate forum to try the matter.

55.  Mr Poon for the Plaintiffs however submits the following:

(1)  The main thrust of the Plaintiffs’ claim in the present action is based on breach of confidence, which is not a specie of tort as recognized by the common law.  Mr Poon relies on the Court of Appeal’s decision^[2] in Douglas v Hello!Ltd (No 3) [2006] QB 125 at 160B-C.  He therefore says that the observations in The Albaforth and Esquel Enterprises do not apply directly to such a claim. 

(2)  Further, what The Albaforth and Esquel Enterprises say in this respect is only that the prima facie natural forum to try a tortuous claim is the jurisdiction where the tort was committed.  This is not conclusive and can still be displaced by other factors.  Mr Poon then relies on the decision in Berezosky v Michaels [2000] 1 WLR 1004 at 1014C-D per Lord Steyn.

(3)  In the present case, the only tortuous claims against the Defendants in the present action are the torts of inducement of breach of contractual or fiduciary duties of confidence by Plaintiffs’ former employees and conspiracy to injure.  These causes of action are only periphery to the main claim for breach of confidence.  On the other hand, in The Albaforth and Esquel Enterprises, the primary cause of action involved respectively in them was in tort.

(4)  Further, there is no evidence to suggest that the PRC laws (being the law of the place of the torts, governing the torts) in relation to the contractual and fiduciary duties of these former employees are different from Hong Kong laws. They should therefore be presumed to be the same as Hong Kong laws. 

(5)  In the premises, even in light of these tortuous claims, insofar as the trial of entire present action is concerned, the natural forum presumption set out in The Albaforth and Esquel Enterprises should be displaced in favour of the Hong Kong forum.

56.  I agree with Mr Poon’s submissions. 

57.  First, on a proper reading of the Statement of Claim in the present action, I accept that the claim for breach of confidence is the Plaintiffs’ main cause of action against the Defendants.   The other tortuous claims are periphery and supplementary to this principal claim.

58.  Secondly, the authorities cited to me do support the proposition that it is at least arguable that the cause of action in breach of confidence should not be categorized as a form of tort.  As stated by the learned editors of Clerk and Lindsell on Torts (19^th ed) at para 28-03 on the nature of a claim in breach for confidence:

 “Juridical basis of the action  There has been a long-standing uncertainty as to how this action [action for breach of confidence and privacy] should be categorized… though there is some judicial support for its recognition as a tort, the most favoured basis for the action to date is that of an equitable principle of good faith.  However, because of its close relationship with other torts this chapter on breach of confidence is included in this work.” (emphasis added)

59.  Given this uncertainty as to the nature of the action for breach of confidence, I do not think the 1^st and 2^nd Defendants could demonstrate to me that for the present case, the Shenzhen Court is clearly or distinctly the more appropriate forum simply by relying on the propositions laid down in The Albaforth and Esquel Enterprises.

60.  I also accept that even for a claim based on tort, under The Albaforth and Esquel Enterprises, although the place in which the tort was committed is a strong prima facie natural forum for the determination of the dispute, it is by no means conclusive and this presumption is displaceable.  I do not think Mr Pe is submitting otherwise.

61.  As such, given that (a) the principal cause of action in the present claim is arguably not a form of tort, (b) the other tortuous claims are only supplementary to this principal claim, and (c) the PRC laws governing these tortuous claim are presumed to be the same as Hong Kong, I am satisfied that the presumption on the natural forum advanced in The Albaforth and Esquel Enterprises is displaced, in that this is not a case where it is shown that the Shenzhen Court is clearly or distinctly the natural forum to try the disputes.

The relevance of PRC law

62.  This can be dealt with shortly.  

63.  As mentioned above, for the identified issues in this action, the 1^st and 2^nd Defendants have not adduced any expert evidence to show that any applicable and relevant PRC laws are different from Hong Kong laws.  As such, the relevant PRC laws are presumed to be the same as Hong Kong law.

64.  In the premises, even if any of the PRC laws is to apply to determine any of the issues, I am of the view that the Hong Kong courts are as equally equipped as the Shenzhen Court to deal with them. 

65.  Mr Pe for the 1^st and 2^nd Defendants then refers me to the Plaintiffs’ Statement of Claim, and points out that the Plaintiffs have specifically pleaded Article 10.  He submits that the need to determine the meaning and effect of Article 10, being a PRC legal code, points to the Shenzhen Court as the more appropriate forum.

66.  For this, Mr Poon for the Plaintiffs confirms that the reference to Article 10 in the Statement of Claim is only for the purpose of satisfying the double actionability test under the Boys v Chaplin principle.  The Plaintiffs are not relying on Article 10 as a material part of their claims against the Defendants.  Therefore (Mr Poon further submits) no issue arises in the present action on the interpretation and applicability of Article 10.

67.  Given Mr Poon’s confirmation, I am satisfied that if the trial of the action is to be conducted in Hong Kong, it is not necessary to determine the meaning and effect of Article 10 under PRC law.

68.  Further, even if I were wrong above, and the issue of the meaning and effect of Article 10 under PRC law did arise in the trial, the expert evidence before me is to the effect that the interpretation and effect of Article 10 under PRC law is not controversial.  As such, I am also satisfied that Hong Kong courts are still competently equipped to deal with this issue.  As said by Cheung JA in Pei Zheng Middle School, supra, at para 20, Hong Kong courts are generally highly competent to deal with any legal or factual issues with a Mainland element.

69.  For these reasons, I am not persuaded that, even with the potential relevance of PRC law in the trial of the present proceedings, the Shenzhen Court is clearly or distinctly the more appropriate forum.

Conclusion under Stage I

70.  For the above reasons, the 1^st and 2^nd Defendants have failed to show that the Shenzhen Court is clearly or distinctly the more appropriate forum to try the present action. 

71.  On this basis alone, I would dismiss the 1^st and 2^nd Defendants’ stay application.

72.  However, if I were wrong in the above, I will deal with the arguments under Stages II and III as follows.

Stage II

73.  The Plaintiffs say that they would be deprived of the following personal or juridical advantages if the action is to be stayed for the Shenzhen Court:

(1)  A compulsory and more extensive discovery procedure and the right to administer interrogatories.

(2)  A higher level of recoverable damages.

(3)  A wider and more effective form of injunction.

(4)  The remedies of constructive trust and tracing.

(5)  The award of exemplary damages.

(6)  The award of costs on an indemnity basis.

Constructive trust, tracing and indemnity costs

74.  As a start, Mr Pe for the 1^st and 2^nd Defendants effectively and fairly accepts that under the PRC legal system and jurisprudence, the remedies of (a) constructive trust and tracing, (b) exemplary damages, and the award of costs on an indemnity basis are not available. 

75.  Notwithstanding the concession, Mr Pe submits that, given the state of the pleading and the evidence before the Court, it is highly unlikely that the Plaintiffs would be able to obtain these reliefs and indemnity costs even if the trial is to be conducted in Hong Kong.  As such, the so-called deprivation of the advantages is more apparent than real. 

76.  I am unable to accept Mr Pe’s submissions. 

77.  In an application for stay on the ground of forum non conveniens, the Court is not to be concerned with, nor is it appropriate for it to deal with, the substantive merits of the claim.  See:  Pei Zheng Middle School, supra, at paras 16-18.  In particular, when it is not the 1^st and 2^nd Defendants’ submissions that any parts of the Statement of Claim are liable to be struck out.

78.  In the circumstances, I do not think I can say at this stage that it is highly unlikely that the Plaintiffs, if successful at trial, would not be granted the relief of constructive trust, tracing and an award of costs on an indemnity basis.   These matters should only be fully canvassed at trial.

79.  As a result, I would accept for the present purpose that, if the action is stayed for the Shenzhen Court, the Plaintiffs would be deprived of these potential juridical advantages.

Discovery and interrogatories

80.  From the PRC law expert evidence adduced by both parties, it is common ground that the major difference between the discovery procedure in Hong Kong and the civil evidence gathering procedure in the Mainland can be described as follows:

(1)  Under the Hong Kong discovery, the parties are obliged to even discover documents which are detrimental or unfavourable to them.   

(2)  On the other hand, under the PRC procedure, a party is initially only required to disclose documents which it wants to rely on to support its case.

81.  It is so accepted by the 1^st and 2^nd Defendants that, there is no procedure under the PRC legal system similar to that of the administration of interrogatories as available in Hong Kong.

82.  Mr Poon for the Plaintiffs submits that the compulsory and more comprehensive discovery in Hong Kong, coupled with and the interrogatories procedure, clearly constitute a juridical advantage for the Plaintiffs.  The advantage will be lost if the case is to be stayed for the Shenzhen Court.

83.  Mr Pe for the 1^st and 2^nd Defendants submits otherwise.  

84.  First, Mr Pe relies on the observation of Lord Goff in Spiliada at 482F to 483B, and submits that it is established that the concept of “legitimate personal or juridical advantage” does not include any of the special features of an extensive discovery such as the one available in Hong Kong.   Thus, as submitted by Mr Pe, there is simply no question of there being a juridical advantage in relation to the Hong Kong discovery and interrogatories procedures.

85.  Secondly, as a matter of evidence, Mr Pe says that the PRC civil procedures do provide a rather similar and comprehensive evidence disclosure system.   The two procedures are therefore not significantly different.   He relies on the following evidence:

(1)  According to the unchallenged expert evidence, under the various articles of the Civil Procedure Law of the People’s Republic of China, if the Plaintiffs can show that the 1^st and 2^nd Defendants are in possession of certain relevant evidence, they can apply to the court to ask the court to investigate, and collect the evidence, and even to preserve evidence.

(2)  Further, as confirmed by the experts on both sides, under Article 75 of the Civil Procedure Law of the People’s Republic of China, if a party refuses to provide the evidence when so asked by the court, it can be inferred as established that such evidence is not favourable to that party possessing the evidence.

86.  Mr Pe therefore submits that, under the relevant PRC procedural laws, it is not the case that there is no procedure to allow the Plaintiffs to seek further evidence from the 1^st and 2^nd Defendants, even if they are against the 1^st and 2^nd Defendants’ case.  Quite to the contrary, the procedures set out above are comprehensive and effective, as they even provide for a detrimental presumption against a party who refuses to disclose certain evidence when asked by the court to do so.  There is therefore again (Mr Pe so further submits) no question of a juridical advantage vis-à-vis the discovery and interrogatories procedures.

87.  I do not accept Mr Pe’s submissions.

88.  I will deal with Mr Pe’s submissions on the law first.    When discussing the test in relation to the loss of legitimate personal or juridical advantage, Lord Goff in Spiliada made the following observations at 482B-483C:

“8) Treatment of ‘a legitimate personal or juridical advantage’

Clearly, the mere fact that the plaintiff has such an advantage in proceedings in England cannot be decisive. As Lord Sumner said of the parties in the Société du Gaz case, 1926 SC (HL) 13, 22:

‘I do not see how one can guide oneself profitably by endeavouring to conciliate and promote the interests of both these antagonists, except in that ironical sense, in which one says that it is in the interests of both that the case should be tried in the best way and in the best tribunal, and that the best man should win.’

Indeed, as Oliver L.J. [1985] 2 Lloyd's Rep. 116, 135, pointed out in his judgment in the present case, an advantage to the plaintiff will ordinarily give rise to a comparable disadvantage to the defendant; and simply to give the plaintiff his advantage at the expense of the defendant is not consistent with the objective approach inherent in Lord Kinnear's statement of principle in Sim v. Robinow, 19 R, 665, 668.

The key to the solution of this problem lies, in my judgment, in the underlying fundamental principle. We have to consider where the case may be tried ‘suitably for the interests of all the parties and for the ends of justice.’ Let me consider the application of that principle in relation to advantages which the plaintiff may derive from invoking the English jurisdiction. Typical examples are: damages awarded on a higher scale; a more complete procedure of discovery; a power to award interest; a more generous limitation period. Now, as a general rule, I do not think that the court should be deterred from granting a stay of proceedings, or from exercising its discretion against granting leave under R.S.C. Ord. 11, simply because the plaintiff will be deprived of such an advantage, provided that the court is satisfied that substantial justice will be done in the available appropriate forum. Take, for example, discovery. We know that there is a spectrum of systems of discovery applicable in various jurisdictions, ranging from the limited discovery available in civil law countries on the continent of Europe to the very generous pre-trial oral discovery procedure applicable in the United States of America. Our procedure lies somewhere in the middle of this spectrum. No doubt each of these systems has its virtues and vices; but, generally speaking, I cannot see that, objectively, injustice can be said to have been done if a party is, in effect, compelled to accept one of these well-recognised systems applicable in the appropriate forum overseas. In this, I recognise that we appear to be differing from the approach presently prevailing in the United States: see, e.g., the recent opinion of Judge Keenan in Re Union Carbide Corp. (1986) 634 F.Supp. 842 in the District Court for the Southern District of New York, where a stay of proceedings in New York, commenced on behalf of Indian plaintiffs against Union Carbide arising out of the tragic disaster in Bhopal, was stayed subject to, inter alia, the condition that Union Carbide was subject to discovery under the model of the United States Federal Rules of Civil Procedure after appropriate demand by the plaintiff. But in the Trendtex case [1982] AC 679, this House thought it right that a stay of proceedings in this country should be granted where the appropriate forum was Switzerland, even though the plaintiffs were thereby deprived of the advantage of the more extensive English procedure of discovery of documents in a case of fraud. Then take the scale on which damages are awarded. Suppose that two parties have been involved in a road accident in a foreign country, where both were resident, and where damages are awarded on a scale substantially lower than those awarded in this country. I do not think that an English court would, in ordinary circumstances, hesitate to stay proceedings brought by one of them against the other in this country merely because he would be deprived of a higher award of damages here.

But the underlying principle requires that regard must be had to the interests of all the parties and the ends of justice; and these considerations may lead to a different conclusion in other cases.”  (emphasis added)

89.  In my view, Lord Goff’s above observation deals more with the proposition as to whether the deprivation of a juridical advantage would invariably lead to the denial of substantial justice.  His Lordship came to the view that it is not necessary the case.  He then cited the examples of the differences between the discovery procedures and the different levels of recoverable damages in two different jurisdictions to say that, the deprivation of such “juridical advantages” generally would not lead to the denial of substantial justice to the party who seeks to rely on a more extensive discovery procedure or higher level of damages available in the local jurisdiction.

90.  However, I do not think Lord Goff waslaying down a generally applicable principle or proposition that, in every forum non conveniens case, the deprivation of a more extensive discovery procedure, or a higher level of recovery damages in the local jurisdiction, would not constitute a “legitimate personal or juridical advantage” and would never lead to the conclusion that the plaintiff would not be able to obtain substantial justice in the other forum.  Each case must be decided on its own circumstances.  That is why, after setting out his general observations, Lord Goff emphasized at 483D that “…these considerations may lead to a different conclusion in other cases”.

91.  I therefore do not accept that there is any established legal proposition that differences in the discovery procedures or levels of damages in two different jurisdictions can never amount to a juridical advantages or would never constitute a valid consideration to refuse to stay the proceedings on the ground of forum non conveniens.  Each case must be looked at individually with reference to its own nature and circumstances. 

92.  Thus, in Beecham Group PLC v Norton Healthcare Ltd [1997] FSR 81, 99, a case where the plaintiffs claimed against the defendant for breach of confidence, Jacobs J in granting leave to the plaintiff to serve outside jurisdiction under O. 11, accepted that the more extensive discovery and interrogatories provided by the English procedure, together with other factors, constituted legitimate juridical advantages, and militated “in favour of the United Kingdom being a forum conveniens for the trial of breach of confidence” against the foreign corporate defendant in Slovenia.

93.  In relation to Mr Pe’s second point, with the expert evidence now placed before the Court, and for the following reasons, I am satisfied that there are significant differences between the discovery procedures in Hong Kong and the evidence gathering procedures in the Mainland.

94.  As rightly pointed out by Mr Poon, in order to invoke the various articles under the PRC procedure law as suggested by the 1^st and 2^nd Defendants’ expert, it is necessary for the Plaintiffs to be able to first demonstrate to the Shenzhen Court (a) the existence of those documents, and (b) that the 1^st and 2^nd Defendants are in possession of them. 

95.  However, without the automatic and compulsory Hong Kong discovery and interrogatories to provide the initial “paper trail”, especially for documents which are detrimental or unfavourable to the 1^st and 2^nd Defendants’ own case, it is very difficult (if not impracticable) for the Plaintiffs to identify the existence of these further documents, so as to invoke those articles under the PRC procedure law.  

96.  This is particularly so in the present case, which is primarily premised on the Defendants’ breach of confidence and wrongful use of the Confidential Information.  For cases like this, most of the relevant evidence concerning the breach, the wrongful use and the extent of the said use of the Confidential Information, is likely to be only within the Defendants’ own knowledge and possession.   Therefore, without the initial paper trails and information that would have been created by the compulsory and comprehensive discovery and interrogatories procedures, it would be even more difficult for the Plaintiffs to satisfy the preconditions under the PRC procedure law to invoke the relevant articles to invite the Shenzhen Court to demand the disclosure of unfavourable evidence and documents from the Defendants.

97.  I therefore accept that there is an appreciable and significant difference between the two discovery procedures in Hong Kong and the Mainland.   For the purpose of this particular case, this could be properly regarded as a legitimate juridical advantage that is available to the Plaintiffs if the proceedings are to remain in Hong Kong.

Damages

98.  The Plaintiffs’ evidence (inclusive of the evidence of the Plaintiffs’ PRC law experts, Mr Li and Mr Dicks) suggests the following:

(1)  Under PRC law, the Plaintiffs were required to specify in the claim document the amount of damages claimed. 

(2)  Under PRC law, although a plaintiff can ask to revise the quantum of damages initially claimed, this is generally not allowed after the expiry of the time for the production of evidence.

(3)  Moreover, according to the expert opinions, the PRC courts rarely award damages beyond RMB500,000 in cases of infringement of business secret.

(4)  As the Plaintiffs were at this stage unable to provide sufficient evidence on the amount of profits gained by the 1^st Defendant through the unlawful use of the Confidential Information, at the suggestion of the Shenzhen Court, the Plaintiffs had to reduce in their writ of the 2006 PRC Action the claimed amount of damages from RMB70 million to RMB5 million.

(5)  Further, since the time for the production of evidence under the 2006 PRC Action had already expired, the Shenzhen Court had in fact disallowed the Plaintiffs’ subsequent application to increase the amount of damages claimed.

99.  In light of the above evidence, it is Mr Poon’s submissions that the damages that the Plaintiffs could recover, if the action is to be tried in the Shenzhen Court, are likely to be limited and be substantially below what they could recover in Hong Kong.

100.  In this respect, the 1^st and 2^nd Defendants’ expert in PRC law, Mr Liu, agrees with the Plaintiffs’ views on the PRC law stated at paragraph 98 above.  However, Mr Liu is of the opinion that given the criminal prosecution that may be commenced against the 1^st Defendant in the PRC, and if the prosecution is successful, the Plaintiffs would then be entitled to commence what is described as the “ancillary civil action” against the 1^st Defendant to claim for further damages.  He further opines that in similar ancillary civil actions, the PRC courts have awarded damages exceeding RMB100 million.  In light of this part of the unchallenged evidence, Mr Pe for the 1^st and 2^nd Defendants submits that there could be no “real” deprivation of the alleged juridical advantage in damages as suggested by the Plaintiffs.

101.  In relation to the “ancillary civil action”, the unchallenged evidence of the Plaintiffs’ experts however shows that this procedure is entirely dependent upon the successful criminal prosecution of the 1^st Defendant, which is beyond the Plaintiffs’ own control.  The procedure is also not well suited to more complex litigation.  Further, Mr Poon submits that, without the discovery procedure and tracing remedy provided under common law, any claim for damages in such an “ancillary civil” action is also unlikely to be fruitful due to the lack of means on the plaintiffs’ part to prove the Defendants’ illegal gains under the relevant PRC law.  As such, Mr Poon further says the Plaintiffs do stand the loss of a realistic juridical advantage in having a lower level of recoverable damages if the action is to be tried in the Shenzhen Court.

102.  I accept Mr Poon’s submissions.   Coupled with the absence of the compulsory and comprehensive discovery procedure and the tracing remedy under PRC law, I am satisfied that the “ancillary civil action” available to the Plaintiffs is unlikely to be effective to enable them to recover substantial damages in the Shenzhen Court.   

103.  In the circumstance, I am prepared accept to that the Plaintiffs would practically suffer a juridical disadvantage in the form of a lower level of recoverable damages if this action is stayed for the Shenzhen Court.

Injunction

104.  It is not disputed that under PRC law, there is no relief in the form of a mandatory injunction to require the Defendants to disclose their infringing use.  Mr Poon at paragraph 55 of his skeleton says the Plaintiffs have asked for such a relief in the present claim.

105.  At first blush, I have hesitation as to whether the Plaintiffs have asked for such an order under their pleaded prayers for injunctive relief, which are as follows:

“AND the Plaintiffs claim against the Defendants for:-

(1)           … An Order restraining the Defendants and each of them whether by themselves, their servants or agents or otherwise howsoever from using the Confidential Information of the Plaintiffs, including in particular the documents set out in Schedules 1 to 7 thereto…

(2)           …delivery up of all documents and materials which are in the possession, power, custody or control of any of the Defendants, their agents or servants the use or disclosure of which would offend the order made in (1) above”

106.  However, on a closer reading of the pleaded prayers as a whole, I accept that they could include an order of such a nature. 

107.  In the circumstances, the existence of this form of the mandatory injunction in this jurisdiction is clearly a juridical advantage for the Plaintiffs.

108.  In relation to the relief of restraining the Defendants from continuing and repeating the wrongful acts using the Confidential Information, the evidence shows that the Shenzhen Court can order “cessation of infringement”, which includes the prohibition of disclosure of the Plaintiffs’ trade secrets.  However, it is pointed out by the Plaintiffs’ experts, which is not challenged by the 1^st and 2^nd Defendants, that the enforcement of such an order has to be achieved by the ordinary process of civil execution, and this can be a lengthy process.  

109.  As such, Mr Poon for the Plaintiff submits that, the existence of a more expedient way of enforcing a prohibitory injunction under Hong Kong law[3] again amounts to a juridical advantage for the Plaintiffs, if the action is to be tried in Hong Kong. 

110.  I do not accept Mr Poon’s submissions.  Albeit it may have to take longer for the Plaintiffs to enforce a prohibitory form of injunctive relief in Shenzhen or the Mainland, the fact is that they can obtain such a relief.  There is no evidence before me to show what is the likely length of time to enforce such an order by way of civil execution.  As such, the mere fact that such an execution process can be lengthier than that in Hong Kong does not satisfy me that this Hong Kong procedure therefore constitutes a juridical advantage for the Plaintiffs under the purview of forum non conveniens.   I repeat Lord Goff’s observations in Spiliada quoted at paragraph 88 above.

Conclusion under Stage II

111.  Under stage II, I therefore conclude that the Plaintiffs would potentially be deprived of the following juridical advantages, if the case is to be stayed for the Shenzhen Court:

(1)  A more comprehensive and extensive compulsory discovery procedure and the right to administer interrogatories.

(2)  A likely higher level of recoverable damages.

(3)  The remedy and relief of (a) constructive trusteeship, (b) tracing, (c) exemplary damages, and (c) mandatory injunction requiring the Defendants to disclose infringing use.

(4)  Indemnity costs to be awarded.

Stage III

112.  The Plaintiffs’ claim is premised primarily on the breach of confidence, and the wrongful use of the Confidential Information by the Defendants to their benefit, and to the detriment of the Plaintiffs.  In such a claim, as rightly submitted by Mr Poon, substantial portions the evidence which is relevant to the alleged wrongful infringing conducts on the parts of the Defendants, and the extent of the use of the Confidential Information, is likely to be only within the Defendants’ own knowledge and possession. 

113.  In the circumstances, I accept that the deprivation of the compulsory and comprehensive discovery and the procedure for the administration of interrogatories would constitute a prejudice to the Plaintiffs in obtaining relevant evidence to advance their claim.  I therefore further accept that the lack of these procedures under the PRC legal system would result in real risk that the Plaintiffs may not be able to obtain substantial justice if the matter is to be tried in the Shenzhen Court instead of here.

114.  Similarly, given the nature of the Plaintiffs’ claim, and given that the volume of the subject business turnovers for both parties are substantial, it is essential to the Plaintiffs to be granted remedies that would (a) adequately compensate their loss (if found) by way of damages (including exemplary damages) or an account of profit, and (b) effectively prevent the Defendants from continuing the breaches or wrongful use of the Confidential Information.  In the premises, I also accept that the absence of the relief and remedy in constructive trusteeship, tracing, mandatory injunction and a higher level of damages, collectively looked at, would result in the risk that Plaintiffs would not be able to obtain substantial justice if the case is to be tried in the Shenzhen Court.

115.  The 1^st and 2^nd Defendants however submit that, as observed by Lord Goff in Spiliada (as quoted in paragraph 88 above), the different level of damages within the two different jurisdictions should seldom lead to the conclusion that substantial justice would not be obtained in the foreign forum.  It therefore should not be a ground to refuse a stay. 

116.  I do not accept this submission:

(1)  As I concluded at paragraphs 90 and 91 above, Lord Goff’s speech should not be read as laying down a general proposition that the absence of a higher level of damages in the foreign forum would never amount to a good ground to refuse stay for forum non conveniens.  This should be decided on a case by case basis. 

(2)  As a matter of fact, in The Adhiguna Meranti, the Court of Appeal refused to stay the proceedings for the Indonesian courts, as it was of the view that in the circumstances of that case, it would be unjust to deprive the plaintiff a higher level of recoverable damages that they could obtain in Hong Kong.

(3)  For the reasons already set out above and with reference to the nature and the circumstances of the present claim, I am satisfied that the potential deprivation of a higher level of recoverable damages in Hong Kong constitutes one of the factors in the balancing exercise to suggest that substantial justice may not be obtained by the Plaintiffs if the matter is to be tried in the other forum.

117.  The 1^st and 2^nd Defendants also submit that, in performing the balancing exercise to decide whether the Court should refuse to stay for forum non conveniens, the Court should take into account of (a) the various civil proceedings that had been commenced by the Plaintiffs in Shenzhen, and (b) the criminal proceedings prompted by the Plaintiffs against the 1^st Defendant in Shenzhen.   This is because (as submitted by Mr Pe) in issuing and triggering these proceedings in Shenzhen, the Plaintiffs must have regarded that they would be able to obtain substantial justice in that jurisdiction.

118.  However, even taking these various Shenzhen proceedings into account, I do not think it would in any material way affect my above conclusions that it would be unjust to deprive the Plaintiffs’ those Hong Kong juridical advantages if the proceedings are stayed for the Shenzhen Court.  My reasons are as follows:

(1)  As fairly accepted by Mr Pe, he is not suggesting that, by reasons of these various proceedings commenced in Shenzhen, it can be said that the Plaintiffs are forum shopping.  As such, the 1^st and 2^nd Defendants fail to discharge what was described in The Adhiguna Meranti as the ultimate burden of proof that the Plaintiffs’ choice of this forum is so inappropriate as to deserve the pejorative description of “forum shopping” and to be retrained accordingly.

(2)  As set out in paragraph 31(3) above, it is established that the mere fact that there are concurrent proceedings in the alternative forum alone is generally not a relevant factor to be considered for an application to stay on the ground of forum non conveniens.  In my view, this is particularly so in the present case since, as of now, there are no similar civil proceedings pending in the Mainland or Shenzhen.

(3)  Insofar as the criminal proceedings are concerned, I do not think they are relevant to the present consideration as well, since the Plaintiffs are fully entitled to make their complaints to the relevant authorities in Shenzhen if it is suspected that certain criminal offences under the PRC criminal codes have been committed.  This can hardly be a reason to support the restraint of the Plaintiffs from proceeding with their civil claim in Hong Kong, which was issued as of right.

119.  In the premises, under stage III, I conclude that the 1^st and 2^nd Defendants have failed to show that, notwithstanding the deprivation of the above juridical advantages, substantial justice would still be done for the interests of the parties if the case is to be tried in the Shenzhen Court.

V.      Conclusion

120.  For the reasons set out above, the 1^st and 2^nd Defendants have failed to show that the Shenzhen Court is clearly or distinctly the more appropriate forum than the Hong Kong Court to try the present case more suitably for the interests of the parties and for the ends of justice.

121.  I therefore dismiss the 1^st and 2^nd Defendants summons for a stay or dismissal of the present proceedings on the ground of forum non conveniens.

122.  I further make an order nisi that costs of this application be to the Plaintiffs, to be taxed if not agreed, with certificate for two counsel.  Unless any of the parties applies in writing to vary the same, this order will be made absolute 14 days after this judgment.

[1] Rambas, supra, at 261 to 262A

[2] Although the Court of Appeal’s decision went eventually to the House of Lords, Mr Poon submits that the House of Lords’ decision does not touch upon this aspect of the Court of Appeal’s decision.

[3] By way of a committal for contempt and the issue of a writ of sequestration,