CHINA CONSTRUCTION BANK (ASIA) CORP LTD v. SHANGHAI PUDONG DEVELOPMENT BANK CO LTD

CACV 14/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 14 OF 2016

(ON APPEAL FROM HCA NO. 1323 OF 2014)

________________________

________________________

________________________

D E C I S I O N

________________________

Hon Cheung JA (giving the Decision of the Court) :

I. Leave to appeal

1.  The plaintiff applies for leave to appeal against our judgment dated 3 February 2017 in which we allowed to a limited extent the plaintiff’s appeal against the decision of Mimmie Chan J who had stayed the plaintiff’s action on the ground of forum non conveniens.  In our judgment we gave a temporary stay only, pending the determination by the People’s Higher Court in Jiangsu.  We will deal with the application on paper.

II.  The three questions

2.  The plaintiff relies on the following grounds which are said to be of great general or public importance in support of its application.

Question 1

‘ In the context of:

a. Hong Kong plaintiff suing as of right in Hong Kong under a Hong Kong law governed contract before the Hong Kong Court; and

b. the existence of lis alibi pendens (i.e., related but not identical proceedings in a (foreign country) which judgment will neither be recognized nor enforced in Hong Kong,

should a forum non conveniens stay be granted to exclude the Hong Kong plaintiff’s right to obtain a judgment in Hong Kong, which has the effect of recognizing and/or enforcing the foreign judgment (impermissibly) through the backdoor?’

Question 2

‘ In a claim by a ‘negotiating bank’ for payment against an ‘issuing bank’ under a letter of credit, should the ‘issuing bank’ be permitted to raise a foreign illegality defence (based on an injunction forbidding it to pay in Country X) when the terms of the letter of credit clearly provides that:

a. the letter of credit is ‘available with any bank by negotiation’ and the place of expiry/presentation/negotiation is the ‘negotiation bank’s country’; and

b. the ‘issuing bank’ will honour the documents as per any instructions given by the ‘negotiating bank’, and the ‘negotiating bank’ has given instructions for reimbursement/payment in Country Y?’

Question 3

‘ In a stay application based on forum non conveniens, is the applicant entitled to:

a. rely on a factual position that is diametrically opposite to the position taken by it in foreign proceedings;

b. rely on the purported availability of witnesses in a foreign jurisdiction when (1) the applicant did not specify the identity of such witnesses, whereby the Court is unable to weigh the importance of their testimony and form a view as to the alleged difficulty in attending; and (2) no witnesses ever appeared in the trial of the foreign proceedings?’

III.  Overview

3.1   The issue before Mimmie Chan J and this Court involved the exercise of judicial discretion and the plaintiff must demonstrate that the exercise of discretion is plainly wrong before it can even begin to ask the Court of Final Appeal to exercise the discretion afresh.

1^st Question

3.2   In our view the first question is not reasonably arguable because the issues raised in the question are simply not engaged.  As pointed out in our judgment, this is a case where the Higher Court in the Mainland has heard the appeal but has not yet given its decision and in the meantime the stop order restricting the defendant to pay out the money under the letters of credit is still in force.  In view of the temporary nature of the stay imposed by us, it is premature to talk about the finality or otherwise of the judgment of the Mainland Courts.  Nor is it meaningful to talk about the issue of recognition or enforceability of such a judgment.  Rather, as we have said, the allegation of fraud raised in the Mainland proceedings clearly has an impact on the question of payment by the defendant to the plaintiff in the Hong Kong action.  Since the Mainland proceedings have proceeded to such an advanced stage, to exercise the discretion in favour of the defendant in staying the Hong Kong action until the delivery of the judgment by the Mainland Higher Court could not possibly constitute a ground for the Court of Final Appeal to revisit this issue again.  In any event the situation on hand is unique and fact sensitive and the issue of great general or public importance is not engaged.

2^nd Question

3.3   The second question does not arise in the present case.  As we have pointed out in the judgment the issue of illegality was not a matter that can be properly canvassed because no leave to appeal was given for the plaintiff to argue illegality. 

3^rd Question

3.4   The third question is fact sensitive and can hardly qualify as a matter of great general or public importance.

IV.  The ‘or otherwise’ limb

4.1   In its Notice of Motion, the plaintiff also seeks leave to appeal under the ‘or otherwise’ limb but it did not identify any basis for so doing.  Instead it merely states that :

‘ Further or alternatively, the Applicant reserves the right to rely on the “or otherwise” ground if the Court of Appeal refuses leave and leave is sought before the Court of Final Appeal.’

4.2   The written submission also did not rely on the ‘or otherwise’ limb.

4.3   The Court strongly disapproves of this approach.  Either there is a basis for the ‘or otherwise’ limb (and, if so, the plaintiff should now articulate it) or, if not, it is a waste of time and costs to raise this topic at all.

V.  Conclusion

5.  Accordingly the application is refused.

VI.  Costs

6.1   Costs of the application are to be to the defendant which we assess summarily at $160,000 ($100,000 being counsel’s fee).

6.2   The plaintiff’s solicitors filed seven volumes of documents totalling 1,339 pages in support of this application.  This is a waste when all that is required is a slim volume containing the Notice of Intended Application for Leave to Appeal, the Notice of Motion and our judgment.  We intend to disallow these costs between the plaintiff’s solicitors and the plaintiff and we direct the plaintiff’s solicitors to inform the Court within 10 days if they object to our intended order.