YANTAI WANHUA POLYURETHANES CO LTD v. PUR PRODUCTS LTD

HCA 930/2011

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 930 OF 2011

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D E C I S I O N

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Introduction

1. This is the hearing of the defendant’s application by summons pursuant to Order 12 rule 8 of the Rules of the High Court and the court’s inherent jurisdiction seeking (1) to stay these proceedings on the ground of forum non conveniens; and (2) an order that the issue and service of the concurrent writ out of the jurisdiction on the defendant be set aside.

2. The plaintiff is a company incorporated in the People’s Republic of China (“the PRC”) with registered office in Yantai.  It develops, produces and sells chemical derived products such as polyurethanes.  The defendant is a company incorporated in the United Kingdom, owned and controlled by Roy Brooks.  Other than Roy Brooks, the defendant employed one secretary.

3. The parties had entered into an agreement (“Agreement”) dated 1 January 2006 under which the defendant was retained as an independent contractor to promote, sell and deliver the plaintiff’s products in Northern Europe.  Subsequently, dispute arose as to whether the Agreement was lawfully terminated as at 31 December 2010.

4. On 2 June 2011, the plaintiff issued a writ in Hong Kong seeking a declaration that the Agreement had been lawfully terminated.  On 27 June 2011, the defendant issued a claim in the High Court of Manchester in the United Kingdom alleging the plaintiff of wrongful repudiation of the Agreement.  On 6 January 2012, the plaintiff filed its statement of claim and on 12 January 2012 obtained leave from the  master to issue and serve the concurrent writ with the statement of claim on the defendant in the United Kingdom.  Service was effected on 20 February 2012.  The defendant now seeks to dispute the court’s jurisdiction.

The applicable legal principles

5. The applicable principles in a challenge to jurisdiction on the ground of forum non conveniens under Order 12 rule 8 and the inherent jurisdiction of the court are well known and are summarised in Hong Kong Civil Procedure2012 at §§11/1/10 to 11/1/11A, 11/1/12B to 11/1/12F and 12/8/1 to 12/8/3.  The leading authority is Spiliada Maritime Corporation v Cansulex [1987] 1 AC 460.  These principles are summarised as follows.

6. In an application for service out of the jurisdiction, which is usually made ex parte, the plaintiff has to satisfy the court that it is a proper case for the exercise of the discretion to grant leave.  He has to show there is a good arguable case that the case falls under one of the  sub-paragraphs of Order 11 rule 1(1); a serious issue to be tried; and that Hong Kong is clearly the appropriate forum for the trial of the action: see Order 11 rule 1(1) and rule 4(2).  This onus remains on the plaintiff when the defendant challenges jurisdiction in an application to set aside the  issue and service of the writ at an inter partes hearing pursuant to Order 12 rule 8: see Ren Yun Liang & Ors v China Merchants Bank Co Ltd unrep HCA 1456/2005; [2007] HKEC 159.

7. Upon an application for a stay of proceedings, the burden of proof lies on the defendant to show that the court should exercise its discretion to grant a stay.  The defendant has to show not merely that the Hong Kong is not the natural or appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate than the Hong Kong forum: see Hong Kong Civil Procedure 2012 at §11/1/10AAB and The Spiliada. However, if the application for stay is founded on the basis that leave to serve out should not have been granted, then the onus remains on the plaintiff to show it is a proper case for service out.  This is because the essential contest is whether the court should have exercised the discretion to grant leave to serve out.  In the present case, Mr Dawes, counsel for the plaintiff, accepts that the onus is on the plaintiff.

8. The fundamental principle applicable to both a stay of proceedings on the ground that some other forum is the appropriate forum and also to the grant of leave to serve proceedings out of the jurisdiction is that the court will choose that forum in which the case can be tried more suitably for the interest of all the parties and for the ends of justice: see Hong Kong Civil Procedure2012 at §11/1/10AAB and The Spiliada.

9. In considering whether there is another forum which is more appropriate, the court will look for the natural or appropriate forum, ie the forum with which the action has the most real and substantial connection, eg in terms of convenience or expenses, availability of witnesses, the law governing the relevant transaction and the places where the parties reside or carry on business.  The court must focus on the appropriateness of the competing forum in light of the factors from the point of view of the matters actually likely to arise in the trial of the action: see Hong Kong Civil Procedure2012 at §11/1/10AAD; and Dynasty Line Ltd v Sukamto Sia [2009] 4 HKLRD 454 at §58-59.  The question is not one of mere convenience, though it may be a factor and the court may take into account whether witnesses and documents that will be required for trial are in the local forum or elsewhere. But in these modern age of communication, instantaneous long distance transmission of documents and ease of air travel, these factors may carry little weight. Other relevant factors include the governing law of the agreement and the place where the parties respectively reside and carry on business: see Hong Kong Civil Procedure 2012 at §11/1/10DA.

10. Choice of law is one relevant factor.  The weight given to this factor depends on the circumstances.  It would be wrong to assume that by agreeing to Hong Kong law the parties must be regarded as having chosen the Hong Kong jurisdiction: see Novus Aviation Ltd v Onur Air Tasimacilik AS [2009] 1 Lloyd’s Rep 576 at §71-81; Sawyer v Atari Ineractive Inc [2005] EWHC 2351 (Ch) at §49-62; and Hong Kong Civil Procedure2012 at §11/1/10A.

11. That there are related proceedings abroad is a factor which may justify a stay or be taken into account in the exercise of the court’s discretion on the question of forum.  However, which proceedings were commenced first is not decisive: see Hong Kong Civil Procedure2012 at §11/1/11.

12. If the court concludes that the alternative forum is prima facie more suitable, it will grant a stay unless the plaintiff can show circumstances by reason of which justice requires that leave to serve out should nevertheless be affirmed.  A proven personal or juridical advantage will not, as a general rule, deter the court from granting a stay if it is satisfied that substantial justice will be done to all parties in the appropriate forum: see Hong Kong Civil Procedure2012 at §11/1/10AAB; §11/1/12B; and The Spiliada 482B‑484E.  The court may also take into account advantages which the defendant may have in the foreign forum: see Hong Kong Civil Procedure2012 at §11/1/12F. 

The Agreement

13. The following articles in the Agreement are relied on by the parties.

“1. Term. This Agreement shall be for a period of five (5) years, commencing on January 1^st 2006 (“Commencement Date”) and shall thereafter automatically renew for successive terms of five (5) years each unless terminated by either party at least sixty (60) days prior to expiration of the then current term (the initial five (5) year period and all successive terms, collectively, the “Term”). This agreement [may be] terminated by mutual consent after 2 years from the beginning of each term, which would not result in Severance Commission. ……”

“6. Effect of Termination

(a) Upon termination of this Agreement, Consultant shall have no further obligation to perform the Services for Company.

(b) After termination of this Agreement for any reason, Company shall pay the Monthly Base Fee, Commission earned through the termination date, and all Expenses incurred by Consultant through the termination date.

(c) If this Agreement is terminated by the Company for any reason except severe fault, unable to fulfil the sales objective and breach of the Agreement by the Consultant, or [if] this Agreement is terminated by Consultant due to the Company’s breach of this Agreement, Company shall pay the following to Consultant: Commission on all Sales in the Exclusive Territory invoiced through the date of termination and a total number of $100,000 (“Severance Commission”). The Severance Commission shall be paid monthly within ten (30) days of Termination of the Agreement.”

“11.  Notices.  Any notice, request, demand, or other communication required or permitted to be given under this Agreement shall be sufficient if in writing and if delivered personally, sent by certified or registered mail, or by overnight delivery as follows or to another addressee or address as shall be set forth in a notice given in the same manner: ……”

“14.  Entire Agreement.  This Agreement represents the entire understanding of the parties.  There are no other outstanding agreements, provisions, or schedules on this subject matter.  This Agreement may not be amended except by a writing signed by the party against whom enforcement of any amendment is sought.”

“16.  Applicable Law.  This Agreement shall be construed and enforced pursuant to the laws of Hong Kong.”

Outline of the dispute

14. The dispute between the parties relates to the circumstances in which the Agreement was brought to an end in 2010 or 2011. Under article 1 of the Agreement, the Agreement was for a term of five years which would be automatically renewed for successive terms of five years unless terminated by either party at least 60 days prior to the expiration of the then current term which was 60 days prior to 31 December 2010 for the first term, ie 1 November 2010.

15. The plaintiff’s position is that the parties had discussed about termination and agreed prior to 22 June 2010 that the Agreement should terminate at the expiry of the first five year term and be replaced by an annual agreement, the terms of which were to be discussed. By an e-mail dated 22 June 2010 from Peter Huo of the plaintiff to Roy Brooks, the plaintiff gave notice of termination to the defendant such that the Agreement came to an end on 31 December 2010. Peter Huo wrote:

“We will discuss the detail when we see each other in a few days.

We can use the original contract as the template; however, the commission-based package will be terminated by the end of 2010.  Instead, 2011 will be retainer based.  You should think about the retainer number before we see each other.”

In reply Roy Brooks wrote on 17 July 2010:

“I promised you a short 1 page report for any future discussions you may have with Mr Liao re my deployment after the end of this year. [It’s] attached. I go on holiday tomorrow back 4^th August. Please feel free to change, subtract or add anything you feel is missing or not relevant or you [don’t] believe ……”

The plaintiff’s case is that by its reply, the defendant acknowledged notice of termination and the Agreement would terminate on 31 December 2010.  That termination was further confirmed at a meeting between Peter Huo and Roy Brooks in the Netherlands.

16. The defendant’s position is that no valid notice of termination was given on 22 June 2010 and that there was no agreement by the parties that the Agreement would be terminated on 31 December 2010.  By those e-mails, the parties were simply negotiating and discussing possible replacement terms for the Agreement.  In the absence of an agreement, the Agreement was automatically renewed for a period of five years pursuant to clause 1 on 1 November 2010.  The plaintiff then repudiated the Agreement during the renewed term by its letter dated 16 February 2011 which reads:

 “We refer to the Independent Contractor Agreement that was entered into between Wanhua and PUR on Jan 1^st, 2006 as the “Agreement”.

According to clause 1 (Term) of the Agreement, Now, we are writing to inform you that the Agreement between us shall be terminated at the date written above.”

The “date written above” was indeed the date of the letter, which was 16 February 2011.  The defendant therefore argues that this letter evidenced that there was no termination notice as at 22 June 2010 or agreement to terminate the Agreement.  Then in the lead up to and following the automatic renewal of the Agreement, the defendant continued to perform valuable consultancy services for the plaintiff.  But, following the acquisition of a Hungarian business (“Borsodchem”) by the group to which the plaintiff belongs, as recommended by the defendant in 2008, Peter Huo informed Roy Brooks that he would not be needed in the new organisation because he was too old.

The issue raised by the application for stay

17. In the Hong Kong proceedings, the only substantive relief sought by the plaintiff is a declaration that the Agreement was lawfully terminated as at 31 December 2010.  Such a claim is sufficient to affect the Agreement for the purposes of Order 11 rule 1(d)(iii): see BP Exploration Co (Libya) Ltd v Hunt [1976] 1 WLR 788 per Kerr J (as he then was).  On the basis of the facts outline above, it cannot be said that there is no reasonable cause of action: see Ren Yun Liang v China Merchants Bank Company Limited at §32; and Dong Shin F&T Co Ltd v Hanmec Co Ltd [2010] 5 HKLRD 261 at §42.  There is, therefore, a serious issue to be tried.  Mr Stock, counsel for the defendant does not argue otherwise.

18. Thus, the remaining question is whether the plaintiff can show that Hong Kong is clearly the appropriate forum for the trial of this action.  To answer this question, I shall turn to the issues which are likely to arise in the trial of the action.

The issues likely to arise in the trial of the action

19. In the Hong Kong proceedings, the only substantive relief sought by the plaintiff is a declaration that the Agreement was lawfully terminated as at 31 December 2010.

20. In the English proceedings, the defendant claims for outstanding commission under the Agreement, damages for breach of the Agreement, an account, and compensatory damages pursuant to regulation 17(6) of the Commercial Agents (Council Directive) Regulations 1993 and the Directive Law (collectively “the Regulations”).

21. The following effect of the Regulations as a matter of English law is not disputed by the plaintiff.  The Regulations are based on European Community law and gives to a commercial agent, inter alia, a right to compensation on termination of an agency contract, even if the termination is not in breach of contract.  The Regulations will be applied by an English court where a commercial agent has performed its obligations in England, even if the relevant agreement contains a choice  of law provision for the application of the law of a non-European  Union country: see Ingmar GB Ltd v Eaton Leonard Technologies [2001] All ER (Comm) 329; and Accentuate Ltd v Asigra Inc [2001] 2 All ER (Comm) 738.  It also seems clear that an English court will not stay the English proceedings in favour of Hong Kong or set aside leave to serve out of the jurisdiction, as to do so would deprive the Regulations of their mandatory effect.  This compensation pursuant to the Regulations is not provided for under the Agreement and is not available under Hong Kong law, which is the governing law of the Agreement.

22. The defendant’s purpose of issuing proceedings in the United Kingdom is obviously to obtain this additional compensation which would only be available in the English forum.  Conversely, the plaintiff’s purpose of issuing proceedings in Hong Kong is to confine the defendant’s possible counterclaim to damages which do not include compensation pursuant to the Regulations, in the event that the plaintiff is found to have repudiated the Agreement.

23. The issues in dispute are: (1) whether the Agreement was terminated on 31 December 2010 in accordance with article 1, or by the plaintiff’s letter of 16 February 2011 in repudiatory breach of the Agreement; and (2) if there was repudiatory breach, the relief the defendant is entitled.  Resolution of the first dispute will largely depend on:

(1)  the interpretation of the Agreement, in particular, whether notice of termination could be given otherwise than in accordance with articles 1 and 11, or could be waived;

(2)  the content of the oral discussions between Peter Huo and Roy Brooks at the meeting in Netherland; and

(3)  the significance of what was said in the e-mails exchanged in June and July 2010.

Resolution of the second dispute will largely depend on:

(4)  the interpretation of the Agreement and the parties’ intention, in particular as regards compensation under article 6;

(5)  the applicable law of damages under Hong Kong law;

(6)  the factual question of outstanding commission;

(7)  the factual question of loss of potential commission had the Agreement run its full course; and

(8)  if proceedings are pursued in the England, the applicable law of damages under English law, in particular (i) whether the case falls within the scope of the Regulations, and (ii) if so, whether the provisions of the Regulations apply to the defendant.

Application of the principles to the facts

24. Natural or appropriate forum means the forum that has  the most real and substantial connection with the action.  To determine which is the natural or appropriate forum, the court must focus on the appropriateness of the competing forum in light of the factors from the point of view of the matters actually likely to arise in the trial of the action rather than merely loading up factors which point to any particular jurisdiction.  In Dynasty Line Ltd v Sukamto Sia, Cheung JA said at §58-59:

“58.  The “appropriate” or “natural” forum is one “with which the action had the most real and substantial connection”.  This includes not only factors affecting convenience and expense (such as availability of witness) but also other factors such as the law governing the relevant transaction and the place where the parties respectively reside and carried on business, Spiliada Maritime Corp v Cansulex Ltd at p. 478.

 59.  …… Ultimately one has to consider the forum where the action could most suitably be tried for the interests of all the parties and for the ends of justice.  Comments of a similar nature although differently put have been made by the courts in the past : the court is not simply to load up factors which point to any particular jurisdiction but to focus on the appropriateness of a forum from the point of view of the trial of the action, see : Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250 per Recorder Ma (now Ma CJHC) at p. 255.”

25. The issues likely to arise in the trial of the action have been listed in the preceding paragraph.  The most notable features of those issues are (1) the choice of law clause under the Agreement; (2) the alleged application of the Regulations by an English court; and (3) multiplicity of proceedings.  These are the factors which the court must focus on when determining the appropriateness of the competing forum.  I shall deal with these factors in turn.

26. Article 16 of the Agreement makes Hong Kong law the governing law of the Agreement.  It provides that the Agreement shall be construed and enforced pursuant to the laws of Hong Kong.  The obvious significance of this clause is that in general it is more satisfactory for the law of a country to be construed, determined and enforced by the courts of that country: see Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v The Eleftheria (Owners) [1970] p 94 at 105, per Brandon J.  This is just simple common sense.  It points to Hong Kong as the preferred forum.  However, a choice of law clause is not to be elevated to the status as a choice of forum clause.  Its significance depends on the issues which are likely to arise at trial and other questions relating to the appropriate forum.  Those factors include: whether there is any substantial difference between Hong Kong law and the law of the competing forum; if there is a difference, whether under its rules of the conflict of laws, the foreign court would apply Hong Kong law; and the extent to which the dispute turns on questions of law: see Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch) at §62 per Lawrence Collins J (as he then was).  In this regard, it is accepted by Mr Dawes that the difference between English law and Hong Kong law on the general issues involved in this case is minimal as Hong Kong law is basically similar to English law.  On the fact, there is nothing to suggest that the English courts are in any way handicapped in construing Hong Kong law and adjudicating the parties’ rights and obligations under Hong Kong law.

27. Of greater significance is the alleged potential application of the Regulations if the case is heard in England.  The defendant claimed compensation under the Regulations.  It must be the defendant’s position that the courts in England will apply the Regulations to this case, notwithstanding the parties’ express choice of Hong Kong law.  The defendant’s position is supported by Novus Aviation Ltd at §78, citing Coast Lines Ltd v Hudig and Veder Chartering NV [1971] 2 Lloyd’s Rep 390 and Dicey, Morris & Collins at §12‑029.

28. In Coast Lines Ltd v Hudig and Veder Chartering NV, the proper law of the charter-party as determined by the court was English law.  The defendant argued that the forum conveniens was the Netherlands.  There was evidence that if the action was heard in the Netherlands, the Dutch courts would refuse to apply English law and would apply the Netherlands Commercial Code instead.  Roskill J approached the issue of jurisdiction from the basic principle that the jurisdiction under Order 11 is an infringement of the sovereignty of other countries which would only be exercised with very great caution and held that the express or presumed intention of the parties as reflected by their choice of English law as the governing law makes the case an appropriate one for the exercise of this jurisdiction.  He said at 395:

“There is no authority on this point …… in the absence of authority one has to determine this as a matter of principle. First, I have in mind the principles which the Courts have applied in the exercise of their discretion under Order 11 from Johnson v Taylor Bros & Co [1920] AC 144, in the early 1920’s onwards to the present day. It is a jurisdiction which is in one sense an infringement of the sovereignty of other countries, and it is a jurisdiction which has always been exercised with very great caution. On the other hand, the English Courts have always claimed to exercise that jurisdiction ‑ not in every case but in cases which the English Courts regard as appropriate cases, such as those when the contract sought to be enforced is a contract governed, either expressly or by necessary implication, by English law. The present is such a contract. One has, when one is dealing with the proper law of the contract, to ascertain the presumed intention of the parties. The presumed intention of both parties to the present contract must, I apprehend, have been that English law should prevail, whatever the position may be under Netherlands law and whatever action the Netherlands Court might take if this matter came before it for determination in the Netherlands. Therefore, if the argument of the defendants is right, they are inviting this Court to refuse to exercise its jurisdiction under Order 11 with a view, if I may use the phrase without offence, to defeating the application of that which they must be presumed to have intended as the proper law of the contract at the time when this charter-party was entered into. That does not seem to me to be right.

…… It would not be right for an English Court to refuse to exercise its undoubted jurisdiction in the case of a contract governed by English law, where both parties are to be presumed to have had the intention that their mutual rights and obligations should be governed by English law, so as to enable one of those parties thereafter to turn round and seek to escape from that intention which English law would attribute by them, by saying: “Well, whatever my intention may have been in the past, nonetheless I now say that this contract should be judged not by the law by which at the time I agreed to be bound but by the law of my own country which I find to be more favourable to me on the facts of the particular case”.”

29. I respectfully agree with the approach of Roskill J.  The jurisdiction under Order 11 has extra‑territorial effect and is an infringement of the sovereignty of other countries.  Such jurisdiction would only be exercised with very great caution.  One very basic principle of our law of contract is that effect should be given to the common intention of the parties.  If the parties have bargained for a governing law of the contract, that bargain or common intention should be upheld unless there are strong reasons for not doing so.  For that purpose, comity and multiplicity of proceedings are not sufficient reasons.  Thus the parties’ choice of law, to the extent that it reflects their common intention as to what their rights and obligations are under the contract, has a significant impact on the exercise of the court’s discretion whether to grant leave to serve out of the jurisdiction under Order 11; or if granted, whether to set aside that leave and to stay the proceedings.  In my view, the court should give effect to that common intention, unless there are strong reasons not to do so.  It would be wrong for a party to turn around to argue that his rights and obligations should be governed by the law of another forum.  To refuse to exercise the jurisdiction in such a case the court would be assisting one of the parties to the contract to frustrate their common intention based on which the contract was entered into.  The corollary is: if the court has assumed the jurisdiction to serve out, it would not lightly set aside the service or stay the proceedings if to do so would have the effect of frustrating the intention of the parties as regards their choice of the law which governs their rights and obligations under their contract.  That intention is sufficient to justify the exercise by the court of its jurisdiction to grant leave to serve out under Order 11. 

30. In the present case, the parties chose Hong Kong law, rather than English law or the PRC law, as the system of law to govern their rights and obligations under the Agreement.  It must have been their deliberate and conscious decision to choose a neutral system of law.  By proceeding in the English forum, the defendant is attempting to go back on its bargain and to defeat their common intention.

31. Furthermore, the defendant’s real purpose of proceeding in the English forum is to obtain compensation under the Regulations.  Such compensation is not recognised under Hong Kong law.  As Peter Huo had said in his affirmation, had he known that the Regulations would apply, the plaintiff would not have entered into the Agreement.  Compensation under the Regulation in the event of breach of the Agreement was not what the parties had bargained for. Thus, the combined effect of the choice of Hong Kong law and the potential application of the Regulations by the English courts giving the defendant a remedy not available under Hong Kong law points strongly in favour of Hong Kong as the more appropriate forum.

32. Mr Stock refers to a number of other factors in favour of   the English forum.  Most obvious of all is that neither of the parties is   a Hong Kong party.  They do not have and never had a place of business or commitment in Hong Kong.  The parties are in dispute as to where the Agreement was concluded.  The plaintiff said it was in Shanghai; the defendant said it was in England.  It is common ground that it was not concluded in Hong Kong.  These factors are just neutral.

33. Mr Stock argues that it is significant that the Agreement was for provision of services in the North European market and that the Agreement was not to be performed in Hong Kong.  The defendant was also paid by the plaintiff in England.  According to Roy Brooks, he operated out of the United Kingdom and since April 2008 half of his role was related to sales into the United Kingdom and Ireland and half in assisting the plaintiff’s global development team.  The defendant was to concentrate on sales in the United Kingdom, while providing support to the defendants’ other sales managers regarding other regions of Europe.  Towards the end of 2007, the parties agreed to amend the terms of the Agreement to the effect that the defendant would be providing sales and marketing services primarily for Ireland and United Kingdom.  Roy Brooks said that the plaintiff also agreed that he would travel regularly in Europe as part of his work.  In my view, these factors only mildly favour the English forum as the appropriate forum.

34. As for witnesses, the plaintiff’s witnesses, Peter Huo and Ms Sun are resident in Shanghai, while the defendant’s witnesses, Roy Brooks and another potential witness are residing in United Kingdom and the Netherlands respectively.  From point of view of convenience as regards witnesses, the English forum would be more convenient.

35. As for documents, the bulk of the defendant’s documents are located in the United Kingdom where the defendant is based and in Amsterdam and Budapest.  The defendant’s auditors are also based in the United Kingdom.  On the other hand, only certain of the plaintiff’s payments were made through a Hong Kong affiliate.  Thus, from point of view of availability of documents, the English forum would be marginally more convenient, but this factor is of little significance.

36. On the other hand, Mr Dawes argues that the English proceedings were commenced after the Hong Kong proceedings and have not reached a stage where there is any real impact between the parties.  The defendant does not claim jurisdiction in England as of right and the plaintiff indicated its intention to contest service out in the United Kingdom.  Accordingly, Mr Dawes submits that the blame for multiplicity of proceedings lies on the defendant.  This factor is mildly favourable to the plaintiff.

37. Considered in the round, the factors advanced by Mr Stock are only mildly in favour of the English forum but are of little significance in these modern days of communication when compared with the issues likely to arise at trial, in particular the governing law of the Agreement.  The combined effect of the choice of Hong Kong law and the potential application of the Regulations by an English court are the most significant factors which this court must focus on in deciding the appropriateness of  a forum from the point of view of the trial of the action.  The parties entered into the Agreement containing a choice of law clause choosing Hong Kong law as the governing law of the Agreement and an entire agreement clause.  It must have been the parties’ common intention that the defendant’s rights in the event of the plaintiff’s breach of that Agreement are those as exhaustively set out in article 6 which do not include compensation under English law and the Regulations.  Compensation under the Regulations is not a remedy which the parties have bargained for at the time of making of the Agreement.  It is obvious that the defendant’s purpose of commencing proceedings in the English forum is to take advantage of the compensation available under English law and the Regulations.  That is not what the parties have bargained for.  To exercise the discretion to set aside the leave or to stay the Hong Kong proceedings would be to defeat the common intention of the parties and to allow the defendant to wriggle out of the Agreement.  That does not seem to me to be right.  The defendant has not advanced any strong reason why the jurisdiction to serve out should not have been exercised, such as immorality, public policy, or contrary to such positive law as would prohibit the making of such an Agreement etc.  The defendant should be held to its bargain and effect given to their common intention.  The master was right to have granted leave to serve out.  Notwithstanding comity considerations, the risk of multiplicity of proceedings and inconsistent outcome, I am firmly of the view that the Hong Kong court is clearly the more appropriate forum for the trial of this action and there is no reason to yield to the English forum.

Conclusion

38. Accordingly, the defendant’s application to stay the proceedings and to set aside the leave to serve out of the jurisdiction is dismissed with costs.