XCHRX MASHREQ ASIA LTD. v. FURNESS LOGISTICS (HK) LTD.

HCCL190/98

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

COMMERCIAL LIST NO.190 OF 1998

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J U D G M E N T

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The Applications

1. There are before the Court, by like summonses dated 16th November 1998, applications by the Defendant for a stay of each of these actions in favour of the Court at Rotterdam on the ground that the Plaintiffs' claims are subject to an exclusive jurisdiction clause contained within Clause 22 of each of the Bills of Lading, viz :-

"22. JURISDICTION

Any claim or dispute arising under this Bill of Lading shall in the first instance be determined by the Court at Rotterdam, the Netherlands. No proceedings may be brought before the court unless the parties expressly agree on the choice of another court or arbitration tribunal."

2. In HCCL No. 195 of 1998 the Defendant also applies, through Counsel, for a stay of the present proceedings upon the basis of lis alibi pendens, the lis in this case arising from proceedings commenced in the Court at Rotterdam by the Plaintiffs for the same claim as that advanced in the current Hong Kong litigation.

3. For ease of reference I adopt in this judgment the shorthand references used in argument, namely the "IBU/ANZ" claim and the "Mashreq" claim.

The Factual Background

4. Each of the Hong Kong actions commenced by the Plaintiffs, in both cases financial institutions now holding the Bills of Lading in question, were commenced by Writ issued in August 1998, and arise out of the alleged wrongful delivery of goods by the Defendant absent production of the relevant Bills.

5. There are 24 Bills of Lading so involved : in the IBU/ANZ action, the Plaintiffs claim approximately US$1.3 million in respect of 19 such Bills, and in the Mashreq proceedings the claim is in the region of US$460,000 in respect of the remaining 5 Bills of Lading.

6. The containerized shipments of electrical goods the focus of these proceedings took place during the period January to December 1997, and were from Hong Kong and Ningbo, and in one instance, Singapore, to ports in Northern Europe, including Antwerp in Holland.

7. The Defendant in each case, Furness Logistics (HK) Ltd., signed and issued the 24 Bills of Lading purportedly as agents for and on behalf of the carrier on "Kingwood Container Lines" ("KCL") form, the carrier being defined in the Bills as :-

"The Carrier means Kingwood Container Lines registered as K-Container Lines nv of 4 Ata Blancanweg, Willemstad, Cura??o, Netherlands Antilles..."

8. The entity named as shipper of all the cargoes was Maratz (HK) Limited, which went into liquidation earlier this year, with outstanding debts apparently due both to the Defendant and to the Plaintiffs, the latter having been involved in the financing of the shipments and which are the present holders of the Bills.

9. Niceties of legal argument apart, the mode of shipment adopted was that Furness, which issued its own 'house' Bills, was responsible for booking space on board container vessels belonging to the ocean carrier 'K-Lines', which in turn issued its own ocean Bills of Lading. The sequence of carriage, therefore, involved two sets of Bills, but for present purposes this Court is concerned solely with the rights and obligations resulting from the issuance of the Kingwood Container Line Bills of Lading. What actually occurred with these containerized cargoes was that after being off-loaded from the ocean carrier, the cargoes were stored at the various destinations prior to being released by or on behalf of the Defendant without production of the KCL Bills of Lading.

10. In addition to the contractual cause of action pleaded on the basis of the "contract of carriage contained in or evidenced by the Bills of Lading", the Plaintiffs in each case further allege that liability is founded against the Defendant upon the ground of breach of warranty of authority and/or negligent misrepresentation, given that the named carrier, KCL, was dissolved and ceased to exist in 1993. I observe in passing I find it difficult to understand how this alternative plea of misrepresentation can overcome what seem to me to be significant difficulties in terms of causation.

11. Be that as it may. It is accepted by Senior Counsel on both sides that the evidence and issues in each action are essentially the same, the only material difference being that in the Mashreq action, Mashreq did not take the precaution of commencing a protective action in Rotterdam, an aspect of this case which has occasioned the Court particular concern.

Applicable Legal Principle

12. There is no dispute between Counsel as to the correct legal approach to be adopted in cases involving what is accepted to be an exclusive foreign jurisdiction clause. The relevant principles governing the situation in which the Plaintiff has brought proceedings "in breach of an agreement to refer disputes to a foreign court" are now well recognized, the starting point in this area remaining the judgment of Brandon LJ (as he then was) in The "El Amria" [1981] 2 Lloyd's Rep 199 at pages 123-124. The Court of Appeal has recently reaffirmed the position in The "Thor Scan" [1999] 2 HKLRD 136, Mortimer V-P observing (at page 143) :-

" The El Amria principles are well known. If the plaintiffs sue in the Hong Kong Courts in breach of an exclusive jurisdiction clause, the Hong Kong Court has a discretion whether to grant the defendant a stay but such should be granted unless there is a 'strong case' for not doing so. In the exercise of this discretion all the circumstances of the case must be taken into account."

13. Whether the Plaintiffs have discharged the burden of demonstrating such a "strong case" for not giving effect to the contractual jurisdiction clause is a matter considered later in this judgment. For the purposes of the present applications, however, I decline at the outset to accede to the Defendant's plea of lis alibi pendens in the "IBU/ANZ" action. Objection is taken by Mr Aiken SC to the lack of formal application in this regard, and whilst there is substantial overlap in terms of the evidential material, given the different bias inherent in a plea of lis alibi pendens I am disinclined now to consider a stay on this distinct basis. I confine myself, therefore, to the specific terms of the two applications as filed by the Defendant.

The Issues for Decision

14. I accept the submission of Mr Haddon-Cave SC, for the Defendant, that these applications dissolve neatly into two main issues :-

First, whether in the circumstances as now revealed, the Defendant can avail itself of Clause 22 of the KCL Bills of Lading; and

Second, and if so, whether the Plaintiffs are able to establish why a stay should not be ordered.

I take these points in turn.

(1) Relevance of the Kingwood Container Lines Bills

15. A great deal has been made by the Plaintiffs of the demise in 1993 of KCL, and it is not difficult to see why. Absent the impact of Clause 22, and the jurisprudence attending such a clause, the complexion of these two cases radically changes. Accordingly, inordinate effort (and significant amounts of paper) has been expended to place as much clear blue water between the Plaintiffs and the provision it is sought now to avoid.

16. Before turning to the legal debate it is perhaps worth looking at the big picture, which in my view is revealing. This is that in the two Hong Kong actions now under consideration, together with the on-going litigation in the Netherlands, each and every such claim is pursued, and reliance placed, upon the very Bills of Lading that the Plaintiffs now seek to disavow. The Points of Claim in the Hong Kong actions plead the 24 Bills of Lading in extenso (the relevant Bills being itemized in the Schedules to the two Writs), whilst in the Dutch proceedings these Bills of Lading, as issued in 1997, are specifically prayed in aid as founding jurisdiction in that country. Paragraph 15 of the Dutch Writ, for example, in the IBU/ANZ action against Furness Logistics (HK) Ltd. and Furness BV of Rotterdam recites :-

"15. Whereas as transpires from Article 22 of the bill of lading conditions the Court of Rotterdam has exclusive jurisdiction as to disputes under the bills of lading in question."

17. As such, therefore, a more striking instance of approbation/ reprobation (or perhaps, election) it would be difficult to find, and whilst this element of the case is not determinative of the present application (and is not put forward as such) these circumstances tend profoundly to colour the argument upon this first issue.

18. In this regard, Mr Haddon-Cave SC, for the Defendant, submitted that there could be no doubt that the Defendant was party to the relevant Bills of Lading contracts. As I understood his argument, he put his case upon three broad bases :-

First, the issue of whether the Defendant was party to valid contracts of carriage contained in or evidenced by the Bills of Lading was a matter to be determined by the putative proper law of the contracts (see Dicey on Conflict of Laws, rule 181, p.1197), that the putative proper law was that of the Netherlands by reason of the choice of law clause in Clause 21 of the Bills, and that under Dutch law there were four distinct reasons why the Defendant could be considered party to the contracts, and therefore entitled to rely upon the exclusive jurisdiction clause;

Second, that under what has become known as the principle in Kelner v. Baxter (1866) LR 2 CP 174, where a person signs purportedly as agent, but in fact on behalf of a non-existent principal, and the contract would otherwise be inoperative, the signatory is bound thereby; and

Third, on the basis that "KCL" was essentially being used as a trade name for the Furness Group, and that at all times material to these contracts of carriage either the Defendant contracted as principal or it was intended that the Defendant should be treated as contracting carrier.

19. For my own part, I am far from sure in the circumstances of this case that this type of detailed analysis in fact is required. As Mr Haddon-Cave pointed out, these goods did not suddenly materialise in Europe. The carriage of these cargoes undoubtedly took place, and it is abundantly clear that it was effected through the medium of the Defendant, Furness Logistics (HK) Ltd., which issued 'house' bills (albeit upon outdated form), received shipping instructions, and thereafter duly invoiced Maratz for services rendered. The KCL Bills of Lading were used and accepted in the 24 contracts of carriage with which these two actions are concerned, and evidence lately filed by Mr Ferreira of the Defendant seeks to establish, inter alia, that the Defendant always purchased space from owners and invoiced shippers for the full freight, that "thousands" of Bills of Lading were issued to Maratz over the three to four year period of the commercial relationship between Maratz and the Defendant, and that the "vast majority" of such Bills would have been on the "KCL" form.

20. Moreover, given the undoubted fact of carriage, in the course of his submission Mr Aiken SC sensibly accepted that these cases must lie against the Defendant qua principal, but argued that, given what he termed the "nullity" of the KCL Bills, the presumed intention of the parties must have been that such carriage had taken place upon HAFFA terms. The latter represent the standard trading conditions of the Hong Kong Association of Freight Forwarding Agents Limited, and are terms which apparently govern other Bills of Lading used by Furness Far East Services, which I am told is a trade name of the Defendant. The significance of this for present purposes is that the jurisdiction clause in that form of Bill refers to actions against the freight forwarder being "instituted only in the place where the freight forwarder has its place of business"; an example of such a Bill, which apparently had been obtained via the liquidators of Maratz, was annexed to a late affidavit of Mr Horton. In the circumstances, however, I can discern no reasonable basis for the assertion that these 24 contracts of carriage were subject to these alternative terms, and I reject unequivocally Mr Aiken's ambitious submission that "it looks as though the carriage was a bailment on HAFFA terms" and that in some way the rights of Maratz, and hence those of its clients were, to use his expression, "transposed" to HAFFA terms.

21. This aspect of the controversy notwithstanding, at the end of the day the position seems to me to be tolerably clear. The carriage that was undoubtedly affected qua principal by the Defendant must, at the least, have constituted a bailment upon the terms of the outdated KCL Bill, and if this conclusion be correct, that, I should have thought, is an end to this part of the case.

22. If this conclusion be incorrect, however, and if it be necessary to consider the detailed analysis of the position that occupied so much of the argument, I should unhesitatingly in the circumstances apply the principle in Kelner v. Baxter (op.cit.) in order to give effect to the contract (see the dictum of Parker J in Newborne v. Sensolid [1984] 1 QB 45 at page 47), not least in all the circumstances because it seems to me to be both right and to make commercial sense; as the judgment of the High Court of Australia in Black v. Smallwood (1966) 117 CLR 52 (approving Fullagar J in Summergreene v. Baxter (1950) 80 CLR 304 at 323) observed :-

"Where A, purporting to act as agent for a non-existent principal, purports to make a binding contract with B, and the circumstances are such that B would suppose that a binding contract had been made, there must be a strong presumption that A has meant to bind himself personally. Where, as in Kelner v. Baxter, the consideration on B's part has been fully executed in reliance on the existence of a contract binding on somebody, the presumption could, I should imagine, only be rebutted in very exceptional circumstances. But the fundamental question in every case must be what the parties intended or must be fairly understood to have intended."

23. Finally under this head I come to the Dutch law issue. There is a considerable amount of expert evidence which, in part at least, is in conflict as to whether the Defendant can properly be regarded as a carrier under Dutch law. I do not propose to attempt to resolve this debate, and Mr Haddon-Cave submitted that the Court does not have to try. This is because, he says, on one specific point there is (and can be) no dispute. This is that in the existing Dutch proceedings, IBU/ANZ have admitted and averred first, that the Defendant was carrier under the Bills of Lading, and second, that the Court of Rotterdam had exclusive jurisdiction under Clause 22 of the Bills. These admissions had been accepted in the Defendant's Defence in these proceedings, and, argued Mr Haddon-Cave, as a matter of Dutch law this amounted to conclusive evidence from which neither party may unilaterally resile.

24. At first blush this appears a strong point. Mr Aiken SC sought to meet it by submitting that, even if this was a correct statement of the Dutch legal position, this was not a matter of Dutch substantive law and thus (and I take this to be his point) that such matters fell outside the putative proper law otherwise applicable pursuant to Dicey, Rule 181.

25. Although this submission was not well-received at the time, on reflection I think that there is merit in this argument. The editors of Dicey make it clear that the English Court will refuse to apply any foreign rule which in its view is procedural (see Dicey, op.cit., Rule 17), and that characterization of whether a foreign rule is procedural in the English sense is to be determined by reference to that foreign law. As to this, the latest evidence from Mr Bruidegom is contained in a recently filed affidavit on the point, where he comments as follows :-

"a. Admission in Dutch proceedings.

I have not seen the statement of defence as submitted in the Dutch proceedings on 15 July 1999. If indeed Furness HK have fully accepted the submission of the plaintiffs that Furness is bound as carrier under the bill of lading and that the Rotterdam Court has exclusive jurisdiction then the Dutch Courts will accept this as both parties agree in that respect. This has nothing to do with Dutch substantive maritime law but follows from art.181 of The Code of Civil Procedure as mentioned by Mr Boonk. This is a provision from the 'general rules on evidence' as inserted in the Code of Civil Procedure and has nothing to do whether the position as adopted by both parties is correct in view of substantive maritime law and especially art.8:461 DCC."

26. It follows from this, therefore, that whilst indeed there is agreement between the Dutch legal experts that the Dutch Court will treat Furness as carrier as a result of the procedural rules, by reason of the operation of the Hong Kong conflicts rules this conclusion is not a matter of which the Court should take note, and as such does not overcome the differences of view exhibited on the papers by the respective foreign legal experts in terms of whether, as a matter of substantive Dutch law, Furness are indeed to be regarded as carrier.

27. Notwithstanding my reluctance to find for the Plaintiffs on the basis of the putative proper law (as to which, if I be wrong on the point, would clearly constitute a further reason underpinning my ultimate conclusion), I am satisfied in all the circumstances, whether it be by virtue of a bailment upon terms, or by virtue of the application of the principle in Kelner v. Baxter, that the Defendant has established a good arguable case that the conditions of the carriage that undoubtedly was effected were governed by the conditions upon the reverse of the KCL Bill as issued. As a consequence, therefore, the exclusive foreign jurisdiction clause "bites" in terms of the legal relationship between the parties, and that the Defendant herein is entitled to take advantage of this provision. I am, however, disinclined to be drawn into the minutiae of the evidence underpinning the 'trade name' submission, or to base my decision thereon, although in broad terms I am satisfied that the confusion over usage of the outdated form of Bill consequent upon the 1993 dissolution of Kingwood Container Lines constituted no more than a practical oversight and was in no sense sinister nor involved any nefarious intent.

28. I turn now to consider these cases in terms of what has been characterized as the traditional "El Amria" principles.

(2) "Strong cause" why the present proceedings should not be stayed

29. This requirement of "strong cause" is no more than a function of the bargain represented by the terms of the carriage. And since I have found that the Defendant has discharged its burden, and has established the operative nature of the foreign jurisdiction clause in this case, the Plaintiffs are required to assume the burden of demonstrating why these existing actions should remain in Hong Kong and why a stay should not be granted.

30. For his part, Mr Haddon-Cave submitted that neither IBU/ANZ nor Mashreq begin to satisfy this burden when their respective cases are viewed through the prism of the "El Amria" criteria. Arguments of this type are almost always evidence-based, and it is unsurprising, perhaps, that Counsel differ in their analysis of this aspect. Mr Haddon-Cave takes as his focus matters arising at the misdelivery end of the chain, and submits that a significant amount of primary evidence and relevant witnesses will be found in Europe. In this context, he points to four distinct categories : evidence relating to how the goods were dealt with at destination, and the pattern of trading whereby the goods were on-carried by land to Eastern Europe; evidence relating to how certain goods were treated by agreement at destination, that is, sold without production of the 'house' Bills; evidence relating to cargoes which were stolen or went missing from warehouses; and finally evidence relating to specific quantum issues, in particular that concerned with storage costs and how long goods would have remained in storage after discharge from the vessels, together with evidence as to the value of goods on delivery.

31. On this element of the case Mr Haddon-Cave linked these evidential requirements to the main defences that are likely to be raised at the trial of any action. So that, for example, with regard to an allegedly agreed pattern of dealing over many months whereby the "KCL" Bills were not treated as documents of title, the goods being on-carried by land to Eastern Europe, sold without production of these 'house' Bills and the Plaintiffs paid direct by Maratz, he suggested that the issues of title to sue/acquiescence/estoppel represented important considerations. As to the time-bar, a salient issue would be whether any of these claims were time-barred either under the one year Hague-Visby limit or under the 9-month time limit under Clause 6(G) of the Bills. A further important aspect was whether certain cargoes had been stolen or had gone missing from warehouses after the carrier had ceased to be liable, whilst in terms of pure quantum, not only was there a primary issue of causation, but there was also the issue of credit for storage costs and the value of goods upon delivery, given that there appeared to have been a sharp deterioration in the market for these goods in Russia and Eastern Europe.

32. To the contrary, Mr Aiken SC submitted that this was not a case with a European focus at all, and that the overriding connection is with Hong Kong. He pointed out that the Plaintiffs, the Defendant and Maratz are Hong Kong companies, and he suggested that the evidence is mainly located here. He submitted that the material witnesses work in Hong Kong, that Bills of Lading were signed in Hong Kong, and that to be forced to litigate in the Netherlands would greatly add to the cost and inconvenience of all parties. Further, the witnesses speak English, the documents are in English, and any judgment would need to be enforced in Hong Kong.

33. Notwithstanding the persuasive way in which Mr Aiken declined to categorize this as a European case, when looked at broadly I find it difficult to agree with this submission. I should have thought that it was as plain as a pikestaff that in terms of the misdelivery element, the focus is strongly European; indeed, the content of the Dutch pleadings as they presently exist (I understand that the filing of a Rejoinder by the Plaintiffs is required for these pleadings to be fully constituted) indicate that the matters outlined by Mr Haddon-Cave are live issues in those proceedings. Given that I have attached little credence to the misrepresentation element of the Plaintiffs' case, it seems to me that in terms of relevant evidence the position essentially points one-way, and that Mr Haddon-Cave is broadly right in his analysis. So that from an evidential point of view, the Plaintiffs have failed to persuade the Court, on this basis at least, that a stay should be refused.

34. With regard to the element of the application of foreign law, which is another of the "El Amria" benchmarks, the Bills of Lading which have been found to be applicable to these transactions are governed by Dutch law (see Clause 21), and Mr Haddon-Cave submitted that a number of difficult and complex issues of Dutch law will arise at the trial which would better be determined by a Dutch Judge. Once again this seems difficult to gainsay, and I can see no good reason in a case with a European focus that the parties should be put in the position of bringing Dutch lawyers to Hong Kong to give evidence, rather than having these matters litigated in Holland which (in one instance at least) represents the current position.

35. I turn now to the interesting question, which arises in many stay applications, as to whether the Defendant genuinely desires trial in the foreign jurisdiction, or is merely interested in obtaining tactical advantage. So far as the IBU/ANZ claim is concerned, the existence of the detailed Dutch pleadings serves neatly to negate argument along these lines, although I have not overlooked to Mr Aiken's protest about the "opportunistic" nature of these Dutch proceedings, as to which more in a moment. The fact is, however, that the present proceedings in Rotterdam appear to have gone a good way down the road, and although they may not be as close to fruition as Mr Haddon-Cave suggested (a submission which was strongly disputed), there is no doubt that the existence of these proceedings demonstrate a degree of desire on the part of the Defendant to proceed in the Dutch jurisdiction and, most certainly, cannot constitute a negative factor. Nor in the circumstances do I think that it can realistically be argued that, for its part, Furness does not desire trial of the Mashreq claim in Rotterdam. There seems to me every reason why these matters should be heard together before the same judge, albeit I do not know whether this will prove possible. But in any event the arguments mounted by the Defendant in the IBU/ANZ proceedings in Holland will no doubt be open to the Defendant in any proceedings against Mashreq which are to be begun there, and, as Mr Haddon-Cave remarked in passing, it is a little difficult to castigate a Defendant as not genuinely wishing to have a trial in a foreign jurisdiction when the probabilities appear to be that, in terms of the time-bar point at least (a matter I consider below), the Defendant may well succeed upon that basis alone. So that in the circumstances I do not think that the element of a 'genuine desire' for trial in another jurisdiction assists the Plaintiffs in this case.

36. So far as procedural disadvantages are concerned, Mr Aiken SC has raised various objections, not least the time-bar point, but he has also pointed out that expert opinion has it that no concept of estoppel exists in these circumstances under Dutch law which might be available to assist the Plaintiffs to circumvent the time-bar point. He also says that discovery is not as developed a concept in Holland as it is in this jurisdiction. As to this, the answer probably is that inevitably there will always be procedural differences and disadvantages between competing jurisdictions, and I think that Mr Haddon-Cave is right when he points out that differences between Dutch and Hong Kong procedure will not avail the Plaintiffs by reason of the fact that, having contractually chosen to submit their disputes to the exclusive jurisdiction of a foreign court, they cannot be seen to complain about the procedures of that court : see Hirst J in The Nile Rhapsody [1992] 2 Lloyd's Rep 399,414, citing Goff J in Trendtex Trading Corpn. v. Credit Suisse, [1980] 3 All ER 721 at 735. So that, the time limit issue apart, the Plaintiffs' submissions under this head do not, I think, greatly help them either.

37. Looked at in the round, therefore, and subject to the matters discussed below, in my view the Plaintiffs in these two actions have failed to satisfy the Court that a stay should be refused on the basis of the "El Amria" criteria. I have not overlooked the fact that each of the Plaintiffs and the Defendant are Hong Kong registered companies. Nevertheless, I am satisfied that the Plaintiffs have not discharged the burden of demonstrating "strong cause" why these actions should not be stayed.

Other Matters

38. I turn, finally, to two particular issues which have arisen during argument.

I. The scope of the jurisdiction clause

39. This point is worth highlighting because of the Plaintiffs' submission (which in the circumstances I do not find easy to accept) to the effect that the Plaintiffs' primary claims are for breach of warranty of authority, misrepresentation, and bailment/conversion. Given the content of the Hong Kong and the Dutch pleadings, this seems to me a difficult submission to make good, certainly in terms of breach of warranty and misrepresentation, and it seems to me that the fundamental causes of action are unerringly contractual and based upon the Bills as issued. Be that as it may. Difficult applications sometimes necessitate difficult arguments. However, I note this aspect of the case only to dismiss any suggestion that if and in so far as the contractual claims ought to be heard in Holland, that the tort claims should be 'split off', and trial thereof maintained in Hong Kong. The evidence before the Court is that under Dutch law, a jurisdictional clause such as that with which we are presently concerned would not be limited to contractual claims only, but would cover all claims concerning the carriage which is the subject to the Bills of Lading. In this regard, also, Mr Haddon-Cave is surely correct when he submits that under English law there is a strong presumption in favour of "one-stop adjudication", so that parties are taken to have intended to avoid the 'forensic nightmare' of having different jurisdictions determine claims in contract and tort arising from the same facts - see Leggatt LJ in The Angelic Grace [1995] 1 Lloyd's Rep 87 at page 90, citing Hoffmann LJ in Harbour Assurance [1993] 1 Lloyd's Rep 455 at 470 and Steyn LJ in Continental Bank v. Aeakos [1994] 1 Lloyd's Rep 505 at 593, which latter judgment employed the oft-quoted "forensic nightmare" epithet.

II. The time-bar point

40. As indicated at the outset, it is this element of the case which has attracted particular concern. Because whilst the IBU/ANZ claim is the subject of a developed action in Rotterdam, there are no such proceedings in place in terms of the Mashreq claim. So that if a stay should in fact be granted, as the Defendant submits, there appears little doubt that Mashreq will face difficulty in Holland in circumscribing this problem.

41. On general principles, it seems clear that a Plaintiff's failure to preserve a time limit in a contractually-chosen forum should not serve thereby to place it in a better position than another litigant who has chosen to be prudent, and to issue proceedings in that other jurisdiction. Which is perhaps another way of saying that failure to preserve a time limit cannot in itself assist in the maintenance of jurisdiction in the non-contractual forum if all other factors point to the desirability of a stay. Fortunately, the Court is not left to consider this position from application of general principle alone, but has the considerable assistance of two relatively recent decisions in England, namely, that of Rix J in The MC Pearl [1997] 1 Lloyd's Rep 566, and that of Colman J in Citi-March v Neptune [1997] 1 Lloyd's Rep 72.

42. In Citi-March(op.cit.) Colman J took what may perhaps be regarded as the more traditional approach, observing :-

" The approach in these cases is, in my judgment, consistent with the view that in an exclusive jurisdiction clause case, where a plaintiff has failed to issue protective proceedings in the contractual forum, a stay will be ordered or service set aside unless strong cause is shown why English jurisdiction should be maintained. In a case where, but for the time bar, there is strong cause for English jurisdiction, a stay will not be ordered or service set aside in spite of the plaintiffs having consciously decided not to preserve time in the contractual forum, for in so conducting himself he cannot be said to have acted unreasonably and it is in the circumstances inappropriate that he should be shut out from pursuing his claim by reason of the foreign jurisdiction clause. In a case where, however, but for the time bar, strong cause in favour of English jurisdiction cannot be shown, a plaintiff may be able to rely on the prejudice to him by reason of a time bar in the contractual forum if he can show that he did not act unreasonably in failing to issue protective proceedings in order to prevent time running against him. Whether his omission is unreasonable will depend on all the circumstances of the case, including his awareness of the potential time bar, the explanation for his omission to preserve time and the extent to which the contractual forum is also, time bar apart, the appropriate forum for the adjudication of the dispute in question. At the end of the day the Court must consider whether in the interests of justice it is more appropriate to permit a plaintiff to proceed in England, although he has omitted to preserve time in the contractual forum, and although England is not clearly the more appropriate forum than to deprive him of all opportunity of pursuing his claim in any forum." (Emphasis added)

43. In the "M C Pearl", Rix J observed that a consideration of the authorities as they have developed over the years "has shown a certain degree of judicial uncertainty as to the proper view to take of a plaintiff's failure to protect the time limit in the contractual jurisdiction". After reviewing various strands of authority as they have developed in this area, he stated :-

" ... it seems to me that it ought to follow that (save possibly in some exceptional circumstance which I cannot presently visualize) a plaintiff's failure to preserve a time limit in the contractual forum cannot assist him to found jurisdiction in England where he does not have a strong case for it separately from the time bar point; and that even where he does have a strong case for jurisdiction in England apart from the time bar point, the fact that he has allowed the time bar to go by default in the contractual jurisdiction always requires some consideration or explanation (as in Citi-March).

... those dicta which have suggested that the time bar point is a neutral factor in this context tend to support the view which I have just expressed, rather than the reverse. If it is a neutral factor, then it cannot make good an appeal to English jurisdiction for which strong cause is not otherwise shown: in such a case the plaintiff will fail to prevent a stay of his English action. Similarly, it cannot derogate from a strong cause otherwise shown for English jurisdiction (the result in Citi-March and this case)..." (Emphasis added)

44. Mr Haddon-Cave submitted that if and in so far as Rix J can be regarded as taking a more analytically robust line than Colman J in ascribing a neutral bias to the time bar issue, for the purposes of this case he does not have to go that far, and that the approach of Colman J will suffice for his purposes. This is because there is not one shred of evidence, he says, from or on behalf of Mashreq which condescends to any explanation as to why protective proceedings were not instituted in Holland in the same way as has been done in the context of the IBU/ANZ claim. This, he observed, was particularly surprising since there were solicitors in place in Hong Kong advising Mashreq in July 1998, Mr Bruidegom was instructed in Holland in August 1998 (or even earlier) and was aware that KCL was only being used as a trade name for the Defendant, whilst of course IBU/ANZ had taken the trouble to issue proceedings. In short, suggested Mr Haddon-Cave, this was "a paradigm case" for ordering a stay against Mashreq, and that the Defendant was perfectly entitled in all the circumstances to take advantage of the Rotterdam time limit.

45. In response on behalf of Mashreq, Mr Aiken SC strongly criticized the Defendant's actions as "opportunistic", and suggested that in a situation of this type the Plaintiff could not win. If it did not institute protective proceedings in the contractual jurisdiction, it was faced with time-bar problems, and if on the other hand it did so institute proceedings, then an unscrupulous Defendant could drive those proceedings forward (much as had happened in this case), and thereby use the existence of those proceedings as an additional argument in favour of the grant of a stay.

46. For my own part, I do not think that this critical analysis is justified. If a protective writ is issued, it is open to the parties to agree (although there was no such agreement in this case) that the protective writ should stay in place as such, without more; alternatively, as Mr Haddon-Cave pointed out in his reply, as a matter of Dutch law, it was open to Mashreq to place a reservation upon the Dutch Writ. This, however, had not happened in this case. With his customary fairness, Mr Aiken accepted, I think, that it was right to say that there was no explanation on the face of the evidence as to why proceedings had not been commenced at least in Rotterdam, but he submitted that there was no need in this case, which represented a "muddled situation" factually, to have taken out a protective writ in Holland, and he urged that the Court should show "sympathy" to Mashreq in its present unfortunate situation. Were the Defendant's rights to be fully exercised, the effect would be "cataclysmic" on Mashreq, he said.

47. It is not, of course, the task of the Commercial Court to found any decision in terms of sympathy for one litigant or another. Had Mashreq condescended to any explanation at all as to why it had left itself unprotected in the contractual forum, no doubt such explanation would have attracted anxious attention in the exercise of judicial discretion. In my judgment this is not a case in which, time-bar considerations apart, strong cause for maintaining Hong Kong jurisdiction otherwise can be shown, and on the basis of the Citi-March approach, which I adopt, it was incumbent upon Mashreq to demonstrate that the failure to issue protective proceedings was not unreasonable in all the circumstances. Yet no explanation of any kind is forthcoming, nor is there anything to be gained by speculating as to why this should be so. Absent any such explanation, in my view Mr Haddon-Cave is right in his argument, although the outcome is not one that I view with any enthusiasm. Accordingly, having reflected on the matter, I do not consider that this element of the case can negate what in my judgment is an otherwise persuasive case in favour of the grant of a stay.

Order

48. It follows from the foregoing, therefore, that in the exercise of my discretion I accede to the Defendant's applications for a stay of proceedings in terms of the respective applications dated 16th November 1998. I so order.

49. I further make an order nisi that the costs of these applications are to follow the event in each case and are to be paid by the Plaintiff to the Defendant, to be taxed if not agreed.

50. I will hear the parties in due course on any matter that may arise as a consequence of this judgment. I thank Senior Counsel for their considerable assistance.