DP WORLD DJIBOUTI FZCO AND OTHERS v. CHINA MERCHANTS PORT HOLDINGS CO LTD

CACV 86/2020

[2022] HKCA 1330

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO 86 OF 2020

(ON APPEAL FROM HCA NO 1951 OF 2018)

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J U D G M E N T

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Hon Kwan VP (giving the Judgment of the Court):

1.  On 20 December 2019, Mimmie Chan J dismissed the defendant’s application to stay this action on the ground of forum non conveniens in favour of the Civil Chamber of the Court of First Instance in the Republic of Djibouti (the “Djibouti Court”; the “Decision”[1]). The defendant’s appeal, which was brought with leave granted by the judge, was dismissed by this court in its judgment dated 14 January 2022 (“CA Judgment”)[2]. By a notice of motion dated 11 February 2022, the defendant seeks leave to appeal to the Court of Final Appeal from the CA Judgment.

2.  The questions said to be of great general or public importance are stated as follows:

Question 1:

In dealing with challenges of jurisdiction on the ground of forum non conveniens, what is the proper approach to be adopted by the Hong Kong Courts where: (1) the plaintiff’s authority to sue is disputed by the defendant (“Authority Issue”); and (2) such dispute over the Authority Issue would be more appropriately decided by the foreign court? In particular:

(a)  Whether the dispute over the Authority Issue should be considered separately (as illustrated in comparable cases like Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250), or whether it should be dealt with as part of the connecting factors in Stage 1 of the approach adopted in The Spiliada [1987] AC 460 line of cases?

(b)  How should the Court consider the different options which may be adopted for dealing with such a situation, including:

(i)  a stay of the action (or at least such parts of the claims as affected by the disputes over the Authority Issue) permanently so that the Authority Issue can be dealt with by the foreign court together with the substantive disputes; or

(ii)  a stay of the action (or at least such parts of the claims as affected by the disputes over the Authority Issue) temporarily pending the final determination by the foreign court of the dispute over the Authority Issue?

Question 2:

What is the proper approach for Stage 1 of the approach adopted in The Spiliada (above) line of cases where the substantive dispute involves a novel point of foreign law, particularly one which requires consideration of public policies under the foreign law? In particular:

(a)  Whether a party challenging jurisdiction of the Hong Kong Courts in such circumstances (like the defendant in this action) should still be required to establish that the disputed issue of foreign law is so substantial or difficult as to warrant a stay of proceedings?

(b)  Or should the Hong Kong Courts in such circumstances generally allow the foreign court to develop its own jurisdiction?

(c)  If the answer to (a) above is in the affirmative, what is the requisite standard or threshold to be adopted in considering whether the disputed and novel issue of foreign law is sufficiently substantial or difficult so as to warrant a stay of proceedings?

Question 3:

In dealing with challenges of jurisdiction on the ground of forum non conveniens, what is the proper approach (including the requisite threshold) to be adopted by the Hong Kong Courts when a party contends that it cannot obtain substantial justice from the foreign court? Among others, how should the Hong Kong Courts consider:

(a)  reports or other forms of literature published by government or non-government organizations on the quality of foreign courts or matters incidental thereto;

(b)  isolated incidents relied on by the party in support of its contentions that it cannot obtain substantial justice from the foreign court (especially when a different legal system with different legal culture is involved, or when such isolated incidents are capable of innocuous explanations).

3.  The defendant also seeks leave to appeal on the “or otherwise” limb.

Background

4.  The relevant factual background has been set out in §§4 to 5 of the CA Judgment quoting the relevant parts of the Decision, and also at §§6 to 11 regarding the further evidence admitted on appeal. We adopt the expressions and abbreviations in the CA Judgment.

5.  In these proceedings, the plaintiffs claim that the defendant has induced/procured the breach of various agreements (specifically, the 2004 Concession, the 2006 Concession and the JVA) which the plaintiffs have entered into with the Djibouti Government for the operation and management of the Terminal at Doraleh. The defendant’s conduct is said to be actionable under Djibouti law for breach of Article 1391 of the New Code, or alternatively, for unfair competition under the same provision.

6.  In applying to stay these proceedings in favour of the Djibouti Court on the grounds of forum non conveniens, the defendant contended that the dispute has no real connection with Hong Kong and should not be tried in the Hong Kong courts. There was no dispute between the parties on the legal principles applicable to the determination of the defendant’s application for stay, which are well settled: see SPH v SA (2014) 17 HKCFAR 364 at §51.

7.  The judge considered the following connecting factors: (1) location of the parties, (2) place of commission of the tort, (3) availability of witnesses and documents, (4) governing law, and (5) the 3^rd plaintiff’s authority to sue, and found that the only factors which have any connection with the Djibouti Court are “the relevance of public policy and the objectives of the New Civil Code, and the fact that one of the issues to be decided may be the validity of the appointment of the Administrator and the consequential authority of the 3^rd plaintiff to continue these proceedings” (§104 of the Decision). All the other factors were held to point to Hong Kong as the forum which has the most real and substantial connection with the action. The judge also found that the plaintiffs will be deprived of a legitimate personal or juridical advantage if the action is tried in Djibouti (§106 of the Decision).

8.  The defendant appealed against the Decision contending that the judge had failed to apply correctly the relevant principles in stage 1 and stage 2, and challenged her assessment of various connecting factors. As the defendant’s appeal to this court was against the judge’s exercise of discretion, it had to establish sufficient reason for this court to interfere with that exercise of discretion (§22 of the CA Judgment).

9.  Having considered the grounds of appeal relating to the stage 1 analysis, we held that it has not been shown that the judge’s conclusion in the “qualitative exercise” of the consideration of the connecting factors is in error (§70 of the CA Judgment). Although not strictly necessary, we went on to consider the grounds of appeal relating to the stage 2 analysis and held that there is no or no sufficient basis to interfere with the judge’s finding that the plaintiffs would be deprived of a legitimate juridical advantage, and there is a real risk that they may not obtain substantial justice if this action were to be tried in Djibouti (§80 of the CA Judgment).

10.  Our reasons, in so far as they relate to the three questions on which leave is sought to appeal to the Court of Final Appeal, were as follows:

(1)  In respect of the 3^rd plaintiff’s authority to sue, we found that there was no error in principle as regards the judge’s evaluation of this issue in the overall analysis at §104 of the Decision. None of the authorities cited by the defendant bear out the proposition that any such “locus” or “standing” issues should carry decisive or special status in the forum analysis merely because it is a dispute to be resolved prior to the resolution of the substantive disputes at trial. As to the weight to be given to this issue in the balancing exercise, the judge properly had regard to the fact that even excluding the 3^rd plaintiff from these proceedings, the 1^st and 2^nd plaintiffs have legitimate causes of action to pursue to trial. Thus we were not persuaded that there are sufficient grounds to interfere with the judge’s exercise of discretion to refuse a permanent stay of the entire action (§§30 to 34 of the CA Judgment).

(2)  As to the alternative of a temporary stay of this action until the final determination by the Djibouti Court of the dispute over the 3^rd plaintiff’s authority to sue, we expressed our reservations whether it would be appropriate to allow this alternative, which was not raised before the judge (and for which no evidence has been adduced), to be raised for the first time on appeal. Nonetheless, we admitted and considered further evidence of a ruling on 31 December 2019 by the Commercial Division of the Court of First Instance in the Invalidity Proceedings, and did not consider it would have much relevance to resolving the substantive disputes in this action so as to justify a temporary stay. This was mainly because the outcome of the appeal therefrom would not be binding as between all the parties in this action, and there are still the legitimate claims of the 1^st and 2^nd plaintiffs (§§35 to 37 of the CA Judgment).

(3)  On the issue of governing law, although there is no dispute that Djibouti law and specifically Article 1391 of the New Code apply to the claims of inducing/procuring breach of contract and unfair competition, and issues pertaining to Article 1391 have not previously been decided in Djibouti, the judge was entitled to come to the view that, based on the foreign law expert evidence before the court, they are not of such complexity or so unique that the Hong Kong court would not be confident to deal with them (§64 of the CA Judgment).

(4)  The judge did not err in law or principle in not holding that the Djibouti Court is obviously in the best position to deal with issues pertaining to the public policy considerations behind Article 1391. Much would depend on matters such as the uniqueness and objective of the public policy and the precise disputed issue of foreign law. However, based on the expert evidence adduced by the parties, liability under Article 1391 does not appear to involve unique Djiboutian public policy which would give rise to such difficulty of ascertaining the principles under Djibouti law that are relevant to a claim for procuring/inducing a breach of contract, and which cannot be resolved by expert evidence at trial (§65 to 67 of the CA Judgment).

(5)  As to the stage 2 analysis, the judge was ultimately concerned with an assessment of the risk that the plaintiffs may not obtain substantial justice if this action is tried in Djibouti. It was common ground that the plaintiffs did not have to prove the matters giving rise to such risk on a balance of probabilities. In her assessment of the risk, the judge was entitled to find, among other things, that one of the bases for the decision of the Djibouti Court in rejecting the 3^rd plaintiff’s jurisdictional challenge in the Invalidity Proceedings was questionable and to infer from this a real risk that substantial justice may not be obtained if this action is tried in Djibouti. In relation to the point that the political and sensitive disputes between the plaintiffs and the Djibouti Government do not concern the Djibouti Courts, we were inclined to think it would be unrealistic to say that the belligerence of the Djibouti Government against the plaintiffs would have no or little impact on claims to be tried in the Djibouti Courts that may appear to be against the Republic’s declared intentions or interests (§72 to 78 of the CA Judgment).

(6)  Moreover, there is evidence of the plaintiffs’ difficulties in finding experienced lawyers to handle the case for them in Djibouti (see §§125 to 126 of the Decision), and the defendant’s submission to counter these matters was of little moment (§79 of the CA Judgment).

11.  We should also mention that in its appeal against the Decision, the defendant also challenged the judge’s assessment of two other connecting factors, namely, (1) the place of commission of the tort and (2) the availability of witnesses. We dealt with these grounds in §§39 to 57 of the CA Judgment. As the three questions put forward by the defendant do not concern these connecting factors, we say nothing more about them.

12.  It is in this context that the defendant is seeking leave to appeal to the Court of Final Appeal on the three questions set out above. As appeals from interlocutory orders to the Court of Final Appeal are rare and exceptional and the proposed appeal is an interlocutory appeal, leave to appeal will generally be refused unless it can clearly be seen that (1) the proposed appeal genuinely raises a question of law of great general or public importance; (2) the result of the appeal would indeed turn on how that question is answered; and (3) such result is likely to make a significant contribution to the just disposal of the litigation: Pacific Electric Wire & Cable Ltd v Hu Hung Chiu & Anr, FAMV 73/2007, 13 March 2008 at §§7 to 8; Bright Shipping Ltd v Changhong Group (HK) Limited [2020] HKCA 162 at §5.

Question 1: Authority Issue

13.  Question 1 concerns the approach to be adopted when an application for stay on the ground of forum non conveniens also involves a dispute over the plaintiff’s authority to sue.

14.  Mr Rimsky Yuen, SC, submitted on behalf of the defendant[3] that Question 1 involves a question of law of great general or public importance in that it raises issues arising from the interplay of the principles for stay of proceedings on the ground of forum non conveniens with the principle that a dispute of the authority to sue should be raised and resolved soonest possible before trial, and not as a point of defence at the trial. This question has not been considered by the Court of Final Appeal or in appellate decisions in other jurisdictions.

15.  He submitted that the judge was wrong to have dealt with the Authority Issue as part of the connecting factors in stage 1 of the Spiliada test (which are only concerned with the substantive disputes between the parties and stage 1 is not devised for the purpose of resolving fundamental or preliminary issues such as the Authority Issue), and ought to have considered it separately outside of stage 1. The Authority Issue should be addressed separately before deciding the appropriate forum for the substantive issues. Reliance was placed on Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250 as illustrating this approach, specifically at 260A to 265E, where the question of locus standi, which is analogous to an Authority Issue, was dealt with separately from the connecting factors. He further submitted that once the judge concluded that the Authority Issue is more appropriately decided by the Djibouti Court, she ought to have stayed the entire action permanently (or at least temporarily) in favour of the Djibouti Court.

16.  We refuse to grant leave to appeal on Question 1 for these reasons.

17.  The defendant’s reliance on Rambas Marketing is misplaced. In that case, one of the issues that emerged as part of the defence to the plaintiff’s claim was that the plaintiff, as assignee of a debt, had no locus standi to pursue the claim against the defendant because of the doubts over the validity or effect of the assignment under Nevada law. As rightly pointed out by Mr Paul Shieh, SC for the plaintiff[4], although in that case Recorder Ma SC (as he then was) laid out five possible issues (including the locus issue) that might be raised as defence to the plaintiff’s claim and dealt with each issue separately, he did so “in order to test the various connecting factors relied on by the defendant under [Stage 1 of the Spiliada test]” (at 259I to 260A) and then considered how those issues interacted with the various connecting factors. The locus issue was not treated in a different way from the other four issues identified as possible defence to the claim. Rambas Marketing is therefore not an illustration of a case where the court dealt with an Authority Issue separately outside of stage 1. It provides no support for the approach contended for by the defendant.

18.  Apart from Rambas Marketing, there are other cases in which the court considered a dispute over the plaintiff’s authority to sue as part of the stage 1 analysis. In §30 of the CA Judgment, we referred to Xinjiang Xingmei Oil-Pipeline Co Ltd v China Petroleum & Chemical Corp [2005] 2 HKC 292 and Ceskoslovenska Obchodni Banka AS v Nomura International Plc [2003] ILPr 20 as examples where the plaintiff’s authority to sue was considered as one of the factors (or even an important factor) in the stage 1 analysis. Although Mr Yuen sought to distinguish these cases on the basis that the point was neither argued nor considered, we do not agree that they are irrelevant. These cases demonstrate that the courts have consistently and without any problem considered disputes involving authority or locus in accordance with the Spiliada test under stage 1.

19.  We also do not think that the result of the proposed appeal would turn on how Question 1 is answered. The Authority Issue must be seen in its proper context. In particular, there is no dispute that it only concerns the 3^rd plaintiff, and does not affect the 1^st and 2^nd plaintiffs who have legitimate causes of action to pursue. The task before the judge was to determine a single jurisdiction in which all of the plaintiffs’ claims (and not just the 3^rd plaintiff’s) can suitably be tried: Lungowe v Vedanta Resources plc [2019] 2 WLR 1051 at §§67 to 68. We therefore do not think that even if the Authority Issue carries some special weight in the stage 1 analysis, it would materially affect the judge’s overall analysis in the exercise of her discretion.

20.  In our view, there is no conflict or incompatibility between the principles at play. Once the court determines that the most appropriate forum for the trial of the action is Hong Kong, if the defendant applies to strike out the 3^rd plaintiff’s claims on the Authority Issue[5], the Hong Kong court will determine whether the action is properly constituted, and will not leave it to be determined at trial together with the substantive issues. The judge did not rule out that the Authority Issue could be decided by the Hong Kong court as questions of fact on expert evidence (§103 of the Decision).

21.  For all these reasons, the “different options” suggested by the defendant to deal with an Authority Issue separately outside of the forum analysis simply do not arise for consideration.

Question 2: novel point of foreign law involving public policy

22.  Question 2 is about how the court should approach the stage 1 analysis where the substantive dispute involves a novel point of foreign law, especially one that involves foreign public policy.

23.  Mr Yuen submitted that the rationale behind requiring an applicant for a stay to demonstrate that there are “substantial and difficult issues of foreign law” does not apply when the dispute involves a novel point of foreign law. This is because the answer to a novel point of foreign law is inherently uncertain, if not also complex and unique, such that expert evidence would be of limited value. When the novel point involves consideration of foreign public policy that is affected by socio-economic factors, which may vary from country to country, comity requires that foreign courts be allowed to develop their own jurisprudence and this in itself is a strong factor which favours the foreign forum. He also argued that an applicant only needs to show a genuine dispute over the novel point of foreign law and/or the foreign public policies involved, without having to establish any “uniqueness” of those public policies.

24.  We do not think that Question 2 raises any genuine question of great general or public importance.

25.  It is well established that the court may exercise its discretion to stay the proceedings where substantial and difficult issues of foreign law are involved. As Recorder Ma SC (as he then was) explained in Rambas Marketing at 266F to 267A, the court may feel compelled to do so where there is an appreciable risk that justice will not be done. But it does not follow that once it is shown that issues of foreign law arise, this will necessarily be a powerful, much less decisive, factor in favour of a stay. It is all a question of degree as to how confident or not the court feels in dealing with complicated issues of foreign law (§58 of the CA Judgment).

26.  In our view, the “novelty” of a point of foreign law is a factor to be taken into account in the court’s assessment of the difficulty of dealing with it and reaching the right conclusion. The existence of a novel point of foreign law itself does not call for a different approach. In assessing the difficulty which may arise from the “novelty” of the point, the judge properly had regard to the fact that it was undisputed between the parties’ experts that the New Code is the same as the French Civil Code, and there is ample French case law, including on procuring/inducing breach of contract, to which Djibouti lawyers make regular reference before the Djibouti Courts (§§81 and 84 of the Decision).

27.  Even where the novel point involves foreign public policy, it is still necessary to consider the nature of the public policy and assess whether the Hong Kong court would feel confident to deal with it at trial with expert evidence. We rejected the submission that New Link Consultants Ltd v Air China [2005] 2 HKC 260 supports the proposition that there is no need to identify any particular public policy in the stay application and such identification could be left to the trial (§66 of the CA Judgment). The defendant failed to identify any specific public policy (as distinguished from general notions of public policy) unique to Djibouti said to give rise to an alleged difficulty of ascertaining the guiding principles under Djibouti law, and which ought not be resolved by the Hong Kong court with expert evidence adduced at trial.

28.  We are also not persuaded that comity is a material or weighty consideration in this context. The Hong Kong court will only be making a finding of fact, based on the evidence before it, as to what the guiding principles under Djibouti law are for the purposes of determining the claims in this action. It is in no way “developing” Djibouti jurisprudence for the Djibouti Courts. There may also be problems in taking too far the argument that a foreign court should generally be allowed to develop its own law, for such a proposition is not conceptually limited to situations where the point involved is “novel”, but can also apply to other situations such as where two or more divergent lines of authority or opinion have emerged and requires reconciliation or clarification by appellate courts of that jurisdiction. In our view, there should be no hard-and-fast-rule, and the courts are more than capable of applying the stage 1 analysis on a case-by-case basis in view of the evidence before it, as the judge did here.

29.  It is also important not to overlook the fact that the issues raised in Question 2 were only part of the judge’s consideration under the connecting factor of “governing law”. Although the tortious claims of inducing/procuring breach of contract and unfair competition are governed by Djibouti law, the determination of these claims would involve the application of English law (in determining whether there was a breach of the 2006 Concession and the Management Agreement) with which the Hong Kong court is more familiar. As we held in §68 of the CA Judgment, it was proper for the judge to give weight to English law being the governing law of these agreements as the defendant disputes that the Djibouti Government had acted in breach of them.

30.  Ultimately, the proposed appeal on Question 2 is a challenge against the weight accorded by the judge to the public policy considerations in her assessment of the “governing law” connecting factor. As the consideration of all the connecting factors is a “qualitative exercise” which the judge properly undertook, we do not think that the result of the proposed appeal would turn on how Question 2 is answered, and we refuse to grant leave to appeal on Question 2.

Question 3: real risk that substantial justice cannot be obtained

31.  Question 3 concerns the court’s approach in assessing whether there is a “real risk” that substantial justice cannot be obtained if the matter were tried in the foreign court.

32.  Mr Yuen submitted that the test of “real risk” has received little consideration by the Hong Kong courts, especially at the appellate level. He says that such a test may introduce uncertainty into the stage 2 analysis, and warrants guidance from the Court of Final Appeal.

33.  We refuse to grant leave to appeal on Question 3 for the following reasons.

34.  We are not persuaded that the standard of “real risk” is uncertain or requires guidance from the Court of Final Appeal. There are ample English authorities which explain the proper approach and relevant principles: starting from The Abidin Daver [1984] AC 398 at 411B to E, to Cherney v Deripaska (No 2) [2010] 2 All ER (Comm) 456 at §29, to Altimo Holdings v Kyrgyz Mobile Tel Ltd [2012] 1 WLR 1804 at §95.

35.  It has been said that the court, in seeking to assess risks of what might occur in the future, must have evidence that the risk exists, but is not required to find on the balance of probabilities that the risks will eventuate. The evaluation is a holistic one taking into account of all relevant factors: Cherney v Deripaska (No 2) at §29. No reasons have been advanced by the defendant why these principles are insufficient or inept to guide the court’s determination under the stage 2 analysis.

36.  We also agree with Mr Shieh there is no need for overly compartmentalised guidance which may circumscribe the court’s discretion in any given case, and whatever changes have taken place in international commercial litigation can and will be taken into account in the “real risk” test, which is a sufficiently fluid concept. This is particularly so in view of the defendant’s formulation of Question 3, which seeks guidance on how the court should consider “among others”: (1) reports or other forms of literature published by government or non-government organizations on the quality of foreign courts “or matters incidental thereto”; and (2) “isolated incidents” relied on by the party in support of its contentions that it cannot obtain substantial justice from the foreign court “when such isolated incidents are capable of innocuous explanations”.

37.  Moreover, as what may constitute an “isolated incident” and whether it is capable of “innocuous explanations” are fact-sensitive questions, we do not think that Question 3 is a genuine question of great general or public importance. Notwithstanding the defendant’s attempt to dress it up as one, it seems to us that the defendant’s true objections go to the weight given by the judge to the matters which she was indisputably entitled to have regard in the stage 2 analysis.

38.  In the premises, it would not be appropriate to grant leave to appeal on Question 3.

“Or otherwise” limb

39.  As mentioned above, the defendant also relied on the “or otherwise” limb. It is the usual practice of this court to defer to the Appeal Committee on whether leave to appeal should be granted on this basis. We see no reason to depart from the usual practice here.

Conclusion and costs

40.  For all the above reasons, the notice of motion is dismissed with costs to the plaintiffs.

41.  Costs of the application should follow the event. Having considered the plaintiffs’ statement of costs for summary assessment, which we find to be reasonable, we allow in full the amount of $236,657. If need be, we also grant a certificate for three counsel to the plaintiffs.