NOBLE POWER INVESTMENTS LTD AND ANOTHER v. NISSEI STOMACH TOKYO CO LTD

HCA 285/2007

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 285 OF 2007

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J U D G M E N T

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1.  This is an application under RHC O 12 r 8 to set aside the ex parte order of Master Kwan made on 6 March 2007 giving leave to serve the writ of summons on the Defendant in Japan, and the subsequent service of the writ pursuant to such leave.

2.  The Defendant’s main contention is that the Plaintiffs have failed to demonstrate that Hong Kong is clearly and distinctly the forum conveniens so as to justify the Hong Kong court exercising “long-arm” jurisdiction over the Japanese Defendant. The thrust of the Defendant’s case is that this case has overwhelming connections with Japan, which is clearly the more appropriate forum for the resolution of this dispute.

The Plaintiffs’ claim

3.  The 1^st and 2^nd Plaintiffs are companies incorporated in the British Virgin Islands and Japan respectively. The Defendant is a company incorporated in Japan.  None of them have any business in Hong Kong or filed any registration under Part XI of the Companies Ordinance.

4.  The Plaintiffs’ pleaded claim against the Defendant is a simple one for the alleged breach of a written Co-Operation Agreement (“Agreement”), apparently signed in Hong Kong on 5 June 2006, in relation to certain plasterboard waste recycling business to be carried out in Japan at premises to be provided by the Defendant.

5.  It is the Plaintiffs’ pleaded case that pursuant to the Agreement, they have entered into contractual relationships with third parties and incurred expenditure:

(1)	The 1st Plaintiff entered into a contract with a Danish company  (“GRI Contract”) to purchase machinery and equipment and for the grant of technology licence for the proposed business, and had paid a deposit of €675,000;
(2)	The 1st Plaintiff also contributed ¥8,000,000 “upfront working capital” towards settling engineering service fees payable to local contractors in relation to the design and renovation of the proposed factory; and
(3)	The 2nd Plaintiff incurred expenditure totalling ¥76,000,000 in the purchase and installation of two additional paper recycling machines.

6.  The Plaintiffs further claim that by a letter dated 6 July 2006, Mr Kubota Susumu, a director of the Defendant, informed them that the Defendant was not going to perform its obligations under the Agreement.  The Plaintiffs accepted that repudiation. Hence they claim damages for breach of the Agreement, including loss of expenses incurred and future profits from the intended business.

The Agreement

7.  The Agreement is in English.  Recitals D to F state that:

“	D.	[The Defendant] and [the 2nd Plaintiff] are desirous of developing and carrying on the plasterboard recycling business in Japan (the “Recycling Business”).
	E.	[The 1st Plaintiff] is also desirous of participating in the Recycling Business.
	F.	In the premises, [the 1st Plaintiff, the 2nd Plaintiff] and [the Defendant] have agreed to enter into this Agreement to regulate their respective rights and obligations in launching this initial project and implementing the Recycling Business contemplated hereunder …”

8.  Clause 3(a) of the Agreement provides, inter alia, that the Defendant was to provide factory premises in Tokyo, for the installation of recycling equipment to be purchased by the 1^st Plaintiff and to obtain all necessary licences and approvals from local (ie Japanese) government authorities, and for supporting services relating to supply of materials and distribution of end-products.

9.  Clause 3(b) and (c) of the Agreement provide for obligations on the part of the 1^st and 2^nd Plaintiffs in relation to the acquisition and supply of the necessary machinery and licence, personnel and technical support for the operation of the factory and the business.

10.  Clause 12 of the Agreement stipulates that payments to be made between the parties by way of profits sharing would be calculated in Japanese Yen.

11.  It is thus reasonably clear that in terms of the performance of the Agreement, the major obligations are to be performed in Japan with little substantial connections with Hong Kong.

12.  Clause 27 is the clause most relied on by the Plaintiffs.  It provides as follows:

“	27.1	This Agreement shall be construed and governed in accordance with the laws of Hong Kong and the parties hereto submit to the non-exclusive jurisdiction of the courts of Hong Kong
	[there is no clause 27.2 and 27.3]
	27.4	Nothing contained in this Clause shall limit the right of any party to take any suit, action or proceedings arising under this Agreement against the other parties in any other court of competent jurisdiction, nor shall the taking of any suit, action or proceedings arising under this Agreement in any one or more jurisdictions preclude the taking of any suit, action or proceedings arising under this Agreement in any other jurisdiction, whether concurrently or not, to the extent permitted by the law of that jurisdiction.”

13.  Mr Robert Whitehead SC, leading Mr Steven Kwan on behalf of the Defendant, drew my attention to some curious features in the Agreement.  It was pointed out that the pages of the Agreement had not been stamped with any company chop or seal of the Defendant, as would be the customary practice of Japanese nationals in executing international contracts in non-Japanese language (according to affidavit evidence on this point).  In contrast, the GRI Contract was initialled on every page.

14.  To these curious features one might also add that Mr Kubota’s signature on the Agreement was not accompanied by any seal or chop of the Defendant, as one might expect in the case of someone signing on behalf of a Japanese corporation. It is noted that the signature of Mr Kaneko bore the seal of the 2^nd Plaintiff.

The Defendant’s challenge

15.  The applicable legal principles are not in dispute.  The Plaintiffs accept that the burden is on them to show:

(1)	that it has a good arguable case that its claim falls under one of the “jurisdictional gateways” under O 11 r 1(1),
(2)	that there is a serious issue to be tried on the merits, and
(3)	that the case is a proper one for the exercise of the court’s discretion to grant leave.

16.  As to jurisdiction, the Plaintiffs relied on RHC O 11, r 1(1)(d)(i), (iii) and (iv) in support of their application for leave to serve out:

“	1.	(1)	… service of a writ out of the jurisdiction is permissible with the leave of the Court if in the action begun by the writ –
			(d)	the claim is brought to … recover damages or obtain other relief in respect of the breach of a contract, being … a contract which –
				(i)	was made within the jurisdiction, or …
				(iii)	is by its terms, or by implication, governed by Hong Kong law, or
				(iv)	contains a term to the effect that the Court of First Instances shall have jurisdiction to hear and determine any action in respect of the contract;”

17.  The Defendant does not dispute that the Hong Kong courts have jurisdiction under the sub-rules relied upon.  Nor is it contended that the Plaintiffs’ case has no merits warranting proper judicial consideration. The Defendant’s main contention is that the Plaintiff has failed to show that Hong Kong is clearly and distinctly the forum conveniens so that the court should not exercise its jurisdiction.

18.  In the affidavits filed in support of the summons, other than relying on matters showing that the case had no or no substantial connection with Hong Kong, the Defendant did not make clear what were the defences it proposed to rely upon.  The identification of the proposed defences is of importance in an application like this because it is necessary for the court to know what are going to be the issues in dispute at trial, as explained by Recorder Geoffrey Ma SC (as he then was) in Rambas Marketing Co LLC v Chow Kam Fai David [2001] 3 HKC 250 at 261F-263H.

19.  Be that as it may, Mr Whitehead in his skeleton submissions identified the principal issues between the parties as follows:

(1)	whether Mr Kubota signed the Agreement, and
(2)	if he did, whether he was properly authorised to enter into the Agreement on behalf of the Defendant.

The evidence

20.  In summary, the Defendant’s evidence is that it had negotiations with the 2^nd Plaintiff but not with the 1^st Plaintiff or any other investor from outside Japan, save possibly for one possible introduction to a representative of the 1^st Plaintiff in Hong Kong.

21.  According to Mr Akiyama, the Defendant’s managing director, in the negotiations the Defendant was represented by Mr Hatakeyama, who is described as the Defendant’s owner, and Mr Akiyama, with Mr Hatakeyama taking the leading role. It would appear to be Mr Akiyama’s evidence that Mr Kubota, a director of the Defendant, was also involved. Their counterpart was Mr Kaneko of the 2^nd Plaintiff.

22.  It is not disputed that Mr Kubota was a director of the Defendant at the material time, but the Defendant claims that he had no authority to enter into the Agreement on behalf of the Defendant and there was no board minute empowering him to do so. At the moment there is no evidence from the Defendant or from Mr Kubota himself as to whether Mr Kubota had signed the Agreement, or if he did, the circumstances under which he did so.

23.  The Plaintiffs, on the other hand, relied on hearsay evidence adduced via their solicitor that various people from Hong Kong were “involved in the negotiations, preparation and execution of the [Agreement] on behalf of the 1^st Plaintiff, the 2^nd Plaintiff and the Defendant”. The persons representing the 1^st Plaintiff were:

(1)	Mr Cheng Ying Nam, the authorised representative of the 1st Plaintiff and an investor of the proposed business. He is a Hong Kong permanent resident living in Hong Kong.
(2)	Mr Robert Lee, an investor who is a Hong Kong permanent resident living and working in Hong Kong.  The evidence produced by the Defendant shows that Mr Lee is a partner of the Plaintiffs’ current solicitors; he speaks fluent Japanese and is qualified to practise law in Japan.
(3)	Mr Li Siu Ping, an investor. He is also a Hong Kong permanent resident living and working in Hong Kong.
(4)	Mr Robin Geoffrey Swaffield, also an investor and a Hong Kong permanent resident living and working in Hong Kong.

24.  However, the Plaintiffs’ affidavits have not explained what were the roles or involvements of these individuals in the negotiations.

25.  There is one aspect of the evidence which I should mention.  The letter of repudiation dated 6 July 2006 relied on by the Plaintiffs is written in Japanese.  The translation of that document reads as follows:

“	Dear President Mr Kaneko,
	….
	Since last year, our company and [the 2nd Plaintiff] have been promoting waste plasterboard recycle business as well as the production of ceramics from release paper attached to plasterboard… As a recycling business running company, we had high expectation of it.
	However, for the Japanese and English contract versions, there is difference for the company name of the agent, and the conditions of making profit are not practical for a business, therefore we conclude that it is not possible to complete this contract.
	We are very grateful for your effort on this business till now. To our company, we have seen the greatness of Denmark machine, and we understood the significance of promoting the business. Therefore, shall the current point of view be organized, issues and situation in Japan be clarified, cooperation based on relations of trust and help be gained, we are willing to discuss again.
	…”

26.  It would therefore appear from this letter that there are two versions of the Agreement, one in English and one in Japanese.  However, neither side mentioned anything about the existence of a Japanese version, or, if there is no such document, explained what was the “difference for the company name of the agent” referred to in the Defendant’s letter.

Parties’ contentions

27.  Mr Whitehead submitted that this case cries out for adjudication in Japan, as virtually everything to be done under the Agreement (if it is binding in the first place) is to be performed in Japan. He submitted that in the circumstances of this case, the location of witnesses and languages do not play a major role in the court’s consideration whether Hong Kong is the forum conveniens.  There are no factors pointing to Hong Kong being the more appropriate forum than the courts in Japan, where the Defendant is located and with which the case has far more substantial connections.

28.  On the other hand, Mr Whitehead submitted that the duties of Mr Kubota as director is a matter of internal management of the Defendant, which is governed by the Japanese law, being the law of the place of incorporation:Banco de Bilbao v Sancha [1938] 2 KB 176, Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] AC 853 and Presentationes Musicales SA v Secunda [1994] Ch 271. There are thus strong reasons to have this matter resolved by the Japanese courts.

29.  Mr Brian Wong, on behalf of the Plaintiffs, contended that this court should exercise its discretion in the Plaintiffs’ favour.  Mr Wong mainly relied on the following factors:

(1)	The Agreement is in English.  This, coupled with an entire agreement clause, shows the parties’ intention that their rights and obligations should be defined in English. Since English is an official language here but not in Japan, it is more appropriate to have the dispute resolved here.
(2)	The location of the witnesses and documents, which are all accessible in Hong Kong.
(3)	The negotiation, signing and performance of the Agreement thus far had all taken place in Hong Kong. In relation to performance, Mr Wong relied on the payment of the sums pleaded in the Statement of Claim, which were made with funds originating from Hong Kong.
(4)	The express choice of law and jurisdiction provision in clause 27.1, indicating that the parties intend that their disputes should be adjudicated in Hong Kong under Hong Kong law.

30.  Mr Wong also contended that in relation to the capacity of Mr Kubota, the “modern approach” is to apply the proper law (or putative proper law) of the contract. Counsel referred to a number of authorities in support of that proposition, including Cheshire and North’s Private International Law, 13^th edn (1999) pp 5292-594; Nygh, Autonomy in International Contracts (1999), pp 124-126; Charron v Montreal Trust Co (1958) 15 DLR (2d) 240; Bodley Head Ltd v Flegon [1972] 1 WLR 680.

Discussion

(1) Witnesses and language

31.  The tribunal trying this case is likely to require the testimony of the persons identified by the parties in order to resolve the dispute over the negotiation of the Agreement and Mr Kubota’s authority to sign the Agreement.

32.  In my view, the location and availability of the witnesses is a neutral factor in this case.  The potential witnesses are easily available in Hong Kong or Japan.

33.  On the basis of the evidence before me, it would seem that most, if not all, of the negotiations would have been undertaken in Japanese: the representatives of the 2^nd Plaintiff and the Defendant are all Japanese, while one of the investors said to be behind the 1^st Plaintiff speaks Japanese. 

34.  In my view, the Japanese courts are clearly in a more advantageous position to receive the witnesses’ evidence “first hand” in their own language, which could be important to the issue of Mr Kubota’s authority.

35.  Another area in which the Japanese courts enjoy advantage over the Hong Kong courts is in relation to the customary practice of executing documents as contended by the Defendant.  It is a factor to be taken into account, although not a very weighty one.

36.  I do not consider the fact that payments have been or are to be made from Hong Kong to be a weighty factor.  The funding could have come from anywhere in the world, and is of little significance one way or the other.

37.  At the moment the evidence does not indicate what documents are likely to be involved, and the language in which the relevant documents are written.

(2) Questions of law

38.  In relation to Mr Kubota’s authority to sign the Agreement, I disagree with Mr Wong that the issue is one of capacity.

39.  In my view the question is whether Mr Kubota had authority of the Defendant to execute the Agreement, and whether the Plaintiffs had any reason to believe that he had authority.  If any question of law arises on Mr Kubota’s authority, that question would have to be resolved by reference to the law of incorporation and the constitution of the Defendant: see Presentationes Musicales SA v Secunda [1994] Ch 271 (CA) at 282H-283A per Roch LJ; see also Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2) [1967] AC 853 at 919G (Lord Reid) and 938G-939A (Lord Guest). That would point to Japanese law.

40.  On the other hand, if any issue should arise as to whether the Plaintiffs were entitled to rely on Mr Kubota’s apparent or implied authority so as to bind the Defendant to the Agreement, the question may have to be decided by reference to the putative proper law of the contract, ie, Hong Kong law: see Dicey, Morris & Collins, The Conflict of Laws, 14^th edn (2006) §§33R-428, 33-429, 33-432 to 33-438.

41.  However, the above distinction is mostly of academic interest in this case, because there is no evidence that there is any material difference between the two systems of law relevant to any issue in dispute. Nor is there any suggestion that there may be any difficulty in either the courts of Hong Kong or Japan to apply the other system of law.

42.  Mr Wong understandably placed reliance on the express choice of Hong Kong law as the proper law. In my judgment, that fact has little significance in the circumstances of this case. As I have already mentioned above, there is no evidence before me that there is any material difference between any applicable principles under Hong Kong law and Japanese law.

(3) Place of performance and evidence on quantum

43.  The place of performance of the Agreement is likely to be of considerable importance, particular in relation to the question of quantum should the Defendant be found to be liable for breach of the Agreement.

44.  The claim for wasted expenditure is relatively straight forward.  The claim for loss of bargain, however, will largely depend on the probability of a successful enterprise and the likely profits of the business.  Since the business is to be carried out in Japan, the evidence on that issue is likely to have far more significant connections with Japan. It seems to me that the Japanese court should be much better placed than the Hong Kong court to evaluate that evidence.

(4) The non-exclusive jurisdiction clause

45.  It is therefore quite clear that but for the non-exclusive jurisdiction clause, Japan would be the more appropriate forum to determine this case.  At any rate, it cannot be said that Hong Kong is clearly and distinctly more appropriate than Japan.

46.  The major issue for determination is whether the express choice of Hong Kong as a non-exclusive jurisdiction “tips the scale” in favour of the Plaintiffs.

47.  The Defendant’s skeleton submissions made the point that the non-exclusive jurisdiction clause “is only a basic indication of availability of a particular forum and the Hong Kong courts have refused to give great weight to such clauses in forum conveniens debates”. Counsel cited the judgments of Stone J in T & K Electronics Ltd v Tai Ping Insurance Co Ltd [1998] 1 HKLRD 172 at 177G-178A and the Court of Appeal in Yu Lap Man v Good First Investment Ltd [1999] 1 HKC 622 at 627D-628D in support of that submission.

48.  In his skeleton submissions, Mr Wong argued that the court should respect the autonomy of the contracting parties and should not ignore the parties’ choice easily. No authority was cited in support of that submission.

49.  At the hearing, counsel’s attention was drawn to commentaries on the effect of a non-exclusive jurisdiction clause in the current edition of Dicey & Morris(at §12-093)and a number of English authorities, including Marubeni Hong Kong and South China Ltd v Mongolian Government [2002] 2 All ER (Comm) 873 at §63 (Aikens J); S & W Berisford plc v New Hampshire Insurance Co [1990] 2 QB 631 at 645E-646B (Hobhouse J) and British Aerospace plc v Dee Howard Co [1993] 1 Lloyd’s Rep 368 at 375-377 (Waller J).

50.  In Marubeni, Aikens J said this:

“	63.	How does the court approach the issue of whether England is the proper place to try the claim when, as I must assume is so here, the parties have agreed to submit disputes concerning the relevant contract for determination by the English Courts? I agree with the view stated in a number of cases at first instance that an agreement making England either the exclusive forum or an agreed forum for the resolution of disputes relating to the contract creates a strong prima facie case that England is the appropriate forum and so is the proper place to try the claim. The cases hold that this principle applies whether the jurisdiction clause is an exclusive or non-exclusive one. See: S & W Beresford Plc v New Hampshire Insurance co [1990] 1 Lloyd's Rep 254 at 463 per Hobhouse J; British Aerospace Plc v Dee Howard Co [1993] 1 Lloyd's Rep 368 at 375 to 377 per Waller J, Mercury Communications Ltd v Communications Telesystems International [1999] 2 All ER (Comm) 33 at 41 to 42 per Moore-Bick J; JP Morgan Securities Asia Private v Malaysian Newsprint Industries Sdn. Bhd [2001] 2 Lloyd's Rep 41 at paragraphs 41 to 54 per Judge Chambers QC sitting as a Deputy High Court Judge in the commercial court. The approach in these cases is consistent with the view of Staughton LJ, albeit stated by the way and in relation to the old Order 11, in Attock Cement Co Ltd v Romanian Bank for Foreign Trade [1989] 1 WLR 1147 at 1161.
	64.	If this is the starting point, then the Defendant will generally have to demonstrate "strong reason" why England is not, in fact, the proper place to try the claim. … In a case where the Claimant is seeking permission to serve out of the jurisdiction and there is an English jurisdiction clause, the court still has to be satisfied that the Claimant has fulfilled CPR Pt 6.21(2A). The court will still have to consider all the circumstances of the case before reaching a decision. But one of the most important factors it has to bear in mind is that the parties have effectively agreed that England is the proper place to try cases. That is why the defendant will have to show "strong reason" why, despite the agreement to English jurisdiction, England is not the proper place to try the claim. In these circumstances the usual discussion of Spiliada factors, such as the connection of the parties with this or that jurisdiction; the whereabouts of witnesses and documents; the prospects for a speedy trial and the putative proper law of the agreement in dispute and so forth, are all far less powerful than they would be without the agreement as to jurisdiction. (See: the British Aerospace case at page 376 per Waller J; the Mercury Communications case at page 41 per Moore-Bick J).
	65.	In the British Aerospace case Waller J suggested (at page 376) that the party asserting that England is not the proper place to try the claim has to demonstrate some factor that could not have been foreseen at the time that the contract was concluded in order to displace the bargain that they had made, ie. that they would not object to the jurisdiction of the English Court. Moore-Bick J adopted the same approach in the Mercury Communications case: page 41. I agree that this may be a good reason for not granting permission, although I think that it will not be determinative either way.” (My emphasis)

51.  There are other first instance English cases following that approach: see Burrows v Jamaica Private Power Co Ltd [2002] 1 All ER (Comm) 374 at §9 (Moore-Bick J); Import Export Metro Ltd v Compania Sud Americana de Vapores SA [2003] 1 All ER (Comm) 703 at §§ 13-15 (Gross J) and Breams Trustees Ltd v Upstream Downstream Simulation Services Inc [2004] EWHC 211 (Ch) at §§19-28  (Patten J).

52.  Moreover, this more “hardened” approach (to use the words of Patten J in Breams at §27) to enforcing jurisdiction clauses has been adopted in decisions of the English Court of Appeal: see Ace Insurance SA-NV v Zurich Insurance Co [2001] 1 All ER (Comm) 802 at §62 (Rix LJ, applying British Aerospace) and Sabah Shipyard (Pakistan) Ltd v Islamic Republic of Pakistan [2003] 2 Lloyd’s Rep 571 at §§32-37 (where Waller LJ in the Court of Appeal adopted his approach in the British Aerospace case).

53.  As I see it, the main effects of these cases in the present context are that:

(1)	There is little practical distinction between an exclusive jurisdiction clause and a non-exclusive one: the difference is that in the former, the clause binds both sides whereas in the latter, it only binds the defendant: see JP Morgan at §43.
(2)	Effectively, the burden is reversed so that it is up to the defendant to show why the contractually chosen forum is inappropriate, and the burden to reverse the “strong prima facie case” is a heavy one: see Ace Insurance at §62 and Breams at §§12, 18, 28.

54.  In response to those authorities, Mr Whitehead referred me to a commentary in Johnston, The Conflict of Laws in Hong Kong (2005) at §3.083 where, in the context of commenting on the principles to be borne in mind in drafting a jurisdiction clause, the learned author observed a divergence of judicial approaches between the English and Hong Kong courts.  The learned author’s view is that:

“

It is respectfully suggested that the Hong Kong authorities on this point [T & K Electronics, Yu Man Lap, Ho Siu Poi v Yue Sheng Finance Ltd [2003] 1 HKC 621 and Hwoo Huang Linda v Fu Being San HCA 4888/2001] are preferable in principle to the English ones: the matter is ultimately one of interpretation and, as such, it is simply wrong to interpret the agreement of parties to non-exclusive jurisdiction as being practically equivalent to an exclusive jurisdiction agreement. The plain meaning of the words is to draw a distinction between the existence and exercise of jurisdiction…”

55.  T & K Electronics is a stay of proceedings for forum non conveniens case. The main issue was whether the foreign jurisdiction clause in that case was an exclusive one.  Stone J held that the clause was a non-exclusive jurisdiction clause, and held that the existence of such a clause was “simply but one factor to be placed into the discretionary ‘mix’”. In so holding, his Lordship rejected an argument raised (but not pressed) that the presence of a non-exclusive jurisdiction clause created a strong prima facie case in favour of the chosen jurisdiction, such that the burden of proof is reversed: see 177D-178A.

56.  Recently, Fung J in China Reit Ltd v Su Ping, HCA 1831/2007, 26.03.07, at §30 followed T & K Electronics without discussion.

57.  I do not consider the Yu Lap Man case to be of particular assistance on the issue before me as the main issue in that case was the proper construction of a forum clause which the court held to be an exclusive one. Nevertheless, it should be noted that Majo JA at 627H-628D adopted as the correct approach to construing jurisdiction clauses Travers J’s dicta in Contractors Ltd v MTE Control Gear Ltd [1964] SASR 47:

“

The second part of the clause is what has been described in argument as ‘submission to the High Court [of England]’ … As I read the second part of the clause it does not require any litigant of necessity to refrain from proceeding in a Court other than the High Court of Justice in England, but it requires a submission to the jurisdiction of that Court. The expression ‘submission to the jurisdiction’ seems to me to be apt to describe a situation which arises after litigation has been commenced in the High Court of Justice in England. No such litigation has been commenced there and I do not think the clause extends to require either of the parties to refrain from commencing proceedings in the Supreme Court of South Australia if they so desire. I do not think the clause can be read as putting any higher duty upon the parties than a duty to refrain from objecting to the jurisdiction of the High Court of justice if any proceedings are taken there.” (My emphasis)

58.  Mr Whitehead submitted that the underlined sentence should be understood to mean that the contracting parties cannot dispute or deny that the chosen forum has jurisdiction. In the present case, the Defendant is not denying the Hong Kong courts’ jurisdiction; it is attempting to persuade this court not to exercise its undoubted jurisdiction.  This approach has the support of an authority cited by Mr Wong: Joseph, Jurisdiction and Arbitration Agreements and Their Enforcement (2005) at §4.04, citing Royal Bank of Canada v Rabobank [2004] 1 Lloyd’s Rep 471 (CA) at §4 (see also §§21-23). I agree with Mr Whitehead on this point.

59.  In Linda Hwoo, the forum clause in favour of “the court inside the USA” was held to be non-exclusive in nature, and Deputy Judge Reyes SC (as he then was) without any discussion on the relevant principles held that on the facts of that case the clause could not be a weighty indicator towards the US.

60.  Ho Siu Poi v Yue Sheng Finance Ltd [2003] 1 HKC 621 does not appear to be of particular relevance on the issue.

61.  More recently in Peregrine Fixed Income Ltd v JP Morgan Chase Bank [2005] 3 HKLRD 1, Stone J was again faced with an argument mounted on the basis of the Mercury Communications and JP Morgan cases that a non-exclusive jurisdiction clause was entitled to “considerable weight” in support of a forum non conveniens stay.  Stone J said, at §§52 and 54 of the judgment, that:

“	52.	It is clear that, in contrast to the effect of an exclusive jurisdiction clause, a non-exclusive jurisdiction clause does not change the burden, which remains on the defendant, but equally the presence of such a clause is not something to which little weight should be attached in forming a conclusion as to the appropriateness of the foreign forum to which the action is sought to be stayed.  The clause in this case represents a contractual agreement by the plaintiff to submit to the jurisdiction of the New York court should an action be brought against it in New York, and to that degree the parties must be taken to have recognised that New York cannot be characterised as other than an appropriate forum. As Mr Shieh [counsel for the defendant] emphasized, the fact that [the plaintiff] did envisage proceedings being brought in New York, and did expressly waive any objection to that forum must be persuasive factors for the court to take into account in considering the discretionary “mix”…
	54.	Nevertheless, in my view there can be no doubt but that the existence of the non-exclusive jurisdiction clause, coupled with the express choice of law provisions as to the applicability of New York law as the governing law of the [agreement], constitute significant connecting factors which point in favour of the [New York court] as the natural and appropriate forum for the resolution of this dispute.” (My emphasis)

62.  I did not have the benefit of any citation of Australian or other commonwealth authorities on this question.  I note that in a recent decision of the Federal Court of Australia, French J considered the existence of a non-exclusive jurisdiction to be a “powerful factor” in determining whether to allow service out of jurisdiction: see Carnegie Corp v Pursuit Dynamic Plc 2007 FCA 1010, 24.07.07, at §61.  I am, however, in no position to say whether this reflects the prevailing jurisprudence in Australia. Since neither counsel have made submissions on Australian and commonwealth authorities, I propose to confine myself to the English and local cases drawn to my attention.

63.  Having considered all the authorities referred to in the materials identified above, I would simply state my view as follows.

64.  In my judgment, the fact that the parties have expressly agreed to submit to a jurisdiction indicates that they intend that jurisdiction to be an appropriate forum for the resolution of their disputes.  That contractual expression of intent must be given due weight. What weight should be given must depend on the proper construction of the clause and the circumstances of the case.  In my view, there is and must be a distinction between an exclusive jurisdiction clause and a non-exclusive jurisdiction clause.  In the former case, the parties have agreed that the chosen forum is the only appropriate one, hence it is right that that choice must be respected unless there are very good reasons not to do so.  In the case of a non-exclusive jurisdiction clause, the parties’ choice must still be respected but there may be a number of equally appropriate jurisdictions, or some available jurisdictions may be clearly more appropriate than others, depending on the circumstances of the case.  It is therefore a relevant factor to be taken into account, and, depending on the terms of the clause and the relevant circumstances of the case, may even be a very significant factor as in the Peregrine Fixed Income case.  But it is in my view wrong to proceed with any preconceived notion that a non-exclusive jurisdiction clause in favour of Hong Kong crowns this court as the “primary forum” which can only be displaced with “strong” or “overwhelming” (or whatever label one may see fit to apply) grounds. As recognised in the English cases referred to above, such an approach effectively reverses the burden which is on the plaintiff to establish that Hong Kong is clearly the more appropriate forum.

65.  Take the instant case. Had there been no jurisdiction agreement in favour of Hong Kong, the most appropriate jurisdiction would undoubtedly be Japan, where the Defendant is found and where most of the significant obligations under the Agreement are to be performed. But for the submission to jurisdiction in clause 27.1, it can hardly be said that Hong Kong is clearly and distinctly the more appropriate forum than Japan to resolve this dispute.  It may well be the case that it is because the Agreement had little connection with Hong Kong that the parties had to make an express choice of non-exclusive forum in favour of Hong Kong so as to give the Hong Kong courts jurisdiction under O 11 r 1 (1). Moreover, the parties expressly recognise in clause 27.4 that there are other jurisdictions appropriate for the determination of their disputes as well. It is therefore difficult to accept that by virtue of the non-jurisdiction clause Hong Kong should somehow be elevated as the prima facie more appropriate forum.

66.  In those circumstances, I do not regard it to be right to start from the premise that Hong Kong is prima facie the most appropriate forum which cannot be displaced without strong grounds.  All that one can say is that Hong Kong is an appropriate forum, but not necessarily the most appropriate forum.

67.  In my judgment, while giving due weight to the parties’ recognition of Hong Kong as an appropriate forum, that factor does not outweigh the overwhelming factors in favour of the courts of Japan.

68.  In case I am wrong on my view as to the force to be given to the non-exclusive jurisdiction clause, so that it is a strong prima facie factor in favour of the Plaintiffs, I am still of the view that the factors in favour of Japan are so much stronger that the Plaintiffs have failed to demonstrate that Hong Kong is clearly and distinctly the more appropriate forum for the resolution of this dispute.

69.  For these reasons, I would, in the exercise of my discretion, set aside the leave for service out and the subsequent service of the writ on the Defendant out of jurisdiction.

70.  I should add that I have come to the above conclusions notwithstanding the Defendant’s non-admission of the Agreement.  In my view, given that all that the court has to be satisfied at this stage is that there is a good arguable case that the jurisdictional grounds under O 11 r 1(1) have been made out, one must proceed on the basis that the Plaintiffs have shown a good arguable case on the existence of a binding Agreement.

Conclusion

71.  I accede to the Defendant’s application and set aside the order of Master Kwan granting leave to serve the writ of summons on the Defendant out of jurisdiction and the service of the writ on the Defendant.

72.  I also make a costs order nisi that the Defendant shall have its costs, to be taxed if not agreed, with certificate for two counsel.