LG ELECTRONICS HONG KONG LTD. v. BANK OF TAIWAN

CACV 3153/2001

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 3153 OF 2001

(ON APPEAL FROM HCCL NO. 7 OF 2001)

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REASONS FOR JUDGMENT

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Hon Le Pichon JA:

1. This is an appeal from the order made by Kwan J dated 21 September 2001 dismissing the defendant's summons dated 7 March 2001 for an order that the court had no jurisdiction over the defendant and, in the alternative, that all further proceedings be stayed on the ground of forum non conveniens. By amendment, the defendant also sought a declaration that the writ had not been duly served on it. At the hearing the appeal was dismissed with costs for reasons to be given later. This we now do.

Background facts

2. The plaintiff is a company incorporated in Hong Kong engaged in the sale of electronic products. The defendant is a fully licensed bank registered in Hong Kong under the Banking Ordinance having its head office in Taiwan with a branch in Hong Kong which is an overseas company registered under Part XI of the Companies Ordinance, Cap. 32. The plaintiff contracted to sell certain goods i.e. a quantity of 17-inch colour display tubes with deflection to Royal Information Electronics Company Limited ("Royal"), payment for which was to be made by drafts at sight drawn on the defendant, Panchiao branch under an irrevocable letter of credit. On 31 August 2000, the defendant opened an irrevocable letter of credit no. 0AEER 22702801025 at their Panchiao branch in favour of the plaintiff as beneficiary. The letter of credit contained the following terms:

(1) the expiration date of the letter of credit was 14 October;

(2) the latest date of shipment to Hong Kong was 23 September 2000;

(3) the documents required were -

(a) commercial invoice in quadruplicate manually signed;

(b) cargo receipt issued and signed by applicant;

(c) packing list in triplicate; and

(4) the documents had to be presented for negotiation within 21 days after the issue of the cargo receipt but not later than the validity of the letter of credit.

The letter of credit was issued pursuant to an application which included a condition that the Uniform Customs and Practice ("UCP") for Documentary Credits in effect on the date of issuance of the letter of credit would apply. It was common ground that the 1993 Revision, ICC Publication No. 500 ("UCP500") governed the letter of credit.

3. On 12 September 2000, HSBC as the collecting bank presented the bills of exchange together with the three documents required for presentation to the Panchiao branch. The commercial invoice submitted showed the delivery date to be 6 September 2000. On 21 September 2000, the Panchiao branch advised HSBC of three alleged discrepancies as follows:

"1. COMMERCIAL INVOICE AND PACKING LIST DESCRIPTION OF GOODS AS 17 FEET COLOR DISPLAY TUBE WITH DEFLECTION YOKE M41LFQ903X05 NOT COMPLIED WITH LC STIPULATION

2. DRAFT COMMERCIAL INVOICE AND PACKING LIST WERE SHOWN LC NO DIFFER FROM CARGO RECEIPT

3. CARGO RECEIPT STAMPED INSTEAD OF SIGNED BY APPLICANT"

On 27 September, HSBC replied to the effect that the first two discrepancies mentioned were immaterial and "obvious typing errors". Further, it did not agree with the defendant's stance that the cargo receipt submitted had to be manually signed.

4. On the same day, HSBC presented a revised set of documents in place of those presented on 12 September. The Panchiao branch also found these documents unacceptable and on 12 October 2000, HSBC presented yet another full set of documents to the Panchiao branch in which the original delivery date had been deleted from both the commercial invoice and the packing list and a new date of 23 September 2000 substituted. This was also the delivery date stated in the cargo receipt dated 9 October 2000 manually signed by a Mr Huang on behalf of Royal. The Panchiao branch refused to pay on the basis that there were discrepancies. One of the issues taken was that the commercial invoice and the packing list had been 'forged'. Further correspondence ensued. The Panchiao branch alleged that the cargo receipt had also been forged.

This appeal

5. The judge ruled against the defendant on all the issues raised, holding that the writ had been duly served on the defendant and that the court had jurisdiction over the defendant. She also refused to grant a stay on the ground of forum non conveniens.

6. This appeal is limited to the question whether the judge's refusal to stay the Hong Kong proceedings on the basis of forum non conveniens was correct.

7. The judge applied the principles set out in Spiliada Maritime Corp. v Cansulex Ltd [1987] 1AC 460 at 476C-478E. It is common ground that those are the applicable principles.

8. Because the defendant has now abandoned its challenge to the court's jurisdiction, it is no longer disputed that jurisdiction has been founded in Hong Kong as of right. As Lord Goff of Chieveley observed in Spiliada (at 477C-E):

"... there are cases where no particular forum can be described as the natural forum for the trial of the action. Such cases are particularly likely to occur in commercial disputes, where there can be pointers to a number of different jurisdictions .... I can see no reason why the English court should not refuse to grant a stay in such a case, where jurisdiction has been founded as of right. It is significant that, in all the leading English cases where a stay has been granted, there has been another clearly more appropriate forum .... In my opinion, the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum. In this way, proper regard is paid to the fact that jurisdiction has been founded in England as of right ..." (emphasis added)

The burden on the defendant is thus twofold: first, it has to demonstrate that Hong Kong is not the appropriate forum and second, it has to demonstrate that there is a distinctly more appropriate forum.

9. As the judge correctly identified, the issue in this case is whether the documents presented for payment complied with the terms of the letter of credit which was governed by UCP500. As noted above, the defendant's refusal to pay against the documents first presented was grounded on three alleged discrepancies. This court intimated to Mr Chan, counsel for the defendant, that the first two alleged discrepancies were unsustainable. Mr Chan effectively conceded as much. As regards the third alleged discrepancy, no evidence had been adduced to support the contention that the Hong Kong court which has jurisdiction over the defendant is not the appropriate forum for determining the question whether under UCP500 the cargo receipt had to be manually signed.

10. The factors relied on by counsel for the defendant i.e. the place of performance, the situation of the debt and the applicable law being Taiwan law do not address the question of Hong Kong not being the appropriate forum. Nor do I see the relevance of the forgery allegation which does not even arise unless and until one gets to the third set of documents presented. It is a total red herring since it is not apparent why Hong Kong is not an appropriate jurisdiction for determining such an issue.

11. As this appeal concerns the exercise of a judicial discretion, unless it can be shown that the judge exercised her discretion under a mistake of law or in disregard of principle or had misunderstood the evidence, it is doomed to fail. The defendant has not begun to demonstrate that the judge had exercised her discretion wrongly. That being so, the appeal must be dismissed.

12. I would only reiterate the sentiments expressed during the hearing. The defence appears to be wholly lacking in substance and merit. A re-assessment by the defendant of its position at this stage may not be amiss.

Hon Rogers VP:

13. I agree.