The Hong Kong High Court issued a Judgment on 24/11/2015 dealing with a mandatory injunction and specific performance in respect of a letter of indemnity in connection with a delivery of cargo without production of the original bills of lading. [HCCL 12/2015]
This was an application made by Loyal Base Development (“LB”) to discharge an ex parte mandatory injunction order (“Order”) made by Deputy High Court Judge Marlene Ng on 26/8/2015. Under the Order, LB was required to provide by 31/8/2015 (“Deadline”) “such security and/or bail , and/or take all steps as are required to provide for the release from arrest” of MV KSL China (“Vessel”), “or to replace any security provided for the purpose of release of (the Vessel) from arrest”. The Vessel had been arrested on 11/8/2015 by order of the Qingdao Maritime Court (“Qingdao Court”) on the Mainland, in proceedings instituted by the Bank of China (“Bank”) against the owners or charterers of the Vessel. On 28/8/2015, which was the return day of the application by Cargill International Trading (“Cargill”) for continuation of the Order, the Deadline for LB to provide security was extended to 7/9/2015. On 2/9/2015, LB applied by summons to set aside the Order (“Summons”), on the ground of material non-disclosure. On 4/9/2015, at the hearing of the Summons, the application for discharge was adjourned, and the Deadline under the Order was further extended until 7 days after the determination of the Summons.
The Order was made on the basis of the claim made by Cargill for a final mandatory injunction and/or an order for specific performance under and in respect of a letter of indemnity issued by LB to Cargill on 11/9/2014 (“LOI”).
Under a contract dated 2/9/2014 (“Sale Contract”), Cargill had agreed to sell and LB had agreed to purchase a cargo of iron ore products (“Cargo”), to be shipped from Australia to China. Cargill had purchased the Cargo from a company which was related to Fortescue Metals (“FM”). FM chartered the Vessel from the owners of the Vessel, for carriage of the Cargo to China. The Uploading Conditions of the Sale Contract provide as follows (under paragraph (t)):
“In the event that original bills of lading are unavailable at the discharging port(s), the Seller shall endeavor to arrange the discharge of the cargo into the custody of the port or the carrier’s/shipowner’s agents against the issuance of a letter of indemnity by the Buyer in a format acceptable to the carrier/shipowner. Provided however that the cargo shall be released to the Buyer only against presentation of original bills of lading or a bank guarantee issued by the LC issuing bank in a format acceptable to the Seller and the carrier/shipowner.”
The Cargo was loaded on board the Vessel, and 2 bills of lading dated 1/9/2014 were issued with respect to the carriage of the Cargo (“Bills”). Pursuant to the request made by LB to Cargill to provide for discharge of the Cargo and its delivery to MSN Shipping Agency (“MSN”), without production of the original Bills, LB issued the LOI on 11 September. Clause 3 of the LOI issued to Cargill provides as follows:
“The above (Cargo) was shipped on the above ship by (FM) and consigned TO ORDER for delivery at the port of MAIN PORT(S), CHINA but the bills of lading have not arrived and we, (LB), hereby request you to deliver the (Cargo) to MSN or to such party as you believe to be or represent (MSN) or to be acting on behalf of (MSN) at RIZHAO PORT, CHINA without production of the original bills of lading. In consideration of your complying with our request, we hereby agree as follows:
To indemnify you, your servants, and agents and to hold all of you harmless in respect of any liability, loss, damage or expense of whatsoever nature which you may sustain by reason of delivering the cargo in accordance with our request.
In the event of any proceedings being commenced against you or any of your servants or agents in connection with the delivery of the cargo as aforesaid, to provide you or them on demand with sufficient funds to defend the same.
If, in connection with the delivery of the cargo as requested, the ship, or any other ship or property in the same or associated ownership, management or control, should be arrested or detained or should the arrest or detention thereof be threatened, or should there be any interference in the use or trading of the vessel (whether by virtue of a caveat being entered on the ship’s registry or otherwise howsoever), to provide on demand such bail or other security as may be required to prevent such arrest or detention or to secure the release of such ship or property or to remove such interference and to indemnify you in respect of any liability, loss, damage or expense caused by such arrest or detention or threatened arrest or detention or such interference, whether or not such arrest or detention or threatened arrest or detention or such interference may be justified. …
This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of Justice of England.” (Emphasis supplied)
Having received the LOI from LB, Cargill also issued a letter of indemnity to FM (“Cargill LOI”) and requested FM to agree to the delivery of the Cargo without production of the original Bills. The Cargill LOI was back to back in terms with LB’s LOI. In turn, FM issued its own letter of indemnity to the owners of the Vessel. In the interim, LB opened a letter of credit in favor of Cargill for payment of the price for the Cargo under the Sale Contract. On 11/9/2014, Cargill submitted documents in accordance with the terms of the letter of credit, which documents included the original Bills. The Vessel arrived at the discharge port on 15/9/2014. Discharge was completed on 17/9/2014 and the Cargo was released to MSN. The Cargo was ultimately released from the port without production of the original Bills.
About a year later, on 11/8/2015, the Bank obtained an order from the Qingdao Maritime Court for the arrest of the Vessel. The Bank claimed that it was the lawful holder of the Bills, which was entitled to take delivery of the Cargo, but that the Cargo had been wrongly released without the original Bills in the Bank’s possession. On 14/8/2015, FM notified Cargill of the arrest of the Vessel and demanded that Cargill should provide security of US $9.3 million in order to allow for the release of the Vessel. On the same day, Cargill demanded LB for its provision of bail or other security for the release of the Vessel. Not having received any response from LB, Cargill gave notice to LB on 24/8/2015 that unless security was provided by LB by 25/8/2015, Cargill would apply to the Court for a mandatory injunction. A Writ was issued on 25/8/2015. On 26/8/2015, Cargill purported to give notice to LB at 5:20pm that it was applying to the Court for ex parte relief. The Order was obtained on that day, in the absence of LB.
LB’s application for discharge of the Order was on the grounds that:
there was no urgency for the ex parte Order on 26/8/2015, Cargill having delayed its application for the Order, when the Vessel had been arrested on 11/8/2015;
Cargill misled the Court that LB’s obligation under the LOI was immediately engaged upon the arrest of the Vessel;
Cargill had misled the Court that the Bank’s arrest of the Vessel was solely based on the delivery of the Cargo without production of the original Bills, when there were issues as to whether the Bank was the lawful holder of the Bills, and as to the true nature of the Bank’s claims;
Cargill had failed to disclose to the Court that it had arranged for security to be provided for the release of the Vessel, which release took place on 31/8/2015.
Applicable legal principles
In the context of discharging an ex parte order on the ground of material non-disclosure, the relevant legal principles are not in dispute. Material facts are those which are material to the judge’s determination of the ex parte application when it was made. Materiality is to be decided by the court, and not by the assessment of the applicant or his legal advisers. The applicant has the duty to make proper inquiries before making the application and the duty of disclosure applies not only to material facts as known to the applicant, but also to any additional facts which the applicant would have known if he had made such proper inquiries. The extent of the necessary inquiries to be made depend on all the circumstances of the case, including the nature of the case which the applicant is making, the order for which application is made, the probable effect of the order on the defendant, and the degree of legitimate urgency and the time available for making inquiries. (Brink’s Mat Ltd v Elcombe [1988] 1 WLR 1350, Bank Mellat v Nikpour [1985] FSR 87).
If material non-disclosure is established, the court will be “astute to ensure that a plaintiff who obtains [an ex parte injunction] without full disclosure… is deprived of any advantage he may have derived by that breach of duty” (per Donaldson LJ in Bank Mellat v Nikpour [1985] FSR 87, at 91). Whether the fact not disclosed is of sufficient materiality to justify or require immediate discharge of the order without examination of the merits depends on the importance of the fact to the issues which were to be decided by the judge on the application. The answer to the question whether the non-disclosure was innocent, in the sense that the fact was not known to the applicant or that its relevance was not perceived, is an important consideration but not decisive by reason of the duty on the applicant to make all proper inquiries and to give careful consideration to the case being presented.
In the present case, Cargill sought a mandatory injunction for LB to comply with its obligations under the LOI. The parties did not dispute that Cargill had to establish a strong prima facie case, and that the Court had to be satisfied to “a high degree of assurance” that at trial, it would appear that the mandatory injunction was rightly granted (TKI Limited v New Happy Limited [1995] 1 HKC 551). As in any case for the grant of interim injunctions, the Court has to consider whether damages would be an adequate remedy and where the balance of convenience lies between the parties (American Cyanamid Co Ltd v Ethicon Ltd [1975] AC 396).
Cargill highlighted that where LB did not have an arguable defence, the question of balance of convenience did not arise (Yeko Trading Ltd v Chow Sai Cheong Tony [2000] 2 HKC 612). Cargill also emphasized that the LOI given by LB to Cargill, and by Cargill to FM up the chain to the owners, were in the standard form used in the shipping industry and were commonplace in international trade. It is common for ship owners to be asked to deliver the cargo to the ultimate consignee without production of the documents of title or the original bills of lading. Typically in such cases, the shipowner is offered, and accepts, an indemnity in respect of the consequences of compliance with such request. The practice is clearly set out in The Jag Ravi [2012] 2 All ER (Comm) 707 at 709-710.
There are clear authorities to the effect that specific performance is an appropriate remedy for letters of indemnity given in cases which provide for the consequences of cargo being discharged without production of the original bills, on the basis that damages would not be an adequate remedy for the indemnified, and that it would be inequitable not to give effect to the very purpose and object of the letter of indemnity and instead to leave the indemnified to a remedy in damages which the letter of indemnity specifically seeks to avoid. In The Laemthong Glory (No 2) [2005] 1 Lloyd’s Rep 632, the Court rejected the argument that damages would be an adequate remedy for the owners of the vessel in the event of breach of a letter of indemnity to put up security, and Cooke J observed as follows (at p 638):
“I consider that the owners are right here in saying that a failure to arrange the provision of security by either receivers or charterers in accordance with their letter of indemnity obligations so negates the object of the letters of indemnity that the Court ought to grant specific performance. The very purpose of the letter of indemnity was to avoid the detention which has actually occurred. This clause is of a different nature therefore from those which constitute the ordinary, primary obligations to be found in most contracts. … Whereas damages may constitute an adequate remedy for failure to perform many primary obligations, the whole point of the letters of indemnity was to replace secondary liability under any suit for damages for detention by the primary performance of the obligation to ensure release of the vessel, so that such a suit was unnecessary. It would, in such circumstances, be inequitable not to grant specific performance to require fulfillment of that obligation and then to leave the owners to a remedy in damages for detention, or even damages for the loss of the ship, which was the very thing that the letters of indemnity were intended to avoid.”
In Hong Kong, the Court likewise refused to discharge an ex parte mandatory injunction for the defendant to provide security pursuant to a letter of indemnity. In Global Maritime Trust (S) Pte Ltd v Fortress Group Limited HCCL 23/2014, 21/10/2014, Recorder A Ho SC stated:
“In my view, this is one of those cases where the plaintiff has demonstrated a strong prima facie case on the merits (though my assessment of the merits is necessarily provisional at this stage). The defendant’s obligation under the Letter of Indemnity to provide bail or other form of security is one that the Court will enforce by specific performance: see The Laemthong Glory (No 2) [2005] 1 Lloyd’s Rep 632, Cooke J at paras 49 to 51. The essence of the injunction is precisely to require the defendant to perform that obligation to prevent the vessel’s arrest.”
Whether there was delay and material non-disclosure
The Vessel was arrested on 11/8/2015. Since 14/8/2015, Cargill had served various demands on LB in its attempts to seek LB’s provision of security, in accordance with the LOI, to procure the release of the Vessel. There had been no response from LB, and Cargill was also threatened with legal proceedings by the owners of the Vessel and by FM under and in respect of the Cargill LOI. In all the circumstances, the Judge did not consider that there had been unexplained or undue delay in applying for the Order. Significantly, Cargill had informed the ex parte judge of the date and circumstances of the arrest.
The affirmation filed by Cargill in support of the ex parte application clearly explained the circumstances of the arrest in the proceedings instituted by the Bank in Qingdao. The Bank claimed that it had issued a letter of credit to one Rizhao Shijia International Trade (“SIT”), became the holder of original bills of lading, and was entitled to take delivery of cargo shipped on board the Vessel upon SIT’s default in payment under the letter of credit. The Bank claimed that the cargo under the letter of credit was released by the carrier without presentation of the original bills of lading in the Bank’s possession, and accordingly claimed that the owners or charterers of the Vessel are liable to compensate the Bank for its loss and damage. The Qingdao Maritime Court made the order for the arrest of the Vessel in respect of the Bank’s claim on 11/8/2015.
The Judge did not consider that there was any non-disclosure of the nature or relevant facts of the Bank’s claims.
Whether the operation of the indemnity was triggered
LB sought to argue that Cargill failed to demonstrate that there could be a high degree of assurance that at trial, the Court would find that the arrest of the Vessel fell within the scope of the LOI, to trigger LB’s obligations and liabilities thereunder.
First, it was argued that emails exchanged on 11/9/2014 between Cargill and LB (or Rizhao Xinye Group Co Ltd (“Xinye”), not disputed to be associated to and representing LB) show that LB had asked for the “discharge” of the Cargo at the time when the LOI was sought, and finally issued. It was claimed that the parties had actually intended that the LOI was to cover “discharge” of the Cargo from the Vessel, and not “delivery” of the Cargo (after discharge) without the original Bills. LB also referred to Cargill’s instructions to MSN, that the Cargo should be “discharged” against the LOI, but to be released against the original Bills. In these circumstances, it was argued that the LOI did not extend to any wrongful delivery of the Cargo to a party which cannot produce the original Bills. LB claimed that the LOI should be rectified on the ground of alleged common mistake.
On the question of construction of the LOI, the Judge agreed with the observations made by the Court in The Jag Ravi [2011] 2 Lloyd’s Rep 309, when HH Judge Mackie QC remarked (at para 43 of his judgment):
“… The goods have been delivered so owners are entitled to enforce the LOI. LOIs, particularly those in standard form, are important commercial instruments which need to be interpreted robustly and in a straightforward way. They are often used and relied upon by those for whom English is not their first language and whose opportunities for close textual analysis before committing to a wording are in the real world very limited.”
The distinction between “discharge” and “delivery” on the basis of the emails is artificial. The LOI refers consistently to “delivery” throughout. It recites the request from LB to Cargill “to deliver” the Cargo to MSN without production of the original Bills. It refers to LB’s agreement to indemnify Cargill in respect of any liability etc “by reason of delivering the Cargo” in accordance with its request.
There was no evidence of any mistake on the part of Cargill, to form the basis of any claim for rectification by reason of alleged common mistake. Even if there is any difference between the “discharge” of the Cargo and its “delivery”, the indisputable fact is that the Cargo was in fact released and “delivered” to MSN, despite and notwithstanding any instructions from Cargill that the Cargo should be “discharged” without the original Bills, but only to be “released” against the original Bills.
There was nothing material in the emails of 11/9/2014, of which LB complained, as having been withheld from the ex parte judge.
As for the capacity of MSN, Cargill had sufficiently established a strong prima facie case that MSN was acting as LB’s agent in taking delivery of the Cargo:
On 5/9/2014, Xinye on behalf of LB declared that the agency nominated at the discharge port of Rizhao was MSN. LB has emphasized that under the Sale Contract, its appointment of MSN as agent had to be approved by Cargill (which approval cannot be unreasonably withheld). The fact that Cargill had to approve LB’s appointment of MSN cannot alter the fact that such appointment was made by LB, and that when the appointment was approved, MSN was appointed as LB’s agent.
On 15/9/2014, the Notice of Readiness for the Vessel at the discharge port was signed by MSN “as agent”, “for and on behalf of the receiver of the Cargo”, ie LB.
Under the “Unloading Conditions” of the Sale Contract, a Statement of Facts (“Statement”) regarding the discharge and completion of discharge is to be signed by the master of the Vessel, and by a person designated by LB. The Statement in question was signed by the master of the Vessel (on behalf of Cargill), and by MSN, which must have been signing as the person designated by LB.
Under the terms of the Sale Contract, the discharge of the Cargo from the Vessel was the responsibility of LB. LB was to make all arrangements for the immediate discharge of the Cargo from the Vessel on her arrival at the discharge port, and to upload the Cargo at its risk and expense. When MSN was making arrangements for the uploading and discharge of the Cargo, it could only be acting for LB.
Even if it should transpire, at trial, that MSN had dual functions or capacities at different times, the Judge accepted on the evidence available at this stage that at the time of the discharge of the Cargo from the Vessel, MSN was taking delivery in the capacity of an agent of the consignee of the Cargo.
As Cargill rightly observed, if MSN was solely Cargill’s agent, there is simply no sensible commercial reason why Cargill would request, and LB would provide, a letter of indemnity for Cargill’s release of the Cargo to Cargill’s own agent.
It is particularly pertinent, that in the affidavit filed on behalf of LB to support its application to discharge the Order, LB itself acknowledges and accepts that the fundamental requirement to trigger LB’s obligations and liability under the LOI is the delivery of the Cargo to MSN.
That can hardly be disputed in view of the express wording of the request contained in, and acknowledged by, the LOI.
The Judge was satisfied, on the authorities relied upon by Cargill (Voyage Charters para 10.2, citing The Jaederen [1892] P 351), that “delivery” took place, when the Cargo passed over the Vessel’s rail into the hands of MSN and agents of the consignees.
On the evidence, after MSN received the Cargo into its possession following discharge from the Vessel, the Cargo was released from the discharge port. This is supported by the claim made by the Bank, and Cargill’s evidence of its meeting with SIT (during which SIT’s representative claimed that the Cargo was released on 15/9/2014 without production of the original Bills). MSN never denied that the Cargo had been taken away from the port of discharge, without production of the original Bills.
LB attempted to argue that the arrest of the Vessel as a result of the Bank’s claims in the Qingdao Maritime Court did not arise by reason of the delivery of the Cargo without the Bills. It was claimed that the Bank’s claim was for loans made and sums due by SIT under the letter of credit, and arguably not connected with the delivery of the Cargo.
LB also sought to argue that the Bank had no contractual right to possession of the Cargo, which right to possession had ceased on delivery of the Cargo, even to the wrong person, such that it could not have acquired any lawful rights under the Bills. Cargill stressed that the merits of the Bank’s claims were irrelevant, but further relied on Standard Chartered Bank v Dorchester LNG (2) Ltd [2015] 3 WLR 261, in which the English Court of Appeal stated that the rights under a contract of carriage to obtain goods from the carrier do not cease when the goods are delivered against a letter of indemnity, and that such rights remain in existence and are capable of forming the basis of a claim against the carrier for misdelivery.
In any event, the short answer to LB’s arguments on the validity of the Bank’s claims was that under the LOI, LB agreed to provide security if, in connection with the delivery of the Cargo, the Vessel is arrested or detained, “whether or not such arrest or detention or threatened arrest or detention … may be justified.” The Judge agreed that LB’s liability under the LOI did not depend on the merits of the claim made by the Bank. To permit arguments being raised as to whether arrests, or threatened arrests, of the Vessel are based on valid claims asserted would, again, defeat the expressed purpose and the objective of the LOI. On the evidence, the Vessel was arrested, on the Bank’s application, as a result of or “in connection with” (a very broad term used in the LOI) the delivery of the Cargo to MSN, without production of the Bills.
For all the above reasons, the Judge was satisfied, to a high degree of assurance, that LB’s obligations and liabilities under the LOI are triggered, and further, that the ex parte judge had not been misled as to the basis of Cargill’s claims under the LOI, and LB’s liability thereunder.
Whether there was material non-disclosure as to jurisdiction
At the ex parte application, the affirmation in support referred to the jurisdiction clause in the LOI. This provides:
“This indemnity shall be governed by and construed in accordance with English law and each and every person liable under this indemnity shall at your request submit to the jurisdiction of the High Court of England.”
LB’s complaint was that Cargill failed to disclose to the Court at the ex parte stage that Cargill had requested LB to submit to the jurisdiction of the High Court of England.
In Wynn Resorts (Macau) SA v Mong Henry HCA 192/2009, 29/9/2009, the Court emphasized that the existence of a non-exclusive jurisdiction clause, which provides that a party may litigate disputes against defendants in a foreign jurisdiction, does not prevent a plaintiff from suing a defendant outside the chosen foreign jurisdiction, and is not a factor which makes the foreign jurisdiction clearly or distinctly a more appropriate forum than Hong Kong.
Cargill’s solicitors in Singapore had by a letter of 16/8/2015 invited LB to submit to the jurisdiction of the High Court of England, but the letter also specified that if LB did not provide security under the LOI, Cargill would “have no choice other than to enforce their rights under (the LOI) in Court proceedings in UK, Hong Kong and any other jurisdictions”.
Since the clause in question was a non-exclusive jurisdiction clause, and Cargill had made it clear that it might commence proceedings in other jurisdictions, including Hong Kong, and since there was no evidence of LB having agreed to submit to the jurisdiction of the English Court, the Judge did not consider the relevant clause to be relevant. Nor did the Judge consider Cargill’s failure to disclose the existence of the jurisdiction clause in question to be material non-disclosure, so as to warrant the discharge of the Order.
Cargill’s provision of security and the release of the Vessel
The more pertinent issue related to the fact that, after the ex parte Injunction was made on 26/8/2015, the Vessel was released from its arrest on 31/8/2015, as a result of security having been procured by Cargill, and provided by Deutsche Bank. A Letter of Undertaking was issued by Deutsche Bank (“Undertaking”) to the Qingdao Maritime Court on 28/8/2015, on the same day as the first hearing of the inter-partes Summons (when the matter was adjourned).
The release of the Vessel and the issue of the Undertaking was first disclosed by Cargill in the affirmation it filed on 29/9/2015, for the inter-partes hearing. LB claimed that Cargill failed in such affirmation to make disclosure of when it first had contact with the Deutsche Bank for the issuance of the Undertaking.
The duty to make full and frank disclosure in an application for ex parte relief continues while the proceedings remain on an ex parte basis (Commercial Bank of the Near East plc v A, B, C and D [1989] 2 Lloyd’s Rep 319). An applicant has a duty to inform the Court as soon as he comes aware that the Court has been misinformed or given incomplete information at the time of the ex parte application. In Commercial Bank of the Near East, the plaintiffs commenced proceedings against the guarantors of a loan and obtained ex parte Mareva injunctions, without making disclosure of the fact that they had taken preliminary steps to obtain other security over the defendants’ property in Greece. The Court highlighted the importance of a plaintiff’s duty to make full disclosure of “everything of materiality”, and stated at p 323 of the reported judgment:
“ … While the proceedings remain on an ex parte basis, in the absence of agreement by the party enjoined or unless the court otherwise directs, it is the duty of a party who obtains ex parte Mareva relief to bring to the attention of the court any subsequent material changes in the situation, ie any new or altered facts or matters which, had they existed at the time of the application, should have been disclosed to the Court. It must always be remembered that the granting of ex parte relief provides (albeit so that justice can be done) an exception to the most basic rule of natural justice – that both parties should be heard. Thus the need for full disclosure by the party seeking relief – and thus to my mind the need to continue to make full disclosure while the proceedings remain on an ex parte basis.”
Whilst the Court in Commercial Bank of the Near East took the view that the plaintiffs should have disclosed “the preliminary steps taken by them to obtain security in Greece”, it considered that no prejudice was caused to the 2nd defendant in this respect, since those applications were in their initial stages and the failure to disclose was not sufficiently grave to cause the Court to discharge the ex parte order.
On Cargill’s evidence, it was on 28/8/2015 that it “procured Deutsche Bank to issue” the Undertaking which led to the release of the Vessel on 31/8/2015.
It was only on 12/11/2015 that Cargill sought leave to file its affirmation, to disclose that due to Cargill’s concerns that LB would not provide security and that it was at risk of being in breach of its own contractual obligations under the Cargill LOI, Cargill “commenced its own investigations to provide security, by contacting Deutsche Bank on or about 19/8/2015”. No further particulars have been given as to what those “contacts” with Deutsche Bank consisted of, and what the results of such contacts were. Even giving the benefit of the doubt to Cargill, that no clear indication had been given by the Deutsche Bank on or shortly after 19 August, and that it was only on 28/8/2015 that the Undertaking was issued, there must have been clearer indication made by Deutsche Bank close to, or even on the eve of, 28/8/2015 that the Undertaking was to be issued.
At the hearing of the inter-partes Summons on 28/8/2015, less than 2 clear days’ notice of the hearing and of the evidence relied upon by Cargill had been given to LB, and there had been no reasonable chance for LB to put its evidence before the Court. The proceedings remained at an ex parte stage on 28/8/2015. The mandatory injunction was continued on that day, in the sense that LB was ordered to furnish security, only that the Deadline for it to do so was extended until 7/9/2015.
In the Judge’s view, Cargill was under the duty to disclose to the Court on 28/8/2015 that the Undertaking had been issued, or was in the course of being issued that day, as a result of Cargill’s approach to Deutsche Bank, and that there was a possibility that the Vessel would be released as a result. This information was relevant to the Court’s consideration of whether it should continue, or extend, or amend the Order.
Whether the undisclosed fact was material to require discharge of the Order
The authorities to which Cargill referred showed that the obligation of LB to provide security under the LOI survived the provision of security by Cargill, or any other party. Cargill was entitled to specific performance of LB’s obligation to provide security under the LOI according to its terms, even though Cargill had already provided security to the Bank, and the Vessel had been released.
In The Bremen Max [2009] 1 All ER (Comm) 423, a vessel was arrested, and the owner of the vessel arranged for security in the form of a corporate guarantee to secure the vessel’s release. The claimant in the proceedings before the Court then provided security by way of cash to be held in escrow by solicitors, and called upon the defendant to provide substitute security under a letter of indemnity. The Court granted interim mandatory relief requiring the defendant to provide the funds necessary to replace those deposited by the plaintiff, pending a trial of preliminary issues: as to whether the obligation to provide bail or other security under the letter of indemnity was no longer a current obligation, when the release of the vessel had already been secured. After the trial of preliminary issues, the court held that the obligation remained a current one, notwithstanding the release of the vessel, and that specific performance was an appropriate remedy for breach of that obligation. At p 429e-f of the reported judgment, Teare J stated:
“The action of the owners in putting up security had the effect of ending the detention of the vessel and to that extent mitigated the loss caused by the charterers’ breach. But the charterers remained in breach of their obligation. The action of the owners did not discharge the obligation of the charterers to put up bail or other security. That obligation had accrued. The action taken by the owners to mitigate the loss cannot discharge that obligation or provide the charterers with a defence to the charge that they remained in breach of the obligation to provide bail or other security. Were it to do so the commercial purpose and intention of the clause would be frustrated; for the owners would have to incur the cost of putting up the bail required to secure the release of the vessel. It is correct that the owners would have a remedy in damages for the cost of putting up bail but the commercial purpose and intention of cl 3 was that the owners should not have to incur the cost at all.” (Emphasis added)
The release of the Vessel and the fact of Cargill putting up or procuring bail or security from Deutsche Bank, therefore, did not discharge LB from its liabilities under the LOI, nor did they prevent or deter the Court from granting specific performance of the LOI. In these circumstances, the Judge was of the view that the non-disclosure of Cargill’s contacts with Deutsche Bank before the provision of the Undertaking on the day of the hearing on 28/8/2015 was not of sufficient materiality to justify the discharge of the Order.
On reviewing the matter inter partes, and bearing in mind the guidance set out in Arena Corp Ltd v Schroeder [2003] EWHC 1089 Ch (applied in Excel Courage Holdings Ltd v Wong Sin Lai [2014] 3 HKLRD 642), the Judge considered that the strong merits of Cargill’s claims, the high degree of assurance that the Judge had that damages were not an adequate remedy and that specific performance would be ordered under the LOI at trial, the inequity of leaving Cargill to a claim of damages against the very objective of the LOI (The Laemthong Glory (No 2); The Bremen Max), and the proportionality between any punishment for any non-disclosure and the offence, led to the conclusion that a mandatory injunction was appropriate, and that the Order should be continued in the interim of trial, with variations as provided below. To balance the justices of the case, the Judge already gave directions at the hearing on 17/11/2015 for a speedy trial, with a timetable for the immediate filing of pleadings, discovery and witness statements, and for dates to be fixed for the trial.
Orders made
The Judge dismissed the application to discharge the Order.
The Order would be revised, to order LB to provide security within 7 days by making payment into this Court of the sum of US$9.3 million. In the event that the parties could agree on an alternative form of security, they could apply by consent to further vary the Order, but otherwise the Order for payment into this Court would stand.
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We mentioned in our Chans advice/225 that the limit of liability under the Montreal Convention for carriage of cargoes was increased from 19 SDR/kg to 22 SDR/kg of the gross weight of the cargoes effective on 28 December 2019. We have recently received some forwarders’ request asking us to talk about the major terms in the Montreal Convention. We in this issue would like to introduce the Montreal Convention’s major provisions as follows:
The Montreal Convention is an international treaty agreed by 140 states in respect of governing carriers’ liability for injury or death of passengers, damage to or loss of baggage and cargo and losses caused by delays. Hong Kong has adopted it through the Carriage by Air Ordinance (Cap 500).
The Hong Kong District Court issued a Judgment on 26 April 2022 dealing with a case concerned with transfer of business and lifting the corporate veil, and held a forwarder and its shareholder and director jointly and severally liable for a debt of HK$975,733.71. [DCCJ 2104/2019] [2022 HKDC 289]
On 5/8/2011, the District Court of Hong Kong dismissed a shipping company’s container claims against a forwarder for want of prosecution and abuse of process. [DCCJ 765/2005]
The Hong Kong High Court issued a Judgment on 22/11/2013 concerning an unless order in relation to a freight forwarder’s claims for outstanding freight charges of HK$4,427,336. [HCA 1755/2011]
The 12th annual SMIC seminar on uncollected cargoes pulled some 300 participants to attend with much curiosity for 3 hours in the YMCA Assembly Hall. The accumulated questionmarks and enigmas about the subject matter lurking in the trade were unleashed among the audiences.
On 12/4/2017, the Hong Kong High Court dismissed an application made by a cargo owner for stay of proceedings commenced by two forwarders in relation to an uncollected cargo case. [HCA 1927/2016]
The Hong Kong High Court issued a Decision on 9/5/2017 allowing a time extension for some cargo interests to claim against the Tonnage Limitation Fund constituted by the owner of one of the two vessels involved in a collision that happened on 7/11/2013. [HCAJ 189/2013]
In the issue of our Chans advice last month, we talked about the major provisions of the Montreal Convention (which is for the international carriage of goods by air). In this issue, we would like to discuss the major terms of an equally important international convention for the international carriage of goods by sea, viz. the Hague Visby Rules.
The Hong Kong District Court issued a Judgment on 28/4/2014 dismissing a seller’s cargo misdelivery claim of US$122,302.80 against a freight forwarder and holding the seller liable to pay the outstanding freight charges of US$28,855 to the forwarder. [DCCJ 344/2010]
The High Court of Hong Kong issued a Judgment on 22/5/2017 holding that the District Court has jurisdiction to determine bill of lading and bailment cases. [HCAJ 150/2014]
In our Chans advice/244, we reported the Hong Kong High Court case [HCA937/2016] [2021 HKCFI 2310] that the forwarder was held liable to pay nominal damages of HKD1,000 to the shipper in the cargo misdelivery claim of USD1,299,189.87. On 20 October 2021, the Hong Kong High Court issued a Decision on Costs holding the shipper liable to pay the costs of the forwarder. [2021 HKCFI 3021]
Remember our Chans advice/165 (reporting the Hong Kong Court of Appeal holding the Hong Kong forwarder liable to pay US$852,339 plus costs and interest to the Indian bank in the air cargo misdelivery case)? On 19/5/2016, the Court of Final Appeal dismissed the Hong Kong forwarder’s application for seeking leave to appeal. [FAMV Nos 45 & 52 of 2015]
Without even knowing, we have published including this one 200 issues of the Chans Advice. As this is a monthly bulletin, 100 issues took more than 8 years and 200 issues took 17 years to run.
The Hong Kong High Court issued a ruling on 2/12/2016 dealing with a shipowner’s interrogatory application in relation to an uncollected cargo case. [HCAJ 118/2015]
As reported in our Chans advice/170 dated 27/2/2015, the English High Court on 14/10/2014 held CSAV’s bill of lading’s English jurisdiction clause as an exclusive jurisdiction clause. On 23/4/2015, the English Court of Appeal issued its Judgment reaching the same conclusion. [Neutral Citation No: 2015 EWCA Civ 401, Case No: A3/2014/3584]
The Hong Kong High Court issued a decision on 11/9/2013 concerning a shipowner’s application to extend the validity of a writ of summons against a Taiwan hull and machinery insurer. [HCAJ 95/2012]
The Hong Kong High Court issued a Decision on 22 January 2021 dealing with an appeal against a Small Claims Tribunal’s award concerning a dispute over a container terminal’s storage charges. [HCSA 44/2020] [2021 HKCFI 200]
The United States District Court (Southern District of New York) issued an order on 29 November 2021 to deny a shipping company’s motion to rely on the Singapore jurisdiction clause in its bill of lading. [1:19-cv-5731-GHW-RWL]
The Hong Kong High Court issued a Decision on 11 May 2021 staying a South Korea container terminal’s legal action in Hong Kong with respect to its allision claims of more than US$90,000,000 against the owners of a container ship. [HCAJ 31/2020] [2021 HKCFI 1283]
In our last issue of Chans advice/253, the Hong Kong District Court’s judgment dated 26 April 2022 mentioned a case authority of China Ocean v Mitrans Shipping. We would like to discuss this judgment dated 11 July 1995 of the Hong Kong Court of Appeal in our Chans advice this month. [1995 No. 71 Civil]
The Hong Kong High Court issued a Judgment on 5/8/2015 holding that a shipment of formula milk powder without the legally required export licence should not be forfeited. [HCMA171/2015]
Remember our Chans advice/163 about the English High Court’s Judgment holding the Hague Visby Rules instead of the Hague Rules to apply to the cargo damage claim case in excess of US$3.6 million? The English Court of Appeal issued a Judgment on 24/2/2016 upholding the High Court’s conclusion but with different reasons. [Case No: A3/2014/1285, 2016 EWCA Civ 101, 2016 WL 00692394]
The Hong Kong High Court issued a Judgment on 9/2/2010 holding a carrier entitled to rely on its bill of lading clause to lien the cargoes for the damages, costs, expenses, charges resulting from the shipper’s overloading the cargoes in the containers. [HCA 1579/2008]
What is the difference between a straight bill of lading and an order bill of lading? This can be illustrated in the Wuhan Maritime Court’s Judgment dated 17 September 2019 concerning a cargo misdelivery claim of US$89,838.
The Hong Kong Court of Appeal issued a Judgment on 9/7/2015 in relation to the High Court Judgment dated 21/7/2014 (reported in our Chans advice/167 dated 28/11/2014). [HCMP 2315/2014]
Following the Hong Kong Court of Appeal’s Judgment dated 11/3/2015 discharging the Mareva Injunctions and the receivership orders (mentioned in our monthly newsletter of Chans advice/171 two months ago), the Hong Kong High Court issued a Judgment on 12/5/2015 to determine the question of who should pay the remuneration to the receivers. [HCMP 1449/2014]
Cargo Misdelivery The Hong Kong High Court issued a Judgment on 12/1/2016 refusing to grant a shipowner an anti-suit injunction because of the shipowner’s delay in applying for the anti-suit injunction. [HCMP 2399/2015] By an Originating Summons dated 25/9/2015 (“OS”), the owner of the vessel MV Zagora (“Vessel”) applied for an anti-suit injunction against a […]
The Hong Kong High Court issued a Judgment on 7/6/2011 explaining the concept of the package limitation of the United States Carriage of Goods by Sea Act. [HCAJ 181/2008]
Against the post-Covid tide, we ran an off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Attendance could not be compared with any webinars but the number of enthusiastic questions in the Q&A session reflected the demand for transport liability issue solutions. For the sake of recapitulations and sharing the Q&A among the Chan Advice readership, we like to report the Q&A in two issues. We welcome any other questions you may have on the following.
Remember our last issue Chans advice/129 that the forwarder was held liable for its refusing to release the goods to the named consignee without original straight Bill of Lading? On 12/8/2011, the Hong Kong Court of Appeal issued a Judgment dismissing the forwarder’s application for leave to appeal. [HCMP 683/2011]
The Hong Kong Court of Appeal issued a Judgment on 29/1/2016 dealing with a case of one or two days’ delay in appeal in relation to a barge sinking accident. [HCMP 3172/2015]
The Hong Kong High Court issued a Judgment on 22/8/2016 dealing with a case that a forwarder wanted to strike out a cargo misdelivery claim on the ground that the claim disclosed no reasonable cause of action. [HCCL 5/2015]
Does the law require forklift trucks to have the third party insurance of motor vehicles? The Hong Kong High Court’s Judgment [Magistracy Appeal No 241 of 1996] dated 2/5/1996 explained the legal principles to answer this question.
According to the Hague-Visby Rules, the carrier shall be discharged of all liability in respect of the cargoes unless suit is brought within one year of their delivery or the date when they should have been delivered. The English High Court issued a Judgment on 22nd July 2025 explaining the meaning of “suit”. [2025 EWHC 1878 (Comm)]
The limit of liability for international carriage of cargoes by air under the Montreal Convention has been revised from 19 SDR/Kg to 22 SDR/Kg of the gross weight of the cargoes effective from 28 December 2019. We have received many enquiries from freight forwarders about changing their house Air Waybills’ terms to cope with the new limit of liability. We would like to take this opportunity to discuss some essential terms in house Air Waybills.
The amendment to the International Convention for the Safety of Life at Sea (SOLAS) 1974 Chapter VI, Regulation 2 in respect of the verified gross mass of a container carrying cargo (laden container) is for entry into force globally on 1 July 2016.
The Hong Kong High Court issued a Decision on 19 March 2018 dealing with some legal principles in relation to granting relief against unless orders in a ship collision case. [HCAJ 84/2017] [2018 HKCFI 609]
The Hong Kong High Court issued a judgment on 30/4/2015 dealing with the legal principles in respect of the order of priorities in distributing the sale proceeds of an arrested ship. [HCAJ 129/2013]
Our Chans advice/191 reported a Hong Kong High Court’s case concerning a shipping company’s restitution claim against its former deputy general manager (Mr Ma) for HK$387,655,303.70. The latest development of this case is: the Hong Kong High Court issued a Judgment on 1/2/2018 and a Decision on 9/2/2018 holding that Mr Ma was in contempt of Court as a result of his breach of a Mareva Injunction Order and that he be committed to prison for 4 months. [HCMP1115/2017] [2018 HKCFI176] [2018 HKCFI328]
The Hong Kong High Court issued a Decision on 29 January 2019 dismissing Changhong Group’s application for stay of the legal proceedings against it brought by the consignee and the insurer of the cargo on board the Sanchi. [HCAJ6/2018, 2019HKCFI263]
Following the issue of Chans advice last month, we would like to report the latest decision issued by the court over this theft case. On 17 January 2023, the Hong Kong High Court dismissed Mr Ma’s application to withdraw HK$1.5 million out of his frozen assets for paying the legal costs for his appeal against conviction in theft. [HCA 619/2016] [2023 HKCFI 197]
The Court of Appeal of Hong Kong issued a judgment on 28 March 2019 dealing with a matter concerning the sale pendente lite of an oil tanker Brightoil Glory. [CAMP49/2019][2019HKCA395]
The Hong Kong Court of Appeal’s Judgment dated 11/4/2008 explained some legal principles relating to whether indemnity claims are allowed by in rem legal actions against vessels. [CACV 257/2007]
The High Court of Hong Kong issued a Decision on 23 May 2018 allowing a shipowner to be represented by 2 different firms of solicitors (one appointed by its hull underwriters and the other appointed by its P&I Club). [HCAJ84/2017] [2018HKCFI1136]
In our Chans advice/169 last month, we mentioned the English Court’s Judgment dated 14/10/2014 holding CSAV’s bill of lading’s English jurisdiction clause to be an exclusive jurisdiction clause. In this issue, let’s look at that English High Court Judgment [2013 Folio No 1248, 2014 EWHC 3632 Comm, 2014 WL 5113447] issued by Justice Cooke in detail.
We recently have received a lot of uncollected cargo claim cases from our forwarder clients, which have kept our 6 claim handlers very busy. We would like to take this opportunity to talk about this troublesome problem of uncollected cargoes. Actually, the forwarders have been facing this real headache in at least these two decades.
The Hong Kong High Court on 13/8/2013 held a shipper liable to a shipping company for paying demurrage of US$1,645,286.74 plus interest and costs. [HCAJ 166/2011]
The Hong Kong High Court issued a judgment on 12/4/2016 to dismiss a cargo owner’s action in respect of breaking a barge owner’s tonnage limitation. [HCAJ 178/2014]
Remember our Chans advice/138 regarding the Hong Kong High Court’s Judgment holding the He Da 98’s owners fully liable in the collision that happened off Shanghai? The Hong Kong High Court issued its Decision on 18/1/2013 dealing with the damages to be paid to the Pontodamon’s owners. [HCAJ 200/2007]
The Hong Kong Court of Final Appeal (“the CFA”) issued a Judgment on 10/9/2014 dismissing a cargo owner’s (“the Assured”) cargo insurance claim of US$1,555,209.00 against an insurance company (“the Insurer”) on the ground that the Assured had breached an insurance warranty relating to the carrying vessel’s deadweight capacity. [FACV No. 18 of 2013]
The Hong Kong High Court issued a Decision on 13 May 2021 to deal with an interpleader action concerning the stakeholding of US$700,000 in relation to a dispute over some management fees between two transport operators. [HCMP510/2020] [2021 HKCFI 1373]
The Hong Kong Court of Appeal on 1 December 2021 allowed a charterer’s appeal against a High Court’s Decision dated 13 April 2021 (which disallowed the charterer’s charter hire claims of US$234,955 against the shipowner because the High Court was not satisfied the claims were well founded). [CACV 294/2021] [2021 HKCA 1865]
The Hong Kong High Court issued a Judgment on 3/2/2017 holding Natural Dairy liable to pay HK$4,360,948.38 to Schenker being the outstanding freight charges. In the Judgment, the Judge also explained the principles regarding the meaning of notice of the forwarder’s standard trading conditions. [HCA 1755/2011].
We have received some enquiries from our forwarder clients about the FCR e.g. what is FCR? How many types of FCR are there? What are the uses of FCR? We would like to discuss these in this issue.
The VGM laws have come into operation in Hong Kong since 1/7/2016. They are mainly contained in Section 3 and Section 3A of the Merchant Shipping (Safety) (Carriage of Cargoes and Oil Fuel) Regulation (Chapter 369AV) as follows:
The Shanghai Maritime Court issued a Judgment on 24/12/2009 to deal with the question whether a shipping company could charge the container demurrage based on the tariff published on its website.
The Hong Kong Court of Appeal issued a Judgment on 17/7/2014 holding a Hong Kong forwarder liable to pay US$852,339 plus costs and interest (as damages for conversion) to an Indian bank in an air cargo misdelivery case. [CACV 282/2012]
The Hong Kong High Court issued a Judgment on 13 August 2021 holding a forwarder liable to pay nominal damages of HKD1,000 to a shipper in a cargo misdelivery claim case of USD1,299,189.87. [HCA 937/2016] [2021 HKCFI 2310]
The Hong Kong High Court issued a Judgment on 9/4/2018 dealing with a cargo total loss case in which a NVOC in Malta was wrongly sued (because it had the same name as that of the correct NVOC in BVI). [HCAJ 65/2016], [2018 HKCFI 699]
The Hong Kong High Court issued a Judgment on 29/4/2013 relating to a discovery order ancillary to and in support of a Mareva injunction. [HCA 2124/2011]
The PRC Supreme Court on 26/11/2015 issued a Judgment holding a shipping company’s container demurrage claim against a shipper time barred. [2015民提字第119號]
Remember Chans advice/142 dated 31/10/2012 that the High Court of Hong Kong held the forwarder liable for cargo misdelivery without production of original bills of lading? The High Court of Hong Kong issued another Judgment on 4/12/2012 dealing with the interest and costs. [HCCL 20/2011 & HCCL 21/2011]
The English Commercial Court issued a Judgment on 7/11/2012 holding a carrier liable for US$458,655.69 owing to its issuing 13 clean Bills of Lading for a consignment of steel pipes which had some pre-shipment damage. [2012 EWHC 3124 (Comm)]
The Hong Kong High Court issued a Judgment on 3/8/2011 holding that a Korean shipping company could not rely on its Bill of Lading’s Korean jurisdiction clause to stay a Hong Kong legal action. [HCCL 13/2010]
The Hong Kong High Court issued a Decision on 30 September 2021 holding a shipowner’s Defences as an abuse of process in a case of unpaid crew wages. [HCAJ 76/2020] [2021 HKCFI 2961] [HCAJ 91/2020]
To continue our recent series of loss prevention articles, we would like to discuss in this issue the major provisions of the PRC Maritime Code as far as the international carriage of goods by sea is concerned.
Remember our Chans advice/171 of 31/3/2015 reporting that the Hong Kong Court of Appeal discharged the Mareva injunctions against Hin-Pro? The Hong Kong Court of Final Appeal issued a Judgment on 14/11/2016 reversing the Court of Appeal’s Judgment of 11/3/2015. [FACA No. 1 of 2016]
In Chans advice/14 dated 28/2/2002, we discussed this topic 15 years ago. In its Judgment dated 16/10/2017, the District Court of New South Wales in Australia had to deal with, inter alia, a malpractice that a forwarder issued its own house B/Ls but signed off with as agent for China Ocean Shipping, Pacific International Lines, Mitsui O.S.K. Lines Limited or Orient Overseas Container Line without authority. [2017 NSWDC 279]
The Hong Kong High Court issued a Decision on 4 March 2020 dismissing a shipowner’s application for a stay of proceedings in favour of arbitration in a case of cargo misdelivery without presentation of original bill of lading. [HCAJ 5/2019] [2020 HKCFI 375]
The English High Court issued a Judgment on 31/7/2015 dismissing a cargo owner’s conversion claim US $565,891.58 against a shipowner in an uncollected cargo case. [(2015) EWHC 2288 (Comm), (2015) 2 C.L.C. 415]
We have received a lot of cargo claims from our forwarder clients in the recent months. In this issue, we would like to discuss in general how the forwarders should handle the cargo claims.
The English Court of Appeal issued a Judgment on 20/1/2011 holding two clauses in the standard trading conditions of the British International Freight Association valid. One of them was about all sums due to the forwarder to be paid without reduction or deferment on account of any claim, counterclaim or set-off. The other was about the 9-month suit time limit. [2011] All ER (D) 128 (Jan); [2011] EWCA Civ 18
The English Court of Appeal gave a Judgment on 6/7/1987 explaining how to calculate the suit time limit for the indemnity claim under the Hague Visby Rules. ([1987] 1 W.L.R. 1213)
The Hong Kong High Court issued a Decision As To Costs on 5 December 2024 ordering a shipowner (which lost in an anti-suit injunction court case) to pay the winning party’s (a cargo owner) costs on an indemnity basis. HCCT 66/2024 [2024 HKCFI 3511]
The Hong Kong High Court issued a Judgment on 2/6/2017 dealing with the liability apportionment among 3 vessels in 2 almost simultaneous collisions that happened near Hong Kong on 14/5/2011. [HCAJ158/2012 and HCAJ49/2013 and HCAJ48/2011]
The Hong Kong High Court issued a Judgment on 21/7/2014 discharging a Mareva injunction in relation to a cargo misdelivery claim of about US$12 million. [HCA 2368/2012]
The Hong Kong Court of Appeal issued a Judgment on 12/2/2018 to deal with the cargo owners’ seeking leave to appeal against the High Court’s Judgment reported in our Chans advice/209 last month. [CAMP 38/2017] [2018 HKCA77]
The Hong Kong High Court issued a Judgment on 11/12/2013 holding that a Hong Kong plaintiff needed to put up a security for costs in a court case concerning a yacht sinking incident. [HCCL 5/2013]
The Hong Kong High Court issued a Judgment on 11 January 2019 dealing with a dispute of US$335,858.31 between a bunker supplier and a ship agent. [HCA119/2015] [2019HKCFI57]
The Hong Kong High Court issued a decision on 31 May 2022 ordering a South Korean shipowner to provide a Hong Kong shipowner with security for costs in the amount of HK$600,000 in relation to a ship collision case that happened in Hong Kong during the super typhoon Hato in August 2017. [HCAJ 80-85/2019] [2022 HKCFI 1631]
This continues the Q&A in our off-line real seminar on Uncollected and Undelivered Cargo on 28 May 2024. Participants were keen to know more about seaway bills, how war plays in insurance? How modes of transport differ mis-delivery claims handling? What is insurers’ attitude towards transloading claims? And finally, why mis-delivery and uncollected cargo claims deserve special attention. SMIC deals with similar questions daily. Each case varies in its cause, and therefore healing recipe differs. But if you are conversant with fundamentals. They could be simple.
The 10th annual SMIC seminar on Forwarders’ Standard Trading Conditions wrapped a decade of unabated effort hammering for the freight industry’s attention to loss prevention by proper freight documents. The topic had attracted over 300 participants to attentively listening for 3 hours in the YMCA Assembly Hall. We thank them all for the patience.
The English Court of Appeal issued a Judgment on 13/12/2017 dealing with a cargo damage claim of EUR2,654,238 and a charter hire claim of USD1,012,740 in connection with a NYPE charterparty. [2017 EWCA Civ 2107] [2017 WL 06343564] [Case No. A3/2016/4770]
In the transport industry, the contracts of carriage (e.g. Bills of Lading, Air Waybills) usually contain an exclusive jurisdiction clause for settling disputes. However, it is not uncommon that the shippers and consignees sue the transport operators in a court other than the one specified in the exclusive jurisdiction clause. In Hong Kong, the transport operators may rely on the Foreign Judgments (Restriction on Recognition and Enforcement) Ordinance to tackle this kind of situation.
The District Court of Hong Kong issued a Judgment on 21/4/2011 dismissing a forwarder’s cargo indemnity claim of US$46,201.81 against a trucking company. [DCCJ 2092/2009]
The Hong Kong High Court issued a Judgment on 25/8/2017 to determine whether the Hong Kong Court or the Yangon Court was the natural and appropriate forum in an in rem legal proceedings in relation to a cargo damage claim of USD143,852.02. [HCAJ 101/2015]
The Hong Kong District Court issued a Judgment on 8/4/2014 holding that the one year’s suit time limit under the Hague Visby Rules does not apply to the carrier’s claims against the shipper. [DCCJ 4438/2013]
The English High Court issued a Judgment on 2/4/2014 holding the Hague Visby Rules instead of the Hague Rules (as incorporated by a Paramount Clause) to apply to a shipment ex Belgium. [Case No: 2012 Folio 102, 2014 EWHC 971 Comm, 2014 WL 1219313]
The High Court of Hong Kong issued a Decision on 31/8/2018 concerning a feeder company’s claim against a shipping company’s lawyer for wasted costs. [HCA1919/2016] [2018HKCFI1879]
The High Court of Hong Kong issued a Judgment on 26/8/2011 to determine which ship to blame in a collision case that occurred at Shanghai. [HCAJ 200/2007]
The Hong Kong High Court issued a Decision on 21 July 2023 in relation to a case that an aircraft (worth at least USD 80 million) and its cargoes were destroyed by a fire caused by the goods of chlorine dioxide disinfection tablets. [HCA 837/2022] [2023 HKCFI 1896]
More and more junior staff of the banks insist all the Bills of Lading to be signed and issued with the above remark “As agent for the Carrier”. This is of course right if the concerned Carrier does not have its own office in the place of issuing the Bill of Lading and therefore instruct its agent there to issue the Carrier’s Bill of Lading.
The Hong Kong High Court issued a Decision on 15 March 2021 converting a domestic Mareva injunction into a worldwide Mareva injunction in a shipowner’s freight and demurrage claim against a charterer. [HCMP 1190/2020] [2021 HKCFI 680]
The Hong Kong District Court issued a Judgment on 8/2/2011 holding a Hong Kong forwarder liable for its refusing to release the cargoes to a consignee without production of the original straight Bill of Lading. [DCCJ 3467/2009]
Remember our Chans advice/112 that the Hong Kong High Court held the Rotterdam terminal liable to pay the cargo value of €950,071.20 for the misdelivery of one container of Sony Play Stations? On 2/4/2013, Judge To of the Hong Kong High Court issued another Judgment holding that the forwarder was entitled to limit its liability to US$24,392 in accordance with its B/L terms. [HCAJ 106/2008]
More than 10 years ago, we broke new grounds unheard of before among insurance brokers by introducing genuine claim support (by truly employing a team of professional transport claim handlers) independent of that from the insurers. Since then, the knowledge advantage of the insurer over that of the transport operator insured has been evened. Those who buy transport liability insurance are truly better protected with professionals standing at their side who really know the freight industry and are conversant in transport insurance and claims handling.
The Hong Kong High Court issued a Decision on 25 February 2019 dealing with Changhong Group’s delayed application for leave to appeal in relation to the collision case reported in our Chans advice/218 and Chans advice/215. [HCAJ3/2018, 2019HKCFI542]
The English Court of Appeal issued a Judgment on 31/7/2009 holding a charterparty clause (concerning late redelivery) as a penalty clause and thereby unenforceable. [2009] EWCA Civ 855;[2009] All ER (D) 35 (Aug)
Remember Chans advice/142 and Chans advice/145 that the High Court of Hong Kong held the forwarder liable for cargo misdelivery without production of original bills of lading? The Court of Appeal of Hong Kong issued a Judgment on 31/1/2013 dismissing the forwarder’s applications for an extension of time to appeal. [HCMP 2366/2012 & HCMP 2367/2012]
The Hong Kong High Court issued a judgment on 21/4/2016 and disallowed a cargo owner’s application for summary judgment against a forwarder in connection with a cargo (a diamond) missing claim of US$900,000. [HCCL 10/2015]
We reported in our Chans advice/252 that the Hong Kong High Court held Hyundai Hong Kong’s ex-Deputy General Manager (Mr Ma) liable to compensate HK$387,655,303.70 to Hyundai Hong Kong in the case of his theft of his employer’s money. On 23 December 2022, the Hong Kong High Court issued a decision ordering a sum of HK$500,000 (which was deposited by Mr Ma as bail money) to be released to Hyundai Hong Kong in partial satisfaction of Mr Ma’s judgment debt. [HCA 619/2016] [2022 HKCFI 3798]
Are Standard Trading Conditions (“STC”) equivalent to the House Bill of Lading (“HB/L”) terms or the House Air Waybill (“HAWB”) terms? We have been frequently asked this question by our forwarder clients.
While the MOL Comfort incident was a disaster widely talked about among forwarders, all who suffered loss without exception will try whatever means to recover their losses down the line wherever the legal regimes permit.
The Hong Kong High Court issued a Judgment on 23/12/2013 dealing with an application for security for costs in relation to a ship sinking case. [HCAJ 213/2009]
The Hong Kong High Court issued a Judgment on 18/11/2016 dismissing a shipping company’s application for summary judgment against its former deputy general manager (Mr Ma) for restitution of the sum of HK$387,655,303.70 on the ground of money had and received and/or unjust enrichment. [HCA 619/2016]
In Chans advice/215, we reported the High Court of Hong Kong refused Changhong Group’s application to stay the Hong Kong action. The Court of Appeal also subsequently dismissed Changhong Group’s appeal. On 13 July 2020, the Court of Final Appeal finally dismissed Changhong Group’s application for leave to appeal. [FAMV No. 34 of 2020] [2020 HKCFA 24]
The Hong Kong High Court issued a Judgment on 11/8/2009 holding a shipping company could rely on two letters of indemnity to seek compensation of US$253,655.50 from a forwarder and a trading company in a case of cargo release without production of original bills of lading. [HCA 208/2008]
The Ningbo Maritime Court issued a Judgment on 25/5/2016, and dismissed a cargo insurer’s (PICC Ningbo) recovery claim of USD25,238.40 against Mitsui O.S.K. Lines Ltd (“MOSK”) in relation to the vessel MOL Comfort sinking into the Indian Ocean on 17/6/2013.
The English High Court issued a Judgment on 15/5/2015 maintaining an anti-suit injunction to restrain the Xiamen Maritime Court’s legal proceedings in breach of a London arbitration agreement. [Case No: 2015-515], [2015 WL 2238741], [2015 EWHC 1974 COMM]
The High Court of Hong Kong issued a Judgment on 21/7/2014, in which some legal principles relating to the in rem jurisdiction of the Court to arrest vessels were explained. [HCAJ 241/2009]
The Hong Kong District Court issued a Decision on 8 May 2020 upholding a summary judgment ordering one forwarder to pay outstanding airfreight charges of HK$440,000 to another forwarder. [DCCJ1202/2018] [2020HKDC307]
The High Court of Hong Kong issued a Decision on 21/9/2017 dealing with the principles in respect of the real risk of dissipation of assets in a case of Mareva Injunction involving a shipowner and a charterer. [HCMP 1010/2017]
The Hong Kong Court of Appeal issued a Judgment on 4 October 2019 upholding the High Court’s Decision dated 9 April 2018 (reported in our Chans advice/208). [CACV593/2018][2019HKCA1101]
The Hong Kong Court of Appeal issued a Judgment on 20 February 2019 dismissing Changhong Group’s appeal against the High Court’s Decision of 15 November 2018 (reported in Chans advice/215) because Changhong Group had not obtained leave to appeal from the Hong Kong High Court. [CACV576/2018] [2019HKCA246]
In Chans advice/215, we reported that the Hong Kong High Court refused Changhong Group’s application to stay the Hong Kong proceedings; and in Chans advice/234, we reported that the Court of Final Appeal dismissed Changhong Group’s application for leave to appeal. On 7 April 2022, the Hong Kong High Court issued a Decision dealing with Changhong Group’s action to re-litigate its stay application. [HCAJ 3/2018] [2022 HKCFI 920]
We refer to our Chans advice/251 last month reporting the Hong Kong High Court’s decision to sentence Mr Ma (Hyundai Hong Kong’s former deputy general manager) to 15 years’ imprisonment. The High Court issued another Judgment on 27 April 2022 holding Mr Ma liable to compensate HK$387,655,303.70 to Hyundai Hong Kong. [HCA 619/2016] [2022 HKCFI 1153]
SMIC has finally jumped on the bandwagon of the cyber media rush by its presence on the Facebook. We would have done this for a long time had it not been for the daily chores and that we were then not too convinced of its value in the commercial world. Thereafter, it becomes obvious that more and more firms are capitalizing on this new media; and unlike the old economies where information flow was imperfect, consumers of the new economies tend to prefer looking up for information by themselves from the web, or augmenting information they are given.
The Hong Kong High Court issued a Decision on 20/12/2017 dealing with a dispute of US$948,802.05 (as the price of bunkers supplied to a vessel) between a vessel charterer and a bunker supplier. [HCA2265/2016]
The English High Court issued a Judgment on 26/2/2010 holding that a shipping company could follow the shipper’s instructions to change the consignee and the destination in its bill of lading and that the original consignee became having no title to sue. (2010 WL 606031)
The Hong Kong High Court issued a Judgment on 27/5/2011 in relation to an air shipment that a forwarder issued two sets of its House Air Waybills to two different parties for one lot of cargoes. [HCCL 117/1994]
The High Court of Hong Kong issued a Judgment on 3/2/2012 concerning which currency (US$ or Euro) should be the proper one for the cargo owners in a shipment to claim against the forwarder for compensation in a cargo damage case. [HCAJ 152/2010]
In Chans advice/191 and Chans advice/206, we reported a case relating to a shipping company’s claim against its former deputy general manager (Mr Ma) over the alleged theft of the company’s money. The Hong Kong High Court on 16 December 2020 sentenced Mr Ma to 15 years’ imprisonment. [HCCC 20/2018] [2021 HKCFI 195]
The Hong Kong High Court issued a Judgment on 16 January 2019 dealing with the appeal of the wasted costs’ case reported by our Chans advice/214. [HCA1919/2016] [2019HKCFI127]
The High Court of Hong Kong issued a Judgment on 4/5/2012 explaining some legal principles as to when shipowners should fear the arrest of their ships. [HCAJ 141/2010]
The Hong Kong District Court issued a Decision on 30 April 2021 dealing with a personal injury case in relation to a container terminal. [DCPI 110/2020] [2021 HKDC 463]
The High Court of Hong Kong issued a Decision on 15 November 2018 concerning the tragic collision between the cargo vessel CF Crystal and the tanker Sanchi, which happened on 6 January 2018 and led to the death of all the officers and crew of the Sanchi. [HCAJ3/2018] [2018HKCFI2474]
The High Court of Hong Kong issued a summary Judgment on 28/9/2012 holding a forwarder liable for US$626,389 plus costs and interest for misdelivery of cargoes without production of the original bills of lading. [HCCL 20/2011 & HCCL 21/2011]
In our newsletter last month, we talked about some essential terms in house Air Waybills. In this issue, as the continuation of the loss prevention exercise for freight forwarders, we would like to discuss some essential terms in house Bills of Lading.
The Hong Kong Court of Appeal issued a Judgment [CACV144/2017] [2018HKCA299] on 29/6/2018 upholding the High Court’s Judgment dated 2/6/2017 (which was reported in our Chans advice/201).
The Hong Kong Court of Appeal issued a Judgment on 18/12/2014 in connection with a cargo misdelivery claim of US$27,835,000 involving also anti-suit injunction and worldwide freezing order issued by the English Court. [CACV 243/2014 & HCMP 1449/2014]
In this issue, we would like to continue with the case (CSAV v Hin-Pro) mentioned in our monthly newsletter of Chans advice/169 two months ago. The Hong Kong Court of Appeal issued its Judgment on 11/3/2015 discharging the Mareva Injunctions and the receivership orders granted by DHCJ Saunders against Hin-Pro and Soar. [CACV 243/2014]
In the last issue of Chans advice, we reported the case that the Hong Kong Court of Appeal rejected the mortgagee’s appeal against the High Court’s order of granting a stay until 24 April 2019 for the sale of the Vessel Brightoil Glory. On 17 May 2019, the Court of Appeal issued another judgment refusing the shipowners’ appeal in respect of their application for a further stay of the sale of the Vessel until 22 May 2019. [CAMP81/2019] [2019 HKCA 561]
The Hong Kong High Court issued a Decision on 22 Feb 2021 holding that the wreck removal claims of a ship sunk were not subject to the Convention on Limitation of Liability for Maritime Claims 1976. [HCAJ 98/2019] [2021 HKCFI 396]
The Hong Kong High Court on 18/11/2011 issued a Judgment concerning a quite confusing situation that three different laws (the USA, the PRC, and Hong Kong) might apply to the one shipment. [HCAJ 198/2009]
There are three ways of fulfilling the deposit requirement of the Ministry of Transport (“MOT”) in the People’s Republic of China (“PRC”) for your NVOCC license.
The Hong Kong Court of Appeal issued a Judgment on 20 September 2019 declining to give leave of appeal to Changhong Group in relation to the High Court Decision dated 29 January 2019 (reported in our Chans advice/221). [CAMP197/2019] [2019HKCA1061]
The Hong Kong High Court issued a Decision on 2 October 2024 dismissing a shipping company’s application to strike out a forwarder’s third party indemnity claim in a cargo (frozen beef) damage case. [HCAJ 9/2023, HCAJ 22/2023, 2024 HKCFI 2708]
The High Court of Hong Kong issued a Judgment on 1/11/2012 ordering the USA/Canada owners of a cargo (a yacht) to put up HK$250,000 as further security for costs in their legal action against the ship owners. [HCAJ 177/2009]
