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 plaintiff (“IRISL”), an Iranian corporation, sued the six defendants for loss and damage arising out of the latter’s alleged fraudulent obtaining of the release of the cargo shipped on board IRISL’s vessel to Mainland China in 2008-2009. IRISL had obtained a Mareva injunction ex parte against all the defendants. IRISL was seeking to continue the injunction. The 4th defendant (“Lafir”), the 5th defendant (“Frever”) and the 6th defendant (“Corera”) contested the application; and sought for the discharge of the ex parte injunction. The 1st defendant (“Phiniqia”) the 2nd defendant (“Tradeline”) refused to accept service; and together with the 3rd defendant (“Ghurair”), they did not enter appearance. Phiniqia and Tradeline were companies incorporated in Dubai. Tradeline carried on business of trading in, amongst other things, minerals and petrochemicals. Phiniqia was the chartering arm for the trading business of Tradeline. Ghurair was a national of the United Arab Emirates and was at all material times the majority shareholder of both Phiniqia and Tradeline. Lafir was an Indian national. He was at the material times a shareholder of Phiniqia and Tradeline; and the managing director of Tradeline. Frever was a Hong Kong company and was the agent nominated by Phiniqia in respect of the custody of the cargo in question at the ports of discharge. Corera was the sole shareholder and director of Frever. He lived and worked in Hong Kong. Corera was also the company secretary of another Hong Kong company, DBL, of which Lafir was the sole shareholder. DBL owned the vessel Emerald Star, the asset so far specifically identified to be subject to the injunction.
The cargo in question formed part of the iron ore concentrates sold by GEG, an Iranian company, to Tradeline pursuant to a sale and purchase contract dated 6/7/2008. Payment for the goods was by way of letter of credit, which Tradeline obtained in favour of GEG on 20/8/2008 (“the L/C”). Pursuant to the above contract, Tradeline as the buyer had to nominate the vessel for the carriage. It did so through Phiniqia. On 29/7/2008, Phiniqia obtained a fixture recap (“the Fixture Recap”) for chartering the vessel MV Iran Bam for the carriage of the cargo from Bandar Abbas, Iran, to Mainland China. A voyage charter was issued at the same time (“the Charter Party”). IRISL was named the owner of the vessel. On 20/8/2008, the cargo was loaded on board the vessel for shipment; and an original bill of lading was issued and signed by IRISL on behalf of the master (“the Original B/L”) on the same date. GEG was the shipper. The consignee was “to the order of Commercial Bank of Dubai”. The notify address was “to order”. Pursuant to the Charter Party, and as nominated by Phiniqia, IRISL appointed Frever as the agent at the ports of discharge; and Corera as the person in charge. Frever was in turn represented by its local sub-agents at the ports of discharge. The cargo arrived at the ports of Beilun and Zhenjiang in the Mainland in early September 2008, when GEG was still holding onto the Original B/L. On 7/9/2008, Phiniqia requested for the discharge of the cargo from the vessel at the ports of discharge in the absence of the Original B/L. In return, Phiniqia gave IRISL its letter of indemnity (“the LOI”). Physical delivery of the cargo would take place only upon the receipt of the Original B/L. IRISL also gave the instruction to Frever that the cargo should not be released without specific written instruction. Apparently GEG could not get the L/C honoured for payment due to discrepancy between the documents presented and the terms of the L/C. Therefore the Original B/L remained with GEG; and the cargo remained at the ports of discharge.
In late 2008, Tradeline started re-negotiating the sale price with GEG on the grounds of quality and the substantial drop in the market price of iron ore concentrates since the shipment of the cargo. Meanwhile Tradeline started negotiation with its own intended buyer, CNMC for onward sale of the cargo. In February 2009, Tradeline reached agreement with CNMC whereby CNMC agreed to buy the cargo. On the other hand, the negotiation with GEG led to no agreement. In early March 2009, while GEG demanded payment for the cargo by Tradeline, Phiniqia/Tradeline gave instructions for the release the cargo to CNMC at the ports of discharge.
The release of the cargo was made possible by the tendering of another bill of lading. This bill of lading bore the same number and date as those of the Original B/L. But the shipper of the cargo was stated to be Tradeline; and the consignee and notify address was “to order”. It was signed by Phiniqia purportedly on behalf of the master of the vessel. Phiniqia and Tradeline described that as a switch bill of lading. IRISL soon became aware of the release of the cargo; but it claimed no knowledge about the issuance of this second bill of lading (“the Second B/L”).
Tradeline continued the negotiation with GEG after the release of the cargo; and apparently made some preliminary payment. Nevertheless it became clear by mid-2009 that no settlement could be reached between them. GEG commenced action against IRISL in the court of Tehran, Iran, for the loss of the cargo and compensation. On 21/12/2010, the Tehran court entered judgment in favour of GEG against IRISL with costs. In May 2011, GEG obtained an executive order from the Tehran court to enforce the Iranian judgment.
Legal proceedings were threatened in 2009; and eventually commenced against Phiniqia, Tradeline, Ghurair and Lafir in London in January 2010. IRISL became a plaintiff in the English action in April 2011. On 14/5/2012, default judgment was entered in the English Action against the first 4 defendants herein in default of defence. These defendants are liable for the sum of £107,040.80 and US$11.85 million (“the English Judgment”). The English Judgment was yet to be served on these defendants.
On 21/12/2012, IRISL applied ex parte and obtained from the Hong Kong High Court a Mareva injunction against the defendants restraining each of them from removing from Hong Kong or disposing of assets here up to the value of US$12.1 million. As mentioned, Lafir’s share in DBL, the major asset of which was the vessel “Emerald Star”, was specifically identified in the injunction. An ancillary order for disclosure of the defendants’ assets in Hong Kong was also made.
The following pre-requisites for the grant the injunction are accepted as a matter of principle:
There is a good arguable case.
There are assets within the jurisdiction.
There is a real risk of dissipation of assets from the jurisdiction that would render the plaintiff’s judgment unsatisfied.
The balance of convenience tilts in favour of the grant of the injunction.
IRISL set out its following case against the defendants:
The primary cause of action was enforcement of the English Judgment against the first 4 defendants as a debt in common law. The injunction was sought primarily in aid of that.
This was also a claim against all the defendants for fraud and conspiracy by the issuance of the Second B/L to enable the release of the cargo unpaid for and the sale of the same to CNMC.
Against Frever and Corera, the claim was also for their breach of fiduciary duty as IRISL’s agents by flouting the express instructions of IRISL not to release the cargo in the absence of the presentation of the Original B/L and IRISL’s express instruction.
On the other hand, Lafir, Frever and Corera argued that the injunction against them should be discharged on the following grounds:
IRISL did not have a good arguable case in seeking to enforce the English Judgment at common law against Lafir. Nor did it have a good arguable case in the tort of conspiracy against the defendants.
If IRISL did not have a good arguable case in respect of the conspiracy claim, the basis for inferring a real risk of dissipation of assets fell away. There was no evidence of such real risk.
The balance of convenience tilted in favour of discharging the Injunction.
ACTION TO ENFORCE THE ENGLISH JUDGMENT
For the enforcement of a foreign judgment at common law in Hong Kong, there is no dispute that the applicant must establish: (i) that the foreign judgment is final and conclusive in the merits; (ii) that the foreign court has competent jurisdiction over the matter; and (iii) that the parties are the same and issues identical. As far as Lafir was concerned, the parties differed mainly in respect of the second pre-requisite.
A foreign court has jurisdiction to give a judgment in personam capable of enforcement where the person against whom the judgment was given was present in the foreign jurisdiction at the time of commencement of proceedings or the person conducted himself as being taken to have submitted to the foreign jurisdiction: see Dicey, Morris & Collins, Conflict of Laws (15th ed) at 14R-054.
IRISL accepted that Lafir was neither present nor submitted to the English jurisdiction at all. IRISL too accepted that the order of the English court for service of proceedings out of jurisdiction on Lafir per se did not suffice to give the English court jurisdiction over him for the purpose of the intended enforcement of the English Judgment in Hong Kong. What IRISL relied on was what was said in Beals v Saldanha [2003] 3 SCR 416, a decision of the Supreme Court of Canada. In Beals, the vendor from Ontario sold land in Florida to the purchaser. Dispute arose. The purchaser sued the vendor in Florida. The vendor filed a defence but did not respond to the subsequent amendments to the claim. The purchaser managed to obtain from the court in Florida judgment on the basis of the deemed admissions of the amended claim by the vendor. Further notices to the vendor were likewise disregarded. The purchaser commenced an action in Ontario seeking to enforce the judgment obtained in Florida. The Supreme Court of Canada, by majority, held (at §§17-29; 32) that the well established approach (mentioned above) in this respect should give way to the test of whether a real and substantial connection existed between the subject matter of the action and the foreign jurisdiction. Justification by reference to comity and reciprocity was also discussed. IRISL acknowledged that the English approach was the norm. But IRISL argued that there was no binding authority in Hong Kong (at least since 1997) on whether the Canadian approach should be preferred where the foreign court decided to seize jurisdiction by ordering service out of jurisdiction. This, IRISL submitted, was a moot point and more than merely arguable.
Lafir disagreed. He pointed out the following considerations against even the embarkation of considering the adoption of the Canadian approach:
Attempts to extend, broaden or replace the well-established approach in this respect on the basis of comity or reciprocity between jurisdictions have been consistently rejected in common law courts around the world: see Dicey (above)(§14-087 to 14-090); Nygh, Conflict of Laws in Australia (8th ed) (at §§40.21 to 40.22).
The Canadian approach was recently considered by the Supreme Court of UK in Rubin v Eurofinance SA [2013] 1 AC 236 in the context of enforcement of foreign judgments in insolvency proceedings. Lord Collins (at §§106-130) advised against preferring this apparently more liberal approach to the well-established one in the absence of legislative intervention. The Canadian approach, it was submitted, would only introduce uncertainty and unduly onerous burden on an overseas defendant.
Beal has its peculiar factual background. It would appear that by filing a defence, the vendor had submitted to the jurisdiction of the court in Florida. Further the cross-border jurisdiction comity that might exist between the United States and Canada could well be attributed to the historical background of the 2 adjoining countries.
Even if the Canadian approach is adopted, there is hardly any real and substantial connection between the dispute (or Lafir) and the English court. The cause of conspiracy did not arise in England. Lafir was not privy to the Charter Party that required reference of dispute to England. Whilst Phiniqia was said to have submitted to the English jurisdiction by virtue of the terms of the LOI, Lafir was not a party to such contractual indemnity.
Lafir submitted that in the absence of exceptional justification, the Hong Kong court should and would not see fit to even start considering the application of the Canadian approach in place of the well-established approach.
Lafir’s argument was forceful; and the Judge preferred his to that of IRISL.
The present application on the basis of the English Judgment against Phiniqia, Tradeline and Ghurair was strictly unopposed. In their affirmations (in support of the opposing defendants), the managers of the Phiniqia and Tradeline explained that they decided not to contest the English proceedings upon the belief that the claim had no merits and defence of that might be prejudicial to their interests.
As to Frever and Corera, who were not parties to the English Judgment, the application on this ground did not concern them.
CONSPIRACY CLAIM
There is no dispute that a claim for conspiracy to injure comprises these pre-requisites: (i) a combination or agreement between two or more individuals; (ii) an intent to injure; (iii) carrying out of acts pursuant to such combination or agreement with such intent; and (iv) loss and damage thus caused to the plaintiff.
To continue the injunction against any of the defendants, the Judge had to be satisfied that there was a good arguable case in respect of the alleged conspiracy. This was IRISL’s burden, notwithstanding the non-appearance of Phiniqia, Tradeline and Ghurair.
It was said to be a conspiracy of the defendants to issue the Second B/L and/or to use the same to obtain the release of the cargo without the Original B/L or payment by Tradeline.
The defendants described the Second B/L as a switch bill of lading, which they claimed Phiniqia was entitled to issue in line with common international trade practice and pursuant to the Fixture Recap. Evidence was adduced to show that Tradeline invariably required the liberty to issue switch bill of lading in its previous instructions to Phiniqia to arrange carriage. Lafir also explained that the shipper GEG was an Iranian company subject to sanctions imposed by the United Nations Security Council; and therefore Tradeline would have difficulty negotiating the shipping documents through banks if the Original B/L was not switched.
As to the contractual terms between IRISL and Phiniqia, there was dispute as to whether they were contained in the Fixture Recap or the Charter Party. Phiniqia relied on the fact that it had not signed and returned the Charter Party. In the Judge’s view, that per se could not be the complete answer. In any event, both the Fixture Recap and the Charter Party contained similar term in respect of switch bill of lading in that switch bill could be issued upon the pre-conditions of the surrender of the first set of the original bill and a letter of indemnity for the switch bill as per the owner’s P&I wordings. On behalf of the defendants, it was suggested that the requirements of vessel owners varied. Some would insist on either or both of these pre-conditions or none of them at all. That in the Judge’s view was irrelevant. There was in fact never such surrender of the Original B/L or letter of indemnity for Phiniqia’s issue of the Second B/L (as a switch bill). There was no suggestion or evidence that Phiniqia had ever communicated to IRISL (or its agent or representative) the intention to issue the Second B/L so as to trigger the switch bill of lading mechanism. Nor was there suggestion or evidence that IRISL (or its agent or representative) had ever waived such pre-conditions in the previous course of dealings, if any.
It was seriously arguable that the Second B/L was unauthorised and contrary to the contract between IRISL and Phiniqia.
In any event, the fact was that when GEG threatened to cease negotiation in early March 2009, Phiniqia and Tradeline directed the release of the cargo by tendering the Second B/L as the “original bill of lading”. The Second B/L was issued contrary to the contract between Phiniqia and IRISL while the original document of title to the cargo remained with GEG, which was unpaid, the consequential detriment to the interest of GEG and IRISL by the release of the cargo must have been obvious to Phiniqia and Tradeline. Against this background, whether it was a so-called commercial decision as alleged was hardly justification for the wrongful act. Nor was the subjective intent of Tradeline to negotiate with GEG after the release of the cargo.
There was at least a good arguable case on the alleged conspiracy by knowingly causing the release of the cargo (which was unpaid for) to CNMC in the absence of the Original B/L or authorised switch bill of lading, and thus causing loss of the same to IRISL and GEG.
The court needed to ask whether a person was sufficiently a party to the alleged combination and common design, having regard to his knowledge of the facts on the basis of which the conspiracy was unlawful, utterance and actions: see Clerk & Lindsell on Torts (20th ed) at §§24-92; 24-94.
In the context of a director of a company, Lafir pointed out that the fact that a person was a director did not by itself render him personally liable for the torts committed by the company during the period of his directorship. Mere management of the company that resulted in the tortuous act was not sufficient. Nor was the director’s execution of his constitutional role in governing the company and not beyond. To be personally liable, the evidence must be such that the director knowingly procured or directed the commission of the tort by his company. The Judge agreed as a matter of principle.
As far as the issuance of the Second B/L was concerned, the own case of Phiniqia/Tradeline was that the Second B/L was issued by Sakib Elahi, who oversaw Phiniqia’s chartering business and was in charge of the day to day management under the order of Ghurair. Lafir was a silent shareholder of Phiniqia and was not involved in its daily management. As the managing director of Tradeline, Lafir’s main role was evaluation and approval of business opportunities, not execution or implementation. Nor was he involved in the negotiation with GEG for the sale and purchase of the iron ore concentrates, the Charter Party, the decision to issue the Second B/L.
However, alleged conspiracy was not only about the issuance of the Second B/L but also the use of it to obtain the release of the cargo in early 2009. Lafir argued that IRISL was essentially asking the court to infer knowledge, intent and conduct of conspiracy on the part of Lafir from his mere position in Tradeline. On the contrary, IRISL described Lafir as someone close to the entire transaction.
The Judge could see why IRISL submitted as mentioned above. The contemporaneous correspondence showed that Lafir was involved in the negotiation with GEG. He was seen involved in the negotiation after the cargo had been released until the end of April 2009. Such aftermath arguably cast no light on Lafir’s role in procuring the release of the cargo. But the correspondence showed that Lafir was involved in the negotiation with GEG even prior to the release of the cargo. In January 2009, he had meetings with GEG; and GEG also addressed its letter of complaint to Lafir. Even without such evidence, Lafir could hardly deny knowledge that GEG was not paid for the cargo. Lafir also admitted that he knew about the use of the Second B/L to obtain the release of the cargo, in the absence of payment or settlement with GEG. There might be no direct evidence that Lafir personally directed the release of the cargo to CNMC. It was however difficult to accept that the decision to do so was the mere initiative of the management or staff and about which Lafir was somehow kept in the dark, notwithstanding his involvement in the negotiation with GEG prior to that. After all, what happened and the monetary amount involved, even without further evidence, were by no means insignificant in the ordinary business of Tradeline.
The dispute as to whether Lafir was liable as a party to the alleged conspiracy was obvious. Nevertheless, the Judge was impressed that this might not be merely a case involving a director doing nothing more than his constitutional duty. There could be basis for the court to find against Lafir, considering all the circumstances.
Whilst Frever was nominated by Phiniqia, it was apparently IRISL which appointed it as the port agent in respect of the cargo. Frever and Corera acknowledged the instruction of IRISL in early September 2008 that the cargo, though discharged at the ports, were not to be released without specific instructions. Frever further nominated local sub-agents at the ports respectively to deal with the port formalities. Both had been advised of the instruction not to release the cargo at the ports until further instructions. According to Corera, he heard nothing from the parties until early 2009 when Tradeline gave instructions for the release of the cargo to its buyer. Frever acted upon the understanding that agreement had been reached between Tradeline with its buyer. Corera emphasized that it was not the duty of Frever as the port agent to find out what led to the delay in the release of the cargo. He had no exact knowledge about the underlying dispute. He had heard nothing from IRISL for over months. When the instruction came from Tradeline, he was given to understand that everything had been sorted out; and he assumed that it was proper to give instructions to the sub-agents to release the cargo. So he did. As to the Second B/L, Corera claimed no involvement in its issue as the same was beyond Frever’s scope of duty in any event. The documents indeed show that it was forwarded by Tradeline through the banking channel without going through Frever.
That Frever appointed and delegated to its sub-agents to act on its behalf at the ports of discharge was neither here nor there; as Frever could not delegate its duty of care owed to IRISL. That Frever and Corera admittedly chose to act on multiple assumptions about the propriety of release of the cargo without confirmation from their principal, IRISL, gave rise to seriously arguable case on whether they were in breach of their duty to their principal. But in the Judge’s view, the evidence fell short of a good arguable case against Frever and Corera as alleged parties to the conspiracy of the other defendants to issue the Second B/L or to obtain the release of the cargo by the use of it.
ASSETS IN HONG KONG
Subject to the ancillary disclosure, IRISL was targeting the vessel Emerald Star, which was owned by DBL and of which Lafir was the sole shareholder. There was basis for suspecting that such asset was being held by Lafir on trust for Phiniqia or Tradeline.
RISK OF DISSIPATION
Whilst the Judge did not rule out a good arguable case in respect of the conspiracy claim against Phiniqia, Tradeline, Ghurair and Lafir, what bothered the Judge was whether IRISL managed to establish a real risk of dissipation of assets on the part of any of them.
The case of IRISL in respect of the risk of dissipation against Lafir, and in fact other defendants as well, was based primarily, if not solely, on the inference of dishonesty and low commercial morality arising out of the conspiracy claim. But that per se could not be the answer in the circumstances of the case in question. The Judge said this because of the substantial lapse of time prior to the ex parte application for the injunction.
The conspiracy claim was threatened and the draft particulars of claim communicated to the defendants in as early as August 2009. The English proceedings were served on the defendants in December 2010. The English Judgment was obtained in May 2012. It was explained that time had been taken since then to obtain clearance from the European Union to enable the solicitors acting IRISL, being an Iranian corporation, to receive payment of legal fees and expenses before further steps could be taken. In July 2012, IRISL changed to its present solicitors. The application for the ex parte injunction was not taken out until December 2012.
The lapse of time prior to the ex parte application, counting from whichever point of time mentioned above, was substantial. Yet not the entire period of delay has been explained. There was no evidence in respect of when IRISL came to know that the defendants have asset in Hong Kong. The vessel Emerald Star was registered in Hong Kong in January 2011. No application was taken out since then. Further months had passed after the present solicitors were instructed before they took out the ex parte application for the injunction.
Irrespective of whether the explanation so far given for the delay was accepted, the lack of application until December 2012 must have been relevant to the consideration of how real the risk of dissipation of assets on the part of the defendant had been and was. The fact had been and still was that IRISL merely relied on the inference from the nature and particulars of its conspiracy claim. Whilst the court accepted as a matter of principle that inference of such risk could be drawn, there was no suggestion or evidence that it was due to any change in circumstances since the time when such inference might first be drawn until the time of the application that prompted the application.
As to Frever and Corera, it was concluded that the case of fraud and conspiracy against Frever and Corera did not amount to a good arguable case. The sole basis for drawing inference of low commercial morality and thus risk of dissipation on their parts fell away. Frever had been carrying on business in Hong Kong for over 30 years; and there was no other evidence to suggest any change of that or circumstances suggesting a real risk of dissipation of the assets by Frever or Corera. Whilst Corera was the company secretary of DBL and Frever was the representative, there was no evidence suggesting his ability and the likelihood of dissipating the asset of DBL including the vessel Emerald Star since the English action.
OTHER ARGUMENTS
No loss
It was argued that IRISL had not suffered loss and damage as at the commencement of this action because the Iranian Judgment had not been satisfied. The Judge was not impressed by this argument, if one considered the adjudged liability against IRISL, albeit yet to be satisfied.
Material non-disclosure
There was alleged material non-disclosure when the ex parte injunction was obtained. They were: (i) that the Iranian Judgment was yet to be satisfied; and (ii) that GEG was not paid because of its own fault in presenting documents discrepant from the terms of the L/C.
As discussed, whether the Iranian Judgment was satisfied, the liability of IRISL under the judgment should have already accrued.
That GEG had failed to secure the honouring of the L/C, and thus payment thereunder, no longer mattered. As the buyer, Tradeline was in a position to waive discrepancy or in any event to pay before obtaining release of the cargo. The fact was that it chose not to do so.
Neither matter allegedly withheld from the ex parte judge would have been material.
Locus standi
The locus standi of IRISL to bring this action was under challenge. Essentially it was said that IRISL was not the owner of the vessel MV Iran Bam but one Ashstead Shipping.
Ashstead Shipping was wholly owned by IRISL, which gave Ashstead’s bank account for the purpose of the Fixture Recap. The Charter Party referred to IRISL as the owner and shipper. The Charter Party was sent to and received by Phiniqia. Whether the same was signed and returned by Phiniqia did not change the fact that it was IRISL which entered into the Charter Party. IRISL was indeed one of the plaintiffs entitled under the English Judgment, which it sought to enforce.
CONCLUSION
Whilst the Judge did not rule out a good arguable case against Lafir on the conspiracy claim, the Judge was not satisfied that IRISL had established a real risk of dissipation of his asset at the time of the ex parte application or the present application to warrant the injunction. Of course, nothing would prevent IRISL from applying on the basis of change in circumstances at any point in future.
In view of the commonality in the case of IRISL against Phiniqia, Tradeline, Ghurair and Lafir for the present purpose, it would be inherently inconsistent for the Judge to maintain the injunction against the first 3 of them merely on the basis that the present application against them was strictly speaking unopposed whilst at the same time discharging the injunction against Lafir. The injunction against all 4 of them should be discharged.
The injunction against Frever and Corera should be discharged.
The application against all the defendants was thus dismissed.
Please feel free to contact us if you have any questions or you would like to have a copy of the Judgment.
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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 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 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]
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 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]
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.
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.
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]
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]
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]
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 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]
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.
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]
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]
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.
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]
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]
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.
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]
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 on 4 October 2019 upholding the High Court’s Decision dated 9 April 2018 (reported in our Chans advice/208). [CACV593/2018][2019HKCA1101]
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]
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]
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 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]
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 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]
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 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 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]
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 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]
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 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 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]
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]
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]
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 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 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 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]
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 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]
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.
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 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]
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 […]
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 29/4/2013 relating to a discovery order ancillary to and in support of a Mareva injunction. [HCA 2124/2011]
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]
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]
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]
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 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 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]
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.
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 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]
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]
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 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 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]
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.
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]
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.
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 ruling on 2/12/2016 dealing with a shipowner’s interrogatory application in relation to an uncollected cargo case. [HCAJ 118/2015]
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]
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.
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]
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 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].
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 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 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]
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]
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 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 5/8/2015 holding that a shipment of formula milk powder without the legally required export licence should not be forfeited. [HCMA171/2015]
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]
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.
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 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]
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]
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 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 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 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]
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]
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]
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]
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]
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:
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]
