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]
Introduction and background
On 6 January 2018, a maritime collision occurred between a Hong Kong flag cargo vessel (CF Crystal) owned by Changhong Group and a Panamanian flag tanker (Sanchi) owned by Bright Shipping in international waters in the East China Sea. The Sanchi exploded and caught fire and eventually sank. The collision resulted in pollution in the form of spilled bunkers and natural gas condensate.
The in personam collision action was commenced in Hong Kong by Bright Shipping against Changhong Group as of right by service of the writ on Changhong Group, a company incorporated in Hong Kong. The main issue to be determined in the action is the extent to which each vessel was to blame for the collision and also the quantum of any damages to be awarded.
Other actions have also been commenced arising out of the collision.
(1) In Hong Kong, another action commenced by parties interested in cargo on the Sanchi will be proceeding to trial, an application by Changhong Group to stay the action on the ground of forum non conveniens having been dismissed. (2) In the Shanghai Maritime Court:
(a) Changhong Group has applied to establish limitation funds in respect of personal injury and property claims respectively; (b) Changhong Group has also commenced an action in that court against the company which managed the Sanchi in respect of the collision; and (c) the insurers of the cargo on board the CF Crystal have brought an action against Changhong Group, Bright Shipping and the manager of the Sanchi in respect of the loss of that cargo; and (d) there are also cargo claims against Changhong Group as well as emergency response and pollution related claims, two of which involve Bright Shipping.
(3) Bright Shipping had not submitted to the jurisdiction of the Shanghai Maritime Court in any of the above proceedings.
The application for a stay of the action in question
Changhong Group applied for a stay of the Hong Kong action on the ground of forum non conveniens. That application was refused by the High Court and the subsequent appeal was dismissed by the Court of Appeal.
In approaching Changhong Group’s application for a stay of the action in favour of the Shanghai Maritime Court, the High Court applied the well-known test applicable to applications to stay proceedings on the ground of forum non conveniens laid down in the House of Lords’ seminal decision in The Spiliada [1987] 1 AC 460. The test, approved and adopted by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at [51], is as follows:
“1. The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice? 2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum (‘appropriate’ in this context means the forum has the most real and substantial connection with the action) and second, there is another available forum which is clearly or distinctly more appropriate than Hong Kong. Failure by the applicant to establish these two matters at this stage is fatal. 3. If the applicant is able to establish both of these two matters, then the plaintiff in the Hong Kong proceedings has to show that he will be deprived of a legitimate personal or juridical advantage if the action is tried in a forum other than Hong Kong. 4. If the plaintiff is able to establish this, the court will have to balance the advantages of the alternative forum with the disadvantages that the plaintiff may suffer. Deprivation of one or more personal advantages will not necessarily be fatal to the applicant for the stay if he is able to establish to the court’s satisfaction that substantial justice will be done in the available appropriate forum.”
The High Court, after weighing up the various factors for and against the competing jurisdictions in terms of the trial of the action between the parties, concluded that Changhong Group failed to establish that the Shanghai Maritime Court is clearly and distinctly more appropriate than the Hong Kong court to determine the issues in the action. The Court of Appeal agreed with this conclusion. Thus, the application failed below at the first stage of the forum non conveniens test (Stage 1) without reference to whether Bright Shipping could show the absence of a legitimate personal or juridical advantage if the action were tried in a forum other than Hong Kong (Stage 2). However, the High Court was of the view that the lower tonnage limitation in the Shanghai Maritime Court as compared with Hong Kong was an important juridical disadvantage for Bright Shipping, as was the fact the time limit for bringing a claim in the PRC had already expired, so that an inter-ship action by Bright Shipping brought in Shanghai would not provide an effective remedy. The High Court concluded that substantial justice would not be done in Shanghai, a conclusion with which the Court of Appeal agreed.
The application for leave to appeal
Changhong Group’s application for leave to appeal to the Court of Final Appeal having been refused by the Court of Appeal, Changhong Group renewed its application for such leave to the Court of Final Appeal. Changhong Group sought leave to appeal on the ground that the case raised three questions of great general or public importance and on the “or otherwise” basis.
The first question concerned the relevance of pending proceedings in another jurisdiction (lis alibi pendens) in the context of an application to stay proceedings on the ground of forum non conveniens. The question proceeded on the premise that the test in such cases boiled down to a choice between what Changhong Group described as “the Nan Tung test”, on the one hand, and “the Abidin Daver test”, on the other. It was suggested by Changhong Group that there was a divergence between the two tests and that final appellate guidance was necessary to clarify the applicable test.
The Court of Final Appeal was satisfied that Changhong Group’s first question proceeded on the false premise that either “the Nan Tung test” or “the Abidin Daver test” was the applicable test for a stay application in the case of lis alibi pendens. Neither of those tests, as defined by Changhong Group, is applicable to that situation. The relevance of lis alibi pendens is clearly established, and consistently applied in a number of court decisions, to be one of the relevant factors that a court will take into account when addressing the Stage 1 question of whether an applicant for a stay has demonstrated that another jurisdiction is clearly or distinctly more appropriate than Hong Kong. That was the approach of the High Court in the case in question, endorsed by the Court of Appeal.
This is also the approach that applies in England and Wales, where the leading textbook Dicey, Morris & Collins on The Conflict of Laws summarises the position as follows:
“Although it was once thought that there were special factors in cases of lis alibi pendens, presumably because litispendence has always been more widely accepted as a ground for jurisdictional relief, it is now clear that the existence of simultaneous proceedings is no more than a factor relevant to the determination of the appropriate forum.”
In any event, the passage from The Abidin Daver which Changhong Group relied upon does not support what it defined as “the Abidin Daver test”. The context of Lord Diplock’s remarks at pp.411H to 412A of his speech is clearly a reference to proceedings taking place in a jurisdiction which is the natural and appropriate forum for the resolution of the dispute. In other words, his remarks are directed to a case where Stage 1 has already been decided in favour of the applicant for the stay and the court is looking to see whether, at Stage 2, the plaintiff who has brought the proceedings sought to be stayed will be deprived of a legitimate personal or juridical advantage if a stay is granted. At the Stage 1 inquiry, as explained in de Dampierre v de Dampierre, a decision on an application for a stay of proceedings decided after The Spiliada where there was a lis alibi pendens between the parties, the existence of other proceedings already pending in the alternative forum is simply a relevant factor which may or may not have particular weight depending on the facts.
The Stage 2 inquiry was never reached in the case in question because the judge concluded that, even taking into account the parallel proceedings in the Shanghai Maritime Court, which in any event were not strictly parallel proceedings to the collision action in Hong Kong, that court was not shown to be clearly and distinctly more appropriate than Hong Kong in relation to the inter-ship action arising out of the collision.
The second question of law for which Changhong Group sought leave to appeal concerned the relevance of the PRC’s exclusive economic zone (“EEZ”). Two separate arguments were sought to be raised. First, it was suggested that the fact that the collision occurred in the PRC’s EEZ distinguished the case in question from a collision occurring in international waters outside an EEZ, where it might properly be said there was no natural or appropriate forum. Secondly, it was sought to argue that the principle in The Albaforth, namely that the jurisdiction in which a tort has been committed is prima facie the natural forum for the determination of the dispute, applied to make the PRC EEZ the (or a) natural or appropriate forum for determining disputes arising from the collision.
The first argument did not justify the grant of leave since it was an academic debate to consider the position as if the collision had occurred in international waters outside an EEZ, which it did not.
The second argument was a new point raised by Changhong Group. Even assuming the point was open to Changhong Group, the Court of Final Appeal was satisfied that it was not reasonably arguable and that its resolution would not lead to a different result. It is well established that the place of a collision at sea is a matter that may be quite fortuitous and in respect of which there may be no obvious or natural forum for the resolution of disputes. The commencement of pollution claims in the Shanghai Maritime Court in respect of a collision that occurred within the PRC’s EEZ does not make that court the natural or appropriate forum for the determination of the inter-ship dispute in question which sought to apportion liability for the collision between the vessels involved. In any event, the collision occurred within the EEZ of not just the PRC but also of Korea and Japan and that claims have been asserted against Bright Shipping in respect of the clean-up operations in Japan. In short, the weight to be attached to the fact of the collision having occurred within the PRC’s EEZ and the pollution claims in the Shanghai Maritime Court was a matter for the judge, again to be tested against other factors going to the question whether the Shanghai Maritime Court was clearly or distinctly more appropriate than Hong Kong.
The third question of law for which leave to appeal was sought concerned the relevance of limitation. Changhong Group’s argument was that, having constituted a limitation fund in the Shanghai Maritime Court, that should be the natural or appropriate forum for the action to be tried. However, the question proceeded on an overall assumption which was circular, namely that because limitation proceedings happened to commence there, the Shanghai Maritime Court was the natural or appropriate forum. While Changhong Group was free to commence a limitation action wherever it chose, this cannot be given undue weight by itself. It also proceeded on a factual assumption that “that jurisdiction is the only jurisdiction where the shipowner is likely to be or has been sued and may limit its liability” which was not warranted. The Court of Final Appeal was not satisfied that Changhong Group’s proposition, namely that, where a limitation action had been commenced in a particular jurisdiction, it would require exceptional factors to displace that jurisdiction for the purposes of forum non conveniens, was reasonably arguable. The weight to be accorded to the limitation proceedings commenced by Changhong Group in the Shanghai Maritime Court was a matter for the High Court in the exercise of its discretion at Stage 1 of the Spiliada test. It was open to the High Court to conclude that, notwithstanding the existence of those proceedings, Changhong Group had not demonstrated that the Shanghai Maritime Court was clearly or distinctly more appropriate than Hong Kong for the trial of the action in question. Given that the issues in the limitation action are different to those in the collision action, there is nothing surprising in the High Court’s conclusion.
Changhong Group also sought leave on the “or otherwise” basis, relying on the same matters in support of the application for leave to appeal on the basis that questions of law of the requisite public importance are involved. This is not an appropriate case for the grant of leave on the “or otherwise” basis. The action in question was commenced by Bright Shipping in Hong Kong against Changhong Group as of right in respect of a collision at sea. If either party is to be described as “forum shopping”, Changhong Group’s desire to litigate the dispute in the Shanghai Maritime Court, where the limitation amount is lower than that in Hong Kong, was more appropriately so characterised, rather than Bright Shipping by bringing this collision action in Hong Kong where the applicant is incorporated.
For the above reasons, the Court of Final Appeal dismissed the application for leave to appeal.
Please feel free to contact us if you have any questions or you would like to have a copy of the Reasons For Determination.
23/F, Excel Centre, 483A Castle Peak Road, Lai Chi Kok, Kowloon, Hong Kong 香港九龍荔枝角青山道483A卓匯中心23樓 Tel: 2299 5566 Fax: 2866 7096 E-mail: gm@smicsl.com Website: www.sun-mobility.com A MEMBER OF THE HONG KONG CONFEDERATION OF INSURANCE BROKERS 香港保險顧問聯會會員
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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]
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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 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]
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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 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 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 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]
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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 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]
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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 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]
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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 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 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]
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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.
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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]
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 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 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]
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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 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]
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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 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 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]
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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]
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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 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 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 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]
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.
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 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]
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 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 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]
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]
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 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 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 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].
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 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]
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 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 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]