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]
Background
The shipowner and the charterer had a long-standing business relationship, with the charterer chartering the shipowner’s vessels for shipment of bauxite cargoes from the Solomon Islands to the PRC. Between September 2018 and June 2020, the parties entered into 16 charterparties governed by English law. The shipowner’s claim against the charterer was for outstanding fees for freight and demurrage.
Procedural history
On 10 August 2020, the High Court granted an ex parte domestic Mareva injunction in the sum of approximately US$5.6 million (“Mareva ceiling”). On 20 August 2020, the charterer disclosed that its assets within Hong Kong were approximately US$40,000 which, in the context of the Mareva ceiling, was a minimal amount.
On 1 September 2020, the shipowner applied to convert the domestic Mareva injunction into an interim worldwide Mareva injunction. At that hearing, the charterer disclosed that it had a wholly-owned subsidiary incorporated in the Solomon Islands, i.e. BMSI and that its shares in BMSI were valuable based on a November 2018 valuation of US$91 million made on a discounted cash-flow basis. Upon the charterer’s undertaking not to dispose of or deal with its shareholding in BMSI, the charterer was ordered to provide a valuation of BMSI within 21 days on a net tangible asset basis and to confirm whether its shareholding was encumbered (“the 4 September order”).
However, the valuation the charterer provided on 25 September 2020 was in breach of the 4 September order in 2 respects: (a) it was a valuation of the charterer and not of BMSI; and (b) it was done on a cash-flow basis and not on a net asset value basis.
On 14 October 2020, the charterer exhibited a certificate of gross tangible asset value of BMSI as of 9 October 2020 of approximately US$23 million (“BMSI gross value certificate”) prepared by Ting & Co, BMSI’s accountants, who opined that there was insignificant debt and all funding was by internal sources. However, as a full audit had not been conducted there was no statement of its exact liabilities.
The BMSI gross value certificate showed that the bulk of its value lay in fixed assets of some US$16.7 million, and the valuer opined that BMSI could operate as a going concern with insignificant external debt.
Applicable legal principles
The applicable legal principles are well established and are not controversial. The burden was on the shipowner to show (a) a good arguable case on the merits; (b) that there was a risk of dissipation; and (c) the balance of convenience was in favour of granting Mareva relief.
The charterer had assets in Hong Kong as well as outside the jurisdiction. The Hong Kong assets were insufficient to satisfy the shipowner’s claim.
The application
The relief the shipowner sought from the High Court consisted of :
(i) an expansion of the domestic Mareva injunction to a worldwide Mareva injunction; (ii) further ancillary disclosure orders should a worldwide Mareva injunction be granted; and (iii) a variation of the Mareva ceiling to approximately US$8.1 million.
The shipowner’s claim for unpaid freight and demurrage under the charterparties was supported by an opinion on English law. That the shipowner had shown a good arguable case on the merits was not seriously challenged: the fact that the charterer had not adduced evidence to counter that opinion spoke for itself.
It was the risk of dissipation that was highly controversial.
The charterer also raised material nondisclosure as a reason for the High Court to refuse to grant the injunctive relief sought.
RISK OF DISSIPATION
In its recent decision in Convoy Collateral Limited v Cho Kwai Chee [2020] HKCA 537, the Court of Appeal had occasion to examine the proper approach when assessing whether there is a risk of dissipation. It adopted the principles set out by Popplewell J in Fundo Soberano de Angola v dos Santos [2018] EWHC 2199 (Comm) at [86] which were held to be applicable in Hong Kong.
The ultimate question, whether a plaintiff succeeds in showing objectively there is a solid basis for concluding that there is a real risk of unjustified dissipation of assets, is to be answered by examining the evidence holistically, involving an evaluative and predictive judgment. Evidence of dishonest and fraudulent conduct or other serious wrongdoing which form the basis of the claims and which reflect adversely on the integrity of the defendant could point powerfully towards the inference of such a risk.
The shipowner relied on 4 factors that supported the inference of a risk of dissipation on the part of the charterer.
I. The charterer’s fraudulent and dishonest conduct towards the shipowner
It was the shipowner’s case that the charterer, for its own benefit, lied to the shipowner on 2 occasions to induce the shipowner to give up its security rights to the detriment of the shipowner’s financial position.
The first attempt was made in the following circumstances:
(i) In view the fees then outstanding, in June/July 2020, the shipowner exercised its security rights and obtained security over 8 cargoes by withholding 3 cargoes and, upon obtaining an order from the Qingdao Maritime Court, arrested 5 cargoes. (ii) After the shipowner’s multiple requests for confirmation of the charterer’s ownership of those cargoes, on 23 July 2020, the charterer did confirm the charterer’s ownership. (iii) In fact, 4 of the 8 cargoes had been sold to a third party who, on 27 July 2020, applied to the Qingdao Maritime Court for their release and it was only on that date that the charterer disclosed their sale.
Prior to 27 July, the charterer had given inconsistent explanations. It was clear from contemporaneous documents that they were shown to be false.
The second attempt was successful. The shipowner was deceived into releasing certain cargo by the charterer’s representation that once sold, proceeds of US$2 million would be used to pay the shipowner. On 5 June 2020, when the shipowner was about to issue a notice of lien over certain cargo, the charterer represented to the shipowner that it had been sold to Chalco Trading (“Chalco”) and that the first instalment proceeds of about US$2 million would be applied to pay the shipowner on 12 June 2020. In reliance on that representation, the shipowner released the cargo on 10 June 2020. However, upon receipt of the proceeds, the charterer did not pay the shipowner but immediately applied the proceeds for other purposes, thus diminishing the amount of security available to the shipowner. The charterer relied on an extract from the transcript of the 24 June meeting to question the very existence of the Chalco representation. However, the extract set out in the charterer’s submissions was not an accurate presentation of the evidence. The unwarranted interpolation into the shipowner’s office transcript spoke to the charterer’s total lack of integrity and willingness to deceive.
II. The charterer’s breach of the Court’s disclosure order
The charterer failed to comply with the 4 September order in 2 material respects.
The reasons for requiring an asset valuation of BMSI were to enable the High Court to obtain a clearer picture of BMSI’s financial position and to evaluate its worth in terms of assets.
What the charterer provided (being a valuation of the charterer done on a cash flow basis as at June 2020) could not possibly have advanced the High Court’s understanding of BMSI’s financial position which was the whole point of the 4 September order. The underlying financial statements of the charterer or its subsidiary did not feature at all and remained unknown.
That the charterer breached the High Court’s disclosure order was an undeniable fact.
III. The charterer’s acts of dissipation
The local assets disclosed by the charterer included sums held in an USD account at Industrial and Commercial Bank of China (Asia) Ltd and one at Agricultural Bank of China. Funds of approximately US$11.8 million (including the Chalco proceeds of US$2.2 million) had been paid into those business bank accounts between March and June 2020. However, by 10 August 2020, such funds had dwindled to less than 1% of what had been paid in during the relevant period.
The charterer submitted that as its cash flow had been restricted because of the Covid pandemic delaying the discharge of cargoes and also from their being withheld/arrested, the monies were spent in the ordinary course of business. It was further submitted that there being no suggestion that money had been squirreled away, the decrease in funds in those accounts could not reasonably be construed as equivalent to active dissipation of assets and the charterer was not required to provide any explanation in the absence of any actual evidence of dissipation.
In the High Court’s view, it was incumbent on the charterer to adduce evidence of its operating expenses for that period in support. It failed to do so and, in the circumstances, the inference of dissipation was warranted.
IV. The charterer’s undertakings dishonestly given to the Court
On 15 October 2020, the charterer gave two undertakings to the High Court.
The undertakings given were:
(i) an undertaking not to dispose of the shares in BMSI (“the BMSI undertaking”); and (ii) undertakings to pay receivables of approximately US $2 million from C & D Logistics (Tianjin) (“C & D”) into the charterer’s Hong Kong bank accounts and to update the shipowner monthly (“the C & D undertaking”).
(A) The BMSI undertaking
This undertaking was premised on BMSI having financial value based on the BMSI gross value certificate.
On 17 November 2020, the charterer produced a certificate dated 12 November 2020 of the BMSI’s net tangible asset value which adopted a valuation date of 15 October 2020 showing a value of approximately US$21 million (the “BMSI net value certificate”). The only difference with its gross value certificate was the item of liabilities of approximately US $2.1 million.
BMSI’s mining operations were conducted on customary land (parcel number 298-005-1 known as “Western Rennell”) pursuant to rights granted under Heads of Agreement dated 21 March 2014 entered into by Asia Pacific Investment Development with the charterer and BMSI, granting them the sole and exclusive right for 25 years to mine, market and sell the bauxite in return for a royalty fee.
The shipowner’s case was that the BMSI undertaking was of no value because Solomon Islands Government had stripped BMSI of its mining rights and fixed assets and that the charterer must have been aware of this on 15 October 2020 when the undertaking was given. The shipowner had produced a Minute dated 19 October 2020 issued by the Registrar of Titles of the Registrar General’s Office of the Solomon Islands rectifying the registration of Western Rennell through revocation of the registration (“the revocation letter”). The Registrar considered the registration unlawful since customary land can only be acquired under Part V by Solomon Islands Government and/or Provincial Governments by private treaty or compulsory acquisition for public purposes. Accordingly, the registration was revoked, returning Western Rennell to customary ownership as customary land pursuant to his powers.
The shipowner submitted (and the High Court accepted) that the land revocation adversely affected the value of the charterer’s shares in BMSI:
(i) BMSI’s ability to continue its mining operations as a going concern was a major component of its value. That was in doubt given the land registration revocation and potential cancellation of the mining lease. (ii) Ownership of the building and infrastructure (which as fixtures would vest with ownership of land), the stockpile (the rights to which were dependent on the mining lease), and potentially parts of the machinery and equipment (which may have become fixtures upon installation) was in serious doubt.
(B) The C&D undertaking
Since the date of the undertaking, the shipowner had never been notified that the charterer had received any part of the C&D proceeds. It then transpired from the shipowner’s own investigations that the underlying contracts proved to have no substance, not being true sales contracts but part of a much wider arrangement, and further, C&D denied any liability to pay such receivables.
The charterer made no submissions in response. In those circumstances, it was irrefutable that the charterer knew that the C&D undertaking was worthless when it was given.
Conclusion on risk of dissipation
Bearing in mind the applicable principles set out in Convoy, looking at the evidence holistically, the shipowner had demonstrated dishonest and fraudulent conduct on the charterer’s part in relation to matters that form the basis of the claims. The charterer’s lack of integrity was amply borne out by the evidence.
The more egregious instances were the following:
(i) The Chalco representation. (ii) The charterer’s failure to apprise the Court of the revocation letter once it came to the charterer’s notice. (iii) On 17 November 2020, the charterer proferred the BMSI net value certificate to the Court when it must have known that the basis for that valuation was no longer valid. (iv) The charterer gave the C & D undertaking when it must have known that the undertaking was worthless.
Those events could not be explained away as innocent errors or misjudgements. They were deliberate and dishonest acts undertaken to deceive and mislead.
Accordingly, the High Court had no hesitation in concluding that the risk of dissipation had been made out.
MATERIAL NONDISCLOSURE
The charterer’s allegations were that at the ex parte stage, the shipowner did not disclose past dealings between the shipowner’s associated companies with Indo Bauxite Mining Corporation (“IBMC”).
The shipowner’s associated companies were separate legal entities. The same applied to IBMC and the charterer. None of these companies was involved in the proceedings in question.
In the High Court’s view, the charterer’s submission that there was material nondisclosure at the ex parte stage had not been made out.
If the High Court was wrong, the principles set out by the Court of Appeal in Excel Courage Holdings Limited v Wong Sin Lai [2014] 3 HKLRD 642 pertaining to the discretion to re-grant injunctions became relevant.
Once the Court finds that there have been breaches of the duty of and fair disclosure on the ex parte application, the general rule is that it should discharge the order obtained in breach and refuse to renew the order until trial. This is sometimes referred to as the “golden rule”. Nevertheless, the Court has jurisdiction to continue or re-grant the order to ensure that justice is done and not to allow the application of the golden rule to become the instrument of injustice in a particular case.
The Court would have regard to the principle of proportionality in the exercise of its penal jurisdiction to impose sanctions for non-disclosure. The overriding question for the Court is what is in the interests of justice in the particular circumstances of the case.
Applying those principles, if necessary, the High Court would re-grant the domestic Mareva injunction.
DISPOSITION
Having regard to the evidence, the High Court had no hesitation in converting the domestic Mareva injunction into a worldwide Mareva injunction.
In addition to the usual ancillary disclosure order, the shipowner sought disclosure of the details of any disposition or transfer of assets on or after 1 March 2020 up to the date of the order to be made. The evidence showed that of funds of approximately US$11.8 million paid into the charterer’s Hong
Kong bank accounts between March and June 2020, by 10 August 2020, only US$40,000 remained.
Given the amount transferred out of the charterer’s Hong Kong bank accounts within such a short time span, it was not unlikely that those funds had been transferred to other entities under circumstances that would fall within the Court’s Chabra jurisdiction.
The High Court agreed that such an order would be appropriate in the circumstances of the case in question.
New Mareva ceiling
The outstanding fees due under the charterparties were US$15,062,391.14. The shipowner calculated the value of valid security it held at US$6,948,338.70. The new Mareva ceiling it sought was US$8,114,052.44.
The High Court agreed that there should be a new Mareva ceiling as sought.
Please feel free to contact us if you have any questions or you would like to have a copy of the Decision.
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
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 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]
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 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 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 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 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]
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 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]
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 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 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 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 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 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]
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.
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]
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 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]
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 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]
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 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]
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.
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 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 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.
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 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 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 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]
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]
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 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 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).
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 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]
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 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 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 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]
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 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 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 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 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 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 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 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.
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 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]
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]
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.
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/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]
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 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 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 Judgment on 22/5/2017 holding that the District Court has jurisdiction to determine bill of lading and bailment cases. [HCAJ 150/2014]
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 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 11 January 2019 dealing with a dispute of US$335,858.31 between a bunker supplier and a ship agent. [HCA119/2015] [2019HKCFI57]
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]
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]
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 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 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]
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]
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 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 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 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 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 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]
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]
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 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]