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Changhong Group (Hk) Limited v Bright Shipping Limited

Judgment Cited authorities 13 Cited in 1 Precedent Map Related
Vincent
Judgment Date16 July 2020
Neutral Citation[2020] HKCFA 24
Year2020
Judgement NumberFAMV34/2020
Subject MatterMiscellaneous Proceedings (Civil)
CourtCourt of Final Appeal (Hong Kong)
FAMV34/2020 CHANGHONG GROUP (HK) LIMITED v. BRIGHT SHIPPING LIMITED

FAMV No. 34 of 2020

[2020] HKCFA 24

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 34 OF 2020 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL

FROM CACV NO. 102 OF 2019)

___________________________

BETWEEN
BRIGHT SHIPPING LIMITED Plaintiff
(Respondent)
and
CHANGHONG GROUP (HK) LIMITED Defendant
(Applicant)

___________________________

Appeal Committee: Chief Justice Ma, Mr Justice Fok PJ and Mr Justice Cheung PJ

Date of Hearing and Determination: 13 July 2020

Date of Reasons for Determination: 16 July 2020

________________________

REASONS FOR DETERMINATION

________________________

Mr Justice Fok PJ:

1. After hearing counsel for the applicant, we dismissed this application for leave to appeal and indicated we would hand down our reasons for doing so in due course. These are our reasons.

Introduction and background

2. On 6 January 2018, a maritime collision occurred between a Hong Kong flag cargo vessel (Crystal) owned by the applicant (defendant) and a Panamanian flag tanker (Sanchi) owned by the respondent (plaintiff) in international waters in the East China Sea. Sanchi exploded and caught fire and eventually sank. The collision resulted in pollution in the form of spilled bunkers and natural gas condensate.

3. This in personam collision action was commenced in Hong Kong by the respondent against the applicant as of right by service of the writ on the applicant, a company incorporated in Hong Kong, at its registered address here. The action has now reached an advanced stage, with the trial due to commence before a judge of the Court of First Instance on 14 October 2020. The main issue to be determined in this action is the extent to which each vessel was to blame for the collision and also the quantum of any damages to be awarded.

4. 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 in this jurisdiction, an application by the applicant (also defendant in that action) to stay the action on the ground of forum non conveniens having been dismissed.[1]

(2) In the Shanghai Maritime Court:

(a) the applicant has applied to establish limitation funds in respect of personal injury and property claims respectively;

(b) the applicant 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 Crystal have brought an action against the applicant, the respondent and the manager of the Sanchi in respect of the loss of that cargo; and

(d) there are also cargo claims against the applicant as well as emergency response and pollution related claims, two of which involve the respondent.

(3) It is noteworthy that the respondent had not, when this matter was before the courts below, submitted to the jurisdiction of the Shanghai Maritime Court in any of the above proceedings in which it is involved.[2]

The application for a stay of this action

5. The applicant applied by summons for a stay of this Hong Kong action on the ground of forum non conveniens. That application was refused by the Admiralty Judge (Anthony Chan J)[3] and an appeal against his refusal of a stay was dismissed by the Court of Appeal.[4]

6. In approaching the applicant’s application for a stay of this action in favour of the Shanghai Maritime Court, the judge 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.”

7. In the present case, the judge, after weighing up the various factors for and against the competing jurisdictions in terms of the trial of the action between the parties, concluded (at [55]) that the applicant failed to establish that the Shanghai Maritime Court is clearly and distinctly more appropriate than the Hong Kong court to determine the issues in this action. The Court of Appeal agreed with this conclusion (at [63]). Thus, the application failed below at the first stage of the forum non conveniens test (Stage 1) without reference to whether the respondent 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 judge 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 the respondent, as was the fact the time limit for bringing a claim in the PRC had already expired, so that an inter-ship action by the respondent brought in Shanghai would not provide an effective remedy. He concluded (at [58]) that substantial justice would not be done in Shanghai, a conclusion with which the Court of Appeal agreed (at [72]).

The application for leave to appeal

8. The applicant’s application for leave to appeal to the Court of Final Appeal having been refused by the Court of Appeal,[5] the applicant renewed its application for such leave to the Appeal Committee by Notice of Application dated 6 May 2020. The applicant’s Notice of Application seeks leave to appeal on the ground that the case raises three questions of great general or public importance and on the “or otherwise” basis.

9. The first question concerns 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 proceeds on the premise that the test in such cases boils down to a choice between what the applicant has described as “the Nan Tung test”,[6] on the one hand, and “the Abidin Daver test”, on the other.[7] It is suggested by the applicant that there is a divergence between the two tests and that final appellate guidance is necessary to clarify the applicable test.

10. We are satisfied that the applicant’s first question proceeds on the false premise that either “the Nan Tung test” or “the Abidin Daver test”, as defined by the applicant, is the applicable test for a stay application in the case of lis alibi pendens. Neither of those tests, as defined by the applicant, is applicable to that situation nor were they applied by the courts below in this case. The relevance of lis alibi pendens is clearly established, and consistently applied in a number of court decisions,[8] 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...

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