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Pusan Newport Co., Ltd. v The Owners And/or Demise Charterers Of The Ships Or Vessels “Milano Bridge” And “Cma Cgm Musca” And “Cma Cgm Hydra

Judgment Cited authorities 9 Cited in 1 Precedent Map Related
Vincent
Judgment Date11 May 2021
Neutral Citation[2021] HKCFI 1283
Judgement NumberHCAJ31/2020
Citation[2021] 2 HKLRD 994
Year2021
Subject MatterAdmiralty Action
CourtCourt of First Instance (Hong Kong)
HCAJ31/2020 PUSAN NEWPORT CO., LTD. v. THE owners and/or demise charterers of the ships or vessels “MILANO BRIDGE” and “CMA CGM MUSCA” and “CMA CGM HYDRA”

HCAJ 31/2020

[2021] HKCFI 1283

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ADMIRALTY ACTION NO 31 OF 2020

____________________

Admiralty action in rem against: the ships or vessels “MILANO BRIDGE” “CMA CGM MUSCA” and “CMA CGM HYDRA”

BETWEEN
PUSAN NEWPORT CO., LTD. Plaintiff
and
THE owners and/or demise charterers of the ships or vessels “MILANO BRIDGE” and “CMA CGM MUSCA” and “CMA CGM HYDRA” Defendants

____________________

Before: Hon Anthony Chan J in Chambers

Date of Hearing: 29 April 2021

Date of Decision: 11 May 2021

________________

DECISION

________________

1. This is the Defendants’ application by Summons filed on 5 November 2020 pursuant to O12, r8 for this action be stayed in favour of the courts of South Korea on the grounds of forum non conveniens (“FNC”) and/or lis alibi pendens (“LAP”).

Issues

2. The issues are: (i) whether the Defendants are unable to demonstrate that South Korea is clearly or distinctly the more appropriate jurisdiction than Hong Kong for the trial of these matters; and (ii) whether depriving the Plaintiff of the higher tonnage limitation provided in Hong Kong would be a decisive factor in refusing a stay.

Background

3. The following facts[1] are not in dispute, save indicated otherwise. The Plaintiff is the Korean operator of a commercial maritime terminal at the port of Busan (“Terminal”) offering berths for loading and unloading container vessels with large movable gantry cranes. It appears that the Plaintiff does not have any business operation outside South Korea.

4. The Defendants were (and are) the joint owners of the vessel “Milano Bridge” (“Vessel”), owned as to 90% by Doun Kisen Co Ltd, a company incorporated in Japan, and 10% by Mi-das Lines SA, a company incorporated in Panama. The Vessel flies the Panamanian flag. The Defendants are both managed from Japan. At the material times, the Vessel was sub-chartered to Ocean Network Express Pte Ltd (“ONE”), which was incorporated in Singapore with operations worldwide, including Busan, South Korea.

5. The Plaintiff operates on, inter alia, (i) its Standard Terms and Conditions 2019 (“STC”) and (ii) specially negotiated agreements, such as the Terminal Services Agreement dated 1 April 2014 (“TSA”) between the Plaintiff and various liner operators comprising a consortium called The Alliance.

6. The Defendants are not party to the TSA. However, both the Charterer and ONE are contracting parties to the TSA. The Plaintiff has made a claim against ONE under the TSA in South Korea.

7. The Defendants are not party to any STC either. The Plaintiff says that the STC are relevant only to liner operators (not vessel owners) who had executed the requisite agreement.

8. However, the Defendants seek to refer to the STC which provided at clauses 18.2 and 19.3 for a contractual limitation of liability of US$15m for both parties. The TSA similarly provided at clauses 18.2 and 19.3 a contractual limitation of liability of US$20m for both sides. It appears from the liability clauses (18.1 and 19.1) of the STC that loss or damage arising from negligence or wilful misconduct would generally be covered.

9. This action concerns an Allision between the Vessel and Berth 8 at Pier 2 at the Terminal which took place at 14:49 on 6 April 2020, involving contact between the Vessel and some of the Plaintiff’s cranes and another vessel. At the time of the Allision, the Vessel was under compulsory pilotage of a Korean pilot and was assisted by Korean tugs, one at the bow and one at the stern. Also, there were maritime works in progress by Korean contractors to remove Todo Islet, a small island at the approach to the berth.

10. The Defendants say that Todo Islet presented a hazard to ships arriving at the Terminal, which explained the need for its removal.

11. The Plaintiff says that Cranes 81, 83 and 84 were partially damaged. Crane 85 had collapsed onto the deck of the Vessel and was very significantly damaged. The Plaintiff asserts that the Allision was caused by the negligence of the Defendants, their servants or agents in the navigation and management of the Vessel and that it has suffered loss and damage in terms of (i) physical damage to the cranes with resulting monetary loss in terms of repair and replacement cost; and (ii) business interruption.

12. The alleged “Material Damage” amounts to US$30,116,930.01, and the alleged “Business Interruption” loss has been quantified at US$60,851,879.83.

13. The Defendants’ position is that the quantum of the Material Damage claim will largely be determined by repair and replacement invoices (with possibly certain internal cost claims). Whilst the claim will be subject to close scrutiny, it will unlikely be disputed that the damaged cranes required significant repair (or replacement), and there will unlikely be much (if any) cross-examination on those quantum issues.

14. However, the Business Interruption claim may have been significantly exaggerated and is likely to be heavily disputed. It will turn largely on historical throughput and occupancy figures, as well as assessment of the Plaintiff’s internal business and cost.

15. It is right to say that in this action all relevant events which gave rise to liability occurred in South Korea, all physical damage was incurred on land in South Korea and all economic loss was suffered in the same country.

16. This action was commenced when a sister ship of the Vessel, “CMA CGM Musca”, called at Hong Kong on 24 June 2020 and was arrested.

17. It is fair to say that except for the fact that the sister ship called at Hong Kong, this dispute has nothing to do with Hong Kong.

Other proceedings

18. As stated above, the Plaintiff has initiated a claim against ONE under the TSA. It appears to be in abeyance.

19. In addition, the Allison has given rise to various sets of proceedings in the courts of South Korea as follows :

(1) Action by the Defendants against the Korean Government in respect of pilot liability, Todo Islet works and Vessel Traffic Service Centre liability;

(2) Action by the Defendants against the Plaintiff which is essentially a ‘mirror image’ action to these proceedings;

(3) Action by the Defendants against the Pilot for negligence;

(4) Action by the Defendants against the Tug Owners for negligence;

(5) Action by the Defendants against Daelim Industrial Co Ltd, the Todo Islet contractors, for negligence;

(6) The Defendants’ Limitation Action;

(7) Action by Busan Port Authority against both the Plaintiff and the Defendants for the cost of maritime markings;

20. As to Action (2), the Plaintiff’s response is that it can be dealt with within the Defendants’ Limitation Action (Action (6)).

21. In respect of the Limitation Action (Action (6)), the Plaintiff has filed a claim against the Limitation Fund on a without prejudice basis. There is no agreement between the parties whether it is open to file a claim on such a basis under Korean law.

22. Action (7) was recently withdrawn upon a promise of full payment by the Plaintiff’s insurers.

23. In addition to these civil actions, there are criminal proceedings pending against the Master of the Vessel in South Korea.

24. The Korean Maritime Safety Tribunal (“KMST”) is conducting an investigation to determine the cause of the maritime incident, any administrative sanctions against Korean officeholders and appropriate corrective measures to avoid similar situations in the future. The Plaintiff is participating in the investigation. The KMST has already issued one report dated 12 January 2021. That report was aim at identifying the cause of the Incident and preventing similar accident in the future. It was not intended to be used for determining liability. This court was informed that another report which may be so used is in the making.

25. In addition to these proceedings, the Plaintiff has commenced materially identical proceedings against the Defendants in Japan. Thus, the Defendants say that they are being vexed twice by the Plaintiff in respect of the Incident.

26. The Plaintiff’s position is that it wishes to have the dispute determined in Hong Kong, ‘failing which’ Japan. It has indicated in evidence that if this court declines to stay this action and it is to proceed, the Plaintiff will withdraw the Japanese Action. On the other hand, if this action is stayed, the Plaintiff will seek to pursue the Japanese Action.

Insurance

27. The Plaintiff was insured by Samsung Fire & Marine Insurance Co Ltd (“SFMI”), which is located in South Korea. SFMI has appointed loss adjusters in South Korea, McLarens Korea.

28. It appears that SFMI was reinsured as to 85% with Chubb Insurance Australia Ltd.

Shipowners’ limitation of liability

29. There is a different shipowners’ liability limitation regime in Hong Kong (and Japan) on one hand and South Korea on the other. The Plaintiff’s evidence[2] suggests that from the outset the Plaintiff and its advisers had targeted Hong Kong as a forum for this dispute, by way of sister ship arrest, because of the limitation regime here.

30. South Korea is not party to any international convention on shipowners’ limitation of liability. However, it has enacted a domestic limitation regime within the Korean Private International Law Act based on the Convention on Limitation of Liability for Maritime Claims 1976 (“LLMC 76”).

31. Unlike Hong Kong, under the Korean Act, questions of whether a shipowner is entitled to limit, and if so in what amount, are determined under the law of the flag of the vessel concerned. In this case, it is the law of Panama.

32. On 24 April 2020, the Defendants...

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