QCR Winter 2020: Bright Shipping ltd v Changhong Group (HK) Ltd (the "CF Crystal" and the "Sanchi") [2019] HKCA 1062

Collision at sea within EEZ of PRC — Forum non conveniens — Whether Hong Kong proceedings should be stayed in favour of Shanghai Maritime Court.

Bright Shipping ltd v  Changhong Group (HK) Ltd (the “CF Crystal” and the “Sanchi”)  [2019] HKCA 1062

The Club had previously reported on the High Court’s decision in this case in which a collision between the CF Crystal and the Sanchi on 6 January 2018 led to the death of all the officers and crew onboard the Sanchi. Please refer to our QCRs Spring 2019. The High Court dismissed the Defendant’s appeal, holding that it had failed to discharge its burden for the Spiliada first-stage analysis.

On 1 August 2019, the High Court refused the Owners of the CF Crystal (“the Defendant”) leave to appeal against its decision.  The Defendant renewed its application for leave to appeal to the Court of Appeal by a summons issued on 14 August 2019.

The Defendant submitted that the judge failed to appreciate the significance of the EEZ regime to the PRC authorities, and that the overwhelming centre of gravity of the case was in Shanghai. It submitted that in the interests of uniformity and judicial comity, once a limitation fund was established in the jurisdiction chosen by a shipowner, all claimants were expected to enforce claims against the fund and not in another jurisdiction. Moreover, the judge's analysis in respect of lis alibi pendens (“dispute elsewhere pending”) was wrong in law.

Judgement

The Court of Appeal upheld the High Court Judge’s conclusion that substantial justice would not be done if the case were to be decided in Shanghai.

(i) It was accepted that the first question for the Spiliada first-stage analysis (the appropriate forum for the trial of the action) was to be answered in favour of the Defendant in that Hong Kong was not the natural forum for the inter-ship litigation, even though the plaintiff was entitled to bring the action as of right, given that the defendant was a Hong Kong company. The dispute concerned the second question: whether the Defendant had established that the Shanghai Maritime Court (SMC) was clearly and distinctly more appropriate than Hong Kong as the forum for the trial of the inter-ship action.

(2) The Defendant's submission that once a shipowner had constituted a limitation fund in a chosen jurisdiction, all claimants were expected to enforce their claims against the fund and not elsewhere was much too broad. What weight was to be given to the setting up of a limitation fund in another jurisdiction and how that should be weighed against other factors in the case would depend on the particular circumstances. The judge's approach could not be faulted. He had not misdirected himself on the applicable principles or fallen into error in his evaluation of the factor that the collision was within the EEZ of the PRC.

(3) There was no basis to interfere with the judge's assessment that lis alibi pendens and related proceedings did not tip the balance in the first-stage analysis. Nor was there any valid basis for interfering with the judge's evaluation of the other factors in the first-stage analysis. The judge had not erred in principle and was not wrong in reaching the conclusion which he did.

Comments

The Defendant’s subsequent application for leave to appeal to the Court of Final Appeal was refused by the Court of Appeal. The Defendant renewed its application for such leave to the Appeal Committee by Notice of Application dated 6 May 2020 but the Court of Final Appeal rejected all three questions relied upon by the Defendant in its ground of appeal.