SHAGANG SHIPPING CO LTD (IN LIQUIDATION) V HNA GROUP CO LTD

[2018] EWCA Civ 1732, Court of Appeal (Civil Division)

Facts

The disponent claimant, Shagang Shipping Co Ltd (Shagang), chartered the vessel Dong-A Astrea, to Grand China Shipping Co Ltd. Grand China's obligations under the charterparty were guaranteed by the defendant HNA Group Co Ltd ("HNA"). Grand China failed to comply with its obligations under the charterparty. It was in repudiatory breach, which breach was accepted by Shagang, and the charterparty was terminated in 2012.

Shagang looked to HNA for payment under the guarantee, but HNA declined to pay, alleging that the charterparty was procured by bribery and was thus unenforceable.  The allegation of bribery was founded on a confession made in Chinese criminal proceedings. Shagang argued that the confession evidence was obtained under torture and was therefore inadmissible in legal proceedings.

The Judge decided that HNA was liable to pay Shagang under the guarantee. The judgement concluded that "on the limited evidence at this trial, and after careful consideration, on the balance of probabilities . . . there was no bribe".  Later on in his judgement, the judge decided that "torture [could not] be ruled out as a reason for the confessions", and that "[t]he fact that [he could not] rule out torture further reduce[d] the confidence that [he could] put in the confessions".

HNA appealed to the Court of Appeal. The issues for decision on appeal were:

1. whether the judge had been justified in deciding the issue of bribery first and the issue of torture thereafter;
2. whether he had provided sufficient reasons for rejecting the reliability of admissible admissions; and
3. whether the Court of Appeal could or should interfere with his evaluation of the agreed primary facts.

Judgement

On the first issue, the Court of Appeal decided that the judge was wrong to have decided the issue of bribery first. He ought to have decided the issue of torture first. If torture was not proved, then the statements would be admissible as hearsay evidence. The next step would then have been to decide the weight that could be attached to that evidence.

Once the judge had determined that torture had not been proved on a balance of probabilities, he was bound to disregard the possibility that the admissions had been obtained by torture. If however, he took his lingering doubts as to torture into account in evaluating the weight to be attached to the admissions, then he would have made an error of law.

The Court of Appeal concluded that the Judge had failed to take all appropriate matters into account, and in failing to exclude irrelevant matters when considering whether the alleged bribe was paid. The Court therefore allowed the appeal and sent the matter back to a different judge for reconsideration.

Comments

This case illustrates the difficulties judges face when dealing with questions of fact, including the order in which each fact should be taken into account.