In 2013, the container vessel MOL Comfort fractured amidship and drifted for a few days before sinking with the loss of all the cargo on board. The vessel was owned by Ural Container Carriers SA, time chartered to Mitsui OSK Lines Ltd (Mitsui) and operated by a subsidiary of Mitsui. MHI was the builder of the vessel.

All the plaintiffs were cargo interests or insurers. Interocean Lines Ltd (the fourth defendant) was the issuer of two bills of lading for carriage of cargo from Hong Kong to Rotterdam. The fourth defendant was sued by the ninth to the 26th and 29th plaintiffs (the plaintiffs) for USD 399,107 and CHF 153,136 respectively. The bills of lading were issued in Hong Kong and the port of loading was Hong Kong.

The contracts of carriage evidenced in the bills of lading were governed by the Hague-Visby Rules, governed by Hong Kong law, and the Hong Kong courts were to have exclusive jurisdiction. The fourth defendant was not the actual carrier of the cargo. The fourth defendant was described as a NVOCC (non-vessel operating common carrier) and had subcontracted the carriage of the cargo under the bills of lading to Mitsui and Hyundai Merchant Marine (HMM).

In July 2013, Mitsui applied to the Tokyo District Court for a decree of limitation of liability. This was granted and a limitation fund was constituted in the sum of JPY 4,097,444,566

The fourth defendant applied for a stay of proceedings until the final determination of:

1. The limitation action commenced by Mitsui before the Tokyo District Court.
2. The action commenced by inter alia Mitsubishi Mitsui and the owner of the vessel against Mitsubishi Heavy Industries before another division of the Tokyo District Court.

By way of background, the concept of limitation of liability is simply that a shipowner and other designated parties are entitled to limit their liability arising out of a maritime incident to a particular sum, irrespective of the total number of claims and their amounts. The act of invoking limitation of liability does not constitute an admission of liability as such. If a limitation decree is granted, the shipowner (and others) will set up a fund and all claimants can only look to the fund for satisfaction of their claims, but not otherwise. It is legally possible, but in practice highly difficult, for a claimant to 'break the limit'. In order for a person liable to lose the right to limit liability, it must be proved that the loss resulted from its personal act or omission, committed with intent to cause such loss, or recklessly and with knowledge that such loss would probably result. In the ordinary course of things, what happens is that the claimants will accept a pro-rata share of the limitation fund in satisfaction of their claims, period. In Hong Kong, the law on limitation can be found in the LLMC 1976, set out in Sch 2 of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434. A Protocol to the 1976 Convention was adopted on 3 May 1996 (LLMC 1996) and entered into force on 13 May 2004 after its ratification by the requisite number of States. The amendments made by the 1996 Protocol to the 1976 Convention are not material for the present purpose. Suffice it to say it is not in dispute that the limitation action was brought by Mitsui in accordance with the LLMC 1996. The LLMC 1996 is said to have come into force in Hong Kong in 2015.

On 10 January 2014, Mitsui (and the owner of the vessel) submitted a petition in the limitation action stating that the cause of the incident was because there was a defect in the vessel and that such defect would qualify as 'latent defects not discoverable by due diligence' under art 4.2.p of the Hague-Visby Rules. Mitsui was therefore exempted from carrier’s liability.

Held: The application is dismissed.

It is reasonably clear that the fourth defendant’s argument boils down to the proposition that the present proceedings should be deferred until the determination of the limitation/MHI action so that the fourth defendant can avail themselves of the evidence filed by the parties in the limitation/MHI action in order to defend the present proceedings.

The fourth defendant is not a party to the limitation/MHI action. If the fourth defendant, as a non-party, is entitled to have access to the evidence filed in the limitation/MHI action, then logically it should make no difference whether the two actions have been finally determined or not. The reverse should also be true.

The fourth defendant’s Japanese attorney has testified that a non-party can, with the Japanese court’s permission, inspect and copy the court files. All they have to do is make out a prima facie case that it has a legal interest in the Japanese proceedings when seeking permission. In the MHI action, the court has no far allowed non-parties to inspect and copy the evidence by submitting a translated transport document as evidence of the non-party’s relation to the casualty. The fourth defendant’s Japanese attorney has testified that he would be able to search and copy the court files on behalf of the fourth defendant.

This Court is not satisfied that the fourth defendant has no means to obtain proof of the cause of the casualty other than from the court files in the two actions. Mitsui is one of the fourth defendant’s subcontractors and, prima facie, has a potential contractual liability to the fourth defendant for the loss of the cargo. It stands to reason that Mitsui has a self-interest in assisting the fourth defendant to defend the present action.

Even after the Tokyo District Courts have finally determined the MHI action and limitation action, their determination will still be subject to appeal to the Tokyo High Court and then the Supreme Court of Justice. The delay to a 'final determination' resulting from such potential appeals will be measured in terms of years.

Apart from the absence of any tangible benefit to the fourth defendant, this Court must also consider the adverse effect on the plaintiffs should the present proceedings be stayed. The plaintiffs are suing the fourth defendant in Hong Kong as of right pursuant to an exclusive jurisdiction clause by which the fourth defendant has agreed to be bound. Circumstances have to be rare and compelling before a stay of the present proceedings should be granted. The circumstances of the present case far from rare or compelling.