This was an appeal by the defendant, Changhong Group (HK) Ltd (Changhong), against the decision of Anthony Chan J on 15 November 2018 (CMI306) dismissing its application to stay an action brought in Hong Kong by the plaintiff, Bright Shipping Ltd (Bright Shipping) on the ground of forum non conveniens.

This case concerned a collision between Changhong’s vessel, the CF Crystal, and a tanker owned by Bright Shipping, the Sanchi. The collision took place about 125 nautical miles from Changjiang Kou Light Ship in the East China Sea. The collision was followed by a number of legal actions, including proceedings in the Shanghai Maritime Court (SMC) and the action in Hong Kong. These actions were commenced simultaneously on 9 January 2018. On the same day Changhong also applied to establish two limitation funds in the SMC: one for personal injury and one for property.

Bright Shipping has not submitted to the jurisdiction of the SMC. Its Hong Kong proceedings are an in personam collision action brought against Changhong. The jurisdiction of the Hong Kong Court was invoked by Bright Shipping as of right, having served proceedings on Changhong at its registered address in Hong Kong.

The collision occurred outside of the PRC’s territorial waters and within the PRC’s exclusive economic zone (EEZ). Article 3 of the United Nations Convention on the Law of the Sea (UNCLOS) provides that the breadth of the territorial sea does not exceed 12 nautical miles. Article 55 of UNCLOS defines the EEZ as an area beyond and adjacent to the territorial sea. Article 57 provides that the breadth of the EEZ shall not extend beyond 200 nautical miles. It appears that the point of collision also lay within the EEZs of Korea and Japan.

Held: Appeal dismissed.

Applying the principles in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460, the first question for the stage 1 analysis (the appropriate forum for the trial of this action) is to be answered in favour of Changhong in that Hong Kong is not the natural forum for the inter-ship litigation, even though Bright Shipping is entitled to bring this action as of right, given that Changhong is a Hong Kong company.

The dispute concerns the second question for the stage 1 analysis: whether Changhong has established that the SMC is clearly and distinctly more appropriate than Hong Kong as the forum for the trial of the inter‑ship action. The constitution of limitation funds in the SMC is not a legal bar to bringing proceedings in Hong Kong. Hong Kong applies the Convention on Limitation of Liability for Maritime Claims 1976 (as amended by the Protocol to that Convention in 1996 and the amendment thereto) (LLMC 1996) as a State party. The LLMC 1996 has the force of law in Hong Kong as provided in s 12 of the Merchant Shipping (Limitation of Shipowner’s Liability) Ordinance, Cap 434. The PRC is not a State party to the LLMC but has enacted Chapter 11 of its Maritime Code which was drafted with reference to the LLMC 1976. Although art 13 of the LLMC 1996 provides for the barring of other actions, this is expressly predicated on there being a fund constituted in accordance with art 11 in any State party in which legal proceedings are instituted. As the PRC is not a State party to the LLMC, there is no statutory bar on Bright Shipping bringing an action against Changhong in Hong Kong, notwithstanding the constitution of the limitation funds by Changhong in the SMC.

The judge did not place undue emphasis on the place of the collision as falling within the EEZ of the PRC and went on to consider other factors. He correctly reminded himself that the focus is on the appropriateness of the forum 'from the point of view of the trial of the action' and on that basis considered the primary issues for trial, namely, the inter-ship apportionment of liability and the assessment of the respective quantum of loss, from the angle of the evidence likely to be adduced for those issues. The claims for incident response costs and environmental damage brought in the SMC do not make the SMC more appropriate for the trial of the inter-ship claim in the present action. The judge’s approach cannot be faulted. He has 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.

There is also no basis to interfere with the judge’s assessment that lis alibi pendens and related proceedings do not tip the balance in the stage 1 analysis.

The appeal must be dismissed on this ground.

It was therefore not strictly necessary to go to the stage 2 analysis (whether Bright Shipping has shown that it will be deprived of a legitimate personal or juridical advantage if the action is tried in the SMC). However, out of deference to the arguments advanced on both sides, the Court gave its views regarding the submissions on the significant disparity in tonnage limitation on an obiter basis.

Counsel for Bright Shipping submitted that the debate in The Herceg Novi v Ming Galaxy about the appropriateness of comparing the 'abstract justice' of the 1957 and 1976 LLMC regimes does not arise in the present situation. The difference in limitation amounts arises because the Hong Kong limits have been increased twice since adopting the LLMC 1976 following the increase of limits by the International Maritime Organization via the 1996 Protocol to that Convention and an amendment thereto, to reflect the loss of value due to inflation, whereas the limits in the PRC Maritime Code have remained static at a level equivalent to the LLMC 1976 computation. The Court was inclined to agree that it must be doubted if substantial justice could be achieved in the SMC by awarding a sum which has been significantly eroded by inflation, and agreed with the judge that, if it had been necessary to undertake the stage 2 analysis, Bright Shipping had shown that it would be deprived of a legitimate juridical advantage if the action were to be tried in the SMC.

[The application for leave to appeal to the Hong Kong Court of Final Appeal was dismissed: see Changhong Group (HK) Ltd v Bright Shipping Ltd [2020] HKCFA 24; FAMV 34/2020 (16 July 2020), [2021] Lloyd's Rep Plus 46.]