The defendant's vessel, the Interhill King, carried the plaintiff's cargo of 6,378 pieces of freshly cut Malaysian hardwood round logs from Kuala Mukah in Sarawak, East Malaysia, to Hong Kong under a bill of lading. The vessel capsized and the cargo was lost while in transit. The plaintiff claimed damages for breach of the duty of the defendant and its servants, agents, bailees and carriers to deliver the cargo in the same good condition and order as it was when shipped, implying that it was their responsibility to exercise care regarding the handling, loading, custody, care, carriage, delivery and discharge of the cargo.

On 12 February 1994, the defendant filed an application for a stay of proceedings on the basis of cl 3 of the bill of lading which states:

(Governing Law and Jurisdiction) The contract evidenced by or contained in this Bill of Lading shall be governed by Japanese Law except as may be otherwise herein, and any action thereunder shall be brought before the Tokyo District Court in Japan.

The defendant also referred to cl 2 which stipulates:

(Clause Paramount) This Bill of Lading shall have effect subject to the provisions of the International Carriage of Goods by Sea Act 1957 of Japan, unless it is adjudged that any other statute of a nature similar to the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on 25 August 1924 compulsorily applies to this Bill of Lading, in which case it shall have effect subject to the provisions of such Statute and the said Act or Statute shall be incorporated herein. Nothing herein contained shall deprive the Carrier of any protection from, or limitation of liability authorized by any provisions of any nation's laws, statutes or regulations which may be pertinent. If any provision of this Bill of Lading is held to be repugnant to any extent to the Hague Rules Legislation or any other laws, statutes or regulations applicable to the contract evidenced by this Bill of Lading, such provision shall be null and void to such extent but no further.

The plaintiff argued that, as the carriage of the cargo was from Malaysia and the bill of lading was issued in Malaysia, the relevant provisions of Malaysian law, which gives effect to the International Convention for the Unification of Certain Rules relating to Bills of Lading signed at Brussels on the 25 August 1924 (the Hague Rules) are applicable.

Held: Application for stay of proceedings dismissed.

Although there is an exclusive foreign jurisdiction clause for the dispute to be heard in Japan, it is not disputed that the defendant is resident in Malaysia and the vessel is registered here. It is also conceded that the cargo was loaded in East Malaysia and the vessel was en route to Hong Kong. In respect of the evidence, it would be cheaper to transport the Filipino crewmembers here than to Japan. All other relevant documentary evidence was also readily available here. The plaintiff could also have some difficulty in enforcing a judgment obtained in Japan. Further, there is also some confusion as to whether the Hague Rules or the Hague-Visby Rules apply in Japan to determine the limit of liability.

The matter can and will be more appropriately dealt with in Malaysia than in Japan.

[For the unsuccessful appeal to the Court of Appeal, Kuala Lumpur, see Inter Maritime Management Sdn Bhd v Kai Tai Timber Co Ltd Hong Kong (CMI907).]