In August 2014 the Kappa Sea arrived at Yangon, Myanmar and began discharging a cargo of 3,200 MT of palm olein when contaminants were discovered. The contaminated cargo was then moved to a site approximately 20 km from the port for storage, where it was assessed by surveyors respectively appointed by Golden Agri International Pte Ltd (seller) and Yangon Technical and Trading Co Ltd (buyer) (together, the plaintiffs) and Yangtze Navigation (Singapore) Pte Ltd (defendant demise charterer). They concluded that the contamination came from the remains of the previous cargo carried by the vessel in the internal discharge line of the Kappa Sea. Eventually, the contaminated cargo was sold at less than market value.

The carriage of the cargo was covered by a bill of lading issued in Singapore, and contained a general paramount clause (cl 1) which incorporated the Hague Rules by virtue of cl 1(a) and contractual incorporation, and alternatively the Hague-Visby Rules by virtue of cl 1(b) and because the bill of lading was signed in Singapore. The Hague Rules are given effect in Myanmar, but the Hague-Visby Rules are in force in Hong Kong.

The plaintiffs claimed damages totaling US$143,852.02 for negligence, breach of contract, breach of duty and breach of either the Hague-Visby Rules or Hague Rules on the part of the defendant for inter alia failing to properly handle the cargo or deliver the cargo at Yangon, Myanmar in the same good order and condition as they were shipped. The plaintiffs did not arrest the Kappa Sea because the P&I club of the defendant signed an undertaking to instruct their solicitors to file an acknowledgment of service upon the service of proceedings by the plaintiffs. An amended writ was served on the defendant’s Hong Kong solicitors who duly endorsed the writ but expressly reserved the defendant’s right to contest the jurisdiction of the Hong Kong courts. A dispute arose as to whether the plaintiffs were entitled to an exercise of jurisdiction by the Hong Kong court. The defendants applied to court for an order not to exercise jurisdiction in this action and in the alternative, to stay all further proceedings in this action.

Held: The action should be stayed. Hong Kong was not the natural or appropriate forum for the trial of this action. The court applied the Spiliada principles to make this determination.

There was another available forum with competent jurisdiction which might try the action more suitably for the interests of all the parties and the ends of justice. Since the cargo was discharged in Yangon, Myanmar and the contaminated part of the cargo was subsequently sold in Myanmar, the Yangon Court had and would accept jurisdiction to hear the plaintiff’s claim.

Hong Kong was not the natural or appropriate forum for the trial of this action. The only connecting factors were that the vessel was Hong-Kong registered and that the plaintiffs elected to commence and serve proceedings in Hong Kong. However, these were irrelevant in considering whether Hong Kong was the natural or appropriate forum. The Yangon Court was clearly and distinctly the more appropriate forum for the trial of the action than Hong Kong. The contaminated portion of the cargo was eventually sold to the local Myanmar market and the incidental expenses were incurred in Myanmar. Potential witnesses were also located in Myanmar.

The plaintiffs were not deprived of any legitimate juridical advantage if the action was tried in the Yangon Court rather than in Hong Kong. The two advantages, which the plaintiffs claimed to be deprived of, were rejected by the judge. First, the plaintiffs claimed they will no longer be able to rely on the conclusiveness of the good order and condition of the cargo as specified in the bill of lading if the bill of lading has been passed to a third party acting in good faith if art 3.4 of the Hague Rules is applied in place of art 3.4 of the Hague Visby Rules. However, this was unlikely to be significant as the defendant has never suggested that the cargo was already contaminated before loading. Second, the plaintiffs claimed they may be deprived of the possibility of a higher award of damages in Hong Kong if the package/unit limits under art 4.5 of the Hague Rules is applied in place of art 4.5 of the Hague-Visby Rules. However, 'unit' as used in the Hague Rules referred to a physical unit for shipment and not to bulk cargo such as grain or liquids in bulk.

Finally, adherence to the Hague Rules as opposed to the Hague-Visby Rules does not mean that substantial justice cannot be obtained in the Yangon Court. Courts should be generally be slow to pass judgment on two international maritime conventions and come to an objective conclusion as to which one is more conducive to the attainment of substantial justice unless there is substantial consensus in the international community on the matter.

The plaintiffs further submitted that the Hong Kong court should not deprive them of the advantage of having sued in Hong Kong within time unless the plaintiffs have acted unreasonably in failing to commence proceedings in Myanmar within the one-year limitation period. There was no question of time-bar in the Hong Kong court as the writ was issued in Hong Kong in time. However, the plaintiff’s claim was now time-barred in Myanmar at the expiry of the one-year time limit. The judge decided that the plaintiffs acted unreasonably in failing to issue a protective writ in Myanmar within the limitation period applicable there as they were unable to provide a clear explanation as to why the plaintiffs did not commence proceedings in Myanmar to protect the limitation period. Accordingly, the judge rejected the time bar argument as weighing against a stay of proceedings.