The plaintiffs were cargo interests who were entitled to delivery of a cargo of logs under a bill of lading. The defendants were the owners of the vessel Lung Yung which carried the logs from Sarawak to Taiwan. The plaintiffs brought a claim against the defendants for misdelivery of the logs in Taiwan. The defendants applied to strike out the statement of claim on the grounds that the plaintiffs' claim was time-barred and that the current proceedings in Malaysia were an abuse of process as there were parallel proceedings against the defendants in Taiwan.

The bill of lading was subject to the Chinese Merchant Marine Act 1929 (the Act) which was loosely modelled on the Hague Rules. The bill of lading also provided for Taiwanese governing law and an exclusive jurisdiction clause in favour of the Taiwanese courts. Clause 3 of the bill of lading stated that the 'carrier shall be entitled to the full benefit of, and right to, all limitations of, or exemptions from, liability authorized by any provisions of any country's law, statutes or regulations which may be pertinent'. In addition to the Act, the defendants based their limitation argument on art 3.6 in the Schedule to the Sarawak Merchant Shipping (Implementation of Conventions Relating to Carriage of Goods by Sea and to Liability of Shipowners and others) Regulations 1960 (the Regulations). The Regulations implemented the Hague Rules in Sarawak. The plaintiffs argued that art 3.6 of the Regulations had no application as the Regulations were not incorporated into the bill of lading and art 3.6 did not, in any event, apply to misdelivery.

The trial judge held that even though the paramount clause in the bill of lading did not incorporate the Regulations, art 3.6 nonetheless had effect in respect of outward carriage of goods from Sarawak. However, construing art 3.6, the definition of 'carriage of goods' in art 1 and 'discharge' in art 3.2 of the Regulations, the trial judge held that the limitation period in art 3.6 did not apply to the plaintiffs' claim, as the alleged breach of contract or duty or conversion occurred after the logs had been discharged from the Lung Yung, and therefore fell outside the ambit of the Hague Rules.

The trial judge also took judicial notice of Taiwanese law, in particular, art 93 of the Act which states that the carrier is relieved of responsibility of carriage if it notifies the consignee and discharges the cargo. The trial judge found that because the consignee was not notified and the cargo was delivered without production of the original bill of lading, the defendants were not entitled to argue that their responsibility had been relieved and the cargo had been discharged. Further, the trial judge also relied on art 100 of the Act (which is somewhat similar to art 3.6 of the Hague Rules) and concluded that delivery had not taken place in conformity with the specified particulars of the bill of lading because the delivery of the cargo was to a person who was not entitled to take delivery of the cargo. By reason of the fact that delivery had not taken place and there was no further evidence to support when delivery should have taken place, the court could not find that the plaintiffs' claim was time-barred under art 3.6.

As for the jurisdiction issue, the trial judge found that there was no abuse of process because the proceedings in Taiwan were different from the proceedings in Malaysia. The proceedings in Malaysia were in rem proceedings whilst those in Taiwan were in personam proceedings. The parties in both Taiwanese and Malaysian proceedings were also different. Therefore, there were no parallel proceedings and no prejudice had been suffered by the defendants.

Accordingly, the trial judge dismissed the defendants' application. The defendants appealed.

Held: Appeal dismissed.

On the first ground, the Federal Court held that the trial judge was wrong in taking judicial notice of Taiwanese law as no expert evidence was adduced on the issue of Taiwanese law. The appeal was dismissed so that a proper hearing could determine the issue on presentation of the requisite evidence in relation to Taiwanese law.

On the second ground, the Federal Court upheld the trial judge's reasoning on the issue of jurisdiction as the exercise of judicial discretion is not to be lightly interfered with and there is a presumption that the trial judge's discretion to refuse a stay of proceedings had been rightly exercised.