In 1981, the vessel Adhiguna Meranti (the vessel) loaded general cargo in Taiwan for carriage to Indonesia. Shortly after leaving port, the vessel ran aground in the territorial waters of Taiwan. The vessel was subsequently declared a constructive total loss and abandoned.

The cargo interests (the plaintiffs) issued three admiralty writs and claimed for damages. The sister ship Adhiguna Nugraha was arrested in Hong Kong and released following the provision of security by the shipowners (the defendants).

The defendants then applied to stay the three actions on the ground that the Court in Jakarta, Indonesia, was the most natural and convenient forum to resolve the disputes. These applications were dismissed. Dissatisfied, the defendants appealed.

Held: Appeal dismissed.

The Court applied the two-stage test of The Spiliada [1987] AC 460, varied by introducing an additional third stage. In this third stage, the advantages of the first stage were to be balanced against the disadvantages of the second stage.

For the first stage, the Court found that Hong Kong was not the natural or appropriate forum for the trial, and that the available forum in Indonesia was clearly or distinctly more appropriate.

For the second stage, the Court found that there were personal or juridical advantages which would not be available to the plaintiffs in the Indonesian forum. The main advantage was the higher limitation of liability in Hong Kong and the certainty of that limit. If a stay was granted, the plaintiffs would lose the certainty of the Hong Kong limit of HKD 1,270,000.00 and face the uncertainty of an unknown limit in Indonesia which could be as low as HKD 2,541.00. The relevant limitation regime for the Hong Kong limit was the International Convention Relating to the Limitation of the Liability of Owners of Sea-going Ships 1957 (the LLMC 1957): see The Herceg Novi and Ming Galaxy [1998] 1 Lloyd's Rep 167, 176.

For the third stage, the Court considered the balance of fairness between the parties. The Court found the plaintiffs' suggestion to adopt an international viewpoint based on the LLMC 1957 more attractive than the defendants' suggestion to adopt an off-shore viewpoint. The Court noted that the LLMC 1957 had been much more widely adopted in Europe than in Southeast Asia. The Court observed that this emphasised the wide differences between conditions, attitudes, and policy considerations in those areas. Although there was a tenuous connection between Hong Kong and the vessel, the Court thought that it would be unjust to the plaintiffs to deprive them of the LLMC 1957 limit in Hong Kong (which reflected international public policy) and confine them to the, at best uncertain, and at worst derisory, level of the Indonesian limit. There were also other procedural advantages which would be lost in the Indonesian forum.