On 16 January 1996, the Russian-registered Kapitan Shvetsov (the Russian ship) collided with the Singapore-registered Nanta Bhum (the Singapore ship) in Bangkok’s Chao Phraya River. The owners of the Singapore ship (the Singaporean owners) sued the owners of the Russian ship (the Russian owners) in Singapore. Significant procedural headway was made in the Singapore proceedings before the Russian owners made an application in Singapore to stay the Singapore proceedings in favour of Hong Kong proceedings. The reason for the stay application was that Hong Kong had a higher limitation limit by reason of its application of the LLMC 1976, whereas Singapore had a lower limitation limit due to its application of the LLMC 1957. The stay application in Singapore eventually failed.

The Russian owners had also sought to establish jurisdiction in Hong Kong by commencing proceedings in Hong Kong. Similarly, a stay application was brought in Hong Kong by the Singaporean owners. The Court had to decide whether Singapore was the appropriate forum and whether the Hong Kong action should be stayed in favour of Singapore.

Held: The Hong Kong action should be stayed in favour of Singapore.

In applying the Spiliada test (as accepted by the Hong Kong courts in The Adhiguna Meranti [1987] HKLR 904 (CMI1342)), the Court held that the Hong Kong action should be stayed for the following reasons.

1. Singapore is the natural forum. The Russian owners never disputed that Hong Kong was not the natural forum.
2. The Singapore proceedings had reached an advanced stage with an imminent trial whereas the Hong Kong proceedings had hardly taken off.
3. The existence of parallel proceedings provides a strong reason to stay the Hong Kong proceedings to allow the objective of forum non conveniens to be achieved, namely to secure a single trial in an appropriate forum.
4. There was no mandatory submission to the Hong Kong jurisdiction in this case. First, art 15 of the LLMC 1976 did not apply because the Singaporean owners did not limit their liability in the State Party (in this case Hong Kong) as they had sought limitation in Singapore. Further, they did not seek any release of their ships because security was voluntarily offered. Second, s 21 of Hong Kong’s Merchant Shipping (Limitation of Shipowners Liability) Ordinance (the 1993 Ordinance) was also not applicable because neither the Singapore ship nor its sister ships were arrested and released pursuant to art 13.2 of the LLMC 1976 in Hong Kong. Third, it would not be the purpose of the LLMC 1976 to force its provisions onto non-contracting States or onto parties who should have their disputes heard in a non-contracting State, as that would go against the principle of comity of nations.
5. There was no loss of any juridical advantage for the Russian owners despite their claim amounting to USD 2.9 million and the limit of liability in Singapore amounting to approximately USD 1 million.  Under the LLMC 1957, the Russian owners could very well have broken the limitation and claimed their full amount as it was easier to do so under the 'actual fault and privity' test of the LLMC 1957 (art 1) as opposed to the much stricter test for conduct barring limitation under art 4 of the LLMC 1976.
6. It cannot be said that the LLMC 1957 was not a widely accepted framework of limitation of liability because it was still used by many countries. Clarke J's reasoning in Caltex Singapore Pte Ltd v BP Shipping [1996] 1 Lloyd's Rep 286 favouring the LLMC 1976 was not in line with the principle of comity of nations and the public policy of Hong Kong. Where an international Convention does not command universal acceptance or agreement by all the countries in the world, the wide divergence of views normally indicate a deep-seated difference of opinion as to the acceptability of such convention. Comity of nations should therefore dictate a respect for the strong view of the other country. It is of course desirable that as many countries as possible should apply the same standard but the debate is always what standard. In this case should it be the LLMC 1957 or the LLMC 1976? The Court does not accept the argument in Caltex that it is desirable that as many countries as possible should apply the LLMC 1976. What may be desirable to Great Britain, is not desirable to many of the civilised countries such as USA, Canada, Italy, Portugal, Singapore and Malaysia, which have chosen not to apply the LLMC 1976. When there are more countries which apparently apply the LLMC 1957 than countries which apply the LLMC 1976, it seems presumptuous for any country (including Hong Kong) which applies the LLMC 1976 to say that that Convention is more desirable as a uniform standard. That begs the very question. Both the Conventions represent in their different ways a balance between the interested parties. The fact that the LLMC 1976 is a development from the LLMC 1957 does not make the former Convention more widely acceptable objectively or more desirable objectively. There are pros and cons in respect to the two Conventions and a country's preference for one Convention over another is a very complicated matter, very often dictated by factors such as whether it is a country of shipowners or cargo owners/traders, its level of economic activity and development and the overall impact of the two Conventions on the country's economic welfare.
7. Whatever might be said about the two sets of limits, it certainly cannot be said that the LLMC 1957 is not a well-known or a rarely accepted system of limitation of liability. It is still in use by most countries and it was just a few years ago that this was the applicable standard in Hong Kong and in the United Kingdom. Objectively, it is not an obscure primitive limitation system which gives derisory compensation. Viewed in that light, confining the claim of the Russian ship to the limitation standard prevailing in Singapore of a Singapore ship is not something which can be characterised as not giving substantial justice objectively. It could be put also another way, can the Russian owners whose country is not a party to the LLMC 1976 complain that it is unjust by being deprived the benefit of that Convention, which Russia had seen fit not to apply?

[For the successful appeal to the Court of Appeal, see The Owners of the Ship 'Kapitan Shvetsov' v The Owners and/or Demise Charterers of the Ship 'Nanta Bhum' [1997] HKCA 656 (CMI1348).]