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 of First Instance decided that Singapore was the appropriate forum and that the Hong Kong action should be stayed in favour of Singapore: see The Owners of the Ship 'Kapitan Shvetsov' v The Owners and/or Demise Charterers of the Ship 'Nanta Bhum' [1996] HKCFI 718 (CMI1347).

The Russian owners appealed.

Held (Liu JA dissenting): Appeal allowed. The stay is to be lifted and the Hong Kong proceedings are to resume.

The majority of the Court of Appeal held that Thailand is the natural forum because it is the forum which had the most real and substantial connection to the incident. The incident took place in Thailand and many of the key witnesses, including the pilots and the crew of the Singapore ship, were of Thai nationality. The actions of the parties which included the sending of lawyers, surveyors and salvors to Thailand, as well as the commencement of proceedings in Singapore, did not displace Thailand as the natural forum.

The majority of the Court also held that the Russian owners would suffer a considerable juridical disadvantage if the Hong Kong proceedings were stayed in favour of the Singapore proceedings. The LLMC 1957, which applies in Singapore, severely limits the liability of the Singapore owners in relation to claims by the Russian owners and cargo owners against the Nanta Bhum. The limit of liability under the LLMC 1957 relates to the tonnage of the Nanta Bhum and this works out to the sum of USD 933,000. Whatever the amount of damages which the courts might ultimately award to the Russian owners and the cargo owners, they can only look to the fund of USD 933,000 in Singapore to be shared amongst themselves rateably in satisfaction of their claims if those claims were prosecuted in Singapore. The same limitation of liability prevailed in Hong Kong until 1993. However, pursuant to the Merchant Shipping (Limitation of Ship Owners' Liability) Ordinance of that year, Hong Kong has adopted the LLMC 1976, which has a much higher ceiling of liability, higher than the claims of the Russian owners and cargo owners combined.

The practical effect of the difference in limitations in the two jurisdictions is this: if the Russian owners were held ultimately to be as much as 60% responsible for the collision, and their claim for damages were accordingly reduced, then after set-off they and the cargo owners would be able to fully satisfy their claims out of the Singapore limitation fund. Anything less, they would suffer financially; and if the Nanta Bhum were ultimately held 100% to blame for the collision then the shortfall to the Russian owners would exceed USD 1.5m.

At first instance, the Judge thought it significant that under the LLMC 1957 the limitation of liability would only apply if the Singapore owners were able to show that the collision occurred without 'actual fault or privity' on the part of their board of directors or shareholders. Under the LLMC 1976 Convention the limitation can only be broken by proof of 'personal act or omissions committed with intent to cause ... loss, or recklessly and with knowledge at such loss would probably result'. Whilst this is a consideration, it does not weigh much in the scales. 

The Russian owners have properly invoked the jurisdiction of the Hong Kong court for the adjudication of their claim. They have a right to have their claim determined by the Hong Kong court. In principle, this right cannot be lightly disturbed. The Singapore owners have not brought proceedings in a forum which is natural to the action; that is, the forum with which the action has the most real and substantial connection. Additionally, there is a considerable juridical disadvantage to the Russian owners if they were forced to prosecute their claim in Singapore; the interests of both parties and the ends of justice do not demand that they be driven from their chosen forum  

Liu JA: Waung J followed the guidelines in The Adhiguna Meranti [1987] HKLR 904 (CMI1342) in forming his balanced view. His appreciation of some of the other authorities cited is very much at issue, but nevertheless he correctly decided against parallel proceedings and proceeded to compare one forum with another for determining which one was the more suitable and convenient. Barring inaccuracies and errors, there was ample affidavit evidence for the Judge to form the view that the Singaporean shipowners had an 'overwhelming powerful case' for a stay. In his balancing operation, the Judge favoured Singapore as clearly the more appropriate forum. Further, given the relatively insubstantial difference between the limits of liability, another trial in Hong Kong, albeit probably only in quantum, was palpably undesirable. In counsel's skeleton argument to this Court, it was submitted for the Russian shipowners that 'in terms of practical convenience and expense alone, there (was) little to choose objectively between Hong Kong and Singapore'. It would seem, therefore, doubly difficult to demonstrate that the Judge's preference in his balancing exercise was plainly wrong. Also, the juridical advantage in terms of Convention limit is hardly substantial. Waung J disregarded it for the wrong reason, but the balanced view in his analysis of forum cannot be faulted. If I had to exercise like discretion on account of his misdirections, I would be driven to grant a stay. It would therefore be futile to set aside the Judge's decision for reaching the same conclusion in a rehashed balancing operation. I would dismiss this appeal.