The plaintiff is the Korean operator of a commercial maritime terminal at the port of Busan, South Korea, offering berths for loading and unloading container vessels with large movable gantry cranes. The defendants are the joint owners of the Milano Bridge, owned as to 90% by Doun Kisen Co Ltd, a company incorporated in Japan, and as to 10% by Mi-das Lines SA, a company incorporated in Panama. The vessel flies the Panamanian flag. The defendants are both managed from Japan. At the material times, the vessel was sub-chartered to Ocean Network Express Pte Ltd (ONE), which was incorporated in Singapore with operations worldwide, including Busan, South Korea.

This action concerns an allision between the vessel and Berth 8 at Pier 2 at the terminal which took place on 6 April 2020. The plaintiff asserts that the allision was caused by the negligence of the defendants, their servants or agents in the navigation and management of the vessel, and that it has suffered loss and damage in terms of: (i) physical damage to the cranes with resulting monetary loss in terms of repair and replacement cost; and (ii) business interruption. This action was commenced when a sister ship of the vessel, the CMA CGM Musca, called at Hong Kong on 24 June 2020 and was arrested.

The allison has also given rise to various civil proceedings in the courts of South Korea. Criminal proceedings are pending against the master of the vessel in South Korea. The Korean Maritime Safety Tribunal (KMST) is conducting an investigation to determine the cause of the maritime incident, any administrative sanctions against Korean officeholders, and appropriate corrective measures to avoid similar situations in the future. The plaintiff is participating in the investigation. The KMST has already issued one report in January 2021.

In addition to these proceedings, the plaintiff has commenced materially identical proceedings against the defendants in Japan. The defendants say that they are being vexed twice by the plaintiff in respect of the incident.

The plaintiff’s position is that it wishes to have the dispute determined in Hong Kong, 'failing which' Japan. It has indicated in evidence that if this Court declines to stay this action and it is to proceed, the plaintiff will withdraw the Japanese action. On the other hand, if this action is stayed, the plaintiff will seek to pursue the Japanese action.

Held: The Hong Kong proceedings are to be stayed.

There is a different shipowners' liability limitation regime in Hong Kong (and Japan) on the one hand, and in South Korea on the other. The plaintiff's evidence suggests that from the outset the plaintiff and its advisers have targeted Hong Kong as a forum for this dispute, by way of sister ship arrest, because of the limitation regime here. South Korea is not a party to any international Convention on shipowners’ limitation of liability. However, it has enacted a domestic limitation regime within the Korean Private International Law Act based on the LLMC 1976. Unlike Hong Kong, under the Korean Act, questions of whether a shipowner is entitled to limit, and if so in what amount, are determined under the law of the flag of the vessel concerned. In this case, it is the law of Panama.

On 24 April 2020, the defendants commenced a limitation action in the Changwon District Court, South Korea. On 11 May 2020, on the defendants' application, the Changwon District Court ordered the defendants to deposit into Court SDR 16,792,098 plus interest at 6% from the date of Incident to date of deposit, an amount calculated in accordance with the Korean Act and Panamanian law. On 18 May 2020, the defendants constituted a limitation fund. On 8 October 2020, the plaintiff lodged a claim against the limitation fund on a without prejudice basis. There is no other significant claimant against the fund apart from the plaintiff. On the basis of the asserted claims of the plaintiff, the limitation fund is insufficient to cover fully the material damage to the terminal.

Under Hong Kong law, by virtue of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance, Cap 434, limitation is governed by LLMC 1976 as amended by the 1996 Protocol (effective in Hong Kong on 3 May 2015), including the June 2015 limit increases (effective in Hong Kong on 4 December 2017). On 26 June 2020, in order to secure the release of the sister ship from arrest in Hong Kong, the defendants put up security in the form of a letter of undertaking from the Japan P&I Club responding to any judgment of this Court in the maximum amount of USD 82.6m. This amount was calculated broadly in accordance with the Hong Kong limit. Hence, the difference between the lower Korean and the higher Hong Kong limits is USD 58.6m.

Applying forum non conveniens principles, the Court found that it is plain from the relevant factors that the court of South Korea is clearly or distinctly the more appropriate forum. All the relevant considerations, eg, the location of evidence (both witnesses and documents), and applicable law, point to the place of alleged commission of the tort as the distinctly more appropriate forum. The lack of connection to Hong Kong serves to highlight the ersatz nature of the plaintiff’s suggestion that this case can just as easily be tried in Hong Kong. One can accept that with the advancement of technology, a trial of these matters can be conducted in any modern city anywhere in the world. But why should the Korean witnesses and documents be dealt with by this Court rather than the Court there? It is not a matter of mere convenience when, with the exception of the experts and the crew of the vessel, all the witnesses are in Korea and the documents are largely in Korean. As to the experts, it must be part of their job to travel to where they are needed.

The Court noted that it was common ground that the higher tonnage limit in Hong Kong is a juridical advantage in favour of the plaintiff. However, deprivation of such a juridical advantage is not conclusive, such that a stay should be refused. The Court no more favours claimants (be they foreign or local) than it does defendants (be they foreign or local).

The line of Hong Kong authorities of The Adhiguna Meranti [1987] HKLR 904 (CMI1342), The Kapitan Shvetsov [1997] HKLRD 374 (HKCFI decision (CMI1347) and HKCA decision (CMI1348)) and Bright Shipping (HKCFI decision (CMI306) and HKCA decision (CMI510)) should be understood with their factual contexts in mind.

In The Adhiguna Meranti, although the Indonesian Court was held to be the more appropriate forum, staying the Hong Kong action would expose the plaintiff to uncertain and possibly derisory limits. It should not be overlooked that there were also other procedural disadvantages which the plaintiff would be deprived of if the Hong Kong action was stayed (922E-F).

In The Kapitan Shvetsov, neither one of the forums chosen by the parties (Hong Kong and Singapore) was the natural forum, which was Thailand where the collision took place (376G-J). In declining the stay, the Court took into consideration that Singapore was not a natural forum and the loss of juridical advantage to the plaintiff in terms of the higher limit (382F-G).

In Bright Shipping, there was no natural forum and the defendant was a Hong Kong company having been served with the proceedings in Hong Kong. It was held that the defendant had failed on the Stage 1 test (HKCFI [55]). The Court went on to hold, obiter, that the significant disparity in tonnage limitation and the expiration of time limit for any claim by the plaintiff against the limitation fund constituted in the alternative forum would have led the court to decline a stay (HKCFI [56]-[58], HKCA [63], [64] and [72]).

The present case is rather different. Neither the incident nor the parties has anything to do with Hong Kong (save for the calling of a sister ship) and Hong Kong was chosen as a forum primarily on the higher tonnage limit. Whilst the Court can accept that this case is about economics with the respective insurers behind the parties, this is no licence for forum shopping. There is little to speak for having the dispute resolved in Hong Kong with the exception of the deprivation of a higher tonnage limitation. There can be no serious suggestion that justice will not be done to the parties in the courts of South Korea. It is for the interests of all the parties and the ends of justice that these proceedings should be stayed, notwithstanding the deprivation of juridical advantage to the plaintiff. Given that the plaintiff is a South Korean entity operating its business there under the applicable legal regime, it lies ill in its mouth to complain that the tonnage limitation there has not kept up with inflation. Quite possibly, the plaintiff had benefited from the lower Korean limit when it was called upon to pay compensation, and from the lower insurance premium which should apply in light of the Korean limit.

[For the unsuccessful appeal to the Court of Appeal, see Pusan Newport Co Ltd v The Owners and/or Demise Charterers of the Ships or Vessels 'Milano Bridge' and 'CMA CGM Musca' and 'CMA CGM Hydra' [2022] HKCA 157 (CMI1736).]