Note: the decision in this
case has been affirmed by the Court of Appeal in Singapore, in a judgment
delivered on 9 September 2004. For a note on the Court of Appeal judgment, click
The "HYUNDAI FORTUNE"
Singapore High Court: Belinda Ang J:  SGHC 45: 1 March 2004
Niru & Co for Uni-Fruitveg Suppliers
TS Oon & Bazul for EMF International SA, the Owners of
CONFLICT OF LAWS: ADMIRALTY ACTION IN SINGAPORE: JURISDICTION
CLAUSE IN BILL OF LADING: WHETHER TO STAY SINGAPORE ACTION FOR KOREA
Uni-Fruitveg Suppliers commenced in rem proceedings against EMF
International SA, the owners of the vessel "HYUNDAI FORTUNE", claiming
damages for loss and damage to their consignment of hami-melons. They arrested
the vessel in Singapore to obtain security for their claim. The Owners applied
unsuccessfully for a stay of the Singapore action in favour of Seoul, Korea,
based on an exclusive jurisdiction clause in the bill of lading.
DMC Rating Category: Confirmed
This Case Note was contributed by Ang &
Website’s International Contributors for Singapore
Uni-Fruitveg imported from China a consignment of 1,473 cartons
of hami-melons which were shipped to Singapore on board the vessel "HYUNDAI
FORTUNE" in a 40ft reefer container. On arrival at Singapore, 1,232 cartons
were found badly damaged. The damage was allegedly caused by the Owners’
failure to provide a reefer container that was capable of maintaining the
requisite pre-set temperature of 3° C throughout the
voyage. There was evidence that the temperature in the reefer fluctuated from 3°
C to as high as 25° C during the transit. The amount
of damages claimed was US$8,396.92.
Uni-Fruitveg, who was holder of the bill of lading, commenced in
rem proceedings against the Owners, claiming damages for loss and damage to the
cargo, and arrested the vessel "HYUNDAI FORTUNE" when she called at
The bill of lading contained an exclusive jurisdiction clause
which stated as follows:
"The claim arising from or in connection with or relating
to this Bill of Lading shall be exclusively governed by the law of Korea except
otherwise provided in this Bill of Lading. Any and all action concerning custody
or carriage under this Bill of Lading whether based on breach of contract, tort
or otherwise shall be brought before the Seoul District Court in Korea."
The Owners submitted that as there was a jurisdiction clause in
the bill of lading, the Court should stay the action in favour of the agreed
jurisdiction, Korea. Uni-Fruitveg resisted the stay, primarily on the ground
that the Owners did not have any arguable defence to the claim.
1. The Court would ordinarily grant a stay of the action pursuant to the
jurisdiction clause, unless the claimant were able to establish that
exceptional circumstances -amounting to strong cause - existed to warrant a
refusal to stay the proceedings. The burden lay on the claimant to show that
it would be unreasonable or unjust, taking into account all the circumstances
of the case, to require him to adhere to the terms of the agreement.
2. The Judge found that the case had strong connecting factors with Singapore
and little or no connection with Korea. The vessel "HYUNDAI FORTUNE"
was a Panamanian flagged vessel. The shippers were from Hong Kong. The reefer
container was received for shipment at Shenzhen, China for overseas shipment
from Hong Kong to Singapore. The ship managers, Hyundai Merchant Marine Co
Ltd, had a Singapore office, Hyundai Merchant Marine (S) Pte Ltd, and the
latter’s general manager had affirmed affidavits on behalf of the Owners.
Singapore was the port of discharge and the place of business of Uni-Fruitveg.
The cargo damage survey was conducted in Singapore. The evidence and witnesses
were located in Singapore. The documents relating to this consignment in the
English language would not require translation into the Korean language if the
litigation continued in Singapore. There would be no need for the services of
a Korean interpreter. Further, the claim was most likely handled by the London
based managers of the Owners’ P&I Club.
3. As the bill of lading was claused "shipper’s load and count",
Uni-Fruitveg were required to establish prima facie the apparent good order
and condition of the cargo at the time the melons were stuffed into the reefer
container. The Judge was of the view that Uni-Fruitveg would have to establish
that by documentary, as opposed to oral, evidence from the packers, whose
recollection of that particular consignment would be hazy after nearly one and
a half years. The Judge inferred from the photographs tendered by Uni-Fruitveg
that the hami-melons were in apparent good order and condition at the time of
packing. In any event, the plaintiffs would have to prove that the damage was
caused by the defendants and if they could not do that, their claim would
fail. The prejudice - if there was any caused by inability to obtain evidence
for the action in Singapore - was on the plaintiffs rather than on the
defendants. For these reasons, the Judge found that there was no real question
of liability which ought to be tried in Korea.
4. The Owners had also not satisfied the Judge that they had valid defences to
the claim. The Owners had simply asserted that they had defences without
identifying them. The Judge held that it was necessary for the Owners to at
least identify the witnesses and indicate what their evidence was as regards
the issues likely to arise in the action, in particular, to show that the
Owners had a valid defence.
5. It was common ground that the claim was already time-barred in Korea and
that was the only viable defence of the Owners. As the Owners were not willing
to waive the time bar defence in the contractual forum, namely Korea, the
claim could not realistically be determined there. In addition, the Owners
were not prepared to transfer the security obtained in Singapore to cover the
proceedings in Korea.
6. The Judge did not think it crucial that Uni-Fruitveg had not issued a
protective writ in Korea. If Uni-Fruitveg could not or did not explain why no
protective writ had been issued, they could still rely on other factors to
show strong cause. Besides, the Owners or their mangers, Hyundai Merchant
Marine Co Ltd, had ignored letters of claim from Uni-Fruitveg and their
solicitors, thus triggering the proceedings in Singapore. The Court rejected
the Owners’ contention that they were not under a duty to reply and stated
that if the Owners had an answer to the claim put forward in correspondence,
they should have replied accordingly.
7. The Judge also rejected the Owners’ submission that since the governing
law was Korean law, Korean courts would be best placed to adjudicate the
claim. As there was no evidence before her that Korean law was different from
Singapore law as to the construction of the bill of lading contract, the judge
assumed it to be the same.
8. A single circumstance may not itself be sufficient to justify refusing a
stay. However, taken together, the circumstances may be found to be
sufficiently exceptional. The small size of this claim in the sum of
US$8,396.92 - when considered in isolation and individually - would not of
itself amount to sufficient cause. However, the judge accorded weight to the
small size of the claim after having already been satisfied that strong cause
had been shown by other factors.
9. Taking into account all the circumstances, the Judge found that the overall
justice of the case fell on the side of Uni-Fruitveg and that there would be
no corresponding prejudice to the Owners if the case remained in Singapore.
She accordingly refused to stay the proceedings in favour of Korea.
Hyundai Merchant Marine Co Ltd, the managers of the vessel
"HYUNDAI FORTUNE", were named in the bill of lading as carriers. The
Owners were the performing carriers and were as such, not parties to the bill of
lading. This issue was not raised and the parties proceeded on the basis that
they were bound by the terms of the bill of lading.
The defendants owners have filed an appeal.