The "Hyundai Fortune"

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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 here

Singapore High Court: Belinda Ang J: [2004] SGHC 45: 1 March 2004

Niru & Co for Uni-Fruitveg Suppliers
TS Oon & Bazul for EMF International SA, the Owners of "HYUNDAI FORTUNE"
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 & Partners, the 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 Singapore.

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.


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