The "Hyundai Fortune" (CofA)

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DMC/SandT/04/59
The "Hyundai Fortune"
Singapore Court of Appeal: Chao Hick Tin JA and Tan Lee Meng J: [2004] SGCA 41: 9 September 2004
TS Oon & Bazul for the Hyundai Fortune
Niru & Co for the claimants
EXCLUSIVE JURISDICTION CLAUSE IN BILL OF LADING REFERRED ALL CLAIMS TO THE SEOUL DISTRICT COURT IN KOREA: ACTION COMMENCED IN SINGAPORE BY CARGO OWNERS FOR DAMAGE TO CARGO: APPLICATION TO STAY PROCEEDINGS IN SINGAPORE: FACTORS TO BE CONSIDERED WHERE THERE WAS EFFECTIVELY NO DEFENCE TO THE CLAIM
Summary
The claimants owned a cargo of melons that was carried in a reefer container from China to Singapore via Hong Kong, under a bill of lading that provided for the exclusive jurisdiction of the Seoul District Court. The melons arrived badly damaged and there was evidence that the reefer container did not maintain the requisite low temperature. The shipowners ignored the claimants’ complaints for close to a year. Eventually, the claimants commenced action against the shipowners in Singapore. The shipowners unsuccessfully tried to rely on the exclusive jurisdiction clause to stay the Singapore action. By then, the time bar would have prevented the claimants from pursuing their claim in Korea. This decision confirmed that given at first instance in March 2004.

DMC Category Rating: Confirmed

This case note is contributed by Ang & Partners, the International Contributors to the website for Singapore

Facts
The claimants were the owners of a cargo of Hami-melons that were loaded into a reefer container in Shenzen, China. The reefer container was then loaded onboard the vessel "Hyundai Fortune" in Hong Kong for carriage to Singapore.

The melons were supposed to be carried at a temperature of 3 degrees C at all times. However, evidence was adduced to the effect that the reefer container did not maintain the required temperature. According to the evidence, the temperature rose to as high as 25 ºC during transit. Consequently, the melons arrived at Singapore in a badly damaged state.

The claimants wrote to the shipowners demanding compensation but the shipowners ignored their demands for a period of almost 1 year. The claimants then commenced an action in rem against the owners of the "Hyundai Fortune" in Singapore.

The shipowners applied to court to stay the proceedings in Singapore by relying on the exclusive jurisdiction clause in the Bill of Lading, which referred all claims arising from or in connection with or relating to the Bill of Lading to the Seoul District Court in Korea.

The High Court refused to stay the proceedings in Singapore after taking into consideration the following factors:

  1. there was really no defence on the merits of the claim;
  2. no trial would be held in Korea as the action had become time barred there;
  3. the connecting factors of the case were all related to Singapore; and
  4. the overall justice of the case was with the claimants.

The shipowners appealed against the decision refusing a stay of proceedings in Singapore.

Judgment
The shipowners’ appeal was dismissed.

1.Notwithstanding an exclusive jurisdiction clause, the court could refuse a stay of proceedings if exceptional circumstances amounting to "strong cause" could be shown.

2. In cases where there was an exclusive jurisdiction clause, the discretion of the court whether to grant a stay of proceedings should not be exercised by just balancing the conveniences as if it were dealing with a case of forum non conveniens (inappropriate forum)

3. The issue of whether there was a defence to the claim and the issue of whether it was reasonable for the Plaintiffs not to have instituted a protective writ in Korea before the limitation period had set in, was - in the view of the Court of Appeal - crucial.

4. As a) there was no defence to the claim; b) there was no likelihood of there being a trial in Korea as the time bar had already set in; c) the Defendants were not prepared to waive the time bar defence and d) there existed strong connecting factors to Singapore, the overall justice was not to grant a stay of proceedings.

5. It was not unreasonable that the claimants had not issued a protective writ in Korea. The shipowners had adopted a stonewalling approach with regard to the claim and the claimants assumed from this that the shipowners had no answer to the claim. The Court inferred from the shipowners’ conduct in waiting for time to elapse in order to seek a procedural advantage (the time bar defence under Korean law) that the shipowners did not want a trial in the contractual forum, namely the Seoul District Court.

6. The exercise of determining "strong cause" against a stay based on a foreign jurisdiction clause cannot be subject to rigid rules or classification. The decision of the judge was based on her discretion in evaluating all the factors for and against a stay. The appellate court would not interfere with her decision unless she had wrongly applied the law, or had wrongly appreciated the facts, or her decision was plainly wrong. It was clear that the judge below had not erred in any manner.

Comment
Notwithstanding this decision, cargo claimants in a similar position to those in this case would be well advised to issue protective writs in the jurisdiction stipulated in the bill of lading. In this case, the shipowners clearly did not have a defence to the claim. Further, the fact that a potential defendant does not respond to a claim does not automatically translate into a waiver of its rights under the jurisdiction clause in the Bill of Lading. The facts of this case may not be applicable to other cases. The courts usually look at the circumstances of the case as a whole and then decide if a stay should be granted. It is not a numbers game of comparing the number of factors for each side, nor is the weight to be given to any one factor amenable to precise definition.

     

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