The "Eastern Trust"

• Jurisdiction: Singapore
• Judge: Lai Kew Chai J
• Judgment Date: 24 May 1994
• Neutral Citation: [1994] SGHC 148
• Date: 24 May 1994
• Subject Matter: Exclusive jurisdiction clause,Principles applicable,Court's discretion in granting stay of action,Exclusive,Convenience and costs,Evidence mainly in Singapore,Stay of proceedings,Choice of jurisdiction,Conflict of Laws,Civil Procedure,Whether stay to be granted in favour of action in Taiwan
• Docket Number: Admiralty in Rem No 657 of 1992
• Published date: 19 September 2003
• Defendant Counsel: Kenneth Tan (Rajah & Tann)
• Court: High Court (Singapore)
• Plaintiff Counsel: Loo Dip Seng (Ang & Partners)

Cur Adv Vult

This appeal arose from the decision of the assistant registrar dismissing an application by the defendants for all further proceedings in this action to be stayed. The defendants founded their application on an exclusive jurisdiction clause contained in a bill of lading requiring any dispute to be decided in the principal place of business of the carrier, which the defendants claimed was Taiwan. After hearing counsel for the parties, I dismissed the appeal. I now give my reasons.

The facts

Admiralty in Rem No 657 of 1992 arose from the shipment in September 1992 of 197,026 cartons and 26,359 willow baskets containing 223,385 pieces of Chinese white garlic in total from Qingdao in the People`s Republic of China to Singapore under a bill of lading. Clause 3 of the bill of lading provided that:

Any dispute arising under this bill of lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply except as provided elsewhere herein.

The shippers of the goods were the China National Native Produce & Animal By-Products I/E Corp of Tibet and the consignees named in the bill of lading were Sinre Development (S) Pte Ltd of Singapore. The goods were shipped on the Liberian registered vessel Eastern Trustwhich was owned by the Liberian registered company Petersham Ltd. The vessel arrived in Singapore on 17 September 1992 and discharge of the goods commenced on 19 September 1992. The goods were discharged and stored by the appropriated berth operator Trans-Orient Shipping Pte Ltd. During and after the discharge, the following was discovered:

(a) 37,435 cartons were badly damaged;

(b) 16,550 cartons were slightly damaged;

(c) 5,680 cartons were torn or exposed resulting in the loss of contents of about 4,810 kg; and

(d) 435 cartons were short delivered.

The consignees obtained a warrant of arrest against the Eastern Trust on 24 September 1992, and the vessel was released on 7 October 1992 after the procuring of a bankers` guarantee by the defendants. The plaintiffs filed their statement of claim on 23 October 1992. After entering an appearance on 24 November 1992, the defendants applied by way of summons-in-chambers on 22 December 1992 for all proceedings in Singapore to be stayed pursuant to the jurisdiction clause. This came up for hearing before the assistant registrar on 23 March 1994, and he dismissed the application with costs on 24 March 1994. The defendants appealed against his decision and the appeal came up for hearing before myself on 28 April 1994.

The law governing applications for stay

The principles to be applied when deciding whether to grant a stay of proceedings where there is an exclusive jurisdiction clause have been authoritatively stated by the Court of Appeal in the case of Amerco Timbers Pte Ltd v Chatsworth Timber Corp Pte Ltd . Kulasekaram J in delivering the judgment of the court, said:

The law concerning an application for a stay is clear. Where a plaintiff sues in Singapore in breach of an agreement to submit their disputes to a foreign court, and the defendant applies to [sic] a stay, the Singapore court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. The court in exercising its discretion should grant the stay and give effect to the agreement between the parties unless strong cause is shown by the plaintiff for not doing so. To put it in other words, the plaintiff must show exceptional circumstances amounting to strong cause for him to succeed in resisting an application for a stay by the defendant. In exercising its discretion the court should take into account all the circumstances of the particular case. In particular, the court may have regard to the following matters where they arise:

(a) In what country the evidence on the issues of fact is situated or more readily available, and the effect of that on the relative convenience and expense of trial as between the Singapore and foreign courts.

(b) Whether the law of the foreign court applies and, if so, whether it differs from Singapore law in any material respects.

(c) With what country either party is connected and, if so, how closely.

(d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages.

(e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would:

(i) be deprived of security for their claim;

(ii) be unable to enforce any judgment obtained;

(iii) be faced with a time-bar not applicable here; or

(iv) for political, racial, religious or other reasons be unlikely to get a fair trial.

The Court of Appeal essentially adopted the test propounded by Brandon J (as he then was) in The Eleftheria; Owners of Cargo Lately Laden on Board the Ship or Vessel Eleftheria v Owners of the Ship or Vessel Eleftheria at pp 99 and 100, save that it took the view that a `strong cause` entitling the plaintiff to resist a stay had to be established by showing that `exceptional circumstances` existed. These principles were reaffirmed by the Court of Appeal in the recent case of The Vishva Apurva; Owners of and Other Persons Interested in the Ship or Vessel `Kalidas` v Owners of Cargo Lately Laden on Board the Ship or Vessel `Vishva Apurva` . Chan Sek Keong J (as he then was), who delivered the judgment of the court, explained that:

After the decision of the Court of Appeal in Amerco Timbers [1977] 2 MLJ 181 , the law in Singapore in this type of case is that the judge has a discretion whether or not to grant the application for a stay, notwithstanding the exclusive jurisdiction clause ... in a case involving an exclusive jurisdiction clause, the discretion of the court should not be exercised just by balancing the conveniences. In this application, the court was not being asked to decide whether Singapore or India was the more convenient forum, but why the plaintiffs should be allowed to be relieved of their contractual obligation to bring their actions in India.

In The Asian Plutus , Yong Pung How J (as he then was) explained (at p 451) that `[t]he legal basis for [ The Eleftheria and Amerco Timbers principles is] the presumption that contracts freely entered into must be upheld and given full effect unless their enforcement would be unreasonable and unjust.` This dictum was impliedly approved by the Court of Appeal in The Vishva Apurva , which allowed the appeal against the refusal of the courts below to grant a stay as the respondents `had failed to discharge the burden of showing that it was unfair, unjust or unreasonable for the court to hold them to their obligations under the relevant bills of lading.`

It is clear from the cases that the court has a discretion whether to stay proceedings or not where there is an exclusive jurisdiction clause. This discretion should be exercised in favour of granting a stay unless the plaintiff can found a strong cause for resisting a stay based on exceptional circumstances. However, in deciding whether to grant a stay or not, the court should take into account all relevant circumstances of each case. The discretion would not be properly exercised unless this had first been done. The circumstances considered should not be limited to those factors which were listed for special mention by Brandon J (as he then was) in The Eleftheria , which are merely examples of the some of the circumstances which should be taken into account. Further, when referring to decided cases on the granting of a stay, it must not be forgotten that the decision in each case was arrived at after such a consideration. Failure to appreciate this will result in an erroneous understanding of the law.

In the present appeal, counsel for the defendants urged the court to grant the stay as the plaintiffs had not shown that it was unjust or unreasonable for them to be held to their bargain. He relied heavily on para 4 of the headnote of The Vishva Apurva , which reads as follows:

The court should accord full recognition to exclusive jurisdiction clauses which are freely negotiated between parties and which are unaffected by fraud, undue influence or overwhelming bargaining power, unless the plaintiff who seeks to break his contractual obligation can show that trial in the contractual forum will be so gravely difficult and inconvenient that he will, for all practical purposes, be deprived of his day in court. The respondents failed to discharge the burden of showing that it was unfair, unjust or unreasonable to hold them to their contractual obligations.

In reply, counsel for the plaintiffs strongly urged the court not to adopt a mechanistic application of The Vishva Apurva . He submitted that a stay should not be granted where the plaintiffs are able to show that there were exceptional circumstances in favour of not granting a stay, which he submitted there were in the present case. He further submitted that the Court of Appeal in The Vishva Apurva was not attempting to depart from the principles laid down in The Eleftheria and Amerco Timbers .

I agreed with counsel for the plaintiffs. It is clear from the judgment of the Court of Appeal in The Vishva Apurva that the court accepted the law on exclusive jurisdiction clauses to be as stated in Amerco Timbers , and that the court did not purport to lay down some new alternative principle.

Paragraph 4 of the headnote is derived from the judgment of the Court of Appeal at p 189 of the report:

In our view, FA Chua J failed to give sufficient weight to the exclusive jurisdiction clause. We should accord full recognition to exclusive jurisdiction clauses which are freely negotiated between the parties and which are unaffected by `fraud, undue influence or overwhelming bargaining power` (see Warren Burger CJ in B

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