The "Jian He"

CourtCourt of Appeal (Singapore)
JudgeChao Hick Tin JA
Judgment Date18 September 1999
Neutral Citation[1999] SGCA 71
Citation[1999] SGCA 71
Defendant CounselGovintharasah Ramanathan (Gurbani & Co)
Plaintiff CounselDanny Chua and Mohd Goush Marikan (Khattar Wong & Partners)
Published date19 September 2003
Docket NumberCivil Appeal No 55 of 1999
Date18 September 1999
Subject MatterWhether claim within scope of exclusive jurisdiction clause in bill of lading,Wrongful delivery of cargo against presentation of false bills of lading,Construction of clause,Civil Procedure,Scope of clause,Choice of jurisdiction,Stay of proceedings,Governing law of contract applicable,Breach of foreign exclusive jurisdiction clause in bill of lading,Whether tortious claim covered by clause,Scope of carrier's contractual duty to deliver,Conflict of Laws,Admiralty and Shipping,Claim against carrier,Whether strong cause for refusing stay shown,Delay in applying for stay,Whether carrier has genuine dispute to be tried in contractual forum,Strong cause for refusing stay,Bills of lading,Time-barring of action in contractual forum,Exclusive jurisdiction clause

(delivering the judgment of the court): This is an appeal against a decision of the High Court refusing the defendants` application for a stay of proceedings on the ground of an exclusive jurisdiction clause.

The facts

The plaintiffs, Darvimn Distributors Pte Ltd, a Singapore company, sold certain electronic goods (the goods) to a company in Johannesburg, South Africa. The goods were shipped in a container on board the defendants` vessel Jian He, pursuant to a bill of lading dated 24 June 1996. The shipment was insured by plaintiffs with an insurer. Upon arrival of the vessel at Johannesburg, the goods were discharged from the vessel and transferred to the container terminal, to be delivered to the consignee upon presentation of the original bill of lading.

On 24 July 1996, the consignees in South Africa presented the original bill of lading to the defendants` agents there (Cosren) in order to take delivery of the goods.
However, it was found that the goods had already been surrendered upon the presentation of an apparently false bill of lading. Correspondence ensued between the plaintiffs and the defendants` Singapore agents, Costar Shipping Pte Ltd (Costar), from 25 July to 7 November 1996. When the correspondence produced no satisfactory results, the plaintiffs made a claim against the insurers, who met the claim. The present action is brought by the insurers, pursuant to their right of subrogation.

The plaintiffs issued the present writ in rem against Jian He on 14 June 1997 and had it served on the defendants` solicitors two days later.
On 17 July 1997, the plaintiffs applied to amend the writ to delete the nine sister ships named in the action. The amended writ was only served on the defendants on 28 August 1997. The defendants filed a memorandum of appearance the next day.

About a year later, on 29 July 1998, the plaintiffs applied for summary judgment.
The hearing was scheduled for 4 September 1998. However, on that day, the assistant registrar granted an adjournment to 23 October 1998 on the ground that the parties were negotiating a settlement. On 23 October 1998, the hearing of the summary judgment application was again adjourned, because the defendants had yet to file their show-cause affidavit and the plaintiffs had also yet to file their statement of claim as required under O 14 r 1. In granting the adjournment, the assistant registrar directed the plaintiffs to file and serve their statement of claim by 28 October 1998 and the defendants to file their show cause affidavit by 4 November 1998. On 24 October 1998 the plaintiffs filed and served their statement of claim.

However, instead of filing the show cause affidavit, the defendants on 4 November 1998 filed an application to stay all further proceedings in Singapore on the ground that the dispute was one which the parties had agreed to be determined in China.
On 26 February 1999 the application was heard by the assistant registrar who allowed it with costs. The plaintiffs filed a notice of appeal on the same day. The learned judge heard the appeal on 31 March 1999 and reversed the decision of the learned assistant registrar. Thus, this further appeal to the Court of Appeal.

Relevant Clauses

For the purposes of the action, two clauses in the bill of lading are relevant:

Clause 3

Jurisdiction: This Bill of Lading is governed by the laws of the People`s Republic of China. All disputes arising under or in connection with this Bill of Ladingshall be determined by the laws of the People`s Republic of China and any action against the carrier shall be brought before the Maritime Court in Guangzhou or Shanghai or Tianjin or Qingdao or Dalian where the principal place of business of the relevant company is situated. [Emphasis added.]

Clause 6

PERIOD OF RESPONSIBILITY the carrier shall not be liable for loss of or damage to the goods occurring before receipt of the goods by the carrier at the port of loading or the place of receipt or after delivery by the carrier at the port of discharge or place of delivery. [Emphasis added.]

Decision of learned judge

In the court below, the learned judge gave two main reasons for refusing a stay:

(i) The contract of carriage had ended when the loss of the goods occurred. Accordingly, the jurisdiction clause, which was part of the contract of carriage, had no relevance to the plaintiffs` claim.

(ii) Even if the clause did apply, exceptional circumstances had been shown why a stay should not be granted as it was clear from the conduct of the defendants that they did not genuinely desire a trial in the contractual forum but were merely seeking a procedural advantage to avoid liability for the plaintiffs` claim.

Before us, counsel for the appellants argued that both these grounds are erroneous.
He also contended that there was no delay on the part of the appellants in filing the stay application.

Does the claim fall outside the bill of lading

Before we proceed to examine the grounds raised, we would like to make this observation. We are here concerned with a foreign jurisdiction clause and it is settled law that such a clause should be construed acording to the governing law of the contract: see The Sindh [1975] 1 Lloyd`s Rep 372. In our present case the bill of lading expressly provides that the laws of the People`s Republic of China shall apply. It follows that Chinese rules of construction should apply in the construction of the jurisdiction clause. But as there is no evidence before us showing that the rules of construction under Chinese law are any different from those under Singapore law, a Singapore court would be entitled to construe the jurisdiction clause in accordance with the rules of construction here: see The Frank Pais [1986] 1 Lloyd`s Rep 529 at p 530.

On the first ground, the learned judge held that `the loss of the cargo occurred after the goods had been discharged from the vessel.
Consequently, the contract of carriage evidenced in the bill of lading had no application` and thus `the jurisdiction clause in the bill of lading was irrelevant.` She felt that the claim was really one founded on negligence even though in the statement of claim the plaintiffs also relied upon the bill of lading.

Counsel for the plaintiffs argued that once the goods had been discharged from the vessel, they were no longer in the custody of the carrier who would, therefore, not be liable for any loss or damage to the goods caused by the mishandling of third parties after the discharge.
But he accepted that the carrier, as the bailee of the goods, had a duty to ensure that his servants or agents effect proper delivery of the goods to the rightful party. But this aspect of the duty was governed by the general law of tort, not contract as evidenced by the bill of lading.

Scope of jurisdiction clause

As would be seen above, the wording of the jurisdiction clause is extremely wide. It applies to `[ a ] ll disputes arising under or in connection with this Bill of Lading`. It clearly would apply to a case where the goods, to which the bill of lading relates, were handed over to a stranger without the production of the bill of lading, irrespective of whether the claim was formulated in contract or in tort. There is nothing in that clause to suggest that a claim in tort `arising under or in connection with` the bill of lading should be excluded. To take such a view would not be in accordance with the intention of the parties.

In our view, a case which illustrates the point succinctly is The Playa Larga [1983] 2 Lloyd`s Rep 171 where the defendants agreed to sell sugar to the plaintiffs.
However, the ship delivering the sugar sailed away from the port of delivery without delivering the cargo which had already been paid for by the plaintiffs. The contract between the parties contained a clause where the parties agreed to refer `all disputes arising out of this contract` to arbitration. The plaintiffs thus claimed in arbitration for damages for breach of contract and for conversion. The defendants tried to argue (inter alia) that the jurisdiction clause did not cover a claim in tort so that the arbitrators had no jurisdiction to hear the claim for conversion. Although the case can be distinguished on technical grounds (ie it involved an arbitration and not a jurisdiction clause), the holding is still relevant to the case at hand. Ackner LJ said (at p 183):

... the contract was not an item of past history leading up to the claim. It was central to the whole dispute. The common sense of the situation was that a trader who had bargained and paid for a quantity of sugar, in the contemplation that he would receive physical possession of it, had had that sugar snatched away by the vendor just as it was about to be delivered to him. Having regard to the nature of the defence, to suggest that the resultant dispute as to whether the trader had a remedy and if so for how much, was not a dispute arising out of the contract, seems to us to be commercially quite unrealistic.

Accordingly, Ackner LJ held (at p 183 RHC):

The claim had a sufficiently close connection with the claims under the contract that it came within the arbitration clause. Adopting the words of Mr Justice Mustill, the contractual and tortious disputes were so closely knitted together on the facts, that the agreement to arbitrate on one can properly be construed as covering the other. Accordingly, we would have held, had the matter required a decision, that the whole of the dispute as reflected in the pleadings could be properly regarded as falling within the scope of the agreement to arbitrate.

The test of `close connection` has much to commend itself and we think it ought to apply to the construction of jurisdiction clauses as well.
Such a test is far more likely to give effect to the intention of the contracting parties, as compared to the blanket rule that a claim in tort...

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