DFS TRADING LTD AND ANOTHER v. SWISS AIR TRANSPORT CO LTD AND OTHERS

HCCL000248A/1995

1995, CL No.248

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

COMMERCIAL LIST

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BETWEEN
DFS TRADING LIMITED 1st Plaintiff
DFS TRADING (HONG KONG) LIMITED 2nd Plaintiff

AND

SWISS AIR TRANSPORT COMPANY LIMITED (trading as SWISSAIR) 1st Defendant
CATHAY PACIFIC AIRWAYS LIMITED 2nd Defendant
HONG KONG AIR CARGO TERMINALS LIMITED 3rd Defendant
JACKY MAEDER INTERNATIONAL FORWARDING LIMITED (otherwise known as JACKY MAEDER SA DE TRANSPORTS INTERNATIONAUX – otherwise known asJacky Maeder AG fur Internationale Transporte) 4th Defendant
JACKY MAEDER (HONG KONG) LIMITED 5th Defendant

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Coram: Deputy Judge Woolley in Chambers

Date of hearing: 7 January 1997

Date of handing down reasons for decision: 14 January 1997

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REASONS FOR DECISION

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1. This is an application by the 4th Defendant for a stay of proceedings in favour of the Zivilgericht Basel-Stadt (The Civil Courtof the City of Basel) in Switzerland, firstly under Order 12 rule 8, on the grounds that the Plaintiffs’ claims are within the exclusivejurisdiction of the Swiss Courts by virtue of contract and/or Swiss law, and secondly, under the Court’s inherent jurisdiction, onthe grounds of forum non conveniens, that Switzerland is the natural and most appropriate forum for trial. At the conclusion of thehearing I dismissed the 4th Defendant’s application with costs to the Plaintiffs and I now give my reasons for so doing.

2. The events which give rise to these proceedings occurred on 13th March 1995 when a consignment of goods, the property of the Plaintiffs,having arrived by air from Switzerland, was stolen from the cargo terminal of Hong Kong Air Cargo Terminals Limited (“HACTL”) atKai Tak Airport by means of a Shipment Release Form taken from the office of the 5th Defendant by a person unknown.

3. Proceedings were commenced against all five Defendants in December 1995, but until late 1996 only the 4th and 5th Defendants hadbeen served. Points of Claim, since amended and re-amended, have been filed and served on the 4th and 5th Defendants; Points of Defence,since amended, have been filed and served by the 5th Defendants, and a Reply filed and served by the Plaintiffs.

4. The 1st Plaintiff is a Swiss company and the 2nd Plaintiff is its Hong Kong associate. The 4th Defendant is also a Swiss companyand the 5th Defendant its Hong Kong subsidiary. Transport of the goods was arranged by the 4th Defendant, with the 1st Plaintiffbeing named as shipper and the 2nd Plaintiff as consignee.

5. The Plaintiffs are now claiming, inter alia, under four contracts for carriage by air, evidenced by four air waybills, which theycontend are separate contracts subject to the conditions printed on the back of each. These conditions in turn make the carriageof the goods subject to the rules relating to liability established by the Warsaw Convention which applies to Hong Kong under theCarriage by Air (Overseas Territories) Order 1967, as amended.

6. It is not in dispute that arrangements for transport of the 1st Plaintiff’s goods from Switzerland to its associates around the worldhave subsisted for some twenty years, and it was the 4th Defendant’s initial contention that, as previous dealings between them weregoverned by the General Conditions of the Swiss Freight Forwarders Association (“GCSFFA”), which give exclusive jurisdiction to theSwiss courts with only Swiss law applicable, the proper law of these contracts is Swiss law and the Swiss courts have exclusive jurisdictionin respect of any dispute arising out of them.

7. This contention was not pursued by Mr. Faulkner on behalf of the 4th Defendant with particular vigour in his arguments before me,and I believe I can deal with the point fairly briefly. The evidence of the arrangements between the 1st Plaintiff and the 4th Defendantin the past show only that they were just that -general arrangements under the umbrella of which individual contracts were made fromtime to time for the transport of goods. It may well be that some of those contracts were governed by Swiss law, but it would benecessary in each case to examine the particular contract to determine this. Equally, it may well be that transport arranged by the4th Defendant within Switzerland would be subject to the GCSFFA giving the Swiss courts jurisdiction and applying Swiss law. However,it is clear from the face of the air waybills that the 4th Defendant entered into separate contracts of carriage by air as contractingcarrier. and in no other capacity, and from the conditions incorporated into the contracts, that these contracts were subject tothe Warsaw Convention. There is nothing in the contracts themselves which makes Swiss law applicable or which gives exclusive jurisdictionto the swiss courts.

8. Mr. Faulkner however takes the matter one step further by maintaining that, on the facts here, it is apparent that the carriage byair had ceased upon the delivery of the goods into the custody of HACTL, that the Convention therefore no longer applied to the contractbetween the parties, and that it is consequently arguable that the contractual conditions of exclusive jurisdiction apply, and thatunder common law principles Swiss law was that with which the contracts had the closest and most real connection. He went on to repeatthe views expressed in Dicey and Morris, The Conflict of Laws at page 424, that a “practical solution would be to treat the jurisdiction clause as effective if a good arguable case is made out that the contractis valid under the law which would apply to it.”

9. It is not for me on this application to try the merits of the action, but I need to look at the facts to see whether it is “arguable”that the carriage by air had terminated. It is clear that the Convention still applies to the carriage of the goods if they are inthe charge of the carrier, in spite of the journey by air having been completed. In this case the goods were taken to the cargo terminalof HACTL at the airport. HACTL having the sole franchise to operate the cargo terminal, the carrier has no choice as to where thegoods are temporarily stored. It is submitted on behalf of the 4th Defendant that this means that they are no longer in the custodyof the carrier and the carriage has terminated.

10. Although I have little sympathy with that view, particularly in the light of the fact that the Defendants were at all material timesin possession of the documents of title to the goods, and it is their conduct in relation to them, not the conduct of HACTL in relationto the goods, that is in question, it is not appropriate that I make a finding on it, and, indeed, I do not think that I need todo so. It is quite clear from the contract itself that the Warsaw Convention applies, and continues to do so until the contract hasbeen performed. I accept and adopt the argument of Mr. Smith on behalf of the Plaintiffs that Article 18 of the First Annex to Schedule1 of the 1967 Order, relied on by Mr. Faulkner in his submission that the carriage by air was concluded, only provides a defenceto a carrier against a claim for loss and damage, and that the definition of carriage by air therein is only for the purposes ofthat Article. It does not have the effect of excluding the contract from the other Provisions of the Convention, of which Article28 gives the Plaintiffs the option of bringing the action in Hong Kong, the place of destination, and Article 32 makes any agreementto alter the rules as to jurisdiction null and void.

11. I accordingly do not accept that it is arguable on the facts here that the Convention does not apply, and a stay on the ground ofexclusive jurisdiction and applicability of Swiss law must accordingly be refused.

12. As to forum non conveniens, I am also satisfied that a stay on this ground must be refused for two reasons.

13. The first is that there is nothing to show that Hong Kong is not, in the words of Lord Goff of Chievely in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] 1 A.C. at page 477: “the natural or appropriate forum for the trial”, or that “there is another available forum which is clearlyor distinctly more appropriate”.

14. Although the contract was made in Switzerland, the main evidence on the facts is all in Hong Kong. This is where the goods were stolenand one of the main issues will be in relation to the events surrounding the loss by the Defendants of the Shipment Release Formand whether they can limit their liability. It is by no means certain that evidence of Swiss witnesses will be required at all asto the making and effect of the contract, but evidence of the events leading to the loss of the goods is only available here, anda trial in Switzerland would inevitably require witnesses to be taken there involving expense and inconvenience.

15. The second reason is that given for the decision in Milor S.R.L. & Ors. v. British Airways PLC. [1996] 3 W.L.R. 642, where the English Court of Appeal held that, if the Warsaw Convention applied, as I have held here that it does, the Plaintiff hasa choice of venue under Article 28 and there is no scope for the court to impose a venue which conflicts with that choice. Mr. Faulknerhas pointed out that I am not bound by the decision of the English Court of Appeal and has directed my attention to the criticismof that decision by the editors of Shawcross and Beaumont. Of the two views I prefer that of the Court of Appeal and on that basismake a similar finding here.

16. In any event, for reasons which I shall address below, I do not consider it appropriate in this case to order a stay for the purposeof the claim being tried in Switzerland even if I had accepted the submissions on behalf of the 4th Defendant with regard to exclusivejurisdiction and applicability of Swiss law.

17. There are altogether five Defendants in this action and, as has already been noted above, until comparatively recently only the 4thand 5th Defendants had been served and taken part in the proceedings. The point has been taken on behalf of the 4th Defendant thatthis raises a doubt as to whether the Plaintiffs intend to pursue their claims against the 1st to 3rd Defendants, and they cannotraise the argument against a stay that the 4th Defendant is sued jointly with others and there would have to be separate trials inrespect of different defendants, giving rise to the risk of the issues being determined differently in two countries.

18. I have to say that the fact of the late service of the other defendants does not seem to me to be conclusive evidence of any reluctanceon the part of the Plaintiffs to proceed against them. Even if it were, the fact remains that the action is proceeding against the5th Defendant who, although, I believe, a subsidiary of the 4th Defendant, is very much a separate entity, and does not seek a stayof these proceedings in Hong Kong. Indeed, it is difficult to see on what grounds it could make such a request. It follows that,come what may, the action will proceed here against the 5th Defendant and many of the same issues as against the 4th Defendant willfall to be determined.

19. It is abundantly clear from the authorities to which Mr. Smith has drawn my attention that the courts have constantly refused togrant a stay of proceedings where the result would be a multiplicity of actions in different jurisdictions on the same issues, butI need to refer here to only one. namely [1990] 1 HKC 247. In spite of a clear jurisdiction clause in the contract the subject of those proceedings. Godfrey J. (as he then was) declined toorder a stay, saying, at page 251:

“All these disputes as to who is responsible for what happened ought to be tried in the same action, at the same time, beforethe same court. Any other result would seem to me to be not only potentially inconvenient but potentially disastrous.”

20. For these reasons I find that there is no merit in the present application and a stay is refused.

(E.T.S. Woolley)
Deputy Judge of the High Court

Representation:

Mr. Raymond Faulkner instructed by Messrs. Richards Butler on behalf of the 4th Defendant

Mr. Clifford Smith instructed by Messrs. Clyde & Co. on behalf of the Plaintiffs