Latest Insights

Edward Alder, together with Clifford Smith SC, instructed by Ince & Co, appeared in the Court of Appeal for the owner of the Milano Bridge successfully opposing an appeal against a stay of a US$90m claim arising from an allision between the ship and a berth in Busan in 2020 ([2022] HKCA 157).

All facts took place in Korea. The terminal operator claimant did not dispute Korea was the natural forum.
The only connection with Hong Kong was arrest of a sister ship after the incident. The owner had
constituted a limitation fund in Korea of US$24m. That figure derived under Korean law from Panama law
as the law of the flag. It represented a limitation figure originally agreed internationally but degraded by
45 years’ inflation. In Hong Kong, the limitation figure would be around US$82m under the LLMC 1976
and 1996 Protocol and subsequent uplifts.
Under Spiliada, a mere difference in damages between the local court and the alternative forum will
generally not preclude a stay, especially where the claimant comes from the alternative forum. But the
court may refuse a stay where a stay would deprive the claimant of a ‘legitimate juridical advantage’.
The court gave guidance on ‘forum shopping’. The claimant’s own evidence was that the main driver of
the Hong Kong action was higher limitation. This pejorative term is a conclusion to be drawn after the
court has performed the Spiliada exercise and concluded the alternative forum is suitable for
determination of the case. It is not a standalone factor a defendant may invoke. If the alternative forum is
not a natural one, or pursuit of an advantage in Hong Kong is legitimate, there is no ‘forum shopping.
This action was not founded on an exorbitant basis. Invoking jurisdiction by an action in rem founded on
an arrest of a sister ship is a procedure of special value in admiralty cases recognised internationally.
On the merits, the court rejected the claimant’s submission, based on three Court of Appeal cases, that
a significant limitation difference ‘will be’ ‘decisive’ at Spiliada analysis Stage 2. The matter is always
discretionary and the court must proceed to the Stage 3 balancing exercise.
The Stage 3 question whether substantial justice will be done in the foreign forum is to be approached
by considering all the circumstances, not just the juridical advantage. The weight to be given to a juridical
advantage is a function of the parties’ connection to the jurisdiction. If a claimant seeks out a jurisdiction
simply to gain a juridical advantage rather than because of a substantial connection of the case to the
jurisdiction, that is ordinarily condemned as ‘forum shopping’. On the other hand, a case with a real and
substantial connection to the forum has a legitimate claim to the advantages that that forum provides.
Here, the claimant plaintiff was entitled to bring the action in Hong Kong by the in rem procedure.

The court rejected the argument that the low Panamanian limitation could only be explained by legislative
inaction or oversight and concluded there is no international unanimity on limitation figures worldwide.
Indeed, China other than Hong Kong has not adopted the 1996 Protocol figures or subsequent uplifts.
The court accepted that a suite of factors in this case tipped the balance in favour of a stay. The Korean
claimant chose to operate a maritime terminal business in Korea entailing risk of costly accidents, subject
to Korean law. It did not limit its services to vessels flagged in jurisdictions such as Hong Kong with higher
tonnage limits or requiring vessels to waive the limitation. On the contrary, the claimant’s terms voluntarily
limited both its own and its customers liability to figures even lower (US$20m or US$15m) than the Korean
law tonnage limit for the vessel. The claimant was insured in Korea. While the claimant had been entitled
to bring action in Hong Kong, it had little legitimate expectation of enjoying the higher limit here.

The judgment in full can be found at