HCAJ000059C.docx

HCAJ000059C.docx

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HCAJ000059C

HCAJ59/2008

INTHEHIGHCOURTOFTHE

HONGKONGSPECIALADMINISTRATIVEREGION

COURTOFFIRSTINSTANCE

ADMIRALTYACTIONNO.59OF2008

Admiraltyactioninremagainst:

Theshiporvessel“HUATIANLONG”ofPeople’sRepublicofChinaflag

----------------------

BETWEEN

INTRALINERESOURCESSDNBHDPlaintiffs

and

THEOWNERSoftheshiporvessel

“HUATIANLONG”Defendants

----------------------

Before:

HonStoneJinChambers（OpentoPublic）

DatesofHearing:

1,2,3&4February2010

DateofSupplementalWrittenSubmissions:

9February2010（byplaintiffs）

19February2010（bydefendants）

DateofJudgment:

23April2010

INDEXTOJUDGMENT

Pages

Natureofthisapplication2-3

Thefactualbackground3-5

Chronologyoftheproceedingsto-date5-7

Evidenceatthehearingofthisapplication7-8

Thisapplication:

theargument8-9

（i）Sovereignimmunity9-11

（ii）‘Modified’sovereignimmunity11-14

（iii）Crownimmunity15

（a）Theconcept15-18

（b）TheHongKongposition18

Pre-1July199718-19

After1July199719-26

Decisiononthe‘Crownimmunity’debate26-29

（iv）Thedefendants’‘additionalground’29-31

Applicationofprincipletofact:

thestatusof31-42

thedefendants

Waiver42-47

Decisiononwaiver/submissiontothejurisdiction47-51

Summary52

Order52

Finally52-54

--------------------------

JUDGMENT

--------------------------

Natureofthisapplication

ThisisapplicationinvolvestheclaimedimmunityfromsuitofanentityoftheCentralPeople’sGovernment–andhencethecontentionthatthiscourthasnojurisdictionoveroneofthevesselsownedbythatentity.

1.Bysummonsdated21October2009thedefendantsintheseproceedings,whichonthewritinremarenamedas“TheOwnersoftheShiporVessel“HUATIANLONG”,butwhichnowhavebeenidentifiedastheGuangzhouSalvageBureau,haveappliedforastayand/ordismissalofthisactiononthegroundthat,inthewordsoftheapplication,“theDefendantenjoys,andhasnotwaived,thesovereignand/orcrownimmunityandhencethisHonourableCourthasnojurisdictionovertheDefendant”.

2.ThisisacasewhichhasbeeninexistencebeforetheHongKongcourtsincetheissueon15May2008oftheAdmiraltyactioninremagainst‘Theshiporvessel“HUATIANLONG”ofthePeople’sRepublicofChinaflag”resultinginthearrestafewdayslaterofthatvesselinHongKongharbour.How,then,hasthepresentsituationarisen?

Thefactualbackground

Theprincipalfactsleadingtothiscaseareessentiallyundisputed.Thisactionarisesoutofanallegedbreachofcontractonthepartofthedefendantownersofthe“HUATIANLONG”whichvessel,saytheplaintiff,failedtohonouritscommitmentunderaMemorandumofAgreemententeredintobytheplaintiffwiththeGuangdongSalvageBureau（‘GZS’）tomakeavailablethisvessel–whichisthelargestfloatingderrickcrane-bargebasedinAsia–toworkonoffshoreMalaysianandVietnameseprojects（‘theNewfield’and‘Talisman’projects）fortheinstallationofpipelinesandoilplatforms.

3.

Consequentuponthenon-appearanceofthe“HUATIANLONG”–which,ittranspires,intheperiodinquestionwasunderchartertoChinaNationalOverseasOilCompany,whichrefusedtoreleasethevesselfortheplaintiff’suse–theplaintiffsaysthatitwasunableproperlytocompletetheNewfieldandTalismanprojects,whichithadbeenawardedon16 January 2007,andhenceitnowclaimsdamagesagainstdefendantownersinthesumofsomehundredsofmillionsofUSdollarsforfraudulentmisrepresentationand/orbreachofcontract.

4.On21 April 2008theplaintiffinvokedtheAdmiraltyjurisdictionoftheHighCourt.Thewritwasnailedtothemast,andthebailiffarrestedthe“HUATINLONG”inHongKongwaters,thismassiveliftingbargeearlierhavingbeensentfromitsGuangzhoubasetoHongKongtoraisefromtheseabedaUkrainiantugwhichsomeweeksearlierhadbeenincollisionwithacontainervesselintheouterreachesoftheharbour,andhadsunkwithtragiclossoflife.

5.Byorderdated30 April 2008ReyesJdismissedthedefendants’applicationforsettingasidethewritandthisaction,andforthereleaseofthevesselfromarrest.

6.IntheskeletonargumentofcounselforownerswhichwasplacedbeforeReyesJatthishearingtosetasidethearrest,thefollowingappearsatparagraph 3thereof,undertheheading‘SovereignImmunity’:

“GZSisaBureauoftheMinistryofCommunications.Forthepurposeofthepresentapplication,GZSwillnotseektoinvokeanyprincipleofSovereignImmunity.However,GZSreservetherighttodosoatafuturestage.”

7.Somefiveweekslater,on9May2008,GZSultimatelysecuredthereleaseofthe“HUATIANLONG”byarrangingbailbondstobepostedonitsbehalfbyChinaMerchants’Bank;intheevent,theapplicationforbailbond（s）washotlydisputedathearingsbothbeforethiscourtandintheCourtofAppeal.

8.AtfirstinstancetheOrderof9May2008wasfortheprovisionofbailinthesumofUS$65million,whichsum,consequentupontheadmissionoffreshevidence,wasvariedbytheCourtofAppealtothesumofUS$122,412.000:

see[2008]4HKLR719（1stinstance）and[2008]4HKLR745（CA）.

9.HavingfurnishedbailandthussecuringthereleaseofthevesselbyOrderofReyesJon4 June 2008,thedefendantsnowseekanordergrantingimmunityfromsuit–hencethepresentapplicationcommandingthisjudgment.

Chronologyoftheproceedingsto-date

Whilstafullandhighlydetailedchronologyofthislitigationto-datehasbeensuppliedtothecourtduringthecourseofthishearing,it maybeworthsketchingintheprincipalprocedurallandmarks,sincethisinformationisgermanetolegalargumentastothesustainabilityofthisapplicationinthecontextofwaiverandsubmissiontothejurisdiction.

10.Subsequenttotheissueofthewritinremon21 April 2008,andthefailureoftheapplicationtosetasidethewrit,thedefendantsacknowledgedserviceofthewriton2 May 2008.Thereafterfollowedthedecision,andsubsequentappeal,astotheamountofbailtobeposted,thewritwasamendedon15May,andon22May2008aStatementofClaimwasfiled;someideaofthescaleofthecasecanbegleanedfromthefiguresclaimed:

thesumclaimedindamagesvariouslyispleadedatUS$190millioninwastedcosts/expenditure,US$96millionindamagesforfraudulentrepresentation,andalikesumindamagesforbreachofcontract.

11.On31July2008aDefenceandCounterclaimwasfiled  thesumofalmostUS$38millionisclaimedindamagesforwrongfularrest  andon16September2008aReplyandDefencetoCounterclaimwasfiled;FurtherandBetterParticularsoftheStatementofClaimweresoughton3November2008.

12.Discoverybylisttookplacebetweenthepartiesovertheperiod13February2009to6October2009.

13.On12May2009aCaseManagementsummonswasissued,resultinginordersfromReyesJon7July（astocasemanagement）andon11 September 2009（astoserviceofwitnessstatements）,andon26 May 2009theplaintiffgavenoticeofpaymentintocourtofsecurityforcostsinthesumofHK$5,812,800;provisionforfurthersecurityforcostswasmadebyorderofthiscourtdated1 February 2009.

14.Exchangeofwitnessstatementsoffactandonquantumtookplaceon2 October 2009,andon6 October 2009anoticewasissuedseekingtosetdownthecasefortrial.

15.Afterdueconsultationwiththecourtandcounsel,trialdateswerefixedfora20dayhearingcommencingon5 July 2010andconcludingon30July2010,butthesedatesclearlynowareinjeopardygiventheissuanceofthedefendants’‘immunitysummons’on21 October 2009;itappearstolerablyclearthatwhateverthiscourt’sdecisionuponthepresentapplication,eithersidewillembarkupontheappellatechainincircumstancesinwhichverylargesumsofmoneyareclaimed,inadditiontothepracticalsignificanceandlegalimportanceofthepointwhichiscentraltothisdebate.

Evidenceatthehearingofthisapplication

FortheplaintiffaffirmationevidencewasfiledbyMs Hui Kit Yu,whosworetwoaffirmations,andMr Lin Feng.

16.MsHuiisatraineesolicitorofM/sHolmanFenwick&Willan,whichfirmactsfortheplaintiff,whoprovidesevidenceofthefactualbackground,identifyingthedefendantsandtheirbusinessactivities,andcommentinguponvariousotheraspectsofthiscase,includingthatofwaiverandtheissueofsubmissiontothejurisdiction;Dr Lin FengisaProfessorattheCityUniversitySchoolofLaw,andgaveevidencetothecourtquaexpertonChineselawinthecontextoftheclaimedimmunityfromsuit.

17.ForthedefendantsprimaryevidencewasprovidedbyMr Fu Shi Qun,whosworefiveaffirmationsinsupportoftheapplication.

18.MrFuisanofficerofthedefendant,GZS,whohasbeenwiththatentitysince1980–hesaysthatheistheManagerofitsBusinessAdministrationOffice.Hisevidencewasfiledinsupportofthedefendant’simmunityapplication,andhesaysinterms（atparagraph 3ofhis1staffirmation）thatheis“authorizedto,andinstructedbytheMinistryofCommunications,GuangzhouSalvageBureauoftheCentralGovernmentofthePRC…andtoprovidetheCourtwithevidenceinsupportoftheDefendant’sentitlementtoCrownImmunity.”

19.Inaddition,anexpertChineselawlegalopinion,entitled‘The LegalNatureofGuangzhouSalvage’,wasadducedonbehalfofthedefendantsbyProfessorLinYuan-minbyaffirmationdated11 November 2009.

20.BothexpertsonChineselaw,DrLinFeng,fortheplaintiff,andProfessorYMLin,forthedefendants,werecross-examinedbytheparties’respectiveleadingcounsel,MrCharlesSussexSCfortheplaintiffandMissTeresaChengSConbehalfofthedefendant