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Lighthouse - September, 2019.

LI LIAN INTERNATIONAL LTD V. HERPORT HONG KONG LTD (MOL COMFORT) [2019] HKCFI 826 [2019] HKEC 964 – A REVIEW

This decision of the Hong Kong Court illustrates one of the potential risks associated with acting as a Non Vessel Owning Common

Carrier and the importance of protecting time in all potential jurisdictions when it comes to claiming indemnity.

Facts:
An NVOC (Herport) issued bills of lading in Hong Kong for carriage of cargo on ‘MOL Comfort’ from Hong Kong to Le Havre. Ocean bills were issued (by NYK) also in Hong Kong, indicating Herport as the shipper.
Unfortunately, the ship fractured amidships in the Indian Ocean, split into two halves and drifted for several days before sinking together with all goods on board.
Cargo interests and their insurers claimed against Herport under the NVOC bills; Herport issued a third party indemnity notice against NYK.

Contentions:
The main issue was conflict of law arose due to the exclusive clauses added in both B/L.
The Herport’s B/L provided exclusive jurisdiction to Hong Kong Courts whereas NYK’s B/L provided exclusive jurisdiction to Tokyo District Court in Japan under the following terms:
The contract evidenced by or contained in this bill of lading shall be governed and construed by Japanese law except as may be provided for herein, and (b) notwithstanding anything else contained in this bill of lading or in any other contract, any and all actions against the carrier in respect of the goods or arising out of the carriage shall be brought before the Tokyo District Court in Japan to the exclusion of jurisdiction of any other courts whilst any such actions against the merchant may be brought before the said Court or any other competent court at the carrier’s option.
NYK argued over the jurisdiction of the case stating that as per the clause in their Bill of lading the Jurisdiction would be Tokyo District in Japan and shall be governed and construed by the Japanese Law, also there were already two legal proceedings in Tokyo in relation to the subject damage thus NYK submitted that Hong Kong had no jurisdiction over the matter.
Herport disputed that the clause mentioned on the NYK BL is not valid as the clause is restricted only to claims under Japanese law and no other indemnity claims would fall under the same provision. They had placed the burden on NYK to prove that Hong Kong was not the right forum for the case.

Judgement:
Judge went by NYK’s contention stating that the clause on NYK bill of lading was very clear and it carried no ambiguities. The Court Stated that Herport had not submitted strong reasons to prove that the Court had jurisdiction and also Herport had to be aware that he may have to proceed against NYK in Tokyo as expressed in the Bill of Lading. The argument of Herport on forum non conveniens was also not accepted by the Court. The Court took a generous interpretation of the exclusive jurisdiction clause.
Thus the case was ruled in favour of NYK. The decision was inconvenient for Herport as the claim was time barred under Tokyo jurisdiction.
Having said the above, the judgement has missed out addressing if the claim can be acceptable under Tokyo Court as per 3 (6 bis) of Hague Visby Rules, to which both Japan and Hong Kong are signatory and this clause would have assisted Herport to fight the issue.

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