The approach of the primary judge
22 In a careful and thorough judgment, the primary judge set out the background facts (at [12]-[38] of the reasons) and surveyed the competing evidence as to Chinese maritime law of Mr Chen, called by Rockwell and Chou Shan, and Professor Zhao, called by the plaintiffs (at [39]-[104]) before undertaking his analysis of the circumstances. Before turning to that analysis, it is convenient to identify the relevant areas of difference between the two experts as identified by the primary judge at [103] of the reasons.
23 The first was the question of the lex causae governing the collision. The primary judge favoured Prof Zhao's view that, whilst Chinese law governs the pollution claims by Chinese authorities (being a subject matter given over to the jurisdiction of the coastal State in its EEZ under Art 56 of the United Nations Convention on the Law of the Sea) (UNCLOS), the law governing the maritime tort in connection with a ship collision was not necessarily Chinese. Mr Chen contended that Chinese law applied to both the pollution case and as the lex causae of the tort claim. Rockwell challenges this finding in a notice of contention. For the reasons expressed below Rockwell's challenge should be rejected.
24 The second area of relevant difference concerned the registration of a claim against a limitation fund and concerning an action under protest. Prof Zhao said that the former was not a submission to jurisdiction and that a Chinese court would take a protest into account. Mr Chen said the former may be a submission and that a Chinese court would not take into account any protest in commencing an action. The resolution of the issue does not affect our view of the appeal.
25 The primary judge then, at [105]-[114], examined the applicable principles, referring to Deane J in Oceanic, Voth and Garsec Pty Ltd v His Majesty The Sultan of Brunei [2008] NSWCA 211; 250 ALR 682. No complaint is made about his expression of the governing principles.
26 At [115]-[149] of the reasons, the primary judge discussed the parties' submissions on the operative considerations by reference to connection with Australia ([115]-[123]), the plaintiffs' security ([124]-[128]), the lex causae ([129]-[146]), other connecting factors ([147]) and parallel related proceedings ([148]-[149]).
27 During the above discussion (at [115]-[149]) the primary judge expressed a number of relevant views or conclusions. At [117], the primary judge described certain matters as "compelling" as follows:
Compellingly, in my view, the Chou Shan argues that there is no connection between Australia and the subject matter of the action, nor is there any connection with the parties, nor is there any connection with the place of collision. No witness or evidence are located in Australia and Chinese law applies. These alone are significantly powerful factors, the Chou Shan contends with considerable force, to warrant a stay being granted.
The reference to Chinese law applying was qualified by his conclusion referred to above and also expressed at [158(c)] to which we refer below.
28 At [147], the primary judge found many of the connecting factors to be neutral, saying:
It should be reiterated that other connecting factors are limited and variable. Specifically, the place of domicile of the first plaintiff is France, the second plaintiff is a domicile of the Republic of Ireland and the owners of the Chou Shan are domiciled in the Marshall Islands. Additionally the Chou Shan is registered in Panama while the CCF is registered in the United Kingdom. The crew of the Chou Shan who might be called as witnesses are Chinese and Taiwanese nationals ordinarily resident in those countries. The crew members of the CCF who may be called as witnesses are Philippino, Romanian and Chinese nationals and ordinarily resident in those countries. It would seem that the location of the parties, vessels and likely witnesses does not lead to the conclusion that any specific jurisdiction has a significantly better claim than any other jurisdiction to be the law pursuant to which the CCF claim is to be resolved. Moreover, even though the crew who are likely to be called to give evidence are ordinarily resident in specific locations, they are by virtue of their vocation, likely to be peripatetic. There is no reason to think that either party is unable to conduct litigation either in Australia or China, each party having demonstrated the capacity to do both. None of these factors would support any conclusion that this Court is a clearly inappropriate forum for resolution of the plaintiffs' claims.
29 At [148]-[149], the primary judge recognised the importance of the consideration of multiple hearings. At those paragraphs, he said the following:
[148] The Chou Shan stresses that there are multiple proceedings in China brought by the CCF interests, the Chou Shan interests, parties associated with the Shanghai MSA, the Fisheries Bureau and many cargo interests. All of these turn on liability for the collision. The litigation in Australia of only one of those claims is, according to the Chou Shan, inherently vexatious and oppressive. In relation to the proceedings in China, the Chou Shan points to the fact that the proceedings are before a single court, the Maritime Court, which has jurisdiction over all aspects of the proceeding. Secondly, a Chinese court will not stay a proceeding in China in favour of a foreign proceeding (this is according to Mr Chen and not disputed by Professor Zhao). This is important because no matter the outcome of the present proceeding, there will be proceedings that continue in China in which liability for the collision will necessarily be determined.
[149] As noted in Henry by Dawson, Gaudron, McHugh and Gummow JJ (at 590-591), the Court will be astute to avoid multiplicity of proceedings including a situation where there are parallel proceedings in courts of different nations in respect of what is substantively the same dispute. The inconvenience and embarrassment of allowing two independent actions involving the same question of liability to proceed contemporaneously in different courts is self-evident.
30 The primary judge's reasoning is substantially to be found in [150]-[161]. At [151]-[152], the primary judge emphasised the importance of the avoidance of multiple proceedings, and the serious inconvenience of the potential for inconsistent findings. This weighty consideration can be seen to be at the forefront of the primary judge's consideration, and rightly so, given what Dawson, Gaudron, McHugh and Gummow JJ said in Henry v Henry at 590-591. Of course, in Henry v Henry the plaintiffs had begun their action after the party seeking a stay (unlike the position here); but, nevertheless, as the primary judge discussed at [153], the Ningbo Maritime Court was seized of all issues, was proceeding in a timely way, and had the advantage (as referred to by the primary judge at [155]) of the evidence collected by the Shanghai MSA.
31 At [157], the primary judge said:
There is no one factor which would lead to this Court being a clearly inappropriate forum but there are multiple factors, taken cumulatively which do, in my view, lead to that conclusion.
32 At [158], the primary judge turned to the seven factors set out earlier in [9] of his reasons, they being the factors relied on by Chou Shan.
33 At [159]-[160], the primary judge dealt with the juridical advantage of the greater security for the plaintiffs' claims in this Court.
34 All of [158]-[161] is set out below. Some importance was placed on the terms and structure of these paragraphs by the appellants in argument. It was submitted that they betrayed error by the primary judge in how he approached the task of evaluating whether this Court was a clearly inappropriate forum. We will deal with that argument later. It is appropriate to say at this point, however, that we would not segregate [158] of his Honour's reasons as the place where one finds his reasons for the conclusion that this Court is a clearly inappropriate forum. The reasons are to be found in [150]-[160] and include not only the matters in [158], but also the emphasis in [151]-[152] on inconsistent findings, as well as the consideration of the juridical advantage discussed at [159]-[160].
35 Paragraphs [9] and [158]-[161] were as follows:
[9] The Chou Shan relies on what it says are the following significant factors:
(a) The natural and obvious forum for all disputes relating to the collision is China.
(b) Other than the fact that the proceeding was commenced here, nothing and no one in this proceeding has any connection with Australia.
(c) The claim is governed by Chinese law as to liability, damages and limitations.
(d) There are proceedings before a Chinese court that has jurisdiction over all persons and claims. Substantial justice will be done in China.
(e) Conversely, substantial justice cannot and will not be done in Australia in the circumstances of this case.
(f) Regardless of what happens in Australia, the proceedings in China will continue. Those proceedings will determine, according to Chinese law, questions of liability and damages. Continuation of proceedings in China and in Australia raises real risks about inconsistent findings and verdicts. Where there is a need to enforce a judgment in a third country, the existence of conflicting findings and verdicts 'presents an intolerable situation'. That situation is only avoided, it is contended, by a stay of this proceeding.
(g) The reality is that the plaintiffs have made an election between two fundamentally different causes of action by filing in China after the parties were subject to the jurisdiction of this Court.
…
[158] I turn to the factors outlined in [9] above on which the Chou Shan relies. In relation to those factors and dealing with them seriatim, I accept the submission that:
(a) the natural and obvious forum for all disputes relating to the collision is China. Unlike the The Ship "Xin Tai Hai" (No 2), this collision occurred proximate to China, in China's EEZ. It was not a collision occurring off the Malaysian coast. Following the collision, both ships steamed to Chinese ports for repair. Neither ship sank but there was considerable oil spillage in China's EEZ which was expressly governed by Chinese jurisdiction. That jurisdiction is well and truly in train and was immediately in train following the collision. Generally speaking, the amount of activity in China in the present case, appears to me have been significantly greater and certainly involving a greater number of interests than the proceeding in Australia.
(b) I also accept the submission and take into account that other than the fact that the in rem proceeding was commenced in Australia, there was nothing and no one in this proceeding which has any connection whatsoever with Australia. While that is certainly no reason why the proceeding in rem should not have been commenced and, indeed, the peripatetic nature of ship travel gives rise to such a prospect, there is simply no connection with Australia at all other than the commencement of the in rem proceeding and the arrest of the ship. That could have occurred in any country having comparable legislation.
(c) as to the submission that the claim is governed by Chinese law as to liability, damages and limitations, I have some reservations. It does seem to me that there is a good argument that the law of the high seas would be applicable in relation to liability for collisions in the EEZ as distinct from those areas of responsibility for which there is expressly prescribed jurisdiction such as pollution control.
(d) as to the submission that there are proceedings before a Chinese court that has jurisdiction over all persons and claims such that substantial justice will be done in China, in essence I accept this submission. There is no doubt that the Chinese Maritime Court is a sophisticated and experienced legal system which has already substantially embraced all of the disputes arising out of the collision. There is no evidence that the manner in which it would resolve liability concerning those disputes would give rise to a significantly different outcome from resolution of the liability dispute in Australia. Indeed, there is some expert evidence suggesting to the contrary that the approach taken would be similar. It seems pointless for both sets of proceedings to occur contemporaneously when they are already well underway in China.
(e) as to the argument that, conversely, substantial justice cannot and will not be done in Australia in the circumstances of this case, I did not understand this to be developed much beyond the submission in relation to (d), namely, that all elements are well advanced in China which has the capacity to deal with all aspects albeit that it is not possible to pursue a claim in rem.
(f) I also take into account the submission that regardless of what happens in Australia, proceedings in China will continue. That is relevant, at least, to the cost factor referred to above. It is highly relevant also to the risk as to inconsistent findings and 'verdicts'.
(g) as to the final argument that the plaintiffs have made an election between two fundamentally different causes of action by filing in China after the parties were subject to the jurisdiction of this Court, I heavily discount this factor for the reasons expressed. My view is that the plaintiffs were protecting their position on a temporary basis. Nevertheless, that having occurred, they are at least in a position to pursue the action they have taken in China.
[159] I turn then to consider the loss of the increased security. I accept that that is a factor to take into account and that it was a factor considered in The Ship "Xin Tai Hai" (No 2). However, such a factor was discounted by the English Court of Appeal in Herceg Novi (owners) v Ming Galaxy (owners) [1998] 2 Lloyds Rep 454 (at 456) where, admittedly, the parties had already accepted that England was not the 'natural or appropriate forum for the trial of the action' and 'that Singapore was clearly and distinctly shown to be more appropriate than England' (see at 456). The question, however, was whether the loss of the increased security under the LLMC76 would be a loss of a legitimate juridical advantage so as to justify refusal of a stay. The Court of Appeal said in its conclusion:
We have to say that we agree with Waung J and with Liu J.A., rather than with the majority of the Court of Appeal in Hong Kong and the English Judges at first instance.
We reach that decision for these reasons:
(1) The [LLMC76] has not received universal acceptance, or anything like it. It is not "an internationally sanctioned and objective view of where substantial justice is now viewed as lying". It is simply the view of some 30 states.
(2) The International Maritime Organisation is not a legislature. It may commend the [LLMC76] to the international community. But if by doing so it were found to have enacted an international consensus, that would be to deprive sovereign states to a large extent of their right to stay with some other regime. We say that because jurisdiction could often be obtained by arresting a ship in a 1976 country, and if that action were allowed to proceeding despite there being a more appropriate forum where 1957 prevailed, the 1957 country would be left with no effective use for its own law.
(3) In our view it is quite impossible to say that substantial justice is not available in Singapore, seeing that there is a significant body of agreement among civilised nations with the law as it is there administered. The preference for the [LLMC76] has no greater justification than for the 1957 regime. Loss in the cases we are considering will often be borne by the insurers of one side or the other. The [LLMC76] provides a greater degree of certainty, which they will perhaps welcome. But in terms of abstract justice, neither Convention is objectively more just than the other. Our task is not to decide whether our law is better than the law of Singapore. It is to decide whether substantial justice will be done in Singapore. In our view it will be. This appeal should be allowed, and an unconditional stay of the English action granted.
(emphasis added)
[160] I take into account the fact that the plaintiffs have the benefit of increased security in the proceeding in rem in this Court but having regard to all the other factors which I have discussed above, it does not appear to me that that is sufficient to undermine the conclusion that I have reached that this Court is a clearly inappropriate forum.
[161] Accordingly, I exercise my discretion in favour of the Chou Shan and grant the stay sought. I will make orders that within 14 days the defendant file and serve a minute of the relief they seek. The plaintiffs should have 10 days to respond to that minute.
36 Before turning to the substance of the application, it is important to recognise that the argument placed before the primary judge involved the proposition that the plaintiffs proposed to run the claims in this Court. That involved, necessarily, the spectre of parallel proceedings, in this Court and in the Ningbo Maritime Court. Hence, the primary judge placed some importance on the potentiality of inconsistent findings. No argument was run before him, and the position was not taken below, by the plaintiffs, that two parallel and competing proceedings should be avoided by managing the Federal Court action to await the findings by the Ningbo Maritime Court, and when those issues litigated between the parties were resolved, the Federal Court claim could proceed, and be finalised, by access to the Australian security or limitation fund. In other words, the case was not put to the primary judge that sought to avoid or ameliorate the vexation of two factual hearings and the potential for inconsistent findings, but to emphasise the retention of the significant juridical advantage given to the plaintiffs by the security put up by the P & I Club for the maritime lien or the value of a limitation fund, if set up, in an amount under the 1976 Convention and the 1996 Protocol under Australian law.