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.

RENNEL ISLAND OIL SPILL AN OVERVIEW

Rennell Island, one of the country’s outlying islands in its southern Rennell and Bellona Province, is geographically remote with little infrastructure and few services. The Solomon Islands is part of the marine biodiversity-rich Coral Triangle and has one of the world’s most important coral reef systems, home to 485 coral species and 1,019 fish species.

On February 5 2019, a Hong Kong-based bulk carrier, the MV Solomon Trader, ran aground off a remote island in the Solomon Islands. It spilled heavy fuel across coastal waters, beaches and a sensitive coral reef system not far from a UNESCO World Heritage Site., eventually spilling more than a hundred tonnes of heavy fuel oil into the ocean.

The country’s president has described it as the worst man-made environmental disaster in recent times. Although the International salvage crews has now contained the oil spill, a massive clean up operation is still underway following which questions of liability and damages is also put forward. However, the scale of damage is still being reckoned. Scientists report that oil spills can kill fish and invertebrates directly, while toxic compounds can curtail coral growth and reproduction and diminish coral and fish biodiversity.

In the latest twist of events the Indonesian miner Bintan Mining Corporation, which chartered the stricken MV Solomon Trader, is suing the ship’s owner King Trader Ltd. And says they were suing the shipping company as the charterer on behalf of the people of the island.

The Rennell islanders were having a hard time availing consumable water and has thence been relying on clean water shipments. The Solomon Islands Maritime Safety administration acting director Jonah Mitau said the government is looking at changes to the Shipping Act following the incident. He said currently the laws only cover safety but will be extended to cover insurance and commercial responsibility for damages.

Reports suggested the damage is estimated to be over $US50 million and the Solomon’s caretaker Prime Minister Rick Hou has confirmed that a review of environmental and mining laws is needed to deal with such emergencies.

The World Heritage Centre is determined to support Solomon Islands and Australia in exploring all options to hold the responsible company, owners and insurers to account.

What is an Oil spill? It is basically when large quantity of liquid petroleum hydrocarbon is released into the water bodies. Oil wastes that enter the ocean comes from various sources. These spills mainly occur due to human activities in coastal areas, shores and oceans, more specifically, the activities involving tankers carrying crude oil, drilling rigs, wells and offshore platforms. These oil spills have adverse ill effects on the ocean and the life in the ocean, which can last for decades. The largest oil spill occurred in 1991, in Gulf of Mexico, in which around 240 million gallons of crude oil was spilled. The oil spilled in this accident went deep into the sea, burrowing up to 40cm in the sand and mudflats, it remains there to this day. This is only one example of how oil spills can be such a menace. In the year 2018 alone, six incidents of oil spill occurred, three large oil spills and three medium oil spills. The oil spill at Solomon Islands leaked 600 tonnes of heavy fuel oil, which implies that it is a medium oil spill. Even though it is a medium spill, it cannot be taken lightly, because it has occurred in one of the UNESCO World Heritage sites, which also happens to be the world’s largest raised coral atoll. The spill is likely to cause long term significant damage to the coral reefs and the local ecosystem. When the corals come in contact with the oil, it can sometimes kill it directly or effect its reproduction and growth. The International Maritime Organisation is a United Nations specialised agency which focuses on the safety and security of shipping and the prevention of marine and atmospheric pollution by ships. IMO plays an important role in promoting the Sustainable Development Goals of the UN. The IMO regulates principles that can be used in situations like these.