FEDERAL COURT OF AUSTRALIA
Atlasnavios Navegacao, LDA v The Ship “Xin Tai Hai” [2012] FCA 715
IN THE FEDERAL COURT OF AUSTRALIA | |
IN ADMIRALTY | |
| Plaintiff | |
AND: | Defendant |
DATE OF ORDER: | |
WHERE MADE: |
Upon the plaintiff by its counsel giving to the Court the usual undertaking as to damages and agreeing to and undertaking to the Court to abide by the condition referred to in order 4 of the orders made on 31 May 2012.
THE COURT ORDERS THAT:
1. In the event that the Qingdao Maritime Court does not consent or agree to the joint application or request made by the plaintiff and the owners of the ship “Xin Tai Hai” (China Earth Shipping Inc) (the owners), pursuant to order 2 of the orders made on 31 May 2012, to stay, defer or adjourn the hearing and determination of the owners’ supplementary application for maritime injunction dated 15 May 2012 and filed in the Qingdao Maritime Court (the Supplementary Application), the defendant and the owners forthwith take all such steps as may be required to withdraw or discontinue the Supplementary Application.
THE COURT FURTHER ORDERS THAT:
2. The defendant’s evidence (including expert evidence, if any) on its interlocutory application filed 3 May 2012 (as amended) be filed and served by 4 pm on 15 June 2012.
3. The plaintiff’s evidence in response (including expert evidence, if any) be filed and served by 4 pm on 29 June 2012.
4. The defendant's evidence in reply (including expert evidence, if any) be filed and served by 4 pm 6 July 2012.
5. The expert witnesses, if any, hold a conclave (in the absence of the parties and their legal representatives) and produce a joint report setting out the matters on which they agree and disagree, specifying brief reasons for each disagreement, by 4 pm on 13 July 2012.
6. The defendant serve and provide to the associate to Rares J an outline of submissions by 4 pm on 18 July 2012.
7. The plaintiff serve and provide to the associate to Rares J an outline of submission by 4 pm on 20 July 2012.
8. The defendant’s amended interlocutory application filed 11 May 2012 be listed for hearing commencing on 24 July 2012.
9. The time for the plaintiff to file its Statement of Claim be extended until further order.
10. Costs be reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
in admiralty | |
NEW SOUTH WALES DISTRICT REGISTRY | |
GENERAL DIVISION | NSD 1941 of 2011 |
BETWEEN: | ATLASNAVIOS NAVEGACAO, LDA Plaintiff
|
AND: | THE SHIP "XIN TAI HAI" Defendant
|
JUDGE: | RARES J |
DATE: | 5 JUNE 2012 |
PLACE: | SYDNEY |
REASONS FOR JUDGMENT
1 This is an application by the plaintiff, Atlasnavios Navegacao LDA (Atlas), for an anti-suit injunction restraining the owner of the defendant ship, Xin Tai Hai, China Earth Shipping Inc (China Earth) from seeking an order in the Qingdao Maritime Court (the Maritime Court) for delivery up of a letter of undertaking for USD 35 million. The letter of undertaking had been given by Skuld (Far East) Ltd to secure the release of Xin Tai Hai from arrest by this Court in early May 2012.
The events leading to the present dispute
2 A collision occurred at night on 29 July 2011 in the Straits of Malacca off the Malaysian coast between the bulk carriers B Oceania, owned by Atlas and Xin Tai Hai. B Oceania sunk as a result of the collision. She was fully laden with a cargo of iron ore fines. Hangzhou Cogeneration Import and Export Company Limited (the cargo owner) was the purchaser of the cargo.
3 Xin Tai Hai arrived at the Port of Qingdao in the People’s Republic of China on about 23 August 2011. On the previous day, the cargo owner had applied to the Maritime Court for an evidence preservation order. That court is one of China’s 10 specialist Admiralty or Maritime Courts.
4 On 24 August 2011, China Earth applied to the Maritime Court to constitute a limitation fund, in respect of Xin Tai Hai’s and its liabilities arising out of the collision in accordance with the provisions of Chapter XI of the Maritime Code of the People’s Republic of China (the Maritime Code). Those provisions are similar to, but do not ratify or implement, the provisions of the Convention on Limitation of Liability for Maritime Claims 1976, done at London on 19 November 1976 (the LLMC 1976). China Earth’s application named both Atlas and the cargo owner as interested parties. The amount of the limitation fund was SDR 12,144,430, based on Xin Tai Hai’s gross tonnage of 94,710 tonnes and the Maritime Code’s use of the original LLMC 1976 limitation calculations. This was equivalent to about USD $18 million at the time.
5 On 26 August 2011, the Maritime Court accepted China Earth’s application to limit its liability, in the sense that the Court allowed the application to be brought in that Court. In consequence, on 30 August 2011, the Maritime Court issued a notice to the public of China Earth’s application to limit liability. On 7 September 2011, the cargo owner obtained an order from the Maritime Court for the arrest of Xin Tai Hai. Next, on 9 September 2011, the cargo owner objected, in the Maritime Court, to China Earth’s application to limit its liability. On 13 October 2011, the Maritime Court rejected the cargo owner’s objection to a limitation fund being established. It appears on the evidence that that ruling does not preclude any party from challenging any entitlement that Xin Tai Hai or China Earth may have under the provisions of the Maritime Code to limit liability in a contested final hearing of the facts.
6 On 19 October 2011, the cargo owners commenced proceedings against China Earth in the Maritime Court by delivering a statement of claim that sought damages of USD 12,708,563. On 31 October 2011, the Maritime Court issued a further notice that confirmed the establishment of a limitation fund in an amount equivalent SDR 12,144,430. That fund was constituted by a letter of undertaking issued by a Chinese protection and indemnity club (P & I club), as a local correspondent, on behalf of Skuld. Skuld is the P & I club with which China Earth has arranged to cover the liabilities for collision damage of the Xin Tai Hai.
7 On 4 November 2011, Atlas commenced two proceedings arising from the loss of B Oceania: one, in this Court, by writ seeking the arrest of Xin Tai Hai and the second, in the Maritime Court, seeking to register its claim for damages in the order of USD 105 million. This claim included the costs of wreck removal of about USD 65 million. Claims for wreck removal appear to be subject to limitation under the Maritime Code, but appear to have been excluded from limitation in Australia by s 6 of the Limitation of Liability for Maritime Claims Act 1989 (Cth) which, with that and a number of other exceptions, gave effect to the LLMC 1976 and the 1996 Protocol to amend that Convention (the LLMC 1996). Xin Tai Hai and China Earth wish to contend, if the proceedings in this Court against them are not dismissed or stayed, that, in the circumstances, Atlas’ claim for wreck removal costs does not fall within the excepted Art 1(d) of LLMC 1996. Rather, they would wish to contend that such a claim, in the circumstances, is part of a broader claim that can be limited under Art 1(a), being consequential loss resulting from a direct connexion with the operation of Xin Tai Hai. The maximum limitation amount that would be payable into a limitation fund here if Xin Tai Hai and China Earth applied to limit liability in Australia for the collision is about USD 35 million.
8 On 10 November 2011, China Earth commenced proceedings against Atlas in the Maritime Court for damages arising from its collision with B Oceania. On 15 November, the Maritime Court accepted Atlas’ application to register its claim against the limitation fund and that was served on Atlas on 24 November 2011. Atlas commenced proceedings against China Earth in the Maritime Court on 26 November 2011 by filing a statement of claim. On 10 January 2011, China Earth applied to the Maritime Court for an extension of time in which to file its evidence and, on 31 January, Atlas made a similar application. No evidence has yet been filed by any party in the Maritime Court.
The Australian Arrest
9 When Atlas discovered that Xin Tai Hai was about to arrive in Australian waters it applied on 1 May 2012 for an arrest warrant in this Court. She was arrested by the Admiralty Marshall off Port Hedland on 2 May 2012. On 3 May China Earth applied to set aside the arrest warrant on the grounds that the existence of the Chinese proceedings and Atlas’ participation in them had not been disclosed to the Registrar in the affidavit in support of the arrest warrant filed pursuant to r 39(3) of the Admiralty Rules 1988 (Cth). A number of interlocutory proceedings before me followed. The parties in these proceedings began negotiating terms for the release of Xia Tai Hai from arrest. Subject to the arrest being lifted, Xia Tai Hai was ready to load a cargo of iron ore at Port Hedland.
10 Xia Tai Hai and China Earth amended their interlocutory application on 11 May 2012 by adding a further challenge to the continuance of these proceedings. This asserted that Australia was a clearly inappropriate forum for the proceedings, including by reason of the fact that Atlas had submitted to the jurisdiction of the Maritime Court prior to the arrest here. The parties agreed that it would be necessary to obtain expert evidence on the effect of Chinese law in order to be able to consider such an application properly and that this evidence would take some time to assemble.
11 Ultimately the parties reached an agreement for the release of the ship on provision of a letter of undertaking by Skuld in the sum of USD 35 million, being the value of the ship at the time of her arrest. On 9 May 2012, Skuld provided its letter of undertaking to Atlas that contained the following reservation:
“This letter of undertaking is provided under protest and is made without prejudice to, or waiver of, any rights of the owners of the above ship or the above ship, including to limit their liability, to apply to have the arrest set aside or for the proceedings to be stayed in accordance with their application in Federal Court of Australia Proceedings No, NSD 1941 of 2011 filed 3 May 2012 (as amended) and for the security to be discharged or reduced by a competent court of Australia, including by reason of the receipt by the plaintiff of monies from the limitation fund established in the Qingdao Maritime Court, provided that nothing contained in this paragraph shall preclude any proceedings or applications being brought by the owners of the above ship or the above ship either in Australia or any other jurisdiction. In the event that a competent court of Australia orders, or the parties otherwise agree, for the security to be discharged, then the security is not effective and this letter of undertaking is to be immediately returned. In the event that a competent court of Australia orders, or the parties otherwise agree, for the security to be reduced, the sum referred to in the above paragraph is deemed to be reduced by such amount as ordered or as agreed.” (emphasis added)
12 Consequently, the ship was released from arrest on 10 May. Also on 10 May, unbeknown to the lawyers acting in Australia for the parties, China Earth obtained a maritime injunction under Art 51 of the Chinese Maritime Procedure Law that ordered Atlas to release the ship from arrest immediately and to “refrain from arresting or taking any obstructive measures as against any property of [China Earth] from now on”. Relevantly, Arts 51 and 56 of the Maritime Procedure Law provide:
“51. A maritime injunction means the compulsory measures taken by a maritime court on the application of a maritime claimant to compel the person against whom a claim is made to act or refrain from action to prevent the legitimate rights and interests of the claimant from being infringed.
56. The following conditions shall be met before a maritime injunction can be granted:
(1) the claimant has a specific maritime claim;
(2) a breach of legal provisions or contractual provisions by the person against whom a claim is made needs to be redressed; and
(3) as a matter of urgency, loss will occur or increase if a maritime injunction is not granted forthwith.”
13 The Maritime Procedure Law also provides that the Maritime Court must make an order, on any application for a maritime injunction that it has allowed to be made, within 48 hours and that, when granted, such an injunction it must be executed forthwith (Art 57). A party who is dissatisfied with such an order may apply for a review by the Maritime Court within five days after the order is served, but while the application for review is pending, the maritime injunction remains in force. The Maritime Court must examine the basis of the objection and determine whether or not the objector has justified the discharge or cancellation of the injunction.
14 Although the maritime injunction had been granted by the Maritime Court on 10 May 2012, when the matter was returned before me on 11 May 2012, the parties had not been notified of it. I then made directions setting a timetable for the hearing of Xin Tai Hai’s and China Earth’s interlocutory application to set aside the arrest and stay the proceedings.
The impugned supplementary application to the Maritime Court
15 On 14 May, after they had learnt of the maritime injunction, the solicitors for Atlas sought an assurance from the solicitors for Xin Tai Hai and China Earth that no further orders would be sought in China in relation to the arrest in Australia. No assurance was provided at that time. On 15 May, China Earth prepared a supplementary application for maritime injunction in the Maritime Court and attempted to have that Court accept it on that day. It sought an order that Atlas immediately return Skuld’s letter of understanding. The next day, the solicitors for Xin Tai Hai and China Earth wrote to the solicitors for Atlas, declining to give the assurance sought. China Earth had further difficulties in having the supplementary application accepted by the Maritime Court until it was accepted eventually on 17 May 2011. Like the original application for a maritime injunction, the supplementary application ordinarily would be heard ex parte by the Maritime Court, without notice to Atlas. If the Maritime Court were minded to grant the supplementary maritime injunction, Atlas would then be given notice of it and have a right to apply for its reconsideration under Art 58 of the Maritime Procedure Law.
16 The supplementary application is the subject of the anti-suit injunction that Atlas seeks. China Earth relied on Art 214 of the Maritime Code to support its supplementary application, which provided that:
“214. Where a limitation fund has been constituted by a person liable, any person having made a claim against the person liable may not exercise any right against any assets of the person liable. Where any ship or other property belonging to the person constituting the fund has been arrested or attached, or, where a security has been provided by such person, the courts will order without delay the release of the ship arrested or the property attached or the return of the security provided.
17 China’s highest court, the Supreme People’s Court, gave an interpretation of the Chinese application of the Chinese Special Maritime Procedure Law. The interpretation provided, in Art 86, that, after a limitation fund has been constituted, any party that makes a claim against the fund must not assert any right against any other property of the person constituting such a fund in respect of such a claim.
The application for the anti-suit injunction
18 Unaware that the supplementary application had been made to the Maritime Court, Atlas brought ex parte an interlocutory application for an anti-suit injunction before me on 18 May 2012, fearing that Xin Tai Hai or China Earth or may seek some further relief against it in the Maritime Court. I granted an ex parte anti-suit injunction at that time, which was returned on 22 May 2012. Shortly after I had done so on 18 May, senior counsel for Xin Tai Hai and China Earth appeared and said that a supplementary application had been made by his clients to the Maritime Court. On 22 May I extended the ex parte injunctions until 31 May, so that the parties could obtain expert evidence on Chinese law for the purposes of my hearing the application to extend the anti-suit injunction until such time as I could hear and determine Xin Tai Hai and China Earth’s application to set aside the arrest warrant or stay the proceedings in this Court. Next, Atlas applied to the Maritime Court on 23 May for reconsideration of its original maritime injunction, and that Court gave notice to the parties on 25 May that it would deal with that application on 31 May.
19 On 31 May, Atlas’ application to continue the ex parte injunctions was argued before me and I made interlocutory orders continuing them. Those orders had the effect of preventing Xin Tai Hai and China Earth pursuing, or permitting to be determined, the supplementary application for maritime injunction or commencing any fresh proceedings that sought to obtain similar relief, but allowed them to oppose Atlas’ application to the Maritime Court to reconsider the original maritime injunction, granted on 10 May 2012. I also ordered both parties to apply jointly to the Maritime Court to stay, defer or adjourn the hearing and determination of the supplementary application until this Court had decided Xin Tai Hai’s and China Earth’s interlocutory application.
20 Both parties did apply to the Maritime Court on 31 May when the proceedings were before it. That Court indicated that it would consider the joint application and that the judges would discuss internally what was to be done with it. However, the Maritime Court indicated that the presiding judge would be away on other business and it would not be able to make a decision on the application to defer its consideration of the supplementary application until after today. The Maritime Court also heard and reserved its decision on Atlas’ application for reconsideration of the 10 May maritime injunction. Thus, it is presently uncertain whether the Maritime Court will grant the parties’ joint stay application.
21 I had made a further order on 31 May 2012 that was to remain in force up to and including today, that in the event that the Maritime Court did not consent or agree to the joint application to defer hearing the China Earth’s supplementary application, China Earth forthwith would have to take all such steps as may be required to withdraw or discontinue that application. I made this order because there was a conflict that had not been completely explored in the expert evidence both sides had relied on at the hearing on 31 May 2012. That involved the potential effect on Xin Tai Hai’s and China Earth’s rights in the Maritime Court to pursue a subsequent fresh supplementary application to obtain delivery-up of Skuld’s letter of undertaking, if the present supplementary application were effectively withdrawn from the Maritime Court.
22 The parties have now agreed on a timetable for the provision of evidence, including expert evidence for the interlocutory application of Xin Tai Hai and China Earth to set aside the arrest and or grant a stay of the proceedings to be heard commencing on 24 July 2012.
23 Atlas seeks an anti suit mandatory injunction that orders Xin Tai Hai and China Earth forthwith to take all such steps as may be required to withdraw or discontinue the supplementary application. Atlas contends that the injunction should not be qualified by the current condition that such a withdrawal or discontinuance should only occur if the Maritime Court did not accede to the joint request of the parties that I had ordered they make and which it is now considering. Xin Tai Hai and China Earth oppose the removal of that condition. They also seek reasons for my having made the interlocutory orders on 31 May.
The expert evidence
24 Initially, Cao Shufeng, the expert lawyer for Atlas, had opined that the supplementary application could be withdrawn at any time before the Maritime Court made an order in respect of it. He said that the Maritime Court would allow such a withdrawal without considering the supplementary application. He expressed the view that there was no limitation or prohibition in Chinese law that prevented Xin Tai Hai or China Earth making a fresh application at a later time to the Maritime Court that sought the same order.
25 In contrast, Wengui Yang, the expert lawyer for Xin Tai Hai and China Earth, opined that an application to withdraw would require the Maritime Court’s permission under Art 131 of the Chinese Civil Procedure Code. He opined that once such an application was withdrawn, the Maritime Court would not grant any similar application by Xin Tai Hai and China Earth if it were resubmitted.
26 Each of Mr Cao and Mr Yang has now filed supplementary affidavits elaborating on, but adhering to, the views he previously expressed. Mr Yang said that, in his experience, it was unheard of for a plaintiff to arrest a vessel after a limitation fund had been constituted in China and that party had registered its claim against the fund, submitted to Chinese jurisdiction and actively taken part in the Chinese proceedings, as Atlas appeared to have done. He said categorically that if China Earth’s supplementary application were withdrawn, its subsequent resubmission would be compromised. He adhered to his view that Art 131 of the Civil Procedure Code was applicable in the present circumstances and that the Maritime Court would be likely to grant permission for the withdrawal of the supplementary application. Mr Yang said in order to justify the grant of a maritime injunction, Art 56 of the Maritime Procedure Law required there to be an element of urgency. He said that, if the application were resubmitted to the Maritime Court following a final determination of Xin Tai Hai’s and China Earth’s interlocutory application in this Court, it would not be possible to establish the element of urgency at that later time. For that reason he opined that the supplementary application would fail. He also expressed the view that the claim for return of Skuld’s letter of undertaking was a further step in the original application for a maritime injunction to the Maritime Court that had been initiated while Xin Tai Hai was still under arrest here. He opined that, once withdrawn, the supplementary application would no longer have the status of having a connection to that maritime injunction but rather it would be considered as a separate application. He reiterated his view that the Maritime Court would not subsequently grant an application for the return of the security, if the present supplementary application were now withdrawn but subsequently resubmitted.
27 In contrast, Mr Cao argued that the applicable provision for determining whether the supplementary application should be permitted to be withdrawn was Art 13 of the Civil Procedure Law. That provided that:
“13. The parties are free to deal with their own civil rights and litigation rights in the way they prefer within the scope provided by the law.”
Mr Cao said that Art 131 applied if a plaintiff applied to withdraw its case in the trial of an action before judgment was pronounced. He said that an application for a maritime injunction under Art 51 of the Maritime Procedure Law was not in the category of case (i.e. a trial) provided for in Art 131, but rather was a litigation right within the meaning of Art 13. He said that there was no provision of the law of China that prevented a party from withdrawing an application for a maritime injunction and that, accordingly, Art 13 was the procedural basis on which the application to withdraw the supplementary application could be made. He referred to a decision made by the Shanghai Maritime Court that permitted an applicant to withdraw a maritime injunction application pursuant to Art 13. However, that decision simply confirmed, what appeared to be common ground, that the Maritime Courts of China will permit such applications to be withdrawn. It did not deal with the critical question of whether, having been withdrawn, such an application could ever succeed, if made again.
28 Mr Cao also referred to Arts 144 and 161 of the Opinion of the Supreme People’s Court on Several Issues Concerning the Application of the Civil Procedural Law of the People’s Republic of China. The status in Chinese law of such an opinion has not been identified. However, Art 144 provided that when a party issued a new case for the same claim, the People’s Court should accept (i.e. allow to be filed) such a case. The People’s Court is at the same level, but different from, the Maritime Courts in structure of the Courts of China. Article 161 of the opinion provided that the People’s Court could disapprove or reject an application to withdraw a case if the person making the application had engaged in an unlawful act. Mr Cao opined that Art 131 of the Civil Procedure Law and the two Articles in the opinion governed a claim in a substantive trial of a matter but were not applicable to the application for maritime injunction. He adhered to the view that the substance of the supplementary application could be brought again in the Maritime Court if the current one were withdrawn.
29 Mr Cao referred to Mr Yang’s opinion about Art 56 of the Maritime Procedure Law requiring a situation of emergency that would cause loss or would make circumstances worse were a maritime injunction not granted immediately. Mr Cao agreed with Mr Yang that Art 56 set out the conditions that needed to be satisfied before a maritime injunction could be granted. But Mr Cao opined that, so long as those conditions were satisfied at the time the new or subsequent application were made, the Maritime Court would grant a maritime injunction even if it was to the same effect as the one previously withdrawn. Mr Cao said that the Maritime Court could be satisfied in the future that the condition of an emergency would exist even though the supplementary application were now required to be withdrawn but later remade. He said that if this Court subsequently dismissed the interlocutory application to set aside the arrest or stay the proceedings, so as to create some danger that Skuld’s letter of undertaking would be called on at that time, the Maritime Court could then consider whether this new situation would create a risk of loss occurring.
The parties submissions
30 Atlas foreshadowed during the course of argument on 31 May that one possible outcome of the interlocutory application to dismiss or stay could be that the proceedings were stayed but an order was made under s 29 of the Admiralty Act 1988 that Skuld’s letter of undertaking be retained as security for other proceedings, including those in the Maritime Court. At the moment it is not possible to evaluate or understand the factual scenarios that might obtain as to whether or not that discretion would be enlivened and how it might be exercised.
31 Xin Tai Hai and China Earth seek an order that no application under s 29 be permitted to be made. But, again, because the circumstances are too unclear and the parties’ evidence as to Chinese law has not yet been filed for the purposes of the dismissal or stay application, I do not think it appropriate to make any prescriptive decision on that question unless and until such an application is brought. Xin Tai Hai and China Earth argued that the right to make the supplementary application was one they had under Chinese law, that ought not be interfered with by orders of this Court. They argued that it was clear in Skuld’s letter of undertaking that they were free to make applications of that kind, including one having the effect of seeking the return of the letter of undertaking in any jurisdiction in which they sought to move, including the Maritime Court.
Consideration
32 As Xin Tai Hai and China Earth argued, Skuld’s letter of undertaking contained the reservation of the right to make applications to any court. However, that did not affect the jurisdiction of this Court to arrest Xin Tai Hai and to order her release when the parties had made satisfactory arrangements for security. I was of opinion that the ex parte injunction and, subsequently on 31 May the interlocutory injunction, should be granted as part of the exercise of the Court’s jurisdiction in the proceedings that had been commenced in rem under the Admiralty Act. The purpose of the injunctions was to preserve the, or part of the, subject matter incidental to the application for dismissal or stay pending its hearing and determination. That involved the preservation of Skuld’s letter of undertaking, being the agreed substitute for Xin Tai Hai for her arrest by the Court.
33 In balancing the respective rights of the parties on 31 May 2012, I was mindful that each side might suffer a prejudice, depending on the outcome of the interlocutory régime that followed and that would obtain up to the hearing of the then unfixed interlocutory application to dismiss or stay. One reason for the delay in hearing that application was that Xin Tai Hai and China Earth required a longer timetable in which to assemble the evidence of Chinese law that would be necessary to support their argument and, and at that time, no hearing date could be fixed, because the nature of the evidence and issues were not sufficiently clear.
34 In my opinion, on the present material before me Mr Cao’s evidence is more persuasive than Mr Yang’s as to the effect of Chinese law. Neither expert was able to instance proceedings in which a supplementary application of this kind, or an application for a maritime injunction, had been withdrawn and then subsequently, when resubmitted, rejected. But, on the present evidence of Chinese law, it seems to me that the Maritime Court would ultimately consider whether it would be appropriate to grant such an order at the time any fresh application were made to it to determine then whether there were a basis for a maritime injunction under Art 56 of the Maritime Procedure Law.
35 I accept there is a risk that Mr Yang is correct and that the Maritime Court will not entertain such further application. However, the Maritime Code and the Maritime Procedure Law evince a very detailed and sophisticated set of provisions that are sufficiently flexible to accommodate the subsequent grant of a similar injunction to that in the current supplementary application. Those provisions principally reflect international maritime law. The adaptability of international maritime law enforced by Courts of Admiralty, including the Maritime Courts of China, arises from centuries, if not millennia, of experience in which such courts have been astute to adapt remedies appropriate to international maritime trade to differing circumstances. It seems to me that Mr Cao’s explanation of how Art 56 of the Maritime Procedure Law operates is more satisfactory than Mr Yang’s.
36 At the moment there is no substantial threat of loss to Xin Tai Hai or China Earth from the giving of Skuld’s letter of undertaking. That is because this Court has yet to determine whether its jurisdiction to arrest was properly invoked, and, if it was, it will exercise that jurisdiction over Xin Tai Hai and China Earth in respect of the subject matter of the letter of undertaking. It is only if this Court decides to exercise that jurisdiction, including any application under s 29 of the Admiralty Act, that an immediate threat of loss under the letter of undertaking could emerge.
37 Moreover, any court can, and ordinarily ought, to correct any injustice that is occasioned to a party in proceedings before it by an order or act of the Court that is subsequently found not to have been justified. Thus, if Xin Tai Hai or China Earth were not allowed to make a further supplementary application by the Maritime Court because of an order made by this Court requiring their present supplementary application to be withdrawn, this Court would have jurisdiction to make an order to put them in the position they would have been in had this Court’s earlier order not been made: see Commonwealth v McCormack (1984) 155 CLR 273 at 276 per Murphy, Wilson, Brennan, Deane and Dawson JJ approving what the Privy Council had said in Rodger v The Comptoir D’Escompte de Paris (1871) LR 3 PC 465 at 475. There, Lord Cairns said that it was the duty of the Courts to take care that no act of the Court in the course of the whole of the proceedings does an injury to any of the suitors in the Court.
38 The grounds on which the Court exercises the jurisdiction to grant an anti-suit injunction were explained by Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ in CSR Limited v Cigna Insurance Limited (1997) 189 CLR 345 at 389-392. The Court has power to prevent its processes being abused and to protect the integrity of those processes once they are set in motion.
39 This Court had jurisdiction under s 15 of the Admiralty Act to arrest Xin Tai Hai, when she entered Australian waters, for the purposes of enabling Atlas to enforce its asserted maritime lien that arose out of the collision. Whether or not that jurisdiction was properly invoked, and whether it ought be exercised, are matters that are the subject of the interlocutory application for a dismissal or stay. The release from arrest was arranged on the provision of Skuld’s letter of undertaking inter partes.
40 It seemed to me on 31 May, and continues to do so, that the proper balance between the rights of each party is best maintained by protecting the integrity of the current processes of this Court that have been set in motion by the issue of the writ, the effecting of the arrest and the bringing by Xin Tai Hai and China Earth of their interlocutory application challenging the initial or further exercise of the Court’s jurisdiction. If Xin Tai Hai and China Earth were permitted to maintain the supplementary application in the Maritime Court, this would have the tendency of interfering with the proceedings pending in this Court. That is because the effect of the Maritime Court granting the supplementary application now would be to destroy the efficacy of Skuld’s letter of undertaking that had operated as a substitute for this Court’s custody, through the marshal, of the ship pending the determination of whatever rights Atlas had to maintain and to enforce in this Court its maritime lien arising from the collision.
41 Xin Tai Hai and China Earth reserved the right to take further proceedings when Skuld gave the letter of undertaking. However, that reservation did not deprive this Court of being able to utilise its powers to protect its own processes, that had been set in motion by the arrest, from the potential effect on those processes were Xin Tai Hai and China Earth permitted to frustrate them if they succeeded in having the supplementary application granted by the Maritime Court. As Gleeson CJ, Gummow, Hayne and Crennan JJ said in Batistatos v Road & Traffic Authority (NSW) (2006) 226 CLR 256 at 265[9]:
“What amounts to abuse of court process is insusceptible of a formulation comprising closed categories. Development continues. One example is the line of authority dealing with the stay of proceedings instituted in a second forum where there are pending proceedings in another forum and the continuance of the second proceedings would be an abuse of the process of the first forum.” (footnote omitted)
Their Honours continued by explaining that the counterpart of the power of a court to prevent the abuse of its processes was the power of the court to protect the integrity of those processes once set in motion such as by the grant of an anti-suit injunction. Their Honours cited with approval what Gaudron, McHugh, Gummow and Callinan JJ had said in Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 393[25], namely:
“The integrity of those processes extends to preserving the efficacy of the execution which would lie against the actual or prospective judgment debtor (Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623,638) . The protection of the administration of justice which this involves may, in a proper case, extend to asset preservation orders against third parties to the principal litigation.”
42 The position here is complicated because Atlas’ proceedings in both the Maritime Court and this Court were instituted on the same day, 4 November 2011. However, the writ was not served on Xin Tai Hai until 2 May 2012. That service gave the Court jurisdiction over the ship and subsequently China Earth, when it appeared as the relevant person conditionally.
43 Xin Tai Hai and China Earth do not contend that China is a State party to the LLMC 1976. Rather, it appears to be common ground that China’s domestic law substantially reflects, but does not ratify or implement, the provisions of that convention.
44 The question of whether or not Atlas' participation in the Maritime Court proceedings and its claim on the limitation fund prevent it from seeking to enforce rights under Australian law is a matter that will need to be determined when the interlocutory application for dismissal or stay is heard. Both parties accept that that is a bona fide claim, albeit that it is fiercely contested. I think now, and thought on 31 May, that the balance of convenience favoured maintaining the present status quo, that is, the position where Skuld’s letter of undertaking is in force, rather than allowing the possibility of the Maritime Court acceding to Xin Tai Hai’s and China Earth’s supplementary application there so as to destroy the utility of that letter of undertaking and, consequently, the proceedings here. Subject to any successful application under s 29 of the Admiralty Act being made to retain the security, if Xin Tai Hai and China Earth were successful here, no harm will have been done to them by temporarily preventing them from exercising such rights as they have at the moment in China to seek in personam relief against Atlas for the return of Skuld's letter of undertaking.
45 On the other hand, I was and remain of opinion that there is a real and substantial risk that irreparable harm would be done to Atlas if Xin Tai Hai and China Earth were permitted to proceed in the Maritime Court with the supplementary application at this time. I am not satisfied that they would lose their right irreparably to make a further supplementary application once this Court has determined the merits of their dismissal or stay application.
Conclusion
46 Accordingly, I am of opinion that the balance of convenience favours the status quo being maintained for the time being. However, I am not satisfied that I should require Xin Tai Hai and China Earth immediately to withdraw or discontinue their supplementary application before the Maritime Court. That Court is considering the joint application made in consequence of the orders I made on 31 May 2012. There is no reason to think that the Maritime Court will proceed other than judicially with that application, and treat it in an appropriate way in accordance with Chinese law.
47 In my opinion, it is only if the Maritime Court were to refuse to accede to the joint request that this Court would be justified to require Xin Tai Hai and China Earth to withdraw or discontinue their supplementary application. If the Maritime Court agrees to the request, the supplementary application can be maintained on foot, and Xin Tai Hai and China Earth will preserve their rights rather than be put into the position where, through no fault of their own, Mr Yang might have been proved right. Thus it would not be appropriate, unless the Maritime Court decided to proceed now to deal with the supplementary application, to make a peremptory order that required that application to be withdrawn or discontinued which might have the effect of forever precluding the assertion of the same rights at a later stage.
48 For these reasons, I made the orders on 31 May 2012 and consider that it is appropriate to extend order 3 that I then made until further order.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. |
Associate:
