Red House International and Rose House China v D and X [2013] WSSC 18 (15 April 2013)

SUPREME COURT OF SAMOA

Red House International Enterprises Ltd and Rose House China Holdings Co. Ltd v D and X [2013] WSSC 18

Case name:
Red House International Enterprises Ltd and Rose House China Holdings Co Ltd v D and X

Citation: [2013] WSSC 18

Decision date: (Conclusions) -15 April 2013

Judgment date: 26 April 2013 [date of the written judgment with reasons]

Parties:
ROSE HOUSE INTERNATIONAL ENTERPRISES LTD a duly registered international company. (First Applicant)AND ROSE HOUSE CHINA HOLDINGS CO LTD a duly registered international company. (Second Applicant) A N D: D a duly registered company in Brunei. (Respondent) CP 198/12 BETWEEN ROSE HOUSE INTERNATIONAL ENTERPRISES LTD a duly registered international company. (First Applicant) A N D ROSE HOUSE CHINA HOLDINGS CO LTD a duly registered international company (Second Applicant) AND X a businessman of Taiwan.(Respondent)

Hearing date: 15 April 2013

File numbers: CP197/12 and CP198/12

Jurisdiction: Civil

Place of delivery: Courthouse, Mulinuu

Judge: Chief Justice Patu Falefatu Sapolu

On appeal from:

Order: Counsel to file submissions as to costs in seven days if they have not done so already.

Representation:
S Leung Wai for first and second applicants
J Annandale for respondents

Catchwords:

Words and phrases:
forum non conveniens

Legislation cited:
Cheshire and North Private International Law
Dicey & Morris The Conflict of Laws
The Eleftheria [1970] P 94
The Fehmarn [1957] 1 WLR 815, [1958] 1 WLR 159;
The Abidin Daver [1984] 1 A11 E R 470
13 Private International Law (1967)
Sociẻte du Gaz case 1926 SC (HL)

Cases cited:
Evans Marshall & Co Ltd v Bertola SA [1973] 1 A11 ER 992
Mackender v Feldia AG [1967] 2 QB 590
Donohue v Armco Inc and Others [2001] UKHL 64
KC Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd[1998] FCA 601
Racecourse Betting Control Board v Secretary for Air [1944] Ch 114
McDonald v Mabee [1917] USSC 47; 243 US 90
Credit Chimique v James Scott Engineering Group Ltd 1982
European Asian Bank AG v Punjab and Sind Bank [1982] 2 Lloyd’s Rep 356

Summary of decision:

IN THE SUPREME COURT OF SAMOA

HELD AT MULINU’U

CP 197/12

BETWEEN

ROSE HOUSE INTERNATIONAL ENTERPRISES LTD a duly registered international company.

First Applicant

A N D

ROSE HOUSE CHINA HOLDINGS CO LTD a duly registered international company.

Second Applicant

A N D:

D a duly registered company in Brunei.

Respondent

CP 198/12

BETWEEN

ROSE HOUSE INTERNATIONAL ENTERPRISES LTD a duly registered international company.

First Applicant

A N D

ROSE HOUSE CHINA HOLDINGS CO LTD a duly registered international company.

Second Applicant

A N D

X a businessman of Taiwan.

Respondent

Counsel:

S Leung Wai for first and second applicants

J Annandale for respondents

Hearing: 15 April 2013

Conclusions: 15 April 2013

Judgment: 26 April 2013

JUDGMENT OF SAPOLU CJ

1. At the conclusion on 15 April 2013 of the hearing of the motion by the first and second applicants for a stay of the proceedings brought by the respondents against them in Samoa, I granted the motion and told counsel that I will prepare a written judgment with reasons which will be delivered to them in due course. This is that judgment.

The parties

2. The first applicant, Rose House International Enterprises Ltd (Rose House International), and the second applicant, Rose House China Holdings Ltd (Rose House China), are international companies registered in Samoa under the provisions of the International Companies Act 1987. Neither of the applicants carries on business in Samoa because of restrictions under the Act or has an office or employees in Samoa.
3. Apart from being an international company registered in Samoa, the first applicant, Rose House International, is domiciled at Taichung City, Taiwan, and conducts business operations in mainland China and Taiwan. The first applicant is also a shareholder in the second applicant. The second applicant, Rose House China, also conducts business operations in mainland China and Taiwan.
4. On the other hand, one of the two respondents to which I will refer as D, is a company incorporated in Brunei but is domiciled in Taipei City, Taiwan. It is one of the two shareholders of the second applicant, Rose House China. The other respondent who is an individual to whom I will refer as X, is a Taiwanese businessman who resides in Taiwan. He carries on business in Taiwan and is the director of the first applicant and one of the directors of the second applicant.
5. It would therefore appear that even though the first and second applicants (the applicants) are international companies registered in Samoa under the International Companies Act 1987, they have no other connection to Samoa apart from the fact of their registration as they do not carry on business operations in Samoa or have any offices or employees in Samoa. Their business operations are carried out in mainland China and Taiwan. It also appears from the documentation before the Court that the people who are associated and involved with the applicants are nationals of Taiwan and reside in Taiwan. The applicants would therefore be much more closely connected to Taiwan than Samoa even though they are registered as international companies in Samoa.
6. Likewise, of the two respondents, D is a company domiciled in Taiwan though registered in Brunei. The other respondent, X, is a Taiwanese businessman who carries on business in Taiwan and resides in Taiwan. Thus, they also have connections to Taiwan. The only connection of D to Samoa is that it is one of the two shareholders of the second applicant; the only connection of X to Samoa is that he is the director of the first applicant and one of the directors of the second applicant.

The proceedings

7. On 17 December 2012, the applicants brought proceedings in the Taiwan Taipei District Court against the respondents and others, who are not parties to the present proceedings, for alleged breaches of two agreements executed in Taiwan in the Chinese language. That was done after the dispute, which later became the subject of Court proceedings, was referred to arbitration in Taiwan which was unsuccessful. On 3 January 2011, the respondents and others filed a counter-claim against the applicants in the same Court. Those proceedings are still pending up to now.
8. On 3 December 2012, the respondents filed proceedings in Samoa in this Court against the applicants. The proceedings are premised on alleged breaches of the agreements executed in Taiwan and alleged non-compliance with ‘implied instructions’ said to have arisen from a shareholders meeting in Taiwan. The respondents seek specific performance of the agreements for a transfer of shares. The said agreements are also the subject of proceedings already commenced in the Taiwan Taipei District Court. On 3 January 2013, the applicants filed a motion in this Court to stay the proceedings by the respondents in Samoa. It is that motion that I have to deal with in this judgment.

The two agreements and the doctrine of privity of contract

9. The two agreements in question are, firstly, the Agreement for Share Transfer, Licensing and Technology abbreviated by counsel as “STA” and, secondly, the Shareholders Agreement also abbreviated by counsel as “SHA2”. The SHA2 superseded the SHA1 which is not relevant to these proceedings. For present purposes, I will adopt the abbreviations “STA” and “SHA2” used by counsel to refer to the said agreements.
10. Both agreements are in the Chinese language and were executed in Taiwan, the STA on 7 January 2009 and the SHA2 on 10 February 2009. As it appears from the written submissions of counsel for the applicants, the parties to the STA are the first applicant, both respondents, and others. The second applicant is not shown as a party to that agreement. In terms of the common law doctrine of privity of contract, if the proceedings by the respondents in Samoa are to go ahead, it is difficult to see how specific performance can be granted against the second applicant if it is not a party to the agreement to be specifically performed.
11. It also appears from the written submissions of counsel for the applicants that only the respondent X is a party to the SHA2 but not the respondent D. The applicants are not parties at all to that agreement. It is therefore also difficult to see how specific performance of the SHA2 can be granted against the applicants if they are not parties to that agreement. It is also highly doubtful whether the respondent D, the registered company which is not a party to the SHA2 has standing to sue for specific performance of that agreement. It is only the respondent X who is a party to the SHA2.
12. Whether the respondents can bring their present claim for specific performance under the laws of Taiwan is unknown as there is no evidence before this Court of the relevant laws of that jurisdiction. But if the proceedings filed by the respondents in Samoa are to go ahead, the respondents will clearly be at a disadvantage because of the common law doctrine of privity of contract.

The two agreements and the question of exclusive jurisdiction clause

13. Counsel for the applicants and for the respondents argued before me the question of whether article 15 of the STA and articles 26 and 27 of the SHA2 contain or constitute an exclusive jurisdiction clause. Each of them also produced English translations of the said articles in support of their opposing submissions. Counsel for the applicants submitted that article 15 of the STA and articles 26 and 27 of the SHA2 contain an exclusive jurisdiction clause. On the other hand, counsel for the respondents submitted that it is not clear whether what counsel for the respondents was submitting to be an exclusive jurisdiction was in fact an exclusive jurisdiction or not because of the differences in the English translations provided by the parties. In deference to the submissions of counsel, I have decided to give my views on the interpretation of the said articles based on their English translations provided by counsel. However, neither counsel raised the question of whether I have jurisdiction to decide whether a foreign jurisdiction clause in an agreement is an exclusive jurisdiction clause or not. This is a question I need to decide and will do so later in this judgment.
14. Counsel for the applicants in his submissions points out that in terms of article 6 (2) of the SHA2 which was executed subsequent to the STA, the STA has been incorporated into the SHA2. This was not disputed by counsel for the respondents.
15. According to the affidavit of the Taiwanese attorney at law who acts as counsel for the applicants in the Taiwan proceedings and who prepared the English translations of the relevant clauses of the STA and SHA2, she says that article 15 of the STA states:

“The three parties hereby agree that Taiwan Taipei District Court shall be the court of first instance having jurisdiction over any dispute arising out of this Agreement”.

16. The same attorney at law also deposes in her affidavit that article 26 of the SHA2 states:

“The execution, force, interpretation and performance of this Agreement, as well as the resolution of any dispute arising therefrom, shall be governed by the applicable laws of Taiwan”.

17. She further deposes in her affidavit that article 27 of the SHA2 states:

“Any and all disputes arising out of or in connection with the performance of this Agreement shall be reconciled through friendly negotiations among the parties hereto. If the negotiations should fail to reconcile any dispute, it shall be submitted to arbitration or the judiciary for resolution thereof”.

18. On the basis of what is said by the applicants Taiwanese attorney at law in her affidavit, counsel for the applicants in the present proceedings submits that any dispute arising out of the STA shall be referred to and dealt with by the Taiwan Taipei District Court. Furthermore, the governing law of the SHA2 is the law of Taiwan and all disputes arising out of that agreement shall be resolved by reconciliation through friendly negotiations. Failing that, the dispute shall be submitted to arbitration or the judiciary, which must be the judiciary of Taiwan, for resolution. Arbitration had been held in Taiwan on the dispute between the applicants and the respondents but it was unsuccessful. Subsequently, the applicants brought a claim in the Taiwan Taipei District Court and that was followed by a counter-claim filed by the respondents in the same Court. Those proceedings, as already mentioned, are still pending.
19. The English translations of article 15 of the STA and articles 26 and 27 SHA2 provided for the respondents are not quite the same as the English translations provided for the applicants. Having no knowledge of the Chinese language, I cannot say whether the translations provided for the applicants or the respondents are the accurate English translations. If there are any more differences of opinions between the applicants and the respondents about the correct English translations of the other provisions of the two agreements, that will undoutedly present real difficulties for a Samoan Court if the claim by the respondents against the applicants is to be tried here. There is also no evidence that there is any person in Samoa who is sufficiently fluent in both Chinese and English and has the competence to translate from one language to the other.
20. The affidavit by a Taiwanese independent consultant for the respondent X provides the following English translations of article 15 of the STA and articles 26 and 27 of the SHA2. Article 15 of the STA states:

“Parties agree that the Taipei District Court shall be the court of first instance having jurisdiction over any litigation initiated in connection with this Share Transfer Agreement.

Article 26 of the SHA2 states:

“The execution of this Agreement and the effect, interpretation, performance and dispute resolution thereof, ‘making a reference to’ the relevant laws of Taiwan”

Article 27 of the SHA2 states:

“Any dispute arising out of performance of this agreement or in relation thereto, Parties shall resolve it through amicable negotiation/conciliation; should negotiations/conciliation fail to resolve the same, it shall be resolved through arbitration or judicial system”.

21. Comparing the two sets of English translations provided for the applicants and the respondents, there is no significant difference in the meaning of their translations of article 15 of the STA. Both translations of article 15 show that the parties had agreed that the Taiwan Taipei District Court shall be the court of first instance having jurisdiction over any dispute “arising out of” or “in connection with” the STA and which becomes the subject of litigation. The parties, by agreement, had therefore made their choice of which Court shall have jurisdiction to deal with any dispute arising out of the STA and which becomes the subject of litigation. That Court is the Taiwan Taipei District Court. I also do not see any significant difference in meaning between the words “arising out of” and “in connection with.”
22. Secondly, there is no significant difference in the meaning of the English translations by the applicants and the respondents of article 26 of the SHA2. It is clear from both translations of article 26 of the SHA2 that the laws that govern or apply to the execution, effect, translation, and any dispute or litigation “arising out of” or “in connection with” the SHA2 are the laws of Taiwan. I would be surprised if the intention of the parties was that the laws of some other country were to govern or apply to the execution, effect, translation, performance and resolution of any dispute or litigation arising out of or in connection with the SHA2 when that agreement is expressed in Chinese, executed in Taiwan, and any dispute or litigation arising therefrom is to be referred to the Taiwan Taipei District Court. There are no other laws mentioned in article 26 except the laws of Taiwan. I conclude, therefore, that what article 26 means is that the governing law for a dispute arising out of or in connection with the SHA2 is the law of Taiwan.
23. Thirdly, I am of the view that the parties to the SHA2 must have intended the term ‘judiciary’ used in the applicants English translation of article 27 and the term ‘judicial system’ used in the respondents English translation of article 27 to mean the ‘judiciary’ or ‘judicial system’ of Taiwan. The SHA2 is expressed in Chinese and was executed in Taiwan and I cannot imagine that the parties, when they used the term ‘judiciary’ or ‘judicial system’ in article 27 of their agreement, had in mind the ‘judiciary’ or ‘judicial system’ of any other country except Taiwan. The fact that the applicants have already brought proceedings in the Taiwan Taipei District after an unsuccessful arbitration in Taiwan and the respondents have filed counter-proceedings in the same Court lends support to that interpretation of article 27 of the SHA2.

Is this Court in a position to decide as a matter of interpretation whether the jurisdiction clause in the STA and SHA2 is an exclusive jurisdiction clause?

24. Before proceeding further, it is necessary to consider at this junction whether I am in a position to decide whether a jurisdiction clause in an agreement is an exclusive jurisdiction clause or a non-exclusive jurisdiction clause. In Cheshire and North Private International Law (1992) 12th ed by North and Fawcett, the learned authors state at p.205:

“Where the parties have agreed to submit their disputes under a contract to the jurisdiction of a foreign Court, then an English Court will need very strong reasons to allow one of them to go back on his word. A distinction has been drawn between foreign jurisdiction clauses which are ‘exclusive’ and those which are not... It seems that it is for the governing law (in principle, this should be that of the jurisdiction agreement) to determine whether a clause is ‘exclusive’. However, the fact that this rule is not an inexorable and inflexible one may be illustrated by Evans Marshall & Co Ltd v Bertola SA [1973] 1 A11 ER 992”

25. Further on in Cheshire and North Private International Law (supra), the learned authors, when discussing service of proceedings out of the jurisdiction, state at p.237:

“Seemingly, it is the governing law to determine whether the clause is, as a matter of construction, ‘exclusive’. In principle, this should be the law governing the agreement on jurisdiction rather than the contract as a whole. The burden of proving that the clause is exclusive is said to rest on the person who relies on it. Moreover, a defendant who is not a party to a contract containing an exclusive jurisdiction clause will not be able to rely on it, unless he can show that under the governing law he has an enforceable right to invoke the clause”

26. In Dicey & Morris The Conflict of Laws (1993) 12th ed, vol 1, by L Collins et al, the learned authors state at pp.422-423:

“It is a question of interpretation, governed by the law applicable to the contract, or more accurately, the law governing the jurisdiction agreement, whether a jurisdiction clause is exclusive or non-exclusive, i.e. whether it requires proceedings to be brought in a particular forum, or simply confers jurisdiction on the Courts of a particular country without requiring proceedings to be brought there. Some authorities suggest that the clause must provide in terms that the jurisdiction of the chosen Court be exclusive, but it is submitted that the question is whether on its true construction the clause obliges the parties to resort to the relevant jurisdiction irrespective of whether the word ‘exclusive’ is used. It is also a question of interpretation whether the claim which is the subject matter of the action falls within its terms. If there is no express choice of the law to govern the contract, the law of the chosen Court will usually, but not invariably, be the applicable law”.

27. It is clear from article 15 of the STA that the chosen Court with jurisdiction over any dispute or litigation arising out of or in connection with that agreement is the Taiwan Taipei District Court. One would expect that the law applied by that Court would be the law of Taiwan. It is also clear from article 26 of the SHA2 that the governing law, or the law that is applicable to the agreements, is the law of Taiwan. As the STA has been incorporated into the SHA2, as counsel for the applicants had pointed out, it is clear that the governing law of the incorporated agreements would be the law of Taiwan and the chosen Court is the Taiwan Taipei District Court. The question of whether the jurisdiction clause of the STA and the SHA2 is an exclusive or non-exclusive jurisdiction clause would therefore have to be determined on the basis of the applicable law of Taiwan, not the law of Samoa. But there is no evidence before this Court of the applicable law of Taiwan. The burden is on the applicants who claim that the jurisdiction clause confers exclusive jurisdiction on the Taiwan Taipei District Court to prove that it is an exclusive jurisdiction clause. They have not done so.
28. Even though the applicants have not proved that the jurisdiction clause is a an exclusive jurisdiction clause for the purpose of these proceedings, important issues were raised in the submissions of counsel regarding the effect of an exclusive jurisdiction clause, foreign choice of jurisdiction clause, or simply jurisdiction clause on the exercise of the Court’s discretion whether to grant a stay of proceedings and the approach to be applied to the exercise of that discretion. I think I should address these issues. In saying this , it should be borne in mind that a foreign choice of jurisdiction clause or jurisdiction clause is not necessarily the same thing as an exclusive jurisdiction clause. A foreign choice of jurisdiction clause or jurisdiction clause may or may not be an exclusive jurisdiction clause. This will depend, as a matter of construction, on the governing law or the law that is applicable to the agreement.

Exclusive jurisdiction clause, foreign choice of jurisdiction clause or jurisdiction clause

(a) Effect of an exclusive jurisdiction clause, foreign choice of jurisdiction clause, or jurisdiction clause

29. In the case of Mackender v Feldia AG [1967] 2 QB 590 which was concerned with the service of proceedings out of the jurisdiction, Lord Denning MR stated at p.598:

“The foreign jurisdiction clause is a positive agreement by the underwriters that the policy is governed exclusively by Belgian law. Any dispute under it is to be exclusively subject to Belgian jurisdiction. That clause still stands and is a strong ground why discretion should be exercised against leave to serve out of jurisdiction”.

30. In Donohue v Armco Inc and Others [2001] UKHL 64, para 25, Lord Bingham of Cornhill said:

“Where the dispute is between two contracting parties, A and B, and A sues B in a non-contractual forum, and A’s claims fall within the scope of an exclusive jurisdiction clause, and the interests of other parties are not involved, effect will in all probability be given to the clause. That was the result in Mackender v Feldia AG [1967] 2 QB 590 ... A similar approach has been followed by Courts in the United States, Canada, Australia and New Zealand...”

31. In the case of KC Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd[1998] FCA 601 Finkelstein J, in the Federal Court of Australia, said:

“Later cases in England have accepted that a Court will enforce a choice of jurisdiction clause...on the basis of the wider principle stated by Mackinnon J in Racecourse Betting Control Board v Secretary for Air [1944] Ch 114. I will not mention all of the cases but will confine myself to a citation of a few of them; they include The Fehmarn [1957] 1 WLR 815, and on appeal [1958] 1 WLR 159; Mackender v Feldia AG [1967] 2 QB 590; The Eleftheria [1970] P 94; and Evans Marshall & Co Ltd v Bertola SA [1973] 1 WLR 349. One point that has emerged from these cases is that a choice of jurisdiction clause will not be treated as absolutely binding but it is a matter to which a Court will pay great regard and will usually give it effect: see e.g. The Fehmarn supra at 161-162 per Denning LJ. (emphasis mine)

32. In Cheshire and North’s Private International Law (1992) 12th ed by North and Fawcett, the learned authors stated at p.234:

“[In] accordance with the principle that a contractual undertaking be honoured, there is a prima facie rule that an action brought in England in defiance of an agreement to submit to a foreign jurisdiction will be stayed. However, the Court does have a discretion in the matter, and where the parties are amenable to the jurisdiction, for example, where the defendant is present in England, it will allow the English action to continue if it considers that the ends of justice will be better served by a trial in this country”.

33. In Dicey & Morris The Conflict of Laws (1993) 12th ed, vol 1, p.422, by L Collins et al, the learned authors stated:

“If a foreign Court is the chosen forum, then the English Court will give effect to the choice by staying proceedings brought in breach of the jurisdiction clause or by refusing to give leave to serve process outside the jurisdiction; but...the English Court has a discretion to override the choice of jurisdiction”.

34. As it would appear from the authorities, an exclusive jurisdiction clause, or foreign choice of jurisdiction clause, or jurisdiction clause would in all probability be given effect by the Courts because the parties in their agreement have agreed to a particular jurisdiction for the resolution of any disputes arising out of their agreement. Such a clause, however, is not absolutely binding but it will still be a strong ground to be taken into consideration in the exercise of the Court’s discretion whether to grant a stay of proceedings. The effect of an exclusive jurisdiction clause may be more weighty because of the word ‘exclusive’ than a foreign choice of jurisdiction clause or jurisdiction clause without the word ‘exclusive’. But it appears from the authorities that the Court will in all probability give effect not only to an ‘exclusive’ jurisdiction clause but also to a foreign choice of jurisdiction clause or jurisdiction clause without the word ‘exclusive’ and often does so.

(b) Approach to the exercise of discretion whether to stay proceedings where there is an exclusive jurisdiction clause, foreign choice of jurisdiction clause, or jurisdiction clause.

35. Even though the Court will in all probability stay proceedings because of an exclusive jurisdiction clause or a foreign choice of jurisdiction clause or a jurisdiction clause and usually does so, as it is clear from Donohue v Arco Inc and Others [2001] UKHL 64, para 25, per Lord Bingham, K C Park Safe (SA) Pty Ltd v Adelaide Terrace Investments Pty Ltd [1998] FCA 601 per Finkelstein J, there is still a discretion to be exercised: Mackender v Feldia AG [1967] 2 QB 590, per Lord Denning MR; Cheshire and North Private International Law (supra) p.234; Dicey & Morris The Conflict of Laws (supra) p.422. The approach to the exercise of that discretion was set out by Brandon J in The Eleftheria [1970] P.94, 110, where His Lordship stated:

“The principles established by the authorities can, I think, be summarised as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within its jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the Court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may properly be regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts. (b) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would: (i) be deprived of security for their claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial”.

36. The approach by Brandon J in The Eleftheria [1970] P.94 was adopted and applied by Robert Goff J in Trendtex Trading Corporation v Credit Suisse [1980] 3 A11 ER 721, 735.

Stay of proceedings

37. In this case, the Court has jurisdiction to hear and determine the proceedings for specific performance brought by the respondents as plaintiffs against the applicants as defendants. This is because of the presence of the applicants in Samoa as international companies registered under our International Companies Act 1987 and that they have been served in Samoa with the respondents proceedings. In Cheshire and North’s Private International Law (1992) 12th ed by North and Fawcett, the learned authors stated at p.183:

“Jurisdiction accordingly depends on the presence of the defendant in England. To this extent, therefore, it is possible to agree with Holmes J that ‘the foundation of jurisdiction is physical power’: McDonald v Mabee [1917] USSC 47; 243 US 90 at 91 (1917). Once the Court has asserted its power by service of process on the defendant it is not rendered incompetent by his subsequent departure from the country. The corollary to this is that if a defendant escapes service, by reason of his absence abroad, no proceedings can be brought against him”.

38. The above passage relates only to the jurisdiction of the Court which arises from the service of proceedings on a defendant who is present within the jurisdiction and not to a defendant who is outside of the jurisdiction. Leave for service of proceedings out of the jurisdiction on a defendant in a foreign country would be required as it is under rule 28 of our Supreme Court (Civil Procedure) Rules 1980.
39. However, even though the Court may have jurisdiction over proceedings, it may still, in the exercise of its inherent jurisdiction, refuse to exercise its jurisdiction and stay the proceedings. In the field of conflict of laws or private international law, the situations where the Court may refuse to exercise its jurisdiction and stay proceedings are set out in Cheshire and North’s Private International Law (1992) 12th ed pp.220-221. These may be stated as follows:

(a) where there is a foreign choice of jurisdiction clause,

(b) where there is an agreement on arbitration, or

(c) where the doctrine of forum non conveniens applies,

40. The applicants did not rely on an agreement on arbitration as a ground to stay the respondents proceedings in Samoa. That ground therefore does not apply. What the applicants relied upon are the foreign choice of jurisdiction clause which they claim is an exclusive jurisdiction clause and the doctrine of forum non conveniens.

The issues

40. There are two issues that I want to address in these proceedings. The first issue is, should the proceedings by the respondents in Samoa against the applicants be stayed because of the foreign choice of jurisdiction clause. The second issue is, should the proceedings by the respondents be stayed on the basis of the doctrine of forum non conveniens.

First issue: Should the proceedings by the respondents in Samoa against the applicants be stayed because of the foreign choice of jurisdiction clause?

41. The approach to be applied to the exercise of the discretion whether to grant a stay of proceedings because of a foreign choice of jurisdiction clause in an agreement was set out by Brandon J in The Eleftheria [1970] P 94, 110. In terms of that approach, the discretion should be exercised by granting a stay where there is a foreign choice of jurisdiction clause in an agreement unless strong cause for not doing so is shown. The burden of proving such strong cause is on the plaintiffs, This would be the respondents in these proceedings. The relevant matters to be considered are listed in the judgment of Brandon J in The Eleftheria (supra) at p110 and I will consider those matters in the order they are listed in that judgment.
42. First, the evidence. The bulk of the evidence, if not all of it, is situated in Taiwan where the agreements to be specifically enforced were executed. The individual or individuals expected to give evidence for the applicants in the Samoan proceedings by the respondents are nationals of Taiwan and reside in Taiwan. Presumably, it is the same with the respondent D because D is a company that is domiciled in Taiwan and carries on business in Taiwan. The respondent X is a businessman who is a national of Taiwan, resides in Taiwan, and carries on business in Taiwan. Thus, all these people who may be expected to be called as witnesses reside or are domiciled in Taiwan. The material before the Court also suggests that the first language of the potential witnesses is Chinese. There is no evidence that any of them speaks English or is fluent in English. If the proceedings by the respondents are to go ahead in Samoa, translation of the witnesses evidence would be needed. Translations would also be needed for the agreements which are in Chinese. But there is no evidence that there is any person in Samoa with the competence to translate from Chinese to English and vice versa. Presumably, any translator would have to be brought from overseas, probably from Taiwan itself. It would therefore be substantially more costly and inconvenient if this case is tried in Samoa than in Taiwan. I am therefore of the view that under this head the case is strongly orientated towards Taiwan.
43. Second, the applicable law. The governing law or the law that is applicable to the agreements is the law of Taiwan. The claim for specific performance, which is premised on alleged breaches of those agreements and alleged non-compliance with ‘implied instructions’ said to have arisen from a shareholders meeting in Taiwan, is likely to involve questions of construction of the agreements to be specifically performed. Those are matters to be determined with reference to Taiwanese law as the governing law or ‘relevant law’. The connection of this case with Taiwanese law is therefore quite substantial.
44. Third, the parties. The only connection of the applicants to Samoa is that they are registered as international companies under our International Companies Act 1987. Neither of them carries on business in Samoa. Everything they do is done in Taiwan or mainland China. The first applicant Rose House International is also domiciled in Taichung City, Taiwan. It is not clear whether the other applicant Rose House China is also domiciled in Taiwan. On the other hand, the only connection of the respondent D to Samoa is that it is a shareholder of the second applicant, Rose House China. But D is domiciled in Taiwan and carries on business in Taiwan. The respondent X is also a national of Taiwan, doing business in Taiwan, and residing in Taiwan. So even though the parties have some connection to Samoa through the registration of the applicants as international companies here, it is clear that they have closer connections to Taiwan than Samoa.
45. Fourth, a genuine desire by the defendants for trial in a foreign country. Because the parties main places of business are in Taiwan, their agreements are in the Chinese language and were executed in Taiwan, the bulk of the evidence if not all of it is in Taiwan, the potential witnesses are in Taiwan, and it would be less costly and inconvenient to try the case in Taiwan, I draw the inference that the applicants, as defendants to the proceedings in Samoa, genuinely desire trial of those proceedings in Taiwan. This is not a case of the applicants seeking trial in a strange and distant forum. In effect, they are seeking trial of the respondents proceedings in Taiwan where they and the respondents are more closely connected than Samoa. Taiwan would apparently be a less ‘strange and distant forum’ to the parties and potential witnesses than Samoa.
46. Fifth, prejudice to the plaintiffs. The respondents as plaintiffs would also have to show that they would be prejudiced by having to sue in Taiwan because they would be deprived of security for their claim, or because they could not enforce a judgment, or because they would be unlikely to obtain a fair trial. There was no evidence that the respondents would be prejudiced on any of those grounds. Counsel for the respondents, however, suggested that if the respondents seek and obtain specific performance in Taiwan, it may be difficult to enforce such a judgment in Samoa. I am not convinced that that will be so. I am also not convinced that the share transfer claimed by the respondents cannot be enforced in proceedings taken before the Taiwanese Courts given that the agreements were executed in Taiwan and the applicable law is the law of Taiwan. I am also not convinced in the absence of cogent evidence that if this matter is tried in Taiwan the respondents will not obtain a fair trial or justice before the Courts of Taiwan.
47. There is also no cogent evidence to show objectively that specific performance of the agreements or a similar remedy is not available under the law of Taiwan or that a judgment by a Court of Taiwan to enforce the agreements cannot be enforced in Taiwan itself without having to bring such a judgment to be enforced in Samoa. But even if counsel for the respondents is right, this is only one factor to be weighed in the balance with other factors in deciding whether proceedings should be stayed.
48. Having considered the relevant matters listed in The Eleftheria [1970] P. 94, 110 and applying the approach set out by Brandon J in that case, I conclude that the respondents as plaintiffs have not shown a strong cause to justify not granting a stay despite the foreign choice of jurisdiction clause which refers to the jurisdiction of the Taiwan Taipei District Court. I would, therefore, accede to the application by the applicants as defendants and stay the respondents proceedings in Samoa.

Second issue: Should the proceedings by the respondents in Samoa be stayed on the basis of the doctrine of forum non conveniens?

49. The second issue does not really arise for decision because the true basis for determining whether to stay the respondents proceedings is the presence of a foreign choice of jurisdiction clause in the agreements. It is when there is no foreign choice of jurisdiction clause or exclusive jurisdiction clause that the question of stay of proceedings may be approached and determined on the basis of the doctrine of forum non conveniens. In this case, there is a foreign choice of jurisdiction clause in terms of which the parties had agreed to refer any disputes arising out of or litigation arising in connection with the agreements to the jurisdiction of the Taiwan Taipei District Court for determination. However, both counsel in their submissions addressed the question of forum non conveniens and ‘appropriate forum’ as well as the relevant principles. In my respectful view, given the importance of the issue, its relative novelty under Samoan law, and the well prepared submissions by counsel, I should take up the opportunity created by counsel to address the question of forum non conveniens.
50. The locus classicus in English law on the doctrine of forum non conveniens is the judgment of Lord Goff of Chieveley in Spiliada Maritime Corporation v Cansulex Ltd [1986] UKHL 10; [1986] 3 All E R 843 which was cited and discussed by both counsel in depth in their submissions. Spiliada was a case concerned with service of proceedings out of the jurisdiction on an overseas defendant – something like service of proceedings out of Samoa on an overseas party under rule 28 of our Supreme Court (Civil Procedure) Rules 1980. Leave was granted ex parte by a Judge in England to the appellants to serve proceedings on the respondent out of the jurisdiction. Subsequently, the respondents made a ‘conditional appearance’ before the English Court and sought to set aside the leave that had been granted ex parte to the appellants on the ground of forum non conveniens. That was how the issue of forum non conveniens (England was not the appropriate forum for trial of the appellants proceedings) arose in the Spiliada. That is different from proceedings ‘as of right’ meaning proceedings commenced within a jurisdiction and served on a defendant within the jurisdiction. In the present case, proceedings are ‘as of right’ because they were commenced by the respondents in Samoa and served on the applicants in Samoa. However, it is clear from the Spiliada that the doctrine of forum non conveniens is applicable to both kinds of proceedings, that is, proceedings with a ‘foreign element’ commenced within jurisdiction but served on a defendant out of the jurisdiction and proceedings with a ‘foreign element’ commenced within jurisdiction and served on a defendant within the jurisdiction. As Lord Goff pointed out in the Spiliada (supra) at p.858:

“It seems to me inevitable that the question in both groups of cases must be, at bottom, that expressed by Lord Kinnear in Sim v Robinow (1892) 19 R (Ct of Sess) 665 at 668, viz to identify the forum in which the case can be suitably tried for the interests of all the parties and for the ends of justice”

51. In Spiliada Maritime Corporation v Cansulex Ltd [1986] UKHL 10; [1986] 3 All E R 843, 854, Lord Goff stated the fundamental principle to be applied in the exercise of the Court’s discretion for granting a stay on the ground of forum non conveniens in these terms:

“ The basic principle is that a stay will only be granted on the ground of forum non conveniens where the Court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all the parties and the ends of justice”

52. Lord Goff then explained the burden of proof and the procedure to be followed when applying the ‘basic principle’ he had just stated. His Lordship said at pp.854 – 855:

“[In] general the burden of proof rests on the defendant to persuade the Court to exercise its discretion to grant a stay (see, eg, the Sociẻte du Gaz case 1926 SC (HL) 13 at 21 per Lord Sumner and Anton Private International Law (1967) p. 150). It is, however, of importance to remember that each party will seek to establish the existence of certain matters which will assist him in persuading the Court to exercise the discretion in his favour, and that in respect of any such matter the evidential burden will rest on the party who asserts its existence. Furthermore, if the Court is satisfied that there is another available forum which is prima facie the appropriate forum for the trial of the action, the burden will then shift to the plaintiff to show that there are special circumstances by reason of which justice requires that the trial should nevertheless take place in this country”.

53. Further on in the Spiliada at p.855, Lord Goff said:

“It is significant that in all the leading English cases where a stay has been granted there has been another clearly more appropriate forum: in The Atlantic Star [1973] 2 A11 E R 175, [1974] AC 436 (Belgium), in MacShannon’s case [1978] 1 A11 E R 625, [1978] AC 975 (Scotland), in Trendtex Trading Corp v Credit Suisse [1981] 3 A11 E R 520, [1982] AC 679 (Switzerland) and in The Abidin Daver [1984] 1 A11 E R 470, [1980] AC 398 (Turkey). In my opinion, the burden resting on the defendant is not just to show that England is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate than the English forum”.

54. Lord Goff then continued at p.856:

“Since the question is whether there exists some other forum which is clearly more appropriate for the trial of the action, the Court will look first to see what factors there are which point in the direction of another forum. These are the factors which Lord Diplock described in MacShannon’s case [1978] 1 A11 E R 625 at 630, [1978] AC 795 at 812, as indicating that justice can be done in the forum at ‘substantially less inconvenience or expense’. Having regard to the anxiety expressed in your Lordships’ House in the Sociẻte du Gaz case 1926 SC (HL) 13 concerning the use of the word ‘convenience’ in this context, I respectfully consider that it may be more desirable, now that the English and Scottish principles are regarded as being the same, to adopt the expression used by Lord Keith in The Abidin Daver [1984] 1 A11 E R 470 at 479, [1984] AC 398 at 415 when he referred to the ‘natural forum’ as being ‘that with which the action has the most real and substantial connection’. So it is for connecting factors in this sense that the Court must first look; and these will include not only factors affecting convenience or expense (such as availability of witnesses), but also other factors such as the law governing the relevant transaction (as to which see Credit Chimique v James Scott Engineering Group Ltd 1982 SLT 131), and the places where the parties respectively reside or carry on business.

“If the Court concludes at that stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay: see, eg, the decision of the Court of Appeal in European Asian Bank AG v Punjab and Sind Bank [1982] 2 Lloyd’s Rep 356. It is difficult to imagine circumstances where, in such a case, a stay may be granted.

“If, however, the Court concludes at that stage that there is some other available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry, the Court will consider all the circumstances of the case, including circumstances which go beyond those taken into account when considering connecting factors with other jurisdictions. One such factor can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction: see The Abidin Daver [1984] 1 A11 E R 470 at 476, [1984] AC 308 at 411 per Lord Diplock, a passage which now makes plain that, on this inquiry, the burden of proof shifts to the plaintiff”

55. In applying the doctrine of forum non conveniens to this case on the basis of the principles set out in the judgment of Lord Goff in Spiliada Maritime v Consulex Ltd [1986] 3 A11 E R 343, I will have to put aside the existence of the foreign choice of jurisdiction clause which has already been dealt with. Essentially, the approach set out in the Spiliada for determining whether to grant a stay on the basis of the doctrine of forum non conveniens may be stated as follows. The burden of persuading the Court that a stay should be granted rests on the defendant. But even though the burden is on the defendant, any matter upon which a party relies to persuade the Court to rule in his favour must be established by that party. At this initial stage of the inquiry if the Court concludes that there is no other available forum which is clearly more appropriate for the trial of the plaintiff’s action, a stay will ordinarily be refused. But if the Court is satisfied that the defendant has shown that there is another available forum which is clearly or distinctly the more appropriate forum for the trial of the plaintiff’s action, a stay will not automatically follow. Instead, the burden will shift to the plaintiff to show that there are special circumstances by reason of which justice requires that a stay should nevertheless not be granted and the trial of the plaintiff’s action proceeds in the country where it has been brought.
56. At the first stage of the inquiry when the burden of proof is on the defendant, the Court will look at the ‘connecting factors’, that is to say, factors which show which forum the plaintiff’s action has the most real and substantial connection. Such factors would include convenience or expense (such as the availability of witnesses), the law governing the relevant transaction, and the places where the parties respectively reside or carry on business. If after consideration of those factors the Court concludes that there is no other available forum which is clearly more appropriate for the trial of the plaintiff’s action, a stay will ordinarily be refused. But if the Court concludes that there is another available forum which is clearly more appropriate for the trial of the action, then a stay will ordinarily be granted unless there are circumstances by reason of which justice requires that a stay should nevertheless be refused. At this second stage of the inquiry when the burden of proof shifts to the plaintiff, the Court will consider all the circumstances of the case, including those which go beyond the ‘connecting factors’. One such circumstance can be the fact, if established objectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction.
57. Applying the Spiliada two stage approach to this case, I will start with the connecting factors to show which forum the respondents action has the most real and substantial connection. The bulk of the evidence, if not all of it, is in Taiwan. All the potential witnesses are in Taiwan. Any translators needed to translate from Chinese to English and vice versa would have to be brought from overseas, probably from Taiwan itself. Such translators would not be needed if the plaintiff’s action for specific performance is tried in Taiwan. So there will be ‘substantially less inconvenience or expense’ if the action is tried in Taiwan than in Samoa.
58. The parties also have closer connections to Taiwan than Samoa. Even though the applicants are registered as international companies under our International Companies Act 1987, they do not carry on any business in Samoa; they carry on business in Taiwan. In fact the first applicant Rose House International is domiciled in Taiwan. It is not clear whether the second applicant Rose House China is also domiciled in Taiwan. But one is inclined to think that it is because it carries on business in Taiwan. The respondent D is also a company domiciled in Taiwan and carries on business in Taiwan. The other respondent X is a national of Taiwan, doing business in Taiwan, and residing in Taiwan. The only connections of the parties to Samoa are that the applicants are registered as international companies in Samoa, the respondent D is a shareholder of the second applicant Rose House China, and the respondent X is the director of the first applicant Rose House International and one of the directors of the second applicant. The parties therefore have closer connections to Taiwan than Samoa.
59. The share transfer that the respondents want to be enforced against the applicants is based on agreements executed in Taiwan to which the law of Taiwan applies. So the respondents action is also closely connected to Taiwan.
60. Having considered the connecting factors, I conclude that Taiwan is clearly the more appropriate forum for trial of the respondent’s action than Samoa. That being so, I move on to the second stage of the inquiry to consider whether there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. Here, it would be of assistance to the respondents if they can establish objectively by cogent evidence that they will not obtain justice in the foreign jurisdiction, namely, Taiwan. The respondents have not done so. There is no cogent evidence to show objectively that the respondents cannot seek or obtain specific performance (or a similar remedy) of the share transfer in the Courts of Taiwan. There is also no cogent evidence to show objectively that if the respondents obtain judgment in Taiwan that judgment cannot be enforced in the Courts of Taiwan without having to bring it to Samoa for enforcement. The proceedings in Samoa by the respondents would therefore have been stayed on the ground of forum non conveniens if that ground had applied.

Conclusions

61. For the foregoing reasons, I have come to the following conclusions:

(a) The proceedings by the respondents in Samoa are stayed, in the exercise of my discretion, on the ground that there is a foreign choice of jurisdiction clause, and

(b) If it had been necessary to decide these proceedings on the ground of forum non conveniens, I would also have stayed the proceedings by the respondents in Samoa on that ground.

62. Counsel to file submissions as to costs in seven days if they have not done so already.
    

CHIEF JUSTICE

Solicitors

Leung Wai Law Firm for first and second applicants

Schuster Annandale and Betham Law Firm for respondents