Choice of Forum

 

Where a defendant is presence in Hong Kong, the plaintiff can sue the defendant as of right. However, where a defendant is not resident in Hong Kong, court's permission is often required to sue. This is because a foreign defendant with little connection with Hong Kong is not automatically subject to the jurisdiction of the Hong Kong court.

 

Order 11 rule 1 of the Rules of High Court is the principal provision for the court for granting leave to commence legal proceedings against someone not residing in Hong Kong. Whether such permission will be granted is a matter of discretion of the court.                    

 

Jurisdiction

 

When there is a question on whether the court should give leave to sue a non-resident, this is a question of jurisdiction. The court will have to consider 3 questions, namely:

 

  1. Whether there is a good arguable case that the court has jurisdiction under Order 11 rule 1 to grant such a leave. If the 'good arguable case' test is not met, there is no discretion to grant leave. A good arguable case is an argument on jurisdiction with a good prospect of success. The standard applied is high.

 

  1. Whether the applicant's evidence disclose a serious issue to be tried. In short, the court will also have regards to the merits of the case.

 

  1. Even if the first 2 requirements are satisfied, as a matter of judicial discretion, whether the court should grant or refuse such leave, it will have regards to the doctrines of forum non conveniens and lis alibi pendens.

 

 

Forum non conveniens and lis alibi pendens

 

As mentioned above, when taking out an application for leave to serve out of the jurisdiction, the applicant has to show that a serious issue to be tried and the court has to determine on the material before it whether a good arguable case has been made out that the court has jurisdiction to grant leave. The court will have to consider at the end, as a matter of judicial discretion, whether it should grant leave on the grounds that the case is a proper one for serve out of the jurisdiction. This involves a consideration of whether Hong Kong is the proper forum for the trial of the action.

 

It has been held that where a defendant was not resident in Hong Kong and a plaintiff instituted proceedings in Hong Kong not as of right, the burden was on the plaintiff, in persuading the court to grant an order to serve out under O.11, to show that Hong Kong was clearly the appropriate forum.

 

Although a plaintiff has the initial choice of forum in which to bring his action, the court retains an inherent jurisdiction to stay or dismiss the action in favour of a more appropriate forum. In determining whether the court will grant or refuse a stay of an action brought in Hong Kong, the court will view the issue in 3 separate stages (Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460).

 

First issue

 

The first issue is that whether it has been shown by the defendant that Hong Kong is not only the natural and appropriate forum for the trial but that there is another available forum which is clearly and distinctively more appropriate than Hong Kong. The relevant factors for deciding upon the natural and appropriate forum for the action have been identified as follows:

 

  1. the law governing the transaction;

 

  1. the place where the parties reside or carry on business;

 

  1. the costs of the trial;

 

  1. the convenience of witnesses;

 

  1. the place where the transaction giving rise to the litigation occurred;

 

  1. the relative ease of execution;

 

  1. in respect of a counterclaim, if any, the desirability of having the claim and the counterclaim adjudicated upon by the same court in the same jurisdiction;

 

  1. the avoidance of a multiplicity of actions.

 

The evidential burden of showing a more appropriate forum lies upon the defendant/application for the stay. The purpose is to identify the forum 'with which the action has the most real and substantial connection'. The court will also take into account whether any action has already been commenced in another jurisdiction. This is often known as the doctrine of lis alibi pendens.

 

Second issue

 

If the defendant/applicant succeeds in satisfying the court that there is a more appropriate available forum for the action, the issue is then whether a trial in this other jurisdiction would deprive the plaintiff of any 'legitimate personal or jurisdictional advantages' see The Abidin Daver [1984] AC 398 at 470. This burden rests on the plaintiff.

 

Third issue

 

The third issue is that if the answer to second issue is affirmative, the court has to balance the advantages of the first issue against the disadvantages of the second issue: see The Abidin Daver [1984] AC 398 at 419.

 

Deprivation of one or more personal or judicial advantages for the plaintiff may not be fatal to the defendant/applicant provided that the court is satisfied that, notwithstanding such loss, substantial justice will be done in the other available appropriate forum. The court must be objective and proof of this, which can fairly be called the ultimate burden of persuasion, rests upon the defendant/applicant for the stay.

                                     

Albert Lam

Hampton, Winter And Glynn

October 2018