The problem of foreign judicial determinations

A charterparty case today, Shagang Shipping Co Ltd v HNA Group Co Ltd [2016] EWHC 1103 (Comm) looked like a simple case of owners claiming charter hire and damages from time charterers (or rather their parent company guarantors). Unfortunately it turned into something like a nightmare for the owners’ lawyers.

The difficulty was that, while the figures were fairly straightforward, the charterers’ group (HNA) sought to escape scot-free by alleging that the charterers had only signed the charter because the owners had bribed one of the charterers’ employees to approve it. HNA was a leading and influential company in Hainan Province in China. It duly produced confessions of, and convictions in Hainan for, the relevant bribery by an officer of the owners and their own employee. Unfortunately there were distinct indications that these confessions had been obtained by some interesting police practices not unconnected with rubber truncheons, cigarette burns and  near-drowning, which were testified to in the case and which Knowles J specifically stated could not be ruled out. Happily Knowles J was able to rule against HNA  on the basis of external evidence that there had been no bribery.

A correct result, therefore. But the difficulties cases like this raise are of a high order. External evidence will not always be present; and where it is not the difficulties of obtaining evidence of malpractice of the kind alleged in Shagang are obvious. The only cure would seem to be a term in the relevant contract excluding a priori the use of at least some court decisions as evidence in subsequent proceedings arising out of a dispute. But that cure might well be worse than the disease.

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