A collision between the Herceg Novi (owned by South Cross Shipping Ltd (the respondent)) and the Ming Galaxy (owned by Yangming Marine Transport Corp (the appellant)) within a traffic separation scheme in the Straits of Singapore on 18 August 1996 resulted in the sinking of the Herceg Novi. The shipowners claimed damages from each other. The damages approximated to USD 10,350,000 for the Herceg Novi, USD 4,000,000 for the cargo carried by the Herceg Novi and USD 3,187,000 for the Ming Galaxy.

The dispute that arose was whether Singapore or the United Kingdom was the appropriate forum to determine these claims and whether the applicable limitation regime was the Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships 1957 (the LLMC 1957) or the Convention on Limitation for Maritime Claims 1976 (the LLMC 1976). The liability limits for the Ming Galaxy under the LLMC 1957 and the LLMC 1976 were USD 2,900,000 and about USD 5,800,000 respectively. Under either Convention, the claim of the Ming Galaxy would not exceed the liability limit of the Herceg Novi.

High Court of Singapore

The appellant commenced four actions during 20 August 1996 and 21 August 1996:

1. in rem against the Herceg Novi;
2. in personam against the respondent;
3. a proceeding against the master and third mate of the Herceg Novi; and
4. limitation proceedings founded on s 136 of the Merchant Shipping Act against the respondent and all persons claiming to have sustained loss or damage from the collision.

Queen's Bench Division of the High Court (England and Wales)

The respondent issued a writ in an action in rem against the appellant on 28 August 1996. The writ was served on the Ming South (a sister ship of the Ming Galaxy) at Felixstowe on 30 August 1996. The appellant applied to stay the English action on 7 November 1996 on the grounds that England was not the appropriate forum and proceedings were pending in Singapore.

Clarke J ordered a stay of the action pending a determination in Singapore of responsibility for the collision and the amount of damages claimed by the appellant. Since England was not the natural or appropriate forum for the trial of the action and Singapore was clearly and distinctly shown to be more appropriate than England, the English action ought to be stayed unless it deprived the respondent of some legitimate juridical advantage.

Significantly, the Judge refused to grant a stay of the English action as a whole which meant that the appellant would have to rely on the English statute and its higher limit if it wished to limit its liability in England.

The appellant appealed.

Held: Appeal allowed.

The Court granted an unconditional stay of the English action and refused an application for leave to appeal to the House of Lords.

There were three reasons why the higher limit of the LLMC 1976 did not qualify as a legitimate juridical advantage for the action to continue in England:

1. The LLMC 1976 had not received universal acceptance. The LLMC 1976 was the view of some 30 States and not 'an internationally sanctioned and objective view of where substantial justice is now viewed as lying'.
2. Although the IMO might commend the LLMC 1976 to the international community, the IMO was not a legislature. If it were to enact an international consensus, it would deprive sovereign States of the right to remain with some other regime, like the LLMC 1957. The LLMC 1957 was ratified or acceded to by 46 States, including Singapore and the United Kingdom. The LLMC 1976 was a package deal whereby the limits were raised considerably but it was more difficult to break the limits. The limits in the LLMC 1976 were increased substantially from the LLMC 1957 and expressed in Units of Account rather than gold francs. The LLMC 1976 also substituted a test where the shipowner had to show that the loss occurred without its actual fault or privity (art 1.1 of the LLMC 1957) with a new test for the circumstances where the limitation would not apply (art 4 of the LLMC 1976). The LLMC 1957 regime continued to prevail in Singapore. The LLMC 1957 had been given effect in the United Kingdom by the Merchant Shipping (Liability of Shipowners and Others) Act 1958 (UK), before being superseded by the LLMC 1976.
3. Substantial justice would be done in Singapore.​ There is a significant body of agreement among civilised nations with the law as it is there administered. The preference for the LLMC 1976 regime has no greater justification than for the LLMC 1957 regime.