Tung Ho Wah (the plaintiff) was a passenger on the Superstar Leo, a cruise liner operated by Star Cruises (HK) Ltd (the defendant), on a six-day excursion from Hong Kong, when he slipped on a patch of water and was injured. The plaintiff received some medical attention from the vessel's doctor. Upon arrival in Shanghai he was diagnosed with fractured ribs over the left lower chest. When he returned to Hong Kong, the plaintiff was admitted to hospital for 3 days.

The plaintiff claimed loss of earnings, loss of earning capacity, medical expenses, special damages and that he had suffered loss of promotion prospects as a result of the accident.

The trip was booked by the plaintiff through the defendant's booking agent by telephone. The plaintiff later received a confirmation slip and receipt by fax. Some printed terms were on the confirmation slip, including cl 9 which read: 'CONTRACT IS SUBJECT TO THE TERMS AND CONDITIONS OF CARRIAGE OF THE OPERATOR AND OWNER.'

The terms and conditions were not to be found on the confirmation slip. The defendant asserted that the terms and conditions were readily available to any passenger upon request at the time of reservation or on the defendant's website.

Condition 22 was an exclusive jurisdiction clause in favour of either Singapore or Malaysia. Condition 25 was a choice of law clause which provided that Malaysian law governed the contract.

The defendant applied to stay the proceedings in favour of the courts of Malaysia.

Held: Application is dismissed. The stay is declined.

The issues to be decided are:

1. Had the Terms and Conditions referred to in cl 9 of the confirmation slip, and hence the exclusive jurisdiction clause (Condition 22), been incorporated into the contract of carriage?
2. Was the exclusive jurisdiction clause 'unconscionable' within the meaning of the Unconscionable Contracts Ordinance (Cap 458) (UCO)?
3. Should the court refuse a stay of proceedings?

As a general rule, issues on the validity of a contract or any term of a contract is determined by the applicable law of the contract. By reason of the choice of law clause, the applicable law would be Malaysian law. Neither party adduced evidence of Malaysian law. Therefore it appears that both parties have proceeded on the assumption that Malaysian law would be the same as Hong Kong law.

The defendant relied upon the well-known English 'ticket cases' and submitted that a passenger would be bound by the terms of the contract of carriage, including those incorporated by reference, on the acceptance of the ticket as long as reasonable notice had been given. Clause 9 on the confirmation slip constituted sufficient notice of the terms and conditions. Therefore, both the exclusive jurisdiction clause and the choice of law clause formed part of the contract.

UCO is applicable notwithstanding that the law governing the material validity of the contract is Malaysian law. Section 7(2) provides that the UCO has effect when one of the parties to the contract dealt as a consumer and was habitually resident in Hong Kong.

The plaintiff objected to the inclusion of the terms and conditions generally on the ground that there was an imbalance of bargaining power and a failure to reveal the severity of the terms to the consumer. In particular, the plaintiff argued, first, that those terms meant he would be required to bring his claim in a strange and distant country in accordance with the law of a place which had no connection with him whatsoever. Second, the claim would be subject to a two year limitation period. Third, the liability of the carrier was limited in accordance with certain limitations imposed by the Athens Convention 1974.

The second and third complaints can be disposed of quickly. The Athens Convention 1974 was extended to Hong Kong by the Merchant Shipping (Limitation of Shipowners’ Liability) Ordinance (Cap 434). The two year limitation period and cap on liability would be available to the defendant irrespective of whether Malaysian or Hong Kong law applied.

The relevant limit of liability under art 7 of the Athens Convention 1974 (46,666 SDR) is in fact lower than that of condition 5(a)(ii) of the terms and conditions (175,000 SDR) as Hong Kong was not a party to the 1990 Protocol which amended the Athens Convention 1974 by enhancing the compensation limit under art 7.

The exclusive jurisdiction clause was merely a provision which was 'reasonably necessary for the protection of the legitimate interests' of the defendant within the meaning of s 6(1)(b) of the UCO. If a plaintiff chooses to sue in the Hong Kong courts in breach of an exclusive jurisdiction clause, the Hong Kong court has a discretion whether to grant the defendant a stay but such should be granted unless there is a 'strong case' for not doing so. In the exercise of this discretion all the circumstances of the case must be taken in account.

The factors to be taken into account by the Court in its exercise of discretion can be summarised as:

1. In which country the evidence is available, and the effect of that on the relative convenience and expense of a trial in this jurisdiction or abroad.
2. Whether the contract is governed by the law of the foreign country in question, and if so, whether it differs from English law in any material respect.
3. With what country either party is connected, and how closely.
4. Whether the defendants genuinely desire trial in a foreign country, or are only seeking procedural advantages.
5. Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would be deprived of security for their claim, or be unable to enforce the judgment in their favour, or be faced with a time-bar not applicable in this jurisdiction, or for political, racial, religious or other reasons be unlikely to get a fair trial.

As most of the witnesses are in Hong Kong, the inconvenience and expenses involved in transporting and accommodating the witnesses if the trial were to take place in Malaysia rather than in Hong Kong militate strongly against the exercise of the court’s discretion to grant a stay. In this case, justice can be done at substantially less convenience and expense if the action is tried in Hong Kong.