Change in the doctrine of forum non conveniens

By Sally Wang, Martin Hu & Partners
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Recently, the author had a hand in a case tried by a Hong Kong court that involved the application of “the doctrine of forum non conveniens”. Forum non conveniens is a concept found in common law, its most famous precedent being Spiliada Maritime Corp v Cansulex. The judge in that case determined the following rules relating to forum non conveniens:

  1. A stay may only be granted where there is another extraterritorial court in which the case may be tried more suitably for the interests of all the parties and the ends of justice;
  2. The burden of proving to the court that a stay ought to be granted rests with the defendant, but if the court preliminarily recognizes that there is another extraterritorial court which is more appropriate for the trial of the action, the burden will then shift to the plaintiff to show that trial in another extraterritorial court would not serve the cause of justice;
  3. The burden resting on the defendant is not just to show that the accepting court is not the appropriate court for the trial, but to establish that the other extraterritorial court is “clearly and distinctly” more appropriate than the accepting court;
  4. The court should review the factors that would make the other extraterritorial court more appropriate, e.g. whether appearance before such court would be convenient for witnesses, the law governing the dispute, the places where the parties respectively reside, etc.;
  5. If the court finds that the other extraterritorial court is not distinctly more appropriate for trial of the case, it should refuse a stay; if, however, the court determines otherwise, it should grant a stay and the case should be tried by the extraterritorial court.
SALLY WANG Partner  Martin Hu & Partners
SALLY WANG
Partner
Martin Hu & Partners

The effect of the Spiliada case is profound, with Canada, Hong Kong, Singapore and New Zealand all adopting the rules established by the case. The precondition for application of the “doctrine of forum non conveniens” is that the court in question has jurisdiction in the case. If the court itself does not have jurisdiction, there is no issue of conveniens or non conveniens worth discussing. Second, the “conveniens” here does not only refer to convenience, but more pointedly to trial by a court in the most appropriate jurisdiction.

CHANGE IN MAINLAND CHINA

Establishment of the doctrine of forum non conveniens in mainland China took more than 10 years from the time it was first raised until it was ultimately embedded in civil procedure-related regulations.

In 2004, the Fourth Civil Division of the Supreme People’s Court (SPC) issued the Answers to Questions on Foreign-Related Commercial and Maritime Adjudication Practice (1), which touches upon the understanding and grasp of forum non conveniens. The doctrine of forum non conveniens was not provided for in the Civil Procedure Law at the time. However, as the opening to the outside world became more extensive and foreign-related civil disputes increased, instances in adjudication practice of defendants demanding that mainland courts not exercise jurisdiction on the grounds that their jurisdiction was “non conveniens” began to arise.

In this regard, the SPC answers expressly make their position known – where certain conditions are met, “the court is not necessarily required to exercise jurisdiction, and may apply the doctrine of forum non conveniens to waive exercise of jurisdiction”. They further go on to list the circumstances that are required to be satisfied before the doctrine of forum non conveniens can be applied, including: the court has jurisdiction in the case; both parties to the case are foreign parties; the main facts in the case have no connection with mainland China; and the court faces major difficulties in determining the facts in the case and the governing law, and is required to effect enforcement in a foreign country.

From this it can be seen that the provisions on the conditions for application of the doctrine of forum non conveniens in mainland China at the time were not very comprehensive, only considering, from the perspective of the circumstances of the case itself, whether trial by a mainland court was convenient, ignoring such issues as whether the parties had agreed in advance that jurisdiction was to be exercised by a mainland court, whether the more convenient extraterritorial court proposed by a party had jurisdiction, etc.

Subsequently, the Guangdong Provincial Higher People’s Court issued the Guiding Opinions on Several Issues Concerning Foreign-Related Commercial Adjudication, becoming one of the earlier local courts to address the doctrine of forum non conveniens. The guiding opinions set out seven conditions that need to be satisfied for application of the doctrine of forum non conveniens. Compared to the SPC answers, the guiding opinions add three conditions: there is no agreement that provides for jurisdiction by a mainland court; the case does not fall within the scope of cases over which mainland courts have exclusive jurisdiction; and extraterritorially, there is a court that is more convenient for trial of the case. The guiding opinions also state that, as the doctrine involves judicial sovereignty and the litigation rights of parties, it must be used judiciously.

The conditions for application specified in the guiding opinions are similar to the provisions on the doctrine of forum non conveniens of the Notice on the Issuance of the Minutes of the Second National Working Meeting on Foreign-Related Commercial and Maritime Adjudication and the Interpretations on the Application of the Civil Procedure Law of the People’s Republic of China, issued subsequently by the SPC, although the latter two delete the condition found in the guiding opinions that “all of the property available for enforcement shall be located outside China”.

The conditions for application ultimately established by the interpretations can be summarized as follows: (1) the defendant claims that the case falls within the jurisdiction of an extraterritorial court or raises a jurisdiction objection; (2) there is no agreement that selects a mainland Chinese court as the competent court; (3) the case is not one that falls within the exclusive jurisdiction of mainland Chinese courts; (4) the case does not involve the interests of mainland China or its citizens, legal persons or other organizations; (5) the main facts of the dispute did not arise in mainland China, the laws of mainland China are not the governing law and a mainland Chinese court would have major difficulties in terms of determination of the facts and the applicable law; and (6) the foreign court has jurisdiction in the case and trial by it would be more convenient.

Sally Wang is a partner at Martin Hu & Partners

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