$
:
Wednesday,
HONGKONG TELEGRAPH
July 26, 1939.
Chief Justice Delivers Judgment In Shipping Case
OF
WAR BETWEEN COURT
STATE JAPAN, HONGKONG
FOR THE first time since the outbreak of hostilities a Hongkong Court has admitted that a State of War exists between China and Japan. This important ruling was made to-day by the Chief Justice, Sir Atholl MacGregor, during his written judgment in the Siang Kee case.
Similar rulings have been made in Courts of Justice in the United Kingdom, but, nevertheless, the British Government, as well as other Powers (including China and Japan themselves) still preserve the fiction that only an incident is occurring.
WRITTEN JUDGMENT
Written judgment on the petition brought by the Shiang Kee, otherwise known as the China Merchants Steam Navigation Co., Ltd, for the winding up of the Hongkong branch of the Ching Kee Steam Navigation Co., Ltd., was delivered by the Chief Justice In the Supreme Court this morning.
One of the grounds for the petition was that in consequence of the Sino-Japanese hostilities, the Company could not carry on legitimate business because of the risk of seizure of their vessels by enemy forces.
4
His Lordship granted the petition, holding that us the Company in China was in process of dissolution, an order for the winding up of the Hongkong branch ought to be made,
Inescapable Knowledge
liquidators. From tint decision an appeal was taken to the Fira! Divi- tonn Court of the Supreme Court of Chinn, which on. May 30 dismissed the appeal. That decision is final.
Threo Grounds
A
THE CHIEF JUSTICE
Intermediate Stage
CHINA, RULES
ledge of conditions on the China by one-eighth in value of the shore- coust, that a state of war exists beholders whereas the petition was
tween China and Japan, and has opposed by four-fiths in value. existed at all times innterial to this application.
In January 1939 the local office of The Company was closet" and Its Chinese employees departed from the Colony,On February 1, 1039 the Dairen Kisen Kabushiki Kaishu pur ported to net as agents of the pany in this Colony.
Mr.
Lo's Affidavit
com-
be
Can It then be sold that the Com-
In these elrcumstances the Court of Appeal held that a winding-up order ought not to be made.
Easily Distinguishablo
distinguishable.
In my opinion that end is easily for the winding-up of an English It was a peiliion Company whereus here have to consider a petillon for the winding- up of the loent branch of a foreign wound up by order of a competent company which has already been court. I know of no authority for keeping alive a branch where the parent trunk is in process of 50- lution.
Only Assots
Tho
two
pany is carrying on business in the That argument is based on purport to net under a coatruct which pany has within the jurisdiction of Colony when its ostensible agents fallacies. In the first place the com- is illegal by the law of China which this court substanilal assets and It is clearly the proper Juw?
has not been suggested that any The answer must be no,
order which I make will not be im
of
Judicial Committee: "The
In these circumstances can said that the Company is still carry ing on business in the Colony?
Mr. T. F. Lo, a well qualified and acknowledged expert in Chinese law, has led a lengthy affidavit sciting out in the clearest terms the common law and statutory provisions govern- Ing trading with an enemy of the Court of China has made an order Secondly, he argues, the Supreme Chinese Republle:
which is entirely nugatory. counter affidavits have been only assets within the jurisdiction of filed and I therefore accept Mr. Lo's that court are fourteen ships based! statements accurate opinion on on Chetoo ar Dairen, and, notwith- the legal principles applicable to this standing the order of the court these case, According to Chinese Inw the ships are still trading. This court action of the Company in churtering will not make a useless or ineffective pite the pendency of foreign liquida-appointing Japanese agents is legal Chancery Appeals p.77).
ships to Japanese interests and in decree (Ferguson va. Wilson LR. 2 tlon. In the latter case Kay J. says and criminal and all such contracts) The present application is based on order which it is said has been made
"What is the effect of the winding up are not only void but illegal.
Two Fallacios three grounds:
(i) Thut there has been
In New Zealand? This court upon winding-up order made by a court would no doubt have great regard to principles of international comity of competent jurladiction In the country in which the company was that winding up order and would be incorporated, and, as a result of that influenced thereby, but the question [winding-up, the corporate powers of of jurisdiction is different question,
the Company have been destroyed in and the mere existence of a winding The parent company in China is inmediately effective so far as these the country of its origin:
up order made by a foreign court process of compulsory winding up and assets are concerned. In the second (1) That the Company has in does not lake away the right of the the local branch is without lawful place the fact that certain foreign "Not only on the authorities which fact ceased to carry on business in courts of this country to make a representation in the Colony. What nationals are in contempt of an order I have cited but also on my Inesenp-the Colony; and
{winding up order here, though it then is the position of this Court?
of a competent court is no reason able knowledge of conditions on the (i) That it is just and equitable would no doubt exercise an influence
why I should disregard that order or China const, a state of war exists be- that the Company should be wound upon this court in making the order."
Cannot. Bo Enforced
fall to treat it with proper respect. Iween China and Japan, and has up. The substratum of the Company existed at all times material to this is gone. It is a shipping company,
Mr. Cheshire in his recent work! The case of de Jager vs. A.G. for Natal (1007) Appeil Cases 326 is Here we have not a dissolution as on Private International Law application," said His Lordship.
at und cannot carry on legitimate busi-In the two enses to which Mr. Potter P. 197 writes "It is axiomatic that direct authority for the proposition by Mr. Eldon Potter, K., and Mr. of their vessels by enemy forces. The stage, an order for compulsory wind-per la cannot be enforced in Eng Chinese courts. As Lord Lorebum The petitioners were represented ness because of the risk of seizure has referred me but an intermediate contract that is illegal by its pro- that the company in Chefoo is still subject to the jurisdiction of the 11. C. Macnamara, instructed by Mr. only avenue of busines open to the ing up. I do not think that that Innd. The dearth of authority, fur D. L. Strellett, of Geo, K. Hall Company are either illegal trading radically alters the Losition. The this proposition is not surprising, for tree said in delivering the judgment Brutton and Co. Mr. H. G. Sheldon, with the enemy or work extraneous Company in China is in process of few would be bold enough to sue on K.., and the Hon. Mr. Leo D'Almuda, to the true objects of the company dissolution, and the circunstances a contract that is prohibited by the Protection of a State does not cense merely because the State forces, for Jnr., instructed by Mr. II. J. Arm- such as the chartering of their are sues that in my judgment this legal system to which It properly strong of Deacons, opposed
strategical or other reasons, are iem- the vessels for use as hulks within this court ought to make an order for the belongs."
porarily withdrawn, so that the enemy pelition on behalf of the following harbour.
In The Torni (1032) p. 70 at On the first of these grounds, Mr. Company.
winding up of the local branch of the Greer L.J. In considering the judge for the time exercises the rights of shareholders: Hau Chin-tang (4,394
an ommy in occupation. On the con- The second and third of Mr. Pot-ments in the Court of Appeal in intrary, when such territory reveris shares), Heu Tel-yen (3,754), Chenglotter relles on the case of in re
The Russian Bank for Foreign Trade ter's grounds necessarily involve a
re Missouri Steamship Co. (42) to the control of Its rightful sovereign (2,044), Kab 'Cheung-chang (1,584),
foreign the Russian revolutionary legislation Yu Weh-ting (1,420),)
Jeiston as meaning that if.
occupation country where the contract was made,
are cognisable by the (1,000), Li Yu-halang (70). Cheng of 1917 and the following years had between China and Jepun, Pen-ching (8,377), Cheng Chung-yu Put an end to the juristic existence these twe countries broke out, and at yoid and unenforceable but illegal
In July 1937
the contract was illegal-not merely (6,178), Ching Chi-yu (5,023), Chang Russia, and it was held that the im-this date are still raging.
ot banking, companies Incorporated
In the third place, he maintains then the courty thi country would the contribulories are the best judges Pen-fah (5,429). Chang Hsin-tel
Chefoo Occupation
recognise the legality and act in us to whether there is any danger to (4,836), Chang Ming-tch (4,500) and possibility of a branch of such a
As a result of these hostilities the accordance with the law of the coun- the local assets of the company. the Dairen Kishen Kaisha, who are Russian bank continuing to function creditors to the amount of $47,157,32, according to its incorporating statutes Japanese are in effective occupation try where the contract was made." Their considered view is shown by was a sufficient ground for a winding of Chetoo and the adjacent country, Mr. Cheshire puls it thus: "It has the fact that whereas the petition is up order.
In delivering julgracht und of all the maritime coast of the been suggested that a contract which presented by contribulories holding | Maugham 3 (as he then was) satd:: Republic of China. The effect of is illegal by the law of the country 1,500 shares it is opposed by 50,000 "The decrees as regards banks whose Proclamations of the Imperial Jap- where I is made cannot be enforced in value, and it is a feruilar and scuts and principal offices were taken anese Government published In in England,
settled principle that a court will not over by the state, must be regarded August and September 1837 is that: Sweeping Statements Interfere with a domestic forum. The Ching Kee Steam Navigation as so crippling the powers of the it is impossible for ships under the "Bold and sweeping statements of It is perhaps not surprising that Company Limited, which hereafter in companies that, it not extinct, they Chinese flag to trade in Chinese this nature are seldon tenable in the majority of the contributories re- this judgment I shuil refer to as "the could no longer exhibit any of the waters without being subject to Im-Private. International Law. This sident either in the province of company" was duly Incorporated and signs of life. At the best the bank,mediate seizure by the naval forces particular one, at any rate, derives Shantung which is in Japanese occu registered as a compuny with limited as a legal corporation, deprived as of Japan. Rability under the laws of the Re- it was of its assets and its corporators, The question whether in these eirille confirmation from the decisions pation or in Duiren in Manchukuo public of China on April 1, 1920. The became no more than a legal con- cumstances a state ot-war exists be usually cited in its favour, since they should desire to trade with the were concerned with cases in which enemy-It-may;-for-aught --1-know head office of the company has at all ception. Its branch in England, if an tween China and Japan has been the lex locl contractus was also the be a profitable undertaking: it is in material Lines, been in Chefoo. The old metaphor may be employed, is raised by Mr. Sheldon on behalf of business of the company is and now a submerged wreck floating on those who oppose the petition. The proper law. The casual place of com- any event more profitabic then hav- rule ralse legnting the company's ships laid up in throughout has been that of ship the ocean of commerce, As a brano various affidavits filed on behalf of pletion couno!
effects.
harbour or forcibly seized by the owners, carriers by sea, and other of the original bank it appears, how
"It Is academle and impracticable Japanese forces. business in connection with shipping, ever, to have or to have had creditors
la suggest that a contract must be Since the year 1920 tie company has in his country, and if the petition Oidavit of Jun-ke Choy filed on regarded as a nullity
High Treason everywhere had a branch office in Hongkong. The before me is properly presented I am March 20 in support of the petition merely because it happens to have
It is clear however from Mr, T. F. company is an unregistered company of opinion both that the bank has refers in paragraph 7 to "the out-been made in a country by the law Lo's affidavit that these activities of so far as the laws of this Colony are used legally to carry on business, break of hostilities between China of which it is legal. But what is the company are by Chinese law concerned, and the jurisdiction in- and that it la just and equitable that and Japan"; his later affidavit of true is that if that country is some-illegal, in fact treasonable and I have voked in this application is that con- it should be wound up. The essential April 3-refers in paragraph 17 10 thing more than the locus contractus, not been referred to any authority ferred on this Court by Section 313 features of the case are, indeed, of "the blockade of Japanese naval if, for instance one of the parties is for the proposition thut, in order to of the Companies Ordinance 1932, the a simple character. A corporation forces exercised against all Chinese resident there, or if the subject matter meet the wishes of a majority of created and established under a vessels"; ond Mr. Matsumoto in his of a contract of sale is situated there, shareholders I should connive at and 313 (1) (b) The circumstances in foreign legal system has been allow-afidavit of May 10 in opposition to then, even though the law of that in fact facilitate high treason by sub- which an unregistered company ed by our laws to carry on business the application likewise refers in country is not the proper law, never- may be wound up are as follows; and to incur debts in this country. parograph 9 to "the outbreak of hos-theless any imperative provision by jects of a triendly power. (1) If the company is dissolved, orporate existence,, have been destroyed
Its corporate powers, it not its cor-tilities between China and Japan." which it prohibits and illegalises, the These considered statements on contract will be recognised by the has ceased to carry on business, or In Its country of origin. is carrying on business only for the be doubled that in such circums
It cannot adnvit are entitled to, and must Engilsh Courts." purpose of winding up its affairs; tances the Court, if it hus Jurisdie- for me sitting as a court of fest receive due weight, but fortunately
Three Arguments (i) If the Court is of opinion that tion, ought to make an order wh'instance, the matter is concluded by It is just and equitable that the will secure as far company should be wound up.
as possible the two recent judgments.
Local Casa
Teh-chun (2,502), Kao Yung-tong (1933) Chancery 745. In that ease consideration of the present relations Ch. D, 321) said: "I regard the de- wrongs done during the
Yu Wei-fan
All of them are of Dalren.
The Judgment
In his Judgment the Chief Justice
sajt:
material provisions of which are:-
313
hostilities
between
the parties to this action are reason- ably explicit on this question. The
(2) Where a company incorporated payment of all just claims against the
corporation," An order was made In the local case of Ford v. Stelri-
for the compulsory winding-up of the 1933 Ruling
upany,
14 Ch.D. 104.
in
the
ordinary courts".
Appeal?
Mr. D'Almada, who followed Mr. Sheldon, hus advanced another argu- ment.
Assuming every argument put for
D'Almada ward by Mr.*Polter, Mr. Mr. Sheldon has submitted three submits that the true remedy is not interesting arguments in opposition a winding up order but on injunction to the making of the order prayed. to restrain the local branch from do- Firstly, he contends, the fact that jing legal acts. That submission outside the Crony which been
man and others, which is unreported, the local branch of the Company is seems to me to disregard two facts, carrying on business in the Colony!
the Full Court of this Colony in precluded by existing circumstances festly, that the company has beca ccases to carry un business in the
the wound up in China and that we are from currying on business in Colony, it may be wound up as an
judgments delivered a carly In his speech in the cure of Lazard Decembly 1937 held that such a state Colony is not in itself a ground for concerned here only with a branch, registered company under this
making winding-up order, and he and, secondly, that, the company Part of the Ordinance notwith-Bros, & Co. v. Midland Bank (1933) of war existed as to justify-sailorselles on the case of In re Middies having 50 representatives here standing that it has been dissolved A.C.209 at 297, Lord Wright says: pence-time articles from refusing or otherwise consed to exist us a "English courts have long since re-
to serve on a voyage into the constat borough Assembly Rooms Co. (1870) except a Japanese corporation whose contract of agency Is illegal by die company under or by virtue of the comised as Juristle persons corpora- waters of China or Japan. Inws of the country under which it tions established by foreign law in vir in England have considered the sume resolved, owing to trade depression,
In that case a company formed for laws of China, there is no one on More recently the Court of Appeal building and letting assembly rooms whom an injunction could be served. wns incorporated.
tue of the fact of their creation and continuance under and by that law question In the case of Kawasaki to suspend work, for more than a Material Facts
Such recognition is said to be by the anthom S.S. Ca. (1930) I.A.E.A. 810 Kisen Kabushki Knisha of Kobe v The facts, 50 for 18 they are comity of nations. This in Henriques,
A shareholder presented a petition material to this application,
where Sir Wilfred Greene M.K., in con bel v. Dutch West India Co. (1728) 2 summerised quite briefly. The Com-Lord Raymond (1632, 1335) the Dutch upholding the decision of the arbitra- for winding-up. He was supported which I have already reached on Mr. pany owns and operates twenty company were permitted to sue In the for who found that the owners were steamships. Eleven of these vessels King's Bench on evidence being given justified in cancelling a charter party
which contained the clause "Charter are chartered to Japanese interests, of the proper instruments whereby ers and owners to have the liberty three are engaged in ordinary ship the
Holland they were of cancelling this charter party if war ping business, and the other six have, effectually
a: corporation breaks out Involving Japan," created since August, 1937, been lying in the Utero". But as the creation depends of his happiness to be able to avoid spoke waters of the Calony. The only local on the act of the foreign state which coming to a conclusion which would activity of the Company during that created them the annulment of the violate nil his feelings of common on Page 07 period has been that one of the act of creation by the same power sense. vessels was from November 1938 to will involve the dissolution and non- February 25, 1919 chartered for use existence of the corporation in the argue that the judgment in each of
Mr. Sheldon has been driven to Queen." as a storage hulk.
eyes of English law. The will of the these cases has relation only to the The Dairen Kisen Kabushiki sovereign authority which created it facts of the particular case. That is Kaliha, a corporation established un- can also destroy it. English low will true, but the point at issue in each of der the laws of Japan, was appointed equally recognise the one, as the these cases was just the one which to set as agents of the Compóny, in other, fact",
I have to decide, and these judgments
law or
Common Sense
1930, and the local representatives of| Mr. Sheldon on this point has re-apply to the facts of the case now that corporation purported to assume ferred to two cases' In re Commercial before me as cogently as they do to duly as agents of the company in Bank of South Australia (1886) 33 the facts of the cases in which they Hongkong as from 1st February 1830. ChD. 174 and In re Matheson were delivered.
The District Court of Chungking, Brothers Ltd. (1884) 27 Ch.D. 225. having been duly authorised in that These cases, irled while the Com-
Sir Wilfred Greene's recourse to behalf by an order of the Supreme pantes Act 1862 was still in force, the touchstone of common sense forti- Court of China, in February 1830 or- decide.only that the English Courts flos me in my conclusion, not only on dered the immediato dlsolution of have Jurisdiction to wind up a branch the authorities which I have clled the Company and appointed three' in England of a foreign company des- but also on my inescapable know
year.
THE POETS IN SUMMER
Having come to the conclusion
Poiler's first ground, it is not strictly Įnecessary · for me to state my views on the second and third grounds, but in case on appeal the Full Court holds that the Arst ground, falls it will obviate the necessity for a rehearing de novo if I record that in my judg
Did you identify all the quotationsment the petion is one which should be granted on all the three grounds advanced, No. 1 was from Spenser's "Faerie
There will be an order for tho winding up of the branch of the company within the furkadletion of this Court. There will be liberty to appeal and the costs of the petitioners will be paid from the local assets of from the company.
(2) Thompson: "The Seasons.” (3) Edward Fitzgerald, From
"Omar Khayyom.”
(4) Coleridge:" "Kubla Khan.” (6) Swinburne: Chorus
"Atalanta."
(0) Frunels Thompson: "A Corym-
bus for Autumn.”
(7) George Meredith: "Love in Chungking Fears
(0) Rossisier Johnson: "Ninety-
nine in the Bhado."
"Tho
(9) Walter James Turner:
Seven Days of the Sun." (19). Georgo William Rusədli: ("A.
E."): The Great Breath." (11) Kehts: "Hyperion."
CHUNGKING, July 25.-The elty has been thrown into. state of alarm to-night as the result of a report that Japanese planes had poured over Telinng in the, direction of the capital. --Trans-Ocean.
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Who's Who In China
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