SOUTH CHINA MORNING POST
27th July,
continuance under and by that law. Į Such recognition is said to be by the comity of nations. This in Henriques v. Dutch West India Co. (1728) 2 Lord Raymond (1532, 1535) the Dutch company were permitted to sue in the King's Bench on evidence being given of the proper instruments whereby the law of Holland they were effectually created a corporation there. But as the creation depends on the act of the foreign state which created them the annulment of the act of creation by the same power will involve the dissolution and non- existence of the corporation in the eyes of English law. The will of the sovereign authority which created it can also destroy it. English law will equally recognise the one, as the other, fact".
Ch.D. 225.
Mr. Sheldon on this point has re-i ferred to two cases In re Commercial Bank of South Australia (1886) 33 Ch.D. 174 and In re
Matheson Brothers Ltd. (1884) 27 These cases, tried while the Com- panies Act 1862 was still in force, decide only that the English Courts have jurisdiction to wind up a branch in England of a foreign company des- pite the pendency of foreign liquida- tion. In the latter case Kay J. says "What is the effect of the winding up order which it is said has been made in New Zealand? This court upon principles of international comity, would no doubt have great regard to that winding up order and would be influenced thereby, but the question of jurisdiction is a different question, and the mere existence of a winding up order made by a foreign court does not take away the right of the courts of this country to make winding up order here, though it would no doubt exercise an influence upon this court in making the order." Intermediate Stage
a
Here we have not a dissolution as in the two cases to which Mr. Potter has referred me but an intermediate stage, an order for compulsory wind- ing up.
I do not think that that radically alters the position. The Company in China is in process of dissolution, and the circumstances are such that in my judgment this court ought to make an order for the winding up of the local branch of the Company.
The second and third of Mr. Pot- ter's grounds necessarily involve a consideration of the present relations between China and Japan.
between
In July 1937 hostilities these two countries broke out, and at this date are still raging.
As a result of these hostilities the Japanese are in effective occupation of Chefoo and the adjacent country, and of all the maritime coast of the Republic of China. The effect of Proclamations of the Imperial Jap- Government published in August and September 1937 is that it is impossible for ships under the Chinese flag to trade in Chinese waters without being subject to im- mediate seizure by the naval forces of Japan.
anese
The question whether in these cir- cumstances a state of war exists be- tween China and Japan has been raised by Mr. Sheldon on behalf of those who oppose the petition. The various affidavits filed on behalf of the parties to this action are reason- ably explicit on this question. The affidavit of Jun-ke Choy filed March 29 in support of the petition refers in paragraph 7 to "the out- break of hostilities between China and Japan"; his later affidavit of April 3-refers in paragraph 17 to "the blockade of Japanese naval
on
(2)
F
1939.
forces exercised against all Chinese vessels"; and Mr. Matsumoto in his affidavit of May 16 in opposition to the application likewise refers in paragraph 9 to "the outbreak of hos- tilities between China and Japan."
Recent Cases
on
These considered statements affidavit are entitled to, and must receive due weight, but fortunately for me sitting as a court of first instance, the matter is concluded by two recent judgments.
as
as
In the local case of Ford v. Stein- man and others, which is unreported, the Full Court of this Colony in judgments delivered early Decembery 1937 held that such a state of war existed as to justify sailors on peace-time articles from refusing to serve on a voyage into the coastal waters of China or Japan.
More recently the Court of Appeal in England have considered the same question in the case of Kawasaki Kisen Kabushiki Kaisha of Kobe v. Hantham S.S. Co. (1939) I.A.E.A. 819 where Sir Wilfred Greene M.R., in upholding the decision of the arbitra- tor who found that the owners were justified in cancelling a charter party which contained the clause "Charter- ers and owners to have the liberty of cancelling this charter party if war breaks out involving Japan," spoke of his happiness to be able to avoid coming to a conclusion which would violate all his feelings of common-
sense.
Mr. Sheldon has been driven to argue that the judgment in each of these cases has relation only to the facts of the particular case. That is true, but the point at issue in each of these cases was just the one which I have to decide, and these judgments apply to the facts of the case now before me as cogently as they do to the facts of the cases in which they were delivered.
Common Sense
Sir Wilfred Greene's recourse to the touchstone of common sense forti- fies me in my conclusion, not only on the authorities which I have cited but also on my inescapable know- ledge of conditions on the China coast, that a state of war exists be- tween China and Japan, and has existed at all times material to this application.
In January 1939 the local office of the Company was closed and its Chinese employees departed from the Colony. On February 1, 1939 the Dairen Kisen Kabushiki Kaisha pur- ported to act as agents of the com- pany in this Colony.
In these circumstances can it be 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 filed a lengthy affidavit setting out in the clearest terms the common law and statutory provisions govern- ing trading with an enemy of the Chinese Republic.
case.
No counter affidavits have been filed and I therefore accept Mr. Lo's statements as an accurate opinion on the legal principles applicable to this According to Chinese law the action of the Company in chartering ships to Japanese interests and in appointing Japanese agents is illegal and criminal and all such contracts are not only void but illegal.
Can it then be said that the Com- pany is carrying on business in the Colony when its ostensible agents purport to act under a contract which is illegal by the law of China which is clearly the proper law?
The answer must be no.
The parent company in China is in process of compulsory winding up and the local branch is without lawful representation in the Colony. What then is the position of this Court?
67
To be cont'd.