Between: Taiping Trustees Ltd (on its Own Behalf and on Behalf of Valley Stone Industry Fund, L.P. (in Voluntary Liquidation)) Plaintiff v Valley Stone Industry Fund Ltd (in its Own Capacity and in its Capacity as General Partner of Valley Stone Industry Fund, L.P. (in Voluntary Liquidation)) First Defendant Huarong International Asset Management Ltd Second Defendant Huarong International Financial Holdings Ltd Third Defendant

• Jurisdiction: Cayman Islands
• Judge: Justice David Doyle
• Judgment Date: 29 January 2024
• Docket Number: CAUSE NO. FSD 0323 OF 2022 (DDJ)
• Court: Grand Court (Cayman Islands)

Between:

Taiping Trustees Limited (On its Own Behalf and on Behalf of Valley Stone Industry Fund, L.P. (In Voluntary Liquidation))

Plaintiff

and

Valley Stone Industry Fund Ltd (In its Own Capacity and in its Capacity as General Partner of Valley Stone Industry Fund, L.P. (In Voluntary Liquidation))

First Defendant

Huarong International Asset Management Limited

Second Defendant

Huarong International Financial Holdings Limited

Third Defendant

Before:

The Hon. Justice David Doyle

CAUSE NO. FSD 0323 OF 2022 (DDJ)

IN THE GRAND COURT OF THE CAYMAN ISLANDS

FINANCIAL SERVICES DIVISION

HEADNOTE

Determination of various jurisdictional issues including appropriate forum and whether a stay of the Cayman proceedings should be granted in favour of proceedings progressing in Hong Kong — consideration of relevant evidence, submissions and law and balancing various competing connecting factors, the irrelevance of public policy considerations and the use of the word “exorbitant”

Appearances:

Tom Lowe KC, Christopher Levers and Corey Byrne of Ogier for the Plaintiff

Vernon Flynn KC, Andrew Johnstone, Luke Fraser and Moesha Ramsay-Howell of Harney Westwood and Riegels for the Defendants

INDEX

Subject	Page
Introduction	3
The law on connecting factors	3–7
Background	7–8
The September 2023 Application	8
The Claims	8–11
The evidence in respect of the connecting factors	11–16
The case through the eyes of the parties	17–18
Law on public policy in the context of jurisdictional issues	19–24
The use of the word “exorbitant”	25–26
The continuing importance of the locality of the parties, documents and witnesses in the modern world of relative ease of travel and technology	26
The proper or necessary party gateway	27
Determination	27
General	27–28
The Cayman Fund and the LPA	28
The overwhelming Hong Kong connecting factors	28–29
Location of parties, documents and witnesses	29
Chinese and English language factors	29–31
Proper law of contracts	31–32
Place of commission of torts	32–33
“Public Policy” arguments	33–36
Late authorities	36–37
Oral arguments not foreshadowed in skeleton arguments	37–38
Implied submission to the jurisdiction?	38
Implied adoption of Cayman non-exclusive jurisdiction clause?	38–41
Submission by conduct?	42
The centre of gravity of the dispute	42–44
Defendants' undertakings and concession on standing	44
The Orders	44
Ancillary applications	44–45

Introduction

1 The jurisdictional issue presently in dispute between the parties which arises for this court's determination is whether the substantive dispute between the parties should be heard and determined by the Grand Court of the Cayman Islands or the High Court of Hong Kong.

2 My primary task is to identify the forum in which this case can be suitably tried for the interests of all the parties and for the ends of justice. The “natural” or appropriate forum is that with which the case has the most real and substantial connection (see for example Spiliada Maritime Corporation v Cansulex Ltd [1987] 1 AC 460; Insurco International Limited v Gowan Company 1994–95 CILR 210; Insurco International Limited v Voluntary Purchasing Group 1999 CILR 532; Brasil Telecom SA v Opportunity Fund 2008 CILR 211; Altimo Holdings and Investment Ltd v Kyrgyz Mobil Tel Ltd [2011] UKPC 7; [2012] 1 WLR 1804; Lungowe v Vedanta Resources plc [2019] UKSC 20; [2020] AC 1045, SatFinance Investment Limited v Athena Art Finance Corp [2020] EWHC 3527 (Ch), FS Cairo (Nile Plaza) v Brownlie [2021] UKSC 45 and Loudmila Bourkakova v Hermitage One Limited [2022] EWHC 1269 (Ch)). For reasons which follow I have decided that Hong Kong is that forum.

The law on connecting factors

3 Lord Neuberger in VTB Capital pic v Nutritek International Corps [2013] UKSC 5; [2013] 2 AC 337 at paragraph 81 in respect of a court determining an appropriate forum procedural issue stated that “where it is common ground that the parties would have a fair trial in the competing jurisdictions, the exercise will normally involve the court weighing up a number of different factors, and deciding where the balance lies”. In the case presently before this court it is not submitted that the parties cannot receive a fair trial in the Cayman Islands or in Hong Kong. The difference between the parties is whether their dispute should be determined in the Cayman Islands or in Hong Kong.

4 As required by the authorities I have conducted a summary examination of the connecting factors between the case and the Cayman Islands and Hong Kong. I have considered all the relevant circumstances and the connecting factors including those of practical convenience such as accessibility to the courts in each jurisdiction for parties and witnesses and any availability of a common language so as to minimise the expense and potential for distortion involved in the translation of evidence. Although these factors are important, they are not necessarily conclusive (see Lord Briggs at paragraph 66 of Lungowe).

5 Connecting factors also include matters such as the system of law which will be applied to decide the issues, the place where the wrongful acts or omissions occurred and the place where the harm occurred.

6 At first instance in VTB Arnold J succinctly stated that the court will consider the personal connections which the parties have to the countries in question; the factual connections which the events relevant to the claim have with those countries; factors affecting convenience or expense such as the location of the witnesses of documents and the applicable law. The consideration of these factors as relevant factors was not criticised at appellate level.

7 Chadwick P in AHAB v SAAD 2010 (2) CILR 289 at page 322 described former Chief Justice Smellie's approach, in the context of an application to set aside an order for service out of the jurisdiction and grant a stay, in respect of the applicable law and consideration of the competing factors advanced by the parties, the weight to be attached to such factors and the determination of which side the scales come down as “a textbook example of the correct approach.” I therefore make no apology for considering that case in some detail.

8 In that case AHAB brought claims against Mr Al Sanea, a resident in Saudi Arabia, and companies controlled by him in respect of an alleged fraud. The Grand Court (Henderson J) granted leave to serve the writ on Mr Al Sanea out of the jurisdiction and he subsequently applied to discharge the service out order. In the alternative he sought an order that the proceedings against him be struck out or stayed on forum non conveniens grounds, submitting that Saudi Arabia was the appropriate forum for the trial of the issues. Several of the defendant companies incorporated in the Cayman Islands supported a stay. The Grand Court (Smellie CJ as he then was) declined to set aside the service court order and dismissed the applications for a stay. However it held that Saudi Arabia, if an available forum, might be the more appropriate forum for the trial of the underlying allegations of fraud against Mr Al Sanea and ordered a temporary case management stay to enable a Saudi Committee to reach a conclusion and or allow AHAB to petition the Saudi courts. Allowing the appeal in part it was held that the dismissal of the application to discharge the service out order would stand. The former Chief Justice had taken the correct approach and applied the correct test. He did not fall into error of thinking that his finding that Mr Al Sanea was a necessary or proper party was determinative of the question of the appropriate forum, as had been submitted before him. Rather he had correctly held that Mr Al Sanea being a necessary and proper party went a long way to “virtually concluding” the issue, but nonetheless needed to be considered alongside other relevant competing factors. The weight to be given to the various competing factors was a matter within the judge's discretion and with which the appeal court would not interfere on the appeal. The court allowed AHAB's appeal against the temporary case management stay.

9 Chadwick P at paragraph 20 stated that it was necessary “to identify the claims in the action and the issues that are likely to require determination at a trial.” He therefore went through the statement of claim in some considerable detail.

10 At paragraph 67 Chadwick P referred to the former Chief Justice's reference to the observations of Cooke J in Credit Agricole Indosuez v Unicof Ltd [2004] 1 Lloyd's Rep 196 at paragraph 19 that “the fact of continuing proceedings in England against other defendants on the same or closely allied issues virtually concludes the question, since all courts recognize the undesirability of duplication of proceedings …”. In the case presently before the court if a stay is granted there would, of course, be no duplication. All the claims could be dealt with in Hong Kong together at the same time, as indeed they could be if dealt with in the Cayman Islands so the duplication point in the circumstances of this case is of no real relevance.

11 The “text book” approach of the former Chief Justice is clear from the judgment. The former Chief Justice referred to various factors pointing to Saudi Arabia as the more appropriate forum including:

• (1) “The most central and many of the other relevant witnesses are in or near Saudi Arabia”;

• (2) “The relevant communications between the central figures would have been in the Arabic language, although … they are to varying degrees, competent in the English language and apparently conducted commercial transactions in English. There would therefore inevitably be the need for translation of documentation from Arabic to English were Cayman to...