Tutorial Questions Chapter Twelve Q1 Soundmaker is an Australian company. Musicart is a company regis- tered in Singapore. They made a contract to manufacture and distribute VCDs, under which Soundmaker is the manufacturer and Musicart is the buyer and distributor. The contract contained, inter alia, the follo- wing terms: The contract and all documents relating to the contract are subject to the law of Freetrade Republic; and Disputes between the parties are subject to the non-exclusive jurisdiction of the court of Freetrade Republic. The contract was made in Australia in October 1998 and the payment was made in Singapore by way of cash deposits in two instalments, with one payment in advance and the other at completion of the contract. Videomaker of New Zealand provided a letter of guarantee to Musicart to ensure the Soundmakers’ performance of the contract. The letter of guarantee was signed in Singapore, drafted in English and contained common law terminology. A large quantity of VCDs supplied by Soundmaker were confiscated by the Australian Customs while they were being transported to Singapore by Musicart because they were pirated products. Musicart alleged that it had no knowledge of the act of piracy by Soundmaker and commenced legal proceedings against Soundmaker and Videomaker at the Federal Court of Australia. Both defendants sought to stay the local proceedings in favour of the Court of Free-trade Republic or the Court of Singapore respectively. The Freetrade Republic is not a member of any international conventions on intellectual property protection. Discuss all issues of international commercial law and conflict of laws arising from these facts. Q2 An Australian bank operating in Mainland China concluded a loan agreement with a Hong Kong company investing in China. The loan was guaranteed by three directors and shareholders of the company, who are permanently resident in Hong Kong. The loan agreement was written in the Chinese language and the loan was paid in Beijing. The currency of the loan was Renminbi. The loan contract also stipulated that the interest and the principal of the loan were to be paid in Beijing. The letter of guarantee was concluded in English and submitted to the Hong Kong branch of the Australian Bank. The Hong Kong company assigned its obligation to repay the loan to a Korean company in China without receiving consent of the Australian Bank. The Korean com- pany was bankrupt and unable to repay the principal of the loan. The newly passed Code of Contract Law of China requires the obligator to acquire consent of the obligee before assigning an obligation. The Australian bank commenced legal proceedings against the Hong Kong company and the guarantors at the High Court of Hong Kong. Discuss all issues of conflict of laws arising from these facts. Q3 Foton Ltd is a New Zealand company, which purchased a quantity of garments from Mitro Co of Vietnam, CIF Sydney. The contract of sale contains a clause which provides that all disputes arising from the contract of sale should be submitted to courts in Vietnam. Vietnamese law does not require the exporter to provide certificates of origin, but Australian law requires either the exporters or importers to provide cer- tificates of origin when exporting or importing garments from and to Australia. Foton received the goods in December 1998, but discovered that about half of the containers which were supposed to carry the garments contained chinaware. The bill of lading held by Foton was issued by the master of Expressway, a Panama registered vessel owned by Merchant Fleet Co Ltd, which is a Japanese company. The bill of lading states that X number of containers were shipped in good order and conditions, and specifies the Japanese court as the forum for dispute settlement and Japanese law as the governing law. Two possibil- ities exist: first, the seller packed wrong goods into the containers, and second, the shipmaster mixed up the containers containing garments and toys. Suppose the Japanese law adopts a limitation on the carrier’s liability lower than the limit set out in the Hague-Visby Rules as adopted in Australia. Advise Foton of the issues of international commercial law and of con- flict of laws. Q4 Advancorp is a US registered company, which holds a patent registered in the United States over a design of motherboard for laptop comput- ers. In May 1995, it granted an exclusive right to use the patent in the area including Australia and New Zealand to Austech Co Ltd, a company registered in Australia. The said exclusive right means that Austech was permitted to use the patent exclusively within the territo- ries of Australia and New Zealand, but the right was not assignable. The licensing agreement contained an arbitration clause, stating that all disputes arising from the dispute should be submitted to the London Court of Arbitration. In September 1996, Austech concluded a licens- ing agreement with Hontech, a Hong Kong registered company, purporting to grant the right to use the said patent to Hontech in the area consisting of Hong Kong, Mainland China and Taiwan. The licens- ing agreement contained a choice of law clause, which chose Australian law as the governing law of the dispute. Hontech was sued in Hong Kong in July 1997 by Advancorp for violating the latter’s intellectual property. In December 1997, Hontech was sued in Hong Kong by Austech for breach of the licensing agreement, because Hontech had stopped paying licensing fees to Austech payable on a quarterly basis since July 1997 when Advancorp sued it in Hong Kong. Discuss all issues of international commercial law and conflict of laws arising from the facts. Q5 Nisson Shipping Co Ltd is a company registered in Japan. It provides shipping services to companies engaged in international trade. It concluded a contract of carriage in June 1996 with Hongang Co Ltd, a Hong Kong registered company, to carry a quantity of fertiliser from South Korea to India. The contract contained a transhipment clause, which permitted the carrier to tranship or sub-bail the cargo as the carrier deemed necessary. Nisson Shipping engaged the services of the Expressor which was a vessel owned by a Taiwanese company. The vessel ran aground in October 1996 near the coasts of PRC and both the cargo and the vessel amounted to a total constructive loss. The bill of lading issued by the Taiwanese company contained a choice of law clause which specified Taiwanese law as the governing law; and a choice of forum clause which gave non-exclusive jurisdiction to the Taiwanese court. Taiwan is a not a member of the Hague-Visby Rules, but Hong Kong is. Suppose under the Maritime Law of Taiwan, the maximum liability of compensation for the carrier is US$10 per kg, but under the relevant law of Hong Kong the maximum liability of compensation for the carrier in the same circumstances is US$20 per kg. Also suppose that Taiwanese law sets out a limitation period of 12 months and Hong Kong law sets out a limitation period of 18 months for the same claim. Hongang Co Ltd sued Nisson Shipping in a Hong Kong court in March 1998. Nisson Shipping sought to rely on the relevant clauses contained in the bill of lading issued by the Taiwanese company. Comment on the relevant conflict of laws issues arising from the above facts.
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