Shagang Shipping v HNA Group Company: Guarantees, bribery and torture evidence

5 August, 2020

The Supreme Court has handed down judgment in Shagang Shipping v HNA Group Company.

Shagang claimed against HNA as guarantor of a long-term charterparty. HNA defended the claim on the basis that the underlying charterparty for the vessel had been procured by bribery of HNA’s employees and was unenforceable. The defence was founded on confession evidence from the employees. Shagang contended that the confessions had been procured by torture and were inadmissible.

The trial Judge found that the allegations of bribery were not proven. He also decided that he did not need to rule on the admissibility of the confession evidence, but that torture could not be ruled out.

The Court of Appeal allowed HNA’s appeal on the basis that the Judge failed to ask and answer the correct legal question. The Judge fell into legal error in failing to take into account all relevant matters and excluding irrelevant matters, including that torture could not be ruled out. The Court of Appeal found that if torture had not made out on the balance of probabilities, the court must disregard the possibility that the evidence was obtained by torture, even if it was a serious possibility.

The Supreme Court allowed the appeal and restored the judgment. The Supreme Court held that:

  1. The Judge did not need to decide, and did not decide, whether torture had been proved. Even if he had decided the point, there would be no inconsistency in his approach. The facts to be taken into account are not limited to facts proven to the civil standard. There is no rule that if an allegation of torture has not been proved, it must be ignored.
  2. The Judge properly took the confession evidence into account. He therefore considered it unnecessary to consider torture and the approach taken was legitimate. The Judge addressed the weight of the confession evidence and his conclusion was not unreasonable or unsustainable. Although it would have been more satisfactory to address the evidence in more detail, it was addressed and there was no error of law justifying the remission of the case.

In reaching its conclusions, the Supreme Court also articulated the principles that apply when considering the exclusionary rule (which excludes torture evidence from civil proceedings) and in relation to principles of admissibility of civil evidence generally.

Edward Brown, with Jessica Boyd and Isabel Buchanan of Blackstone Chambers, instructed by Nathan Searle of Hogan Lovells International LLP, acted for HNA.

The Judgment is available here.