Expert commentary: Judicial review of vessel detained in Hong Kong for breach of UN sanctions against North Korea

This article is authored by Edward Liu and Maggie Lee of Hill Dickinson Hong Kong and first appeared in Lloyd’s Shipping and Trade Law (Informa Law) on 13 March 2020 and has been reproduced here with kind permission.

This article forms part of a series of articles looking important cases which were seen before the Hong Kong courts in 2019, which you can find here.

Win More Shipping Ltd -v- Director of Marine [2019] HKCFI 1137; [2019] 2 Lloyd’s Rep 420

This was an application for judicial review made by the registered owner of a Hong Kong-registered motor tanker, “LIGHTHOUSE WINMORE” to challenge: (1) the decision made by the director of marine to close the registration of the vessel; and (2) the failure of the director to make a request to the United Nations Security Council Sanctions Committee for the release of the vessel from detention pursuant to para 9 of UN Security Council Resolution 2397 (2017).

At all material times, the vessel’s class was provided by BV, a PRC classification society. Its safety management certificate, international ship security certificate and MLC statement of compliance (collectively referred to as the Statutory Certificates) were provided by BV.

The vessel was alleged to have violated sanctions imposed on North Korea by engaging in illicit ship-to-ship transfer of petroleum products to a North Korean vessel. Since then, the Statutory Certificates had been withdrawn by BV. The director then indicated an intention to close the registration of the vessel and the vessel was detained pursuant to Resolution 2397.

The owners argued that: (1) the decision had no factual basis supporting the closure of the vessel’s registration; and (2) the director had a statutory duty under article 94 of the United Nations Convention on the Law of the Sea 1982 (UNCLOS) to make a request to the Sanctions Committee for the vessel’s release.

The owners’ application for judicial review was dismissed for the following reasons.

The owners’ application for judicial review of the decision was premature. While the director intended to close the registration of the vessel, the vessel was not yet deregistered. Judicial review was generally a remedy of last resort. An applicant should normally exhaust all alternative remedies to challenge a decision before applying for judicial review of that decision.

In this case, the decision was issued pursuant to section 64(4) of the Merchant Shipping (Registration) Ordinance, Cap 415. Under section 64(3) to (5) of the Ordinance, where the director, having regard to the matters mentioned in its section 22(3)(a) or (b) or (4), considered that it would be inappropriate for the ship to continue to be registered, the director should serve a notice on the shipowner, and after the end of a period of 90 days beginning with the date of service of the notice, direct that the ship’s registration be closed unless satisfied that it would be inappropriate to do so by any representations made by or on behalf of the owner or demise charterer within the period.

The purpose of the notice under section 64(4) was to give the shipowner an opportunity to persuade the director that it would be inappropriate for the ship to be deregistered, by proving to the director that the condition of the ship satisfied the conditions in section 22(3)(a) or (b) of the Ordinance (i.e. safety or risk of pollution, or the safety, health and welfare of persons employed or engaged in any capacity on board the ship).

Since the decision was not a final decision but a ‘mere intention’ to deregister the vessel and the owners had not exhausted the alternative remedy under section 64(4) of the Ordinance, the owners’ application was premature and refused by the court.

The court also held that the director did not have any statutory duty under article 94 of UNCLOS to make a request for the release of the vessel. First, article 94 of UNCLOS did not impose a duty on a state to make a request for the release of a vessel flying its flag pursuant to para 9 of Resolution 2397. The duties imposed on the flag state by article 94 related to the administrative, technical and social matters over the ship, including matters of marine safety and welfare of the crew, but had nothing to do with matters such as seeking relief from sanctions imposed by resolutions of the Security Council.

Secondly, UNCLOS was an international treaty which did not give rise to any legal rights or obligations directly enforceable in the domestic court. Paragraph 9 of Resolution 2397 contemplated that a request would be made by a ‘flag dtate’.

The HKSAR was not a ‘state’ nor the ‘flag state’ of the vessel, and had no standing to make any relevant request under that paragraph. Such request could only be properly made by the central people’s government. The making of a request to the Committee pursuant to para 9 of Resolution 2397 was a matter of ‘foreign affairs’ relating to HKSAR, and thus, a matter that lay with the central people’s government to the exclusion of HKSAR under article 13(1) of the Basic Law, unless it was something which the central people’s government authorised the HKSAR to conduct on its own in accordance with the Basic Law article 13(4).

Finally, the court rejected the owners’ alternative argument that the director should have transmitted the applicant’s request to the Committee via the PRC government. It was the view of the judge that such a request was entirely a matter for the central people’s government.