Shagang Shipping Company Ltd v HNA Group Company Ltd

Number: [ Neutral Citation IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH DIVISION COMMERCIAL COURT 2016] EWHC 1103 (Comm) Case No: CL-2012-000243 Royal Courts of Justice Strand, London, WC2A 2LL Date: 16/05/2016 Before : MR JUSTICE KNOWLES CBE - - - - - - - - - - - - - - - - - - - - - Between : Shagang Shipping Company Limited (in liquidation) - and - HNA Group Company Limited Claimant Defendant - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Mr Luke Parsons QC and Ms Caroline Pounds (instructed by Holman Fenwick Willan LLP) for the Claimant Mr Philip Edey QC and Mr Alexander Wright (instructed by Wikborg Rein LLP) for the Defendant Hearing dates: 26, 27, 28, 29 January and 1, 2, 3, 4, 5 and 9 February 2016 - - - - - - - - - - - - - - - - - - - - - Judgment Mr Justice Knowles : Introduction 1. 2. 3. 4. 5. In 2008 Grand China Shipping Co Ltd (“Grand China”) chartered a Cape size bulk carrier, the Dong-A Astrea (“the Vessel”) from the Claimant, Shagang Shipping Co Ltd (“Shagang”). A few months earlier, Shagang itself had chartered the Vessel from head owners, Dong-A Tanker Corporation. The Vessel was then under construction and would be newly-built at delivery into the charterparties in 2010. The charterparties were for a period of 82-86 months. The charterparty between Shagang and Grand China (“the Charterparty”) was dated 6 August 2008. By a guarantee dated the same date (“the Guarantee”) Grand China’s obligations under the Charterparty were guaranteed by the Defendant, HNA Group Company Ltd (“HNA”). Grand China and HNA were in the same group of companies, but Grand China was new. HNA, on the other hand, was well established and the ultimate parent of Grand China. In the event Grand China failed to comply with its obligations under the Charterparty. It was in repudiatory breach and the Charterparty was terminated in 2012 on Shagang accepting that repudiatory breach. Shagang looked to HNA for payment under the Guarantee, but HNA declined to pay. It is now agreed that, subject to determination at this trial of the remaining allegations between the parties, the sum due is US$68,641,712. There is a small admitted money counterclaim. The remaining allegations between the parties are of a very serious nature. It is HNA’s case, argued by Mr Philip Edey QC and Mr Alexander Wright of Counsel, that the Charterparty was procured by bribery and is therefore unenforceable. The allegation of bribery is founded on confession evidence. It is Shagang’s case, argued by Mr Luke Parsons QC and Ms Caroline Pounds of Counsel, that the confession evidence was obtained by torture and is therefore inadmissible in legal proceedings. The alleged bribery 6. 7. 8. Mr Shen Wenfu (“Mr Shen”) was general manager of Shagang. Mr Xu Wenxhong (“Mr Xu”) also worked for Shagang. Mr Xu knew Mr Jia Tingsheng (“Mr Jia T”) from college. Mr Jia Hongxiang (“Mr Jia H”) was Mr Jia T’s father and a general manager or chairman in the same group of companies as Grand China and HNA, including Grand China itself. It is HNA’s case that in 2008 payment of RMB 300,000 was made in two tranches by Mr Xu, at the instigation of Mr Shen, to Mr Jia T and in order to induce Mr Jia T to persuade Mr Jia H to approve the Charterparty. 9. Haikou is the capital of Hainan province in the People’s Republic of China. Meilan is a district within Hainan. On 17 February 2014 the Meilan Sub-Bureau of the Public Security Bureau for Haikou (“PSB”) wrote to HNA in reply to a letter from HNA. The reply included these passages: “In October 2013, we filed a case regarding [Mr Jia H’s and Mr Jia T’s] suspected offences and took criminal coercive measures accordingly. They confessed. And [Mr Jia T] confessed that: in July and August, 2008, during the negotiation of the … charter party between [Grand China and Shagang], took bribes in amount of 300,000 RMB from [Mr Xu] … and persuaded his father [Mr Jia H] into approving this deal according to Mr Xu’s request. At last, [Mr Jia H] approved this deal. In December 2013, our Bureau opened file for [Mr Xu] and took criminal enforcement measures against him on grounds of suspected crime of offering [b]ribery to non-state staff, and meanwhile he admitted the fact that he had bribed [Mr Jia T] with RMB 300,000, and claimed that he did so because he was instructed by [Mr Shen]. … On 15th February 2014 [Mr Shen] … was filed and placed criminal enforcement measures, and [Mr Shen] confessed that he had [Mr Xu] to bribe [Mr Jia T and Mr Jia H] with RMB 300,000 …” Evidence at trial 10. There was little first-hand oral evidence available at the trial. None of Mr Xu, Mr Jia T, Mr Jia H or Mr Shen was available to give oral evidence at trial, and nor was any officer from the PSB. 11. Mr Zhang Jie (“Mr Zhang”) of Shagang gave oral evidence, but he was not at Shagang at the time of the alleged bribe. Mr Xu’s lawyer from August 2014, Mr Guo Zhilain (“Mr Guo”) gave oral evidence and I refer to this below. Mr Wu Lie (“Mr Wu”), General Manager of Audit and Legal Affairs at HNA gave oral evidence and I refer to this below. 12. 13. I am invited by HNA to draw adverse inferences against Shagang from, in particular, Mr Xu’s absence at trial and from the absence of his wife, Mrs Li Xueping (“Mrs Xue”) at trial. I decline to do so. I am unpersuaded that Shagang could realistically be expected to procure their presence at this trial. Shagang is now in liquidation and Mr Xu is no longer employed by it. I am unpersuaded that the reason for their absence is because, as HNA suggested, they fear the truth. The documentation available was substantially incomplete, and the reliability was challenged of some of what there was. To some extent it is a position that it is only realistic to expect in a case of this nature. HNA criticised Shagang’s approach to disclosure and suggested that Shagang’s witnesses had deliberately withheld or deleted documents, but I am not persuaded that that was the case. 14. 15. 16. 17. The documentation included some documentation from records of the PSB or from records of the relevant Criminal Court in China. Assistance given in response to official letters of request from England to China helped in making this documentation available, and the assistance given is appreciated by this Court. The focus was on Mr Xu; there was substantially less of this documentation in relation to Mr Jia T, Mr Shen and Mr Jia H. Both Shagang and HNA adduced a substantial quantity of expert evidence at trial. This included expert evidence in relation to Chinese criminal law and procedure, and also in relation to experience in China of confession evidence. This expert evidence took the form of written expert reports, which often relied on further published reports. In the event neither party sought to cross examine any expert. I have considered the expert evidence and have done so with the assistance of lists (provided at my invitation) of key propositions that each party seeks to derive from that expert evidence. I have found the expert evidence valuable. However there are two important limitations. First, its value at this trial is limited to context or background. In the end it is the facts of the present case that matter for the decisions that I have to reach. Second, the issues addressed by the experts are issues that would benefit from access to far more materials and information than can realistically be available to this trial. A substantial proportion of the evidence at trial, documentary and oral, was in Chinese in the original, and translated into English. Many of the quotations in this judgment (including from the law of the People’s Republic of China) are translated from original text in Chinese. I am grateful for the contribution made by the translators and interpretors. Commercial context 18. 19. 20. 21. 22. August 2008 was at the height of the relevant chartering market. It was an active market in which owners (including head charterers like Shagang) held the dominant bargaining position. The rates for the Vessel, agreed in the Charterparty, were in line with the market. The points just made were well established by factual and expert evidence and not seriously in issue between the parties. The financial crisis in and from Autumn 2008 would change things dramatically. By 2010 market rates were very considerably lower than those seen in August 2008. HNA is of major commercial and economic importance to Hainan and Haikou. Some clear, straightforward propositions to this effect were put to Mr Wu by Mr Parsons QC. Making every allowance for the language difference, I regret that I found him here (and in other parts of his evidence) choosing to attempt to avoid giving a straightforward answer. Approval of the Charterparty within Grand China and HNA 23. 24. An initial requirement for board approval was “lifted” within Grand China. The Charterparty was not submitted for a legal and financial review within HNA, although that had been required by the Vice Chairman of HNA. The Charterparty did go through various levels of approval within Grand China, including, among others, Mr Jia H. It was also approved by a main board director of HNA (and Chairman of Grand China’s immediate parent Grand China Logistics Holding Company Limited), and also by the Chairman of HNA. Confession by Mr Xu 25. The Chinese criminal process, by Article 3 of the Criminal Procedure Law 2012 (“the 2012 Law”) has three parts. First, “public security authorities are responsible for criminal investigation, detention, execution of arrest warrants and interrogation”. Second, “People’s Protectorates are responsible for procuratorial supervision, approval of arrests, investigation of cases directly accepted by procuratorial authorities, and initiation of public prosecution”. Third, “People’s Courts are responsible for trial and sentencing.” 26. According to an interrogation record, Mr Xu was questioned overnight on 22 and 23 January 2014 by officers of the PSB at Meilan after he had been taken there from Shanghai. 27. Mr Xu gave, according to the interrogation record, an account of being asked by Mr Shen to use his relationship with Mr Jia T to cause Mr Jia H to charter the Vessel from Shagang as soon as possible. According to the interrogation record, Mr Xu said that Mr Shen produced “favor fees” of RMB 100,000 in cash and Mr Xu delivered this to Mr Jia T in a single instalment. 28. 29. 30. On the face of the interrogation record, the account given by Mr Xu was given voluntarily. According to the record, Mr Xu said he was willing to confess his involvement “for leniency”. A document entitled “confession note” dated 24 January 2014 and in Mr Xu’s name, gives an account with different details. The note refers to payments of RMB 300,000 in two instalments by Mr Xu to Mr Jia T, one instalment before and one after the signing of the Charterparty. A later interrogation record dated 4 March 2014 records Mr Xu being asked about the discrepancy in amount and his giving the answer that he was trying to escape punishment. His interrogator was the same officer who had been the “recorder” in January. According to this March interrogation record, Mr Xu was also asked why he and Mr Shen would want to bribe Mr Jia T to have his father charter the Vessel if the pricing of the Charterparty was (as he suggested) reasonable. His answer is recorded as being to the effect that it would have been difficult to charter quickly. 31. The March record concluded with Mr Xu saying: “I made false statements in my previous confessions. Being educated by the police officers, I full realised my crimes. I am willing to truthfully confess my problems, for leniency. And I would like to give my appreciation to the Public Security Bureau for its lawful acts and protection of my rights.” 32. Mr Xu had no lawyer or representative present at the interrogations in January and March. On 21 August 2014 Mr Xu was interviewed at the Haikou City Detention Centre by Mr Guo, a lawyer retained by his wife, Mrs Xue. Mr Guo made notes of this interview. 33. As I have mentioned, Mr Guo also gave evidence at this trial. I found myself able to accept substantial parts of his evidence, though there were other parts that I found unconvincing. At times my ability to place confidence in him was damaged: an example was in his explanation about the inclusion of an untrue allegation, in a bail application for Mr Xu, that Mrs Xue was pregnant. Overall, I found a pragmatic man who had tried to work for Mr Xu and Mrs Xue in difficult circumstances. I am quite satisfied that there is nothing in HNA’s suggestion that Mr Guo was looking to help Shagang. There were times in his representation of Mr Xu when Mr Guo protected his own position. That said, Mr Guo did not have to attend this trial and it is to his credit that he was prepared to do so. 34. I do not doubt the essential accuracy of the interview notes Mr Guo made. Mr Xu maintained that he was innocent. He was asked by Mr Guo about when he was brought there by the PSB and what the charge was. He gave the following answer: “I was brought to Hainan on 23rd January this year. Initially there weren’t any charges. I was taken to the basement of the [PSB]. It was around 11pm and I was definitely there for over 48 hours. I came out on the afternoon of the 26th [January]. The least serious methods used against me were fists and truncheons. I was stripped of my clothes and cold air was blown on me. They covered my mouth with their hands after water was poured into me. I was also burnt with a cigarette butt. … At first I said that there had been no such thing, but then they tortured me and I couldn’t take it any longer. On the morning of 24th [January], I said I had paid out 100,000 yuan. I made this up. On the afternoon of 24th [January] they tortured me again and poured water into me. I couldn’t bear it any more. They told me it had been 300,000 and it had been paid in two batches – 150,000 each time. In the end, I had no other way out but to say what I was told to say. … … There was a camera there, but they controlled whether it recorded or not.” 35. Asked by Mr Guo “Truthfully, did you bribe [Mr Jia T] or not?” Mr Xu is recorded as answering: “I definitely never did it. At that time, the market was dominated by ship-owners and we didn’t have to ask any favours of him. They had to ask help from us. Their company was a new company and we were an established company.” 36. 37. 38. 39. 40. At a further interview on 15 September 2014 Mr Xu told Mr Guo again that he had been tortured. An “urgent report” was prepared in the name of Mr Xu’s wife, exhibiting the two interview records. Between these two interviews, on 22 August 2014 an application for bail was made by Mr Guo on behalf of Mr Xu on the basis that Mr Xu had given a true account in his confessions and repented. Mr Guo was later to write in an opinion that he asked Mr Xu to consider changing his account in light of the torture to which he had referred, but Mr Xu had “expressed his worries about being beaten or pressed into water once more and refused to do so at the stage of investigation”. There are notes of further interviews with Mr Xu on 17 and 19 December 2014 by a colleague from Mr Guo’s firm. According to these, Mr Xu explained a decision to adhere to his earlier account accepting guilt because it would lead to a much reduced sentence than if he contested the allegations and was found guilty. There is sufficient material to show that, according to Mr Xu, this reflected what had been indicated to him by officers of the PSB. It would not have been wrong for the officers to have given this type of indication where they did so in accordance with the relevant law. Article 118 of the 2012 Law provides in part “When interrogating a criminal suspect, the investigators shall inform the criminal suspect of the legal provisions on leniency if a criminal suspect confesses his or her crime.” Article 67 of the Criminal Law of the People’s Republic of China (“the Criminal Law”) provides in part: “A criminal suspect who truthfully confesses to his crime may be given a lighter penalty … and may be given a mitigated penalty if any especially serious consequence is avoided by his truthful confession.” However in the present case what matters is whether Mr Xu’s decision to accept guilt was because Mr Xu was in fact guilty. The case against Mr Xu came before the Meilan District People’s Court of Haikou City, Hainan Province on 22 September 2015. The hearing was in open court. The Presiding Judge, sitting with colleagues, recorded that Mr Xu had been criminally detained by the PSB on 22 January 2014, subject to residential surveillance from 23 January 2014, and arrested on 23 July 2014 upon approval of the Procuratorate. 41. Mr Xu had instructed Mr Guo to “proceed to defend him on the basis of a guilty plea … [observing] that the authorities would never admit that he had been forced into giving a false confession”. Mr Xu admitted the allegations against him. From the trial record it appears the evidence relied on by the prosecution comprised only confession evidence, including from Mr Shen and Mr Jia T. No evidence or confession from Mr Jia H was tendered on the face of the transcript (although there is a cross reference to a witness statement in the judgment on 16 November 2015 referred to below). 42. Mr Guo relied on the fact of a voluntary confession in asking the Court for leniency. Mr Guo “did not object or express any opinion that [Mr Xu] was innocent”. The court transcript notes his submission that Mr Xu’s “guilty attitude is really good and sincere; he voluntarily confessed his guilt”. Mr Xu wanted a lenient sentence, and Mr Guo said (and I accept) that this was because he was expecting to be given credit for time served. 43. The Court handed down a judgment on 16 November 2015. The effect of the sentence passed was, taking into account (as Mr Xu anticipated) the time he had been held in detention or custody, to allow a release date of 21 December 2015, one month later. Mr Xu was advised of his right to appeal to the Intermediate Court and said that he would not appeal. 44. Mr Xu was also accused of and admitted taking a watch as a bribe in connecting with a matter unrelated to the Charterparty and the Guarantee. His overall sentence took this offence into account. Confession by Mr Jia T 45. 46. According to an interrogation record, Mr Jia T was questioned on 23 January 2014 by the same officers of the PSB as had questioned by Mr Xu. The record is marked as the “fourth”. No first, second or third is available. Earlier interrogations are, however, described in an unsigned document entitled “Report on torture suffered by Jia Tingsheng during the period detailed in Hainan” (the “Jia T report”). HNA asks me to treat this document with circumspection, and I do so. On Mr Guo’s evidence it was given to him in late 2015 by Mr Jia H’s lawyer who told him it came from Mr Jia T’s wife. 47. In the interrogation record for 23 January 2014, Mr Jia T gave an account of receiving RMB 300,000 from Mr Xu in two instalments. According to the record, Mr Jia T said: “After we met each other, [Mr Xu] raised another requirement, which was … he hoped that my father could communicate with HNA Group to quickly arrange the guarantee as soon as possible. Then, he gave me the 150,000 RMB. Few days after I received the money, I told my father [Mr Jia H] about this matter. I told [Mr Jia H] that I had received 150,000 RMB from [Mr Xu]. As regards the guarantee, my father said that he could only communicate with HNA Group according to usual and normal rules of the company, and as to the 150,000 RMB that [Mr Xu] gave to me he told me to send it back.” 48. 49. According to the record, and to a document entitled “confession”, Mr Jia T said that he did not send the money back, and he met Mr Xu again and received a second instalment of RMB 150,000, about which his father did not know. At the end of the interrogation the record states the question “Is there any extort confessions by torture or deceit in this interrogation?”, and the answer “No”. The Jia T report asserts Mr Jia T’s innocence, and makes allegations of torture, both at the January 2014 interrogation and at previous interrogations for which no interrogation record is available but which are said in the Jia T report to have produced differing versions of events. The torture alleged to have occurred at the January 2014 interrogation again involved forcing water, but also mustard oil. At the interview of Mr Xu by Mr Guo on 15 September 2014, referred to above, Mr Xu also referred to hearing Mr Jia T screaming. 50. The also contains the following passage, apparently referring to a point on 24 January 2014 after he had been tortured and before a confession had been written down: “[A senior officer] came in and said: “Actually, you do not know to what stage this situation has developed. Shagang recently wound up Grand China, and took over USD20 million, now they are preparing to wind up our HNA. We are undoubtedly not interested in your people as individuals, our HNA Group just wants to solve a problem. So really it is no big deal, just co-operate and write down a confession, and strive to return home for Chinese New Year’s. After you go home do not ever recant your confession or you know what the consequence will be.” Confession by Mr Shen 51. 52. According to an interrogation note, Mr Shen was questioned on 16 February 2014 by the PSB. The interrogating officer was different to the officer who had interrogated Mr Xu. Mr Shen said, according to the note, that he offered a bribe of RMB 300,000 to Mr Jia T. He attributed to Mr Xu the proposal that Mr Jia T be approached. The focus was particularly on the guarantee from HNA. At the further interview of Mr Xu by Mr Guo on 15 September 2014, Mr Xu referred to being shown Mr Shen whom he thought, from his appearance, had had water poured into him. 53. Mr Zhang of Shagang gave evidence at trial that was tested in cross examination. Substantial points were added to his earlier witness statement testimony by later witness statements. I was not satisfied with his explanation for this and it left me viewing his evidence with caution. So too did his claim not to have remembered until late the existence of an audio file. 54. However what I do accept that is that in June 2014 Mr Shen said to Mr Zhang that he (Mr Shen) was innocent; though in that connection Mr Zhang’s account about a system by which Mr Shen signalled an interrogation using force by embedding a “p” when he signed documents was unconvincing. 55. Mr Shen has also been accused of fraudulent breach of fiduciary duty, but this is not connected with the alleged bribe by Mr Xu. Mr Jia H 56. 57. On the available materials it appears Mr Jia H was detained and prosecuted. Very little information is available. It is not clear to me that the offence for which he was prosecuted involved the alleged bribe by Mr Xu. The documents available from the Procuratorate indicate that there was a confession from Mr Jia H, but a copy of that confession is not available to this Court. In evidence that I am prepared to accept, Mr Guo said that he had read it and that in it Mr Jia H mentioned he did not receive the RMB 300,000. The “Sun bribe” 58. In June 2011, after the Charterparty and the Guarantee had been entered into, US$30,000 is alleged to have been paid by Mr Hong Xiangbin (“Mr Hong”), a broker, to Mr Sun Che (“Mr Sun”) of Grand China. 59. Mr Sun admitted and was convicted of bribery. Until trial, HNA’s case was that the alleged bribe by Mr Sun also gave it a defence to Shagang’s claim. However this case was not pursued at trial. 60. 61. 62. Nonetheless in written closing submissions HNA argued that “the fact of the Sun bribe” supported its case “that the Xu bribe happened”. I do not accept this argument. I do not find anything in the alleged bribe to Mr Sun that realistically supports the allegation that a bribe was paid by Mr Xu. The matrix of timing, circumstances and individuals said to have been involved is different. Moreover I do not feel able to place any weight on the incomplete insight the documents give of Mr Sun’s version of events; they also give inconsistent versions of when a bribe was offered to him. HNA’s statement of case alleges a link to the effect that Mr Shen procured Mr Hong to pay Mr Sun. I find no evidence sufficient to establish that alleged link. A witness statement from Mr Hong was available at the trial. In this, Mr Hong said that Shagang wanted the Charterparty executed quickly “to hedge against market fluctuations”. He also, however, referred to the speed at which some charterparties were being entered into at the time. Confession evidence and torture 63. Torture is corrupt. Expert evidence at this trial confirmed that torture is illegal in China. Further, by Article 247 of the Criminal Law of the People’s Republic of China the torture of suspects or accused persons by officers in the criminal justice process is a crime. 64. In his judgment in Belhaj v Straw [2014] EWCA Civ 1394 at [116] Lord Dyson MR said: “… The abhorrent nature of torture and its condemnation by the community of nations is apparent from the participation of states in the United Nations Convention against Torture … and the International Covenant on Civil and Political Rights … and from the recognition in customary international law of its prohibition as a rule of jus cogens, a preremtory norm from which no derogation is permitted.” 65. In the earlier decision of A and Others v Secretary of State for the Home Department (No 2) [2005] UKHL 71; [2006] 2 AC 221 at [51]-[52] Lord Bingham said: “It trivialises the issue … to treat it as an argument about the law of evidence. The issue is one of constitutional principle, whether evidence obtained by torturing another human being may lawfully be admitted against a party to proceedings in a British court, irrespective of where, or by whom, or on whose authority the torture was inflicted. To that question I would give a very clear negative answer. … The principles of the common law, standing alone, in my opinion compel the exclusion of third party torture evidence as unreliable, unfair, offensive to ordinary standards of humanity and decency and incompatible with the principles which should animate a tribunal seeking to administer justice. But the principles of the common law do not stand alone. Effect must be given to the European Convention [on Human Rights], which itself takes account of the all but universal consensus embodied in the [International Convention against Torture]. …” 66. Lord Bingham referred to unreliability, and that is an important point in its own right in the context of the present case. Although as Lord Bingham said this subject is about much more than the law of evidence, it is the case that if torture is used to cause someone to say he admits something the result is not reliable as evidence. 67. In A, Lord Carswell addressed unreliability at [147]: “The unreliability of such evidence is notorious: in most cases one cannot tell whether correct information has been wrung out of the victim of torture … or whether, as is frequently suspected, the victim has told the torturers what they want to hear in the hope of relieving his suffering.” And in the Court of Appeal in the same case Neuberger LJ (as he then was) observed [2005] EWCA Civ 1123; [2005] 1 WLR 414 at [414]: “… one of the principal reasons why a confession made by an accused is excluded from evidence unless it was voluntary is that such a confession is self evidently unreliable. That reason would apply with equal force to a statement obtained from a third party under torture.” Dealing specifically with civil proceedings, in Shah v Gale [2005] EWHC 1087 (QB) Leveson J (as he then was) said: “… for the purposes of civil proceedings … the most important aspect of any so- called confession must be its reliability. Torture or oppression critically affect reliability …” 68. The system of justice in England and Wales, like the system of justice in China, takes account of admissions of guilt by an accused. But in such a system a confession or admission after torture has no value. Indeed the system itself, and the stability it can contribute, is actively harmed. Confidence and moral authority are lost. The innocent may be convicted and the guilty may remain at large to commit further crime. Investigation may stop when it needs to continue if the truth is to be found. 69. This is also why it is important that a system of justice that takes account of admissions of guilt does not come to depend on them, but places its confidence in an investigation process that will look for all forms of evidence, and in a trial process that will be there to find the truth in all cases where there is no admission. 70. 71. 72. The expert evidence shows that a high proportion of criminal convictions in China follow confessions from the accused. The expert evidence shows that there have been reported instances of confessions coerced by torture. Some reports have been without foundation but some have been with foundation. As a result, the points just made bear particular emphasis. That this is appreciated in China appears from a number of provisions in the 2012 Law, to which I will turn. There has been concern that the PSB may feel pressure to secure confessions because of the extent to which convictions have followed from confessions. Of course that sense of pressure would be misplaced, and the 2012 Law is firmly set against it. Article 2 of the 2012 Law lists its objectives. These include to ensure that “the criminal facts are found out accurately and [in good time]”, “criminals are punished and … innocent people are not incriminated” and “human rights are respected and protected”. 73. Article 50 provides in part: “Judges, prosecutors, and criminal investigators must, under legal procedures, gather various kinds of evidence that can prove the guilt or innocence of a criminal suspect or defendant and the gravity of the crime. It shall be strictly prohibited to extort confessions by torture, gather evidence by threat, enticement, deceit, or other illegal means, or force anyone to commit self-incrimination. …” 74. Article 53 goes as far as stating “Credence shall not be readily given to confessions. A defendant shall not be convicted and sentenced to a criminal punishment merely based on the defendant’s confession without other evidence …”. 75. Articles 54 and 58 are in these terms: “54. A confession of a criminal suspect or defendant extorted by torture or obtained by other illegal means and a witness or victim statement obtained by violence, threat, or other illegal means shall be excluded.” “58. Where, at trial, any illegal obtainment of evidence as described in Article 54 of this Law is confirmed or the suspicion thereon cannot be ruled out, the relevant evidence shall be excluded.” 76. 77. Article 33 gives a criminal suspect a right to retain a lawyer “from the day when the criminal suspect is interrogated by a criminal investigation authority for the first time” and requires that the authority inform the suspect of this right. By Article 116, during interrogation there must be two investigators present. One of the functions of the Supreme People’s Court of the People’s Republic of China is to issue judicial interpretations that will guide lower courts in the application of the law. Three interpretations call for particular mention: (a) In its “Interpretation on the Application of the Criminal Procedure Law”, the Supreme People’s Court has said: “If corporal punishment or disguised corporal punishment, or other measures which may cause defendants to suffer from physical or mental harm or severe pain are used to force defendants to make confessions against their will, such measures shall be identified as the extortion of confession by torture or other illegal measures in Article 54 …” (b) In its “Interpretation on Several Issues for Implementing the Criminal Procedure Law, the Supreme People’s Court has said: “Evidence collected by illegal means is strictly forbidden. Any witness statement, confession or victim’s statement collected by torture, threat, inducement fraud and etc., where verified, shall not be used as evidence to determine the case.” (c) In its “Interpretation on Establishing and Improving the Working Mechanisms for the Prevention of Miscarriages of Justice in Criminal Cases”, the Supreme People’s Court has said: “Any confession which cannot be said for sure that it is not obtained illegally should also be excluded.” 78. 79. 80. 81. The expert evidence characterises the 2012 Law as enshrining respect for and safeguarding of human rights as a constitutional principle. Since the 2012 Law and associated reforms there has been a substantial reduction in reported instances of torture. However, there do continue to be reported instances of torture. The Committee Against Torture was established to monitor the implementation of the Convention against Torture, of which China is a State party. In its Concluding Observations on the Fifth Periodic Report of China, dated December 2015, the Committee notes “the numerous legal and administrative provisions prohibiting the use of torture” in China. The Committee nonetheless expresses its concern over consistent reports indicating torture and ill-treatment by public security officers and expresses the view that the criminal justice system “overly relies on confessions as the basis for convictions”. Part of the challenge may lie in ensuring, including through training and inspection, ever-improving compliance with the 2012 Law. Part of the challenge may be because the 2012 Law has its particular limits: for example, by Article 121 an audio or visual record of the interrogation process is permitted, but is only mandatory “in a case regarding a crime possibly to be sentenced to life imprisonment or death penalty or any other significant crime”. Part of the challenge may arise if the requirements of Article 53 are treated as met where the required “other evidence” is itself in the form of other confessions. And part of the challenge may exist because the system tends to require the suspect or accused person to call for examination into whether the 2012 Law has been complied with. The present case illustrates why that may not in practice be the course chosen by an innocent person and why his or her confession may be followed with a plea of guilty at trial. 82. These are possibilities, which I hope it may be helpful to reference. I do so respectfully. I am in no position to suggest a comprehensive or definitive list. Conclusions from the evidence at trial 83. 84. 85. 86. I must do my best to draw conclusions from the evidence that has been available at this trial. That evidence is limited in many respects when compared with the evidence that would be desirable for conclusions on the issues in this case. Thus, many of the documents require caution before reliance can be put on what they appear to say. The evidence of those few factual witnesses the Court has seen has its shortcomings. Accounts of the same key people (Mr Xu in particular) are used both to support and to deny the case of bribery, and both to support and to deny the case of torture. Accounts are altogether missing from other key people. The standard of proof at this civil trial is the balance of probabilities, but taking into account the seriousness of many of the allegations. Both Shagang and HNA argued that the other had the burden of proof on particular aspects. In the event, my conclusions do not turn on where the burden of proof lies. Conclusions on bribery 87. 88. On the limited evidence at this trial, and after careful consideration, on the balance of probabilities I find that there was no bribe by Mr Xu. I fully acknowledge that the Meilan District People’s Court of Haikou City found Mr Xu guilty of bribery and sentenced him. On the material put before that Court I can entirely follow its finding. However, material has been put before this Court that was not put before the Meilan District People’s Court. In particular, the Meilan District People’s Court had evidence of Mr Xu (and others) admitting the alleged bribery, but did not have the evidence of his (and their) also denying the alleged bribery. 89. When Mr Xu, Mr Jia T and Mr Shen each first referred to a bribe they did so without a lawyer or representative present. Although it appears Mr Guo was not his first lawyer, when Mr Xu had access to Mr Guo as his lawyer Mr Xu denied that there was a bribe. 90. 91. There is no evidence that any account of the officers of PSB who were present at any interrogation has been tested with them in China. I appreciate the practical difficulties, but there has been no opportunity to test an account from them at this trial. The reason given for the alleged bribing - concluding the Charterparty quickly rather than the pricing of the Charterparty - is unconvincing, in my judgment. Even if there was a desire for a quick conclusion I am unpersuaded, on the evidence, that bribes were introduced to achieve that end. On the documents, Mr Xu at one point suggested it as a reason for bribing. The same appears to be the case for Mr Shen. But both have also denied any such bribe. Further, the state of the market was not such as to provide an objective reason for a quick conclusion being so important, or being other than achievable in ordinary course in any event. The relevant chartering market was active and an owners’ market. As for the facts that the charter period would commence in 2010 and be of some length, it is hard to accept these would have made a difference: Shagang itself had recently agreed a charterparty for the Vessel of identical commencement and duration to the Charterparty. Even when Mr Jia T gave an account consistent with receiving a bribe, that account supported the fact that Mr Jia H’s response was to insist on normal procedures. I do not overlook HNA’s point that a requirement for board approval was lifted and the Charterparty was not submitted for a required legal and financial review, but in the result the Charterparty was approved by, among others, a main board director of HNA, and by the Chairman of HNA. I do not overlook Mr Wu’s own evidence that he did not become aware of the Charterparty until 2011, but in the next several years following the agreement of the Charterparty in 2008 I do not see anyone at HNA bringing out the point that the Charterparty was agreed too quickly so as to cause suspicion of bribery. Further, I have seen no records to show withdrawal of funds used for the alleged bribe or expenditure of funds by Mr Jia T. The reasons I have given would alone cause me to reach the conclusion that there was no bribe. I am not led to a different conclusion by the fact that Mr Xu pleaded guilty at trial, when I consider that plea in context. Further my conclusion is not disturbed by Mr Xu’s admission of accepting a watch as a bribe in connection with an unrelated matter. I have considered carefully a challenge by HNA to the reliability of Mr Xu’s apparent accounts by reference to the dates and times, and sequence of events, in January 2014, including by comparison with the Jia T report. I do not find these points affect the substance of the matter, and I would have been surprised not to find some possible discrepancies in the circumstances that obtained. HNA argues that an unequivocal confession is sufficient to convict an accused even on the criminal standard of proof. But the question in the present case is not whether a confession by an accused may lead to a conviction of that accused. In these proceedings HNA relies on the alleged confessions against Shagang and not against the individuals said to have made them. Mr Edey QC refers to R v Tippet (1823) Russ & Ry 509 and R v Sykes (1913) 8 Cr App 233 at 236 but those were cases where confessions were relied upon against the individuals said to have made them. HNA argues that, in the absence of torture, there is no credible reason why Mr Xu, Mr Jia T and Mr Shen should falsely confess to crimes which they did not commit. However, the possibility of a large difference between the sentence that might follow an admission and the sentence that might follow a conviction was referenced expressly by Mr Xu in his exchanges with Mr Guo, and on his account reflected what had been indicated to him by officers of the PSB. 92. 93. 94. 95. 96. 97. 98. HNA argues that the prospect of a lighter sentence cannot be a reason for a false confession. I do not accept that argument. Mr Edey QC for HNA seeks to support this 99. 100. argument by reference to two decisions, R v Rennie [1982] 1 WLR 64, at 69G-H and McKinnon v United States [2008] 1 WLR 1739. These decisions do not support the argument. The first decision (a decision of the Court of Appeal) concerns the circumstances in which a confession by an accused person will be admissible in evidence against that person. Even in that context, which is not the context at this trial (which is between Shagang and HNA and not Mr Xu and others), the decision is authority for the proposition that the question is whether a confession is voluntary, and that question is one of fact. As against Mr Xu, the confession would not be voluntary if obtained by fear of prejudice or hope of advantage exercised or held out by a person in authority, or by oppression. The second decision referred to by Mr Edey QC (a decision of the House of Lords, as predecessor to the UK Supreme Court) is a decision in the context of extradition. The question under consideration by the House of Lords (as a certified point of law) was whether it is “an abuse of process in extradition proceedings, such that the proceedings should be stayed, and/or an unjustified interference with the [accused person’s] human rights, for the requesting state to engage in plea bargaining …”. The essential answer given was that it would only be so in a wholly extreme case. The question and the answer do not bear on HNA’s argument that the prospect of a lighter sentence cannot be a reason for a false confession. Conclusions on torture 101. But what of the allegations of torture? I have considered the evidence available at this trial for and against the allegations of torture, and the limitations of that evidence, including the absence – emphasised by HNA – of medical evidence. Having done so, I find that torture cannot be ruled out as a reason for the confessions. 102. The fact that I cannot rule out torture further reduces the confidence that I can put in the confessions, although it will be apparent from my conclusions on bribery (above) that I already have insufficient confidence in the confessions to allow a finding of bribery. 103. HNA distinguishes the confessions from later admissions (including in bail applications) and pleas of guilty, at which later points torture is not alleged to have been practised. But in the present case the matters are interconnected. Once the confessions had been made, a departure from them, in the form of a denial or a not guilty plea, would likely require reference back to the torture allegations. 104. 105. In the present case, in the circumstances of my conclusion that there was no bribe, it is not necessary to express a definitive conclusion on whether there was torture. I have said that I cannot rule it out; the evidence available does not equip me well to reach a firmer conclusion. That I should so confine my view at this trial is also in the interests of leaving proper room for investigation in China by the appropriate authorities, to include questioning of the officers who were on duty. I have not set out in this judgment the full extent and nature of the torture alleged to have occurred, but if the allegations were all true it would be hard to imagine a more comprehensive breach of the duties and responsibilities of the officers. 106. Mr Guo’s evidence included reference to some informal communication with a judge and to some correspondence addressed to the authorities, but I have reservations about his evidence in this regard and cannot be confident about what was said and what was sent. It is therefore possible that an investigation may not yet have happened in the present case. Outcome 107. In my judgment, HNA is liable to pay Shagang under the Guarantee of the Charterparty of the Vessel. A further aspect 108. In November 2014 Shagang obtained permission to amend its case to allege torture. In December 2014 HNA obtained an adjournment of the trial, then due to commence in February 2015. It argued before the English Court that an adjournment was necessary in order that the allegations of torture “are investigated as fully as possible”. 109. At the same time, HNA sent a letter to the PSB describing two solicitors from Shagang’s legal team as criminal suspects and alleging that the solicitors had colluded to fabricate evidence. HNA did not tell the English Court at the time that this is what it was doing. There was no foundation for the allegation, which should never have been made by HNA (acting in this regard by Mr Wu). To their credit, the authorities in China appear to have recognised this. To their credit, and not without some courage, the two solicitors did not allow the allegation to deflect them from their professional work in representing their client. 110. I also wish to acknowledge, with gratitude, the skilled and responsible advocacy at this trial by Mr Parsons QC and Ms Pounds, and by Mr Edey QC and Mr Wright.