Shagang HNA: A Non-binary Approach To The Weighing Of Evidence In A Civil Trial And Taking Into Account The Risk That Evidence May Have Been Obtained By The Use Of Torture (Video)

• Published date: 06 August 2020
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution, Trials & Appeals & Compensation, Civil Law
• Law Firm: Quadrant Chambers
• Author: Ms Caroline Pounds

OVERVIEW

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As the Supreme Court observes in the first paragraph of its judgment in Shagang v HNA, handed down today, allegations that a bribe was paid to procure a contract are by no means unknown in international business disputes heard by the Commercial Court. Less common (at least in the context of commercial disputes) are allegations that key evidence was procured by the use of torture. In this matter, however, that is what was alleged by the appellants, Shagang, on behalf of whom Caroline Pounds, as junior counsel instructed by HFW, appeared at each stage of the proceedings.

It was common ground throughout that, if evidence was proved on the balance of probabilities to have been procured through the use of torture, then it was inadmissible in evidence pursuant to the decision of the House of Lords inA v Secretary of State for the Home Department (No. 2) [2005] UKHL 71. In issue on appeal, however, was the extent to which a judge is permitted to take their doubts as to the same into account when weighing the evidence (even if the judge is not satisfied that torture has been proved on the balance of probabilities).

In a decision that had obvious ramifications going well beyond commercial disputes (in consequence of which, Liberty was granted permission to intervene on the appeal to the Supreme Court), the Court of Appeal held that a judge was not so entitled. In its judgment upholding Shagang's appeal, the Supreme Court has overturned that decision, holding that, where there are reasonable grounds for suspecting that a statement was obtained by torture, that is a matter which a judge can and should take into account, along with all other relevant circumstances, in assessing the reliability of the statement as evidence of the facts stated.

The Supreme Court judgment also, again, reinforces the limited scope for intervention by an appeal court in relation not only to the factual findings of the trial judge, but also the inferences drawn therefrom and the judge's process of reasoning.

The Facts and the First Instance and Court of Appeal Decisions

Shagang's claim started life as a relatively straightforward claim for damages (qua disponent owners) for repudiatory breach of a long-term time charterparty concluded at the height of the market before the financial crash in 2008. HNA having guaranteed the charterers' performance of the charterparty, Shagang sought to recover its losses from HNA under the guarantee. Part way through the proceedings, HNA amended its case to plead that the charterparty had been procured by bribery (with the consequence that the guarantee was unenforceable), relying on confessions to the alleged bribe having been given to the Public Security Bureau (akin to a police force) in the People's Republic of China by the individuals who had allegedly paid and received the bribe. Shagang in turn alleged that the confessions had been obtained by torture and were therefore inadmissible in evidence, alternatively that no weight should be afforded to them.

At first instance before Knowles J, Shagang succeeded in its claim, the Judge finding that the alleged bribery had not been proved on the balance of probabilities. In his short judgment ([2016] EWHC 1103 (Comm)), which ran to only 16 pages after a 10-day trial, the Judge dealt first with his 'Conclusions on bribery' (explaining - albeit very succinctly - the factors that had led him to that conclusion) before then addressing his 'Conclusions on torture'. At [102], he stated that the fact that he could not rule out torture further reduced the confidence that he could place in the confessions (although he already had insufficient confidence in them to allow a finding of bribery). At [104], he stated that, in the circumstances of his conclusion that there was no bribe, it was not necessary to express a definitive conclusion on whether there was torture.

The Court of Appeal allowed HNA's appeal and remitted the matter back to the Commercial Court for redetermination. They accepted HNA's argument that the Judge had failed to ask and answer the correct legal question as to what weight should be accorded to the confession evidence and, in those circumstances, fell into legal error in failing to...