Shagang Shipping Company Ltd v HNA Group Company Ltd

In civil proceedings, a foreign criminal conviction and confession do not determine whether the underlying conduct is proved against a different party. The court must assess the confession evidence itself, including whether it is reliable and whether oppression or torture may have affected it.

The possibility that a lighter sentence may induce a false confession is a legitimate evidential consideration. Where torture cannot be ruled out, confidence in related confessions is reduced. On the evidence, the alleged bribe was not proved on the balance of probabilities, and the guarantor remained liable under the guarantee.

Shagang chartered a vessel to Grand China Shipping under a long-term charterparty. HNA Group guaranteed Grand China’s obligations. After Grand China repudiated the charterparty, Shagang claimed payment under the guarantee.

HNA alleged that the charterparty had been procured by a bribe paid to an employee of the HNA group. Its case relied principally on confessions obtained during criminal proceedings in China. Shagang alleged that the confessions had been obtained by torture and were inadmissible or unreliable. The central issues were whether the alleged bribe was proved and whether HNA was liable under the guarantee.

1. Claim succeeded. HNA was liable to pay Shagang under the guarantee. The court found on the balance of probabilities that no bribe had been paid.
2. The Chinese criminal conviction of Mr Xu did not determine the civil issue. The Chinese court had received admissions of bribery but had not received the later evidence denying the bribery and alleging torture. The English court therefore had to assess the evidence placed before it.
3. The alleged reason for the bribe was unconvincing. The market was active and favoured owners, the charterparty rates were in line with the market, and the transaction had been approved by senior HNA and Grand China personnel. There was also no documentary evidence showing withdrawal or expenditure of the alleged bribe money.
4. The possibility of a lighter sentence inducing a false confession was a proper evidential consideration. The authorities relied on by HNA concerning voluntary confessions and plea bargaining did not establish the contrary proposition, and concerned materially different contexts.
5. Torture could not be ruled out on the evidence. That possibility materially reduced confidence in the confessions and later guilty plea, although the court did not need to reach a definitive finding that torture had occurred. The court emphasised the unreliability and constitutional seriousness of evidence obtained by torture, referring to Belhaj v Straw, [2014] EWCA Civ 1394, A and Others v Secretary of State for the Home Department (No 2), [2005] UKHL 71, and related authorities.
6. The provisions of the Criminal Procedure Law 2012 directed investigators to gather evidence of guilt and innocence, prohibited coerced confessions, required caution before relying on confessions, and required unlawfully obtained evidence to be excluded. Those provisions reinforced the court’s assessment of the reliability of the evidence.

First-instance decision. The judgment records that the Meilan District People’s Court of Haikou City convicted Mr Xu of bribery on 16 November 2015, but that criminal decision was not treated as determinative of the civil claim.