Shagang Shipping Co Ltd v HNA Group Co Ltd (The “Dong-A Astrea”) – Supreme Court (Lord Hodge DP, Lord Briggs, Lord Hamblen, Lord Leggatt and Lord Burrows JJSC) UKSC 34 –  5 August 2020



The issue on appeal was whether a guarantor (HNA) could avoid liability under the guarantee if the charter party was obtained through bribery.  The bribery charges were disclosed in Chinese criminal proceedings and were allegedly obtained through torture. 

The claimant and disponent owners (Shagang) alleged that the confession evidence was obtained through torture and was therefore inadmissible in court. The first judge found there was insufficient evidence to prove that a bribe had occurred. He also asserted that torture could not be ruled out as a basis for the confessions and that the allegation the confessions were obtained through torture was significant.   With this uncertainty, the judge had less confidence in the confessions, and accordingly held that HNA was liable to pay Shagang under the guarantee.

HNA petitioned to the Court of Appeal claiming it was common ground that the judge had established the bribery confessions were not obtained through torture. The issues on appeal were:

  1. Whether the judge was justified in ruling on bribery first and torture second,
  2. Whether he had provided sufficient reasons for rejecting the reliability of admissible confessions, and
  3. Whether the Court of Appeal could or should interfere with his assessment of the agreed primary facts.

The Court of Appeal ruled that the first judge erred by failing to ask and answer the correct legal question on the weight to be given confession evidence.  By doing this, he failed to take all relevant evidence into account. The Court of Appeal allowed the appeal and remanded the case to a new judge for review. Shagang appealed to the Supreme Court.  

Supreme Court Decision

The Supreme Court held that the judge was entitled to rule on the issue of torture first, and further, there was evidence to support his conclusion that there was no bribery; As such, the confessions bore little to no weight on the decision.  

Further, the Supreme Court ruled that the Court of Appeal was incorrect in its assertion that the judge made an error of law. The judge had repeatedly and clearly stated that he did not have a definitive conclusion on the existence of torture because, based on the evidence, he found no bribe was paid. Since there was no bribe, he did not have to rule on whether torture occurred.  

The Supreme Court appeal was granted, and the ruling in Shagang’s favor was restored.