The Supreme Court restored a judgment enforcing a parent company’s guarantee of a ship charter. The guarantor’s only evidence of bribery was confessions made in China. The trial judge found that bribery was not proved, and that torture could not be ruled out as a reason for the confessions. The Court of Appeal was wrong to set his decision aside and wrong to hold that a serious possibility of torture must be ignored unless torture is proved on the balance of probabilities.
The dispute
In August 2008 Shagang chartered a vessel to Grand China at a hire in line with an owners’ market. HNA, Grand China’s ultimate parent, guaranteed performance under a contract governed by English law and subject to the English courts. After delivery in 2010 the market had fallen, Grand China defaulted, and Shagang terminated the charterparty and sued on the guarantee.
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HNA later alleged that the charterparty had been procured by bribery and was unenforceable, so that the guarantee could not be enforced either. Unless that defence succeeded, Shagang was entitled to judgment.
Confessions and allegations of torture
HNA’s bribery defence rested on confessions given to investigators in China. Shagang challenged their reliability and argued that they had been obtained by torture.
The evidence did not establish on the balance of probabilities that torture had occurred. The judge nevertheless found that the possibility could not be ruled out. The appeal concerned what the judge could do with that distinction.
The trial judge
Robin Knowles J found, on the balance of probabilities, that there was no bribe by Mr Xu. His reasons included the absence of a lawyer when the confessions were first made, the lack of any testable account from the officers, the unconvincing commercial explanation, approval of the charterparty within HNA, the absence of records of the alleged funds, and the prospect of a lighter sentence. He said that these reasons alone led him to his conclusion.
He then found that “torture cannot be ruled out as a reason for the confessions”. That further reduced the confidence he could place in them, although he already had too little to find that a bribe had been paid. He did not decide whether torture had taken place. Judgment was entered for Shagang in the sum of US$68,597,049.59.
The Court of Appeal
The Court of Appeal held that this conclusion was unsustainable, although the judge’s primary findings of fact were not appealed. It said that he should have decided torture first. It treated him as having found that torture was not proved and therefore, in law, as having found that there was no torture. On that view, his remaining doubt was irrelevant to the weight of the confessions. It remitted the assessment of weight and the bribery issue to a different judge, on the basis that torture had already been decided.
The Supreme Court
Lord Hamblen and Lord Leggatt, with whom Lord Hodge, Lord Briggs and Lord Burrows agreed, held that a judge need not decide admissibility first. Evidence may be considered on the assumption that it is admissible, and admissibility left undecided if it does not affect the result. That is what the judge did. He had not found, even implicitly, that torture was disproved.
They also held that he had dealt with weight. The confessions were the only evidence of a bribe, so their reliability and the bribery allegation were the same question. His reasons were sparse, and a fuller treatment would have shown HNA more clearly that its case had been considered. Lack of detail was not an error of law, or a conclusion no reasonable judge could reach.
The Court of Appeal’s rule about torture was wrong. Where a legal rule requires a fact to be proved, the law treats it as having happened or not. Admissibility is such a rule: a statement proved on the balance of probabilities to have been made as a result of torture must be excluded altogether, for reasons of public policy and morality and not merely relevance. Estimating weight is different. Section 4 of the Civil Evidence Act 1995 requires regard to any circumstance from which reliability may reasonably be inferred, including a motive to give a false account. That circumstance need not itself be proved.
In re B, on which the Court of Appeal relied, concerned the Children Act. It did not require an unproved allegation to be ignored for every purpose in the litigation. In A v Secretary of State for the Home Department (No 2), the House of Lords held that doubt about torture is not enough to exclude a statement, but must be borne in mind when the statement is assessed. The Supreme Court held that this was the rational approach generally, not a rule confined to special immigration appeals.
Where there are reasonable grounds to suspect torture, the judge can and should take that possibility into account. Ignoring it would be irrational and would tend to encourage torture which could be denied. Ill-treatment short of torture is not disregarded, and torture should not receive more favourable treatment. The judge was entitled to use his finding as further support for the conclusion that Mr Xu had paid no bribe. New documents before the Court of Appeal, including a report that a complaint of torture was unsupported and a medical note recording no injury, did not undermine the conclusion that torture could not be ruled out.
Verdict: The Court unanimously allowed Shagang’s appeal and restored the judgment enforcing the guarantee. The judge was entitled to consider a supported possibility of torture when assessing the weight of the confessions. The Court did not find that torture had occurred.
Source: Shagang Shipping Company Ltd v HNA Group Company Ltd [2020] UKSC 34
