Arbitration/Jurisdiction Clauses

Carriage of Goods - Arbitration Clause - Stay of Proceedings - Application of s.46 MLA to Charterparties

T. Co. Metals LLC v.  Vessel "Federal Ems", 2011 FC 291, 

This case concerned carriage of a cargo of cold-rolled steel coils carried from Brazil to Toronto. The bills of lading incorporated the terms and conditions of a charterparty between the ship owner and the exporter of the cargo. Pursuant to the terms of the charterparty, the charterer/exporter was to be responsible for the loading, stowing and discharging of the cargo. The charterparty also contained an arbitration clause in favour of New York arbitration. At about the time of the loading of the cargo there was a disagreement between the owner and the charterer/exporter as to whether the cargo should be covered with plastic sheeting. To resolve this disagreement, the charterer/exporter provided the owner with a letter of indemnity holding the owner harmless for any damage due to the use of the plastic sheets. Upon arrival of the cargo at Toronto, there was damage to the cargo and the plaintiff commenced this action against the ship owner. The ship owner, in turn, commenced third party proceedings against the charterer/exporter. The charterer/exporter then brought an application to stay the third party proceedings relying upon the arbitration clause in the charterparty. The primary issue was whether a charterparty was a “contract for the carriage of goods by water” within the meaning of s.46 of the Marine Liability Act. If it was then the arbitration clause would not oust the jurisdiction of the court.

At first instance, the Prothonotary dismissed the motion holding that s. 46 of the Marine Liability Act applied and proceedings were entitled to be brought in Canada. However, on appeal, the Appeal Judge allowed the appeal and stayed the proceedings. The main issue in thicase was whether s. 46 of the Marine Liability Act applies to charterparties. The Appeal Judge noted that the ordinary meaning of the expression “contract for the carriage of goods by water” in s. 46 could support the inclusion of charterparties. However, relying heavily on the fact that the Hague-Visby and Hamburg Rules excluded charterparties, the Appeal Judge concluded that s. 46 did not apply to charterparties. In reaching this conclusion the Appeal Judge reasoned that s. 46 was a transitional provision which was eventually to be replaced by the Hamburg Rules and, as a transitional provision, it should not be given a wider scope than the Hamburg Rules. (A subsidiary issue in the case was whether the contract was to be found in the bills of lading or the charterparty. The Court held that the bills of lading functioned only as receipts as they remained in the hands of the charterer and never passed to a third party. A second subsidiary issue was whether the LOI was a separate contract unaffected by the arbitration clause in the charter party. The Court held that it was an amendment of the charterparty and therefore any claim under the LOI was caught by the arbitration clause in the charterparty.)

Stay of Proceedings - Arbitration Clause - Fraud - Res Judicata

New World Expedition Yachts LLC v. P.R. Yacht Builders, 2011 BCSC 78, 

In this action the plaintiff alleged that the defendant shipbuilders had engaged in a fraudulent scheme in relation to a ship building contract. The vessel was being built under a contract between the plaintiff/purchaser, NWEY, and the defendant/builder, PRYB. PRYB sub-contracted
the labour part of the build to a related company, FCY, also a defendant. Disputes arose during the course of the construction which were referred to arbitration and decided against the plaintiff in two arbitrations. The plaintiff first sought unsuccessfully to set aside the award on
the basis of bias of the arbitrator. When that was unsuccessful, the plaintiff brought this action for damages alleging fraud. The defendants moved to stay the action on the basis of the arbitration clause in the building contract and on the grounds that the issues were res judicata having already been decided in the arbitrations. The Court agreed with the defendants on both counts holding that the plaintiff was seeking to re-litigate matters that were or could have been decided in the arbitrations.

Practice - Carriage - Stay of Proceedings - Jurisdiction Clause - Federal Court Jurisdiction

Hitachi Maxco Ltd v. Dolphin Logistics Co., 2010 FC 853, 

This was a motion by the defendants for a stay of proceedings. The main issue was whether an admiralty action instituted in Canada in personam by two foreign corporations against four foreign corporations for the loss of cargo shipped from one foreign port and intended for discharge and delivery in another foreign jurisdiction should be stayed in favour of the jurisdiction stipulated in the bill of lading. The Court noted that there is no geographical limitation on the subject matter jurisdiction of the Federal Court and that it did not matter that the goods were not shipped from or to a Canadian port. The Court further noted that one may always institute an admiralty action in Federal Court that has absolutely no connection with Canada provided the defendants were served in Canada. The issue, the Court said, is whether it should maintain the jurisdiction or refer the matter to another court. The Court reviewed the authorities and the evidence and ultimately held that the defendants had not proven that there was a more convenient forum. The absence of evidence from the defendants was a significant factor in the decision.

Practice – Stay of Proceedings – Jurisdiction – Charter Dispute

McDermott Gulf Operating Company v. Oceanographia Sociedad Anonima de Capital Variable, 2010 NSSC 118, 

This was an application to stay proceedings commenced in the Nova Scotia Supreme Court on the basis that the court lacked jurisdiction simpliciter or was otherwise not the appropriate forum. The underlying claim by the plaintiff was for charter hire and other charges allegedly owed by the defendants. The first plaintiff was a Panamanian company and was the owner of the vessel which was registered in Barbados. The second plaintiff managed the charter party for the first plaintiff and was a Nova Scotia company. The defendants were resident in the United States or Mexico. The area of operations of the vessel that were the subject of the proceedings were entirely in Mexico. The Charterparty provided for Nova Scotia jurisdiction and Canadian law. The moving defendant was not the charterer under the Charterparty but it was the entity that obtained the benefit of the vessel and it appears that it had essentially assumed the obligations of the charterer. The Court first referred to the Nova Scotia Court Jurisdiction and Proceedings Transfer Act (“CJPTA”) which lists the circumstances where the court has jurisdiction. These include where there is an agreement on jurisdiction or where there is a real and substantial connection with the jurisdiction. The Court held that there was insufficient evidence of an agreement on jurisdiction given that the moving defendant was not a party to the Charterparty. The Court next considered whether there was a real and substantial connection with the province and noted that the CJPTA lists some of the factors to be taken into account when determining a real and substantial connection. The Court found that none of these factors were applicable but held that other factors may be taken into consideration including the connection of the parties to the jurisdiction, fairness, the involvement of other parties, comity and others. The Court reviewed these various factors and ultimately held that Nova Scotia did have jurisdiction. The Court further held that Mexico was not a more appropriate forum.

Carriage of Goods - Stay of Proceedings - s.46 M.L.A. – Jurisdiction Clause

Mitsui O.S.K. Lines Ltd. v. Mazda Canada Inc., 2008 FCA 219,  2008 CanLII 63491

The Cougar Ace took on a list of 60 degrees while en route to Canada and the U.S.A. from Japan. As a consequence, a large number of automobiles destined for Canada and U.S.A. were damaged. All of the automobiles were subject to a contract of carriage that contained a jurisdiction clause in favour of Japan and a choice of law clause selecting Japanese law. This action was commenced by the Plaintiff to recover damages for those automobiles destined to be unloaded at Canadian Ports. A separate action was commenced in the U.S.A. in respect of the automobiles bound for U.S.A. ports but that action was dismissed based on the jurisdiction clause. Although the dismissal of the American action was under appeal, a separate action was commenced in Japan in respect of the U.S.A. bound automobiles. An action was also commenced in Japan in respect of some damaged trucks and the ship owner also commenced proceedings in Japan for a declaration of non-liability. The ship owner brought this application for an order enforcing the jurisdiction clause and for a stay of the Canadian proceedings. The Plaintiff argued, in reliance on s. 46 of the Marine Liability Act , that it was entitled to bring the action in Canada notwithstanding the jurisdiction clause. At first instance (2007 FC 916), the motions Judge noted that s. 46 permits certain actions to be brought in Canada notwithstanding a jurisdiction clause but does not override the court’s discretion to grant a stay of proceedings based on forum non conveniens factors. He then considered the various factors that are often considered and held that it had not been clearly established that Japan was a more appropriate forum than Canada. Factors that seemed to be of particular relevance to his decision included that Canada was the intended port of discharge, that the limitation amount would be higher in Canada and that the public policy behind s. 46 favoured Canada.

On appeal, the Federal Court of Appeal agreed with the motions Judge that jurisdiction clauses were no longer controlling but are now merely one of many factors to take into account in deciding the forum non conveniens issue. However, the Court of Appeal held that the motions Judge had made errors of law in his assessment of the various factors by undervaluing some and overvaluing others. Specifically, the court found that the motions Judge failed to attach sufficient weight to: the fact that there were three actions in Japan that were proceeding expeditiously; the fact that the residence of most witnesses would be Japan; the fact that applicable law was Japanese law; and, the fact of the jurisdiction clause in favour of Japan. The Court of Appeal also said it was unclear that greater damages would be available in Canada than in Japan and, in any event, suggested that this was not a reason justifying a refusal of a stay. The Court also said the motions Judge was wrong to reason that s. 46 evinced a policy in favour of Canada. In result, the appeal was allowed and the action was stayed. An application for leave to appeal to the Supreme Court of Canada was subsequently dismissed.

Carriage - Freight - set off - jurisdiction - Ciffa Terms

Locher Evers International  v. Canada Garlic Distribution Inc. , 2008 FC 319, 

This was an action for the recovery of freight in relation to the carriage of produce from China to Toronto. The Defendant did not dispute the freight was owing but alleged a right to set-off and argued that the agreement ousted the jurisdiction of the Federal Court. The agreement between the parties expressly incorporated the Ciffa terms and those terms contained a no set-off clause which the Court had no difficulty enforcing. With respect to the jurisdiction issue, unfortunately, it is not clear from the judgment how this issue arose. There was apparently a jurisdiction clause but its contents are not set out. Nevertheless, the Court does say that the issue was raised too late.

Stay of Proceedings – Jurisdiction Clause – MLA s. 46

OT Africa Line Ltd. v. Magic Sportswear Corp., 2006 FCA 284, 

This was a subrogated action by cargo insurers for damages for the short shipment of goods carried from New York to Liberia under a bill of lading that was issued in Canada. The freight was also payable in Canada and the Defendant carrier, although not a Canadian resident, had offices in Canada. None of the Plaintiffs resided in Canada. The bill of lading contained a jurisdiction clause granting exclusive jurisdiction to the High Court of England. One month after the Plaintiff commenced this proceeding in the Federal Court of Canada, the Defendant commenced proceedings in England for a determination that it was not liable to the Plaintiff and it obtained an interim ex parte anti-suit injunction against the Plaintiff. This was later transformed into a regular anti-suit injunction (reported at [2004] EWHC 2441) which was confirmed by the English Court of Appeal (reported at [2005] EWCA Civ 710). A later petition to appeal to the House of Lords was dismissed. Meanwhile, the Defendant brought this application in the Federal Court of Canada to stay the Federal Court action on the basis of the jurisdiction clause in the bill of lading and on the basis of the doctrine of forum non conveniens.

At first instance, the Prothonotary dismissed the motion. The Prothonotary held that where the conditions of s. 46 of the Marine Liability Act were met the court had no discretion to stay proceedings on the basis of a jurisdiction or arbitration clause in a bill of lading. However, the Prothonotary also held that s. 46 did not prevent the court from granting a stay on the basis of forum non conveniens. The Prothonotary considered the relevant factors and held that Canada, not England, was the most convenient and appropriate forum in the circumstances. Accordingly, the Prothonotary dismissed the application for a stay.

The decision of the Prothonotary was appealed and the appeal is reported at 2004 FC 1165. The appeal Judge ultimately found that he was in agreement with the Prothonotary as to the effect of s. 46 of the Marine Liability Act and dismissed the appeal.

On further appeal to the Federal Court of Appeal, the Court of Appeal agreed with the lower courts that s. 46 of the Marine Liability Act did not require the Federal Court to take jurisdiction without regard to whether it was the more convenient forum. The Federal Court and Federal Court of Appeal still retained a broad jurisdiction to stay proceedings under s. 50(1) of the Federal Act. The Federal Court of Appeal, however, departed from the reasoning of the lower courts on the issue of whether the Orders and Judgments of the English courts were relevant to and should be included in a forum non conveniens analysis. The Court of Appeal considered that they were relevant and should be taken into account in the interests of international comity, to avoid parallel proceedings and to avoid inconsistent results. The Court of Appeal further held that the jurisdiction clause in the contract of carriage was a relevant factor to be taken into account in the forum non conveniens analysis noting that s. 46 did not declare such clauses to be null and void. The Court of Appeal then considered and weighed the various relevant factors and concluded that the factors connecting the dispute to Canada were relatively minor whereas those connecting it to England were much more significant. The Court of Appeal therefore concluded that English courts were a more convenient forum and granted the stay.

It is important to note that the Court of Appeal in this matter was particularly influenced by the facts that the Plaintiffs and the goods were not Canadian. At para. 88 of the Reasons, the Court of Appeal said in obiter that, when the Plaintiffs or the goods were Canadian, it was inclined to think that the jurisdiction clause and the assumption of jurisdiction by the English courts were factors that should be given no weight, as otherwise the policy of s. 46 would be frustrated.

Stay of Proceedings – Jurisdiction Clause – MLA s. 46

Sumisho Reftech Co. Ltd. v. The “Great Pride”, 2006 FC 388, 

This was an application to stay proceedings. The underlying matter concerned a contract for the carriage of goods from China to Japan and the parties to that contract were not Canadian residents. The only basis for bringing the action in Canada was that the Defendant COSCO had a Canadian office and the existence of this Canadian subsidiary gave the court jurisdiction under s. 46 of the Marine Liability Act. The Prothonotary granted the application for a stay subject only to COSCO's waiver of any time bar defence, which COSCO agreed to do. The Prothonotary refused, however, to order that the stay be conditional on Japan accepting jurisdiction, a condition requested by the Plaintiff.

Enforcement of Arbitration Award – Related Companies – Stay of Proceedings - Arbitration Clause

Pan Liberty Navigation Co. Ltd. v. World Link (HK) Resources Ltd., 2005 BCCA 206, 

In this matter the Plaintiff had obtained an arbitration award in London against a defaulting charterer under a charter party that required English law and arbitration. The Plaintiff commenced this action against the defaulting charterer to enforce the award but also included as Defendants various other corporate entities. The Plaintiff alleged that the corporate entities were one and the same and that their separate existence was a fraud. One of the entities, World Link (HK) was the charterer of the ship “Eirini” which had called at Vancouver. The Plaintiff obtained an ex parte Mareva Injunction against the ship's fuel and bunkers. The injunction was lifted when World Link (HK) paid the value of the fuel and bunkers into court. World Link (HK) then brought this application for a stay of proceedings. At first instance the stay was refused but on appeal to the Court of Appeal of British Columbia the stay was granted. The Court of Appeal held that the allegations of the Plaintiff fell squarely within the arbitration provision of the charter party because the real issue was whether World Link (HK), although not named in the charter party, was the defaulting charterer. These were matters that were properly to be heard and decided by the arbitrator according to English law. The Court of Appeal further indicated that it agreed with the approach taken by the English High Court in Norsk Hydro ASA v State Property Fund of Ukraine, [2002] EWHC 2120, that when enforcing arbitration awards the enforcing court is neither entitled nor bound to go behind the award in question. (Note: This case should be compared with Trans-Pacific Shipping Co. v Atlantic & Orient Trust Co. Ltd. et al., 2005 FC 311.)

Jurisdiction Clause – MLA s.46 – Parallel Proceedings – Appeal from Prothonotary – Standard of Review

Ford Aquitaine Industries SAS et al. v. The “Canmar Pride” et al., 2005 FC 431, 

This action concerned the loss of or damage to several containers carried from LeHavre to Montreal. The damages were estimated at $6 million. The carriage was pursuant to a transportation services agreement which provided for American law and jurisdiction. The carrier under the transportation services agreement was OOCL but OOCL was expressly permitted to subcontract the carriage, which it did, to CP Ships. The Plaintiff originally commenced proceedings against only OOCL in a U.S. District Court. The Plaintiff attempted to discontinue those proceedings but was not allowed to do so. The Plaintiff also commenced this proceeding in the Federal Court against both OOCL and CP Ships. The Defendants brought this application to stay the Canadian proceedings. At first instance, the Prothonotary granted the application for a stay. He held that section 46 of the Marine Liability Act did not oust the court's jurisdiction under section 50 of the Federal Court Act to grant a stay on grounds other than a forum selection clause. He then applied the test from the decision of the British Columbia Court of Appeal in Westec Aerospace v Raytheon Aircraft Co., (1999) 173 DLR (4th) 498. That test was: 1) Are there parallel proceedings underway?; 2) If so, is the other jurisdiction an appropriate forum?; and, 3) Has the Plaintiff established by cogent evidence that there is some personal or juridical advantage available to him in the British Columbia action that is of such importance that it would be unjust to deprive him of it? The Prothonotary held that the Plaintiff had failed to meet the third element of that test. In this regard a main point argued by the Plaintiff was that a U.S. Court would apply the COGSA limit which was substantially lower than the limitation that would apply in a Canadian court applying the Hague-Visby Rules. The Prothonotary, however, considered that the issue of the applicable limitation would be argued in either court. On appeal, the appeal Judge first considered the appropriate standard of review from a discretionary order of a Prothonotary and noted that the test had been recently reformulated to require the reviewing judge to first determine whether the questions raised are vital to the final issue in the case. If so, the discretion should be exercised de novo and the reviewing judge need not consider the second branch of the test (whether the orders were clearly wrong). The appeal Judge considered the Prothonotary's decision final and thus proceeded to exercise her discretion de novo. The appeal Judge held that the Prothonotary had erred in applying the test from Westec. She considered that the Westec approach was incorrect in that it set up “loss of juridical advantage” as a separate test or step rather than weighing it with the other usual factors to be taken into account. Moreover, she considered that the objective was not just to determine if the foreign forum was equally appropriate to the domestic forum but whether it was more appropriate than the domestic forum. Nevertheless, weighing the relevant factors she concluded that the U.S District Court was a more appropriate forum and upheld the decision of the Prothonotary.

Stay of Proceedings – Arbitration Clause – MLA s. 46 – Charterparties – Bills of Lading and Incorporation of Charter Terms – Striking Claims

Dongnam Oil & Fats Co. v. Chemex Ltd. et al., 2004 FC 1732, 

This matter concerned damage to a cargo of bleached tallow to be carried from Newark, New Jersey to Inchon, Korea. The cargo was to be carried on board the ship “Tuapse”. The “Tuapse” was owned by Novoship but chartered under a head charter to Chemex. The head charter provided for London arbitration. The Plaintiff and Chemex entered into a voyage charter party which again called for London arbitration. The cargo was loaded at Newark and two bills of lading were issued which incorporated the voyage charter party. The cargo was carried on board the “Tuapse” to Nanaimo, British Columbia where it was transhipped to another vessel for carriage to Korea. The cargo was allegedly damaged during the transhipment. The Plaintiff subsequently commenced this proceeding and the Defendants Novoship and Chemex brought applications to stay the proceedings in favour of London arbitration. The Plaintiff argued that s. 46 of the Marine Liability Act applied making the arbitration provisions inapplicable. The Prothonotary disagreed ruling that a transhipment from one vessel to another was not loading or discharging at a Canadian port within the meaning of s. 46(1)(a). The Prothonotary further noted that section 46 should be interpreted strictly since it was a restriction on freedom to contract. The Prothonotary then considered whether the arbitration provisions were incorporated. With respect to the dispute between the Plaintiff and Chemex he found that there was clearly an arbitration provision in the voyage charter and therefore concluded that he had no alternative but to allow the stay. With respect to the dispute between the Plaintiff and Novoship, however, there was no direct contractual relationship between these two and therefore he had to consider the effect of the bills of lading. In this regard he noted that if the bills of lading had specifically referred to the arbitration provision, Novoship would be entitled to a stay. In addition, if the bills of lading incorporated the charter party terms and those terms provided that the arbitration provision applied to disputes under the bill of lading, then Novoship would be entitled to a stay. However, in this case the terms of the voyage charter party did not provide that the arbitration provision applied to disputes under the bill of lading and the bills of lading did not specifically refer to arbitration. Accordingly, Novoship was not entitled to a stay. Two subsidiary issues dealt with in these reasons concerned applications to strike out a claim for a declaration the Plaintiff did not owe dead freight and a claim for wrongful arrest. The claim for a declaration on the dead freight issue was struck on the grounds that the issue had been decided in an arbitration. The claim for wrongful arrest was struck on the grounds the Plaintiff was not the owner or in possession of the cargo at the time it was arrested.

Stay of Proceedings – Jurisdiction Clause – Bill of Lading

Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, 

The Plaintiffs claimed that cargo carried from Belgium to Canada and then on to the US was damaged. The Appellant shipowner sought to rely on an exclusive jurisdiction clause in the bill of lading referring claims to the Courts of Belgium. The matter arose before s.46(1) of the Marine Liability Act came into force. The Prothonotary refused to uphold the jurisdiction clause on the basis that there had been an unauthorized deviation. The Prothonotary's decision was upheld by the Federal Court Trial Division and Federal Court of Appeal. Unusually, the test applied by the Federal Court of Appeal was the tripartite test normally used in relation to interlocutory injunctions rather than the test from the The “Eleftheria”, [1969] 1 Lloyd’s L.R.237. The Supreme Court of Canada held that the Court of Appeal had applied the wrong test and that the correct test was that set out in The “Eleftheria” which requires that “strong cause” must be shown before the court will refuse to enforce an agreed jurisdiction. The Supreme Court held that there were strong public policy considerations in favour of upholding the “strong cause” test as it created commercial certainty. The Supreme Court also rejected the finding that there had been a deviation that rendered the jurisdiction clause ineffective.

Jurisdiction Clause – Bill of Lading – MLA s. 46

Nestle Canada Inc. v. The “Viljandi” et al., 2003 FCT 28, 

This was an an application for a stay of proceedings on the basis of a jurisdiction clause contained in a bill of lading. The Court refused the stay on the grounds that the action had been commenced after the Marine Liability Act was proclaimed in force (August 8, 2001) and, therefore, the matter was covered by s. 46(1) of the Marine Liability Act.

Carriage of Passengers – Jurisdiction Clause – Athens Convention

Friesen  v. Norwegian Cruise Lines et al., 2003 BCSC 256, 

This was an application by the Defendant to stay proceedings commenced in British Columbia on the grounds of a jurisdiction clause contained in the passenger ticket. The Plaintiff, a British Columbia resident, was injured on an Alaskan cruise ship which had departed from the port of Vancouver. The Plaintiff argued that the matter was governed by the Athens Convention; Article 17 of which gave her the right to commence the proceedings in British Columbia. The Court, however, held that the Athens Convention was not applicable since Canada had not enacted the Convention at the time of the Plaintiff's accident. Moreover, the fact that the vessel was registered in the Bahamas, a signatory to the Convention, was held to not be sufficient to make Bahamian law applicable. The Court therefore held that the test set out in The Eleftheria, [1969] 2 All E.R. 641, was applicable and the onus was on the Plaintiff to establish a strong cause for not enforcing the jurisdiction clause. The Court held that the Plaintiff had met this onus in that virtually all of the witnesses resided in British Columbia and a stay of the action in favour of Florida would come close to denying the Plaintiff access to a court at all.

Jurisdiction clause -Marine Liability Act s.46 - Retrospective Application

Incremona-Salerno v. The “Castor” and “Katsuragi”, 2002 FCA 479, 

The issue in these applications was whether s. 46(1) of the he Marine Liability Act, (which provides that notwithstanding any jurisdiction or arbitration clause claims arising under a contract of carriage of goods by water may be brought in Canada where inter alia the port of loading or port of discharge is in Canada) applies to actions commenced prior to 8 August 2001, the date the Act came into force. The applications arose out of a contract for the carriage of goods by water from Italy to Canada in 1999. In February and March 2001, prior to the coming into force of section 46(1) of the Marine Liability Act , the Defendants brought the applications to stay the proceedings relying upon a jurisdiction clause in the bill of lading that gave exclusive jurisdiction to the courts of Hamburg. The motions, however, were not heard until after the coming into force of the Marine Liability Act and the Plaintiff argued that the Act applied. At first instance, the Motions Judge agreed with the Plaintiff and dismissed the stay applications. On appeal, however, the Court of Appeal held that section 46(1) was not retroactive and did not apply to actions commenced prior to 8 August 2001.

Stay of Proceedings - Jurisdiction Clause - Towage

Atlantic Cement Carriers Ltd. v. Atlantic Towing Ltd., 2002 FCT 761, 

This was an application by a tug owner to stay proceedings commenced in the Federal Court by the owner of a barge for damages sustained because of the sinking of the barge and for an indemnity for any amounts the barge owner might be required to pay to the owner of the cargo on board the barge at the time of the sinking. The sinking occurred during the course of a towing operation from Pictou, Nova Scotia to various ports in Newfoundland. The application for the stay was based upon a jurisdiction clause in the TOWCON agreement that specified the agreement was to be governed by English law and conferred jurisdiction on the High Court of Justice in London. The application was resisted on the grounds that s. 46 of the Marine Liability Act applied or, alternatively, that there were strong reasons to not enforce the jurisdiction clause. With respect to the application of s. 46 of the Marine Liability Act the Prothonotary held that the contract in issue was one of towage not carriage and that s. 46 therefore did not apply. With respect to whether there were strong reasons to deny the stay, the Prothonotary reviewed the various factors set out in the “Eleftheria” [1996] 1 Lloyd’s Rep. 23, and held that there were no strong reasons. Accordingly, the stay was granted.

Stay of Proceedings - Arbitration Clause - Commercial Arbitration Code

Mariana Maritime S.A. v. Stella Jones Inc., 2002 FCA 215 , 

This was an appeal from an Order by the motions Judge dismissing an application by the Defendant carriers for a stay of proceedings. The facts were that the parties had entered into a “Conline” booking note for the carriage of the Plaintiffs’ cargo. The booking note specified that its terms would be superceded by the terms of the bill of lading which were said to be set out in full on the reverse of the booking note. In fact, as the booking note had been sent by facsimile, the terms were not on the reverse. It was, however, common ground that those terms did not include an arbitration clause. On the bill of lading that was actually issued there was added a typed “Centrocon” arbitration clause in the margin which called for London arbitration. It was this clause which the Defendants sought to enforce. The motions Judge referred to Article 8 of the Commercial Arbitration Code and noted that the court had no discretion where it finds an arbitration clause. However, the motions Judge found that on the facts of the particular case there was no evidence the Plaintiff had ever signed or agreed to the arbitration clause contained in the bill of lading and held it was therefore not part of the contract. On appeal, the Court of Appeal affirmed the decision of the motions Judge holding that if the carrier wanted to make the contract of carriage subject to the arbitration clause they should have made their intention known to the Plaintiffs.

Stay - Jurisdiction Clause - "Merchant" - Who is Bound

Encan Liquidation v. Transintra Canada, 2000 CanLII 16598 , 

This was an application by the Defendant carrier to stay a Third Party claim brought against it by a co-Defendant, the freight forwarder of the Plaintiff cargo owner, on the basis of a jurisdiction clause in the bill of lading. The Court noted that the bill of lading was a contract between the carrier and the "Merchant" as defined. The term "Merchant" was defined as including the shipper, holder, consignee, receiver of the goods ... and anyone acting on behalf of any such person". On this definition, the Court held the freight forwarder was a "Merchant" and was bound by the terms of the bill of lading, including the jurisdiction clause. In the result, the Court ordered the proceedings stayed.

Stay of Proceedings - Jurisdiction Clause - Appeals Prothonotaries

Hyundai Merchant Marine Co. Ltd. v. Anraj Fish Products Industries Ltd. et al., 2000 CanLII 15628, 

This was an appeal from an order of a Motions Judge in which the Motions Judge overturned the order of a Prothonotary staying the action on the grounds of a jurisdiction clause in the bill of lading selecting Korea as the appropriate jurisdiction. The Federal Court of Appeal stated that the standard of review on an appeal of this sort, whether from a decision of a Motions Judge or a Prothonotary, is that the court of appeal must uphold the order unless it was arrived at on a wrong basis or was plainly wrong. The Court of Appeal noted that the court should not microscopically examine the reasons of the Motions Judge or Prothonotary in applying this test and held that the Motions Judge had erred in overturning the decision of the Prothonotary. The Court of Appeal further re-stated that prima facie an application to stay proceedings based on a jurisdiction or arbitration clause must succeed unless "strong reasons" are shown that it would not be reasonable or just to enforce the clause. The Court examined the factors set out in The Eleftheria, [1969] 1 Lloyd’s Rep.237, (i.e. the country in which the issues of fact are situated, the applicable law, the country with which the parties are most closely connected, whether the defendant genuinely desires trial in a foreign country and the prejudice to the plaintiff of litigating in a foreign country) and concluded that there were not strong reasons to decline to enforce the jurisdiction clause. In the result, the action was stayed.

Stay of Proceedings - In Rem Proceedings - Change of Ownership

Fibreco Pulp Inc. v.  Star Shipping A/S et.al., 1998 CanLII 7356 ,  2000 CanLII 15323

This was an appeal from the order of a Motions Judge upholding the decision of a Prothonotary in which the Prothonotary ordered that the action be stayed not only against parties to an arbitration agreement but also against Defendants not parties to the agreement. The case involved two shipments of pulp from Squamish, British Columbia to Finland via Rotterdam. The Plaintiffs were the vendor of the pulp, the buyer of the pulp for resale, and the ultimate buyer/consignee of the pulp. The Defendants were the Squamish terminal, the charterers, Star Shipping A/S, and the owners of the various ships that carried the pulp. The buyer of the pulp and Star Shipping had entered into a contract of affreightment that contained an arbitration agreement in favour of London arbitration. The Prothonotary held that pursuant to the Commercial Arbitration Act he had no alternative but to grant a stay of proceedings against Star Shipping. The Prothonotary noted that the more interesting question was whether the action ought to be stayed against the other Defendants who were not parties to the agreement. The Prothonotary referred to Nanisivik Mines Ltd. v Canarctic Shipping Co. Ltd., (1994), 113 D.L.R. (4th) 536, where the Federal Court of Appeal ordered a stay against persons not parties to an arbitration agreement on the grounds that "disposing of the issues between the two parties to the arbitration agreement might, more likely than not, resolve the entire litigation". In reliance on this decision, the Prothonotary noted that London arbitration "may well resolve the whole claim" and consequently ordered that the entire action be stayed.

A secondary issue in this case was whether the in rem action against one of the Defendant ships ought to be set aside and the security given by the shipowner returned. The grounds were that there had been a change in the beneficial ownership of the ship after the voyage in question but before the action was commenced. (For certain specified claims, including cargo claims, section 43(3) of the Federal Court Act requires that the ship's beneficial ownership be the same at the time of commencement of the action as it was when the cause of action arose.) The Court granted the motion and ordered that the in rem proceeding be struck and that the security be returned.

On appeal, the Motions Judge noted that the Prothonotary's reasons were detailed and sound and the appeal was dismissed. On further appeal, the Federal Court of Appeal noted that there were multiple competing jurisdictions none of which were ideal. Nevertheless, the Court of Appeal found no error on the part of the Prothonotary and dismissed the appeal. In the result, the action was stayed.

Stay of Proceedings – Jurisdiction Clause

Texserv Inc. v. Incon Container USA Ltd., 2000 CanLII 22371, 

This was an application by the Defendant carrier to stay proceedings on the basis of a jurisdiction clause in the bill of lading requiring actions to be commenced in Florida. The Court declined the stay on the basis that the contract of carriage was effected before the bill of lading was issued, the Plaintiff was not aware of the jurisdiction clause until it received delivery of the goods, and there was virtually nothing to connect the proceedings with Florida except that the cargo was transhipped there.

Arbitration Clause - Incorporation by Reference

Thyssen Canada Limited v. The "Mariana, [2000] 3 FC 398, 

This was a motion to stay proceedings and refer the matter to arbitration pursuant to an arbitration clause contained in a charter party and incorporated by reference in the bill of lading. Clause 1 of the bill of lading expressly incorporated the charter party including any choice of law clause or arbitration clause. However, the details of the charter party were not filled in on the overleaf of the bill of lading. There were, in fact, two charter parties; a head charter and a sub-charter. Although both charters were subject to English law and called for English arbitration, the Plaintiff, the holder of the bill of lading, argued that there was no agreement to arbitrate as the details of the charter party were not filled in on the bill of lading. At first instance and on appeal it was held that clause 1 of the bill of lading was a sufficient agreement to arbitrate and that the failure to fill in the details of the charter party was not relevant. The court stayed the action.

Arbitration Clause - Stay - Counter Security - Costs

Frontier International Shipping Corp. v. The "Tavros", [2000] 2 FC 427,  [2000] 2 FC 445

In this matter the Plaintiff commenced proceedings to obtain security by arrest for arbitration proceedings in New York. Once the security was obtained the Plaintiff brought an application to stay the proceedings. The Defendant questioned the fairness of an arrest to obtain security for an arbitration and also requested counter-security for its counter-claim in the arbitration as well as security for costs for the arbitration and security for the costs of the Federal Court proceeding. The Prothonotary reviewed the authorities relating to the use of the court's in rem jurisdiction to obtain security for an arbitration and although he noted it had bothered judges from time to time he concluded that it was not open to the Defendant to urge any unfairness. He next considered the Defendant's request for counter-security. He accepted that Article 9 of the Commercial Arbitration Code gave the court the power to order interim measures of protection such as mareva injunctions, garnishment and arrest, however, these measures are based upon the presence in the jurisdiction of an asset which might be moved against. In the instant case there was no asset belonging to the Plaintiff in the jurisdiction. He next considered whether he could order that the Plaintiff post security for the costs of the arbitration. He held that this was the purview of the arbitrators, that the Federal Court Rules did not allow such security and that, in any event, there was not a demonstrated need for security. Finally, he considered the Defendant's request for security for costs of the Federal Court proceeding. Rather than ordering security for costs, however, he ordered that the Plaintiff pay costs to the Defendant as an interim measure of protection, including the costs of the security which the Defendant had posted. This latter part of the Prothonotary's order was overturned on appeal on the basis that it was not "interim protection" but was a final order.

Jurisdiction Clause - Stay of Proceedings

Cerco Industries Ltd. v. The OOCL Canada, Vancouver Registry No.C990101 (B.C.S.C.), 

This was an application for a stay of proceedings based on a jurisdiction clause in the bill of lading in favour of Belgium. The court noted that a stay should be ordered unless the Plaintiff showed "strong cause" for not doing so and that the "strong cause" the Plaintiff must show goes beyond mere balance of convenience. The court further noted that it should show deference for forum selection clauses in commercial matters. The Plaintiff argued that the stay should be refused on the basis that it would be costly, inefficient and inconvenient to determine the dispute in Belgium and that a stay would result in duplicitous proceedings. Although the court accepted that the balance of convenience probably favoured British Columbia, this was not sufficient, and the court ordered the stay.

Jurisdiction Clause - Stay - Korea

Itochu Canada Ltd. v. The "Fu Ning Hai", 1999 CanLII 8532, 

This was an application for a stay of proceedings based on a Korean jurisdiction clause in the bill of lading. The stay was refused. The factors that led the court to deny the stay were many. First, the proceeding was against multiple Defendants, only one of whom requested the stay. The court considered that a stay would result in a multiplicity of proceedings with the possibility of inconsistent decisions. Second, the court found there was sufficient reason to refuse the stay in the fact that the Defendant had not agreed to waive the time bar that would otherwise apply to any Korean action. Third, the court considered that the lack of formal discovery procedures in Korea was a substantial point against allowing a stay. Fourth, the court noted that counsel for the Defendant had initially requested and been given a time extension to file a defence and had further advised the Plaintiff that they would make an application for late filing of their Statement of Defence. The court considered that this raised an estoppel and was a strong reason to deny the stay. Finally, the court noted that the Defendant's delay in bringing the stay application was also a strong reason to deny the stay.

Jurisdiction Clause - Stay of Proceedings

Town Shoes Limited v. Panalpina Inc. et al., 1999 CanLII 8326, 

This case concerned the theft of a container of shoes carried by the Defendants from Italy to Montreal. The theft occurred at a Montreal warehouse. The Defendants brought this motion to stay the proceedings pursuant to a law and jurisdiction clause in the bill of lading that provided for the exclusive jurisdiction of the Court of Hamburg and the application of German Law. The court denied the stay on the grounds that the choice of law clause was inconsistent with the Clause Paramount which provided for the application of the Canadian Carriage of Goods by Water Act. Additionally, the court held that there were strong reasons for denying the stay as the evidence and witnesses were in Quebec, the Defendants had little connection with Germany, and the Defendants would suffer no prejudice if the case were heard in Canada. The court further concluded that the Defendants did not have a genuine desire to have the trial take place in Germany.

Stay of Proceedings - Jurisdiction Clause

Mitsui & Co. v. The "Evelyn", 1998 CanLII 5872 (BC SC), 

This was an application to stay proceedings in British Columbia in favour of Japan. The action was for damage to a cargo of coils shipped from Japan to British Columbia. The Defendants relied upon a jurisdiction clause in the bills of lading selecting the Tokyo District Court as the appropriate forum. The motions judge followed well established case law to the effect that such clauses will be enforced unless the Plaintiff can show "strong cause" to override the agreement. The motions judge held that the Plaintiff had not shown "strong cause" for not enforcing the jurisdiction clause. The factors that the motions judge thought were persuasive were: that the contract was subject to Japanese law; that the shipper was a Japanese company; that the evidence of pre-shipment damage was in Japan; and that the Defendant had agreed to waive any time bar.

Stay of Proceedings - Jurisdiction Clauses - Carriage of Goods - Identity of Carrier

Jian Sheng Co. Ltd. v. Great Tempo S.A., 1998 CanLII 9059 (FCA), 

This is an important case on the issue of the identity of the carrier under a bill of lading although the case arose in the context of a motion for a stay of proceedings under a jurisdiction clause. The Federal Court of Appeal held that where the bill of lading is signed for or on behalf of the Master it is a shipowner's bill and the shipowner is prima facie the carrier. The Court expressly rejected the notion that both the charterer and owner could be a carrier. See the full summary on the Arbitration/Jurisdiction Clauses page.

Stay of Proceedings - Arbitration Clause - Letters of Undertaking

Methanex New Zealand v. Fontaine Navigation S.A., 1998 CanLII 9039 (FC), 

This was an application for a stay of proceedings on the grounds of an arbitration clause in a contract of affreightment and a jurisdiction clause in the bill of lading. The Plaintiff resisted the application on various grounds including that the Defendants, through their solicitors, had given a letter of undertaking. The letter of undertaking provided that, in consideration of the Plaintiff refraining from arresting the Defendant vessel, the Defendants undertook to instruct named solicitors to accept service of the Statement of Claim and to file a Statement of Defence. The letter further provided that it was "without prejudice as to any rights or defences which the owners or vessel may have, non of which is to be regarded as waived". The Court held that the letter of undertaking superseded the arbitration and jurisdiction clauses with the result that the stay was refused. In addition, with respect to the jurisdiction clause, the Court felt there were strong reasons to exercise its discretion against a stay. These reasons included: that under Japanese law only the owner would be a carrier; that a stay would result in duplicitous proceedings, a strong grounds for refusing a stay; that the security provided by the letter of undertaking applied only to a judgement of the Federal Court of Canada and the Defendant had not offered to post alternate security, a strong reason to deny a stay; and that the Defendant did not waive any time bar defence it might have.

Stays of Proceedings - Marine Insurance - Interpretation of Arbitration Provision in Policy

Ocean Fisheries Ltd. v. Pacific Coast Mutual Marine Insurance Company, 1997 CanLII 6367 (FCA),  30/10/1997

This was an appeal from an order of Mr. Justice Teitelbaum of the Trial Division. A motion for a stay was initially brought before the Prothonotary who ordered a stay on the basis of an arbitration provision contained in the by-laws of the Defendant, a mutual insurance company, and incorporated by reference into the terms of an insurance policy. The Plaintiff argued that the arbitration provisions should be read contra proferentem against the Defendant and, that when so read they did not apply. The Prothonotary held that there was no ambiguity in the provisions and that they did apply. Further, the Prothonotary disagreed that the doctrine of contra proferentem should apply to an insurance policy issued by a mutual insurance company such as the Defendant. On appeal, Mr. Justice Teitelbaum held that the Prothonotary erred in failing to read the insurance policy contra proferentem. Further, he held that when the policy was so read the arbitration provision applied only if the Defendant had made an offer of settlement. As the Defendant had not made an offer of settlement, the Plaintiff was not obliged to arbitrate. On further appeal to the Court of Appeal the Court affirmed the result of Mr. Justice Teitelbaum. The Court held that a contract of insurance was to be interpreted like any other cont ract,i.e.. to discover and give effect to the intention of the parties as disclosed by the words used, the context and the purpose. The Court held that when and the bylaws of the Defendant were so interpreted the dispute did not come within the arbitration clause.

Stay of Proceedings - Jurisdiction Clause - Bills of Lading - Past Practices

Transcontinental Sales Inc. v. Zim Container Service , 1997 CanLII 6103 (CF), 

This was a motion for a stay of proceedings on the grounds that a jurisdiction clause in the bills of lading required any disputes to be brought in Israel. The Plaintiff argued that countless claims between the parties in the past had been resolved in Canada and that the Defendant was only seeking procedural advantages. The Court, nevertheless, ordered that the action be stayed.

Stay - Jurisdiction Clause - Injury to Seaman - Employment Contract - Foreign Law

Sarabia v. The Oceanic Mindoro, 1996 CanLII 1537 (BC CA), 

In this matter a seaman was injured while his ship was at Vancouver. His employment contract provided that all actions arising out of or by virtue of the contract were to be heard by the Courts of the Philippines. The issue in the case was whether this wording was wide enough to include claims in negligence against the shipowner. At first instance, the Court held it was not and refused the shipowner's application for a stay of proceedings.On appeal, the Court of Appeal held that the contract was clear and ordered the proceedings stayed.

Stay of Proceedings – Jurisdiction Clause – Bill of Lading

Can-Am Produce and Trading Ltd. v. The "Senator", No. T-2353-95 (F.C.T.D.), 

This matter concerned a motion by the Defendant to stay proceedings by reason of a jurisdiction clause in the bill of lading. The Plaintiff opposed the motion on three grounds: that there were two jurisdiction clauses in the bill of lading which were inconsistent; that Canada was the more convenient jurisdiction; and that the action was also against Canadian stevedores who were not subject to the jurisdiction clause. The Prothonotary held that the two jurisdiction clauses in the bill of lading could be read together and that the other grounds argued by the Plaintiff were not sufficiently compelling to depart from the jurisdiction chosen by the contract.

Summary Judgment - Stay of Proceedings

Granville Shipping Co. v.  Pegasus Lines Ltd., [1996] 2 FC 853, 

This case involved a claim by the Plaintiff for unpaid hire under a charterparty and a counterclaim by the Defendant for damages for delay. The Plaintiff brought a motion for summary judgment on the main claim and a motion for an order staying the counterclaim and referring it to arbitration pursuant to the arbitration clause in the charterparty. The Court declined the request for summary judgment finding there were genuine issues of fact and credibility. With respect to the stay application, the Court held the request for a stay had not been made in a timely manner and further held the Plaintiff had waived its right to a stay of the counterclaim by commencing the main action in the Federal Court.

Stay of Proceedings - Arbitration Clause - Charter Party - Waiver/Estoppel

Siderurgica Mendes Junior S.A. v. The "Ice Pearl", 1996 CanLII 2746 (BC SC), 

In this cargo case the Plaintiffs argued that an arbitration clause in a charter party should not be given effect to on two grounds: First, that the bill of lading contained a "supersession clause" that did not specifically refer to the arbitration provision and, second, that the Defendant had waived its right to arbitration. On the first issue, the Court held that the "supersession clause" did not oust the arbitration agreement. On the second issue, the Court seemed to question whether there could be waiver or estoppel in relation to an agreement to arbitrate. The salient facts were that the Defendant had filed an appearance and had promised to file a Statement of Defence but had not yet done so. The Defendant had also issued a Demand for Discovery of Documents and had requested particulars of the Statement of Claim. The Court referred to the Commercial Arbitration Code which provides that an application for a stay shall be brought not later than when submitting the first statement on the substance of the dispute. The Court held that since the Defendant had not yet filed a defence it had not submitted its first statement on the substance of the dispute and was therefore not precluded for requesting a stay.

Stay of Proceedings – Jurisdiction Clause – Bill of Lading - Attornment

Trans-Continental Textile Recycling v. The "Erato II" and "MSC Giovanna", 1995 CanLII 3547 (FC), 

In this matter the Defendant sought to rely on a jurisdiction clause in a bill of lading that selected New York as the proper forum. The Plaintiff opposed the Defendant's motion for a stay on the grounds, inter alia, that the Defendant had attorned to the jurisdiction of the Federal Court. The Defendant had filed a Statement of Defence in the action and draft Affidavits of Documents had been exchanged between the parties. It was not until nine months after the defence had been filed that the Defendants brought their motion for a stay. The Court concluded that the Defendants had given every indication of attornment to the jurisdiction and refused the motion for a stay.

Stay of Proceedings – Jurisdiction Clause – Notice

Usach Technologies Inc. v. Lamprecht Transport Ltd., No. T-1928-94, (F.C.T.D.), 

In this matter the Court enforced a jurisdiction clause, contained in a through bill of lading, in favour of Switzerland. The Plaintiff attempted to argue that the clause had not been properly brought to its attention but the Court held that the Plaintiff knew of the existence of the clause and accepted it.

Stays of Proceedings - Arbitration Clause - Charter Party

Arbella S.A. v. The "Aghia Markella", 94 F.T.R. 229, 

The subject matter of this dispute was whether the Defendant had breached a charter party when it failed to supply the ship on the date specified. The reason the Defendant could not supply the ship is that it had been detained by Canadian Coast Guard. The Plaintiff argued that the arbitration clause was inoperative because, at the time it was entered into, the parties did not contemplate that the dispute would relate to Canadian Coast Guard. The Court disagreed and referred the matter to arbitration in London.

Stay of Proceedings – Jurisdiction Clause – Multiple Proceedings

Donohue Inc. v. The "Ocean Link", No. T-1692-92, (F.C.T.D.), 

In this matter the Court refused a motion for a stay of Third Party proceedings on the grounds that, first, the Court could not determine on the evidence before it whether a contract with a jurisdiction clause existed and, second, it was likely that if the stay was granted two separate actions would proceed.

Stay of Proceedings - Arbitration Clause - Substitute Bills of Ladingl

Conagra International S.A. v. Seamotion Navigation Ltd., 1995 CanLII 1789 (BC SC), 

In this matter the Defendant shipowner attempted to enforce an arbitration agreement contained in a charter party. The case concerned a shipment of wheat from Canada originally intended for Iraq. The case was unusual in that, because of the embargo on shipments to Iraq, the shipment was resold at sea and redirected to Malta. New bills of lading were issued at the request of the shipper so that the new buyer could obtain title to the shipment. The new bills of lading contained a term that incorporated all provisions of the Charter Party "including arbitration clause". The shipowner relied on the new bills of lading as incorporating the arbitration clause in the Charter Party. The Court, however, held that the new bills of lading were not intended to create a new contractual obligation between the shipper and the shipowner but were merely intended to redirect the shipment and to act as documents of title. The application for a stay was refused.