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 The booking note specified that its terms would be superceded by the terms of the bill of lading which were said to be set out in full on the reverse of the booking note.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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.