Arc-En-Ciel Produce Inc. v. BF Leticia (Ship)

Arc-En-Ciel Produce Inc. v. BF Leticia (Ship)
Court (s) Database
Federal Court Decisions
Date
2022-06-07
Neutral citation
2022 FC 843
File numbers
T-2184-18, T-2185-18
Notes
Reported Decision
Decision Content
Date: 20220607
Dockets: T-2184-18
T-2185-18
Citation: 2022 FC 843
Ottawa, Ontario, June 7, 2022
PRESENT: The Honourable Madam Justice Rochester
ADMIRALTY ACTION IN REM AND IN PERSONAM
Docket: T-2184-18
BETWEEN:
ARC-EN-CIEL PRODUCE INC., A BODY POLITIC AND CORPORATE LOCATED AT 122 THE WEST MALL, TORONTO, ONTARIO, CANADA M9C 1B9
Plaintiff
and
THE SHIP "BF LETICIA" AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP “BF LETICIA” AND BF LETICIA FOROOHARI SCHIFFS, A BODY POLITIC AND CORPORATE CARE OF PETER DOEHLE SCHIFFAHRTS-KG, ELBCHAUSSEE 370, 22609, HAMBURG, GERMANY, C/O MONTSHIP INC., 360 ST. JACQUES STREET, SUITE 100, MONTREAL, QUEBEC H2Y 1R2 AND GREAT WHITE FLEET, A BODY POLITIC AND CORPORATE OF THE UNITED STATES, C/O MONTSHIP INC., 360 ST. JACQUES STREET, SUITE 100, MONTREAL, QUEBEC H2Y 1R2
Defendants
Docket: T-2185-18
AND BETWEEN:
ARC-EN-CIEL PRODUCE INC., A BODY POLITIC AND CORPORATE LOCATED AT 122 THE WEST MALL, TORONTO, ONTARIO, CANADA M9C 1B9
Plaintiff
and
THE SHIP "MSC BELLE" AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP “MSC BELLE” AND BELLE INC., A BODY POLITIC AND CORPORATE CARE OF MSC MEDITERRANEAN SHIPPING CO. SA, CHEMIN RIEU, 12-14, 1208 GENEVA, SWITZERLAND, C/O MONTSHIP INC., 360 ST. JACQUES STREET, SUITE 100, MONTREAL, QUEBEC H2Y 1R2 AND GREAT WHITE FLEET, A BODY POLITIC AND CORPORATE OF THE UNITED STATES, C/O MONTSHIP INC., 360 ST. JACQUES STREET, SUITE 100, MONTREAL, QUEBEC H2Y 1R2
Defendants
JUDGMENT AND REASONS
TABLE OF CONTENTS:
I. Introduction
II. Facts
III. Procedural History
IV. Issues
V. Analysis
A. Bills of Lading
(1) First Function – Receipt
(2) Second Function – Evidence of the Contract of Carriage
(3) Third Function – Document of Title
(4) The Form of a Bill of Lading
B. The Hague-Visby Rules – Introduction and Context
C. Is the Shipping Document a Contract of Carriage Covered by a Bill of Lading or Any Similar Document of Title Under the Hague-Visby Rules?
D. Is the Shipping Document akin to a Waybill?
E. The Service Contract
F. Conclusion – Characterization of the Shipping Documents and the Service Contract under the Hague-Visby Rules and section 43 of the Act
G. Does Section 46 of the Act Apply to the Shipping Documents?
H. Is There a Strong Cause Not to Enforce the Forum Selection Clause in Favour of the United States District Court, Southern District of New York?
VI. Conclusion
I. Introduction
The history of maritime law bears the stamp of a constant search for stability and security in the relations between the men who commit themselves and their belongings to the capricious and indomitable sea. Since time immemorial, the postulate which has inspired all the approaches to the problem has implied the establishment of a uniform law.
L’histoire du droit maritime porte l’empreinte d’une recherché constant de stabilité et de sécurité dans les rapports entre les hommes qui confient leur personne et leurs biens à la mer capricieuse et indomptable. Depuis des temps immémoriaux, le postulat qui a inspiré toutes les approches du problème, implique l’établissement d’un droit uniforme.
Lilar et Bosch, Le Comité Maritime International 1897-1972.
[1] Save for the use of the term “men” rather than persons, this statement holds true today. The parties in this action are seeking certainty as to the legal regime applicable to the contractual arrangements for the carriage of the goods at issue.
[2] This matter concerns several containerized shipments of fresh produce transported from Costa Rica to Etobicoke, Canada. The Plaintiff, Arc-En-Ciel Produce Inc. [the Cargo Claimant] alleges that the cargo arrived at its destination in a damaged and deteriorated state. The Cargo Claimant commenced two actions in this Court, naming as Defendants, Great White Fleet, the vessels that carried the cargo, and their respective owners. The Defendant, Great White Fleet [the Carrier], is a defendant in both actions.
[3] The Carrier and the Cargo Claimant have a business relationship spanning several years. The nature of the contractual relationship between them, as it pertains to the shipments in question, is at issue in the present motions.
[4] The Carrier brought a motion in each of the actions seeking a stay, pursuant to subsection 50(1) of the Federal Courts Act, RSC 1985, c F-7, on the basis of a forum selection clause in favour of the United States District Court, Southern District of New York. The Carrier’s position is that the parties should be held to their bargain and, consequently, this Court should exercise its discretion to grant a stay. The Carrier submits that the Cargo Claimant has failed to show a “strong cause” as to why the forum selection clause should not be enforced. The Carrier relies on ZI Pompey Industrie v ECU-Line NV, 2003 SCC 27 [ZI Pompey], in which the Supreme Court of Canada endorsed the “strong cause” test as set out in Cargo Owners v “Eleftheria” (The), [1969] 1 Lloyd's Rep. 237 at 242 (Adm Div) [The Eleftheria].
[5] The Cargo Claimant asks this Court to decline to enforce the forum selection clause on two grounds. First, the Cargo Claimant submits that the contracts at issue fall within the scope of section 46 of the Marine Liability Act, SC 2001, c 6 [the Act]. Section 46 of the Act permits a claimant to institute proceedings in Canada despite a foreign jurisdiction clause, provided certain requirements are met. Second, and in the alternative, the Cargo Claimant submits that it has demonstrated that a “strong cause” exists to set aside the forum selection clause.
[6] The two issues in the present motion are therefore (i) whether section 46 of the Marine Liability Act applies to the contracts at issue; and (ii) if not, whether there is a “strong cause” to refuse to enforce the forum selection clause.
[7] In order to rule on the first issue, it is necessary to consider the nature of the contractual arrangements between the Carrier and the Cargo Claimant. I will state from the outset that this is not an easy task. The applicable provisions of the Act, including the international convention known as the Hague-Visby Rules appended thereto, are rooted in provisions that were negotiated in 1893. Those 1893 provisions were in turn based on pre-existing mercantile and maritime trade practices. These maritime trade practices had existed and evolved over the course of approximately six centuries prior to 1893. They have continued to evolve over the course of the 20th and 21st centuries, while much of the statutory language at issue, conceived in the 19th century, remains the same.
[8] This Court thus finds itself faced with a choice between, on the one hand, a strict interpretation of the Act based on the meaning of language used and the documents in existence in the 19th century, and on the other hand, an expansive interpretation taking into account the modern realities of the international carriage of goods and the objective of protecting Canadian consumers. A consideration of the origins of the documentation and the legislative texts at issue is therefore, among other things, appropriate and necessary to the determination of the present motions. I wish to note that I have been assisted in this task by the able submissions of counsel, both practitioners of the maritime bar, whose efforts on behalf of their respective clients were thorough, considered, and clear.
II. Facts [9] Before turning to the origins of the type of documents at issue and the history of the language contained in Canada’s carriage of goods by water regime, I shall briefly set out the facts, and following that, the procedural history of this case.
[10] The Carrier and the Cargo Claimant have filed affidavits in support of their motion materials. The Carrier relies upon the affidavit of Luis Rodriguez Contreras, Transportation Claims Analyst, who handles claims for the Carrier, including the claims that are the subject of this action. Mr. Contreras describes in detail the business relationship between the parties and the process followed, along with the documentation used, with respect to cargo transported by the Carrier under the terms of its arrangements with the Cargo Claimant. The relevant documentation to which Mr. Contreras refers is appended to his affidavit.
[11] The Cargo Claimant relies upon the affidavit of Sam Hak, President of the Claimant, who also sets out the relationship between the parties, addresses the shipments at issue, and attaches the relevant documentation to his affidavit.
[12] The Carrier and the Cargo Claimant have had a business relationship since 2012. The Cargo Claimant is a Canadian company that specializes in the importation and distribution of fresh produce to local merchants. The Carrier specializes in dry and refrigerated containerized cargo services between Central and North America. The Carrier is an affiliate of Chiquita Fresh North America LLC and has its principal place of business in Florida.
[13] Over the course of the business relationship, the Carrier provided the Cargo Claimant with door-to-door transportation services for produce from Central America to Toronto or Etobicoke, Ontario using refrigerated containers. As of June 2019, the Carrier had transported approximately 185 containers of produce for the Cargo Claimant. With respect to shipments originating from Costa Rica, the Carrier and the Cargo Claimant had entered into a series of what are termed service contracts. The most recent service contract, entitled Confidential Service Contract [Service Contract], was entered into in June 2017, and remained in effect through June 30, 2018. It was in effect at the time of the shipments at issue.
[14] The Service Contract provided for discounted rates, as compared to the Carrier’s published tariff, provided the minimum cargo commitment was reached. The Service Contract contained a clause incorporating the “Carrier’s bill of lading” and providing that said, “bill of lading will determine the terms and conditions of the shipment”.
[15] The Carrier’s standard form bill of lading is a one-page form with printed text on both sides. The vast majority of the clauses containing the terms and conditions are printed on the reverse side of the one-page form. The clauses include a jurisdiction clause, also known as a forum selection clause, providing for the exclusive jurisdiction of the United States District Court, Southern District of New York. They further include a “clause paramount” which provides that the carriage shall be governed by the United States Carriage of Goods by Sea Act, 1936 [US COGSA], and an applicable law clause specifying the application of United States federal law, or where there is no governing federal law, the laws of the State of New York.
[16] The Cargo Claimant states that at no time was it provided with a copy of the terms and conditions of the Carrier’s standard form bill of lading. In response, the Carrier states that it was available and referenced in all the contractual documentation between the parties.
[17] The Carrier filed evidence of the modus operandi between the parties for door-to-door shipments. This method of operating also formed the subject of submissions during the hearing. The Cargo Claimant has not contradicted the parties’ modus operandi and it is common ground that the shipments at issue were door-to-door shipments.
[18] In order to initiate a shipment in Costa Rica, a company called Arcsam de Costa Rica [the Shipper], which the Carrier believes to be an affiliate of the Cargo Claimant, contacts the Carrier’s representative in Costa Rica with a booking request. The booking request confirms, among other things, the type of produce, quantities, place of pick up and requested date for the delivery of one or more empty containers. The Carrier then arranges for a local trucking company to deliver the required number of containers to be stuffed and sealed by the Shipper. Once stuffed and sealed, the containers are then transported by truck to the vessel’s port of loading, Puerto Limon, in Costa Rica.
[19] The containers are shipped as “shipper load, stow and count”, meaning it is the Shipper who provides the information to the Carrier about the contents of the container. The Shipper provides the Carrier with, among other things, the seal numbers of the containers, the description and quantity of the goods therein, and the required temperature setting for the refrigeration unit. This information is then entered into the Carrier’s database.
[20] Once the containers arrive in Puerto Limon, they are stored until such time as they are loaded onto a vessel for a short-sea transit to Guatamala, following which they are discharged and then loaded onto a vessel bound for Wilmington, United States.
[21] Once the containers are loaded, the Carrier sends an email to the Cargo Claimant with (i) a notice of arrival and (ii) a copy of what shall be referred to as a shipping document [Shipping Document] for each container. The Carrier refers to the Shipping Document as an “unsigned non-negotiable Express Release Bill of Lading”. The Cargo Claimant refers to the Shipping Document as a “non-negotiable International Bill of Lading”. The nature and characterization of the Shipping Document and the consequences that flow from that characterization are central to the present motions.
[22] For the cargo at issue, six (6) Shipping Documents were issued, copies of which are in the record. A copy of one of the Shipping Documents is appended to these reasons as Appendix A. I shall discuss the contents of the Shipping Documents, along with the Service Contract, in greater detail in the analysis section of these reasons. For the moment, it is sufficient to say that the Shipping Documents bear the printed name of the Carrier on the top left and the printed heading “INTERNATIONAL BILL OF LADING” on the top right. Each Shipping Document contains a reference to the Service Contract number. The Shipping Documents indicate a door-to-door transport, the name of the vessel, the container number and contents, an “express release” notation, and are unsigned. The Cargo Claimant is identified as both the consignee and the notify party. The places of receipt are indicated as inland in Costa Rica (Ujarras and Chachagua), the port of loading is Puerto Limon, Costa Rica, the port of discharge is Puerto Barrios, Guatemala, and the place of delivery is Etobicoke, Ontario. Once issued, the Cargo Claimant receives copies of the Shipping Documents, but the Cargo Claimant does not receive any originals.
[23] To continue with the modus operandi, once the vessel arrives in Wilmington, United States, the containers are discharged and the Carrier obtains authorization from customs to move the cargo. The Carrier then engages a road carrier to collect the containers at the Port of Wilmington and deliver them to the final destination of Etobicoke, Ontario. Upon delivery of the containers to the Cargo Claimant, the truck driver requests that a representative of the Cargo Claimant sign a copy of a trucking bill of lading. A copy of the trucking bill of lading, also known as a road carrier’s bill of lading, is not in the record.
[24] It is common ground that in order to obtain delivery of the cargo, the Cargo Claimant was not required to tender or present a copy of the Shipping Document.
[25] The carriage of the cargo at issue was booked between December 8, 2017 and January 15, 2018. The Shipping Documents pertaining to each of the containers were issued between December 15, 2017 and January 28, 2018. The shipments arrived in Etobicoke between January 4 and February 26, 2018. The Cargo Claimant claims that when it unsealed the containers, it discovered that the cargoes exhibited various forms of damage.
[26] The Cargo Claimant notified the Carrier of the loss and submitted claims to the Carrier. As to the claims process with the Carrier, the Cargo Claimant dealt with Montship Inc., the Carrier’s agent, based in Montréal, Canada.
[27] On December 21, 2018, the Cargo Claimant commenced the present actions. The Carrier filed the present motions on June 7, 2019. As will be discussed below, the procedural path of the motions has been a lengthy one.
III. Procedural History [28] The motions were initially heard by my colleague Justice Elizabeth Heneghan. In a judgment dated January 29, 2020, Justice Heneghan found that it was premature to determine the nature of the contractual arrangements between the parties, and in particular whether the contractual arrangements in question constituted a “contract for the carriage of goods by water” within the scope of section 46 of the Act (Arc-En-Ciel Produce Inc v MSC Belle (Ship), 2020 FC 23 [Arc-En-Ciel 2020]). Nevertheless, Justice Heneghan found sufficient grounds to decline to grant the requested stay.
[29] The Carrier appealed. In Great White Fleet v Arc-En-Ciel Produce Inc, 2021 FCA 70 [Arc-En-Ciel 2021], the Federal Court of Appeal allowed the Carrier’s appeal, finding that the question of whether the contractual arrangements between the parties falls within the scope of section 46 of the Act should generally be settled before trial. The Federal Court of Appeal noted that leaving this question to the trial judge defeats one of the purposes of section 46 of the Act, namely bringing certainty to the question of jurisdiction. Consequently, the Federal Court of Appeal held that the proper recourse was to remit the matter to a different judge of the Federal Court for determination of the applicability of section 46 of the Act.
[30] The Federal Court of Appeal also confirmed that if section 46 of the Act is found to apply then the test to determine whether a stay should be granted is the forum non conveniens test. If section 46 is found not to apply, then the appropriate test for determining whether a stay should be granted is the strong cause test as set out in The Eleftheria. I note that the Carrier abandoned its forum non conveniens arguments at the hearing before Justice Heneghan. This was also the case when the matter was pleaded before me. Accordingly, if I find that section 46 of the Act applies, then the Carrier’s motions shall be dismissed and the matter shall proceed in Canada. If I find that section 46 of the Act does not apply, then the Cargo Claimant bears the burden of demonstrating a strong cause to refuse to enforce the forum selection clause.
[31] If the nature of the contractual arrangement is one that attracts the application of section 46 of the Act, a claimant is permitted to institute a claim in Canada provided one or more of the connecting factors listed in section 46 of the Act exist. The listed factors connecting a claim to Canada include, but are not limited to, that the actual port of loading or discharge is in Canada, that the intended port of loading or discharge in the contract is in Canada, and where the defendant has a place of business, branch or agency in Canada. The complete text of section 46 is appended to these reasons (see Appendix B). The Federal Court of Appeal instructed that the question of whether the Carrier had an agent in Canada had been decided by Justice Heneghan, thereby satisfying the requirement in paragraph 46(1)(b) of the Act. If I find that section 46 of the Act applies to the contractual arrangements at issue, then I do not need to reanalyze whether a connecting factor exists.
IV. Issues [32] The issues for determination are as follows:
What is the nature of the contractual arrangements between the Carrier and the Cargo Claimant, as evidenced by the Service Contract and the Shipping Documents?
Do the contractual arrangements attract the application of section 46 of the Act with the result that the Cargo Claimant may continue its proceedings in Canada despite the forum selection clause?
If section 46 of the Act does not apply, should the forum selection clause nevertheless be set aside on the basis of the strong cause test as set out in The Eleftheria and adopted by the Supreme Court of Canada in ZI Pompey?
[33] As alluded to in the introduction to these reasons, the determination of issues A and B above require a detailed consideration of the history and evolution of certain contractual arrangements used in the context of carriage of goods by sea, along with an examination of the history, meaning and context of certain provisions of Canada’s carriage of goods by water regime as contained in Part 5 and Schedule 3 the Act. The contractual arrangements at issue are rooted in centuries-old maritime trade practices; however, the arrangements also reflect the modern conveniences of multi-modal door-to-door transport. Certain language contained in the Act that is relevant to the matter at hand dates to a time before containers, containerships and radio transmitters were even invented. To put it succinctly, I am, in part, applying centuries’ old terms and statutory language to modern facts.
V. Analysis [34] At the beginning of each section of my analysis below, I introduce the topic and state why the particular topic is relevant to the determination of the Carrier’s motions.
A. Bills of Lading [35] The Cargo Claimant pleads that the Shipping Document is a bill of lading. The Carrier pleads that it is not a “bill of lading” in the sense that it attracts the application of sections 43 and 46 of the Act, despite the language on the heading of the document. Whether or not the Shipping Document is a bill of lading is ultimately important because that will impact how the Shipping Document is treated under the Act. The Act, however, does not provide a definition of a bill of lading (Wells Fargo Equipment Finance Company v Barge “MLT-3”, 2012 FC 738 at para 73 [Wells Fargo]). Consequently, we must first turn to the common law, and thereafter to the international convention governing the carriage of goods by sea known as the Hague-Visby Rules, in order to ascertain the meaning of this term.
[36] Unfortunately, “[l]ike an elephant, a bill of lading is generally easier to recognize than to define” (Richard Aikens et al, Bills of Lading, 2nd ed (Informa Law 2016) at 19 [Aikens, Bills of Lading]). Nevertheless, to begin with the basics, a bill of lading is a document that is widely used in the carriage of goods by sea. It tends to be employed in the liner trade and on chartered ships in certain trades (Edgar Gold et al, Canadian Maritime Law, 2nd ed (Irwin 2016) at 564 [Canadian Maritime Law]). It is important to note from the outset that there are various types of documents used in the carriage of goods by sea that are loosely referred to as bills of lading. While the documents may have similar characteristics, certain documents perform different legal and commercial functions (see Sir Treitel, Carver on Bills of Lading, 4th ed (Sweet & Maxwell 2017) at 1-002 – 1-011 [Carver]). For the purposes of the present section, it is important to define the features and functions of what are referred to as “order” or “negotiable” bills of lading (Canadian Maritime Law at 564-565). For the moment, I shall simply refer to them as a bill of lading.
[37] Justice Sean Harrington has described a bill of lading as “a venerable document with centuries of use in the transportation of goods” (H Paulin & Co Ltd v A Plus Freight Forwarder Co Ltd, 2009 FC 727 at para 27 [H Paulin]). It is generally accepted that a bill of lading fulfills three key functions: (a) to act as a receipt for the goods received by the carrier; (b) to evidence the terms of the contract of carriage; and (c) to act as a “document of title” (Canadian Maritime Law at 565; Canadian General Electric Company Limited et al v Les Armateurs du St-Laurent Inc et al (The Maurice Desgagnes), [1977] 1 FC 215 at para 14 [The Maurice Desgagnes]; Cami Automotive, Inc v Westwood Shipping Lines Inc, 2009 FC 664 at para 13 [Cami Automotive]; H Paulin at para 27). In its argument, the Carrier has relied on these three functions, which it refers to as “three essential characteristics”. The Carrier pleads that the Shipping Document does not fulfill the three functions, and thus, is not a bill of lading. The Cargo Claimant does not dispute that bills of lading can have three functions or characteristics, but as shall be discussed further below, pleads that it is the term bill of lading as used on the Shipping Document that is, among other things, determinative.
[38] While there is no universally accepted definition of a bill of lading, a document that has all three characteristics will almost certainly be one, while a document that does not will rarely be one (Aikens, Bills of Lading, at 19). I now turn to the three functions or characteristics of a bill of lading, noting, however, that such a review cannot be isolated from the historical context in which the functions of a bill of lading developed (Aikens, Bills of Lading at 19).
(1) First Function – Receipt [39] The first function is that of a receipt. The earliest bills of lading were devised in the 14th century. By that time, the trade between ports in the Mediterranean had grown significantly, and the trade practices had evolved such that certain merchants sent their goods to correspondents at the ports of destination rather than travelling with the goods as they had previously done (Aikens, Bills of Lading at 1.1). Thus, the earliest bills of lading were merely receipts issued to merchants once their goods had been received by the carrier (Canadian Maritime Law at 565).
(2) Second Function – Evidence of the Contract of Carriage [40] By the 16th and 17th centuries, bills of lading began to include terms of the contract, thus performing a contractual function (Aikens, Bills of Lading, at 1.12 – 1.25). As to this second function, it is not to say that the bill of lading is the contract of carriage. It is well settled that the bill of lading is not, in and of itself, the contract between the shipper and the carrier. Rather it is considered to be the “best evidence” of the terms of that contract (The Maurice Desgagnes at para 19; The Ardennes [1951] 1 KB 55; Canadian Maritime Law at 567). One of the reasons for this is that the bill of lading will generally only be issued after the goods have been received and shipped, but the agreement to ship the goods will have been reached before that (Canadian Maritime Law at 567). Hence the common law evolved to accommodate the commercial practice (ibid).
(3) Third Function – Document of Title [41] The third function, acting as a “document of title”, has its origins in transferability and the need to demonstrate entitlement to the delivery of the goods. In the 16th century, we see changes in the form of the bills of lading, likely caused by changes in trading practice (Aikens at 1-8 – 1.11). Shipments were dispatched before the shipper knew to whom the goods were destined, consequently the bill of lading needed to evidence entitlement to the goods (Aikens ibid). The bill of lading therefore gave the holder of the bill a right against the carrier to call for delivery, and in turn it indicated to the carrier to whom the goods should be delivered (Aikens, ibid). In this sense, the bill of lading is a transferable key to the floating warehouse (The Delfini [1990] 1 Lloyd’s Rep. 347 at 359 [Delfini]). It must be produced to the carrier by the person claiming delivery of the goods.
[42] As of the 1787 case Lickbarrow v Mason, the courts have recognized what may be loosely termed as the modern version of the bill of lading (Aikens, Bills of Lading at 1.28; Canadian Maritime Law at 565). In Lickbarrow v Mason, a merchant jury decided that by the custom of merchants, a shipped, negotiable, and transferable bill of lading may transfer the property in the goods through the endorsement and delivery, or the transmission, of the bill of lading ((1794) 5 TR at 683, 685-686). Since Lickbarrow v Mason, the common law has accepted the commercial practice of transferring or trading the bill of lading as if it represented the goods while the goods are in transit (Canadian Maritime Law at 570; The Rafaela S [2005] UKHL 11, [2005] 1 Lloyd’s Rep. 347 (HL) at para 59 [The Rafaela S]). It has been noted, at the time, that while the courts spoke of transfer, it was clear that the transfer of a bill of lading raised a presumption of an intention to transfer property, but that the presumption was rebuttable (Aikens, Bills of Lading, at 1.33).
[43] The function of a bill of lading as “document of title” can therefore be broken down into two elements: (i) the bill of lading’s transfer is a transfer of constructive possession entitling the holder to receive the goods from the carrier (the key to the floating warehouse); and (ii) while strictly speaking it does not transfer property in the goods which it represents (it is not a negotiable instrument akin to a bill of exchange or a cheque), it is capable of being part of the mechanism by which property is passed (Delfini at 359; Canadian Maritime Law at 570; William Tetley, Marine Cargo Claims, 4th ed, (Thompson) at 533 [Tetley]).
[44] The concept that the bill of lading is a “document of title”, based on Lickbarrow v Manson, has been described, in its traditional sense, as meaning a document “relating to goods the transfer of which operates as a transfer of the constructive possession in the goods, and may, if so intended operate as a transfer of them” (Carver at 6-002). Sir Guentel Treitel in Carver on Bills of Lading notes that “at common law there is no other class of documents which is recognized as a document of title in this sense” (Carver at 6-002).
[45] For those unfamiliar with bills of lading, the expression “document of title” could be inadvertently understood to mean a document that necessarily transfers ownership, i.e. title, in the goods when it is transferred from one holder to another. As explained above, this is not the case, and thus it is better understood as a document entitling the holder to receive the goods at the end of the voyage. Professor William Tetley’s explanation in this regard is helpful:
The term “document of title” as applied to a bill of lading generally refers not to “title” in the sense of ownership of the goods carried under the bill, but, more precisely, to the right to possession of them. “Title” thus has to do primarily with the right of the consignee or last endorsee of the bill to demand delivery of the goods from the carrier or its agent at the port of discharge. In this sense, the bill of lading, although traditionally termed “a document of title”, is better understood as being a document of transfer. It is important to make this distinction.
(Tetley at 533; see also The Rafaela S.)
[46] The bill of lading can thus be described as a document entitling possession of the goods described therein rather than necessarily identifying the legal owner or the person with the right of property in the goods. By transferring or negotiating the bill of lading, the right to possession is transferred.
(4) The Form of a Bill of Lading [47] The foregoing briefly defines the three key functions of a bill of lading under common law. As to its form, in practice, a bill of lading tends to follow a fairly standardized two-page format with the details of the shipper, the cargo, the date, the name of the ship, and the ports of loading and discharge on the front (also known as the face), and the carrier’s standard printed terms on the back (Canadian Maritime Law at 565). Bills of lading have traditionally been issued in sets of at least three original copies, which, as described by Professor Gold, have generally been dealt with as follows:
One is given to the shipper (for transmittal to the consignee), one is kept by the shipping company for its records, and one is carried on board attached to the manifest of the ship. The latter is required for customs purposes for entry of the ship at the port of discharge, as well as to match the original bill presented by the consignee or endorsee in exchange for the delivery of the goods. The practice of issuing sets of bills of lading reflects the vagaries and inefficiencies of communications in times past; the principle remains that once one copy had been validly presented to the carrier, the rest stand void.
(Canadian Maritime Law at 566.)
[48] In the introduction to this section, I referred to bills of lading as being “order” or “negotiable” bills of lading. This refers to the transferability of the bills of lading. An order bill of lading is made out to “order”, “order or assigns” or a named consignee and to his “order and assigns”, or similar words of transferability (Carver at 1-011 – 1-012). Where the bill of lading is to a named consignee or his “order”, the practice to transfer it is to simply for the consignee to endorse the bill of lading with the name of the transferee under its signature and provide the transferee with possession of the bill (Canadian Maritime Law at 570).
[49] As will be discussed further below, certain types of bills of lading and shipping documentation have evolved alongside commercial practices with the result that these newer documents (i) are not referred to as order bills of lading, (ii) are no longer transferable or negotiable, and (iii) in certain cases, but not all, they no longer need to be presented in order to obtain delivery. This is relevant to the matter at hand, as the presence of the statement “not negotiable unless consigned to order” and the question of presentation at delivery relate to the characterization of the Shipping Document. For the purposes of the present section and section V.B (The Hague-Visby Rules – Introduction and Context) of these reasons below, references to a bill of lading shall mean an order or a negotiable bill. Before turning to the more recent forms of shipping documents, we first turn to the international convention, applicable in Canada, that governs carriage of goods by sea under bills of lading.
B. The Hague-Visby Rules – Introduction and Context
[50] A discussion of the Hague-Visby Rules provides context that assists in the determination of this matter. The Hague-Visby Rules are appended to the Act and incorporated into it by reference. It has been pled by the Carrier that the definition of a contract of carriage as contained in the Hague-Visby Rules does not include the Shipping Document, with the result that neither section 43 nor section 46 of the Act apply. The Cargo Claimant disagrees, and invites this Court to consider the imbalance in bargaining power between carriers and cargo interests that led to the development of international regimes, such as the Hague Visby Rules, and ultimately to section 46 of the Act. The Cargo Claimant relies on the reasons authored by Justice Gauthier in The Federal Ems, where Federal Court of Appeal considered the liner trade and the imbalance of power that the international regimes sought to address (Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa (The Federal Ems) 2012 FCA 284 [The Federal Ems]).
[51] Like Justice Gauthier before me, I consider that, as part of the legal context of the provisions that will be interpreted, it is worth considering how the Hague-Visby Rules came to be, what they covered, and the mischief they sought to address (The Federal Ems at para 45; see also Riverstone Meat Co Pty Ltd v Lancashire Shipping Co Ltd (The Muncaster Castle) [1961] 1 Lloyd’s Rep 57 at 67 [The Muncaster Castle]).
[52] By the 17th century, in most European nations and new world colonies, ocean carriers were held strictly liable for the goods they carried. In the centuries that followed, carriers were effectively treated as insurers of the cargo they carried (Canadian Maritime Law at 596; The Federal Ems at para 46; Riley v Horne (1828) 130 ER 1044 at 1045). By the same token, under common law, a carrier is entitled to contractually limit its liability. Prior to the 19th century, attempts by carriers to escape liability through contractual exemptions were restricted by adverse reactions from cargo interests. In the 19th century, however, advances in shipping and increases in world trade resulted in an increase in the relative bargaining power of carriers. As a result, extensive exculpatory clauses were inserted into bills of lading, resulting in little or no liability on the part of the carriers (Canadian Maritime Law at 596; The Federal Ems at para 46; Rafaela S at para 8). Divergences in the law began to appear where previously it had been fairly uniform. The courts in England were willing to enforce such exculpatory clauses on the basis of freedom of contract, while courts in the United States began to invalidate the clauses on the basis of public policy.
[53] It soon became clear that certainty and uniformity were desirable for all involved. In 1882, the International Law Association attempted to reach an agreement on a model bill of lading that would regulate the rights and duties as between the carriers and the cargo interests, but was ultimately unsuccessful. Not long thereafter, a number of states “adopted what might be considered the first consumer protection legislation regulating the rights and obligations of ocean carriers under bills of lading, albeit in the commercial world” (The Federal Ems at para 47). In 1893, the United States enacted the Harter Act, creating what was considered at the time to be a balanced regime between carriers and cargo interests. Shortly thereafter, New Zealand (in 1903), Australia (in 1904), Fiji (in 1906), Canada (in 1910), and Morocco (in 1919) all adopted legislation modelled after the Harter Act. Furthermore, many other nations were contemplating introducing similar legislation, notably Denmark, Finland, France, Iceland, the Netherlands, Norway, South Africa, Spain and Sweden (Comité Maritime International, The Travaux Préparatoires of the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading of 25 August 1924, The Hague Rules, and of the Protocols of 23 February 1968 and 21 December 1979, The Hague-Visby Rules (1997) CMI Headquarters at 23-24).
[54] As noted by Professor Gold and quoted by Justice Gauthier, it had become “clear that a proliferation of national legislation imposing different rules on merchant ships, which, by the nature of their business, call in many different countries, would cause legal confusion and inhibit trade.” (Canadian Maritime Law at 596; The Federal Ems at para 48). This proliferation of national legislation was brought to an end by work of the International Law Association and the newly founded Comité Maritime International [CMI]. The CMI, a non-governmental international organization founded in 1897, brought together experts in maritime law from around the world to contribute towards the unification of maritime law. After meetings and diplomatic conferences held in Brussels over the course of several years, a compromise was struck between the rights, duties and obligations of the parties to contracts of carriage of goods as evidenced by bills of lading. The resulting Hague Rules of 1924, which entered into force in 1931, was a success and was widely ratified and adopted throughout the world (The Federal Ems at para 49). So much so, that it has even been argued that the Hague Rules has acquired the status of international customary shipping law – lex maritima (Maris Lejnieks, “Diverging solutions in the harmonisation of carriage of goods by sea: which approach to choose?” (2003) Uniform Law Review at 304).
[55] As explained by Viscount Simonds in The Muncaster Castle, the aim of the Hague Rules “was broadly to standardise within certain limits the rights of every holder of a bill of lading against the shipowner, prescribing an irreducible minimum for the responsibilities and liabilities to