OT Africa Line Ltd. v. Magic Sporstwear Corp.

OT Africa Line Ltd. v. Magic Sporstwear Corp.
Court (s) Database
Federal Court of Appeal Decisions
Date
2006-08-23
Neutral citation
2006 FCA 284
File numbers
A-444-04
Notes
Reported Decision
Decision Content
Date: 20060823
Docket: A-444-04
Citation: 2006 FCA 284
CORAM: DÉCARY J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
OT AFRICA LINE LTD., OT AFRICA LINE,
and the Owners and Charterers and all others interested
in the Ship “MATHILDE MAERSK”: and in
the Ship “SUZANNE DELMAS”
Appellants
(Defendants)
and
MAGIC SPORTSWEAR CORP. and
BLUE BANANA
Respondents
(Plaintiffs)
Heard at Ottawa, Ontario, on June 21, 2006.
Judgment delivered at Ottawa, Ontario, on August 23, 2006.
REASONS FOR JUDGMENT BY: EVANS J.A.
CONCURRED IN BY: DÉCARY J.A.
SHARLOW J.A.
Date: 20060823
Docket: A-444-04
Citation: 2006 FCA 284
CORAM: DÉCARY J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
OT AFRICA LINE LTD., OT AFRICA LINE,
and the Owners and Charterers and all others interested
in the Ship “MATHILDE MAERSK”: and in
the Ship “SUZANNE DELMAS”
Appellants
(Defendants)
and
MAGIC SPORTSWEAR CORP. and
BLUE BANANA
Respondents
(Plaintiffs)
REASONS FOR JUDGMENT
EVANS J.A.
A. INTRODUCTION
[1] Contracts for the carriage of goods by sea often specify both the exclusive forum for settling disputes between the shipper and the carrier, and the applicable law. The High Court, or an arbitrator, in London is often named as the exclusive forum where any disputes arising from the contract are to be resolved in accordance with English law. The high cost and inconvenience of having to litigate a claim for cargo loss in a foreign forum can deprive Canadian shippers of an effective remedy for a breach of contract by the carrier, and compel the acceptance of a settlement on terms favourable to the carrier.
[2] In 2001, Parliament addressed this issue by enacting subsection 46(1) of the Marine Liability Act, S.C. 2001, c. 6:
46. (1) If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where
(a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada;
(b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or
(c) the contract was made in Canada.
46. (1) Lorsqu'un contrat de transport de marchandises par eau, non assujetti aux règles de Hambourg, prévoit le renvoi de toute créance découlant du contrat à une cour de justice ou à l'arbitrage en un lieu situé à l'étranger, le réclamant peut, à son choix, intenter une procédure judiciaire ou arbitrale au Canada devant un tribunal qui serait compétent dans le cas où le contrat aurait prévu le renvoi de la créance au Canada, si l'une ou l'autre des conditions suivantes existe :
a) le port de chargement ou de déchargement — prévu au contrat ou effectif — est situé au Canada;
b) l'autre partie a au Canada sa résidence, un établissement, une succursale ou une agence;
c) le contrat a été conclu au Canada.
[3] This is an appeal by carriers from an order of a Judge of the Federal Court affirming the decision of a Prothonotary to dismiss their motion to stay an action by shippers for damages for the partial loss of cargo. The Prothonotary’s reasons are reported as Magic Sportswear Corp v. OT Africa Line Ltd, 2003 FC 1513, and the Judge’s as Magic Sportswear Corp v. Mathilde Maersk (The), [2005] 2 F.C.R. 236, 2004 FC 1165.
[4] The appeal is about whether the dispute over the alleged cargo loss should be resolved in the High Court in London, as the contract provides, or in the Federal Court, which has jurisdiction by virtue of subsection 46(1). It requires a consideration of two questions. First, to what extent has subsection 46(1) modified private international law principles regarding the Court’s discretion to decline to exercise its jurisdiction on the ground that another forum is more appropriate? Second, in making that determination, must the Court take into account foreign judgments and contractual foreign exclusive forum clauses?
B. BACKGROUND
[5] Following the commencement of the shippers’ action in the Federal Court, the carriers sought, and obtained, from the High Court in London an anti-suit injunction to restrain the shippers from litigating their claim in Canada, or elsewhere, in breach of the clause in the contract specifying the High Court in London as the exclusive forum. Armed with the English judgment, the carriers brought the motion in the Federal Court to stay the shippers’ action.
[6] The appellants are OT Africa Line Ltd, OT Africa Line, and the owners, charterers and others interested in the two ships that carried the cargo from New York to Monrovia, Liberia, via Le Havre where it was transhipped. OT Africa Line Ltd has its head office in London and other offices around the world, including a branch office in Toronto where it conducts its business through the agency services of Seabridge International Shipping Inc. I shall refer to the appellants as “the carriers”.
[7] The respondents to the appeal are Magic Sportswear Corporation, a Delaware corporation, carrying on business in New York, and Blue Banana, a Liberian company, carrying on business in Monrovia. They are the shipper and consignee, respectively, of the allegedly lost cargo and are the plaintiffs in an action in the Federal Court against the carriers to recover damages for the loss. I shall refer to the respondents collectively as “the shippers”.
[8] The alleged loss was discovered and investigated after the ship carrying the goods arrived in Monrovia. The litigation is being pursued at the instigation of the insurers of the cargo who, having paid under the policy on a claim by the consignee, are exercising their right of subrogation to the rights of the shippers.
[9] Like the shippers, the goods have no connection with Canada. However, the insurers of the cargo are based in Toronto, where the bill of lading evidencing the contract for the carriage of the goods was issued on February 5, 2002, and where the ocean freight was payable to OT Africa Line Ltd.
[10] The clause of the conditions to the bill of lading relevant to this appeal provides:
25. LAW AND JURISDICTION
(1) Any claim or dispute whatsoever arising in connection with the carriage under the Bill of Lading shall exclusively be governed by English law and determined by the High Court in London.
(2) In the event that anything herein contained is inconsistent with any applicable international convention or national law which cannot be departed for private contract the provisions hereof shall to the extent of such inconsistency but no further be null and void.
[11] The chronology of the principal events in the protracted history of this litigation is as follows:
· August 1, 2003: the shippers commenced an action in the Federal Court against the carriers, claiming $30,000.00 for breach of contract for the partial loss of the cargo;
· August 15, 2003: notice of the shippers’ action was served on the Toronto office of OT Africa Line Ltd;
· September 3, 2003: the carriers commenced proceedings in London claiming: (i) damages against the shippers for commencing an action in the Federal Court in breach of clause 25 of the conditions to the bill of lading; (ii) damages from the cargo insurers for inducing the breach of contract; (iii) an anti-suit injunction against the shippers and their insurers to restrain them from breaching clause 25 by pursuing their action in the Federal Court, and from commencing any other proceedings for the alleged cargo loss anywhere other than in London; and (iv) a declaration that the carriers were not liable for the alleged partial loss of the cargo;
· September 8, 2003: the carriers obtained an interim anti-suit injunction from Gross J., a Judge of the High Court in London, on an ex parte motion of which the shippers had short notice;
· September 9, 2003: the carriers filed a motion in the Federal Court to stay the shippers’ action against them;
· October 28, 2003: at the instance of their insurers, the shippers filed an acknowledgement of service indicating their intention to contest the jurisdiction of the High Court, but subsequently made no jurisdiction application;
· December 15, 2003: Prothonotary Milczynski of the Federal Court issued an oral order dismissing the carriers’ motion for an order staying the shippers’ action against them in the Federal Court for damages for the partial loss of the cargo. Written reasons were issued on December 22, 2003;
· April 5, 2004: Cooke J. of the English High Court gave the carriers leave to join the shippers’ insurers as parties to the English proceedings, to serve them in Canada, and to amend the claim accordingly;
· August 23, 2004: O’Keefe J. of the Federal Court dismissed the carriers’ appeal from the order of the Prothonotary refusing the stay;
· November 3, 2004: an anti-suit injunction against the shippers was issued by Langley J., a Judge of the Commercial Court of the High Court in London. His reasons are reported at [2004] EWHC 2441 (Comm.);
· June 13, 2005: the English Court of Appeal dismissed the shippers’ appeal from the issue of the anti-suit injunction. The Court’s reasons are reported at [2005] EWCA 710;
· June 15, 2005: the carriers’ appeal to this Court from the order of O’Keefe J. was adjourned pending the disposition of the shippers’ petition to the House of Lords for leave to appeal the order of the English Court of Appeal upholding the anti-suit injunction;
· December 9, 2005; the House of Lords dismissed the petition for leave to appeal; and
· June 21, 2006: this Court heard the carriers’ appeal.
C. THE ISSUES AND THE PARTIES’ POSITIONS
[12] Although the shippers are seeking a relatively small amount in damages for the cargo loss, the case raises issues of principle potentially affecting hundreds of similar claims. The question in dispute concerns the appropriate forum for litigating the claim and involves a conflict of laws.
[13] English law, the proper law of the contract in this case, regards the parties’ contractual choice of forum as virtually conclusive. In contrast, subsection 46(1) permits a party to institute proceedings in Canada for breach of contract, despite the presence of a clause nominating a foreign court as the exclusive forum for the resolution of disputes under the contract, provided that the claimant establishes that the parties or the contract have one of the statutorily specified connections to Canada.
[14] In the present case, subsection 46(1) confers jurisdiction on the Federal Court over the shippers’ claim against the carriers because the contract was made in Canada and the carriers have a place of business in Canada. The appeal raises two issues concerning the exercise of that jurisdiction.
[15] First, does subsection 46(1) remove the discretion of the Federal Court and the Federal Court of Appeal to grant a stay pursuant to subsection 50(1) of the Federal Courts Act, R.S.C. 1985, c. F-7, even if another jurisdiction is a more convenient forum (the forum non conveniens doctrine) than Canada? The carriers say that it does not, while the shippers say that it does.
[16] As relevant to this appeal, the Federal Courts Act provides as follows:
50. (1) The Federal Court of Appeal or the Federal Court may, in its discretion, stay proceedings in any cause or matter
(a) on the ground that the claim is being proceeded with in another court or jurisdiction; or
(b) where for any other reason it is in the interest of justice that the proceedings be stayed.
50. (1) La Cour d'appel fédérale et la Cour fédérale ont le pouvoir discrétionnaire de suspendre les procédures dans toute affaire :
a) au motif que la demande est en instance devant un autre tribunal;
b) lorsque, pour quelque autre raison, l'intérêt de la justice l'exige.
[17] Second, if subsection 46(1) does not deprive the Court of its discretion to stay proceedings when it is the less convenient forum, what weight, if any, should the Court give in its forum non conveniens analysis to the parties’ contractual choice of forum and to the judgments asserting the jurisdiction of the English High Court over the dispute by virtue of the exclusive jurisdiction clause?
[18] The carriers say that the principles of comity and freedom of contract, commercial certainty, and the desirability of avoiding parallel proceedings in Canada and England, require that these factors be afforded considerable weight. The shippers, on the other hand, say that to give the exclusive jurisdiction clause and the English judgments any weight would defeat the purpose of subsection 46(1) of the Marine Liability Act by depriving them of their statutory right to litigate in Canada, despite the foreign exclusive jurisdiction clause in the contract.
[19] For the reasons which follow, I am of the opinion that the carriers are right and that the shippers’ action in the Federal Court should be stayed. Accordingly, I would allow the carriers’ appeal.
C. ANALYSIS
Issue 1: Standard of review
[20] The bases upon which this Court may set aside a decision of the Federal Court respecting a motion for a stay were clearly articulated by Décary J.A. in Jian Sheng Co. v. Great Tempo S.A., [1998] 3 F.C. 418 (C.A.) at para. 12:
In reviewing a discretionary decision of a Motions Judge upon an application to stay proceedings on the basis of a jurisdiction clause, a court of appeal must uphold the decision unless it was arrived at on a wrong basis or was plainly a wrong decision (see The "Seapearl" [Seapearl (The Ship M/V) v. Seven Seas Dry Cargo Shipping Corporation of Santiago, Chile, [1982] 2 F.C. 161 (C.A.)] at 176, Pratte J.A.). A similar standard of review is to be applied by a Motions Judge in an appeal from a prothonotary's order of this kind (see Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 at 454 (C.A.)). This Court may therefore interfere only if the Motions Judge had no grounds to interfere with the Prothonotary's decision or, in the event such grounds existed, if her own decision was arrived at on a wrong basis or was plainly a wrong decision.
[21] In the present case, the issues raised on appeal are questions of law. The first question of law is whether subsection 46(1) removes the Court’s discretion to decline to exercise its jurisdiction on the ground that it is not the more convenient forum. If the subsection does not remove the Court’s discretion to order a stay, a second question of law arises, namely, whether any weight should be given to the exclusive jurisdiction clause and to the English judgments asserting jurisdiction over the dispute.
[22] If the Court below was wrong on either of these issues, it exercised its discretion on a wrong basis, and this Court is warranted in setting aside the order and substituting its own.
Issue 2: Does subsection 46(1) of the Marine Liability Act remove the Court’s jurisdiction under section 50 of the Federal Courts Act to stay the shippers’ proceeding in the Federal Court if it is forum non conveniens?
[23] For convenience, I set out again subsection 46(1), which lies at the heart of this appeal.
46. (1) If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where
(a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada;
(b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or
(c) the contract was made in Canada.
46. (1) Lorsqu'un contrat de transport de marchandises par eau, non assujetti aux règles de Hambourg, prévoit le renvoi de toute créance découlant du contrat à une cour de justice ou à l'arbitrage en un lieu situé à l'étranger, le réclamant peut, à son choix, intenter une procédure judiciaire ou arbitrale au Canada devant un tribunal qui serait compétent dans le cas où le contrat aurait prévu le renvoi de la créance au Canada, si l'une ou l'autre des conditions suivantes existe :
a) le port de chargement ou de déchargement — prévu au contrat ou effectif — est situé au Canada;
b) l'autre partie a au Canada sa résidence, un établissement, une succursale ou une agence;
c) le contrat a été conclu au Canada.
[24] It is common ground that this provision confers jurisdiction on the Federal Court over the shippers’ claim in this case. First, the Hamburg Rules (the United Nations Convention on the Carriage of Goods by Sea, 1978, 30 March 1978, 1695 U.N.T.S. 3), which came into effect internationally on November 1, 1993, when 20 countries ratified or acceded to them, do not apply, and the contract directs the adjudication of claims arising under it to a court outside Canada. Second, two of the statutory factors connecting the dispute with Canada are satisfied: the defendant to the claim, OT Africa Line Ltd, has a place of business in Canada (paragraph 46(1)(b)), and the contract for the carriage of goods was made in Canada (paragraph 46(1)(c)). Third, the Federal Court would be competent to determine the claim if the contract had referred it to Canada.
[25] The shippers argue that subsection 46(1) not only confers jurisdiction on the Federal Court over the dispute, but also directs the Court to exercise its jurisdiction, without considering whether it, or the High Court in London, is the more convenient forum for litigating it. Accordingly, they say, the Federal Court was wrong to decide otherwise. I disagree for the following three reasons.
[26] First, subsection 46(1) does not state that, once one of the jurisdictional criteria in subsection 46(1) is present, the court in which the claimant has elected to proceed must exercise its jurisdiction. The subsection merely provides that, when it applies, a claimant may institute proceedings in a court in Canada that would have jurisdiction if the contract had referred the claim to Canada. It gives no directive to the court in Canada in which the claimant elects to proceed respecting that court’s exercise of its jurisdiction.
[27] Second, subsection 46(1) does not expressly remove the broad discretion of the Federal Court and the Federal Court of Appeal under subsection 50(1) of the Federal Courts Act to stay a proceeding over which they have jurisdiction, but where “the claim is being proceeded with in another jurisdiction” or a stay “is in the interests of justice”. In my opinion, it requires more specific language than that in section 46 to remove from the Courts a power fundamental to their ability to control their own process.
[28] Third, it would produce anomalous results to interpret subsection 46(1) as implicitly removing the Federal Courts’ discretion in deciding to stay on the ground that another court is the more convenient forum.
[29] Suppose, for example, that, in this case, in addition to the English choice of law and exclusive forum clauses, the contract had provided for the carriage of the cargo from New York to London, the bill of lading had been issued in London, and the loss of the cargo was alleged to have occurred in London, where all the witnesses resided.
[30] Since all these connecting factors favour litigating the dispute in a competing forum, England, it would make no sense to require the Federal Court to decide the dispute, simply because it has jurisdiction under subsection 46(1) on the ground that the carrier has an office in Toronto. And, if proceedings had already been commenced in England, to interpret the legislation as precluding a Canadian court from subsequently considering whether it was the less convenient forum would require the court to exclude considerations of international comity.
[31] It would also be odd to conclude that subsection 46(1) requires a court in Canada to decide a dispute because the parties had agreed to a forum outside Canada, whereas if the contract had contained no exclusive jurisdiction clause, a court in Canada would have declined to exercise jurisdiction on the ground that it was not the more convenient forum.
[32] Counsel for the shippers argues that this Court is bound by precedent deciding that subsection 46(1) not only confers jurisdiction on a court in Canada where a claimant elects to proceed, but also requires the court to exercise it. He relies in particular on the following paragraphs in the reasons of Justice Bastarache when writing for the Supreme Court of Canada in Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450, 2003 SCC 27:
[37] Section 46(1) of the Marine Liability Act, which entered into force on August 8, 2001, has the effect of removing from the Federal Court its discretion under s. 50 of the Federal Court Act to stay proceedings because of a forum selection clause where the requirements of s. 46(1)(a), (b), or (c) are met. This includes where the actual port of loading or discharge is in Canada. In this case, there would be no question that the Federal Court is an appropriate forum to hear the respondents' claim but for the fact that s. 46 does not apply to judicial proceedings commenced prior to its coming into force: Incremona-Salerno Marmi Affini Siciliani (I.S.M.A.S.) s.n.c. v. Ship Castor (2002), 297 N.R. 151, 2002 FCA 479, at paras. 13-24. Section 46 of the Marine Liability Act is therefore irrelevant in this appeal.
[38] Indeed, s. 46(1) would appear to establish that, in select circumstances, Parliament has deemed it appropriate to limit the scope of forum selection clauses by facilitating the litigation in Canada of claims related to the carriage of goods by water having a minimum level of connection to this country. Such a legislative development does not, however, provide support for the fundamental jurisprudential shift made by the Court of Appeal in the case at bar. To the contrary, s. 46(1) indicates Parliament's intent to broaden the jurisdiction of the Federal Court only in very particular instances that can easily be ascertained by a prothonotary called upon to grant a stay of proceedings pursuant to the forum selection clause of a bill of lading. Section 46(1) in no way mandates a prothonotary to consider the merits of the case, an approach in line with the general objectives of certainty and efficiency, which underlie this area of the law.
[33] Although the meaning of these passages may not be beyond dispute, I do not agree with counsel’s interpretation of them. In my view, Justice Bastarache was saying that, when one of the statutory conditions for jurisdiction is satisfied, subsection 46(1) removes the court’s discretion to stay proceedings solely because of a foreign forum selection clause. Justice Bastarache was thus not addressing the question in our case, namely, whether subsection 46(1) also removes the Court’s discretion to order a stay when, taking all relevant considerations into account, it is not the more convenient forum.
[34] I interpret in the same manner the passage in the reasons given for this Court by Nadon J.A. in Incremona-Salerno Marmi Affini Siciliani (I.S.M.A.S) s.n.c. v. Castor (The), [2003] 3 F.C. 220, 2002 FCA 479 at para. 13 and referred to above by Justice Bastarache.
[35] Counsel for the shippers also suggested that subsection 46(1) would be largely redundant if it was not interpreted as removing the Federal Court’s discretion to grant a stay on the ground that it was not the more convenient forum. Again, I do not agree.
[36] First, subsection 46(1) affirms the Court’s jurisdiction by specifying that claimants who satisfy one of the three connecting factors set out in paragraphs (a), (b), and (c) may pursue their claim in Canada, despite a contractual foreign exclusive jurisdiction clause. Second, the statutory bases of jurisdiction are simpler to apply than the common law’s “real and substantial connection” test for determining whether the Court has jurisdiction over a claim and, arguably, more easily satisfied. Third, it removes the Court’s discretion to stay solely on the ground that the parties have selected an exclusive forum outside Canada.
[37] Accordingly, like the Federal Court Judge, I agree with the Prothonotary’s analysis (at para. 16 of her reasons) on this issue: see also Ford Aquitaine Industries SAS v. Canmar Pride (The), [2005] 4 F.C.R. 441, 2005 FC 431 at paras. 38-40. Thus, while subsection 46(1) confers jurisdiction on the Federal Court over the shippers’ claim for the partial cargo loss, it is still necessary to decide if the Federal Court or the High Court in London is the more convenient forum in order to determine if the carriers’ motion for a stay should be granted.
Issue 3: Did the Federal Court err in exercising its discretion under section 50 of the Federal Courts Act to refuse to stay the shippers’ action, on the ground that it was not the less convenient forum?
(i) The English judgments
(a) the attornment issue
[38] The forum non conveniens analysis conducted by the Federal Court appears to have given no weight to the interim anti-suit injunction issued ex parte by Justice Gross in the High Court in London, on the ground that the shippers had not attorned to the jurisdiction of the English court.
[39] The Prothonotary principally based her rejection of the argument that the shippers had attorned on the ground of an annotation to the English Civil Procedure Rules. She also mentioned the possible existence of practical reasons why the shippers did not contest the court’s jurisdiction. On appeal, the Judge of the Federal Court agreed. In my respectful opinion, they were in error in discounting the English judgement on the ground of non-attornment.
[40] The law of a foreign jurisdiction is a question of fact to be determined on the basis of the evidence before the court. The record before the Prothonotary included an uncontradicted affidavit from Sean Gibbons, an English solicitor and a partner in the firm acting on behalf of the carriers in the English proceeding for an anti-suit injunction.
[41] Mr Gibbons explained in the affidavit that, after Justice Gross had issued the anti-suit injunction, the shippers’ English solicitors filed two acknowledgements of service with the Commercial Court indicating that they intended to contest the jurisdiction of the English courts over the cargo claim. However, they failed to bring an application to contest the jurisdiction within the 28 days prescribed in the rules of the Commercial Court.
[42] Mr Gibbons further stated that the effect of Part 11(5) of the English Civil Procedure Rules is that, having failed to contest the jurisdiction of the court within the time specified after filing their acknowledgement of service, the shippers were to be treated in English law as having accepted that the court had jurisdiction to try the claim. The reasons of Justice Langley (at para. 11), which were rendered after the decisions of the Prothonotary and the Federal Court, confirm Mr Gibbons’ view of the law in England on this issue.
[43] Having concluded that the Federal Court’s refusal to attach weight to the anti-suit injunction was based on a misapprehension of the evidence, I must consider de novo whether weight should be given in the forum non conveniens analysis to the English decisions, including the decisions of Justice Langley and the English Court of Appeal, which were not available to the Federal Court.
(b) Commercial Court
[44] Sitting in the Commercial Court, Justice Langley had the benefit of the reasons of both the Prothonotary and the Federal Court Judge. The issues in the Commercial Court most relevant to the present appeal were whether (i) the carriers’ proceeding in the English High Court should be stayed in view of the action already commenced by the shippers in the Federal Court, and (ii) the carriers’ anti-suit injunction against the shippers should be continued or discharged, and a similar injunction issued against their insurers.
[45] On the first issue, he stated that English courts normally give effect to contractual exclusive jurisdiction clauses, in the absence of “strong reasons” for not so doing. Accordingly, he reasoned (at para. 33), it would take “some exceptional justification” to stay the English proceedings when the parties had selected the High Court in London as the exclusive forum for resolving disputes arising from the contract.
[46] Justice Langley declined to depart from the rule of English private international law that parties’ contractual selection of the exclusive forum is normally determinative. He found the connections with Canada relied on by the shippers (the place where the contract was made, ocean freight was payable, and the carriers had an office) to be minor and not relevant to the issues arising from the cargo claim. Hence, apart from the effect of subsection 46(1), which he termed “the overriding issue”, he concluded that the shippers had not made out a case for an order staying the carriers’ action in England.
[47] Justice Langley regarded subsection 46(1) as relevant to the request for a stay of the English proceedings, as well as to the anti-suit injunction restraining the shippers from proceeding with their claim in another forum. He stated that, on both issues, the question was whether the subsection constituted “strong reasons” for not giving effect to the exclusive jurisdiction clause. He concluded (at para. 41) that:
… there is insufficient logic in treating section 46 as giving rise to some exceptional circumstance beyond the usual case where a party seeks to proceed in another court, relying on the principles by which that court is guided in the exercise of its own jurisdiction, and does so despite an exclusive jurisdiction clause binding upon that party. In such circumstances, English law is, I think, settled at the highest level that an anti-suit injunction should be granted essentially to ensure that the parties abide by the agreement they have made.
(c) Court of Appeal
[48] In more elaborate reasons, Lord Justice Longmore defined the crucial issue (at para. 15) as the extent to which, when deciding whether to stay the carriers’ proceeding, the English court should have regard to subsection 46(1) and to the judgments of the Federal Court refusing to stay the shippers’ action. He noted that, in enacting section 46, Parliament had adopted a provision respecting exclusive jurisdiction clauses similar to Article 21 of the Hamburg Rules, which Canada had not yet implemented in its domestic law.
[49] He held that, under English private international law, the conflict between subsection 46(1) and the common law rule respecting exclusive jurisdiction clauses was to be resolved by the proper law governing the interpretation and enforcement of the contract. The parties had agreed that any disputes arising from the contract were to be determined by English law, and English conflict of laws rules permit parties to specify the proper law of the contract. Accordingly, he reasoned, English private international law required the Court to give effect to the exclusive jurisdiction clause in this case, in the absence of strong reasons for not so doing.
[50] Lord Justice Longmore regarded section 46 as an insufficient basis for staying the carriers’ English proceedings, on the ground that (at para. 24):
… no English court would expect a foreign court to grant a stay by reason of any provision of English law, if an action was proceeding in that foreign court by virtue of an agreement, governed by the law of that court, that proceedings were to be brought in the courts of that country. Conversely, an English court would hope that a decision to restrain an action brought in England, pursuant to an exclusive jurisdiction clause in a contract governed by English law, would be respected by any foreign court.
[51] For similar reasons, he was prepared to reinforce the refusal of a stay with an anti-suit injunction, stating that this was not an attack on the Canadian Parliament or courts because it only restrained the shippers if they elected to pursue the proceeding in Canada in breach of the contract. Moreover, he added, granting the injunction would help to avoid the unattractive prospect of parallel proceedings on the same claim, with the potential for different results.
[52] In concurring reasons, Lord Justice Rix said (at para. 54) that the principles governing the exercise by the English courts of their residual discretion not to give effect to a contractual exclusive jurisdiction clause “if the interests of justice demand otherwise” are analogous to those respecting the identification of the more convenient forum. Turning to subsection 46(1), he noted that the Federal Court had not treated the exclusive jurisdiction clause as a factor in its forum non conveniens analysis.
[53] Lord Justice Rix considered the argument advanced by the shippers that subsection 46(1) reflected a growing international consensus, evidenced by the Hamburg Rules, respecting exclusive jurisdiction clauses. The argument was that considerations of international comity militated against granting the anti-suit injunction, as an exception to the common law principle giving primacy to party autonomy in the selection of an exclusive forum.
[54] One of the grounds on which Lord Justice Rix rejected this argument was a statement by Justice Sopinka in Amchem Products Inc v. British Columbia (Workers’ Compensation Board), [1993] 1 S.C.R. 897 at 934, to the effect that, as a matter of comity, a Canadian court would respect a decision of a foreign court to assume jurisdiction over a matter on the basis of principles broadly conforming to those of Canadian private international law. Conversely, a Canadian court would not respect a decision of a foreign court to assume jurisdiction on a basis which was inconsistent with those principles and would expose a potential litigant in a Canadian court to an injustice.
[55] Lord Justice Rix inferred (at para. 81) from Justice Sopinka’s reasons that Canadian law “would also understand without offence” the anti-suit injunction granted in this case by the courts in England, applying the proper law of the contract, to restrain the shippers from seeking a remedy in Canada, where, as an exception to the rule normally applied in Canada, legislation directs Canadian courts not to give effect to a foreign exclusive jurisdiction clause agreed to by the parties.
(ii) Subsection 46(1)
[56] On the basis of submissions to the Parliamentary Committees, and statements made in the House of Commons Debates, it would appear that section 46 of the Marine Liability Act was primarily enacted to protect Canadian exporters and importers from having to litigate claims against carriers in a foreign forum where the expense may be prohibitive. When applicable, section 46 provides a litigant with the option of pursuing a claim in a competent court in Canada, despite the exclusive foreign jurisdiction clause in the contract of carriage.
[57] Particular concern was expressed in the parliamentary proceedings that small to medium-sized Canadian shippers and consignees do not have as much bargaining power as large ship owners in the negotiation of the terms of the contract: exclusive jurisdiction clauses are normally inserted in the interests of the carrier. Since Canada is a significant trading nation, the interests of Canadian exporters and importers are a matter of legitimate public concern.
[58] Thus, in his submissions to the House of Commons Standing Committee considering a Bill containing what became section 46, Mr James Gould, the then President of the Canadian Maritime Law Association, stated that the Association supported the clause because
… it provides Canadian claimants with an option – and it’s just that, an option – to sue or arbitrate in Canada in circumstances in which there is a substantial connection with Canada. It would provide an advantage to Canadian exporters and importers whose only other option might be to abandon their claims or sue or arbitrate claims in a foreign jurisdiction.
Particularly, advancing low or medium-sized claims can be subject to very significant inconvenience and disproportionate cost if one is forced to litigate or arbitrate in a foreign jurisdiction.
If the jurisdiction clause [i.e. section 46] is not retained, the present situation will continue, keeping Canadian importers and exporters at a significant disadvantage, I think, and that would only benefit foreign shipowners and operators.
(Canada, House of Commons, Evidence of the Standing Committee on Transport and Government Operations, (27 March 2001) at 1205)
And, in an exchange with a representative of ship-owning interests, Mr Marcel Proulx, M.P. said:
I assume that clause 46 was included to avoid situations where Canadian consumers, regardless of their size, would have to incur exorbitant costs to defend or institute proceedings against one of your clients abroad. That must be the reason, at least in part, for this provision.
(Canada, House of Commons, Evidence of the Standing Committee on Transport and Government Operations, (27 March 2001) at 1140)
It is clear from the exchange that “Canadian consumers” refers to Canadian shippers of goods.
[59] The position of the proponents of section 46 was well captured in the House of Commons by Mr Norman Doyle, M.P. who said:
Indeed, a culture has grown up that sees most of these disputes resolved in British boardrooms and in British courts. That suits the big shipping lines and the British legal profession just fine. However, I would submit that a small Canadian exporter would be badly outclassed going up against the big boys in that kind of a setting.
(House of Commons Debates, 37th Parliament, 1st Session, No. 058, May 9, 2001, at 1645)
[60] Some of the above statements may need to be read in light of the fact that shippers generally insure the cargo and that, as in the present case, the insurers are the real litigants. Nonetheless, the principal policy objective of section 46 would be advanced if insurers of the goods of Canadian shippers and consignees were not forced by an exclusive jurisdiction clause to exercise their subrogated rights outside Canada.
[61] Allowing insurers to sue in Canada may reduce the cost of litigation and thus improve their prospects of recouping the amount paid on a claim by the shippers or consignees. In theory, these reduced costs of doing business should be reflected in the premiums payable by Canadian shippers or consignees, thereby either making Canadian exports more competitive or reducing the final price paid by the consumer in Canada for imported goods.
[62] Section 46 should also be seen in an international context. It was described in the parliamentary proceedings as moving Canada closer to adopting in domestic law the Hamburg Rules which provide a uniform international legal framework for the carriage of goods by sea. The Hamburg Rules are given the force of law in Canada by Schedule 4, of the Marine Liability Act. However, this Schedule only comes into force on a date to be fixed by the Governor in Council on the recommendation of the Minister of Transport, who must consider the question every five years: section 44. No date has been fixed yet.
[63] Section 46 is similar, but not identical, to Article 21 of the Hamburg Rules. For example, Article 21 permits a claimant to commence proceedings in a forum on the ground that the defendant has a place of business in the jurisdiction but, unlike section 46,