OT Africa Line Ltd v Magic Sportswear Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Longmore,Lord Justice Rix,Lord Justice Laws |
| Judgment Date | 13 June 2005 |
| Neutral Citation | [2005] EWCA Civ 710 |
| Docket Number | Case No: A3/2004/2553 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 June 2005 |
[2005] EWCA Civ 710
Lord Justice Laws
Lord Justice Rix and
Lord Justice Longmore
Case No: A3/2004/2553
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE (Commercial Court)
Mr Justice Langley
Royal Courts of Justice
Strand, London, WC2A 2LL
MICHAEL McPARLAND Esq (instructed by Clyde & Co) for the Appellants/Defendants
JAMES COLLINS Esq (instructed by Stephenson Harwood) for the Respondent/Claimant
Introduction
The critical question in the present appeal is whether an English court, on which the parties to a contract of carriage have conferred exclusive jurisdiction to resolve their disputes, should in its discretion decline to stay proceedings in this country and grant injunctive relief to restrain one of the parties from bringing and continuing proceedings in the courts of a country whose law permits proceedings to be brought in those courts. The traditional answer to this question has in the past been that it depends on the proper law of the contract of carriage. If the proper law provides that the exclusive jurisdiction clause is unenforceable, the English court will have no regard to it; if the proper law says that it is enforceable, or enforceable in the absence of strong reason for it not to be enforced and no such strong reason exists, the question will then arise whether, as a matter of discretion, it is appropriate to support that enforceability by injunctive relief.
It can often be difficult to ascertain the proper law of contracts of carriage whereby goods are shipped in one country for delivery in another country on board a ship whose owners may carry on business in a third country. For this reason it is common for the parties to the carriage contract to agree on the law which is to govern their relationship. In the present case the contract of carriage did contain such an agreement viz that it should be governed by English law. There can be no doubt that in the light of such agreement, the proper law of the contract was English law. It would, therefore, on any ordinary view of the principles of private international law, be English law which determines whether the exclusive jurisdiction clause applies to the dispute; it should also be a matter of English law to determine whether it is appropriate to restrain any party from acting contrary to the clause by bringing proceedings in some court other than that provided for by that clause.
Facts
The claimants, O.T. Africa Line Ltd ("OTAL"), were the owners of the "Mathilde Maersk" on which the goods were shipped at New York on 5th February 2002 for a voyage to Monrovia in Liberia. OTAL is an English company and also has offices in Toronto. It was at Toronto that they issued the bill of lading covering the goods naming the first defendants, Magic Sportswear Corporation, as shippers. The intended receivers of the cargo were the second defendants, an entity known as Blue Banana. I shall refer to them as "Magic" and "Blue Banana". Insurance was taken out with Canadian insurers who are the third, fourth and fifth defendants, all of whom are based in Toronto. The vessel arrived at Monrovia in March 2002, but complaint is made of short delivery. Magic and Blue Banana started proceedings before the Federal Court Trial Division in Toronto on 1st August 2003. The insurers were the instigators of those proceedings, exercising rights of subrogation. OTAL issued proceedings in England on 2nd September 2003 against Magic and Blue Banana claiming (inter alia) a declaration that there was no short delivery, and an injunction restraining the Canadian proceedings.
The bill of lading contained the following terms:—
"24. USA/CANADA CLAUSE
If the Bill of Lading covers the transportation of the goods to or from ports of the United States of America or Canada this Bill of Lading shall be subject to United States Carriage of Goods by Sea Act 1936 and/or subject to Carriage of Goods by Water Act 1936 of Canada which shall be incorporated herein and the provisions of said act shall govern before loading and after discharge and throughout the entire time the goods are in the custody of the Carrier. If anything herein contained to be (sic) invalid or unenforceable under the provisions of said act such circumstances shall not affect the validity or enforceability of any other part or term of this Bill of Lading. The Carrier shall not be liable in any capacity whatsoever for loss, damage or delay of goods while the goods are not in his actual custody.
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 of 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."
I take the course of the proceedings from the concise judgment of Langley J. The basis on which the insurers invoked the jurisdiction of the Canadian Court, despite clause 25 of the bill of lading, was Section 46(1) of the Canadian Marine Liability Act 2001 which provides:—
"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 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."
Sub-sections (b) and (c) applied because OTAL had a place of business, branch or agency in Canada and the bill of lading was issued in Toronto.
On 8 September Gross J granted permission to serve the English proceedings on Magic and Blue Banana and also granted OTAL an anti-suit injunction in respect of the Canadian proceedings. On 28th October Magic and Blue Banana (again at the instigation of the insurers) filed an Acknowledgement of Service indicating an intention to contest the jurisdiction. However, no jurisdiction application was made thereafter and so, in accordance with CPR 11(5), both Magic and Blue Banana are to be treated as having accepted that the English court has jurisdiction to try OTAL's claims against them.
Notwithstanding the anti-suit injunction the Canadian proceedings have continued. OTAL, also on 8 September, filed a challenge to the jurisdiction of the Canadian court. Judgment on that challenge was given on 22nd December. The challenge was rejected. In the course of her judgment, Madam Prothonotary Milczynski found that the conditions of Section 46 were satisfied, that the Act "clearly removes the determining or binding effect of a forum selection clause in a bill of lading" and that Canada was the appropriate forum for the trial of the claim. The last of these findings was addressed in paragraph 18 of the judgment as follows:
"In this case, taking into account all of the facts and surrounding circumstances relating to the shipment of goods from New York to Monrovia, including the value of the goods, the fact that the true Plaintiffs are in Canada, the Defendants have business interests in Canada, and most particularly the fact that most if not all of the material witnesses will come from Monrovia and/or New York, (which factor favours neither England nor Canada), I find that the most convenient and appropriate forum for the determination of the Plaintiff's claim, including the interpretation and application of English law, is this Court."
OTAL appealed this decision to the Federal Court Judge. The appeal was heard in February 2004. It was dismissed on 23rd August by Mr Justice John A. O'Keefe. It was held that the Prothonotary's analysis of the issues was "not clearly wrong nor did she exercise her discretion based upon a wrong principle or upon a misapprehension of the facts". OTAL has now lodged a further appeal against this decision to the Canadian Federal Court of Appeal. This appeal is, we were told, to be heard on 14th June 2005.
No further steps were taken in the proceedings in the English court until, on OTAL's application, on 5th April 2004, Cooke J made an order pursuant to CPR Part 19 granting OTAL permission to join the insurers as defendants to the action (and amend the claim accordingly) and to serve the amended claim on the insurers out of the jurisdiction in Canada.
The grounds on which the claim was served on the insurers out of the jurisdiction were:
(i) that, pursuant to CPR Rule 6.20(8)(a), a claim was made in tort where damage was sustained within the jurisdiction. The tort alleged was procuring a breach of contract by Magic and Blue Banana by procuring those companies to commence the proceedings in Canada in breach of Clause 25 of the Conditions of the bill of lading. The damage relied upon was the legal costs of the proceedings against Magic and Blue Banana in England;
(ii) that, pursuant to CPR Rule 6.20(17), OTAL sought an order that the court exercise its power under Section 51 of the Supreme Court Act...
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