Date: 20020709
Docket: T-1847-01
Neutral citation: 2002 FCT 761
Admiralty Action in rem and in personam
BETWEEN:
ATLANTIC CEMENT CARRIERS LIMITED
Plaintiff
and
ATLANTIC TOWING LIMITED AND THE
OWNERS AND ALL OTHERS INTERESTED
IN THE SHIP "ATLANTIC ELM"
Defendants
RICHARD MORNEAU, ESQ., PROTHONOTARY:
[1] This is a motion by the Defendant Atlantic Towing Limited under subparagraph 50(1)(b) of the Federal Court Act, R.S.C. 1985, c. F-7, for a stay of the proceedings herein which it submits ought to be heard by the High Court of Justice in London, England.
Facts
[2] The Plaintiff was the owner of the barge PORTLAND STAR. The Plaintiff entered into a contract on Towcon terms with the Defendant, Atlantic Towing, for the towage by the tug ATLANTIC ELM of the barge PORTLAND STAR which was laden with cement bags (the Cargo).
[3] The Cargo was owned by St. Lawrence Cement Inc. and was being transported by the Plaintiff on the PORTLAND STAR under a contract of affreightment.
[4] On October 16, 2000, the ATLANTIC HELM departed Pictou, Nova Scotia, towing the PORTLAND STAR, which was laden with the Cargo owned by St. Lawrence Cement. The destination was various ports in Newfoundland.
[5] On October 19, 2000, the barge PORTLAND STAR sank and both the barge and the Cargo on board were lost at sea.
[6] On October 16, 2001, the Plaintiff filed the within action against the Defendants.
[7] To complete the proceedings picture, St. Lawrence Cement Inc. has commenced arbitration proceedings in Canada against the Plaintiff for damages arising out of the loss of its Cargo.
[8] St. Lawrence Cement Inc. has also commenced proceedings in this Court in Court File No. T-1519-01 against the Defendants, seeking to recover damages arising out of the loss of its Cargo.
[9] In the present action, the Plaintiff claims damages for loss of the PORTLAND STAR and also requests a declaration that the Defendants must indemnify the Plaintiff for any damages it may have to pay to St. Lawrence Cement Inc. as a result of the loss of the Cargo.
[10] Finally, the Defendant has recently filed a claim with the High Court of Justice in London, England, pursuant to the Towcon agreement entered between the parties (the Agreement).
[11] Clause 25 of the Agreement states that:
This Agreement shall be construed in accordance with and governed by English law. Any dispute or difference which may arise out of or in connection with this Agreement or the services to be performed hereunder shall be referred to the High Court of Justice in London.
No suit shall be brought in any other state or jurisdiction except that either party shall have the option to bring proceedings in rem to obtain conservative seizure or other similar remedy against any vessel or property owned by the other party in any state or jurisdiction where such vessel or property may be found.
Analysis
[12] Counsel for the Plaintiff argued that section 46 of the Marine Liability Act, S.C. 2001, c. 6, limits the discretion of this Court to stay proceedings in the interest of justice where there is a jurisdiction clause.
[13] Said section 46 reads as follows:
| 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. |
|
|
|
[14] Section 46 of the Marine Liability Act was dealt with by Gibson J. in Incremona-Salerno Marmi Affini Siciliani (I.S.M.A.S.) s.n.c. v. Castor (The), [2001] F.C.J. No. 1821 (T.D.). In that case, Gibson J. stated at paragraph 9:
More particularly, the stay applications are brought pursuant to paragraph 50(1)(b). Put another way, the issue is whether subsection 46(1) of the Marine Liability Act in effect limits the discretion of this Court under paragraph 50(1)(b) of the Federal Court Act in its determination of where it is in the interest of justice that a proceeding be stayed, and does so retroactively or retrospectively. Clearly, subsection 46(1) does limit the discretion of this Court to stay proceedings in the interest of justice where there is a jurisdiction clause, such as on the facts before me, in a bill of lading.
[15] It is to be noted that section 46 of the Marine Liability Act contemplates at its beginning "a contract for the carriage of goods". Counsel for the Plaintiff alleges that in the present case, the Agreement is both for towing and for the carriage of the Cargo. I disagree with such proposition. Clearly here the pith and substance of the Agreement is for the towage by the tug ATLANTIC ELM of the barge PORTLAND STAR. The carriage of the Cargo was the business of the contract of affreightment between the Plaintiff and the owner of the Cargo, St. Lawrence Cement Inc.
[16] Therefore, in my view, section 46 of the Marine Liability Act does not apply in the circumstances at bar.
[17] This brings us back to the Agreement that the parties negotiated and to clause 25 thereof.
[18] As reaffirmed by my colleague Hargrave in Trans-Continental Textile Recycling v. Flairius Enterprises (1995), 106 F.T.R. 278, at 281, in the presence of an undertaking clause to submit a dispute to a foreign court:
There is a substantial body of law as to how a court should exercise its discretion, including Burrard-Yarrows Corp. v. Ship Hoegh Merchant, [1982] 1 F.C. 248 (T.D.), Ship M/V SeaPearl and Patmos Navigation Co. v. Seven Seas Dry Cargo Shipping Corp. (1982), 43 N.R. 517; 139 D.L.R. (3d) 669 (F.C.A.) and Mountainbell Co. et al. v. W.T.C. Air Freight (H.K.) Ltd. (1988), 20 F.T.R. 57 (T.D.).
In the Sea Pearl (supra) Mr. Justice Pratte, speaking for the Court of Appeal, pointed out that, "Prima facie, an application to stay proceedings commenced in the Federal Court in defiance of undertaking to submit a dispute to arbitration or to a foreign court must succeed because, as a rule, contractual undertakings must be honoured." (at p. 681). He went on to point out that to depart from the prima facie rule there must be strong reasons to enable a court to conclude that it would not be just or reasonable, in the circumstances, to enforce the contractual obligation.
In all three of the cases, The "Hoegh Merchant", The "Sea Pearl" and Mountainbell Co., the courts either considered or quoted from the leading case in the area of an application for a stay grounded upon a jurisdiction clause in a bill of lading, The "Eleftheria", [1969] 1 Lloyd's Rep. 23, a decision of Mr. Justice Brandon (as he then was) [footnote omitted]. The much quoted passage is at p. 242:
The principles established by the authorities can, I think, be summarized as follows: (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign court, and the defendants apply for a stay, the English court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may be properly regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign courts. (b) Whether the law of the foreign court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected, and how closely. (d) Whether the defendants genuinely desire trial in the foreign, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign court because they would (i) be deprived of security for that claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons by unlikely to get a fair trial.
The "Eleftheria" involved a Greek jurisdiction clause in a bill of lading for carriage of plywood from Galatz in Romania to the United Kingdom. Mr. Justice Brandon began his consideration of the arguments by the parties by pointing out:
First, as to the prima facie case for a stay arising from the Greek jurisdiction clause. I think that it is essential that the court should give full weight to the prima facie desirability of holding the plaintiffs to their agreement. In this connection I think that the Court must be careful not just to pay lip service to the principle involved, and then fail to give effect to it because of a mere balance of convenience.
These cautions, against only paying lip service to the principle, and against the granting of a stay, where there is a contractual obligation as to jurisdiction, on the basis of a "mere balance of convenience" is the corollary to the general proposition that there must be a strong reason to deny a contractual jurisdiction clause.
(See also the following case for an application of the factors looked at in the Eleftheria case: Anraj Fish Products Industries Ltd. v. Hyundai Merchant Marine Co. (2000), 262 N.R. 270 (Fed. C.A.), at 273-274; leave to appeal to S.C.C. refused (March 22, 2001) 269 N.R. 393.)
[19] As the Federal Court of Appeal did in the Anraj case, let us proceed to review as against the main facts of this case the factors set out by Brandon J. in the Eleftheria case.
1. In what country are the issues of fact situated?
[20] It appears uncontested that the evidence and witnesses are expected to be situated in Canada.
[21] However, in a case involving a request for a stay based on a clause similar to clause 25 of the Agreement, Corostel Trading Ltd. v. Secunda Marine Services Ltd. et al. (1990), 38 F.T.R. 232, at p. 237, the Court dismissed the "Canadian elements" as mere convenience as follows:
[17] I am satisfied that it would be more convenient to have the dispute settled before the Federal Court of Canada. The contracting parties are Canadian and the Head Offices of the parties are in Canada. The route contemplated for the moving of plaintiff's dry dock was within Canada, Montreal to Sydney, Nova Scotia and within Canadian waters. The crew on board the tug, 12 in number, are Canadian. It is also very likely that the two pilots on board the tug are Canadian. The third party, the owners of the "Georges P. Vanier" are Canadian, M.I.L. Davie Inc. and M.I.L. Vickers Inc. and are subject to a Federal Court subpeona and could be forced to appear and give evidence.
[18] It is clear that mere convenience is not a "strong reason" to refuse to grant a stay when a clause in an agreement clearly states what jurisdiction should decide the dispute.
[19] The defendants have supplied plaintiff with a letter of guarantee that would be valid in both the Canadian and English jurisdiction and thus, plaintiff cannot state it is concerned about enforcing any English judgment.
[20] I am satisfied that the only possible "strong reason" for refusing the present application put forth by Corostel is the possibility it could not make the necessary proof without having the third party representatives give evidence as it could not require the third party representatives to travel to England nor could it require the pilots to go to England. Neither the pilots nor the representatives of M.I.L. Davie Inc. and M.I.L. Vickers Inc. have any interest in the outcome of the proceedings.
[21] I was not given any evidence that this would be the case, that is, that these witnesses would not go to England to give evidence but I believe that there is a very strong possibility that this would occur. There is no reason why either or both pilots would want to go to England on a specific date. The same applies to the representatives of "Davie" and "Vickers". These persons are not subject to being subpoenaed by the English Court while in Canada.
[22] Without the evidence of the third party "Davie" and "Vickers" Corostel cannot make its case. It is more than just a matter of convenience.
[23] Although this was not a determinating fact in my arriving to the conclusion that I have, I notice that Secunda instituted proceedings in the Federal Court of Canada on November 25, 1988, against the present plaintiff for an incident arising out of the same agreement and that Secunda instituted the action both in rem and in personam notwithstanding Clause 25 (T-2386-88).
[24] As I am satisfied that Corostel would suffer a serious prejudice if it could not have available to it witnesses in England to attempt to prove its case, these witnesses being the third party and the pilots, the present application to stay is denied.
[22] One realizes from the above citation that the Court denied the stay because it was satisfied that the plaintiff therein could not have available to it witnesses in England.
[23] In the case at bar, the Defendant has introduced into the record evidence which confirms the availability, under the rules of practice of the High Court of Justice in England, of various ways to enable a plaintiff to adduce witness evidence in support of its case.
[24] In addition, as pointed out by the Defendant, the facts that the evidence and witnesses are likely to be located in Canada are facts that were known or should have been known to Plaintiff prior to entering into the Agreement; if this was a concern on the part of the Plaintiff, then it should have raised the issue at the time of negotiating the Agreement with the Defendant and seek an amendment to the choice of jurisdiction provision.
[25] Indeed, as it appears from paragraphs 3 to 7 of the affidavit of Graham Curren filed by the Defendant, the Agreement has been the subject of negotiations between the parties:
3. The agreement was negotiated on behalf of Atlantic Towing Limited by David Lint under my supervision;
4. I am informed by one of our employees, Dan McPherson, and do verily believe it to be true that, at the time, Atlantic Towing Limited had been providing tug services to Atlantic Cement Carriers Limited for about six years, at a rate of 3 to 4 voyages a year;
5. All of these voyages were made pursuant to the standard terms and conditions of the TOWCON agreement;
6. To the best of my recollection and as far as I have been informed, Atlantic Cement Carriers Ltd. never raised any concerns regarding the choice of law and/or of the forum provisions contained in the TOWCON agreement;
7. The TOWCON agreement is a standard form of contract common in the industry recommended by prominent international bodies such as the International Salvage Union (ISU), the European Tugowners Association (ETA) and the Baltic and International Maritime Council (BIMCO);
2. Does the law of the foreign court apply? If so, does it differ from Canadian law in any material respects?
[26] Here clearly English law applies. The Plaintiff has not established that said law differs from the Canadian law.
3. With what court is each party connected, and how closely?
[27] Here the Plaintiff is connected to this Court by virtue of the action herein. However, it is also a party to the arbitration proceedings launched by St. Lawrence Cement, and it is a party to the newly launched claim by the Defendant in England. Its connection to this Court is therefore diluted.
4. Does the defendant genuinely desire a trial in the foreign country, or is the defendant only seeking procedural advantages?
[28] Here, as found by the Court in the Anraj decision, there is no evidence to support the conclusion that the Defendant's main motive in seeking a stay of proceedings is to attempt to seek a procedural advantage. In addition, the fact that the Defendant has sued the Plaintiff in England under clause 25 of the Agreement demonstrates its desire to have a trial in England.
5. Would the plaintiff be prejudiced by having to litigate in the foreign court?
[29] Plaintiff has not introduced evidence to that effect. In additional, similarly to the situation in the Anraj case, as far as the Plaintiff is concerned, it must be taken to have known of the jurisdiction selection clause at the time it negotiated and signed the Agreement.
[30] For the above reasons, I am of the view that there are no strong reasons to conclude that it would not be reasonable or just to hold the Plaintiff to the jurisdiction selection clause. Consequently, the Defendant's motion shall be granted with costs to the Defendant.
[31] An order shall issue accordingly.
Richard Morneau
Prothonotary
Montreal, Quebec
July 9 2002
FEDERAL COURT OF CANADA
TRIAL DIVISION
Date : 20020709
Docket : T-1847-01
Admiralty Action in rem and in personam
BETWEEN:
ATLANTIC CEMENT CARRIERS LIMITED
Plaintiff
AND
ATLANTIC TOWING LIMITED AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP "ATLANTIC ELM"
Defendants
REASONS FOR ORDER
FEDERAL COURT OF CANADA
COUNSEL AND SOLICITORS OF RECORD
DOCKET:
STYLE OF CAUSE:
T-1847-01
Admiralty Action in rem and in personam
Between:
ATLANTIC CEMENT CARRIERS LIMITED
Plaintiff
and
ATLANTIC TOWING LIMITED AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP "ATLANTIC ELM"
Defendants
PLACE OF HEARING:Montreal, Quebec
DATE OF HEARING:June 26, 2002
REASONS FOR ORDER: RICHARD MORNEAU, ESQ., PROTHONOTARY
DATED:July 9, 2002
APPEARANCES:
| Mr. T. Hart |
|
for Plaintiff |
|
|
|
|
| Mr. Richard L. Desgagnés |
|
for Defendants |
|
|
|
|
SOLICITORS OF RECORD:
| McInnes Cooper Halifax, Nova Scotia |
|
for Plaintiff |
|
|
|
|
| Ogilvy Renault Montreal, Quebec |
|
for Defendants |