A-60-78
United Nations and Food and Agriculture Organi
zations of the United Nations (Plaintiffs)
(Appellants)
v.
Atlantic Seaways Corporation and Unimarine S.A.
(Defendants) (Respondents)
Court of Appeal, Ryan and Le Dain JJ. and
MacKay D.J.—Toronto, September 27, 1978;
Ottawa, March 26, 1979.
Jurisdiction — Maritime law — Jurisdictional clause in bill
of lading declaring exclusive applicability of Canadian law
and determination of disputes in Canada by the Federal Court
of Canada — All parties located outside Canada, and contract
alleged to have been made in U.S. for shipment from U.S. port
to another foreign port — Whether or not jurisdiction in
personam of Federal Court in respect of a cargo claim extends
to a cause of action arising outside Canada — If yes, whether
or not the present claim is made under or by virtue of
Canadian maritime law within the meaning of s. 22(2) of the
Federal Court Act — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 22.
This is an appeal from a judgment of the Trial Division
dismissing an action for damages arising out of the carriage of
goods by sea from a port in the United States to a port in the
Yemen Arab Republic on the ground that the Court is without
jurisdiction to entertain the claim. All the parties are located
outside Canada, and the contract of carriage is alleged to have
been made in the United States. Clause 2 of the bill of lading,
however, stipulated that the contract evidenced by the bill of
lading be governed by Canadian law and that the disputes be
determined in the Federal Court of Canada, to the exclusion of
jurisdiction of any other courts. The issues on the appeal are:
(1) does the jurisdiction in personam of the Federal Court in
respect of a cargo claim extend to a cause of action arising
outside Canada? and (2) if yes, is the claim in the present case,
in view of the clauses in the bill of lading dealing with
jurisdiction one that is made under or by virtue of Canadian
maritime law or other law of Canada on the subject of naviga
tion and shipping within the meaning of section 22(1) of the
Federal Court Act.
Held, the appeal is allowed. The jurisdiction of the Court
ration materiae in an action in personam in respect of a claim
for damage to cargo extends to a cause of action arising outside
Canada. The terms of the Federal Court Act which confer
jurisdiction in personam in respect of cargo claims contain no
qualification, express or implied, based on the place where the
cause of action arises. Significantly, this fact is quite unlike
cases of jurisdiction in personam in collision. Once it is deter
mined that a particular claim is one which falls within one of
the categories of jurisdiction specified in section 22(2) of the
Federal Court Act the claim must be deemed to be one
recognized by Canadian maritime law and one to which that
law applies, in so far as the requirement in Quebec North Shore
Paper and McNamara Construction cases is concerned. There
is no other workable approach to the admiralty jurisdiction of
the Court. To make jurisdiction depend upon the law that will
govern by operation of the conflict of laws would create com
pletely unpredictable and hazardous jurisdictional dichotomies.
Santa Maria Shipowning and Trading Co. S.A. v. Hawker
Industries Ltd. [1976] 2 F.C. 325, considered. Quebec
North Shore Paper Co. v. Canadian Pacific Ltd. [1977] 2
S.C.R. 1054, considered. McNamara Construction (West-
ern) Ltd. v. The Queen [1977] 2 S.C.R. 654, considered.
Associated Metals & Minerals Corp. v. The 'Evie W -
[1978] 2 F.C. 710, referred to. Tropwood A.G. v. Sivaco
Wire & Nail Co. (1979) 26 N.R. 313, considered.
APPEAL.
COUNSEL:
Nigel H. Frawley for plaintiffs (appellants).
John T. Morin and L. Price for defendant
(respondent) Atlantic Seaways Corporation.
Arthur J. Stone, Q.C. for defendant (respond-
ent) Unimarine S.A.
SOLICITORS:
McMillan, Binch, Toronto, for plaintiffs
(appellants).
Campbell, Godfrey & Lewtas, Toronto, for
defendant (respondent) Atlantic Seaways
Corporation.
McTaggart, Potts, Stone & Herridge,
Toronto, for defendant (respondent) Unima-
rine S.A.
The following are the reasons for judgment
rendered in English by
LE DAIN J.: This is an appeal from a judgment
of the Trial Division [[1978] 2 F.C. 510] dismiss
ing an action for damages arising out of the car
riage of goods by sea from a port in the United
States to a port in the Yemen Arab Republic on
the ground that the Court is without jurisdiction to
entertain the claim. Judgment was rendered upon
an application made under Rule 474 pursuant to
an order granting leave to file a conditional
appearance for the purpose of objecting to the
jurisdiction of the Court.
The material before the Court from which the
relevant facts must be taken as established for
purposes of determining the question of jurisdic
tion consists of the statement of claim, an affidavit
filed in support of the applications for an order for
service ex juris, and the bill of lading which is an
exhibit to the affidavit.
The action is in personam by the appellants as
owners of a cargo of wheat which was shipped on
their behalf on board the vessel Valiant for car
riage from New Orleans, Louisiana, to the port of
Hodeidah in the Yemen Arab Republic against the
respondents Atlantic Seaways Corporation and
Unimarine S.A., as owner and charterer respec
tively of the vessel. All the parties are located
outside Canada. The United Nations has its head
quarters in the City of New York and the Food
and Agriculture Organization of the United
Nations has its headquarters in Rome. Atlantic
Seaways Corporation is a Liberian corporation
with head office at Monrovia, Liberia, and Unima-
rine S.A. is a Panamanian corporation with an
address for service in Panama. The Valiant is of
Liberian registry.
The contract of carriage is alleged to have been
made in the United States of America between the
Commodity Credit Corporation, an agency of the
Government of the United States, which donated
the wheat to the appellants, and the respondent
Unimarine S.A., and is evidenced by a bill of
lading issued by the master of the vessel at New
Orleans. The World Food Programme, an organi
zation established by the appellants with head
quarters in Rome, is said to have shipped the
wheat as agent for the appellants, and in this
capacity to be the assignee of the rights of Com
modity Credit Corporation under the contract of
carriage.
The statement of claim alleges that upon arrival
at Hodeidah the wheat was affected by "infesta-
tion and sprouting to the point of germination"
and that in consequence a large portion of it was
rejected by the Yemenese authorities. The appel
lants claim for the expense of replacing the
damaged cargo. They allege a breach of the con
tract of carriage and specific acts of negligence by
the respondents and those for whom they are
responsible.
Two clauses in the bill of lading have a bearing
on the contentions with respect to jurisdiction.
They are clauses 1 and 2, which read as follows:
1. Clause Paramount. The contract evidenced by this bill of
lading shall have effect subject to the provisions of the Hague
Rules contained in the International Convention for the Unifi
cation of Certain Rules relating to Bills of Lading dated
Brussels, August 25, 1924, as enacted in the country of ship
ment. When no such enactment is in force in the country of
shipment, the Carriage of Goods by Sea Act 1924 of the United
Kingdom shall apply. With respect to goods loaded at a
Canadian port, the Water Carriage of Goods Act, 1936 shall
apply. When issued for carriage of goods by sea to or from
ports in the United States of America in foreign trade, this bill
of lading shall have effect subject to the provisions of the
Carriage of Goods by Sea Act of the United States approved
April 16, 1936. During any time when the Carriage of Goods
by Sea Act of the United States is not applicable by its own
terms and the carrier has any responsibility by law or otherwise
with respect to cargo, such responsibility shall be governed by,
and limited to, that prescribed by Subsections (5), (6) and (7)
of Section 3, Subsections (2), except (2)(q), and (5) and (6) of
Section 4, and Section 7 of COGSA, which subsections and
sections are incorporated herein by reference and made a part
hereof. The carrier shall at all times have the benefit of all
exemptions, privileges and limitations of liability provided in
the U.S. Rev. Statutes, Section 4281 and 4287, inclusive, and
amendments thereto, and of all statutes or laws creating or
permitting exemptions from or limitations of a carrier's liabili
ty, which statutes are incorporated herein by reference and
made a part hereof.
The provisions, exemptions and conditions of this bill of
lading being separable, if any thereof is repugnant to any extent
to any of the said Acts or legislation, such provision, exemption
and condition shall be void to that extent but no further.
2. Governing Law and Jurisdiction. The contract evidenced by
this bill of lading shall be governed by Canadian law and
disputes determined in Canada by the Federal Court of Canada
to the exclusion of the jurisdiction of any other Courts.
The goods reached the port of Hodeidah on or
about April 18, 1976. The statement of claim was
filed on April 7, 1977. On May 9, 1977 an order
was made by the Trial Division granting the appel
lants leave to serve a notice of the statement of
claim on the respondents out of the jurisdiction.
Upon being served the respondents applied for
leave to file a conditional appearance "for the
purpose of objecting to the jurisdiction of the
Court". By orders of the Trial Division on Decem-
ber 5, 1977 leave was granted on condition that
the respondents make a motion on the question of
jurisdiction returnable on December 19, 1977. In
accordance with such leave conditional appear
ances were filed by the respondents and applica
tion was made by them "for an Order pursuant to
Rule 474 striking out the Statement of Claim and
dismissing the action, with costs, on the ground
that this Court is without jurisdiction to hear and
determine the claim made in this action."
After a full argument, including written as well
as oral submissions, the Trial Division on January
26, 1978, granted the application and dismissed
the action on the ground that it was not a claim
that was made under "Canadian maritime law or
other law of Canada." This was a reference to the
requirement for jurisdiction found in section 22(1)
of the Federal Court Act which is as follows:
22. (1) The Trial Division has concurrent original jurisdic
tion as well between subject and subject as otherwise, in all
cases in which a claim for relief is made or a remedy is sought
under or by virtue of Canadian maritime law or any other law
of Canada relating to any matter coming within the class of
subject of navigation and shipping, except to the extent that
jurisdiction has been otherwise specially assigned.
The Trial Division held that the contract of
carriage had no connection with Canada, that it
was governed by the United States Carriage of
Goods by Sea Act, 1936', and that in the absence
of any connection with Canada clause 2 of the bill
of lading, which is quoted above, did not make the
claim one that was made under Canadian mari
time law or other law of Canada.
As I understand the reasons for judgment and
the arguments that were put to us, the issues on
the appeal are essentially two: (1) Does the juris
diction in personam of the Federal Court in
respect of a cargo claim extend to a cause of action
arising outside Canada? and (2) Assuming that it
does, is the claim in the present case, in view of the
provisions of clauses 1 and 2 of the bill of lading, a
claim that is made under or by virtue of Canadian
maritime law or other law of Canada on the
subject of navigation and shipping within the
meaning of section 22(1) of the Federal Court
Act? Alternatively to their submissions on these
two issues, the appellants contend that the ques
tion of jurisdiction should not be determined at
this stage of the proceedings because there is an
insufficient basis of fact in the material before the
Court. The merits of this contention can only be
appreciated, of course, after a consideration of
what the issues necessarily imply and the extent to
' 46 U.S. Code, ss. 1300-1315.
which they may turn on matters of fact that are
not before the Court.
The specific heads of jurisdiction that are
invoked by the appellants are paragraphs (e),(h)
and (i) of subsection 22(2) of the Federal Court
Act which are as follows:
22....
(2) Without limiting the generality of subsection (1), it is
hereby declared for greater certainty that the Trial Division has
jurisdiction with respect to any claim or question arising out of
one or more of the following:
(e) any claim for damage sustained by, or for loss of, a ship
including, without restricting the generality of the foregoing,
damage to or loss of the cargo or equipment of or any
property in or on or being loaded on or off a ship;
(h) any claim for loss of or damage to goods carried in or on
a ship including, without restricting the generality of the
foregoing, loss of or damage to passengers' baggage or
personal effects;
(1) any claim arising out of any agreement relating to the
carriage of goods in or on a ship or to the use or hire of a ship
whether by charter party or otherwise;
The respondents contend that these heads of
jurisdiction should be construed to exclude a claim
based on a cause of action arising outside Canada.
There was reference in the course of argument to
the history of admiralty jurisdiction with respect to
foreign maritime contracts, and in particular to
the question whether the jurisdiction extended in
early times to contracts made beyond the seas but
was later restricted to contracts made on the high
seas. Reference was made to the Laws of Oleron 2 ,
the statutes of Richard II 3 , and the attitude of the
2 Reference was made to two passages in the Laws of Oleron,
as found in The Black Book of the Admiralty, edited by Sir
Travers Twist. The first, in Volume I, p. 69, reads: "Item any
contract made between merchant and merchant, or merchant
or marriner beyond the sea, or within the fflood marke, shal be
tryed before the admirall and noe where else by the ordinance
of the said King Edward and his lords.—No.E.38, Dr. Zouch,
fol.101. Articles of Agreement 18 ffeb. 1632. Littleton L.3, c.7,
sect. 440." The second, in Volume II, p. 327, reads: "If a
contract is made between people of Oleron and people of
another country, and afterwards if suit arises, the suit shall be
heard in the country where the contract was made, for one can
there hear more easily those who shall have heard the
contract."
3 Chapter 6 of Richard II of 1389 ("... the admirals and
their deputies shall not meddle from henceforth of any thing
done within the realm, but only of a thing done upon the sea,
common law courts 4 . The contention in respect of
foreign contracts of carriage, however, was based
primarily, as I understood it, on the limited scope
of the jurisdiction in respect of cargo claims that
was conferred on the English Court of Admiralty
by section 6 of The Admiralty Court Act, 1861, 24
Vict., c. 10, which reads:
6. The High Court of Admiralty shall have Jurisdiction over
any Claim by the Owner or Consignee or Assignee of any Bill
of Lading of any Goods carried into any Port in England or
Wales in any Ship, for Damage done to the Goods or any Part
thereof by the Negligence or Misconduct of or for any Breach
of Duty or Breach of Contract on the part of the Owner,
Master, or Crew of the Ship, unless it is shown to the Satisfac
tion of the Court that at the Time of the Institution of the
Cause any Owner or Part Owner of the Ship is domiciled in
England or Wales:.. .
The Act of 1861 gave the High Court of Admi
ralty jurisdiction in rem and in personam in
respect of claims for damage to cargo carried into
a port in England or Wales. It provided a remedy
...") and Chapter 3 of Richard II of 1391 (".. . of all manner
of contracts, pleas, and quarrels, and all other things rising
within the bodies of the counties, . as well by land as by water,
and also of wreck of the sea, the admiral's Court shall have no
manner of cognizance, ...")
4 The Laws of Oleron, as well as the effect of the statutes of
Richard II and the attitude of the common law courts on
admiralty jurisdiction with respect to foreign maritime con
tracts, were considered by Justice Story in his classic judgment
in De Lovio v. Boit, 2 Gall. 398, 7 Fed. Cas. 418. He held that
the English Court of Admiralty had jurisdiction prior to the
statutes of Richard II over foreign maritime contracts wherever
made or intended to be performed, that the statutes were not
intended to take away the jurisdiction with respect to foreign
maritime contracts made on land despite the contentions of the
common law courts to the contrary, and that there was no
reason to import the restrictions placed by the common law
courts on admiralty jurisdiction into the United States. He
concluded: "On the whole, I am, without the slightest hesita
tion, ready to pronounce, that the delegation of cognizance of
"all civil cases of admiralty and maritime jurisdiction" to the
courts of the United States comprehends all maritime con
tracts, torts, and injuries. The latter branch is necessarily
bounded by locality; the former extends over all contracts,
(wheresoever they may be made or executed, or whatsoever
may be the form of the stipulations,) which relate to the
navigation, business or commerce of the sea."
where none had existed previously: The `Iron-
sides" 167 E.R. 205; The "St. Cloud" 167 E.R.
269. But it also marked the limits of the admiralty
jurisdiction exercised by the Exchequer Court of
Canada in respect of cargo claims under The
Admiralty Act, 1891, S.C. 1891, c. 29, which was
enacted pursuant to the Colonial Courts of Admi
ralty Act, 1890, 53-54 Vict., c. 27 (Imp.). The
limitation was applied by the Exchequer Court in
The Harris Abattoir Co., Ltd. v. The S.S. "Aledo"
[ 1923] Ex.C.R. 217, in which it was held that the
Court did not have jurisdiction to entertain a claim
for damage to cargo arising out of a shipment
from a port in Canada to a foreign port. By The
Admiralty Act, 1934, S.C. 1934, c. 31, the juris
diction conferred on the Exchequer Court in
respect of cargo claims was not confined to cargo
carried into a port in Canada. Paragraph (a) of
subsection 18(3) of the Admiralty Act, R.S.C.
1952, c. 1, conferred jurisdiction in the following
terms:
18....
(3) Notwithstanding anything in this Act or in the Act
mentioned in subsection (2), the Court has jurisdiction to hear
and determine
(a) any claim
(i) arising out of an agreement relating to the use or hire
of a ship,
(ii) relating to the carriage of goods in a ship, or
(iii) in tort in respect of goods carried in a ship,
Subsection 18(4) provided:
18....
(4) No action in rem in respect of any claim mentioned in
paragraph (a) of subsection (3) is within the jurisdiction of the
Court unless it is shown to the Court that at the time of the
institution of the proceedings no owner or part owner of the
ship was domiciled in Canada.
Jurisdiction in respect of cargo claims had been
conferred on the English Court by section
22(1)(a)(xii) of the Supreme Court of Judicature
(Consolidation) Act, 1925, 15-16 Geo. V, c. 49, as
follows:
22.—(1) The High Court shall, in relation to admiralty
matters, have the following jurisdiction (in this Act referred to
as "admiralty jurisdiction") that is to say:—
(a) Jurisdiction to hear and determine any of the following
questions or claims:—
(xii) Any claim—
(1) arising out of an agreement relating to the use or
hire of a ship; or
(2) relating to the carriage of goods in a ship; or
(3) in tort in respect of goods carried in a ship;
unless it is shown to the court that at the time of the
institution of the proceedings any owner or part owner of the
ship was domiciled in England:
It is clear from these provisions that the limita
tion in section 6 of The Admiralty Court Act,
1861, was not carried over in the English Act of
1925 or the Canadian Act of 1934. The jurisdic
tion in respect of cargo claims that was conferred
by these statutes on the English and Canadian
courts of admiralty respectively was on its face
unlimited in so far as the place where the cause of
action arose was concerned.
The Admiralty Act, 1934 imposed certain limits
on the exercise of jurisdiction in personam in
respect of cargo claims. Subsection 19(2) of the
Act provided that "Subject to subsections (3) and
(4) of section 18 and subsection (1) of section 20,
the Admiralty jurisdiction of the Exchequer Court
may be exercised either in proceedings in rem or in
proceedings in personam." The relevant provisions
of subsection 20(1) are paragraphs (e) and (/)
which read as follows:
20. (1) An action may be instituted in any registry when,
(e) the action is in personam and is founded on any breach
or alleged breach within the district or division of such
registry, of any contract, wherever made, which is one within
the jurisdiction of the Court and which, according to the
terms thereof, ought to be performed within such district or
division; or
(J) the action is in personam and is in tort in respect of goods
carried on a ship into a port within the district or division of
such registry.
It may also be observed that Rule 20 respecting
service out of the jurisdiction under the Act of
1934 reflected these limitations in paragraphs (b)
and (e) thereof as follows:
20. Service out of the jurisdiction of a writ of summons or
notice of a writ of summons or a third party notice, may be
allowed by the Court whenever:—
(b) The action is founded on any breach or alleged breach
within the district or division in which the action is instituted
of any contract wherever made, which according to the terms
thereof ought to be performed within such district or division;
(e) The action is in tort in respect of goods carried on a ship
into a port within the district or division of the registry in
which the action is instituted.
The terms of the Federal Court Act which
confer jurisdiction in personam in respect of cargo
claims contain no qualification, express or implied,
based on the place where the cause of action
arises. In addition to the unqualified terms of
paragraphs (e),(h) and (i) of subsection 22(2),
which have been quoted above, reference may be
made to subsection 22(3)(c) which reads:
22....
(3) For greater certainty it is hereby declared that the
jurisdiction conferred on the Court by this section is applicable
(e) in relation to all claims whether arising on the high seas
or within the limits of the territorial, internal or other waters
of Canada or elsewhere and whether such waters are natural
ly navigable or artificially made so, including, without
restricting the generality of the foregoing, in the case of
salvage, claims in respect of cargo or wreck found on the
shore of such waters; ... [emphasis added].
Subsection 43(1) provides that "Subject to sub
section (4) of this section, the jurisdiction con
ferred on the Court by section 22 may in all cases
be exercised in personam." Subsection (4) imposes
certain conditions or limitations on the jurisdiction
in personam in collision cases as follows:
43....
(4) No action in personam may be commenced in Canada
for a collision between ships unless
(a) the defendant is a person who has a residence or place of
business in Canada;
(b) the cause of action arose within the territorial, internal
or other waters of Canada; or
(c) the parties have agreed that the Court is to have
jurisdiction.
It is significant, I think, that no such limitations
are placed upon jurisdiction in personam in respect
of cargo claims. It is a reason for not implying any.
There is support for this view in the opinion
expressed by Jackett C.J. in the Santa Maria
Shipowning and Trading Company S.A. v.
Hawker Industries Limited [1976] 2 F.C. 325.
The case involved an action in personam based on
a contract for the repair of a ship. A question
arose as to the extent of the jurisdiction conferred
by section 22(2)(n) of the Federal Court Act with
respect to "any claim arising out of a contract
relating to the construction, repair or equipping of
a ship" because, as the Chief Justice stated in his
reasons, it was argued that "the whole of the
contractual cause of action so pleaded is geograph
ically situated outside Canada and is, therefore,
not within the jurisdiction of a Canadian court."
The Chief Justice held that the statement of claim
was so drawn as to permit proof to be made of a
cause of action arising within Canada, but he
expressed the following opinion with respect to the
argument concerning the limits of the Court's
jurisdiction in admiralty:
In the absence of any knowledge of authority directly related
to the question, I am not persuaded that admiralty subject
matter jurisdiction is subject to implied geographical limita
tions. In an admiralty cause (and, as far as I am aware, in any
other cause in any court), in the absence of express limitation,
there is no basis for implying geographical limitations on the
Court's jurisdiction other than the necessity of serving the
defendant within the Court's geographical jurisdiction unless
leave under appropriate authority is obtained to serve ex juris.
[P. 335.]
This view of the Court's admiralty jurisdiction
would appear to be in keeping with that conferred
on the English Admiralty Court by the Adminis
tration of Justice Act, 1956, section 1(4)(b) of
which provides that the provisions of section 1
which confer jurisdiction in respect of different
categories of claim apply "in relation to all claims,
wheresoever arising ...". (Section 4 of that Act
imposes certain territorial limitations in respect of
an action in personam in collision cases, much as
does section 43(4) of the Federal Court Act.) It is
also interesting to note what was said by Lord
Wilberforce in The `Atlantic Star" [1974] A.C.
436 at page 469 concerning the view which the
English Admiralty Court takes of its jurisdiction:
... the Admiralty court in this country is one with a long
history and a wide international reputation. It is one to which
resort is made from all over the world in matters having no
intrinsic connection with England. The proportion (we were
supplied with figures researched by counsel) of purely foreign
suits which it entertains is substantial. It is a forum of choice
often selected by parties to contracts; it is accustomed to
applying foreign law, it is well-equipped to take expert advice
which itself has a high repute.
For these reasons I am of the opinion that the
jurisdiction of the Court ratione materiae in an
action in personam in respect of a claim for
damage to cargo extends to a cause of action
arising outside Canada. Whether the Court should
assume jurisdiction in a case that requires leave for
service ex juris is, of course, another question. It is
a matter of discretion to be exercised with regard
to the doctrine of forum conveniens: Antares
Shipping Corporation v. The "Capricorn" [1977]
2 S.C.R. 422. In the present case the Trial Divi
sion gave leave for service out of the jurisdiction
and it is not that exercise of discretion, as such,
that is attacked by the respondents' application.
The challenge is to the jurisdiction ratione mate-
riae of the Court.
I turn now to the question whether the claim can
be said to be made under or by virtue of Canadian
maritime law or other law of Canada in relation to
a matter falling within the subject of navigation
and shipping. In Quebec North Shore Paper Com
pany v. Canadian Pacific Limited [1977] 2 S.C.R.
1054 and McNamara Construction (Western)
Limited v. The Queen [1977] 2 S.C.R. 654 the
Supreme Court of Canada, basing itself on the
words "administration of the laws of Canada" in
section 101 of The British North America Act,
1867, held that in order for the Federal Court to
have jurisdiction in a particular case there must be
applicable and existing federal law, whether stat
ute, regulation or common law, to support the
claim. It is not sufficient that the subject matter of
the action falls within the legislative competence of
Parliament. In neither case was there found to be
applicable and existing federal law so that the
Court was not required to consider what the rela
tionship must be between the existing federal law
and the cause of action in a particular case to meet
the requirements of section 101 and the terms of
the particular grant of jurisdiction. But in the
McNamara Construction case Laskin C.J.C. used
language suggesting that the claim must be
"founded" on existing federal law.
It has been held by this Court in several cases
now that Canadian maritime law as defined by
section 2 of the Federal Court Act and affirmed as
continuing law by section 42 thereof is existing
federal law within the meaning of the Supreme
Court's decisions in the Quebec North Shore
Paper Company and McNamara Construction
cases. See, for example, Associated Metals &
Minerals Corporation v. The "Evie W" [1978] 2
F.C. 710, in which Jackett C.J. said at p. 716 that
"there is, in Canada, a body of substantive law
known as admiralty law, the exact limits of which
are uncertain but which clearly includes substan
tive law concerning contracts for the carriage of
goods by sea."
In the present case Canadian maritime law must
constitute the applicable and existing federal law
required for jurisdiction; it is not suggested that
there is any other existing law of Canada on the
subject of navigation and shipping that could be
applicable. The issue as presented by the reasons
for judgment in the Trial Division and the argu
ment in appeal is whether in view of the terms of
clause 1 of the bill of lading the claim can be said
to be one made under or by virtue of Canadian
maritime law. By that clause, where the carriage is
from a port in the United States in foreign trade
the bill of lading is to have effect subject to the
provisions of the United States Carriage of Goods
by Sea Act, 1936. It is argued from this provision
that the rights and obligations of the parties will
be determined by American rather than Canadian
law.
On the other hand, the appellants laid great
stress on clause 2, which is a choice of proper law
as well as a choice of forum clause, as indicating
the application of Canadian maritime law in this
case. The question of the validity and effect of
clause 2 in relation to clause 1 was a major focus
of the argument on the appeal. It raises problems
of construction and conflict of laws. The respective
contentions of the parties may be briefly summa
rized. The respondents contended that clause 2
should be held to be null and void or of no effect
because it was in conflict with or repugnant to
clause 1. The respondents invoked the principle
referred to in Forbes v. Git [1922] 1 A.C. 256 at
page 259: "If in a deed an earlier clause is fol
lowed by a later clause which destroys altogether
the obligation created by the earlier clause, the
later clause is to be rejected as repugnant and the
earlier clause prevails." Reliance was also placed
on the decision in Ocean Steamship Company,
Limited v. Queensland State Wheat Board [1941]
1 K.B. 402, in which a stipulation in a bill of
lading of English law as the proper law of the
contract was held to be null and void because of
conflict with a provision of the Australian Sea-
Carriage of Goods Act, 1924, [No. 22, 1924]
which had been incorporated into the contract,
making Australian law the proper law in the case
of a shipment from an Australian port. The
respondents also contended that clause 2 should be
denied effect on the ground, citing the decision of
the United States Court of Appeals, Second Cir
cuit, in Indussa Corporation v. Steamship "Ran-
borg" 1967 A.M.C. 589, that an American court
would hold it to be null and void as being contrary
to the United States Carriage of Goods by Sea Act
in so far as it purported to exclude the jurisdiction
of American courts. The appellants contended, in
effect, that there was no necessary conflict be
tween the provisions of clause 1 and those of clause
2 and that they could both be given effect on the
view that clause 1 incorporated the provisions of
the United States Carriage of Goods by Sea Act
as part of the contract of carriage in accordance
with the principle recognized in such cases as G.E.
Dobell & Co. v. The Steamship Rossmore Com
pany, Limited [1895] 2 Q.B. 408, and the Ocean
Steamship case itself, and that clause 2 could have
effect subject to these and other terms of the
contract.
A decision that would appear to have an impor
tant bearing on the issues raised is that of the
Privy Council in Vita Food Products, Incorpo
rated v. Unus Shipping Company, Limited [1939]
A.C. 277. The bill of lading in that case, which
covered a shipment from a port in Newfoundland
to a port in the United States, did not contain a
clause paramount making the Hague Rules as
adopted by the Newfoundland Carriage of Goods
by Sea Act, 1932, [1932, c. 18] part of the con
tract, but it contained a clause providing that the
contract was to be governed by English law. The
question was whether the failure to comply with
the requirement of the Newfoundland Act that
there be a clause paramount rendered the bills of
lading illegal. The Privy Council held that it did
not. With respect to the freedom of the parties to
stipulate the proper law of the contract, Lord
Wright, who delivered the judgment, said [at page
290]: "But where the English rule that intention is
the test applies, and where there is an express
statement by the parties of their intention to select
the law of the contract, it is difficult to see what
qualifications are possible, provided the intention
expressed is bona fide and legal, and provided
there is no reason for avoiding the choice on the
ground of public policy." As to whether the parties
are free to stipulate a proper law with which the
contract has no connection, he said [at page 290];
"Connection with English law is not as a matter of
principle essential." This decision has been the
subject of critical commentary by learned authors
on conflict of laws but it would appear to remain
the dominant view. Some would say that in such
circumstances the choice of the parties is a factor
to be considered but should not be regarded as
conclusive. But the chief qualification of the free
dom to choose the proper law of the contract, and
the meaning to be attributed to the words "bona
fide and legal" in the dictum of Lord Wright,
would seem to be that the proper law must not
have been chosen to evade a mandatory provision
of the law with which the contract has its closest
and most real connection. See Dicey and Morris,
The Conflict of Laws, 9th ed., 1973, pages 729-
732; Cheshire, Private International Law, 9th ed.,
1974, pages 205-208; Castel, Canadian Conflict of
Laws, 1977, vol. 2, pages 535-537. The question as
to the system of law with which the contract has
its closest and most real connection is essentially
one of fact, and to the extent that it is a foreign
system of law, so also is the question as to what are
to be considered mandatory provisions of such law
affecting the validity of the contract or any provi
sions thereof. These questions are better left to be
determined upon the basis of all the relevant evi
dence of the circumstances surrounding the
making and performance of the contract. To that
extent I think it would be premature to attempt to
determine these questions at this stage of the
proceedings on the basis of the statement of claim
alone. The question of the extent to which Canadi-
an law will apply is further complicated by the
appellants' contention that their claim is based on
tort as well as contract. Whether in this case,
where the owner as well as the charterer is sued,
there can be a claim in tort as well as contract,
whether in such a case the defendants would have
the benefit of the exceptions in the contract, and
whether it would be necessary to apply foreign law
to any extent to determine liability are also ques
tions that are better left to be decided upon the
whole of the pleadings and evidence.
In any event, I am of the opinion that the
answer to the question whether the claim is one
made under Canadian maritime law cannot
depend on the extent to which foreign law will
apply. In my view, once it is determined that a
particular claim is one which falls within one of
the categories of jurisdiction specified in section
22(2) of the Federal Court Act the claim must be
deemed to be one recognized by Canadian mari
time law and one to which that law applies, in so
far as the requirement in the Quebec North Shore
Paper and McNamara Construction cases is con
cerned. There is no other workable approach to the
admiralty jurisdiction of the Court. To make juris
diction depend upon the law that will govern by
operation of the conflict of laws would create
completely unpredictable and hazardous jurisdic
tional dichotomies. It would exclude from the
jurisdiction of the Court, for example, a case such
as Drew Brown Limited v. The "Orient Trader"
[1974] S.C.R. 1286, in which the Court applied
United States law as the proper law of the contract
in a claim falling within the admiralty jurisdiction
of the Exchequer Court. I cannot believe that it
could ever have been intended that the principle
affirmed in the Quebec North Shore Paper and
McNamara Construction cases should have such
consequences. Where foreign law must be estab
lished to determine the rights and obligations of
the parties it must be proved and found as a fact,
and it is given effect to by the domestic law both
as a matter of choice of law and a matter of public
policy. See Dynamit Actien-Gesellschaft (Vormals
Alfred Nobel and Company) v. Rio Tinto Com
pany, Limited [1918] A.C. 292, per Lord Parker
of Waddington at page 302; Cheshire's Private
International Law, 9th ed., 1974, pages 148-149.
It is impossible to determine in advance the extent
to which the domestic law and foreign law will be
applied in a particular case. In the absence of
proof that foreign law is different from the domes-
tic law it will be presumed to be the same. It is not
practicable to make jurisdiction depend on the
relative extent to which foreign law may apply to
substantive issues in a particular case. For these
reasons I would hold that the claim is one that is
made under or by virtue of Canadian maritime
law, and is therefore within the jurisdiction of the
Court.
After these reasons were prepared a judgment
was rendered on March 6, 1979 by the Supreme
Court of Canada in the case of Tropwood A.G. v.
Sivaco Wire & Nail Company (1979) 26 N.R.
313, which I have felt it is necessary to consider
because of its possible bearing on the issues on the
appeal. That case involved a challenge to the
jurisdiction of the Federal Court to entertain a
claim for damage to cargo carried from a port in
France to Montreal under bills of lading which
provided that the Hague Rules as adopted by the
country of shipment should apply. The Supreme
Court held that the claim was within the jurisdic
tion of the Federal Court. In his reasons, Laskin
C.J.C., who delivered the judgment of the Court,
held that section 4 of the The Admiralty Act,
1891, (supra), introduced into the law of Canada a
body of admiralty law which recognized claims for
damage to cargo, and that such claims were there
fore recognized by Canadian maritime law as
defined by section 2 of the Federal Court Act. He
further held that where the Federal Court has
jurisdiction with respect to a particular claim
under section 22 of the Act it may determine upon
the basis of conflict of law rules that some foreign
law should be applied. After careful consideration
of this judgment I am of the respectful opinion
that I am not required by it to come to a conclu
sion on the issues in this appeal different from that
which I have expressed in the foregoing reasons.
Accordingly, I would allow the appeal, set aside
the judgment of the Trial Division and dismiss the
application with costs in this Court and in the
Trial Division.
* * *
RYAN J.: I concur.
* *
MACKAY D.J.: I concur.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.