T-1353-81
Agro Company of Canada Limited, Toshoku
America Inc., and Toshoku Ltd. (Plaintiffs)
v.
The Owners and all others interested in the Ship
Regal Scout and Argonaut Marine Inc. (Defend-
ants)
Trial Division, Walsh J.—Vancouver, April 6 and
12, 1983.
Maritime law — Practice — Motion for stay of proceedings
on ground dispute as to liability for damage to cargo to be
settled in Japan pursuant to arbitration clause — General
endorsement on bill of lading purporting to incorporate all
terms and conditions of charter-party — Adoption of con
sistent British practice of not considering general endorsement
on bill of lading sufficient to incorporate arbitration clause —
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 50(1).
The defendant vessel was chartered from its owner, the
defendant company, and subsequently subchartered to the
plaintiff Toshoku America Inc. A bill of lading purporting to
incorporate, by a general endorsement, all the terms and condi
tions of the subcharter-party was issued for the voyage during
which the plaintiffs' cargo was damaged. The plaintiffs ini
tiated an action for damages in this Court. The defendants
present a motion for a stay of proceedings under subsection
50(1) of the Federal Court Act, contending that the dispute
should be settled by arbitration in Tokyo pursuant to the
subcharter-party arbitration clause alleged to have been incor
porated in the bill of lading. While there are strong reasons for
granting the stay, the issue is whether the arbitration clause has
been accepted by the parties as applicable to this contract of
carriage.
Held, the motion should be dismissed.
Reading the bill of lading makes it clear that, in spite of the
plaintiffs' argument to the contrary, the contract evidenced
thereby is between Agro Company of Canada Limited and
Argonaut Marine Inc., neither of which has any interest in
having the matter litigated in Japan. It is also clear that the
charter-party referred to in the bill of lading is the subcharter-
party. Although there has been no decision in Canada on the
incorporation of arbitration clauses in bills of lading by general
terms, it would be wrongful not to adopt what has been
consistent practice in Britain in recent years. According to that
practice, the general clause in the endorsement on the bill of
lading incorporating all the terms, conditions and exceptions of
the charter-party does not have the effect of specifically incor
porating the arbitration clause which is therefore neither
specifically incorporated by the terms of the charter-party
itself, nor by the bill of lading. Since the issue of the application
of the jurisdiction clause in the bill of lading had not been
submitted to the Court, it was decided that it should not be
argued at this time, but the defendants' right to invoke it by a
new application is preserved.
CASES JUDICIALLY CONSIDERED
APPLIED:
The Ship M/V "Seapearl", et al. v. Seven Seas Dry
Cargo Shipping Corporation of Santiago, Chile, [ 1983] 2
F.C. 161 (C.A.); The Rena K, [1979] 1 All E.R. 397
(Q.B.D.); The Annefield, [1971] 1 All E.R. 394
(P.D.A.); The Emmanuel Colocotronis (No 2), [1982] 1
All E.R. 823 (Q.B.D.); Atlantic Shipping & Trading Co.
v. Louis Dreyfus & Co., [1922] 2 A.C. 250; [1922] All
E.R. 559 (H.L.); The Eleftheria, [1969] 1 Lloyd's Rep.
237 (Adm.).
CONSIDERED:
Cansulex Limited v. Proteus Shipping Co. Ltd., et al.,
judgment dated March 31, 1982, Federal Court, Trial
Division, T-3023-81, not reported.
REFERRED TO:
Athenee (1922), 11 LI.L. Rep. 6 (Eng. C.A.).
COUNSEL:
P. J. Lowry for plaintiffs.
D. Brander Smith for defendants.
SOLICITORS:
Ladner Downs, Vancouver, for plaintiffs.
Bull, Housser & Tupper, Vancouver, for
defendants.
The following are the reasons for order ren
dered in English by
WALSH J.: UPON motion dated the 30th day of
March, 1983 on behalf of the defendant, Argonaut
Marine Inc. for an order "staying all proceedings
in this action pursuant to Section 50(1) of the
Federal Court Act."
REASONS FOR ORDER
This action relates to a shipment of a cargo of
feed barley owned by plaintiffs on the ship Regal
Scout owned by defendant Argonaut Marine Inc.,
on October 30, 1975 from Vancouver to Otaru and
Shiogama, Japan for delivery there to the plaintiff
Toshoku Ltd. On arrival it was found to be con
taminated by salt water allegedly attributable to
negligence on the part of defendant, its servants
and employees in failing to make and keep the
defendant ship seaworthy and fit for the voyage. It
was not until December 31, 1981 that the vessel
Regal Scout was arrested on entry into Canadian
waters at Vancouver and she was released on
January 6, 1982 on defendants giving an undertak
ing in the amount of $1,400,000 (Can.). Defend
ants now have filed a conditional appearance seek
ing a stay of proceedings in this Court contending
the dispute should be dealt with by arbitration in
Tokyo, Japan.
The vessel was chartered from the defendant,
Argonaut Marine Inc. by Yamashita Shinnihon
Steamship Company Limited pursuant to a New
York Produce Exchange Charter-party dated
March 11, 1974 and was in turn subchartered to
plaintiff Toshoku America Inc. pursuant to a Bal-
timore Berth Grain Charter-party dated July 16,
1975. A bill of lading allegedly incorporating the
Baltimore Berth Grain Charter-party was issued
for the voyage in question on October 30, 1975.
Clause 17 of the New York Produce Exchange
Head Charter-party between the owners,
Argonaut Marine Inc. and the charterers Yama-
shita Shinnihon provides as follows:
That should any dispute arise between Owners and the Chart-
erers, the matter in dispute shall be referred to three persons at
London, one to be appointed by each of the parties hereto, and
the third by the two so chosen; their decision or that of any two
of them, shall be final, and for the purpose of enforcing any
award, this agreement may be made a rule of the Court. The
Arbitrators shall be commercial men.
However, clause 16 of the subcharter-party be
tween Yamashita Shinnihon as disponent owners
and Toshoku America Inc. as charterers provides
as follows:
Should any dispute arise between Owners and Charterers, the
matter in dispute shall be referred to three persons in Tokyo,
one to be appointed by each of the parties hereto, and the third
by the two so chosen; their decision, or that of any two of them
shall be final and for the purpose of enforcing any award, this
agreement may be made a Rule of the Court. The Arbitrators
shall be commercial men.
The bill of lading provides inter alia as follows:
All terms, conditions and exceptions of the relative Charter
Party are to be deemed incorporated herein, anything to the
contrary contained in this Bill of Lading notwithstanding.
The affidavit supporting the motion states that a
major issue is the cause of the entry of sea water
into the hatches and therefore the condition of the
vessel. A survey was carried out for the renewal of
the International Load Line Certificate in Japan
on May 22, 1975 and a further survey in the form
of a special periodical survey was carried out in
Japan on July 22, 1975. The evidence relating to
these surveys would presumably be used by
defendants to rebut any proof made by plaintiffs
as to the unseaworthiness of the vessel, having
been made within six months prior to the voyage in
question.
At discharge at Otaru and Shiogama the cargo
was surveyed in Japan to ascertain the damages
and it is further contended that aggravation of
damage occurred to a portion of the cargo stored
in the open on the wharf in Otaru which was
inadequately protected by a tarpaulin from snow,
rain and birds. It is also suggested that in addition
to the survey, lay witnesses in Japan might be able
to give evidence relating to the portion of the cargo
on the dock at Otaru. It is stated in the Japanese
Carriage of Goods By Sea Act which incorporates
the Hague Rules and is interpreted in a similar
manner to the Canadian Carriage of Goods by
Water Act [R.S.C. 1970, c. C-15], both plaintiff
Toshoku Ltd. and Yamashita Shinnihon, which is
not a party to the proceedings at this stage in any
event, are companies resident in Japan, the plain
tiff Toshoku America Inc. being an American
branch of Toshoku Ltd., controlled from Tokyo.
The plaintiffs' counsel concedes that there is no
real reason why it should have been made a plain
tiff, having no direct interest in the proceedings,
and that if this became an issue he would be
prepared to amend so that Toshoku America Inc.
would withdraw as a plaintiff.
Defendants confirm that the letter of undertak
ing of January 6, 1982, posted in Vancouver would
stand as security for any arbitration award in the
Japanese proceedings and that in any Tokyo arbi
tration defendant Argonaut Marine Inc. will not
rely upon any time-bar defences which it could not
raise in litigation proceedings in Vancouver.
It is futher stated in the affidavit that if pro
ceedings herein were to proceed, defendant
Argonaut Marine Inc. would apply to the Court to
add the charterer Yamashita Shinnihon to these
proceedings.
In seeking the stay defendants contend that the
damage was ascertained in Japan and all the
evidence relating to it will be from witnesses there
and that plaintiffs will suffer no prejudice by the
stay as defendants have given many extensions of
time to plaintiffs within which to institute proceed
ings which were not instituted until March 5, 1981
and although the vessel was arrested on December
31, 1981, it was not until January 26, 1983 that
plaintiffs took any further steps by writing
demanding a defence be filed. It was pointed out
that although the head charter called for arbitra
tion in London, England, it is in the subcharter to
Toshoku America Inc., one of the plaintiffs, that
the parties changed the clause, now calling for
arbitration in Tokyo and that this was done delib
erately, Toshoku Ltd. being the parent company
which controls Toshoku America Inc., which is
merely its office in New York and it being evident
that it preferred arbitration in Tokyo to arbitration
in London. Moreover, as defendants contend, para
graph 3 of the bill of lading covering the shipment
states:
Jurisdiction
Any dispute arising under this Bill of Lading shall be decided
in the Tokyo District Court in Japan according to Japanese
law, except only as otherwise agreed herein or as otherwise
determined by controlling foreign law.
This bill of lading has an endorsement on the face
of it, reading as follows:
All terms, conditions and acceptance of the relative charter-
party are to be deemed incorporated herein, anything to the
contrary contained in this bill of lading notwithstanding.
This was issued to Agro Company of Canada
Limited as shipper by Yamashita Shinnihon
Steamship Company Limited through its agents.
The jurisprudence relating to stay of proceed
ings to admit arbitration to be held was examined
at some length in the case of Cansulex Limited v.
Proteus Shipping Co. Ltd., et al., judgment dated
March 31, 1982, Federal Court, Trial Division,
T-3023-81, not reported. In it reference was made
to the principle set out by Mr. Justice Brandon in
the case of The Eleftheria' where he stated at
page 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, assum
ing 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 circum
stances 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 country, 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 be unlikely to get a fair trial.
At page 7 of the unreported judgment in the
Cansulex case it is stated:
I believe that the jurisprudence is consistent to the effect that
arbitration clauses should be applied unless as a matter of
convenience or in order to obtain a more just determination of
the proceedings they should be brought in a court elsewhere,
but the burden is on the party seeking a judicial determination
in court rather than determination by arbitration proceedings
to establish why this would be preferable.
The word "convenience" is perhaps not entirely
accurate in view of the majority decision in the as
yet unreported judgment of Federal Court of
Appeal in The Ship MIV "Seapearl", et al. v.
Seven Seas Dry Cargo Shipping Corporation of
Santiago, Chile, [1983] 2 F.C. 161 in which Pratte
J., rendering the majority judgment stated at
pages 176 and 177:
In other words, the Judge decided on a mere balance of
convenience. In so doing, the learned Judge applied what I
1 [1969] 1 Lloyd's Rep. 237 (Adm.).
consider to be a wrong principle. Prima facie, an application to
stay proceedings commenced in the Federal Court in defiance
of an undertaking to submit a dispute to arbitration or to a
foreign court must succeed because, as a rule, contractual
undertakings must be honoured. In order to depart from that
prima facie rule, "strong reasons" are needed, that is to say
reasons that are sufficient to support the conclusion that it
would not be reasonable or just, in the circumstances, to keep
the plaintiff to his promise and enforce the contract he made
with the defendant. This is the principle which is now applied in
England [The "Adolf Warski" and The "Sniadecki", [ 1976] 1
Lloyd's Rep. 107 (Q.B.), affirmed [1976] 2 Lloyd's Rep. 241
(C.A.); Kitchens of Sara Lee (Canada) Ltd. et al. v. A/S
Falkefjell et al. (The "Makefje!!"), [1975] 1 Lloyd's Rep. 528
(Q.B.); [1976] 2 Lloyd's Rep. 29 (C.A.); Owners of Cargo
Lately Laden on Board The Ship or Vessel Eleftheria v. The
Eleftheria (Owners), [1969] 2 All E.R. 641; [1969] 1 Lloyd's
Rep. 237 (Adm.); The "Fehmarn", [1957] 2 All E.R. 707
(P.D.A.); [1958] 1 All E.R. 333 (C.A.)] and in the United
States [Zapata Offshore Co. v. The "Bremen" and Unterweser
Reederee G.M.B.H. (The Chaparral!), [1972] 2 Lloyd's Rep.
315 (U.S. Sup. Ct.)] that is also, in my opinion, the principle
that should be applied in this Court.
In his dissenting judgment Chief Justice Thur-
low [at page 168] refers to the proper criterion as
having variously been characterized as
... a "strong" [The "Fehmarn", [1957] 1 Lloyd's Rep. 511
(P.D.A.) per Willmer J. at p. 514], or "exceptional" [YTC
Universal Ltd. v. Trans Europa, [1973] 1 Lloyd's Rep. 480
(C.A.) per Denning L.J. at p. 481] case or a case in which there
was a "strong balance of argument" [The "Adolf Warski" and
The "Sniadecki", [ 1976] 1 Lloyd's Rep. 107 (Q.B.) per Bran-
don J. at p. 112] in favour of permitting the action to proceed
He also cites the case of the Athenee (1922), 11
L1.L. Rep. 6 (Eng. C.A.), as an example of a case
justifying the refusal of a stay.
Applying this most recent jurisprudence in this
Court I would conclude that there are "strong
reasons" for granting a stay on the facts of this
case assuming, of course, that - the arbitration
clause has been accepted by the parties as appli
cable to this contract of carriage, which plaintiffs
contend it has not. On the facts plaintiffs point out
that neither plaintiff Agro Company of Canada
Limited nor defendant Argonaut Marine Inc. are
Japanese companies and that with respect to the
evidence of the load line survey and the special
periodical survey of the vessel made in Japan, this
evidence would only become pertinent in the event
that there is evidence to the effect that water
entered into the hold during the voyage as the
result of some defect in the vessel. They further
contend that it is not unusual in cargo shipments
from a Canadian port such as Vancouver to Japan
or elsewhere to have the action heard in Canada
even if cargo damage is only ascertained on arrival
in Japan or other foreign country, and that the
fact that the surveyor who surveyed the damage is
in Japan would not be a serious obstacle to a trial
in Vancouver. It was also pointed out, and I agree,
that the paragraph in the supporting affidavit
referring to the possibility of there being lay wit
nesses who could give evidence in Japan about the
portion of the cargo which was damaged on the
docks in Otaru is vague and indefinite and insuffi
cient to indicate that any such witnesses will be
available or required to testify in Japan. On the
other hand, it is evident that Toshoku Ltd. who
subchartered the vessel from Yamashita Shinnihon
and the latter company would prefer arbitration in
Tokyo and certainly most of the evidence would be
more readily available there, where the damage
was ascertained and that the proceedings there
would be less costly, and apparently, in view of the
undertakings with respect to the security and the
waiver of any time-bar defence which could not be
raised here, would not be prejudicial to plaintiffs.
The bill of lading itself is the Japanese form of
Yamashita Shinnihon and while signed by
Toshoku America Inc., as has been pointed out
they are merely American agents of Toshoku Ltd.
which is the interested plaintiff along with Agro
Company of Canada Limited. The statement of
claim states that the "plaintiffs" were at all times
material the owners of the cargo and the bill of
lading under the heading Consignee and Notify
Party states "order of shipper/NFY Toshoku Ltd.
Tokyo, Japan".
Paragraph 3 of the bill of lading reads as
follows:
Any dispute arising under this Bill of Lading shall be decided
in the Tokyo District Court in Japan according to Japanese
law, except only as otherwise agreed herein or as otherwise
determined by controlling foreign law.
The question of whether the endorsement already
referred to incorporating the terms of the "relative
charter-party" overcomes this is one which I will
deal with below in considering plaintiffs' other
arguments in opposing the stay, but whether it is
effective or not, reference in the bill of lading to
the Tokyo District Court in Japan is further indi
cation of the intent of the parties to have any
disputes dealt with in Japan.
I therefore conclude that on the facts plaintiffs
have failed to show "strong reasons" sufficient to
support a conclusion that it would not be reason
able or just to arbitrate the matter in Japan, if, in
fact, this is what the parties contracted to do and
hence to stay the proceedings here.
However, this is by no means the sole issue
raised by plaintiffs in opposing the stay as they
contend that plaintiffs never agreed to any such
condition, nor, if they did, was it properly incorpo
rated in the bill of lading. Extensive reference was
made to British jurisprudence in this connection
plaintiffs' counsel indicating that he had been
unable to find any Canadian case directly on point.
Plaintiffs' counsel contends that plaintiff Agro
Company of Canada Limited, the shipper, never
agreed either expressly or by implication to arbi
tration whether in Tokyo or London and that there
is no contract between it and defendant Argonaut
Marine Inc., owners of the ship Regal Scout, the
contract as represented by the bill of lading being
between it and Yamashita Shinnihon Steamship
Company Limited. However, paragraph 35 of the
bill of lading reads as follows:
35. (Identity of Carrier) This contract evidenced by this Bill of
Lading is between the shipper and the owner or demise charter-
er, as the case may be, of the vessel named herein (or substi
tute) and it is therefore agreed that said shipowner or demise
charterer only shall be liable for any damage or loss due to any
breach or non-performance of any obligation arising out of the
contract of carriage, whether or not relating to the vessel's
seaworthiness. If, despite the foregoing, it is adjudged that any
other is liable as carrier and/or bailee of the goods shipped
hereunder, then all rights, exemptions, immunities or limitation
of, and exoneration from, liability provided for by law or by this
Bill of Lading shall be available to such other.
It is further understood that as the line, company or agents who
has executed this Bill of Lading for and on behalf of the Master
is not a principal in the transaction, said line, company or
agents shall not be under any liability arising out of the
contract of carriage, nor as carrier nor bailee of the goods.
Since Yamashita Shinnihon Steamship Company
Limited is not a demise charterer, the contract
evidence by the bill of lading is between plaintiff
Agro Company of Canada Limited and defendant,
Argonaut Marine Inc., neither of whom has any
interest in having the matter litigated in Japan.
Moreover, plaintiffs contend that the words "the
relative charter-party" in the endorsement on the
face of the bill of lading incorporating the terms
and conditions of the charter-party notwithstand
ing anything to the contrary in the bill of lading,
are ambiguous and might just as well refer to the
head charter-party calling for arbitration in
London as to the subcharter calling for arbitration
in Tokyo. I find little merit in this argument,
however, since, as Yamashita Shinnihon Steam
ship Company Limited was one of the parties to
the bill of lading undertaking the carriage for
Agro Company of Canada Limited to be delivered
to Toshoku Ltd. in Tokyo, it is evident that the
charter-party to which reference is made must be
the subcharter between Yamashita Shinnihon and
Toshoku Ltd.'s New York agents, Toshoku Ameri-
ca Inc. While the wording is not as clear as it
might be, this would be the only charter-party in
which the parties are interested. It is in this chart-
er-party in which reference to arbitration in
London was specifically struck out so as to insert
the word "Tokyo". It is of interest to note that it
was entered into in Tokyo on July 16, 1975.
Plaintiffs argue further, however, that this gen
eral endorsement is not specific enough to bring
into play the arbitration clause 16 in the subchart-
er-party. It is in this connection that the British
jurisprudence is referred to. Plaintiffs make four
points in connection with this argument.
1. General words of incorporation in a bill of
lading are apt to incorporate only those charter-
party clauses which are directly germane to the
subject matter of the bill of lading which deals
with the shipment, carriage and delivery of goods.
2. Explicit words of incorporation in the bill of
lading or the charter-party are required to incorpo
rate any charter-party clauses which are not
directly germane.
3. The arbitration clause is not directly germane to
the subject matter of the bill of lading governing
only settlement of disputes between the owners
and charterers and not claims from the shipment,
carriage or delivery of goods.
4. An arbitration clause can only be incorporated
if one of two conditions are present:
(a) it is expressly incorporated,
(b) it is explicitly stated in the charter-party that
the arbitration clause is to be incorporated in
the bill of lading.
In this connection reference was made to Hals -
bury, 3rd ed., Vol. 35, No. 514, dealing with
incorporation of the charter-party in the bill of
lading where it is stated:
514. Where contract to be found. As between the shipowner
and the charterer, the contract of carriage is contained in the
charterparty in the absence of an agreement to vary it by the
bill of lading or otherwise; as regards other persons, it is prima
facie, to be found in the bill of lading. The terms of the
charterparty are not as such binding either on the shipper,
where he is not the charterer, or on the consignee or endorsee of
the bill of lading, whether he knows of its existence or not.
And again, under the same number:
The terms of the charterparty may, however, be incorporated
in the bill of lading by express reference, and in this case they
become terms of the contract contained in the bill of lading,
capable of being enforced by or against the shipper, consignee,
or endorsee as the case may be.
Under No. 515 we find the statement:
Liens for demurrage at the port of loading or for dead freight
may also be incorporated. On the other hand, conditions such
as, for instance, arbitration clauses, or cesser clauses, which are
intended to relate solely to the contract between the charterer
and the shipowner, and thus are not applicable to a bill of
lading at all, are inoperative.
In support of this reference was made to the
case of The Rena K 2 in which Brandon J. states at
page 404:
A long series of authorities has established that, where a
charterparty contains an arbitration clause providing for arbi
tration of disputes arising under it, general words in a bill of
lading incorporating into it all the terms and conditions, or all
the terms, conditions and clauses, of such charterparty, are not
sufficient to bring such arbitration clause into the bill of lading
so as to make its provisions applicable to disputes arising under
that document: see Hamilton y Mackie & Sons Ltd. ((1889) 5
TLR 677), T. W. Thomas & Co Ltd y Portsea Steamship Co
Ltd ([1912] AC 1), The Njegos ([1936] P 90, [1935] All ER
Rep 863), The Phonizien ([1966] 1 Lloyd's Rep 150) and The
Annefield ([ 1971 ] 1 All ER 394, [1971] P 160).
By contrast it has been held that, where an arbitration clause
in a charter-party provides for arbitration of disputes arising
2 [1979] 1 All E.R. 397 (Q.B.D.).
not only under the charter-party itself but also under any bill of
lading issued pursuant to it general words of incorporation in
such a bill of lading of the kind referred to above are sufficient
to bring in the arbitration clause so as to make it applicable to
disputes arising under that bill of lading: see The Merak
([1965] 1 All ER 230, [1965] P 223).
In the authorities mentioned above a distinction has been
drawn between clauses in the relevant charterparty which are
directly germane to the shipment, carriage and delivery of the
goods covered by the bill of lading and other clauses which are
not directly germane to such matters.
In that case bills of lading contained clauses incor
porating all the terms, clauses, conditions and
exceptions of the charter-party including, by
express description, the arbitration clause con
tained in the latter contract. Reference was made
to the judgment of Lord Denning M.R. in The
Annefield 3 which at page 406 makes a distinction
between the jurisprudence in which the words
incorporating the words of the charter in the bill of
lading were general words and the case before him
in which there were added to the general words of
incorporation the further specific words "including
the arbitration clause".
In the case of The Emmanuel Colocotronis (No
2) 4 the judgment again refers at page 832 to the
judgment of Brandon J. in The Rena K, specifical
ly citing the passage to which reference has been
made (supra). The learned judge goes on to state:
I respectfully follow and adopt that passage. It accords with
The Northumbria, The Merak and dicta that I have cited from
The Annefield. Counsel for the receivers submits that the word
"conditions" does not come within the term "general words"
there used. In my judgment the contrast is between general
words and specific words, and "conditions" is clearly a general
word in the context.
In The Annefield (supra), Lord Denning stated
at page 406:
Applying this test, it is clear that an arbitration clause is not
directly germane to the shipment, carriage and delivery of
goods. That appears from the decision of the House of Lords in
Thomas & Co Ltd y Portsea Steamship Co Ltd ([1912] AC 1).
It is, therefore, not incorporated by general words in the bill of
lading. If it is to be incorporated, it must be either by express
words in the bill of lading itself (e g if there were added in this
case: "including the arbitration clause as well as the negligence
clause"), or by express words in the charterparty itself (as
indeed happened in The Merak ([1965] 1 All ER 230, [1965]
P 223) where the words were: "Any dispute arising out of this
charter or any bill of lading issued hereunder"). If it is desired
3 [1971] 1 All E.R. 394 (P.D.A.).
4 [1982] 1 All E.R. 823 (Q.B.D.).
to bring in an arbitration clause, it must be done explicitly in
one document or the other. As Lord Loreburn LC said in
Thomas & Co Ltd y Portsea Steamship Co Ltd ([1912] AC at
6):
. if it is desired to put upon the holders of a bill of lading
an obligation to arbitrate because that obligation is stated in
the charter-party, it must be done explicitly."
In this case the words in the charterparty are "any disputes
under this contract". Those words, in this context, meant:
"under this charterparty contract." They do not include the bill
of lading contract. In any case they are not so explicit as to
bring in disputes under the bill of lading.
While it is true that in the present case clause
16 does not include the words "any dispute under
this contract" I question whether the absence of
these words would result in a different finding as
to the necessity of including this clause in the bill
of lading by specific reference, rather than as a
general clause used in the endorsement.
In The Emmanuel Colocotronis (supra), there
was a clause in the charter-party reading as fol
lows [at page 826]:
"It is also mutually agreed that this contract shall be completed
and superseded by the signing of Bills of Lading in the form
customary for such voyages for grain cargoes, which Bills of
Lading shall contain the following clauses..."
These words were specifically struck out in the
charter-party in question here. It is true that only
certain of the following clauses are then struck and
it is stated that clauses 7 to 29 inclusive in the
attached riders are incorporated into the charter-
party which of course includes the arbitration
clause 16. The striking of the words in the
preamble, however, would appear to have the
effect of not specifically requiring that these
clauses be incorporated in the bill of lading even
though they remain as an issue in the charter-par
ty, and if the British jurisprudence is followed, the
general clause in the endorsement on the bill of
lading incorporating all the terms, conditions and
exceptions of the charter-party does not have the
effect of specifically incorporating the arbitration
clause which is therefore neither specifically incor
porated by the terms of the charter-party itself,
nor by the bill of lading. In the case of The
Annefield (supra) Phillimore L.J. at pages 406-407
referred with approval to the opinion of Lord
Dunedin in Atlantic Shipping & Trading Co. v.
Louis Dreyfus & Co. 5 Where he said at page 257:
... in these commercial cases it is, I think of the highest
importance that authority should not be disturbed, and if your
Lordships find that a certain doctrine has been laid down in
former cases and presumably acted on in the framing of other
contracts you will not be disposed to alter that doctrine unless
you think it is clearly wrong.
Cairns L.J. at page 407 makes a statement to the
same effect when he says:
There is no decision binding on this court which is on all fours
with the present case or with The Njegos ([1936] P 90, [1935]
All ER Rep 863). But a case which has stood unchallenged so
long as The Njegos has and which was decided on consider
ation of a practice which had existed for many years before
should not be overruled unless it is clearly wrong. I do not think
it was wrong at all; I think it was right.
Although, according to counsel, there has been
no decision in Canada on the point, I too think it
would be wrongful not to adopt what has been
consistent practice in Britain for some time and
especially in recent years.
Having reached this conclusion it follows that I
must find that plaintiffs are not bound by clause
16 in the charter-party calling for arbitration in
Tokyo and that plaintiffs are justified in bringing
the present proceedings in Canada.
Had I not reached this conclusion a subsidiary
question would have arisen in the event that I had
found that there was ambiguity with respect to the
words "the relative charter-party" in the endorse
ment on the bill of lading and hence did not
express what was common in the minds of the
parties to the bill of lading, so should be disregard
ed. In this event defendants' counsel indicated that
he would rely on paragraph 3 of the bill of lading,
the jurisdiction clause (supra), providing any dis
pute arising under it should be decided in the
Tokyo District Court in Japan according to Japa-
nese law. It was his contention that since the
application for stay was general in nature and did
not specify the grounds on which the stay was
asked, defendants were entitled to rely on this
alternative argument. Plaintiffs' counsel vigou-
rously opposed this, stating that it was clear that
what was being sought was a stay to allow arbitra -
5 [1922] 2 A.C. 250; [1922] All E.R. 559 (H.L.).
tion in Tokyo and if this other ground for a stay
were now invoked, he was unprepared to argue it
at this time and in fact would have extensive
affidavit material to submit in opposition to it. In
fairness to both parties it was decided that the
secondary issue not be argued at this time so that,
as a matter of convenience to all parties the Court
would not be seized with it but the defendants'
right to invoke it by a new and further application
for stay if this became necessary should be pre
served. In view of the grounds on which I reach the
decision that the stay should not be granted which
do not result from any ambiguity in the endorse
ment clause this reservation is most probably un
necessary, but having agreed to reserve defend
ants' rights to make such further motion if they so
desire, I will do so in the order.
ORDER
Defendants' motion pursuant to section 50(1) of
the Federal Court Act for a stay of proceedings is
dismissed with costs. Having been argued, how
ever, only with respect to the stay sought to permit
arbitration in Tokyo, defendants' rights are pre
served and if they so desire may make a further
application for a stay in order to invoke the juris
diction of the Tokyo District Court in Japan,
which matter can be dealt with by a new motion,
the Court not being seized with this issue on the
present motion.
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.