Date: 20000620
Docket: A-836-99
CORAM: DÉCARY J.A.
SEXTON J.A.
EVANS J.A.
BETWEEN:
| HYUNDAI MERCHANT MARINE CO. LTD. |
Appellant
(Defendant in the Trial Division)
- and -
| ANRAJ FISH PRODUCTS INDUSTRIES LTD. and BENGAL SEAFOODS INC. |
Respondents
(Plaintiffs in the Trial Division)
Heard at Toronto, Ontario, Thursday, June 15, 2000
JUDGMENT delivered at Ottawa, Ontario, on Tuesday, June 20, 2000
REASONS FOR JUDGMENT BY: SEXTON J.A.
CONCURRED IN BY: DÉCARY J.A.
EVANS J.A.
Date: 20000620
Docket: A-836-99
CORAM: DÉCARY, J.A.
SEXTON, J.A.
EVANS, J.A.
BETWEEN:
HYUNDAI MERCHANT MARINE CO. LTD.
Appellant
(Defendant in the Trial Division)
- and -
ANRAJ FISH PRODUCTS INDUSTRIES LTD.
and BENGAL SEAFOODS INC.
Respondents
(Plaintiffs in the Trial Division)
REASONS FOR JUDGMENT
SEXTON J.A.
The issue in this appeal is whether a clause contained in a bill of lading, which provides that any action relating to carriage of goods under the bill of lading should be brought in Korea, should be enforced.
The plaintiff Bengal, an Ontario company, bought a cargo of fish from the plaintiff Anraj, a Bangladeshi company. Anraj arranged with the defendant Hyundai to ship the fish from Bangladesh to New York via France and Singapore. When the fish arrived in New York, it was found to not be fit for human consumption. The plaintiffs commenced an action in this Court against Hyundai for damages, alleging negligence on the part of Hyundai in the carriage of the goods. Hyundai obtained a stay of the action from a Prothonotary, based on a Korea jurisdiction-selection clause contained in the bill of lading. In ordering the stay, the Prothonotary relied on the decision of Brandon J. in The Eleftheria1 in holding:
| In exercising my discretion whether to grant a stay, a number of factors were taken into account. The fact that a jurisdiction clause exists shifts the onus onto the Plaintiffs to establish a "strong cause" which would militate against granting the relief requested by the Defendant (see The Eleftheria , [1969] 1 Lloyd"s 237. |
| I accept that the Plaintiffs may be seriously inconvenienced, primarily from the point of view of costs, by having to pursue their action in Korea. However, that by itself is not sufficient. Nor do I accept that the Korean system of administering justice would deny the Plaintiffs a fair trial. Moreover, it has not been established before me that Canada is the country where the evidence on issues of fact is situated. It appears that witnesses could be called from other countries, including Bangladesh, France and the United States. Moreover, I cannot conclude on the evidence that the Defendant is merely seeking a procedural advantage by insisting that the proceeding be instituted in Korea. There is an advantage to both parties to have a jurisdiction clause in that the presence of same should avoid, or at least reduce, multiplicity of proceedings. |
Hyundai appealed the Prothonotary"s decision to a Motions Judge, who disagreed with the Prothonotary. The Motions Judge held that the Prothonotary failed to apply the full test set out in the Eleftheria case, that the Prothonotary placed too much weight on the fact that Canada was not the country in which evidence on issues of fact existed, and that the Prothonotary failed to consider the matter of the jurisdiction in which the evidence would be more readily available and the pursuit of the litigation less expensive.
The role of an appeal court in circumstances such as the present case has been set out by Décary J.A. of this Court in Jian Sheng Co. v. Great Tempo S.A.2 as follows:
| In reviewing a discretionary decision of a Motions Judge upon an application to stay proceedings on the basis of a jurisdiction clause, a court of appeal must uphold the decision unless it was arrived at on a wrong basis or was plainly a wrong decision (see Seapearl, at page 176, Pratte, J.A.). A similar standard of review is to be applied by a Motions Judge in an appeal from a Prothonotary"s order of this kind (see Canada v. Aqua-Gem Investments Ltd. [1993] 2 FC 425 (C.A.), at page 454). This Court may therefore interfere only if the Motions Judge had no grounds to interfere with the Prothonotary"s decision or, in the event such grounds existed, if her own decision was arrived at on a wrong basis or was plainly a wrong decision.3 |
In deciding whether the Prothonotary erred, the Court should not microscopically examine his reasons. His reasons, read in their entirety, do not reveal that his decision was arrived at on a wrong basis or that his decision was plainly wrong. He properly applied the test in The Eleftheria case, and his reasons indicate he was aware of the individual aspects of the test and that he took them into account in reaching his decision. Accordingly, the Motions Judge erred by reversing the decision of the Prothonotary.
I am of the view that while the Motions Judge accurately described the factors outlined by Brandon J. in the Eleftheria case, she neglected his pivotal premise which was stated as follows:
| It is essential that the Court should give full weight to the prima facie desirability of holding the plaintiffs to their agreement [...] 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.4 |
This Court has accepted this principle in the case of The "Seapearl" v. Seven Seas Corp. :5
| 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 the 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 and in the United States; that is also, in my opinion, the principle that should be applied in this Court, [citing The Eleftheria ].6 |
The factors to be looked at are set out by Brandon J. in the Eleftheria as follows:
| 1. In what country are the issues of fact situated? |
| In this case, it would seem likely that evidence would be required of witnesses from Bangladesh, France, and the United States. While it is possible that some evidence might come from a Canadian witness, it would seem more likely that the contentious evidence relating to the carriage of and damage to the fish would come from the other places. |
| 2. Does the law of the foreign court apply? If so, does it differ from Canadian law in any material respects? |
| At paragraph 15 of the Motion Judge"s reasons for judgment, she held that "the applicable law will not be that of Korea, it is likely that it will be United States law."7 While I agree that clause 2(b) of the bill of lading does demonstrate that the United States Carriage of Goods by Sea Act, 1936 will apply to this dispute, clause 30 of the bill of lading also states that claims arising from the bill of lading "shall be exclusively governed by the law of Korea except as otherwise provided in this Bill of Lading." Therefore, where the United States Carriage of Goods by Sea Act, 1936 does not apply, Korean law will. This factor demonstrates, as Brandon J. held in The Eleftheria, that "other things being equal, it is more satisfactory for the law of a foreign court to be decided by the courts of that country."8 I think that the Motions Judge erred in saying that it was clear that Korean law would not apply to the matter in dispute. |
| In the circumstances of this appeal, I do not think that Korean procedure differs from Canadian procedure in any material respects. In particular, while there are differences between Canadian and Korean discovery procedures, I do not think that such differences amount to "really serious defects" in the Korean Court"s procedure.9 |
| 3. With what court is each party connected, and how closely? |
| Although Hyundai has an office in Canada, its head office is Korea. In the present case, one plaintiff is located in Canada and the other in Bangladesh. This factor does not demonstrate a strong reason to displace the jurisdiction-selection clause. |
| 4. Does the defendant genuinely desire a trial in the foreign country, or is the defendant only seeking procedural advantages? |
| Brandon L.J. amplified this test in a subsequent case, The "El Amria", where he stated: |
| I consider, fourthly, whether the defendants genuinely desire trial in Egypt, or are merely seeking procedural advantages. This kind of consideration arises out of the facts in The Fehmarn, in which the main motive of the West German defendants in applying for a stay was shown by the evidence to have been, not to litigate in a Russian Court, but to avoid giving security for the plaintiffs" claim in England.10 |
| In this case, there is no evidence to support the conclusion that Hyundai"s main motive in seeking a stay of proceedings is to attempt to seek a procedural advantage. |
| 5. Would the plaintiff be prejudiced by having to litigate in the foreign court? |
| While the plaintiff Bengal has provided evidence that it would be prejudiced by litigating in Korea because of the expense, there is no similar evidence from the plaintiff Anraj. With respect to Bengal, it must be taken to have known of the jurisdiction-selection clause. Presumably, the parties contracted and set shipping prices with the knowledge that any disputes would normally be litigated in Korea. In any event, I feel it would be unwise to decide the place of jurisdiction based essentially on the financial resources of one of the parties. |
| One area where it might be said that prejudice would be suffered by the plaintiffs is that the time for bringing suit in Korea would now appear to be time-barred. Although Hyundai argues that it should not be required to waive the Korea time-bar, it nevertheless is agreeable to the Court imposing a condition whereby any time-bar is waived provided the jurisdiction selection clause is honoured. |
I am of the view that there are not strong reasons to conclude that it would not be reasonable or just to hold the plaintiffs to the jurisdiction-selection clause.
Accordingly, the appeal will be allowed and the order of the Motions Judge dated December 10, 1999, will be set aside. The Prothonotary"s order dated November 1, 1999, will be restored subject to a waiver of any time bar defence in Korea being filed by the defendant Hyundai into the Court Record within sixty (60) days of this Court"s judgment. The Appellant is awarded its costs both in this Court and in the appeal before the Trial Division.
"J. Edgar Sexton J.A."
"I agree Robert Décary j.a."
"I agree John M. Evans J.A."
__________________1 [1969] 1 Lloyd"s 237 (Adm.).
2 [1998] 3 F.C. 418 (C.A.), per Décary J.A, leave to appeal to S.C.C. refused [1998] S.C.C.A. No. 287.
4 The Eleftheria, supra at p. 245.
5 [1983] 2 F.C. 161 (C.A.), per Pratte J.A.
6 Ibid., pp. 176-177 and note 9.
7 Anraj Fish Products Industries Ltd. v. Hyundai Merchant Merine Co., [1999] F.C.J. No. 1908 (T.D.) at para. 15.
8 The Eleftheria, supra at p. 246.
9 The "El Amria", [1981] 2 Lloyd"s Rep. 119 (C.A.) at p. 127 ("Nor would I exclude altogether the possibility that in wholly exceptional cases, of which I do not regard the present case as being one, really serious defects in the procedure of the foreign Court in relation to the determination of the particular dispute concerned, if clearly established, again by admissions or uncontradicted evidence, might properly be taken into account.")