The cargo claimant brought claims for damage to several containerised shipments of fresh produce transported from Costa Rica to Etobicoke, Canada, against the carrier, Great White Fleet (GWF), the vessels that carried the cargo, and their respective owners.

The carrier sought a stay, pursuant to s 50(1) of the Federal Courts Act, RSC 1985, c F-7, on the basis of forum selection clauses in the shipping documents in favour of the US District Court, Southern District of New York. The carrier submitted that the claimant had failed to show a 'strong cause' as to why the forum selection clauses should not be enforced. The carrier relied on ZI Pompey Industrie v ECU-Line NV 2003 SCC 27, in which the Supreme Court of Canada endorsed the 'strong cause' test set out in Cargo Owners v The Eleftheria [1969] 1 Lloyd's Rep 237, 242.

The claimant asked the Court to decline to enforce the forum selection clauses on two grounds. First, the contracts of carriage fell within the scope of s 46 of the Marine Liability Act, SC 2001, c 6 (the Act). Section 46 of the Act permits a claimant to institute proceedings in Canada despite a foreign jurisdiction clause, provided certain requirements are met. Second, alternatively, the claimant argued that it had demonstrated a 'strong cause' to set aside the forum selection clause.

Held: Judgment for the carrier. The motions for stays of the proceedings are granted, conditional upon the carrier providing an undertaking in writing to waive any applicable time bar and/or defence based thereon, to be served and filed into the Court record within 60 days.

The claimant argues that the shipping documents are bills of lading. The carrier argues that they are not, despite the language of the heading of the documents. The Act does not provide a definition of a bill of lading (Wells Fargo Equipment Finance Co v Barge MLT-3 2012 FC 738 [73] (CMI1150)). Consequently, one must turn to the common law and the Hague-Visby Rules in order to ascertain the meaning of this term.

The Hague-Visby Rules are appended to the Act and incorporated into it by reference. The carrier's position is that the definition of a 'contract of carriage', as contained in art 1.b of the Hague-Visby Rules, does not include the shipping documents, with the result that neither ss 43 nor 46 of the Act apply. The claimant disagrees, and invites this Court to consider the imbalance in bargaining power between carriers and cargo interests that led to the development of international regimes such as the Hague-Visby Rules, and ultimately to s 46 of the Act. The claimant relies on the reasoning of Gauthier J in Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa (The Federal Ems) 2012 FCA 284 (CMI1151), where the Federal Court of Appeal considered the liner trade, and the imbalance of power that the international regimes sought to address.

By the 17th century, in most European nations and New World colonies, ocean carriers were held strictly liable for the goods they carried. In the centuries that followed, carriers were effectively treated as insurers of the cargo they carried. By the same token, under common law, a carrier was entitled contractually to limit its liability. Prior to the 19th century, attempts by carriers to escape liability through contractual exemptions were restricted by adverse reactions from cargo interests. In the 19th century, however, advances in shipping and increases in world trade resulted in an increase in the relative bargaining power of carriers. As a result, extensive exculpatory clauses were inserted into bills of lading, resulting in little or no liability on the part of carriers. Divergences in the law began to appear where previously it had been fairly uniform. The courts in England were willing to enforce such clauses on the basis of freedom of contract, while courts in the United States began to invalidate them on the basis of public policy.

It soon became clear that certainty and uniformity were desirable for all involved. In 1882, the International Law Association attempted to reach an agreement on a model bill of lading that would regulate the rights and duties between carriers and cargo interests, but was ultimately unsuccessful. Not long thereafter, a number of States 'adopted what might be considered the first consumer protection legislation regulating the rights and obligations of ocean carriers under bills of lading, albeit in the commercial world' (The Federal Ems [47]). In 1893, the United States enacted the Harter Act, creating what was considered at the time to be a balanced regime between carriers and cargo interests. Shortly thereafter, New Zealand (1903), Australia (1904), Fiji (1906), Canada (1910), and Morocco (1919) adopted legislation modelled on the Harter Act. Furthermore, many other nations were contemplating introducing similar legislation, notably Denmark, Finland, France, Iceland, the Netherlands, Norway, South Africa, Spain, and Sweden (Comité Maritime International, The Travaux Préparatoires of the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading of 25 August 1924, The Hague Rules, and of the Protocols of 23 February 1968 and 21 December 1979, The Hague-Visby Rules (CMI Headquarters 1997) 23-24).

This proliferation of national legislation was brought to an end by work of the International Law Association and the newly founded Comité Maritime International (CMI). The CMI, a non-governmental international organisation founded in 1897, brought together experts in maritime law from around the world to contribute towards the unification of maritime law. After meetings and diplomatic conferences held in Brussels over the course of several years, a compromise was struck between the rights, duties, and obligations of the parties to contracts of carriage of goods as evidenced by bills of lading. The resulting Hague Rules of 1924, which entered into force in 1931, were a success and were widely ratified and adopted throughout the world (The Federal Ems [49]). So much so, that it has even been argued that the Hague Rules have acquired the status of international customary shipping law – a lex maritima (Maris Lejnieks, 'Diverging solutions in the harmonisation of carriage of goods by sea: which approach to choose?' (2003) Uniform Law Review 304).

In 1936, Canada incorporated the Hague Rules into its domestic legislation entitled the Carriage of Goods by Water Act, thereby replacing the Water-Carriage of Goods Act 1910. As a result of advancements and changes in the shipping industry, including the advent of containers, updates were made to the Hague Rules in 1968 by way of a Protocol. The resulting Hague-Visby Rules came into force in 1977. They were incorporated into Canadian law by way of the Carriage of Goods by Water Act 1993.

In parallel, it was recognised that the Hague-Visby Rules were in need of modernisation. The United Nations Commission on International Trade Law (UNCITRAL) undertook the work of creating a new Convention dealing with carriage of goods by sea, resulting in the Hamburg Rules 1978. The Hamburg Rules raised the limits of liability, and narrowed the number of exceptions from which the carrier may benefit. Unlike the Hague-Visby Rules, they included provisions dealing with arbitration and jurisdiction clauses. The Hamburg Rules were also meant to apply to new types of shipping documents used by carriers that differed from traditional bills of lading. The Hamburg Rules have not been widely adopted. Few, if any, of the States who ratified the Hamburg Rules are considered significant maritime trading nations.

A further Convention, the Rotterdam Rules 2009, was the latest effort at modernisation, but it has not entered into force. As a result, most nations operate under Hague or Hague-Visby Rules regimes. In practice, while the variety of shipping documentation used in the liner trade has increased in recent years, the law governing the carriage of goods by common carriers has remained substantially the same since 1924, and in many respects even earlier.

Given that there has not been a widely adopted carriage of goods by sea Convention since the Hague and Hague-Visby Rules, and many countries did not embrace the Hamburg Rules, an appreciable number of nations have taken steps to modernise certain aspects of their carriage regimes through domestic legislation, while nevertheless retaining many aspects of the Hague and Hague-Visby Rules. Such nations include the United Kingdom, Australia, New Zealand, South Africa, Singapore, Denmark, Sweden, Norway, Finland, Germany, the Republic of Korea, and the People's Republic of China.

Canada’s carriage of goods by water regime remains a Hague-Visby Rules-based regime. In 2001, Pt 5 of the Act replaced the Carriage of Goods by Water Act 1993. Save for s 46 of the Act, Canada's carriage regime has remained the same. Section 46 of the Act applies to 'a contract for the carriage of goods by water'. This is not defined in the Act. The carrier argues that the same expression is also used in s 43 of the Act, where it provides that the 'Hague-Visby Rules have the force of law in Canada in respect of contracts for the carriage of goods by water'. A 'contract for the carriage of goods by water', therefore, whether in s 43 or s 46 of the Act, must have the same meaning. The carrier relies on Cami Automotive Inc v Westwood Shipping Lines Inc 2009 FC 664 (CMI1081), where Blanchard J found that to determine the meaning of the phrase a 'contract for the carriage of goods by water' in the context of s 43 of the Act, one must turn to the definition of 'contract of carriage' as contained in art 1.b of the Hague-Visby Rules appended to the Act. Article 1.b defines a contract of carriage as a contract 'covered by a bill of lading or any similar document of title'. The carrier’s position is that neither the service contract nor the shipping documents are contracts 'covered by a bill of lading or similar document of title' as per the Hague-Visby Rules. Consequently, they are not the type of contract that attracts the application of the Hague-Visby Rules by force of law pursuant to s 43 of the Act, and thus do not attract the application of s 46 of the Act.

The claimant pleads that the shipping documents are bills of lading, as they clearly say so on the face of the documents, and the phrase contained in s 46 of the Act, whose policy it is to protect Canadian importers and exporters, should be given a wider scope than the same phrase found in s 43 of the Act or the definition contained in art 1.b of the Hague-Visby Rules.

It is common ground that the shipping documents were used as acknowledgement of receipt for the cargoes. Moreover, it is clear from the record that they evidenced the terms of carriage between the parties. The material issue is whether they were documents of title. The documents name the claimant as consignee. There is no language contained on the face of the documents that indicates that they are transferable. The upper right-hand corner of the documents contain the printed words 'NOT NEGOTIABLE UNLESS CONSIGNED TO ORDER'. Not only is there no language permitting transferability, there is language negating it. The fact that a bill of lading is not transferable does not necessarily mean that it is excluded from art 1.b of the Hague-Visby Rules on the basis that it is not a 'document of title'.

In The Rafaela S [2005] UKHL 11, [2005] 1 Lloyd’s Rep 347 (CMI632), the House of Lords considered whether a straight bill of lading was 'a bill of lading or any similar document of title' for the purpose of art 1.b of the Hague-Visby Rules. The House of Lords concluded that a straight bill of lading was a document of title for the purposes of the Hague-Visby Rules on the basis that, among other things, it had to be presented in order to obtain delivery of the cargo.

In Voss v APL Co Pte Ltd [2002] 2 Lloyd's Rep 707, referenced by the House of Lords in The Rafaela S, the Singapore Court of Appeal considered a non-negotiable straight bill of lading issued by a carrier in a set of three originals and containing the language 'Upon surrender to the Carrier of any one negotiable bill of lading, properly endorsed, all others shall stand void'. The Court found that presentation of the straight bill of lading was required to obtain delivery of the goods. If the parties had wished to avoid the requirement of presentation, they would not have issued a bill of lading with three originals. The Court contrasted a waybill with a straight bill of lading, noting that a waybill is retained by the shipper, and all the consignee need show to take delivery is proof of its identity. While a waybill is a receipt, it is unlike a straight bill of lading in that it is not a document of title.

This Court, relying on The Rafaela S, has recognised that both negotiable and non-negotiable bills of lading (straight bills of lading) are 'documents of title', and as such must be presented at the port of discharge to obtain delivery of the goods (Cami Automotive [16]). In Cami Automotive, Blanchard J found that a shipping document was not a 'document of title' because, among other things, it did not have to be produced at the port of discharge, and only one copy was issued by the carrier, rather than in triplicate, as is usually the case for bills of lading. Consequently, the Court found the document to be a waybill rather than a straight bill of lading.

In the present matter, the fact that the documents were not required to be surrendered to the carrier or its agent in order to obtain delivery of the cargoes substantially weighs against them being considered straight bills of lading or other documents of title under the Hague-Visby Rules. It is clear from the record that the parties did not intend the documents to be presented, and it was the practice that presentation was not required. The shipping documents contain the notation 'express release', which is in fact what took place. No originals were issued, and only one copy was issued for each cargo. In the copies that were issued by the carrier, the attestation clause was left blank, and the document was not signed. Although the documents were entitled 'INTERNATIONAL BILL OF LADING', they were used and treated as waybills would be. While the carrier used a hybrid form as the basis for the documents, the manner in which it was filled in and the portions that were left blank, speak to the documents being akin to waybills. They were not documents of title. Consequently, the contracts of carriage were not evidenced by a bill of lading or similar document of title as per art 1.b of the Hague-Visby Rules, and was not the type of contract that would attract the application of the Hague-Visby Rules by force of law.

The service contract was also not the type of contract that would attract the application of the Hague-Visby Rules by force of law. While it did govern the commercial relationship between the parties, it cannot be considered to be a bill of lading or similar document of title for any particular shipment. It stood apart from the documents issued for each shipment.

Having found that the nature and effect of the shipping documents was akin to waybills not covered by the Hague-Visby Rules and s 43 of the Act, the issue arises whether a waybill is a 'contract for the carriage of goods by water' under s 46 of the Act. Section 46 was primarily enacted in order to protect Canadian exporters and importers from having to bear the expense, which may be prohibitive, of litigating claims against carriers in foreign jurisdictions. During Parliamentary proceedings, particular concern was expressed that small and medium-sized Canadian shippers and consignees did not have much bargaining power, and would thus be at the mercy of carriers, who tend to insert exclusive jurisdiction clauses into their documentation. Section 46 has been described as being designed to redress a perceived power imbalance between carriers and shippers, by favouring the shippers.

This purpose of seeking to redress a perceived power imbalance was also one of the driving factors behind the development of the Hague and Hague-Visby Rules. Sections 43 and 46 are contained in Pt 5 of the Act entitled 'Liability for the Carriage of Goods by Water'. The purpose of the provisions, as well as the legal context in which they were adopted, speak to an effort to address a power imbalance between carriers operating in the liner trade, and the shippers and consignees whose cargo is carried. Given the alignment between the aims of ss 43 and 46, the meaning of the language in s 46 cannot be divorced from the meaning of the language in s 43. It cannot be said that the purposes of ss 43 and 46 differ such that a different interpretation of the term 'contract for the carriage of goods by water' is warranted.

The widespread use of non-negotiable carriage documents may well result in claimants, such as in this case, not being able to avail themselves of rights of action in Canada pursuant to s 46 of the Act. It is not for this Court, however, to broaden the scope of Canada’s carriage of goods regime, contained in Pt 5 of the Act, so as to include waybills and other similar non-negotiable documents. The question of whether Canada’s carriage of goods regime, and particularly s 46, should be extended to apply to waybills, is one for Parliament.

Given that s 46 of the Act is not applicable, the appropriate test is the 'strong cause' test set out in The Eleftheria and adopted by the Supreme Court of Canada in ZI Pompey. On an application of that test, this Court finds that proceedings should be stayed in favour of the US court, subject to the carrier providing an appropriate undertaking not to rely on a time-bar defence.