This appeal was against an order by McGarvie J extending the time period for the respondent, Kooragang Cement Pty Ltd (Kooragang), to initiate arbitration proceedings against the appellant in regard to a dispute arising under a charterparty agreement. In 1984, Kooragang chartered the Lake Eyre from the Australian Shipping Commission (ASC) for a week in order to ferry a cargo of cement clinker from Adelaide to Newcastle. The cargo was damaged, which Kooragang alleged was due to seawater entering the hold. The vessel arrived in Newcastle on 6 July 1984. Kooragang suffered a loss and sought to start arbitration proceedings against ASC to recover the amount.

Held: Appeal dismissed.

The charterparty provided that the entirety of the 'Carriage of Goods by Sea Act 1924' (actually referring to the Sea-Carriage of Goods Act 1924 (Cth)) applied to the contract, including the Schedule to the Act containing the Hague Rules. Article 3.6 of the Hague Rules establishes that carrier and ship shall be discharged of all liability in respect of loss or damage to cargo after the expiry of one year from the goods' delivery, or the date when they should have been delivered. The reference in the article to a 'suit' was taken to include arbitration proceedings.

Kooragang's solicitors formally requested damages on 28 November 1984 from ASC. It appointed an arbitrator on 19 July 1985, which ASC claimed was done out of time (in accordance with art 3.6 of the Hague Rules). Kooragang applied for an order to extend the time period on 6 December 1985, and McGarvie J granted it, pursuant to s 48 of the Commercial Arbitration Act 1984 (Vic). This appeal raised the question whether an extension of time under s 48 could revive a course of action barred by operation of the paramount clause of a charterparty incorporating art 3.6 of the Hague Rules.

It was held that the purpose of art 3.6 leans more toward creating a time bar for claims than allowing for the discharge of liability; the latter is merely a consequence of failing to meet the former. In Aries Tanker Corporation v Total Transport Ltd [1977] 1 WLR 185 (CMI2194), Lord Wilberforce stated that when art 3.6 of the Hague Rules is incorporated into a charterparty, it creates a contractual time bar, totally extinguishing any claim brought outside of the applicable one year period. However, that case was not concerned with the impact of legislation purporting to extend the time bar. This issue was addressed in Consolidated Investment & Contracting Co v Saponaria Shipping Co Ltd [1978] 1 WLR 986, which found that, in the right circumstances, an order under s 27 of the Arbitration Act 1950 (UK) could revive an extinguished cause of action. That case also concerned a charterparty incorporating art 3.6 of the Hague Rules. Lord Denning MR found that s 27 would apply regardless of whether the claim in question had expired, or the remedy was merely prevented, meaning the legislation could extend the time bar under art 3.6 of the Hague Rules as incorporated into contract.

There were considerable similarities between s 27 of the Arbitration Act 1950 (UK) and s 48 of the Commercial Arbitration Act 1984 (Vic), including how both sections allow relief to be granted regardless of whether the time for commencing arbitration proceedings has ended. The limitations and qualifications upon the Court's power to grant its discretion are also worded in virtually the same way in both provisions. This combined with other reasons led the Court to the conclusion that s 27 of the UK legislation was the model for the Victorian legislation. There was no evidence that the Victorian legislature intended to limit the Commercial Arbitration Act 1984 (Vic) so that it was incapable of reviving an extinct remedy for recovery by arbitration proceedings. If the legislature did mean to prevent the resurrection of claims extinguished by contract, a subsection could have been added to s 48 to this effect.

Claims become time-barred by contract purely through the expiry of an arbitrary period agreed to by the parties. This consequence can be overcome through various means, including agreement and through statutory exceptions or extensions. In Tadgell J's view, there is no need even to touch on the concept of 'revival' as the claim in question was never 'dead' to begin with. The foundation of the time bar had simply disappeared. If a Court exercises its discretion under s 48 of the Commercial Arbitration Act 1984 (Vic), the respondent's claim 'survives' as though it were never barred at all.

McGarvie J's order to revive Kooragang's cause of action under s 48 of the Act was valid and the legislation was fit for the purpose of reviving causes of action otherwise nullified under contract due to expiry of the limitation period. McGarvie J was also found to have given the appropriate level of consideration to the Hague Rules in this matter and was not unreasonable or unjust in the exercise of the discretion.