Dampskibsselskabet Norden A/S (DSN) as shipowner, chartered a vessel to Beach Building & Civil Group Pty Ltd (Beach) for a voyage carrying coal from Dalrymple Bay Coal Terminal, Australia, to Ningbo, China. The description on the final recap misdescribed Beach as 'Beach Building and Construction Group'. The vessel Ocean Baron was nominated to perform the charterparty. In December 2009, the vessel loaded a cargo of 72,752 mt of coal in Australia and proceeded to China, where the cargo was discharged. A dispute arose between DSN and Beach in relation to demurrage payable under the charterparty in respect of delays both at the ports of loading and discharge. DSN claimed that Beach was liable for demurrage totalling USD 824,663.20.

The dispute was referred to arbitration in London pursuant to cl 32 of the charterparty.

Prior to the service of Beach’s substantive defence submissions, the arbitrator agreed to determine two preliminary issues which had been raised by Beach. These were:

• The arbitrator’s jurisdiction to hear an arbitration concerning a dispute arising out of the charterparty; and
• The identity/correct name of the charterer.

In relation to the first issue, Beach contended that the arbitration clause was invalid and unenforceable by reason of s 11 of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA).

Before the arbitrator, DSN contended the charterer had been misdescribed in the charterparty. DSN contended that it was the common intention of those who negotiated the terms of the charterparty that the charterer would be Beach. In his first award, the arbitrator rectified the charterparty by altering the charterer's name to Beach Building & Civil Group Pty Ltd. In the final award, the arbitrator awarded DSN USD 824,663.18, together with interest at the rate of 4% per annum, and also awarded costs in favour of DSN. DSN sought leave to enforce both awards in Australia.

Beach submitted that because it was not named as a contracting party on the face of the charterparty, it was not bound by either of the two awards. Beach argued that because it was not named on the charterparty before rectification, it was not a party to the charterparty and was not bound by it. Therefore, the arbitrator lacked jurisdiction in respect of Beach when he made the first award. Beach further submitted that it was not competent for the arbitrator retrospectively to give himself jurisdiction in respect of Beach by rectifying the charterparty after he commenced arbitration.

The second ground of defence raised by Beach was that the arbitration clause in the charterparty was invalid by reason of s 11 of COGSA. The arbitrator held that a voyage charterpary of the kind involved in the present case was not a 'sea carriage document' within the meaning of s 11 of COGSA, with the consequence that the London arbitration clause was not rendered invalid by that section.

The question of whether s 11 of COGSA was engaged depended upon whether the charterparty was a 'sea carriage document relating to the carriage of goods from Australia to any place outside Australia' or 'a non-negotiable document of a kind mention in subparagraph 10(1)(b)(iii) [of COGSA] relating to such a carriage of goods'.

Beach argued that, pursuant to ss 7 and 9 of COGSA, 'sea-carriage document' is defined in art 1.1.g.4 of the Hague-Visby Rules as amended in Sch 1A of COGSA (the amended Hague-Visby Rules) as:

A non-negotiable document (including a consignment note and a document of the kind known as a sea waybill or the kind known as a ship's delivery order) that either contains or evidences a contract of carriage of goods by sea.

Beach contended that the charterparty fell within that definition, and thus was a 'sea carriage document' within the meaning of s 11(1)(a) of COGSA. Beach submitted that the charterparty was also a non-negotiable document of the kind mentioned in s 10(1)(b)(iii) of COGSA, which provides:

(1) The amended Hague[-Visby] Rules only apply to a contract of carriage of goods by sea that: ...

(b) is a contract: ...

(iii) contained in or evidenced by a non-negotiable document (other than a bill of lading or similar document of title), being a contract that contains express provision to the effect that the amended Hague[-Visby] Rules are to govern the contract as if the document were a bill of lading.

Clause 24(a) of the charterparty provided that:

This Charter Party is subject to the following clauses all of which are also to be included in all bills of lading issued hereunder:

(a) 'CLAUSE PARAMOUNT': This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, the Hague Rules, or the Hague-Visby Rules, as applicable, or such other similar national legislation as may mandatorily apply by virtue of origin or destination of the bills of lading, which shall be deemed to be incorporated herein and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said applicable Act. If any term of this bill of lading be repugnant to said applicable Act to any extent, such term shall be void to that extent, but no further.

According to Beach, it was clear that the charterparty 'contains express provision to the effect that the amended Hague[-Visby] Rules are to govern the contract as if the document were a bill of lading', and it was thus a 'non-negotiable document' for the purposes of s 11(1)(b) of COGSA. For these reasons, s 11(2) provides that the arbitration agreement in the charterparty has no effect. Section 11(3) of COGSA, which provides for an exception for arbitration clauses provided that the arbitration is conducted in Australia, does not save the clause.

Beach submitted that when regard is had to the relevant explanatory memorandum in respect of COGSA, it is clear beyond argument that the intention of Parliament was that s 11 of COGSA would operate in the same way as the former s 9 of the Sea-Carriage of Goods Act 1924 (Cth). Beach also relied upon the proposition that provisions of international Conventions and domestic legislation giving effect to them have traditionally been broadly interpreted: see El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) FCR 296, 209 ALR 448, [2004] FCAFC 202 [139]-[144] (CMI1).

DSN submitted that the expression 'sea carriage document' as used in s 11(1)(a) of COGSA should be construed not simply by reference to the ordinary meaning of the words used, but rather:

(a) In the context of COGSA as a whole, including the terms of the amended Hague-Visby Rules which are reproduced in Sch 1A to COGSA;

(b) With a purposive approach and having regard to the history of the Commonwealth's legislation in this area, including the amendments made to the position that had existed under the earlier legislation with the enactment of COGSA, and the subsequent amendments in 1997 and 1998 to COGSA, including s 11; and

(c) With regard to the legislative power by which the 1998 amendments to s 11 were made.

DSN argued that adopting this approach, the phrase 'sea carriage document' in s 11(1) of COGSA has the same meaning that it has in art 1.1.g of the amended Hague-Visby Rules. A charterparty (including a voyage charterparty) does not fall within the classes of documents referred to in subparas (i), (ii) or (iii) of that definition. While it may be argued that a voyage charterparty falls within the words of subpara (iv) of that definition, it is not a document of the same type or within the same class of documents referred to in the text in parentheses, namely, a consignment note, sea waybill or ship's delivery order (each of which is analogous to, and a substitute for, a bill of lading).

DSN further submitted that the definition of 'sea carriage document' in the amended Hague-Visby Rules, and in particular the type of non-negotiable documents falling within para (iv) of the definition which appears in art 1.1.g of the amended Hague-Visby Rules, should also be read in the context of the amended Hague-Visby Rules themselves and their application, including in particular:

(a) Article 1.1.b of the amended Hague-Visby Rules, which, when defining a contract of carriage, states that it means a contract of carriage covered by a sea carriage document (to the extent that the document relates to the carriage of goods by sea), and includes a negotiable sea carriage document issued under a charterparty;

(b) Article 10.6, which qualifies the operation of arts 10.1 and 10.2, and states that the amended Hague-Visby Rules do not apply to the carriage of goods by sea under a charterparty, unless a sea carriage document is issued for their carriage; and

(c) Article 10.7, which provides that the amended Hague-Visby Rules apply to a sea carriage document issued under a charterparty only if the sea carriage document is a negotiable sea carriage document, and only while the document regulates the relationship between the holder of it and the carrier of the relevant goods.

DSN submitted that the amended Hague-Visby Rules plainly draw a distinction between a charterparty and a sea carriage document, and that that distinction has been maintained in the definitions in art 1.1.g. DSN went on to argue that the charterparty was also not a non-negotiable document of the kind mentioned in s 10(1)(b)(iii) of COGSA. DSN submitted that there are four elements to the class of documents referred to in s 10(1)(b)(iii) of COGSA. These are:

(a) The document must be a non-negotiable document;

(b) There must be an 'express provision' to the necessary effect;

(c) That effect is 'that the amended Hague[-Visby] Rules' are to govern the contract; and

(d) Those Rules are to govern the contract 'as if the contract were a bill of lading'.

DSN argued the last three of these requirements are not met by the charterparty. In particular, cl 24 does not satisfy these requirements. Clause 24 does not expressly render the charterparty subject to the amended Hague-Visby Rules, nor does it do so as if the charterparty were a bill of lading. The fact that, under previous legislation, a voyage charterparty has been held to be within a predecessor provision of s 11 of COGSA, is irrelevant.

Held: DSN's application to enforce the awards in Australia is dismissed.

The critical question for present purposes is whether s 11(2)(b) of COGSA is engaged in the present case, so as to lead to the conclusion that cl 32 has no effect so far as it purports to preclude or limit the jurisdiction of Australian courts in respect of a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia, or in respect of a non-negotiable instrument of a kind mentioned in s10(1)(b)(iii) of COGSA relating to such carriage of goods.

The charterparty relates to the carriage of goods from Australia to China. Clause 32 precludes or limits the jurisdiction of Australian courts. Therefore, the critical question is to determine whether the charterparty is either a 'sea carriage document' within the meaning of s 11(1)(a) of COGSA or a 'non-negotiable document' of the kind described in s 11(1)(b). If the charterparty is either one of those documents, cl 32 has no effect, and the arbitration agreement embodied therein did not compel Beach to accept arbitration as the agreed contractual method of dispute resolution, with the consequence that this Court cannot enforce either of the awards against Beach.

There is no definition of 'sea carriage document' in COGSA. However, it is defined in art 1.1.g.iv of the amended Hague-Visby Rules which are set out in Sch 1A to COGSA. Strictly speaking, that definition applies only to those Rules, not to COGSA itself. However, those Rules have the force of law and assume some significance in COGSA.

That definition is nonetheless of some assistance. It provides that 'a sea carriage document' is a non-negotiable instrument (including a consignment note and a document of the kind known as a sea waybill or the kind known as a ship’s delivery order) which either contains or evidences a contract of carriage of goods by sea.

Recourse cannot be had to other parts of the amended Hague-Visby Rules (eg art 10, as submitted by DSN) in order to demonstrate that, in at least one part of those Rules, a distinction is made between a 'sea carriage document' on the one hand, and a 'charterparty' on the other hand. In any event, the distinction between those two types of documents is not so stark in the particular parts of art 10 relied upon by DSN.

The Carriage of Goods by Sea Regulations 1998 (Cth) removed the phrase 'a bill of lading, or a similar document of title' in s 11(1)(a) of COGSA and replaced it with 'a sea carriage document to which, or relating to a contract of which, the amended Hague[-Visby] Rules apply'. An identical change was effected to s 11(2)(c)(i). The current form of words found in s 11(1)(a) of COGSA was inserted by Item 1 in Sch 1 of the Carriage of Goods by Sea Regulations 1998 (No 2) (Cth). Item 2 of that Schedule effected an identical change to s 11(2)(c)(i). These legislative changes indicate that, from 1997 onwards, the legislature was intending by the relevant amendments which it made to broaden the class of documents covered by s 11(1)(a) and s 11(2)(b) of COGSA.

Art 1.1.g.iv should be given a meaning reflective of ordinary English usage. Taking that approach, because the charterparty is a contract of carriage of goods by sea, it 'contains or evidences such a contract'. It is, therefore, a 'sea carriage document' within the meaning of s 11(1)(a). The same result would be arrived at by simply construing the phrase 'sea carriage document' in s 11(1)(a), without recourse to art 1.1.g.iv of the amended Hague-Visby Rules.

For these reasons, cl 32 has no effect, because its whole purpose (leaving aside the last sentence, which is a choice of law provision) is to preclude or limit the jurisdiction of Australian courts.

However, as to Beach's argument regarding s 11(1)(b) of COGSA, that the charterparty is a contract which contains an express provision to the effect that the amended Hague-Visby Rules are to govern the contract as if the document were a bill of lading, cl 24 of the charterparty is not such a provision. There is no mention of the amended Hague-Visby Rules in cl 24, and nothing to suggest that those rules are to govern the charterparty as if it were a bill of lading. The charterparty is not a non-negotiable instrument of the relevant kind. The contention advanced by Beach that s 11(1)(b) and s 11(2)(b) of COGSA were engaged in this case is thus rejected.

[For the successful appeal to the Full Court of the Federal Court, see Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd [2013] FCAFC 107 (CMI23).]