This was an appeal from a decision of a single Judge of the Federal Court in Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd [2012] FCA 696 (CMI1947). The issue was whether a clause that provided for the arbitration in London of disputes arising under a voyage charterparty for the carriage of coal from Australia to China was of no effect, because the charterparty was a sea carriage document relating to the carriage of goods. Section 11(2)(b) of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA) provides that an agreement has no effect so far as it purports to preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a bill of lading or sea carriage document.

On 6 October 2009, the appellants (the owners) entered into a voyage charter with the respondents (the charterers) on the Americanized Welsh Coal Charter (AMWELSH 93) form. The owners were to nominate a ship to lift a cargo of 68,000 mt of coal, 10% more or less in the owners’ option, for a voyage from Dalrymple Bay in Queensland to Ningbo and Jiangyin in the People’s Republic of China. Freight was to be paid at USD 17 per ton and demurrage was payable at the rate of USD 18,500 per day or pro rata. The charterparty provided that it was governed by English law and that all disputes arising from it would be arbitrated in London. The vessel Ocean Baron was loaded in Australia in December 2009 and proceeded to China where it discharged the cargo.

Disputes arose as to the identity of the charterer, and the owners' entitlement to demurrage. The owners referred to arbitration in London. The arbitrator made two awards. The first award found that the arbitrator had jurisdiction despite s 11 of COGSA, and that the charterers were the party that had been incompletely described in the recap telex that concluded the charterparty. The second award found that the owners had established their demurrage claim and awarded their claim in full plus interest and costs.

The owners then sought to enforce the two English awards in Australia. The primary Judge held that the charterparty was a sea carriage document within the meaning of s 11(1)(a) of COGSA. His Honour held that the English arbitration agreement was of no effect under Australian law by reason of s 11(2)(b) of COGSA, and thus refused to enforce the English awards under the International Arbitration Act 1974 (Cth) (IAA).

The owners appealed. The charterers submitted that the primary Judge was correct, and argued that the construction of a 'sea carriage document' ought to be consistent with a broad and liberal interpretation required for domestic legislation that gives effect to international Conventions, relying on El Greco (Australia) Pty Ltd v Mediterranean Shipping Co SA (2004) 140 FCR 926 (CMI1).

Held by Mansfield and Rares JJ (Buchanan J dissenting): The owners' appeal is allowed.

The charterparty was not a 'sea carriage document' within the meaning of s 11 of COGSA. Whether the voyage charterparty was a sea carriage document for the purposes of COGSA was a matter of statutory construction. The objects of COGSA, found in s 3(1), related to providing a regime for marine cargo liability and to giving effect to the Hague-Visby Rules and the Hamburg Rules. The objects are not concerned directly with regulating the relationship between persons contracting for the hire of ships. Article 5 of the Hague-Visby Rules (and art 2.3 of the Hamburg Rules) explicitly negates the Rules' application to charterparties.

There has traditionally been a clear line drawn between a charterparty (including a voyage charterparty) involving the contract for the hire of a ship, and a sea carriage document. There has also been a clear and longstanding acceptance under various international instruments that international commercial disputes (including voyage charterparties) may be settled by arbitration. That policy is reflected in the IAA, and was referred to by the High Court in TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia (2013) 295 ALR 596. Consequently, the Court should not too readily construe s 11(1) of COGSA to limit the effect of arbitration clauses in respect of such disputes.

The undefined term ‘sea carriage document’ was introduced into COGSA by the Carriage of Goods at Sea Regulations 1998 (Cth) at the same time as the defined term 'sea carriage document’ in art 1.1.g of the amended Hague-Visby Rules in Sch 1 of COGSA. Therefore, it is appropriate to construe the undefined term consistently with the defined term in the Hague-Visby Rules. The definition in art 1.1.g of the amended Hague-Visby Rules does not refer to a charterparty. The words of this article indicate the focus is on documents having characteristics similar to a bill of lading. Paragraph 4 of art 1.1.g should be construed within the context of other relevant provisions of the Hague-Visby Rules. Art 10.6 excludes the Rules to the carriage of goods by sea under a charterparty unless a sea carriage document is issued for their carriage, and art 10.7 recognises that a sea carriage document issued under a charterparty will attract the application of the Hague-Visby Rules. This suggests that a charterparty is distinct from a contract for the carriage of goods by sea.

Further, the Sea Carriage Documents Acts of the Australian States and Territories reflect the distinction between a voyage charterparty and a sea carriage document. The legislative ancestry of s 11 of COGSA shows that the concept of a sea carriage document when introduced into COGSA was narrower than the scope of the Sea-Carriage of Goods Act 1924 (Cth), as remarked upon in BHP Trading Asia Ltd v Oceaname Shipping Ltd (1996) 67 FCR 211, 235.

Art 3.3 of the amended Hague-Visby Rules requires the carrier, master, or agent of the carrier to issue to the shipper, upon its request, a sea carriage document after the goods have been delivered to the carrier. A charterparty is highly unlikely to meet the requirements of art 3.3, because it deals with the hire of the ship as opposed to evidencing receipt of goods on board. The definitions of 'contract of carriage', 'carriage of goods by sea', and 'sea carriage document' in arts 1.b, 1.e, and 1.g are predicated on the distinction drawn by arts 1.c, 5, 10.6 and 10.7 between the function of a contract of carriage and a charterparty for the purposes of the Hague-Visby Rules and COGSA.

The Hague-Visby Rules preserve the distinction between a charterparty and a sea carriage document. That distinction is also preserved by COGSA.

Buchanan J, dissenting held that the findings and conclusions of the primary Judge were correct and should not be disturbed. The appeal should be dismissed.