In each of three cases with similar facts, the shippers (the respondents) brought actions against a carrier (the appellant) for loss of or damage to cargo carried by sea. The appellant was contracted to carry cold rolled steel in coils from Antwerp in Belgium to either Detroit or Chicago in the USA. These coils were found to have suffered damage when unloaded at the ports of discharge.

The carriage involved several bills of lading on the same printed form. They included cl 4 which required actions to be brought in the courts of Canada within one year of delivery of the goods at the port of discharge.

The shippers requested time extensions to file suits and the appellant's authorised agent agreed in written letters. The three actions were commenced in Canada within the time limit specified in the letters, but more than one year after the cargo had been delivered at the port of discharge. The time extensions were made subject to four conditions. The fourth condition stipulated that actions were required to be taken in the USA instead of Canada.

The respondents applied for declarations that their actions had been brought before the Federal Court of Canada properly and in due time, while the appellant applied for judgments dismissing those actions on the basis that they were time-barred and prescribed. The trial Judge granted the shippers' applications and dismissed the appellant's applications summarily: see Sidmar NV v Fednav International Ltd (CMI863). The appellant appealed.

The appeal was on the status of the enforceability of the change of forum condition.

The respondents posited that the Hague-Visby Rules made the change of forum conditions in the extension of time agreements null and void. In the alternative, the appellant were estopped from relying on them, given the circumstances in which they were imposed.

The appellant argued that the time extension letter containing the change of forum condition did not fall within the scope of the Hague-Visby Rules because it was entered into as a new agreement after the goods had arrived at the port of destination, notwithstanding that it related to a cause of action that arose with the carriage of goods by sea. The appellant also contended that there was no reason why it would be estopped from relying on them.

Held: Appeal dismissed.

The provisions of the bills of lading establishing Canada as the correct forum still applied, so the time suit limitation of one year had been validly extended. The choice of forum condition in the time extension agreements, however, was null and void. This condition ought to be disregarded totally without affecting the rest of the document.

The Hague-Visby Rules applied to those bills of lading as the carriage was from Belgium, where the Hague-Visby Rules had the force of law (art 10.b). The Court was thus required by the Canadian Carriage of Goods by Water Act, SC 1993, c 21 to apply the Hague-Visby Rules notwithstanding that the paramount clause in the bills of lading purported to incorporate the US Carriage of Goods by Sea Act (COGSA) or the Hague Rules. The paramount clause in the bills of lading did not have effect because the Hague-Visby Rules operated mandatorily. The prerequisites for the application of the Hague-Visby Rules existed and applied regardless of whether the parties had attempted by contract to have their agreement subject to the law of a jurisdiction that did not recognise them (s 7(2)(a)). They could not be modified by contract because the modification had the direct or indirect effect of reducing the carrier's liability (art 3.8).

The limit of liability under the COGSA was considerably lower than that imposed by the Hague-Visby Rules. The Hague-Visby Rules allowed parties to extend the time to file suit (art 3.6). The Hague-Visby Rules allowed a carrier, but not a shipper, to surrender some or all of its rights and immunity in a bill of lading (art 5).

The time extension agreements were valid even if the shippers' representative did not fully appreciate the effect of the change of forum condition. The right of action for damage to its goods that a shipper might have against an appellant was embodied into the contract of carriage and the time extension agreements operated as a continuation of the contract of carriage. It could not be said that the condition was so fundamental to the agreement that the whole should be struck down if that part could not stand. There was also no suggestion that the enforceability of the change of forum condition was at the root of the acceptance by the appellant to extend time nor evidence that the appellant would not have agreed to the time extensions but for the inclusion of the change of forum condition.