H&M Imports (H&M) imported motor vehicles from Japan. Dateline Transam Ltd (Dateline) was the Tongan shipping agent for NYK Bulk & Projects Carriers Ltd (NYK), a Japanese shipping carrier.

H&M purchased a tow truck from Imperial Solutions (Imperial). Imperial engaged NYK to ship the vehicle from Japan to Tonga. NYK issued a copy of a non-negotiable bill of lading naming H&M as consignee. On 11 January 2022, the vehicle arrived in Tonga. After some delay, H&M transferred the purchase price to Imperial. H&M then presented Dateline with the copy of the bill of lading, the invoice, Imperial's letter of demand, and proof of H&M's transfer of the funds, and requested that Dateline facilitate the release of the vehicle to H&M.

However, NYK refused to hand over the original bill of lading naming H&M as consignee on the basis that it had been instructed by Imperial that H&M owed Imperial over USD 100,000 in respect of other committed purchases of vehicles. Imperial then instructed NYK to change the consignee on the original bill of lading to Vaitohi Enterprises, another Tongan company.

H&M commenced proceedings against Dateline and NYK alleging that:

• Dateline and NYK were liable for failing to release the vehicle;
• NYK was liable for refusing to release the original bill of lading naming H&M as consignee; and
• NYK knew or ought reasonably to have known that changing the name of the consignee on the bill of lading was unlawful.

H&M sought a declaration that any lien over the vehicle was unlawful, and an order that it be released to H&M. Alternatively, H&M claimed damages for the amount it had paid for the vehicle plus loss of profit. H&M also obtained an interim injunction restraining Dateline from releasing the vehicle to any other person and NYK from disposing of it.

Dateline and NYK challenged the jurisdiction of the Court on the basis of cl 3 of the bill of lading:

3. Governing Law and Jurisdiction

(1) ... for shipments worldwide the contract evidenced by or contained in this Bill shall be governed by Japanese law and all actions against the Carrier (NYK) in respect of the Goods or arising out of the carriage shall be brought before the Tokyo District Court in Japan to the exclusion of any other Courts, whilst any such actions against the Merchant may be brought before the said Court or any other competent court at the Carrier’s option.

H&M submitted that the Court nonetheless had jurisdiction in respect of the claim on the basis of s 7(2)(c) of the Tonga Carriage of Goods by Sea Act 2008 (the TCOGSA) which provides:

(2) Any stipulation or agreement (whether made in the Kingdom or elsewhere) shall be illegal, null and void and of no effect in so far as it purports to - ...

(c) preclude, lessen or limit the jurisdiction of the courts of the Kingdom in respect of a bill of lading or a similar document of title or a non- negotiable document described in section 4(b)(iii) relating to the carriage of goods from any place within or outside the Kingdom to any place in the Kingdom.

Dateline and NYK replied that:

• As Dateline is the disclosed agent of NYK and NYK is the disclosed agent of Imperial, at common law, neither Dateline nor NYK can be held liable to H&M;
• Imperial is the proper defendant;
• The TCOGSA has no application in this case where the governing law of the bill of lading is specified to be that of Japan; does not restrict the governing law; and applies the Hague-Visby Rules to the contract of carriage evidenced by the bill of lading;
• Article 10.c of the Hague-Visby Rules provides that the bill of lading can provide that the rules of the Convention or legislation of any State giving effect to them may govern the contract;
• Tonga and Japan are contracting States to the Hague-Visby Rules;
• Clause 2 of the bill of lading provides that it shall have effect subject to the International Carriage of Goods by Sea Act 1957 of Japan (the JCOGSA), unless it is judged by a competent court that any other legislation of a similar nature to the Hague Rules compulsorily applies to the bill;
• The TCOGSA does not contain any provision by which it compulsorily applies to the bill of lading;
• Section 7 of the TCOGSA does not prohibit the governing law of the bill of lading being the law of another State;
• Section 7(1) of the TCOGSA provides that all parties to a bill of lading relating to the carriage of goods from any place in the Kingdom to any place whether in or outside the Kingdom are deemed to have intended to contract according to the laws in force at that place of shipment;
• The TCOGSA is silent on the law applying to bills of lading relating to carriage of goods from any other place (such as Japan) to Tonga;
• In that event, the governing law is as provided by the bill of lading which is that of Japan;
• The TCOGSA is not in force in Japan; and
• As the bill of lading specifically provides that the governing law is the law of Japan and the court of jurisdiction is the District Court of Tokyo, the Court does not have jurisdiction in this case.

In the alternative, Dateline and NYK submitted that the Court should exercise its common law discretion to find that the clearly appropriate forum for the dispute is Japan, principally because the governing law is that of Japan.

Held: Dateline and NYK’s application is granted. Notwithstanding that the Court has jurisdiction over this proceeding, it is forum non conveniens and, as result, this proceeding before the Court is stayed. The injunction issued on 27 May 2022 is dissolved.

Clause 3 provides that the contract evidenced by or contained in the bill shall be governed by Japanese law. The bill specifies its applicable sources of law as ‘the Act’ and the Hague Rules. The Act is defined as the JCOGSA.

Section 4 of the TCOGSA incorporates and gives effect to the Hague-Visby Rules. The Rules are a mandatory framework of rights and obligations that apply to the carriage of goods by sea and specified maximum exclusions of liability. The Rules apply to this bill of lading. Outside of the basic framework, the parties to a contract of carriage are free to negotiate additional terms as they wish. The Rules neither prescribe nor constrain parties in relation to agreeing on their choice of governing law for a dispute (the lex causae) or the jurisdiction or forum in which any such disputes are to be litigated.

Section 7(1) of the TCOGSA provides that ‘all parties to a bill of lading ... relating to the carriage of goods from any place in the Kingdom to any place whether in or outside the Kingdom are deemed to have intended to contract according to the laws in force at that place of shipment’. However, the TCOGSA is silent on choice of governing law provisions in bills of lading relating to the carriage of goods from any place outside the Kingdom. As a matter of interpretation, the express limitation in s 7(1) would tend to suggest that Parliament intended that parties to a bill of lading relating to the carriage of goods from outside the Kingdom are free to contract according to the laws in force at the place of their choosing. Accordingly, there is no statutory impediment to the relevant parties here agreeing on the bill of lading (and by extension, claims in respect of it) being governed by Japanese law. As such, the JCOGSA will apply as well as other laws of that country relevant to the dispute arising from the bill. Japan is also a party to the Hague-Visby Rules.

There is a superficial attraction to the proposition that the parties' choice of Japanese law governing the bill means that they also agreed that any relevant Tongan law, including as to jurisdiction, would be excluded. In this regard, the distinction between the choice of governing law provision in cl 3 and the choice of jurisdiction provision is important. It does not necessarily follow that the choice of governing law in respect of the bill excludes the operation of s 7(2) of the TCOGSA. They deal with different subject matters. Choice of law can determine the validity and enforceability of the contract and its terms and the extent of the rights and obligations which are not expressly set out. Further, the contract is unenforceable if it is illegal under the proper law or if it is illegal under the law of the forum. A choice of jurisdiction clause evidences the parties' agreement as to where any specified dispute is to be determined. Section 4 of the Tonga Supreme Court Act provides that the Court shall have jurisdiction to hear any proceedings, other than proceedings which by law, are within the exclusive jurisdiction of another court or tribunal. Any attempt to enforce the contractual law choice of jurisdiction in cl 3 of the bill here, specifying the Tokyo District Court in Japan to the exclusion of any other Courts, conflicts with s 7(2) of the TCOGSA.

The Hague-Visby Rules do not contain any mandatory provisions on jurisdiction. As a result, shipowners have historically felt able to stipulate their own choice of law and jurisdiction within their bill of lading terms. Although freedom of contract therefore exists under the Hague and Hague-Visby Rules, and the carrier's bill of lading terms might therefore be expected to be enforced, however unfavourable to shippers, national legislation sometimes sets out jurisdiction provisions which allow courts to hear a shipper's claim even though the claim is not brought in the carrier's chosen jurisdiction. Thus, in a number of jurisdictions such as Australia, New Zealand, Canada, and South Africa, clauses ousting the national jurisdiction are often treated as invalid. English courts have tended to uphold the carrier's bill of lading terms, provided they are unambiguous and comprehensive.

Section 7(2) of the TCOGSA seeks to preserve the jurisdiction of the Tongan courts in respect of actions concerning bills of lading. On a plain reading, s 7(2)(c), unlike s 7(1), is not limited to shipments from within Tonga, and is expressly stated to apply to bills of lading relating to the carriage of goods from any place within or outside the Kingdom to any place in the Kingdom. The provision is in very similar terms to s 11(2) of the Australian Carriage of Goods by Sea Act 1991 (Cth). Both provisions do not confer jurisdiction on the domestic courts. Rather, they act as mandatory rules preventing the court’s existing jurisdiction from being ousted. Accordingly, in so far as it purports to exclude the jurisdiction of this Court, s 7(2) of the TCOGSA renders cl 3 of the bill of lading void.

But that is not the end of the matter. Applying the forum non conveniens doctrine in Spiliada Maritime Corp v Cansulex Ltd [1986] UKHL 10, [1987] AC 460, factors in favour of the proceeding being determined in Tonga include that Dateline carries on business here and the vehicle is here. Factors in favour of the proceeding being determined in Japan include that NYK is based there, as is Imperial, which, if the litigation proceeds, will invariably be involved at some stage, and the bill of lading was issued in Japan. There was no evidence as to the likely timeframe for determination of the dispute by the Tokyo District Court, or whether that is likely to be significantly longer than if the proceedings are heard and determined before this Court. The fact that H&M’s witnesses are located in Tonga and 'do not have any Japanese language' is likely to apply conversely to NYK (and Imperial).

The determinative factor in this balancing exercise is the choice of governing law. Of particular relevance will be the question of whether, pursuant to Japanese law, Imperial, through NYK, was lawfully entitled to change the name of the consignee on the bill. Theoretically, at least, there is no impediment to this Court deciding issues concerning the bill in accordance with Japanese law. However, as a matter of practicality, the issues in this case, as presently pleaded, are likely to involve more than an interpretation and application of the COGSA. That is because the JCOGSA itself imports various provisions of the Japanese Commercial and Civil Codes. There was no evidence adduced by H&M as to Japanese law and whether it is similar to the law in Tonga on the relevant issues. Japan is not a Common Law system. Those features alone strongly suggest that it would be neither fair nor reasonable to presume similarity. Further, there was no evidence as to the existence or availability of any Japanese law experts in Tonga. To have to bring any such experts from overseas to Tonga will add time, cost, and inconvenience to the conduct of the litigation here.