This was an appeal from a decision of the Federal Court refusing to stay an action for damages for loss of cargo by sea. The appeal was about whether the dispute over the alleged cargo loss should be resolved in the High Court in London, or in the Federal Court which has jurisdiction by s 46(1) of the Marine Liability Act 2001.

The appellants were OT Africa Line Ltd, OT Africa Line, and the owners, charterers and other interested in the two ships that carried the cargo from New York to Monrovia, Liberia, via Le Havre where it was transhipped (the carriers). OT Africa Line Ltd has its head office in London and other offices around the world, including a branch office in Toronto.

The respondents to the appeal (and plaintiffs in the Federal Court action) were Magic Sportswear Corp, a Delaware corporation, carrying on business in New York, and Blue Banana, a Liberian company, carrying on business in Monrovia (the shippers).

The shippers and the goods had no connection with Canada. However, the insurers of the cargo were based in Toronto where the bill of lading evidencing the contract for the carriage of goods was issued on 5 February 2002, and where the ocean freight was payable to OT Africa Ltd.

The relevant clause of the conditions to the bill of lading relevant to the appeal provided:

25. Law and Jurisdiction

(1) Any claim or dispute whatsoever arising in connection with the carriage under the Bill of Lading shall exclusively be governed by English law and determined by the High Court in London.

(2) In the event that anything herein contained is inconsistent with any applicable international convention or national law which cannot be departed for private contract the provisions hereof shall to the extent of such inconsistency but no further be null and void.

On 8 September 2003 the carriers obtained an interim anti-suit injunction from Gross J in the High Court of England and Wales on an ex parte motion of which the shippers had short notice.

On 9 September 2003, the carriers filed a motion in the Federal Court to stay the shippers' action against them.

On 28 October 2003, at the instance of their insurers, the shippers filed an acknowledgement of service indicating their intention to contest the jurisdiction of the High Court, but subsequently made no jurisdiction application.

On 15 December 2003, Prothonotary Milczynski of the Federal Court issued an oral order dismissing the carriers' motion for an order staying the shippers' action against them in the Federal Court for damages for the partial loss of the cargo.

On 5 April 2004, Cooke J of the High Court of England and Wales gave the carriers leave to join the shippers' insurers as parties to the English proceedings, to serve them in Canada and to amend the claim accordingly.

On 23 August 2004, O'Keefe J of the Federal Court dismissed the carriers' appeal from the order of the Prothonotary refusing the stay.

On 3 November 2004 Langley J issued an anti-suit injunction against the shippers in the High Court of England and Wales.

On 13 June 2005 the English Court of Appeal dismissed the shippers' appeal from the issue of the anti-suit injunction.

On 15 June 2005 the carriers' appeal to this Court from the order of O'Keefe J was adjourned pending the disposition of the shippers' petition to the House of Lords for leave to appeal the order of the English Court of Appeal upholding the anti-suit injunction.

On 9 December 2005 the House of Lords dismissed the petition for leave to appeal.

On 21 June 2006 this Court heard the carriers' appeal.

Held: Appeal allowed.

English law is the proper law of the contract and London is the parties' contractual choice of forum. As many contracts for the carriage of goods by sea specify London as the exclusive forum. Due to the high cost and inconvenience of having to litigate a claim for cargo loss in a foreign forum, Canadian shippers can be denied an effective remedy for a breach of contract by the carrier and compelled to accept a settlement on terms favourable to the carrier. Parliament enacted s 46(1) of the Marine Liability Act, SC 2001, c 6 (the MLA) which provides:

If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where

(a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada;

(b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or

(c) the contract was made in Canada.

This section permits a party to institute proceedings in Canada for breach of contract, despite the presence of a clause nominating a foreign court as the exclusive forum for the resolution of disputes under the contract, provided that the claimant establishes that the parties or the contract have one of the statutorily specified connections to Canada.

Here, s 46(1) of the MLA confers jurisdiction on the Federal Court over the shippers' claim against the carriers because the contract was made in Canada and the carriers have a place of business in Canada. The appeal raises two issues concerning the exercise of that jurisdiction.

First, does s 46(1) of the MLA remove the discretion of the Federal Court and the Federal Court of Appeal to grant a stay pursuant to s 50(1) of the Federal Courts Act, RSC 1985, c F-7 (the FCA) even if another jurisdiction is a more convenient forum than Canada? The carriers say that it does not, while the shippers say that it does.

Section 50 of the FCA provides:

The Federal Court of Appeal or the Federal Court may, in its discretion, stay proceedings in any cause or matter

(a) on the ground that the claim is being proceeded with in another court or jurisdiction; or

(b) where for any other reason it is in the interest of justice that the proceedings be stayed.

Second, if s 46(1) of the MLA does not deprive the Court of its discretion to stay proceedings when it is the less appropriate forum, what weight, if any, should the Court give in its forum non conveniens analysis to the parties' contractual choice of forum and to the judgments asserting the jurisdiction of the High Court of England and Wales over the dispute by virtue of the exclusive jurisdiction clause?

The carriers say that the principles of comity and freedom of contract, commercial certainty, and the desirability of avoiding parallel proceedings in Canada and England, require that these factors be afforded considerable weight. The shippers say that to give the exclusive jurisdiction clause and the English judgments any weight would defeat the purpose of s 46(1) of the MLA by depriving them of their statutory right to litigate in Canada despite the foreign exclusive jurisdiction clause in the contract.

It is common ground that s 46(1) of the MLA confers jurisdiction on the Federal Court over the shippers' claim in this case. First, the Hamburg Rules which came into effect internationally on 1 November 1993 when 20 countries ratified or acceded to them, do not apply, and the contract directs the adjudication of claims arising under it to a court outside Canada. Second, two of the statutory factors connecting the dispute with Canada are satisfied: the defendant to the claim OT Africa Line Ltd has a place of business in Canada and the contract for the carriage of goods was made in Canada. Third, the Federal Court would be competent to determine the claim if the contract had referred it to Canada.

Section 46(1) does not state that, once one of the jurisdictional criteria in s 46(1) is present, the court in which the claimant has elected to proceed must exercise its jurisdiction. The section merely provides that, when it applies, a claimant may institute proceedings in a court in Canada that would have jurisdiction if the contract had referred the claim to Canada. It gives no directive to the court in Canada in which the claimant elects to proceed respecting that court’s exercise of jurisdiction.

Nor does it expressly remove the broad discretion of the Federal Court and the Federal Court of Appeal under s 50(1) of the FCA to stay a proceeding over which they have jurisdiction, but where 'the claim is being proceeded with in another court of jurisdiction' or a stay 'is in the interest of justice'. It requires more specific language than in s 46(1) of the MLA to remove from the courts a power fundamental to their ability to control their own process.

It would produce anomalous results to interpret s 46(1) of the MLA as implicitly removing the Federal Courts' discretion in deciding to stay on the ground that another court is the more appropriate forum. All the connecting factors favour litigating the dispute in England and it would make no sense to require the Federal Court to decide the dispute, simply because it has jurisdiction under s 46(1) of the MLA on the ground that the carrier has an office in Toronto. If proceedings had already been commenced in England, to interpret the legislation as precluding a Canadian court from subsequently considering whether it was the less appropriate forum would require the court to exclude considerations of international comity. It would also be odd to conclude that s 46(1) of the MLA requires a court in Canada to decide a dispute because the parties had agreed to a forum outside Canada, whereas if the contract had contained no exclusive jurisdiction clause, a court in Canada would have declined to exercise jurisdiction on the ground that it was not the more appropriate forum.

The forum non conveniens analysis conducted by the Federal Court appears to have given no weight to the interim anti-suit injunction issued ex parte by Gross J in the High Court of England and Wales on the ground that the shippers had not attorned to the jurisdiction of the English court. The Federal Court’s refusal to attach weight to the anti-suit injunction was based on a misapprehension of the evidence. This Court must consider de novo whether weight should be given in the forum non conveniens analysis to the English decisions including the decisions of Langley J and the English Court of Appeal which were not available to the Federal Court.

Langley J regarded s 46(1) of the MLA as relevant to the request for a stay of the English proceedings, as well as to the anti-suit injunction restraining the shippers from proceeding with their claim in another forum. He stated that on both issues, the question was whether there were 'strong reasons' for not giving effect to the exclusive jurisdiction clause. Both Langley J and Longmore LJ regarded s 46(1) as an insufficient basis for staying the carriers' English proceedings.

Section 46(1) of the MLA was primarily enacted to protect Canadian exporters and importers from having to litigate claims against carriers in a foreign forum where the expense may be prohibitive. Section 46(1) should also be seen in an international context. It was described in the Parliamentary proceedings as moving Canada closer to adopting in domestic law the Hamburg Rules which provide a uniform international legal framework for the carriage of goods by sea. The Hamburg Rules are given the force of law in Canada by Sch 4 of the MLA. However, this Schedule only comes into force on a date to be fixed by the Governor in Council on the recommendation of the Minister of Transport who must consider the question every five years. No date has been fixed yet.

Section 46(1) of the MLA is similar, but not identical to, art 21 of the Hamburg Rules. For example, art 21 permits a claimant to commence proceedings in a forum on the ground that the defendant has a place of business in the jurisdiction but, unlike s 46(1), only if that is the defendant’s principal place of business or, failing that, habitual residence.

Provisions analogous to s 46(1) have been enacted by other countries, including Australia, New Zealand, South Africa, the four Nordic countries of Denmark, Finland, Norway and Sweden, and the People's Republic of China, which have not implemented the Hamburg Rules in their domestic law.

Three principal considerations favour a Canadian court treating the English judgments as relevant in a forum non conveniens analysis: (1) international comity; (2) the avoidance of parallel proceedings on the same matter; and (3) problems of recognition in the event that the parallel proceedings produce different results. Minimising litigation with its attendant costs and complications is good public policy.

The critical facts of this case are that the shippers, the consignees, the goods, and the ports of loading and discharge, have no connection to Canada. It is true that s 46(1) of the MLA confers jurisdiction on a competent Canadian court over the shippers' claim since OT Africa Line Ltd has a 'place of business, branch or agency' in Canada, and the contract was made in Canada.

The principal policy objective of s 46(1) is the protection of the interests of Canadian exporters and importers and their insurers. While s 46(1) preserves the jurisdiction of Canadian courts in proceedings brought by foreign shippers and consignees, it does not follow that, in deciding whether to exercise its jurisdiction, a court should depart from its normal practice of affording respect to foreign judgments.

The factors connecting the dispute to Canada are minor, those connecting it with England are cumulatively much more significant. The English judgments implicate the principle of comity, raise the possibility of parallel proceedings, and make the recognition in England of a judgment by the Federal Court potentially problematic.

Taking into the account the parties' choice of the High Court in London as the exclusive forum respects the principle of freedom of contract, promotes commercial certainty, and does not frustrate the policy objectives of s 46(1).

It is generally more convenient to litigate in a forum in the jurisdiction whose law governs the dispute. In this case the parties have chosen English law.

Finally, OT Africa Line Ltd has its head office in London where it keeps its corporate records, books and accounts. It may also need to call one of its London-based employees to testify about the company’s practice respecting the discharge of cargo.

Accordingly, the Federal Court is a less appropriate forum than the High Court in London. The interests of justice will be better served if the shippers' action in the Federal Court is stayed. The stay is conditional on the carriers pursuing, without delay, their proceeding in the High Court of England and Wales.