Mazda Canada Inc (the respondent) shipped a cargo of automobiles and trucks on the Cougar Ace from Japan to Canada. During a ballasting operation at sea, the vessel listed violently and severely and the cargo was damaged. The respondent commenced action in Canada and sued the vessel, the shipowner MOB Cougar (Pte) Ltd, the time charterer Mitsui OSK Lines Co Ltd, as well as the master, chief engineer and second engineer of the vessel (collectively the appellants). The appellants applied to have the Canadian proceedings stayed in favour of Japanese proceedings, on the basis that: (i) the bill of lading called for Japanese law and jurisdiction; and (ii) Japan had the closest connection with the dispute. Their application failed in the Federal Court: see Mazda Canada Inc v Cougar Ace (The) 2007 FC 916 (CMI1098). The appellants lodged an appeal.

Held: Appeal allowed.

The Court clarified that s 46 of the Marine Liability Act, SC 2001, c 6, does not automatically grant Canadian Courts jurisdiction, but instead allows them to consider whether Canada is the most appropriate forum. Section 46 merely opens the door for Canadian plaintiffs, allowing an action to be instituted. However, the Court may still decline the jurisdiction on the basis of forum non conveniens (see Magic Sportswear Corp v Mathilde Maersk (The) 2006 FCA 284 (CMI1038). Section 46 applies here because the intended port of discharge of the vehicles was New Westminster, British Columbia. The plaintiff may therefore institute proceedings here, but forum non conveniens arguments remain available to the defendants.

The Court disagreed with the lower Court's view of the relevance and weight that should be accorded to the applicable law. Regardless of which jurisdiction applied, Japanese law applied to the contract of carriage and it was unclear how the question of limitation of liability under art 4.5 of the Hague-Visby Rules would apply under Japanese law. In a similar vein, the defence under art 4.2.a of the Hague-Visby Rules and its relationship to seaworthiness and due diligence would have to be answered at Japanese law and it is also unclear how these issues would turn out. By handling these issues in Japan in Japanese by Japanese judges and lawyers, a more accurate picture of the complex legal issues of Japanese law would emerge. This would be preferable to dealing with these matters by affidavits translated into English, by judges totally unaware of the actual Japanese jurisprudence and its legal system. Moreover, all of these issues will form a significant aspect of the litigation that will proceed in Japan in any event, and will be resolved there. It makes little sense to engage in the same complex exercise in Canada, risking different results.

The lower Court’s view that the respondent could obtain a juridical financial advantage in Canada was also misplaced. It was unclear whether the question of limitation under the LLMC 1976 and the LLMC 1996 was to be answered by Canadian law or Japanese law. Hence, it cannot be said with certainty that there was indeed a juridical financial advantage enjoyed by the respondent in Canada. In any event, there is authority that the availability of higher damages in a jurisdiction is not a factor justifying the refusal of a stay, provided that substantial justice could be done in that jurisdiction (see Spiliada Maritime Corp v Cansulex Ltd [1987] 1 Lloyd's Rep 1; The Owners of the Ship 'Herceg Novi' v The Owners of the Ship 'Ming Galaxy' [1998] EWCA Civ 1223 (CMI770)).

Japan was the most appropriate forum because: (i) the vessel was inspected, loaded and departed from Japan; (ii) Japanese law applies to the litigation between the parties; (iii) at least two consolidated actions will be conducted in Japan with similar issues, law and witnesses; and (iv) Japanese law and jurisdiction were contracted for by the parties.