This was an appeal by the plaintiff, Ford Aquitaine Industries SAS (Ford), from a decision by Prothonotary Richard Morneau staying the action which Ford had commenced in the Federal Court naming as defendants Orient Overseas Container Line Ltd (OOCL), and the vessel Canmar Pride and its owners who are corporations reflecting the interests of CP Ships (UK) Ltd (CP).

Ford claimed that the defendants were responsible for the loss or damage at sea (estimated at CAD 6,000,000) of several containers stuffed with automatic transmissions manufactured by Ford and loaded onto the Canmar Pride at Le Havre, France, on 3 March 2003.

Prior to commencing its action in Canada, Ford had commenced an action in the United State District Court for the Eastern District of Michigan, Southern Division, for the same loss naming only OOCL as a defendant, who subsequently added the Canmar Pride and its owners as third parties in the US proceeding, claiming that they were responsible for the loss.

Prior to loading the containers on the Canmar Pride, OOCL and Ford had entered into a Transportation Services Main Agreement (the TSM Agreement) in contemplation that the services of OOCL would be required to make several trips from Europe to the US carrying automobile parts manufactured by Ford facilities in Europe. The TSM Agreement annexed Ford’s Supplemental Ocean Transportation Terms and Ford's Global Terms and Conditions. The TSM Agreement also included a standard form of OOCL's bills of lading.

Clause 26 of Ford's Global Terms read:

A Purchase Order shall be governed by the law of Buyers' principal place of business without regard to conflict of laws provisions thereof, and litigation on contractual causes arising from a Purchase Order shall be brought only in that jurisdiction. For Ford Motor Company, a Delaware corporation and any U.S. subsidiary, joint venture or other operation located in the U.S., the principal place of business will be deemed to be Michigan. The UN Convention for the International Sale of Goods is expressly excluded.

Clause 25 of OOCL’s standard bill of lading permitted OOCLA to subcontract any of its obligations under the bill of lading and, in particular, to subcontract the carriage of cargo to another carrier. OOCL did so pursuant to a slot agreement with CP. In cl 25(b) there was an undertaking by Ford not to sue any OOCL subcontractor.

Clause 10 of the TSM Agreement provided that OOCL’s liability for loss or damage of Ford's goods shall be determined by OOCL's standard bill of lading which stated:

All carriage under this Bill of Lading . . . shall have effect subject to any legislation enacted in any country making The Hague or Hague-Visby Rules compulsorily applicable and in the absence of any such legislation in accordance with The Hague Rules or COGSA in the case of carriage to and from the United States of America.

COGSA is a reference to the US Carriage of Goods by Sea Act. COGSA and the Hague-Visby Rules deal with an ocean carrier's limitation of liability in case of loss or damage. The question whether the Hague-Visby Rules on limitation of liability applied was central to the litigation between the parties, whether in Canada or the US, because the limit of liability under COGSA is very much lower than the monetary limit of liability under the Hague-Visby Rules. In its defence filed in the US action, OOCL claimed that COGSA applied, which would limit its liability to USD 210,000 or USD 500 per lost/damaged container. Under the Hague-Visby Rules, if applicable, Ford would have the opportunity to collect significantly higher damages in the range of USD 4,500,000.

Prothonotary Morneau ruled that s 46(1) of the Marine Liability Act, SC 2001, c 6 (the MLA) did not oust this Court’s jurisdiction under the Federal Courts Act, RSC 1985, c F-7 (the FCA), s 50 to grant a stay on grounds different than the choice of forum stipulated in a contract of carriage.

Section 46 of the MLA provides:

(1) 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.

(2) Notwithstanding subsection (1), the parties to a contract referred to in that subsection may, after a claim arises under the contract, designate by agreement the place where the claimant may institute judicial or arbitral proceedings.

Section 50 of the FCA provides:

(1) 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.

The Prothonotary applied the following test developed in 472900 BC Ltd v Thrifty Canada (1998) CanLII 6522 (BC CA) and endorsed in Westec Aerospace Inc v Raytheon Aircraft Co (1999) BCCA 243 (CanLII):

(1) Are there parallel proceedings underway in another jurisdiction?

(2) If so, is the other jurisdiction an appropriate forum for the resolution of the dispute?

(3) Assuming there are parallel proceedings in another appropriate forum, has the plaintiff established objectively by cogent evidence that there is some personal or juridical advantage that would be available to him only in the British Columbia action that is of such importance that it would cause injustice to him to deprive him of it?

The Prothonotary was of the opinion that the US action met the first two criteria but Ford failed to meet the third. Ford submitted that the Court in the Michigan action would lean towards COGSA which establishes some liability limits for OOCL that are lower than if the action were to proceed in this Court, where the Court would be more inclined to apply the Hague-Visby Rules. However, the Prothonotary held that this is a complex question that will be argued in the Michigan action as it would also be in this Court if the present action were not stayed. This debate mean that for the purposes of the third criterion in the Westec test, Ford did not establish objectively by cogent evidence that it would enjoy in Canada some juridical advantage that it could not have in the action in Michigan.

Ford appealed, arguing that the Prothonotary erred in applying the 'far less stringent test' stemming from Westec. In the view of Ford’s counsel, the proper test to be applied was that in Plibrico (Canada) Ltd v Combustion Engineering Canada Inc (1990) 30 CPR (3d) 312 where Strayer J stated that a stay should not be granted under s 50 of the FCA unless it can be shown that the party asking for a stay demonstrated that the continuation of the action would cause prejudice or injustice (not merely inconvenience or extra expense) to the defendant and the stay would not work an injustice to the plaintiff.

In this context, Ford argued that the Prothonotary failed to recognise that the dichotomy between the limitation of liability under COGSA and the Hague-Visby Rules was a material prejudice inextricably linked to the country in which the proceedings were heard and, as a consequence, Ford would suffer injustice if the Federal Court action was stayed.

Held: Appeal dismissed.

The fundamental issue before the Court is whether on the application of proper principles, the Court should decline to exercise jurisdiction by staying the action at the behest of the defendants. The doctrine of forum non conveniens does not speak to the issue whether a forum has jurisdiction or should assume jurisdiction but rather is a discretionary doctrine which recognises that there may be more than one forum capable of assuming or exercising jurisdiction and may decline to exercise that jurisdiction on the ground there is a more appropriate forum to entertain or try the action.

The proper approach and principles can be summarised as follows:

First, achieving justice, taking into account all relevant circumstances, is the overarching principle which guides the Court in deciding whether, pursuant to s 50 of the FCA, to stay an action before it when the ground advanced for such a stay is the doctrine of forum non conveniens.

Second, all relevant circumstances must be appropriately weighed in their proper context. As an example, marine transportation has been recognised as warranting more weight to certain factors than others.

Third, none of the relevant factors in the balance of justice or injustice to a plaintiff or a defendant is determinative and it would not be appropriate to elevate any one consideration to a controlling position in the exercise of the Court’s decision to stay a proceeding under s 50 of the FCA. As an example, it would be inappropriate to elevate the existence of a parallel action in another jurisdiction as the determinative factor.

Fourth, the test for forum non conveniens is that there must be some other forum more convenient and appropriate for the pursuit of the action and for securing the ends of justice. Courts have developed a list of several factors that may be considered in determining the most appropriate forum for the action, including the following:

• the location of the majority of the parties;
• the location of key witnesses and evidence;
• contractual provisions that specify applicable law or accord jurisdiction;
• the avoidance of a multiplicity of proceedings;
• the applicable law and its weight in comparison to the factual questions to be decided;
• geographical factors in suggesting the natural forum;
• whether declining jurisdiction would deprive the plaintiff of a legitimate juridical advantage available in the domestic court.

When deciding if the Court should decline to exercise its uncontested jurisdiction because there is a more appropriate place to try Ford’s action, it must balance all the appropriate factors, none of which in itself is determinative, in the interests of all and in the ends of justice. It is a flexible approach and not formula driven.

Ford’s action in the Federal Court has a real and substantial connection to Canada and Ford had a legitimate claim to the advantages the Federal Court applying the applicable law of the Hague-Visby Rules would provide.

Ford has not established by cogent evidence that it would lose the advantage of higher damages in the US because COGSA would automatically apply and the Hague-Visby Rules would not. An affidavit evidence is to the contrary effect. The expert witness clearly states that COGSA does not apply to the carriage from France to Montréal and then by rail to destinations in the US. He is also of the view that COGSA does not arise by virtue of the OOCL/Ford agreement.

There are three factors that warrant Ford’s action to be stayed on the basis of the doctrine of forum non conveniens. The first is the existence of parallel proceedings in the US and the desirability of unnecessary expenses or conflicting decisions if justice can be done in the US District Court. The second important factor is that of comity. The third factor is the issue of applicable law. Many of the issues in this case will relate to US law.