The appellants claimed damages from the respondents for breach of contract arising out of non-delivery of 25,322 bags of parboiled long grain rice shipped from Bangkok to Lagos on board the MV Nordwind, which belonged to the respondents. Clause 3 of the bill of lading evidencing the carriage contract provided that any 'dispute arising under this Bill of Lading shall be decided in the country where the "carrier" has his principal place of business and the law of such country shall apply except as provided elsewhere herein'. It is agreed that the relevant country is West Germany.

The first respondent applied to stay the action against it on the grounds that the cause of action arose out of a contract of carriage of goods which is subject to a foreign jurisdiction. The trial Judge applied the test set out in The Eleftheria [1970] P 94 and held that the appellants had not discharged the onus on them to show strong cause as to why the foreign exclusive jurisdiction clause should not be upheld. He granted a stay of proceedings. The appellants appealed to the Court of Appeal. The Court of Appeal confirmed the judgment of the trial Judge. The appellants appealed to the Supreme Court on the grounds that the Court of Appeal misdirected itself in law in failing to consider adequately the implications of an unchallenged opinion of German lawyers that the German courts would not accept jurisdiction in this case, on the ground that under German law the shipowners are not the carriers; and erred in law in holding that the parties should abide by their contract when to do so would lead to a manifest absurdity not in contemplation of the parties.

Held: Appeal allowed; judgments of the Courts below set aside. The proceedings shall proceed to be heard by the Federal High Court.

The important question that we are left with in this case is this. Upon what facts is the Court in Nigeria to assume jurisdiction despite a clause in the bill of lading which positively adopts Germany as the place of litigation in regard to any dispute arising under the bill of lading?

1. There is the statement before the Court which purports to emanate from some German lawyers that there exists a decision in Hamburg, Germany, that German law would not consider the owner of the vessel in this case as carrier. In other words the action would not be maintainable against the defendants if it is taken in Germany. This statement, however slim, remains uncontroverted.
2. If the case is struck out now in the Nigerian Court, and the appellants' only recourse would be to take action in Germany, the action would already be time-barred. Both counsel have admitted that the action was filed on 22 November 1979, while the cause of action arose on 25 November 1978. In other words, the action, as per the bill of lading and art 3.6 of the Hague Rules, has become time-barred since 25 November 1979.

If the action is struck out or stayed in the Nigeria Court, the appellants would be barred for ever from litigating their claim.

It is true that in The Eleftheria, Brandon J in his powerful judgment emphasised the essentiality of giving full weight to the prima facie desirability of holding the appellants to their agreement. He also enjoined courts to be careful not just to pay lip service to the principle involved and then fail to give effect to it because of a mere balance of convenience. What we may have in this case transcends mere balance of convenience. It is a total loss of action by the appellants, if effect is given herein to the principle of pact servanda sunt, having regard to the peculiar circumstances of this case. Justice could not be served in this case by holding the appellants to their pact of having the action taken only in the German Court.