CHOICE OF LAW AND FORUM CLAUSES
IN SHIPPING DOCUMENTS — REVISING
SECTION 11 OF THE CARRIAGE OF GOODS BY
SEA ACT 1991 (CTH)
SIMON ALLISON*
Since 1904, Australia has sought to protect shippers by prohibiting parties
to contracts such as bills of lading from contracting out of Australian law
and jurisdiction. Today, this protection lives on in s 11 of the Carriage
of Goods by Sea Act 1991 (Cth). This section has recently been in the
spotlight following a divergence of authority relating to its scope. This
article argues that legislative revision of s 11 is necessary in order to
clarify its scope and to ensure that its operation is consistent with the
underlying policies justifying its existence, as expressed by the legislature.
I
INTRODUCTION
Approaching the 19th century, the legal norms governing the liability of those
who were contracted to carry goods by sea were regarded as forming part of
a unified international maritime law.1 Regarded as common carriers, they were
held to be strictly liable for cargo damage or loss occurring during a voyage.2
However, carriers began to take advantage of the liberal approach of English
and European courts to the principle of freedom of contract, seeking to avoid
liability through the use of exclusion clauses.3 Regarded as a valid exercise of
party autonomy, these exclusion clauses effectively denied redress for any losses
*
1
2
3
BEc, LLB (Hons) (W Aust), MPhil Candidate, Cambridge Australia Poynton Scholar, Queens’
College, University of Cambridge. The author is grateful to Kanaga Dharmananda SC for his
patience, insight and support. The author would also like to thank esteemed peers, friends and family
for their assistance and encouragement.
William Tetley, ‘The Proposed New United States Senate COGSA: The Disintegration of Uniform
International Carriage of Goods by Sea Law’ (1999) 30 Journal of Maritime Law and Commerce 595,
596; Samuel Robert Mandelbaum, ‘International Ocean Shipping and Risk Allocation for Cargo Loss,
Damage and Delay: A US Approach to COGSA, Hague/Visby, Hamburgg and the Multimodal Rules’
(1995) 5 Journal of Transnational Law & Policy 1, 3; Paul Myburgh, ‘Uniformity or Unilateralism in
the Law of Carriage of Goods by Sea’ (2000) 31 Victoria University Wellington Law Review 355, 357.
The Australasian United Steam Navigation Co Ltd v Hiskens (1914) 18 CLR 646, 663–8 (Isaacs J)
(‘Hiskens’).
See, Re Missouri Steamship Co (1889) 42 Ch D 321; Jose Angelo Estrella Faria, ‘Uniform Law for
International Transport at UNCITRAL: New Times, News Players, and New Rules’ (2008) 44 Texas
International Law Journall 277, 281.
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Monash University Law Review (Vol 40, No 3)
suffered by cargo interests.4 Other jurisdictions were less than enthusiastic when
it came to enforcing such clauses.5
A
The Sea-Carriage of Goods Act 1904 (Cth)
Australia joined a number of other jurisdictions such as New Zealand, South
Africa and Canada in adopting legislation modelled on the United States’ Harter
Act.6 The successful lobbying efforts of disgruntled Australian fruit exporters led
to the introduction to Parliament of the Sea-Carriage of Goods Bill 1904 (Cth).7
During the second reading speech before the Senate on 23 November 1904, the
Attorney-General, Senator Sir Josiah Symon noted that ‘[i]n one sentence’ the
object of the measure was to ‘prevent ship-owners from escaping liability for
their own negligence’.8
4
5
6
7
8
English courts enforced bills of lading even where they included ‘the most far-reaching exculpatory
clauses’: Mandelbaum, above n 1, 9. In an 1889 Annual Report, an English Protection and Indemnity
Club stated: ‘the Committee congratulates the members on the absence in recent years of cargo claims
which has been brought about by the now general adoption of the negligence clause; the premium
reduction for use of this clause is therefore discontinued’: Francis Reynolds, ‘The Hague Rules, the
Hague-Visby Rules, and the Hamburg Rules’ (1990) 7 Australian and New Zealand Maritime Law
Journal 16, 16, quoting English Protection and Indemnity Club, 1889 Annual Report.
I L Evans, ‘The Harter Actt and its Limitations’ (1910) 8 Michigan Law Review 637, 638. This was
particularly so in the case of export nations such as the United States of America. This sentiment
is reflected in a later Congressional document which noted: ‘Such unjust special clauses in bills of
lading were enforced by the foreign shipowners through the power of their practical monopoly of
ocean transportation between the United States and foreign countries. Humiliating and burdensome
as such conditions were, American shippers were forced to submit in order to get their merchandise
carried’: United States Congress, Liability for Damages Arising in the Navigation of Vessels
(Argument in Support of Senate Bill 7208: A Necessary Amendment to the Harter Act)
t 4. ‘The
economic conflict over risk allocation between carriers and shippers goes back centuries. The earliest
recorded occurrence of economic conflict was in the 1680s, when shipowners and merchants met at
Lloyd’s Coffeeshop in England to wrangle over terms of all-purpose marine insurance policies and
the risks for loss and damage to cargo’: Mandelbaum, above n 1, 2, citing Scott M Thompson, ‘The
Hamburg Rules: Should They Be Implemented in Australia and New Zealand?’ (1992) 4 Bond Law
Review 168. In 1893, the United States Congress enacted the Harter Actt which mandated liability for
goods carried from or to American ports: see Harter Act of 1893, 46 USC §§ 30701–30707 (2006)
(‘Harter Act’). The Harter Actt was ‘a great achievement of American maritime law’: William Teltey,
‘Reform of Carriage of Goods — The UNCITRAL Draft and Senate COGS’ 99 (2003) 28 Tulane
Maritime Law Journall 1, 23. See also Joseph Sweeney, ‘Happy Birthday, Harter: A Reappraisal
of the Harter Actt on its 100th Anniversary’ (1993) 24 Journal of Maritime Law and Commerce 1,
4. The original bill was introduced to Congress by Ohio Democrat Michael Harter. Harter later
committed suicide: ‘Suicide of M D Harter’, Chicago Tribune (Chicago), 23 February 1896, 5. His
legacy, however, remains. The Harter Actt is still in force in the United States: see Martin Davies,
‘Forum Selection, Choice of Law and Mandatory Rules’ (2011) 2 Lloyd’s Maritime & Commercial
Law Quarterly 237, 238 n 5.
See Shipping and Seamen Act 1903 (NZ); Sea-Carriage of Goods Act 1904 (Cth); Water-Carriage of
Goods Act 1910 (Can); Hiskens (1914) 18 CLR 646, 655 (Griffith CJ); Sweeney, above n 5, 30; Bulk
Chartering & Wonsultants Australia Pty Ltd v T & T Metal Trading Pty Ltd “The Krasnogrosk”
(1993) 31 NSWLR 18, 22 (Kirby P) (‘The Krasnogrosk’).
See John Mo, International Commercial Law (Butterworths, 1997). ‘Australia was predominantly an
agricultural society in the nineteenth century’ exporting ‘mainly primary products, such as fruits,
sugar and coal’ to England: at 19 [1.33]. See also Michael Sturley, ‘The History of COGSA and the
Hague Rules’ (1991) 22 Journal of Maritime Law and Commerce 1, 15.
Commonwealth, Parliamentary Debates, Senate, 23 November 1904, 7286–7 (Sir Josiah Symon).
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
641
From the perspective of the Attorney-General, an Australian enactment of a
carbon copy of the Harter Actt would have been sufficient to achieve the same
outcome.9 However, concerns were raised by other senators that carriers would
be able to avoid liability by using English choice of law and forum clauses.10 In
response, Sir Josiah stated with confidence that the proposed law act as a ‘positive
law’ invaliding foreign choice of law and forum clauses.11 However, following
considerable debate, Sir Josiah conceded that there was a need to ensure that
the Australian regime was ‘absolutely without a loophole’.12 He therefore
introduced an amendment to the Sea-Carriage of Goods Bill 1904 (Cth) to insert
the ‘wonderfully tautological’13 s 6. The provision, titled ‘[c]onstruction and
jurisdiction’ provided:
All parties to any bill of lading or document relating to the carriage of goods
from any place in Australia to any place outside Australia shall be deemed
to have intended to contract according to the laws in force at the place of
shipment, and any stipulation or agreement to the contrary, or purporting
to oust or lessen the jurisdiction of the Courts of the Commonwealth or
of a State in respect of the bill of lading or document, shall be illegal, null
and void, and of no effect.
Further, the cost and time required to travel to England at that time were other
factors supporting the adoption of s 6.14 The amended Sea-Carriage of Goods Bill
1904 (Cth) enjoyed support from both houses of the Commonwealth Parliament.
It came into force on 1 January 1905.15
B
The Sea-Carriage of Goods Act 1924 (Cth)
Michael Sturley notes the ‘conflict among major maritime nations, which became
more serious in the early 20th century, meant that the general maritime law no longer
provided for uniform risk allocation’.16 International uniformity was necessary in
9
10
11
12
13
14
15
16
Ibid 7286–8 (Sir Josiah Symon): ‘The Harter Actt was the fi rst Act of Congress passed on the subject.
It still exists. It has worked well. The conditions in American bills of lading are considered by all
mercantile people to be perfectly fair’.
Davies, ‘Forum Selection, Choice of Law’, above n 5, 239. See Commonwealth, Parliamentary
Debates, Senate, 23 November 1904, 7306 (Paul Keating). Reference was made to the English
decision in Re Missouri Steamship Co (1889) 42 Ch D 321. In that case, cattle were shipped from the
United States of America under a bill of lading issued in Boston, Massachusetts. The ship, along with
her bovine occupants, failed to arrive in England. The court applied English law to resolve the dispute
as it was that body of law that was implied by the parties to the contract in question. The claimants
were left without remedy as the bill of lading contained an exclusion clause that was valid as a matter
of English law.
Commonwealth, Parliamentary Debates, Senate, 23 November 1904, 7286–8 (Sir Josiah Symon).
Ibid 7297 (Sir Josiah Symon).
Davies, ‘Forum Selection, Choice of Law’, above n 5, 239. See also Hiskens (1914) 18 CLR 646, 654–5
(Griffith CJ), 669 (Isaacs J).
Mo, International Commercial Law, above n 7, 19 [1.33]: Australian exporters forced to agree to the
carrier’s terms in a bill of lading ‘would have to travel a long way to England for any legal action
against the carrier under the bill’.
Sea-Carriage of Goods Bill 1904 (Cth) s 2.
Sturley, ‘The History of COGSA’, above n 7, 6.
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order to provide commercial certainty to those involved in international trade.17
In 1921, the Comité Maritime International (CMI) coordinated the negotiation
of a set of uniform liability rules at a conference held at the Hague. They were
adopted as an international convention, which opened for signature in August
1924.18 The Hague Rules represented a compromise between ship owners,
importers, and exporters, and applied by their own force to contracts of carriage
covered by bills of lading and similar documents of title.19 They were widely
adopted, and given force of law in Australia by the Sea-Carriage of Goods Act
1924 (Cth) (‘1924 Act’).
Following the ‘successful deliberations’ of the CMI in Stockholm in 1963, the
Visby Amendments to the Hague Rules were adopted.20 The Hague Rules as
amended by the Visby Amendments are known as the Hague/Visby Rules. Since
coming into force on 23 June 1968, the Hague/Visby Rules have been adopted
by the vast majority of the world’s shipping nations.21 The significance of the
Hague/Visby Rules was highlighted by the House of Lords in The Hollandia.22
In that case, their Lordships refused to stay English proceedings on the basis of
an exclusive jurisdiction clause that nominated the courts of the Netherlands to
resolve disputes. Lord Diplock held that rules had mandatory application where
the port of shipment was located within a contracting state.23
The Hague Rules remained silent on the question of issues relating to choice
of forum.24 Their widespread adoption and uniform application meant that for
some time choice of forum became less important.25 Despite this, the 1924 Act
continued the ‘protectionist policy enshrined’ in its predecessor.26 Further, the
17
18
19
20
21
22
23
24
25
26
Justice Steven Rares, ‘The Onus of Proof in a Cargo Claim Articles III and IV of the Hague/Visby
Rules and the UNCITRAL Draft Convention’ [2008] Federal Judicial Scholarship 37, [3]: ‘As
more nations enacted legislation, a number of ship owners, particularly in the then British Empire,
expressed concern that they would be subject to different regimes for damage caused to cargo in
many different countries of the world.’ See also Faria, above n 3, 286.
International Convention for the Unification of Certain Rules of Law relating to Bills of Lading
(Hague Rules), signed 25 August 1924, 120 LNTS 187 (entered into force 2 June 1931) (‘Hague
Rules’); Sturley, ‘The History of COGSA’, above n 7, 30–2.
Hilditch Pty Ltd v Dorval Kaiun KK [No 2] (2007) 245 ALR 125, 144 [84] (Rares J).
Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating
to Bills of Lading (Visby Amendments), opened for signature 23 February 1968, 1412 UNTS 127
(entered into force 23 June 1977) (‘Visibility Amendments’); W Tetley, Marine Cargo Claims (The
Carswell Company Limited, 4th ed, 2007) 11.
Tetley, Marine Cargo Claims, above n 20, 6.
[1983] 1 AC 565. See also M Davies, A Bell and P L G Brereton, Nygh’s Conflict of Laws in Australia
(Lexis Nexis Butterworths, 8th ed, 2010) 403 [19.41].
The Hollandia [1983] 1 AC 565, 572–3; Simon Baughen, Shipping Law (Routledge-Cavendsh, 4th ed,
2009) 399.
In contrast, both the United Nations Convention on the Carriage of Goods by Sea, opened for signature
31 March 1978, 1695 UNTS 3 (entered into force on 1 November 1992) arts 21–2 (‘Hamburg Rules’)
and United Nations Convention on Contracts for the International Carriage of Goods Wholly or
Partly by Sea, opened for signature 23 September 2009 (not yet in force) arts 75–6 (‘Rotterdam Rules’)
cover choice of forum. Albeit on a opt-in basis in the Rotterdam Rules: Baughen, above n 23, 175–6.
Alexander von Zeigler, ‘Jurisdiction and Forum Selection Clauses in a Modern Law on Carriage of
Goods by Sea’ in Martin Davies (ed), Jurisdiction and Forum Selection in International Maritime
Law: Essays in Honor of Robert Force (Kluwer Law International, 2005) ch 3 85, 89.
Davies, ‘Forum Selection, Choice of Law’, above n 5, 240. See also John Mo, ‘“The Duty to Obey”
versus an “Inherent Sense of Justice”’ (1995) 69 Australian Law Journall 276, 290; Commonwealth,
Parliamentary Debates, Senate, 28 August 1924, 3677 (Senator Green).
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
643
jurisdictional protection was extended to the inward-bound carriage of goods.
Section 9 of the 1924 Act, titled ‘[c]onstruction and jurisdiction’ provided:
(1) All parties to any bill of lading or document relating to the carriage
of goods from any place in Australia to any place outside Australia
shall be deemed to have intended to contract according to the laws in
force at the place of shipment, and any stipulation or agreement to the
contrary, or purporting to oust or lessen the jurisdiction of the Courts
of the Commonwealth or of a State in respect of the bill of lading or
document, shall be illegal, null and void, and of no effect.
(2)
Any stipulation or agreement, whether made in the Commonwealth
or elsewhere, purporting to oust or lessen the jurisdiction of the
Courts of the Commonwealth or of a State in respect of any bill of
lading or document relating to the carriage of goods from any place
outside Australia to any place in Australia shall be illegal, null and
void, and of no effect.
Section 9 was ‘completely effective’ in ensuring cargo claimants had access to
Australian courts.27 It was applied by the High Court of Australia in Compagnie
Des Messageries Maritimes v Wilson.28 In that case, Dixon CJ stated that s 9 was
‘expressed in the strongest words’29 and rendered any ‘stipulation or agreement
falling within its terms illegal, null, void and of no effect’.30 The court relied
upon s 9(2) to strike down a French exclusive jurisdiction clause contained in a
bill of lading relating to the carriage of goods from Dunkirk, France to Sydney,
Australia. The High Court held that s 9 rendered the clause invalid.31
C
The Carriage of Goods by Sea Act 1991 (Cth)
An attempt to modernise the rules of cargo liability was made with the adoption
of the Hamburg Rules as drafted by the United Nations Commission on
International Trade Law (UNCITRAL) in 1978. In 1991, Australia repealed the
1924 Act, replacing it with the Carriage of Goods by Sea Act 1991 (Cth) (‘1991
Act’). The 1991 Actt gave effect to the Hague/Visby Rules, but also provided for
the future application of the Hamburg Rules. The changes to the liability regime
27
28
29
30
31
Davies, ‘Forum Selection, Choice of Law’, above n 5, 240. ‘Not only strong words but in an ambit
widely cast’: The Krasnogrosk (1993) 31 NSWLR 18, 23 (Kirby P).
(1954) 94 CLR 577 (‘Wilson’). See also Mo, ‘The Duty to Obey’, above n 26, 290.
Wilson (1954) 94 CLR 577, 583. See also The Krasnogrosk (1993) 31 NSWLR 18, 21 (Kirby P).
Wilson (1954) 94 CLR 577, 583. See also The Krasnogrosk (1993) 31 NSWLR 18, 23 (Kirby P):
The Federal Parliament has thus left no doubt as to its objective, emphatically expressed.
A trilogy of invalidity is invoked. It is the duty of courts to obey, and faithfully implement,
such strongly worded legislative instruction. Courts must do so, however unjust may be
the apparent consequences in a particular case; however inconvenient to the parties; and
however irritating may be the result having regard to the prior dealings between the parties.
Wilson (1954) 94 CLR 577, 583, 585 (Fullagar J): ‘The contract contained in the bill of lading was
made in France in the French language, and relates to the carriage of goods by a ship sailing under the
French flag. For these and other reasons it seems clear that the governing law of the contract is French
law.’ However, s 9 was a ‘law made by the Parliament of the Commonwealth, and must ... be applied
by the Supreme Court of New South Wales in all cases to which it is, in terms, relevant’.
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Monash University Law Review (Vol 40, No 3)
in the 1991 Actt were a ‘welcome piece of news for shippers throughout Australia’
because it was said that ‘at first blush’ the legislation ‘would save them the cost’
of insuring goods during transit.32 The purpose was to allocate responsibility as
simply as possible and to reduce the amount and cost of legal disputes. Section
11 was introduced to avoid ‘potential delays, increased costs and language
difficulties’ thought to be associated with the resolution of disputes under foreign
laws.33 Headed ‘[c]onstruction and jurisdiction’, s 11 provided:
(1)
All parties to:
(a)
a bill of lading, or a similar document of title, relating to the
carriage of goods from any place in Australia to any place
outside Australia;
(b)
a non-negotiable document of a kind mentioned in subparagraph
10(1)(b)(iii), relating to such a carriage of goods;
are taken to have intended to contract according to the laws in force
at the place of shipment.
(2)
An agreement (whether made in Australia or elsewhere) has no effect
so far as it purports to:
(a)
preclude or limit the effect of subsection (1) in respect of a bill
of lading or a document mentioned in that subsection; or
(b)
preclude or limit the jurisdiction of a court of the Commonwealth
or of a State or Territory in respect of a bill of lading or a
document mentioned in subsection (1); or
(c)
preclude or limit the jurisdiction of a court of the Commonwealth
or of a State or Territory in respect of:
(i)
a bill of lading, or a similar document of title, relating to
the carriage of goods from any place outside Australia to
any place in Australia; or
(ii)
a non-negotiable document of a kind mentioned in
subparagraph 10(1)(b)(iii) relating to such a carriage of
goods.
The Hamburg Rules have failed to get sufficient support from other
governments.34 In 1997, the Carriage of Goods by Sea Amendment Act 1997
(Cth) (‘1997 Amendment Act’) was passed to prevent the Hamburg Rules from
32
33
34
Commonwealth, Parliamentary Debates, House of Representatives, 17 October 1991, 2225 (John
Sharp).
Commonwealth, Parliamentary Debates, House of Representatives, 15 October 1991, 1926 (Robert
Brown).
The Hamburg Rules failed to attract support from ‘major trading nations’ including Australia’s
‘major trading partners’: Explanatory Memorandum, Carriage of Goods by Sea Amendment Bill
1997 (Cth) 3. That support seemed unlikely in the near future.
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
645
coming into force.35 In addition, s 7 was also amended to enable the Hague/Visby
Rules, and parts of the 1991 Act, to be amended by regulation.36 The explanatory
memorandum accompanying the Bill for the 1997 Amendment Act stated that the
intention behind the regulatory power to amend the 1991 Act was inter alia to
ensure that ‘all relevant shipping documents’ were covered.37 Regulations were
subsequently passed by the Commonwealth Parliament in 1998 which modified
the Hague/Visby Rules in a number of respects,38 as provided for by s 7 of the
1991 Actt as amended by the 1997 Amendment Act. The Australian version of the
Hague/Visby Rules as modified by these regulations are known as the ‘‘Amended
Hague Rules’.39
1
The 1998 Regulations
The Carriage of Goods by Sea Regulations 1998 (Cth) (‘First
‘
1998 Regulations’)
also amended s 11 of the 1991 Actt to replace the reference to ‘bills of lading, or
similar documents of title’ with ‘a sea carriage document to which, or relating to a
contract to which, the Amended Hague Rules apply’.40 This amendment was made
in order to be consistent with modifications that these regulations also introduced
into the Amended Hague Rules. However, this new definition ‘inadvertently
restricted’ the operation of s 11 to documents governed by the Amended Hague
Rules.41 A second set of regulations was introduced in 1998 to correct what was
described as ‘technical drafting errors’ made in the first set of regulations.42
These were the Carriage of Goods by Sea Regulations (No 2) 1998 (Cth) (‘Second
1998 Regulations’). The Second 1998 Regulations redefined the phrase ‘a sea
carriage document’ extending it to documents ‘relating to the carriage of goods’
to broaden the ‘categories of shipping documents under which import shippers
have access to Australian courts’.43
As the Second 1998 Regulations were about to commence, the Federal Court held
that the amendment to s 11 in the First 1998 Regulations was invalid.44 Emmett J
35
36
37
38
39
40
41
42
43
44
Section 2 of the 1991 Actt provided for the Hamburg Rules to come into force in 1997 (‘the Hamburg
Rules trigger’). It was ‘not appropriate’ to ‘adopt the Hamburg Rules at [that] … time’: Explanatory
Memorandum, Carriage of Goods by Sea Amendment Bill 1997 (Cth), 3. See also Commonwealth,
Parliamentary Debates, House of Representatives, 12 March 2007, 5554–5 (M Ronaldson).
This ‘very precise’ regulatory power might be ‘regarded as an “Henry VIII clause” [as it enabled] …
regulations [to] … have the effect of amending the operation of an Act’: Explanatory Memorandum,
Carriage of Goods by Sea Amendment Bill 1997 (Cth) 6–7.
Those documents included ‘sea waybills and certain consignment notes as well as bills of lading, and
including electronic forms of such documents’: ibid 7. This reflected concern that the Hague/Visby
Rules may not extend to non-negotiable sea carriage documents such as straight bills of lading and
sea waybills: see generally Tetley, Marine Cargo Claims, above n 20, 18–20.
Carriage of Goods by Sea Regulations 1998 (Cth).
1997 Amendment Actt s 7(1); 1991 Actt sch 1A ‘Amended Hague Rules’.
First 1998 Regulations reg 6. The purpose was to ‘reflect the wider range of export sea carriage
documents’ covered by ss 10 and 11: Explanatory Statement, Carriage of Goods by Sea Regulations
1998 (Cth).
Explanatory Statement, Carriage of Goods by Sea Regulations (No 2) 1998 (Cth).
Ibid. Section 11 was amended to make clear ‘that the same range of shipping documents is intended
to be covered by the COGSA for outwards shipments as for inwards shipments’.
Ibid.
Hi-Fert Pty Ltd v United Shipping Adriatic (1998) 89 FCR 166, 182 (Emmett J) (‘Hi-Fert’).
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stated that s 7(3)(b) of the 1991 Actt did not authorise such a ‘significant restriction’
to s 11.45 Following that case, the Second 1998 Regulations commenced expanding
the scope of s 11 as applying to sea carriage documents ‘relating to the carriage
of goods’.46 This is the definition that still exists today. The consequences of this
are considered in the next Part.
II SECTION 11 AND CHARTERPARTIES
A
The Text of Section 11
Section 11 of the 1991 Actt — titled ‘[c]onstruction and jurisdiction’ — in its
current amended form provides:
(1) All parties to:
(a)
a sea carriage document relating to the carriage of goods from
any place in Australia to any place outside Australia; or
(b)
a non-negotiable document of a kind mentioned in subparagraph
10(1)(b)(iii), relating to such a carriage of goods;
are taken to have intended to contract according to the laws in force
at the place of shipment.
(2)
(3)
45
46
An agreement (whether made in Australia or elsewhere) has no effect
so far as it purports to:
(a)
preclude or limit the effect of subsection (1) in respect of a bill
of lading or a document mentioned in that subsection; or
(b)
preclude or limit the jurisdiction of a court of the Commonwealth
or of a State or Territory in respect of a bill of lading or a
document mentioned in subsection (1); or
(c)
preclude or limit the jurisdiction of a court of the Commonwealth
or of a State or Territory in respect of:
(i)
a sea carriage document relating to the carriage of goods
from any place outside Australia to any place in Australia;
or
(ii)
a non-negotiable document relating to such a carriage of
goods.
An agreement, or a provision of an agreement, that provides for
the resolution of a dispute by arbitration is not made ineffective
Ibid 181 (Emmett J).
Second 1998 Regulations reg 3. See also Davies, ‘Forum Selection, Choice of Law’, above n 5, 246.
The broadly encompassing phrase ‘a sea carriage document’ seems ‘broad enough to include all
kinds of documents’ including ‘bills of lading, seawaybills, voyage charterparties and contracts of
affreightment’: at 241.
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
647
by subsection (2) (despite the fact that it may preclude or limit the
jurisdiction of a court) if, under the agreement or provision, the
arbitration must be conducted in Australia.
The current wording of s 11 has been considered in a number of recent cases, in
which the courts were asked to determine whether a voyage charter was a ‘sea
carriage document’ to which s 11 applied. As this Part will detail, this question
has been answered with inconsistent results.
B Jebsens International (Australia) Pty Ltd v Interfert
Australia Pty Ltd47
In Jebsens, a ruling was sought on whether a voyage charter was ‘a sea carriage
document’ within the meaning of and for the purposes of s 11(1)(a) of the 1991 Act.
Anderson J of the Supreme Court of South Australia held that the voyage charter
did not come within the ambit of s 11 as it was not a ‘sea carriage document’ as
defined in art 1 of the Amended Hague Rules.48 According to his Honour, the 1991
Actt dealt ‘with the rights of persons holding bills of lading or similar instruments’
and a charter party ‘is a document of a different genus’.49 His Honour held that
a charter party was not a sea carriage document simply because it ‘contain[ed] a
contract for the carriage of goods by sea’.50
This decision has been the subject of some comment (and criticism) since it was
handed down.51 The court’s reliance on the definition of ‘sea carriage document’
as contained in the Amended Hague Rules has been questioned as that definition
is expressed as applying to the Amended Hague Rules and not ‘the Act itself’.52
The decision has also been critiqued as lacking rigorous legal reasoning.53
C
Dampskibsselskabet Norden A/S v Beach Building and
Civil Group Pty Ltd54
In 2012, the same issue arose for resolution by the Federal Court of Australia
in Norden. The ship owners, DKN, brought arbitration proceedings against the
charterers in London pursuant to cl 32 of the voyage charter in question. DKN
asserted the charterers were liable for demurrage due to delays in loading the
47
48
49
50
51
52
53
54
(2011) 112 SASR 297 (‘Jebsens
‘
’).
Ibid 298 [6].
Ibid 298 [7].
Ibid 298 [8].
See, eg, Michael White and Lauren Humphrey, ‘Australian Maritime Law Update 2011’ (2012) 26
Australian and New Zealand Maritime Law Journall 172. ‘Despite the absence of reasons for the
judgment the decision would appear to be a correct interpretation of the Act’: at 190. Cf Martin
Davies, ‘Australian Maritime Law’ [2012] International Maritime & Commercial Law Yearbookk 1,
7: ‘The Act uses the simple, general, expression “sea carriage document”. A voyage charterparty is
a document. It contains a contract for carriage of goods by sea. To hold that it is not a “sea carriage
document” is to ignore the plain words of the Act.’
Davies, ‘Australian Maritime Law’, above n 51, 6–7.
White and Humphrey, above n 51, 190.
(2012) 292 ALR 161 (‘Norden’).
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cargo of coal at Dalrymple Bay Coal Terminal, Queensland and in discharging
the coal at the destination port in Lianyungang, China.
The arbitrator found in DKN’s favour. DKN sought to enforce this award against
the charterer in Australia pursuant to s 8 of the International Arbitration Act 1974
(Cth). The charterer sought to resist enforcement, arguing inter alia that the award
was made subject to an arbitration agreement rendered ineffective by s 11 of the
1991 Act. That argument ultimately found favour with the judge hearing the case,
Foster J, who dismissed DKN’s application to enforce the award.
In doing so, his Honour stated that the critical question was whether the voyage
charter was a ‘sea carriage document’ pursuant to s 11(1)(a) or a ‘non-negotiable
document’ of the kind described in s 11(1)(b) of the 1991 Act.55 If that question
was answered in the affirmative, s 11 would operate to deprive the arbitral
tribunal of jurisdiction to determine the dispute and any award made by it would
be ineffective and unenforceable in Australia.
Foster J held that the reference to a ‘document relating to the carriage of
goods from any place in Australia’ was, ‘as a matter of ordinary English’ apt
to encompass a voyage charter.56 Further, the subsequent amendments to s 11
indicated an intention to ‘broaden the class of documents covered by’ it. 57 His
Honour went on to consider art 1(g) of the Amended Hague Rules.58 It defines a
‘sea carriage document’ as:
(i)
a bill of lading; or
(ii) a negotiable document of title that is similar to a bill of lading and
that contains or evidences a contract of carriage of goods by sea; or
(iii) a bill of lading that, by law, is not negotiable; or
(iv) a non-negotiable document (including a consignment note and a
document of the kind known as a sea waybill or the kind known as a
ship’s delivery order) that either contains or evidences a contract of
carriage of goods by sea.59
Foster J noted that, ‘[s]trictly speaking, that definition applies only to those Rules’
and not the 1991 Act.60 Despite this, his Honour commented that the definition
was ‘none the less of some assistance’ given the ‘Rules have the force of law and
assume some significance’ in the 1991 Act.61 As the voyage charter contained or
55
56
57
58
59
60
61
Ibid 189 [135] (Foster J).
Ibid 189 [135] (Foster J), citing with approval Sonmez Denizcilik Ve Ticaret Anonim Sirketi v The MV
“Blooming Orchard” (1990) 22 NSWLR 273, 281 (Carruthers J) (‘The Blooming Orchard [No 2]’);
BHP Trading Asia Ltd v Oceaname Shipping Ltd
d (1996) 67 FCR 211, 235 (Hill J) (‘BHP Trading Asia’).
Norden (2012) 292 ALR 161, 189–90 [136]–[141]. Foster J stated it was ‘difficult to discern from the
relevant extrinsic materials an intention on the part of the legislature’ to narrow the relevant class: at
189 [137]. Further, His Honour rejected DKN’s contention that art 10 of the Amended Hague Rules
drew a clear distinction between charter parties and sea carriage documents: at 185 [120]–[121].
Ibid 190 [142] (Foster J).
1991 Actt (Cth) sch 1A art 1(g).
Norden (2012) 292 ALR 161, 188 [130].
Ibid 188–9 [130]–[131]. See Davies, ‘Australian Maritime Law’, above n 51, 6–7. Cf Jebsens (2011)
112 SASR 297, 298 [5]–[9] (Anderson J).
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
649
evidenced a contract for the carriage of goods by sea his Honour held that it was
therefore a ‘sea carriage document’ as defined by the Amended Hague Rules.
Having established the voyage charter was a sea carriage document for
the purposes of s 11, Foster J went on to discuss whether it was also a nonnegotiable instrument of a kind mentioned in s 10(1)(b)(iii) of the 1991 Act.
Section 10(1)(b)(iii), headed ‘[a]pplication of Amended Hague Rules’ provides:
(1) The Amended Hague Rules only apply to a contract of carriage of
goods by sea that:
(b)
is a contract:
…
(iii) contained in or evidenced by a non-negotiable document
(other than a bill of lading or similar document of title),
being a contract that contains express provision to the
effect that the Amended Hague Rules are to govern the
contract as if the document were a bill of lading.
Clause 24 of the voyage charter provided that the charter was subject to a clause
paramount providing for the application of the Hague Rules, Hague/Visby Rules
and other national legislation as mandatorily applicable at the port of shipment or
discharge.62 Foster J held the voyage charter was ‘not a non-negotiable instrument
of the relevant kind’.63 The clause made ‘no mention’ of the Amended Hague
Rules, nor did it ‘suggest that those rules are to govern the charterparty as if it
were a bill of lading’64 as s 10(1)(b)(iii) of the 1991 Actt contemplated.
The decision of Foster J is consistent with a 1990 decision handed down by the
Supreme Court of New South Wales in The Blooming Orchard [No 2].65 In that
case, Carruthers J held that a voyage charter was a ‘document relating to the
carriage of goods’ for the purposes of s 9 of the 1924 Act.66 As a result, the London
arbitration clause it contained was held to be invalid. The ship owners had argued
that a voyage charter was not a document relating to the carriage of goods, but
rather a document relating to the hire of a ship. Carruthers J rejected this argument
and stated that this submission confused a voyage charter with a time charter.67
His Honour went on to state that it would be ‘absurd’ that the protection afforded
62
63
64
65
66
67
Norden (2012) 292 ALR 161, 183 [110]. Foster J appeared to accept DKN’s submission that
s 10(1)(b)(iii) required: ‘(a) the document must be a non-negotiable document; (b) there must be an
“express provision” to the necessary effect; (c) that effect is “that the Amended Hague Rules” are to
govern the contract; and (d) those rules are to govern the contract “as if the contract were a bill of
lading”’: at 185 [122].
Ibid 190 [144] (Foster J).
Ibid.
(1990) 22 NSWLR 273 (Carruthers J).
Ibid 273.
Ibid 278.
[T]he primary difference between a voyage charter and a time charter is that the former is
a contract to carry specified goods on a defi ned voyage or voyages, the remuneration of the
shipowner being a freight calculated according to the quantity of cargo loaded or carried or
sometimes a lump sum freight. A time charter on the other hand is a contract of services by
which the owner makes the ship and crew available to the charterer.
At 278–9.
650
Monash University Law Review (Vol 40, No 3)
by the 1924 Actt would only apply to bills of lading issued pursuant to voyage
charters and not the charter itself.68
D The Narrow Purposive Reading: Norden on Appeal
Norden was subsequently overturned on appeal to the Full Federal Court by a 2:1
majority.69 Rares J (with whom Mansfield J concurred) held that a voyage charter
was not a sea carriage document for the purposes of s 11.70
For Rares J, the meaning of ‘sea carriage documents’ in s 11 ‘must be ascertained
from that Act as a whole, including the [amended] … Hague Rules’.71 While ‘[t]he
task of statutory construction commences with a consideration of the text itself’
that ‘may require the consideration of the context, including the general purpose
and policy of a provision, in particular the mischief it sought to remedy’.72 That
context ‘includes the legislative history and extrinsic materials’ provided they are
not used to ‘displace the clear meaning of the text and that the actual language
used by the legislature’.73
Having established this, his Honour seems to have directed attention to those
rules without having concluded whether the term ‘sea carriage document’ was
capable of more than one expression. For Rares J, the words ‘relating to the
carriage of goods from any place in Australia to any place outside Australia’ in
s 11(1)(a) ‘did not change the intended function of a sea carriage document as a
means of enabling a consignee or holder to use it as evidence of its contractual
or legal right to receive the goods at the port of destination’.74 The port of
loading and discharge were ‘features of a sea carriage document’ to which s 11
applied.75 As the actual text of s 11 did not modify the intended function a ‘sea
carriage document’ referred to in art 3(3) of the Amended Hague Rules the same
interpretation was adopted. 76 This is indicative of the somewhat superpurposive
trend in his Honour’s reasoning.
For Rares J, ‘[o]rdinarily, a voyage charter, like most charterparties, is a contract
for the hire of a ship’ where shipowners agree ‘to perform one or more designated
voyages in return for the payment of freight and, when appropriate, demurrage’.77
Rares J cited a recent decision of the Canadian Federal Court of Appeal in
68
69
70
71
72
73
74
75
76
77
Ibid 281.
Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd (2013) 216 FCR 469 (‘Norden on Appeal’).
Ibid 477 [28].
Ibid 486 [57] (Rares J).
Ibid 485 [55] (Rares J), citing Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (NT)
(2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ).
Norden on Appeal (2013) 216 FCR 469, 485 [55], citing Alcan (NT) Alumina Pty Ltd v Commissioner
of Territory Revenue (NT) (2009) 239 CLR 27, 46–7 [47] (Hayne, Heydon, Crennan and Kiefel JJ);
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd
d (2012) 250 CLR 503, 519 [39]
(French CJ, Hayne, Crennan, Bell and Gageler JJ).
Norden on Appeal (2013) 216 FCR 469, 486 [59] (Rares J).
Ibid.
Ibid.
Ibid 486–7 [60] (Rares J).
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
651
Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa where
Gauthier JA stated:
One can readily see that the imbalance in the bargaining power that is the
mischief that led to the development of the various international regimes
discussed above did not exist in relation to charter-parties. The liner trade
(common carriers operating regular services in certain areas, using the
sea carriage documents covered by the various international regimes)
is simply quite different from the tramp trade (chartered vessels). There
was thus no policy to restrict the freedom to contract of parties to such
agreements.78
Rares J echoed this sentiment, noting that charterparties ‘as an ordinary incident’
of shipping will contain arbitration clauses ‘freely negotiated by sophisticated,
professional parties’ who ‘could bargain at arms length’ for their terms.79 The
‘realities of commercial life and the evident purpose’ of s 11 ‘respect the free
negotiation of charters by commercial parties in the international shipping
trade’.80 In the case of a bill of lading, the ‘shipper will have no substantive say’
and the consignee ‘no say at all, in the terms and conditions in such a document’.81
Section 11 purports to protect those parties from ‘being forced to litigate or
arbitrate, away from Australia’. Its purpose is to
protect, as part of a regime of marine cargo liability within the object of
s 3, the interests of Australian shippers and consignees from being forced
contractually to litigate or arbitrate outside Australia. That purpose does
not extend to protection of charterers or shipowners from the consequences
of enforcement of their freely negotiated charterparties subjecting them to
the well-recognised and usual mechanism of international arbitration in
their chosen venue.82
For Rares J, it was ‘unlikely that’ the ‘Parliament intended that agreements for
international arbitration in voyage or other charterparties would be deprived
of force or effect unless the arbitration occurred in Australia’.83 His Honour
continued:
Had the Parliament intended COGSA to make a sweeping change to the
ways in which arbitration agreements in charterparties operated it would
have needed to say so in clear terms. Section 11 cannot be read as depriving
international arbitration clauses in charterparties made anywhere in the
78
79
80
81
82
83
Ibid, quoting Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa [2012] FCA
284 (26 March 2012) [61].
Norden on Appeal (2013) 216 FCR 469, 489 [66] (Rares J).
Ibid 490 [70] (Rares J).
Ibid. The
statutory analogues enacted at the turn of the 20th century, and later the Hague Rules and
their successors evolved from the Harter Act 1893 (US). Those statutes and international
conventions sought to protect the owners of cargoes from the harsh consequences of the
actions of shipowners and carriers of goods creating virtual contracts of adhesion in bills of
lading, and now sea carriage documents.
Ibid 488–9 [65] (Rares J).
Ibid.
652
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world of force or effect, just because the charter relates to the carriage of
goods from overseas to Australia.84
Article 3 of those rules requires a carrier issue a ‘sea carriage document’ to a
shipper after goods have been delivered. A voyage charter could not be said to be
evidence of the receipt of goods on board by a ship.
Buchanan J dissented.85 While agreeing with the reasoning of the trial judge,
his Honour was more prepared to read the phrase ‘sea carriage document’
consistently with the same phrase in the Amended Hague Rules.86 However, in
contrast to Rares and Mansfield JJ, Buchanan J was prepared to find that the
definition would extend to cover a voyage charter.87
For Buchanan J, it was not a prerequisite of a ‘sea carriage document’ that it be
a document to which the Amended Hague Rules applied.88 Having regard to the
definition in art (1)(g)(iv), Buchanan J went on to characterise the voyage charter
in question as a ‘sea carriage document’ that ‘contains or evidences a contract
of carriage of goods by sea’.89 In deciding this, his Honour made clear that his
conclusion was based on a characterisation of the voyage charter in question,
stating his analysis did
not have the consequence that charterparties generally would be exposed
to the operation of s 11 of COGSA, or that the arbitration clauses they
contain would be rendered ineffective under Australian law. The present
case (on the view I favour) turns on the particular provisions and character
of the charterparty and the fact that it deals directly with the terms on
which freight is to be carried.90
With Rares and Buchanan JJ on opposing sides, Mansfield J delivered the deciding
judgment. For Mansfield J there was ‘obviously an available constructional choice
as selected by the primary judge’.91 However his Honour agreed with Rares J,
84
85
86
87
88
89
90
91
Ibid.
See ibid 506–7 [133]–[134].
Ibid 496–501 [92]–[106]. Cf Norden (2012) 292 ALR 161, 188 [130] (Foster J).
Norden on Appeal (2013) 216 FCR 469, 502 [116], 503 [120].
Ibid 501–2 [107]–[111].
Ibid 502 [116].
Ibid 503 [118]. Referring to clauses 1 and 2 of the voyage charter. Clause 1 ‘Loading Port(s)/
Discharging Port(s)’ provided
[t]hat the said Vessel being tight, staunch and strong, and in every way fit for the voyage,
shall, with all convenient speed, proceed to … Dalrymple Bay Coal Terminal, Australia
and there load, always afloat, and in the customary manner from the Charterers, in such
safe berth as they shall direct, a full and complete cargo Of [sic] coal 68,000 tons of …
1000 kilos 10 % more or less in the Owners’ option; and being so loaded, shall therefrom
proceed, with all convenient speed, to [China]. … and there deliver her cargo, as ordered by
the Charterers, where she can safely deliver it, always afloat, on having been paid freight at
the rate of 17.00 US$ per ton of … 1000 kilos, free in and out spout trimmed, basis 1 port
load, 2 port discharge, on bill of lading quantity.
Clause 2 ‘Freight Payment’ provided that ‘[t]he FREIGHT shall be paid in Denmark in free transferable
US currency into the following account designated by carriers. Payment to be effected within 3 New
York banking days after signing/releasing Bills of Lading, marked FREIGHT PAYABLE AS PER
C/P’: at 503 [119] (emphasis altered).
Ibid 474–5 [15].
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
653
giving the necessary majority to uphold the appeal. 92 He was in general agreement
that the ‘better approach’ was to conclude that a charter party was not a sea
carriage document.93 Mansfield J’s reasoning echoed that of Rares J considering
the context of the 1991 Act and the widespread acceptance of arbitration as a
method of resolving charter party disputes.94 Further, his Honour noted a voyage
charter party as being ‘a contract for the hire of a ship’ and ‘distinct from a
contract for the carriage of goods by sea’.95
The decision and judgment of the majority of the Full Court has attracted support
from commentators emphasising the importance of arbitration to the shipping
community.96 For Ashwin Nair, the first instance judgment in Norden ‘risked
Australia’s legislative environment being perceived as hostile to international
arbitration’ and the appeal decision ‘dispels such a perception’.97
III
THE OPERATION OF SECTION 11
A
Which Agreements are Affected?
Once enlivened, s 11 renders ineffective any agreement purporting to preclude
or limit the jurisdiction of an Australian court in respect of the sea carriage
document; and the application of the laws in place at the place of shipment, as
mandated by s 11(1) of the 1991 Act, where the sea carriage document relates to
the shipment of goods from Australia.98
Section 11 does not confer jurisdiction on Australian courts. Rather, it acts as a
mandatory rule preventing the court’s existing jurisdiction from being ousted.
It follows that it is necessary to demonstrate that an Australian court does have
jurisdiction in respect of the sea carriage document before asking whether it
92
93
94
95
96
97
98
Ibid 471 [4].
Ibid 472–5 [14]–[15].
Ibid 474–6 [15]–[20].
Ibid 474–5 [15]. Cf Buchanan J at 494–5 [90], 501 [110], 502 [116], 504 [124]–[125].
See, eg, Patricia Saraceni, ‘Recent Cases: When Is a Voyage Charter Party Not a “Sea Carriage
d [2013] FCAFC 107’ (2013)
Document”? Dampskibsselskabet Nordon A/S v Gladstone Civil Pty Ltd
87 Australian Law Journall 744, 747; Ashwin Nair, ‘A Note on Norden: Voyage Charterparties, the
Hague/Visby Rules and Enforcing Foreign Arbitral Awards’ (2013) 27 Australian and New Zealand
Maritime Law Journall 90, 99.
Nair, above n 96, 99. For example, the potential wide ranging reach of the Insurance Contracts
Act 1984 (Cth) and the Trade Practices Act 1974 (Cth) (now the Competition and Consumer Act
2010 (Cth)) have, in addition to curial decisions such as that in Australian Granites Ltd v Eisenwerk
Hensel Bayreuth Dipl-Ing Burkhardt Gmbh [2001] 1 QD R 461, given Australia a reputation for being
arbitration unfriendly. See Kate Lewins, ‘Maritime Law and the TPA as a “Mandatory Statute” in
Australia and England: Confusion and Consternation’ (2008) 36 Australian Business Law Review
78; Akai Pty Ltd v The People’s Insurance Co Ltd
d (1996) 188 CLR 418 (‘‘Akai’). See also Rizhao Steel
Holding Group Co Ltd v Koolan Iron Ore Pty Ltd
d (2012) 43 WAR 91 (‘Rizhao’). In BHPB Freight
Pty Ltd v Cosco Oceania Chartering Pty Ltd
d (2008) 168 FCR 169 (‘BHPB’) a London arbitrator
continued with proceedings despite the granting of an anti-suit injunction by an Australian court.
The injunction was made to protect the jurisdiction of Australian courts to determine disputes arising
under the Trade Practices Act 1974 (Cth). Finkelstein J of the Federal Court of Australia was not
impressed, warning the arbitrator that ‘he may be in for a rude shock were he to fi nd himself subject
to the personal jurisdiction of the Federal Court’: BHPB (2008) 168 FCR 169, 173–4 [6].
Rail Equipment Leasing Pty Ltd v CV Scheepvaartonderneming Emmagrachtt [2008] NSWSC 850 (18
August 2008) [18] (Rein J).
654
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may be ousted. Australian courts are required to determine whether they have
both subject matter jurisdiction to decide the substantive issues in dispute, and
personal jurisdiction over the parties to the dispute.99 Personal jurisdiction over
a foreign defendant is governed by the rules of court regarding service out of the
jurisdiction.100
Where a sea carriage document concerns the outward-bound international
carriage of goods, s 11 requires that a court ignore any express choice of foreign
law and mandates an intention of the parties ‘to contract according to the laws
in force at the place of shipment’.101 The imputed choice of Australian law would
appear sufficient to justify service out of the jurisdiction. An action concerning
the inward-bound international carriage of goods appears to be more complicated.
Section 11 does not prevent the contract for the carriage of those goods being
subject to some foreign law, including any system of law that the parties have
themselves selected. In those circumstances, the plaintiff will generally have to
rely upon some other factor connecting their claim with Australia in order to
secure jurisdiction.102 The jurisdiction of an Australia court may be protested
where there is not the requisite connection required by the rules of court between
the claim and Australia or the state in which the proceeding is commenced
to authorise the service out of the court’s process on the foreign defendant.103
Further, the doctrine off forum non conveniens104 provides Australian courts with
a discretion to stay proceedings which are otherwise within their jurisdiction but
where that court is a ‘clearly inappropriate forum’ to hear the dispute.105 However,
this strict test poses an uphill battle for any party seeking a stay of proceedings
on these grounds. While a stay may be easier to obtain where proceedings have
already commenced in an foreign forum,106 the protection afforded by the 1991
Actt will act as a significant factor weighing against a stay, particularly if the 1991
Actt will not be applied in a foreign forum.107
99
100
101
102
103
104
105
106
107
Subject matter jurisdiction is decided by looking at statutes conferring jurisdiction upon a court. In
contrast, personal jurisdiction is determined by asking whether the party bringing proceedings is
able to effect service of originating process on a proposed defendant: Drew James, ‘Cargo Claims in
Australia; Establishing Jurisdiction’ (1995) 11 Australian and New Zealand Maritime Law Journal
23, 24.
See, eg, Federal Court Rules 2011 (Cth) r 10.42; Rules of the Supreme Court 1971 (WA) O 10 r 1.
1991 Act ss 11(1)–(2)(a).
Such as where the damage claimed was suffered in Australia as a result of a tortious act (see Heilbrunn
v Lightwood PLC
C [2007] FCA 433 (28 March 2007)) or there having been an alleged breach of the
contract of carriage within Australia, following the delivery of the damaged cargo there (see Omega
Tankers & Trailers Pty Ltd v East-West Air Services Co Ltd [2009] FCA 648 (15 May 2009) [10]).
A failure may be fatal to the proceedings: Rules of the Supreme Court 1971 (WA) O 10; ANZ Grindlays
Bank PLC v Fattah (1991) 4 WAR 296.
Voth v Manildra Flour Mills Pty Ltd
d (1990) 171 CLR 538, 564 (‘Voth’).
Ibid 565. Cf Spiliada Maritime Co v Cansulex Ltdd [1987] AC 460, 477–8.
See, eg, Oceanic Sun Line Special Shipping Co Inc v Fay (1988) 165 CLR 197; Henry v Henry (1996)
185 CLR 571.
As a result of Voth, a plaintiff can ‘more easily rebuff’ an application, asserting it would be at a
‘juridical disadvantage’ by litigating abroad: Lewins, ‘Maritime Law and the TPA’, above n 97, 82–3.
See also Richard Garnett, ‘Stay of Proceedings in Australia: A “Clearly Inappropriate” Test?’ (1999)
23 Melbourne University Law Review 30, 46–8.
Choice of Law and Forum Clauses in Shipping Documents — Revising Section 11 of the
Carriage of Goods by Sea Act 1991 (Cth)
B
1
655
Recognition and Application of Section 11
In Australian Courts
Australian courts have held that in order for s 11 to be effective and to prevent
parties to a contract from avoiding its operation, it must apply regardless of the
applicable law.108 The Parliament, in enacting s 11, has displaced the default rules
relating to private international law.109 Where s 11 applies, a claimant may bring
an action in an Australian court, where they would otherwise be prevented from
doing so, due to a choice of forum clause in the contract.110 In this respect, s 11
is a mandatory rule of the forum.111 Mandatory rules are municipal laws that
demand application in a particular forum.112 A court subject to such laws has no
choice but to apply them, ‘irrespective of the parties’ contractual choice’.113 This
applies even where the forum would otherwise apply the law of another state to
resolve the dispute.114 They displace the traditionally accepted principles relating
to choice of law analysis.115 Mandatory rules vary in form and can impact on any
of the stages of resolution of international disputes.116
In Comandate Marine Corp v Pan Australia Shipping Pty Ltd,117 the Full Court of
the Federal Court considered whether a claimant could avoid a London arbitration
agreement by bringing an action in Australian courts pursuant to the Trade
Practices Act 1974 (Cth). The arbitration agreement in question was contained
108 Mary Keyes notes there ‘are very few cases’ in which s 11 is relied upon. However, when it does
arise, ‘courts always retain jurisdiction in accordance with [the] statutory direction’: Mary Keyes,
Jurisdiction in International Litigation (Federation Press, 2005) 125, citing Hi-Fert (1998) 89 FCR
166; Hi-Fert Pty Ltd v Kiukiang Maritime Carriers Inc [No 5] (1998) 90 FCR 1. See also Kate
Lewins, The Trade Practices Act (Cth) 1974 and Its Impact on Maritime Law in Australia (PhD
Thesis, Murdoch University, 2005) 5.
109 Davies, Bell and Brereton, above n 22, 403 [19.42].
110 Peter Nygh, Autonomy in International Contracts (Clarendon Press Oxford, 1999) 230; Reid
Mortensen, Richard Garnett and Mary Keyes, Private International Law in Australia (LexisNexis
Butterworths, 2ndd ed, 2011) 444–5 [17.12].
111 Lewins, ‘Maritime Law and the TPA’, above n 97. Lewins noting ‘Parliament has attempted to
enshrine the mandatory status’ of such rules using ‘provisions designed to overcome attempts to
avoid them’: at 79. See also Wilson (1954) 94 CLR 577, 585 (Fullagar J); Richard Garnett, ‘The Hague
Choice of Court Convention: Magnum Opus or Much Ado About Nothing?’ (2009) 5 Journal of
Private International Law 161, 166.
112 Lewins, ‘Maritime Law and the TPA’, above n 97. Mandatory rules ‘need not be encapsulated in
statutes, but they are increasingly so. Statutes intended to be of mandatory status usually indicate
their intent to take effect regardless of the proper law of the contract’: at 95.
113 Davies, Bell and Brereton, above n 22, 402 [19.40].
114 Peter Megens and Max Bonnell, ‘The Bakun Dispute: Mandatory National Laws in International
Arbitration’ (2007) 81 Australian Law Journall 259. ‘There has been a reluctance on the part of
many arbitrators to apply the notion of mandatory national laws to arbitrations, because they have
considered themselves bound to give effect to the expressed intentions of the parties’: at 262.
115 Lewins, ‘Maritime Law and the TPA’, above n 97, 95; Michael J Whincop and Mary Keyes, Policy
and Pragmatism in the Conflict of Laws (Ashgate Publishing Company, 2001) 52.
116 Andrew Barraclough and Jeff Waincymer, ‘Mandatory Rules of Law in International Commercial
Arbitration’ (2005) 6 Melbourne Journal of International Law 205: ‘They can be either procedural,
for example requiring due process, or substantive, such as certain tax, competition and import/
export laws. Unsurprisingly, it is the application of substantive mandatory rules that creates the most
controversy’: at 206.
117 (2006) 157 FCR 45 (‘The Comandate’), on appeal from Pan Australia Shipping Pty Ltd v Ship
“Comandate” [No 2] (2006) 234 ALR 483 (Rares J) (‘The Comandate [No 2]’).
656
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in a New York Produce Exchange standard form time charter. For Allsop J, the
policy underlying the enactment of the New York Convention118 in Australia was
of assistance in reconciling the International Arbitration Act 1974 (Cth) ‘with
another statute exhibiting important public policy’.119 To limit the arbitrability
of a claim on the basis that it may not provide the same remedy as courts of
a particular country would undermine the New York Convention by infringing
on the autonomy of the parties recognised by the New York Convention in the
scope of the arbitration agreement.120 There was ‘nothing inimical to Australian
public policy’ or the Australian statute in allowing commercial parties to agree
to resolve disputes in London under English law.121 His Honour added that having
freely entered a bargain to resolve their disputes in London [there were] …
powerful discretionary reasons why [the] … arbitration agreement should
be enforced, even if the contractually chosen venue and law [gave] …
rights not entirely the same as would arise under [Australian law. Where]
Australian commercial parties desire Australian dispute resolution clauses
they should bargain for them.122
It was for the arbitrator to determine, applying the relevant principles of conflict
of laws, whether the Australian statute would be applied.123
2
By Foreign Courts and Arbitral Tribunals
A valid and binding arbitration agreement is an essential precondition to the
arbitration of a dispute. However, the question of validity varies between
jurisdictions. The prevailing approach is that the question of validity of an
arbitration agreement is a question to be determined according to the governing
law of the contract.124 Following this approach, an arbitral tribunal seated in a
foreign jurisdiction will determine the validity of an arbitration agreement
according to their own laws and will not be bound to apply the mandatory laws
of Australia to resolve the question. As a result, a foreign court, not bound by the
mandate of the Australian legislature, may not give efficacy to s 11 of the 1991
118 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature 10
June 1958, 330 UNTS 3 (entered into force 7 June 1959) (‘New York Convention’).
119 The Comandate (2006) 157 FCR 45, 94 [191]. The charterer sought damages pursuant to s 82 of the
Trade Practices Act 1974 (Cth), alleging that representations made by a shipbroker amounted to
misleading or deceptive conduct. See also Peter Megens and Beth Cubitt, ‘Australian Case Report:
Comandate Marine Corp v Pan Australia Shipping Pty Ltd’ (2009) 5 Asian International Arbitration
Journall 95.
120 The Comandate (2006) 157 FCR 45, 106–7 [237]. Allsop J noted that it would be ‘antithetical’ to the
New York Convention to ‘limit the reference to arbitration to those parts of the differences of the
parties that would be dealt with in the same way in the arbitration as they would be in the national
court in which proceedings have been begun’.
121 Ibid 107–8 [240].
122 Ibid 109–10 [249].
123 Ibid. ‘It is not for this Court to pre-empt that decision’: at 108 [241], citing with approval Francis
Travel Marketing Pty Ltd v Virgin Atlantic Airways Ltd
d (1996) 39 NSWLR 160, 167 (Gleeson CJ).
124 See, eg, Sumitomo Heavy Industries v Oil and Natural Gas Commission [1994] 1 Lloyd’s Rep 45.
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Actt where, in its view, Australian law is not the governing law of the contract.125
In 2004, Davies and Dickey expressed with some confidence that s 11(2) would
meet a fate similar to that encountered by s 8(2) of the Insurance Contracts Act
1984 (Cth) in the Akai saga.126 In that infamous set of cases, the English High
Court upheld an English choice of law clause in an insurance contract,127 despite
a previous finding by the High Court of Australia that the clause was invalid
pursuant to the Commonwealth statute.128
Section 9 of the 1924 Actt was recognised in English proceedings in the case
of the The Amazonia.129 That case concerned a voyage charter containing an
agreement to arbitrate in London pursuant to English Law. However, the voyage
charter also expressly provided that it was subject to the provisions of the 1924
Act. Gatehouse J held that the arbitration agreement was invalid as the parties
had expressly agreed that the 1924 Actt (which included s 9) should be applied.130
Despite this, Gatehouse J held that the conduct of the parties in referring their
dispute to London arbitration (albeit on the mistaken belief that the arbitration
agreement was valid) had amounted to an ad hoc agreement to refer their disputes
to London arbitration.131 Gatehouse J concluded that proper law of the ad hoc
agreement was English law.132 The determinative factor was that London was the
place of performance of the ad hoc arbitration and consequently English law had
the closest and most real connection to the ad hoc agreement.133 Having decided
that English law was the proper law of the arbitration ‘no question of illegality’
arose as the 1924 Actt including s 9 no longer applied.134
C
The Status of Arbitration
The validity of an arbitration agreement providing for arbitration to take place in
Australia was questioned in The Krasnogrosk,135 when Sheller JA suggested that
such agreements may also be invalid in light of s 11 of the 1991 Actt in the terms in
which it was originally enacted.136 In The Krasnogrosk,137 the New South Wales
Court of Appeal considered a situation where the appellant, having agreed to an
ad hoc arbitration in Sydney pursuant to the law of New South Wales, and having
125 Mo, ‘The Duty to Obey’, above n 26, 300: it ‘must be pointed out that, as we have seen, such expected
advantage is largely dependent on the operation of rules of conflict of laws adopted by the court
exercising the jurisdiction’. See also The Amazonia [1990] 1 Lloyd’s Rep 236; Nygh, above n 110, 230.
126 See Martin Davies and Anthony Dickey, Shipping Law (Thompson Reuters, 3rdd ed, 2004); Akai Pty
Ltd v The People’s Insurance Co Ltdd [1998] 1 Lloyd’s Rep 90; Akai (1996) 188 CLR 418.
127 See Akai Pty Ltd v The People’s Insurance Co Ltdd [1998] 1 Lloyd’s Rep 90.
128 See Akai (1996) 188 CLR 418.
129 [1989] 1 Lloyd’s Rep 403. The decision was upheld on appeal: The Amazonia [1990] 1 Lloyd’s Rep
236, 244–5 (Staughton LJ), 247–8 (Mann LJ), 248–9 (Dillon LJ).
130 The Amazonia [1989] 1 Lloyd’s Rep 403, 406; Michael C Pryles, ‘Legal Issues Concerning
International Arbitrations’ (1990) 64 Australian Law Journal 470, 472.
131 The Amazonia [1989] 1 Lloyd’s Rep 403, 407–8.
132 Ibid 408–9.
133 Ibid.
134 Ibid.
135 The Krasnogrosk (1993) 31 NSWLR 18.
136 See ibid 43 (Sheller JA).
137 See generally ibid.
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participated in the arbitration, then sought to challenge the enforcement of the
resultant award before the courts of New South Wales. The appellants contended
that the arbitral award was invalid as it was made pursuant to an arbitration
agreement rendered invalid pursuant to s 9 of the 1924 Act. Handley and Sheller
JJA upheld the validity of the award, holding that s 9 did not invalidate arbitral
awards, even if made pursuant to an ineffective arbitration agreement.138 Kirby P,
in a dissenting judgment, stated that s 9 left little room to prevent the litigation of
a dispute by a party unsatisfied with the decision of an arbitral tribunal.139 Despite
his finding, Kirby P empathised with the position taken by the rest of the court,
noting that
it … [was] understandable that a decision-maker, approaching the present
case, would react with distaste to the arguments which the appellant
advances. Having agreed to submit … [the dispute to arbitration, the
appellant] now seeks to reject the arbitrator’s decision; to have the
agreement to arbitrate (and the award which followed) declared void by
statute; and to recontest the debt in the Federal Court of Australia.140
His Honour added: ‘If I were deciding this case upon an inherent sense of justice,
fairness or propriety, I would have no hesitation in upholding [the trial judge’s
decision by] dismissing the appeal’.141
This concern led to the insertion of s 11(3) into the 1991 Actt by the 1997
Amendment Act. Section 11(3) provides that an arbitration agreement is not made
ineffective by s 11 if under the agreement, ‘the arbitration must be conducted in
Australia’.142 The amendment was designed to shield maritime arbitrations taking
place in Australia from the operation of s 11.143
Despite this amendment, the status of arbitration in Australia is still in doubt. The
physical location of an arbitral tribunal is considered distinct from its juridical
‘seat’.144 The seat determines which municipal courts have supervisory jurisdiction
over the arbitration.145 In most cases, the choice of seat is indicated by the country
chosen as the place of the arbitration. Despite this, the parties are still able to
138 Ibid 28 (Handley JA), 42–3 (Sheller JA). The ‘majority’s decision in The Krasnogroskk arguably
represents a judicial effort to fill in a gap left by the legislators in law’: Mo, ‘The Duty to Obey’,
above n 26, 299.
139 The Krasnogrosk (1993) 31 NSWLR 18, 25–6 (Kirby P); Mo, ‘The Duty to Obey’, above n 26, 300.
140 The Krasnogrosk (1993) 31 NSWLR 18, 25–6 (Kirby P).
141 Ibid. See, also, Allsop J in Walter Rau Neusser Oel Und Fett AG v Cross Pacific Trading Ltd
d [2005]
FCA 1102 (15 August 2005) [68]–[69].
142 1991 Act (Cth) s 11(3). Explanatory Memorandum, Carriage of Goods by Sea Amendment Bill 1997
(Cth) item 8 (‘Arbitration’): ‘Item 8 adds sub-s 11(3) which makes clear that an arbitration in Australia
does not offend section 11 ... an agreement is of no effect which purports to preclude or limit the
jurisdiction of a court of the Commonwealth’ of Australia.
143 Fabrizio Marrella, ‘Unity and Diversity in International Arbitration: The Case of Maritime
Arbitration’ (2005) 20 American University International Law Review 1055, 1074–5.
144 Rizhao (2012) 43 WAR 91, 128 [167] (Murphy JA), citing Raguz v Sullivan (2000) 50 NSWLR 236,
254–7 [90]–[103], 259 [122].
145 Sir Lawrence Collins (ed), Dicey, Morris & Collins on the Conflict of Laws (Sweet & Maxwell,
14th ed, 2006) vol 1. ‘The legal “seat” must not be confused with the geographically convenient
place chosen to conduct particular hearings. The courts of the seat … have the sole supervisory and
primary supportive function in relation to the conduct of the arbitration’: at 724–5 [16-035]–[16-036]
(citations omitted).
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agree on a seat that is different to the physical place of the arbitral tribunal.146
Section 11(3) does not appear to distinguish between these two concepts. It is
unclear whether an arbitration agreement that nominates Australia as the place
of the arbitration but selects a different jurisdiction as its seat would be invalid.147
This question goes unanswered and contributes to the uncertainty plaguing s 11.
D Remedies, Recognition and Enforcement
Curial and arbitral disputes take place in pursuance by a party of one thing
— remedies. Without a remedy, a cause of action is meaningless.148 A remedy
burdened by costs and lost time is little better. Sun Tzu’s Art of Warr cautions
against waging war unless thoroughly acquainted with its evils.149 The
resolution of international contract disputes requires a similar acquaintance.150
In determining whether to bring an action, a claimant should consider whether
any potential judgment or award will be recognised by the jurisdictions in which
enforcement is sought — namely, where the judgment or award debtor’s assets are
located. In 2005, John Mo warned:
Although the foreign carrier is able to sue the Australian shipper in her or
his own country, he or she is not able to enforce the judgment in Australia,
because an Australian court will probably refuse to enforce this judgment
on the ground of contravention to Australian law, in particular, s 11.151
Recognition and enforcement of foreign judgments is a question for the conflict
of law rules as applicable in each jurisdiction.152 In Australia, recognition and
enforcement of foreign court judgments is governed by the Foreign Judgments
Act 1991 (Cth). This statute sets out a number of substantive requirements and
procedural steps that must be followed, in addition to the grounds on which
recognition and enforcement may be resisted. They include where a foreign court
lacks jurisdiction and where enforcement would be contrary to public policy.153
146 See the discussion of The Bay Hotel v Cavalier Construction Co Ltd
d [2001] All ER (D) 229 (Jul)
in Kanaga Dharmananda, ‘The Unconscious Choice: Reflections on Determining the Lex Arbitri’
(2002) 19 Journal of International Arbitration 151.
147 Davies and Dickey, above n 126, 281 (citations omitted): ‘[T]he rules of the London Maritime
Arbitrators Association (LMAA) provide that arbitrations may be conducted without a hearing if the
parties so agree, so it is quite possible to conduct a London arbitration “on the documents” entirely
from Australia’.
148 Baughen, above n 23, 357.
149 The Art of War by Sun Tzu (translated by Lionel Giles) <http://classics.mit.edu/Tzu/artwar.html>.
150 Antonin Pribetic, ‘The “Trial Warrior”: Applying Sun Tzu’s The Art of Warr to Trial Advocacy’ (2008)
45 Alberta Law Review 1017, 1026, 1035; Lewins, The Trade Practices Act (Cth) 1974 and Its Impact
on Maritime Law in Australia, above n 108, 6–7.
151 Mo, ‘The Duty to Obey’, above n 26, 300.
152 See, eg, Foreign Judgments Act 1991 (Cth) s 7(2)(a)(xi); Civil Jurisdiction and Judgments Actt 1982
(UK) c 27, s 32.
153 Foreign Judgments Act 1991 (Cth) ss 7(2)(a)(iv), (2)(a)(xi).
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The broad adoption of the New York Convention means a more uniform approach
is taken to the recognition and enforcement of arbitral awards.154 The New York
Convention is regarded as being ‘the high water mark of co-operation and
uniformity between countries … and also the high water mark of upholding
party choice’.155 The International Arbitration Act 1974 (Cth) reflects the proenforcement bias of the New York Convention.156 Its objects include ‘facilitat[ing]
… international trade and commerce by encouraging the use of [international]
arbitration’.157 Section 7 of the International Arbitration Act 1974 (Cth) requires
Australian courts recognise and enforce foreign arbitral awards as if they were a
judgment of court.158 Enforcement of an award may only be refused pursuant to
the grounds as set out in s 8 of that Act.159 They include where:
1.
the subject matter of the dispute is not capable of settlement by
arbitration under its laws; or
2.
it would be contrary to its public policy.160
In addition, before a court exercises its power to refuse enforcement of a foreign
arbitral award, s 39 states that the court must consider the objects of the Act, and
the ‘fact’ that ‘(i) arbitration is an efficient, impartial, enforceable and timely
method by which to resolve commercial disputes; and (ii) [that arbitral] awards
are intended to provide certainty and finality’.161
However, recourse to the public policy exception may be unnecessary. Section
2C of the International Arbitration Act 1974 (Cth) provides that ‘nothing in this
Act affects the continued operation’ of s 11 of the 1991 Act.162 In Norden, Foster
J stated that the terms of s 2C provide a ‘carve out’ from the operation of the
International Arbitration Act 1974 (Cth) for maritime claims covered by s 11 of
154 Richard J Howarth, ‘Lex Mercatoria: Can General Principles of Law Govern International
Commercial Contracts’ (2004) 10 Canterbury Law Review 36, 50; Michael Pryles, ‘Choice of Law
Issues in International Arbitration’ (1997) 15 Arbitrator 260, 262: The Convention ‘has done more
than any other development to promote and establish the … effectiveness … of arbitration’.
155 Lewins, ‘Maritime Law and the TPA’, above n 97, 116.
156 Garnett, ‘The Hague Choice of Court Convention’, above n 111, 171, citing The Comandate (2006)
157 FCR 45 (Allsop J).
157 International Arbitration Act 1974 (Cth) s 2D(a).
158 Section 3(1) of the International Arbitration Act 1974 (Cth) defines a ‘foreign award’ as ‘an arbitral
award made, in pursuance of an arbitration agreement, in a country other than Australia, being an
arbitral award in relation to which the Convention applies’.
159 Pryles, ‘Legal Issues Concerning International Arbitrations’, above n 130, 487.
160 Section 8 of the International Arbitration Act 1974 (Cth) reflects art V of the New York Convention.
See Garnett, ‘The Hague Choice of Court Convention’, above n 111, 166. Broad public policy
arguments have been used by Australian courts to defeat foreign choice forum. The arguments rely
on mandatory statutes in an ‘expansive way’. Plaintiffs are able to ‘argue [they] would be denied
justice’ if the choice of forum clause was enforced: at 166. See also Duncan Miller, ‘Public Policy in
International Commercial Arbitrations in Australia’ (1993) 9 Arbitration International 167; Georgios
I Zekos, International Commercial and Maritime Arbitration (Routledge-Cavendish, 2008) 45.
161 International Arbitration Act 1974 (Cth) ss 39(2)(b)(i)–(ii). See also Altain Khuder LLC v IMC Mining
Inc (2011) 276 ALR 733, 746 [38] (Croft J) (‘Altain
‘
Khuder’).
162 See Davies, Bell and Bereton, above n 22, 134–5 [7.18].
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the 1991 Act.163 Where s 11 is invoked, s 2C operates to prevent enforcement of
foreign arbitral awards.164
It is submitted that interaction between s 11 of the 1991 Act and the International
Arbitration Act 1974 (Cth) should be governed by the provisions of the International
Arbitration Act 1974 (Cth) (with the exception of s 2C).165 Enforcement of a
foreign arbitral award may still be refused as contrary to Australian public policy.
However, as the power to resist enforcement of an award is subject to s 39 of
the International Arbitration Act 1974 (Cth), it would allow a court to balance
the operation of s 11 with pro-enforcement bias of the New York Convention.166
Further, given s 11 may not be recognised abroad, it is doubtful whether a foreign
court will ‘enforce the judgment of an Australian court merely because s 11
declares Australian law to be the governing law’.167
Where it applies, s 11 may permit parties to participate without protest in a
foreign arbitration and if unsatisfied with the outcome, recontest the dispute
in Australia through reliance on s 11.168 Questions relating to whether a party
may be estopped from relying on s 11 remain unanswered.169 In recent years two
contrasting approaches to this issue have emerged.
In a 2011 decision, Croft J of the Supreme Court of Victoria adopted recent
English authority to the effect that questions relating to the ‘existence or scope
of the arbitrator’s jurisdiction’ are questions for the courts and law ‘of the place
designated as the seat of the arbitration’.170 The decision involved an application
to enforce an award handed down by an arbitral tribunal seated in Mongolia. The
award debtor sought to resist enforcement by arguing that as they were not a party
to the arbitration agreement, the award would be rendered unenforceable through
the operation of s 8 of the International Arbitration Act 1974 (Cth). Croft J held
that the debtor was not entitled to resist enforcement of the award in Australia as
the arbitration agreement was valid under Mongolian law and having participated
in the arbitration the award debtor was estopped from arguing that they were
163 (2012) 292 ALR 161, 190 [146] (Foster J). See also Hi-Fert (1998) 89 FCR 166, 184 (Emmett J):
‘Section 2C of that Act also provides that nothing in the Act affects the operation’ of s 11. Since the
arbitration agreement was invalid, it was unnecessary to determine a public policy argument based
on s 7(5).
164 Norden (2012) 292 ALR 161, 190 [146] (Foster J). As a result of s 2C ‘neither Award can be enforced
in Australia under the Act’. See also Hi-Fert (1998) 89 FCR 166, 184 (Emmett J).
165 See generally The Comandate (2006) 157 FCR 45, 106–7 [237] (Allsop J).
166 Altain Khuder (2011) 276 ALR 733, 762 [64] (Croft J).
167 Mo, ‘The Duty to Obey’, above n 26, 300–1.
168 Altain Khuder (2011) 276 ALR 733, 766–7 [69] (Croft J): ‘[T]he utility of international arbitration
would be diminished markedly as a result of the cost and delay [generated by] repetition of the
arbitration proceedings again before an enforcing court’. It would ‘be intolerable if the law …
[required] an award creditor … relitigate matters which were the subject of the arbitration; possibly
many times and in a multiplicity of courts, and with the possibility of inconsistent fi ndings’.
169 Hi-Fert (1998) 89 FCR 166, 195 (Emmett J): It was not necessary ‘to consider the question of whether
s 11 applies to an ad hoc submission to arbitration. That appears to me to be a matter that is not
without difficulty and since it is not necessary for me to resolve it, I do not propose to attempt to do
so’.
170 Altain Khuder (2011) 276 ALR 733, 764 [67], quoting C v D [2008] 1 All ER (Comm) 1001, 1009 [17],
quoting A v B [No 2] [2007] 1 All ER (Comm) 591, 617–18 [111]. See also Karen Maxwell, ‘British
Arbitration Law’ [2012] International Maritime & Commercial Law Yearbook 2012 18; Shashoua v
Sharma [2009] 2 All ER (Comm) 477, 483–5 [23]–[29] (Cooke J).
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not party to the arbitration agreement as a basis for resisting enforcement of the
award in Australia.171
The decision of Croft J was overturned on appeal.172 The Court of Appeal does
not appear to have explicitly rejected the application of the law of the seat to
the validity of the award. However, the application of s 8 of the International
Arbitration Act 1974 (Cth) meant that the arbitration agreement did not extend
to the award debtor and thus the award could not be enforced.173 Despite this,
Warren CJ found that nothing in the International Arbitration Act 1974 (Cth)
suggested it intended to exclude the application estoppel.174 Gregory Nell notes
some commentators have criticised the judgment as hostile to arbitration.175
However, he also observes that ultimately the findings of the Court of Appeal
turned on the facts of case and that in this regard, the ‘judgment and findings of
the majority are of limited utility for future purposes’.176
Foster J considered the question of estoppel in Coeclerici Asia (PTE) Ltd v
Gujarat NRE Coke Limited.177 In that case the award debtor had previously applied
to the English High Court to have the award set aside on the basis reasonable
opportunity to be heard and that there had been a serious irregularity.178 The
award debtor then sought to resist enforcement of the award in Australia arguing
they were not provided with a reasonable opportunity to present their case before
the arbitral tribunal and that there was a breach of the rules of natural justice.
Foster J found the question of natural justice had been determined by the English
High Court and could not be re-litigated.179 Even if issue estoppel could not
be established it would, generally speaking, be inappropriate for enforcement
court of a New York Convention country to form a different conclusion on the
same issue is that reached by a court of the seat of arbitration. The decision was
appealed unsuccessfully to the Full Court of the Federal Court.180 In a unanimous
judgment the appellate court upheld the decision of the trial judge.181
E
The Potential for Parallel Proceedings
According to the doctrine of forum non conveniens, the existence of parallel
proceedings appears to be one of the few circumstances justifying a stay of
171
172
173
174
175
176
177
178
179
180
181
Altain Khuder (2011) 276 ALR 733, 782–3 [98].
See IMC Aviation Solutions Pty Ltd v Altain Khuder LLC (2011) 38 VR 303.
Ibid 315 [42] (Warren CJ).
See Gregory Nell, ‘Recent Developments in the Enforcement of Foreign Arbitral Awards in Australia’
(2012) 26 Australian and New Zealand Maritime Law Journal 24, 56–7:
In this regard, her Honour recognised that an award debtor’s conduct in respect of the
arbitration proceeding and any relevant proceedings brought before the courts having
supervisory jurisdiction over the arbitration may give rise to an issue estoppel, estoppel by
convention or some other established category of estoppel.
Ibid 67.
Ibid 49.
[2013] FCA 882 (30 August 2013).
See Gujarat NRE Coke Limited v Coeclerici Asia (PTE) Ltd [2013] All ER (D) 137 (Jul).
Coeclerici Asia (PTE) Ltd v Gujarat NRE Coke Limited
d [2013] FCA 882 (30 August 2013) [102].
See Gujarat NRE Coke Limited v Coeclerici Asia (PTE) Ltd (2013) 304 ALR 468.
Ibid 486–7 [65]–[67] (Allsop CJ, Besanko and Middleton JJ).
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663
Australian proceedings.182 The High Court of Australia has recognised that where
proceedings have already been commenced in another jurisdiction, it would be
prima facie vexatious and oppressive to have the same controversy litigated in
Australia.183 In such a situation, an Australian court may exercise its discretion
to stay the proceedings before it in favour of the other forum in which similar
proceedings are also pending.184 Section 11 of the 1991 Actt appears to remove
this discretion. Where it applies, Australian courts are required to give effect
to the overriding mandatory rules of the forum. By rendering foreign choice of
forum clauses ineffective, s 11 prevents Australian courts from recognising the
jurisdiction of foreign courts and tribunals. There is clearly a significant risk of
a jurisdictional stalemate arising where s 11 is not recognised by foreign courts
and arbitral tribunals.185 The consequence of this is that the resolution of a dispute
becomes impractical, leaving a cargo claimant without redress.
Such a stalemate occurred in the Magic Sportswear186 saga. Relying on s 46
of the Canadian Marine Liability Act, SC 2001, c 6, cargo claimants instituted
proceedings in Canada in defiance of an English exclusive jurisdiction clause.187
In response, an English court issued an ‘anti-suit injunction’ purporting to
prohibit continuance of the Canadian proceedings.188 The injunction was upheld
by the English Court of Appeal who, relying on Akai Pty Ltd v The People’s
182 Despite the seemingly insurmountable hurdle provided in Voth (1990) 171 CLR 538.
183 Henry v Henry (1996) 185 CLR 571, 592–3 (Dawson, Gaudron, McHugh and Gummow JJ); CSR Ltd
v Cigna Insurance Australia Ltd
d (1997) 189 CLR 345, 390 –1 (Dawson, Toohey, Gaudron, McHugh,
Gummow and Kirby JJ).
184 Voth (1990) 171 CLR 538, 564 (Mason CJ, Deane, Dawson and Gaudron JJ).
185 See Mo, ‘The Duty to Obey’, above n 26. Foreign courts are unlikely to give effect to s 11. As a
consequence, it is not the ‘most efficient means of avoiding conflict’: at 297–8.
186 The saga was an ‘infamous’ and ‘awkward trans-national squabble between England and Canada’
with parallel proceedings taking place on ‘both sides of the Atlantic’: Lewins, ‘Maritime Law and the
TPA’, above n 97, 112.
187 Magic Sportswear Co v OT Africa Line Ltd
d [2003] FC 1513; Magic Sportswear Co v Mathilde Maersk
[2004] FC 1165. Section 46, while still favouring ‘local jurisdiction and arbitration is significantly
less restrictive and nationalistic than the corresponding legislation in Australia’: William Tetley,
‘Jurisdiction Clauses and Forum Non Conveniens in the Carriage of Goods by Sea’ in Martin Davies
(ed), Jurisdiction and Forum Selection in International Maritime Law: Essays in Honor of Robert
Force (Kluwer Law International, 2005) 183, 192. ‘The doctrine of forum non conveniens is not
inconsistent with section 46, and may also be applied to determine the most appropriate forum’:
Deborah A Laurent, Foreign Jurisdiction and Arbitration Clauses in the New Zealand Maritime
Context’ (2007) 21 Australian and New Zealand Maritime Law Journall 121, 151, citing OT Africa
Line Ltd v Magic Sportswear Corp [2006] FCA 284 (9 March 2006).
188 OT Africa Line Ltd v Magic Sportswear Co [2005] 1 Lloyd’s Rep 252, 258 [38]–[40] (Langley J).
Anti-suit injunctions are frequently granted by English courts where proceedings are brought in
breach of a jurisdiction or arbitration agreement. There is ‘no good reason for diffidence in granting
an injunction to restrain foreign proceedings on the clear and simple ground that the defendant
has promised not to bring them’: Aggeliki Charis Compania Maritima SA v Pagnan SPA (The
‘Angelic Grace’) [1995] 1 Lloyd’s Rep 87, 96 (Millet LJ). To ‘reflect the interests of comity and in
recognition of the possibility that an injunction, although directed against a respondent personally,
may be regarded as an (albeit indirect) interference in the foreign proceedings, an injunction must be
necessary to protect the applicant’s legitimate interest in English proceedings’: OT Africa Line Ltd v
Magic Sportswear Corporation [2005] 2 Lloyd’s Rep 170, 183–4 [63] (Rix LJ).
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Insurance Co Ltd,189 held there were no ‘strong reasons’ not to enforce the
exclusive jurisdiction clause.190 The Canadian proceedings continued in defiance
of the injunction191 leaving, as Langley J aptly described, a ‘clash of jurisdictions,
with the appalling prospect of an apparent challenge from [the English] … Court
to Canadian legislation and the cost and disruption of the same claims proceeding
in two jurisdictions with the added risk of different outcomes’.192 Kate Lewins
cites the Magic Sportswear saga as confirming and solidifying the approach by
English courts in ‘almost universally’ upholding jurisdictional clauses favouring
English courts.193
IV
THE CALL TO REVISE SECTION 11
A
A Questionable Safeguard
Section 11 of the 1991 Actt was introduced to avoid ‘the potential delays, increased
costs and language difficulties which may be involved with the resolution of
disputes under foreign laws’.194 The default jurisdiction rule, without s 11, is that
unless otherwise agreed, the claimant may bring an action in a court provided the
court has jurisdiction. In enacting s 11, the Parliament, has displaced the default
rule. Where it applies, a claimant may bring an action in an Australian court,
where, due to a foreign choice of forum agreement or foreign arbitration clause,
they would otherwise be prevented from doing so. While s 11 may be explained
by ‘entirely understandable’ policies such as protecting Australian shippers, it
is, as Justice James Allsop (as he then was) notes, a species of ‘jurisdictional
sabotage’.195
Section 11(1) requires an Australian court to apply Australian law where the port
of shipment is in Australia. However, the same cannot be said for sea carriage
documents relating to the carriage of goods to Australia from abroad. Where
goods are carried to Australia, choice of law is left untouched by s 11.196 Australian
189 [1998] 1 Lloyd’s Rep 90 (Thomas J). See also Yvonne Baatz, ‘An English Jurisdiction Clause Does
Battle with Canadian Legislation Similar to the Hamburg Rules: OT Africa v Magic Sportswear’
[2006] 2 Lloyds Maritime & Commercial Law Quarterly 143, 147. Cf Akai (1996) 188 CLR 418.
190 OT Africa Line Ltd v Magic Sportswear Co [2005] 2 Lloyd’s Rep 170, 177–85. Leave to appeal to the
House of Lords was refused: see OT Africa Line Ltd v Magic Sportswear Co [2007] 1 Lloyd’s Rep 85,
87.
191 Baatz, above n 189, 145.
192 OT Africa Line Ltd v Magic Sportswear Co [2005] 1 Lloyd’s Rep 252, 258 [38] (Langley J).
193 Lewins, ‘Maritime Law and the TPA’, above n 97, 115. ‘The home truth for Australian litigants is
that in all but very limited circumstances, the English courts will uphold contractual clauses as to
jurisdiction, choice of law or arbitration above all else, even an Australian statute that nullifies such
a clause which would apply if the matter was before Australian courts’: at 125.
194 Commonwealth, Parliamentary Debates, House of Representatives, 15 October 1991, 1926 (Robert
Brown), quoted in Mo, ‘The Duty to Obey’, above n 26, 293–4. Shippers argued ‘with some
justification that Australia should not allow its marine cargo interests to be dictated by “maritime”
nations’: Department of Transport and Communications, ‘Australian Marine Cargo Liability: A
Discussion Paper’ (Discussion Paper, September 1987) [7.20] (‘Australian
‘
Marine Cargo Liability’).
195 Justice James Allsop, ‘International Maritime Arbitration: Legal and Policy Issues’ (Paper presented
to Australian Maritime and Transport Arbitration Commission, Sydney, 4 December 2007).
196 Mortensen, Garnett and Keyes, above n 110, 463 [17.49].
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courts must still turn to their conflict of law rules to determine the proper law of
the contract.197 As a result, litigating parties may not be protected from the costs,
delays and language difficulties associated with resolving a dispute that is subject
to a foreign liability regime. In 1999, the Federal Court considered the carriage of
a Texan built motor yacht from the United States to Sydney. The Court applied a
United States statute to resolve the dispute, as it was the law in force at the place
of shipment.198
Further, the danger of a jurisdictional stalemate may make the resolution of a
dispute so impractical as to outweigh any benefit that s 11 intends to afford to
cargo claimants. It is beyond argument that only one court should determine
a particular dispute. The ability of courts to resolve ‘otherwise irreconcilable
conflicts between national legal systems’ is a key objective of international
commercial litigation necessary to achieve ‘substantial justice between the
parties’.199 There may be nothing more injurious to the efficient and just resolution
of international commercial disputes than the risk posed by parallel proceedings.
The simultaneous litigation and arbitration of a single dispute in two different
jurisdictions, at the same time, would be a costly nightmare.200 The resolution
of the substantive dispute may become impractical, with the parties to a dispute
liable for their own legal costs.
Further, where the assets are located outside an Australian territory, enforcement
of any judgment made in defiance of s 11 will depend on the decision of foreign
courts. Many jurisdictions, such as Australia and England, confer discretion on
courts to refuse to enforce foreign judgments that they consider to be contrary
to their public policy.201 It is arguable that to enforce an Australian judgment
made in breach of an arbitration agreement would infringe ‘on the autonomy
of the parties [that is] recognised by the New York Convention’.202 As a result, a
remedy under s 11 may be vulnerable to public policy considerations relating to
arbitration and freedom of contract in other jurisdictions.203 Where enforcement
is sought in England, this refusal is almost guaranteed.204
While the outcome under the default rule may not be the claimant’s preferred
outcome, it is difficult to prove (with any degree of certainty) that the outcome
197 Davies and Dickey, above n 126, 176; Wilson (1954) 94 CLR 577, 584–5.
198 Chapman Marine Pty Ltd v Wilhelmsen Lines A/S
S [1999] FCA 178 (5 March 1999) [25] (Emmett J).
199 Chief Justice James Spigelman, ‘Law and International Commerce: Between the Parochial and the
Cosmopolitan’ (Speech delivered to the New South Wales Bar Association, Sydney, 22 June 2010) 29.
This ‘universally accepted’ consideration ensures a wide scope for the application of the subjective
values of a judge, as they relate to the suitability of their Court to determine a dispute: at 8 (citations
omitted).
200 Catherine Kessedjian, ‘Dispute Resolution in a Complex International Society’ (2005) 29 Melbourne
University Law Review 765. There are ‘growing difficulties in arbitration, such as simultaneous
proceedings before an arbitral tribunal and state courts’: at 768.
201 See, eg, Foreign Judgments Act (Cth) s 7; Foreign Judgments (Reciprocal Enforcement) Act 1933
(UK) c 13, s 4.
202 The Comandate (2006) 157 FCR 45, 106–7 [237] (Allsop J).
203 Garnett, ‘The Hague Choice of Court Convention’, above n 111. It is ‘important to note that whatever
attitude Australian courts take to choice-of-court clauses under the Convention, Australian parties
can reasonably expect courts of otherr contracting states to be generally willing to respect such
clauses’: at 167 (emphasis in original).
204 Lewins, ‘Maritime Law and the TPA’, above n 97, 125.
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will be better by pursuing a claim in Australia in reliance on s 11. This issue must
be considered up-front, even though it represents the end of the judicial process.
It would appear to favour the resolution of a cargo dispute in the place where the
defendant’s assets are located.
B
Commercial Certainty and International Trade
In a press release accompanying the launch of the Australian Maritime and
Transport Arbitration Commission (AMTAC), the then Commonwealth AttorneyGeneral stated:
there is no reason why more arbitrations should not take place in Australia
... parties will now have a cheaper and more efficient avenue for the
resolution of such disputes. ... I am committed to encouraging parties to
disputes of all kinds to engage in alternative methods of dispute resolution
… The Commission paves the way for Australia to play a leading role in
maritime transport arbitration … 205
While this sentiment is to be congratulated, there are clear reasons why Australia
is not a popular venue for maritime arbitration. This is despite very active
participation of Australian lawyers in arbitration taking place overseas.206 Those
reasons include the parochial approach taken by Australian courts to international
commercial arbitration.207 In addition, the enactment of legislation requiring
205 Phillip Ruddock, ‘Launch of the Australian Maritime and Transport Arbitration Commission’ (News
Release, 72/2007, 26 April 2007). See also Robert McClelland MP, ‘Simply Resolving Disputes’
(Speech delivered at the ACICA International Commercial Arbitration Conference, Sydney, 21
November 2008): ‘Australia is well placed to meet the growing demand for fi rst-rate, cost-effective
arbitration services in the Asia-Pacific … Australian arbitration practitioners are among the world’s
best’.
206 Luke Nottage, ‘International Commercial Arbitration Developments in Model Law Jurisdictions:
Japan Seen from Australia’ (2012) 29 Japan Commercial Arbitration Association Newsletter 3;
Spigelman, ‘Law and International Commerce’, above n 199, 6–7; Mo, ‘The Duty to Obey’, above n
26, 295; Luke Nottage, ‘Symposium Paper: Afterthoughts: International Commercial Contracts and
Arbitration’ (2010) 17 Australian International Law Journall 197, 203.
207 Chief Justice James Spigelman, ‘Global Engagement by Australian Lawyers’ (2011) 49(2) Law
Society Journall 45, 49; Albert Monichino, Luke Nottage and Diana Hu, ‘International Arbitration
in Australia: Selected Case Notes and Trends’ (Sydney Law School Research Paper, August 2012);
Peter Megens and Beth Cubitt, ‘The Continuing Role of the State Supreme Courts in Domestic
and International Arbitration in Australia’ (2010) 21 Australasian Dispute Resolution Journall 124,
133; Moonchul Chang, The Autonomy of International Commercial and Maritime Arbitration:
International, Canadian and Far Eastern Perspectives (1989) 92. Australia has had an ‘unhappy
record of unfortunate judicial decisions in the arbitration sphere’: Albert Monichino, ‘International
Arbitration in Australia: The Need to Centralise Judicial Power’ (2012) 86 Australian Law Journal
118, 121 (citations omitted).
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mandatory application stands in the way of parties to international commercial
arrangements favouring an Australia forum for disputes resolution.208
As Allsop J correctly states, an ‘ordered efficient dispute resolution mechanism’ is
an ‘essential underpinning of commerce’.209 In contrast, ‘[u]nreliable or otherwise
unsatisfactory decision making, or the fear of such, distorts commerce and makes
markets less efficient, raising the cost of commerce’.210 The parochial tendency
of courts to assert jurisdiction over a cross-border dispute ‘fails to pay sufficient
respect to the importance of the efficient disposition of international commerce’.211
This criticism, levelled at courts who illustrate a potential misunderstanding of
maritime law as a uniform, international body of law by adopting ‘national or
chauvinistic public policy’ into their interpretation, would seem applicable to
similar parochial public policy reflected in s 11.212 The parochial nature of the s 9
of the 1924 Act was reflected in comments by Kirby P as including:
•
Considerations of national pride;
•
The assertion of national jurisdiction, which has been a repeated
phenomenon especially of United States jurisprudence for more than
a century;
•
The determination of the legislature to protect the economic interests
of local traders;
•
A partial mistrust of overseas courts, tribunals and arbitrators and
their laws; [and]
208 Spigelman, ‘Global Engagement by Australian Lawyers’, above n 207, 49. ‘Whatever their domestic
value, however, they are not likely to be welcomed by parties to multi-national agreements as a lucky
door prize which comes with the choice of an Australian forum. That is especially so if Courts are
disposed to take an expansive view of the application of these statutes’: Chief Justice Patrick Keane,
‘The Prospects for International Arbitration in Australia: Meeting the Challenge of Regional Forum
Competition or our House our Rules’ (Address to the Australian Maritime and Transport Arbitration
Commission, 25 September 2012) 7. A repeal of s 11 ‘may be strongly objected by those who believe
in unilateral protection (if not parochialism). To those people, the nominal existence of the so-called
protection … is more important its practical functions … The matter has to be ultimately settled at
a policy level by the legislators’: Mo, ‘The Duty to Obey’, above n 26, 303. See also Garnett, ‘The
Hague Choice of Court Convention’, above n 111, 166.
209 The Comandate (2006) 157 FCR 45, 94–5 [192] (Allsop J). It is a ‘sensible commercial presumption’
that parties do not intend on having ‘possible disputes from their transaction being heard in two
places’: at 87 [165].
210 Ibid 94–5 [192] (Allsop J). The ‘simplest and most economic system for establishing the law
applicable to a contract is to let the parties choose both the law and the court they wish to hear the
dispute’: Lewins, ‘Maritime Law and the TPA’, above n 97, 125.
211 Allsop, above n 195: this failure is ‘especially important in well-understood and stable markets’ such
as the chartering of ships.
212 Ibid. See also Lewins, The Trade Practices Act (Cth) 1974 and Its Impact on Maritime Law in
Australia, above n 108, 6; William Tetley, ‘Reform of Carriage of Goods: The UNCITRAL Draft And
Senate COGSA ‘99’ (2003) 28 Tulane Maritime Law Journall 1. Such unilateral measures ‘violate
the normal rules of comity and of private international law’: at 29. Provisions on ‘arbitration and
jurisdiction are exacerbated and are even more nationalistic’ as applied ‘inwards and outwards’: at 29.
The notion of comity received a cold reception in the High Court of Australia in Neilson v Overseas
Projects Corporation of Victoria Ltdd (2005) 223 CLR 331. In that case, Gummow and Hayne JJ stated
the concept was both ‘meaningless’ and ‘misleading’: at 363 [90].
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•
A reaction to the prevailing dominance of sea trade by certain foreign
powers.213
Australia’s approach to international commercial agreements is seen as
anachronistic and interventionist.214 For international commercial arbitration
to succeed in Australia, it is vital for ‘parochial nationalistic legal policy’ to be
avoided.215 Our legal system should facilitate commercial certainty, not impair
it.216 In a recent submission, the Australian Centre for International Commercial
Arbitration (ACICA) stated that it is
of critical importance that Australia is both seen to have, and does in
fact have, a modern and consistently applied international arbitration law
and system which at least meets world’s best practice in the international
arbitration community and embraces ... the most current international
conventions.217
The New York Convention and Model Law218 are designed to facilitate certainty
for commercial parties to international agreements where they have ‘by their
own bargain, chosen arbitration as their agreed method of dispute resolution’.219
The doctrine of party autonomy is a basal principle of law that has existed for
centuries and is recognised by governments across the globe. The ability of parties
to nominate both the law governing their contractual arrangements and the way
in which disputes will be resolved provides commercial certainty necessary to
213 The Krasnogrosk (1993) 31 NSWLR 18, 22 (Kirby P).
214 Monichino, above n 207. Acknowledging that Australia is disadvantaged by its geographic location,
Monichino goes on to state that it ‘does not help that we have a fragmented legislative and judicial
regulatory system governing domestic and international arbitration’: at 132. It ‘is instructive to look
to Australian law’ which Adrian Briggs regards as having ‘developed a striking jurisprudence’
invalidating agreements on jurisdiction where the ‘provisions of Australian statutory law, made with
the force of mandatory application, would be sidelined because the designated court would, for one
reason or another, not apply them’: Adrian Briggs, ‘The Subtle Variety of Jurisdiction Agreements’
[2012] 3 Lloyd’s Maritime & Commercial Law Quarterly 364, 366 (citations omitted).
215 Chang, above n 207, 93. See also Mo, ‘The Duty to Obey’, above n 26, 295. Policies relating to the
resolution of disputes arising out of international commerce may be characterised using a ‘broad
spectrum’ ranging from ‘parochialism at one end to cosmopolitanism at the other’: Spigelman, ‘Law
and International Commerce’, above n 199, 1.
216 The ‘parties involved in the transportation of goods (and related maritime arrangements) would
undoubtedly regard them as commercial arrangements fi rst and foremost, rather than legal ones.
But the legal framework is critically important. The wheels of international commerce work best
when “greased” by a receptive legal framework’: Lewins, The Trade Practices Act (Cth) 1974 and
Its Impact on Maritime Law in Australia, above n 108, 2. Arbitration depends ‘on the informed and
sympathetic attitude of the courts to concepts such as the construction of arbitration agreements;
arbitrability; public policy; and separability’: Justice James Allsop, ‘International Arbitration and the
Courts: The Australian Approach’ [2012] 17 ADR Reporterr 18, 20. The approach of courts to these
concepts can ‘see arbitration flourish or suffocate’: at 20, quoted in Monichino, above n 207, 124. The
CMI representative ‘was in favour of any system that ensured maximum unification of maritime law.
The question as to which party the risk was allocated was less important than certainty in knowing
where it lay’: Australian Marine Cargo Liability, above n 194, [6.4].
217 Australian Centre for International Commercial Arbitration, Submission to the Attorney-General’s
Department, Review of International Arbitration Act 1974, 1.
218 Model Law on International Commercial Arbitration, UN GAOR, 40th sess, Supp No 17, UN Doc
A/40/17 (21 June 1985).
219 Allsop, above n 195. It is the ‘contractually bargained method or forum, often between parties who
come from very different legal systems’. See also Mo, ‘The Duty to Obey’, above n 26, 295; Garnett,
‘The Hague Choice of Court Convention’, above n 111, 172.
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international commerce.220 This is particularly important in the case of nations
‘such as Australia so significantly involved in international trade and commerce’.221
English courts have built a strong reputation for upholding contractual choice
regarding law and forum. Kate Lewins argues ‘certainty is the commodity in
which the English Courts trade, and they are at pains to protect it’.222 England
has become the forum of choice for the commercial community, and its economy
benefits from this.223
In a recent speech, Chief Justice Patrick Keane, then Chief Justice of the Federal
Court of Australia, recognised the importance of international commercial
arbitration in the region, stating that Australia’s
principal competitors, Hong Kong and Singapore, share our common
law inheritance and the use of English. ... their embrace of international
arbitration has been energetic and unequivocal. In Australia, however,
our attitude may perhaps be described as two steps forward and one step
back.224
As Moonchul Chang stated in his 1989 text, ‘freedom of arbitration is a matter of
legal policy’ as opposed to ‘legal principle’ and therefore ‘depends on the political
decisions of legislators’.225 Policy makers need to ensure that our legal system
facilitates the regional economic cooperation our governments seek within the
Asia-Pacific.
220 Justice Steven Rares, ‘Australia’s Sea Change: Towards Developing a Comprehensive System of
Admiralty and Maritime Dispute Resolution for Twenty-First Century Trade in the Asia-Pacific
Region’ (2008) 30 Australian Bar Review 242, 243. It would be destructive of commercial confidence
were a ‘nation’s courts to ignore the decisions of other judicial systems on aspects of international
trade and commerce’: at 243. At a ‘practical level, the views of international traders, and their
priorities and perspectives’ are crucial to the success of international arbitration in Australia: Keane,
above n 208, 17. ‘One is reminded of the observation that it makes little sense for sheep to pass
resolutions in favour of vegetarianism while the wolves remain of a different opinion.’
221 The Comandate (2006) 157 FCR 45, 96 [194] (Allsop J).
222 Lewins, ‘Maritime Law and the TPA’, above n 97, 125. The importance of ‘national courts recognising
and enforcing international arbitration agreements’ cannot be understated, it is ‘critical that the
courts respect and enforce arbitration agreements where they exist’ and that they avoid displaying
‘judicial prejudice or xenophobia against the parties’ chosen method or place of dispute resolution’:
Rares, ‘Australia’s Sea Change’, above n 220, 243–4. Sam Luttrell notes that ‘Australia holds itself
out as a free market, but there is a gap between economic policy and adjudicatory trend on the issue
of what can and cannot be settled by arbitration’ : Sam Luttrell, ‘Public Policy Conflicts in the
Arbitrability of the Trade Practices Act 1974 (Cth) — A Comment on Clough Engineering’ (2007)
4 Macquarie Journal of Business Law 139, 146. Australian courts ‘must follow’ the decision in The
Comandate and prevent Australian companies from masquerading as ‘consumers’ and avoiding their
‘commitments to arbitrate’.
223 Lewins, ‘Maritime Law and the TPA, above n 97, 125. ‘[C]ommercial litigation alone represents
over £800 million of invisible export value to the UK each year’: at 125 (citations omitted). See also
Justice David Steel, ‘Frank Stuart Dethridge Memorial Address 2002: The Modern Maritime Judge
— Policeman or Salesman?’ (2003) 17 Maritime Law Association of Australia and New Zealand
Journall 6, 7; Whincop and Keyes, above n 115, 29.
224 Keane, above n 208, 2 (citations omitted). Justice Steven Rares notes the opportunity for judicial
cooperation within the region, suggesting that the ‘courts of the Asia Pacific region should seek
to expand their familiarity with one another’s jurisprudence in international trade matters so as to
develop such a regional law merchant’: Rares, ‘Australia’s Sea Change’, above n 220, 250.
225 Chang, above n 207, 92–3.
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C
Interstate Carriage
One peculiarity of the protection under s 11 of the 1991 Actt is that it does not apply
to vessels on an interstate voyage.226 Foreign choice of law and forum clauses will
still be valid in this instance. It would seem perverse that the law would allow
parties to contracts of carriage relating to a voyage between Australian ports to
go to London to resolve disputes where the contract of carriage contains a London
arbitration clause (for example), whilst protecting Australian jurisdiction to hear
claims relating to international voyages. This clearly needs revision.
D
The Rotterdam Rules
As the Hamburg Rules awaited adoption, UNCITRAL began drafting yet another
cargo liability regime, known as the Rotterdam Rules. On first glance, it would
appear that the Rotterdam Rules will provide global uniformity to the question of
choice of forum under sea carriage documents (excluding charterparties). Under
the Rotterdam Rules, a claimant is given a choice of jurisdictions in which they
may pursue a claim against a carrier, notwithstanding an exclusive jurisdiction
clause to the contrary. They include:
(i)
The domicile of the carrier;
(ii) The place of receipt agreed in the contract of carriage;
(iii) The place of delivery agreed in the contract of carriage; or
(iv) The port where the goods are initially loaded on a ship or the port
where the goods are finally discharged from a ship … 227
A claim may also be brought in a competent court designated by a jurisdiction
agreement.228 Where a claimant has agreed to arbitration, the election to
arbitration will be upheld.229 However the claimant is not required to arbitrate
in the nominated forum and may instead proceed to arbitration in the same
jurisdictions that they would be entitled to in the case of judicial proceedings.
However, there are two key impediments to this solution. First, the choice of
forum provisions contained in the Rotterdam Rules are only binding on an opt-in
basis by state parties.230 This discretion reflects the controversial nature of those
provisions during the negotiations.231 Some maritime nations such as the United
226 The provisions of s 11 only apply to applicable documents relating to the carriage of goods from
any place in Australia to any place outside Australia (ss 11(1)(a)–(b), (2)(a)–(b), (3)) and applicable
documents relating to the carriage of goods from any place outside Australia to any place in Australia
(ss 11(2)(c)(i)–(ii), (3)).
227 Rotterdam Rules art 66(a). This applies unless agreed to after a dispute arises (art 72(1)), or where an
exception applies (art 67).
228 Ibid art 66(b).
229 Ibid art 75(1).
230 Ibid arts 74, 78.
231 Michael F Sturley, ‘Jurisdiction and Arbitration under the Rotterdam Rules’ (2009) 14 Uniform Law
Review 945, 946, 950, 951–2.
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671
Kingdom were fiercely opposed to changing the status quo, resulting in fears that
the negotiations would fail to produce a convention unless a compromise could
be reached.232 Even if nations such as the United Kingdom adopted the Rotterdam
Rules, it is unlikely that they would opt-in to the choice of forum provisions.
Second, the Rotterdam Rules have failed receive widespread adoption and appear
unlikely to do so. Four conventions later, the uniformity achieved by the Hague
Rules has been fragmented.233
E
Options for Revision
Any legislative change should reflect Australia’s legislative policy on international
commercial arbitration. That policy should be clarified, and perhaps reformulated
and restated, having regard to the views of stakeholders in industry. In terms of the
form legislative revision may take, a number of options may be worth considering.
They include: amending s 11 of the 1991 Actt to clarify its documentary scope;
clarifying the reference to arbitration taking place in Australia in s 11(3); and,
ensuring that interstate contracts of carriage are dealt with consistently with
international contracts of carriage. However, it may be that it is preferable to
do away with the s 11 protection altogether (and correspondingly, s 2C of the
International Arbitration Act 1984 (Cth)). In any event, the revision process
should begin with a clarification of Australia’s arbitration and shipping policies.
V
CONCLUSION
While concerning, it is submitted that the application of s 11 of the 1991 Act
to voyage charters is justified according to the accepted principles of statutory
construction. If this is correct, it means that the mandated application of Australian
law extends well beyond the cargo liability regime implemented by the 1991 Act.
Section 11 as it stands is not the outcome of a legislative process. Its expansive
scope represents the aftermath of a difficult task ‘faced by the drafters of
Australia’s unilateral amendments to the Hague/Visby Rules’.234 It has been
over a decade since the Federal Court invalidated part of the 1998 regulatory
amendments to s 11.235 Since that decision, the Commonwealth Parliament has
232 Ibid 950–1.
233 There is also the question of who is the appropriate international body to draft new rules. See Tetley,
‘Reform of Carriage of Goods’, above n 212, 3–6. Paul Myburgh describes the processes leading to
the Hague Rules, Hague-Visby and Hamburg Rules and the subsequent debates as suffering from a
surplus of ‘legal discourse, voodoo economics and generalised speculation, and an almost total lack
of detailed empirical economic research’: Myburgh, above n 1, 365.
234 Davies and Dickey, above n 126, 179.
235 Hi-Fert (1998) 89 FCR 166, 181 (Emmett J); Norden (2012) 292 ALR 161, 189 [139]. In Norden Foster
J noted that the current form of words found in s 11 is a product of second regulatory amendment
in 1998. In his view, the ‘legislative changes indicate that, from 1997 onwards, the legislature was
intending … to broaden the class of documents covered’ by s 11: Norden (2012) 292 ALR 161, 190
[140]–[141].
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made no effort to clarify or amend s 11. First principles of statutory interpretation
require Australian courts to give s 11 its ordinary and natural meaning.236 In
2004, Davies and Dickey suggested that the 1998 regulatory modification of s 11
had ‘perhaps inadvertently’ restored the pre-1991 Blooming Orchardd position,
extending the scope of s 11 to include voyage charters.237 In the author’s opinion,
they were right.238
It is submitted that this is still a live issue despite the Full Federal Court decision
in Norden on Appeal. The reading of s 11 by the Full Federal Court is arguably
an example of courts having to ‘amend’ legislation to fix the mistakes made by
Parliament. This should not detract from the ultimate responsibility of Parliament
to ensure statutes are clear and provide certainty to those that it relates to. While
the Norden on Appeall decision appears to resolve ambiguity relating to the
scope of s 11 of the 1991 Act, at least so far as voyage charters are concerned,
it is clear from both a textual analysis of s 11 and from a number of decisions
that an alternative reading of s 11 (as done by Foster J) is available. Mansfield
J, the decider in Norden on Appeal admitted as such.239 That is, a majority of
judges in Norden on Appeall agreed that an interpretation of s 11 that extended
its scope to include voyage charters was available, although by a majority the
Full Court ultimately rejected that position and found that s 11 did not apply.240
The decision of the Full Federal Court will be binding on first instance judges
in the Federal Court and Federal Circuit Court and will be highly persuasive on
other state courts, especially at first instance and in the absence of any appellate
authority within that Court to the contrary. With Buchanan, Mansfield, Foster and
Carruthers JJ, joined by Martin Davies, finding that a voyage charter could be
regarded as a sea carriage document it is difficult to deny that the legislation needs
revision. Remedying the uncertainty plaguing s 11 can be best achieved through
clearly formulated legislative policy and consequent legislative amendment. This
responsibility should not be left to the judiciary.
236 Davies and Dickey, above n 126, 280; The Amalgamated Society of Engineers v The Adelaide
Steamship Co Ltd (1920) 28 CLR 129, 161–2 (Higgins J).
237 Davies and Dickey, above n 126, 177–8; Norden (2012) 292 ALR 161, 190 [142] (Foster J).
238 Norden (2012) 292 ALR 161, 189–90 [135]–[143]. Foster J noted his ‘conclusion [was] … consistent
with the jurisprudence contained in the cases which interpreted s 9 of the 1924 Act’: at 190 [143]. See
also The Blooming Orchard [No 2] (1990) 22 NSWLR 273, 281 (Carruthers J); BHP Trading Asia
(1996) 67 FCR 211, 235 (Hill J).
239 Norden on Appeal (2013) 216 FCR 469, 474–5 [15] (Mansfield J).
240 Ibid 471 [4], 474–5 [15] (Mansfield J), 485–90 [55]–[72] (Rares J).
Simon Allison