The plaintiff, Rich Palm Enterprise Corp Ltd (Rich Palm) of Taiwan, sold a cargo of roller chains and parts to its co-plaintiff, Hitachi Maxco Ltd (Hitachi Maxco), of Kennesaw, Georgia, USA. The invoice indicates that the goods were intended to be shipped on the YM Prosperity from Kaohsiung City, Taiwan, to Portland, Oregon. Kuehne & Nagel Ltd, said to be a Taiwanese company, but with evidence on file that it also has an office in Montréal, as agent for Blue Anchor Line, issued a non-negotiable bill of lading in Taiwan which identifies the shipper as Rich Palm and the consignee as Hitachi Maxco. The cargo was described as 168 cartons of roller chains and parts contained within 8 pallets and loaded in a container. This was a combined transport bill of lading indicating that the port of loading was Kaohsiung City, the port of discharge Tacoma, Washington and the place of delivery Portland. The bill of lading identifies Blue Anchor Line, a division of Transpac Container System Ltd, of Hong Kong, as the carrier. Blue Anchor Line did not hold itself out as being the owner of the YM Prosperity. It undertook either to perform or to procure the performance of transport, and apparently did the latter. This is a clear indication that it was acting as a Non-Vessel Owning Common Carrier (NVOCC).

The bill of lading calls for the application of Hong Kong law and for Hong Kong jurisdiction, except as regards the performance of carriage itself. The bill of lading stipulates that liability is to be determined in accordance with any national law making the Hague Rules, or the Visby Protocol, compulsory applicable, or if no such law is compulsory applicable then in accordance with the Hague Rules as contained in the Brussels Convention of 1924. No evidence was led as to the state of Hong Kong or Taiwanese law. However, more specifically in the event of a shipment to or from the United States, the shipment was contractually, if not legally, subject to the Hague Rules as enacted in the US Carriage of Goods by Sea Act 1936 (COGSA).

Kuehne & Nagel Ltd in turn confided the cargo to co-defendant Dolphin Logistics Co as carrier. Its bill of lading shows Kuehne & Nagel Ltd as shipper and Kuehne & Nagel Inc as consignee. These two companies are described as agents of Blue Anchor Line. Later, Kuehne & Nagel Inc invoiced Hitachi Maxco for freight and related charges. According to the terms and conditions pertaining thereto, Kuehne & Nagel Inc was purportedly acting as agent for Hitachi Maxco for the purpose of performing duties in connection with the customs entry and release of goods. The terms and conditions of this contract are to be construed according to the laws of the State of New York, with irrevocable jurisdiction given to the US District Court and the State Courts of New York.

Hanjin Shipping Co Ltd advised Shipco Transport Inc that it had been informed by Yang Ming Marine Transport, 'the owners/operators' of the YM Prosperity, that the ship had encountered heavy weather and that the container in which the cargo was stowed was lost overboard. Shipco Transport Inc passed on that message the following day.

Thereafter, Hitachi Maxco and Rich Palm filed a statement of claim in the Federal Court against Dolphin Logistics Co Ltd, Blue Anchor Line, Kuehne & Nagel Ltd and Kuehne & Nagel Inc, alleging that all of them were the 'operators, managers, charterers and utilisers' of the YM Prosperity and carriers. The usual allegations that the defendants had failed to safely load, stow, handle, carry, care for, discharge, store and deliver the plaintiffs' cargo were advanced.

Dolphin Logistics was served at Shipco Transport Inc's offices in Lachine, Quebec. It did not cause a statement of defence to be entered, and judgment was rendered against it. The other defendants were all served at the offices of Kuehne & Nagel Ltd in Montréal. The service on Kuehne & Nagel Ltd was service effected at one of its offices and is clearly valid. The plaintiffs claim that Kuehne & Nagel Ltd is the agent of Kuehne & Nagel Inc and of Blue Anchor Line, neither of whom is Canadian. The other defendants state in their notice of motion that, 'notwithstanding the issue of whether or not service of the Statement of Claim was properly effected on all the defendants, these defendants wish to object to the jurisdiction of the Federal Court'. They seek a stay of proceedings in favour of Hong Kong, or alternatively New York.

Held: Motion dismissed.

The jurisdiction of this Court both over the subject matter of the action and over the defendants does not in any way derive from s 46(1) of the Marine Liability Act, SC 2001, c 6 (MLA). One may always institute an admiralty action in the Federal Court which has absolutely no connection with Canada save that the defendants were served in Canada in personam or in rem (Antares Shipping Corp v The Ship 'Capricorn', 1979 CanLII 182 (SCC), [1980] 1 SCR 553; Holt Cargo Systems Inc v ABC Container Line NV (Trustees of), 2001 SCC 90, [2001] 3 SCR 907). The issue is whether the Court should maintain jurisdiction and hear the case on the merits or rather defer to some other Court. It is in that context that s 46(1) of the MLA must be considered and read in conjunction with s 50(1) of the Federal Courts Act, RSC 1985, c F-7.

The international regime covering carriage of cargo under bills of lading to which Canada adheres is the Hague Rules with the Visby Protocol. These rules are set out in Sch 3 of the MLA. They do not compulsorily apply to import shipments. The Hamburg Rules have also been enacted in Canada and are to be found in Sch 4 of the MLA. However, they have not been proclaimed in force. The Hague-Visby Rules have no jurisdictional provisions. The Hamburg Rules do, as set forth in art 21. However, since no evidence has been led that they are applicable in the other jurisdictions to which this case has some contact, Taiwan, Hong Kong and the United States, it will not be considered whether Canada would maintain jurisdiction over the defendants if they were applicable.

This Court in its discretion always had jurisdiction to proceed to hear a case on the merits notwithstanding a foreign forum selection clause. However, the jurisprudence, particularly in Canada, had developed such that a Court which otherwise had jurisdiction should in its discretion grant a stay in the light of a foreign forum selection clause. In reality Canadian proceedings would almost automatically be stayed unless the plaintiff would be unlikely to get a fair trial for political, racial, religious or other reasons. There is no suggestion that the plaintiffs would not get a fair trial in Hong Kong or in the United States.

The plaintiffs submit that since the defendants invoke Hong Kong and New York jurisdiction in the alternative, there clearly is no more suitable forum than Canada. However, little value should be placed on the New York jurisdiction clause set out in the freight invoice. It was issued after the bill of lading and covers Kuehne & Nagel Inc’s activities as an agent for the cargo interests. It is being sued, rightly or wrongly, as a carrier. Furthermore, that jurisdiction clause would not benefit the other defendants.

In this case, based on the allegations that the defendants are carriers, and given that the cargo was not delivered in sound order and condition, the burden of proof to establish absence of liability falls upon them. They have not identified the evidence they wish to bring forward in defence, or the witnesses they need. The Court has not been told who owns the ship and whether it was on charter. If on charter, is there a charter party by demise, one or more time charters, and who was responsible for stowage? Where are the crew members to be located? How was the container secured on deck? Did eye-pads give way? Is there any evidence left? Have master mariners, naval architects, metallurgists, surveyors and weather experts been retained? If so, by whom, and where are they to be found? Are there any gaps or unexplained areas in Hong Kong law, or in the Hague Rules as applied by US courts? Both jurisdictions are in the Common Law tradition. There is no evidence that anyone involved in the loading, stowing or carriage of the cargo lives in Hong Kong. Indeed as a NVOCC, presumably Blue Anchor Line had no physical involvement whatsoever. At most it may have retained an agent to stuff the container in Taiwan.

In the present case, Blue Anchor Line has not set out any advantage to proceeding in Hong Kong (discounting New York) other than it is its home jurisdiction. Furthermore, a fresh action would be likely to be time barred in virtue of the one-year limitation set forth in the Hague Rules. Certainly there is no offer in the record to extend time.

As stated in the bill of lading, US COGSA gives effect to the Hague Rules. So does Canada, but now with the addition of the Visby Protocol. There is no evidence that US law is undeveloped when it comes to applying the Hague Rules. If US COGSA has to be proved as a fact, it has to be proved just as much in Hong Kong as in Canada. No suggestion has been made that US law differs from Canadian law except for the customary freight unit limitation of liability as expressly stated in the bill of lading. Both Canadian and US law derive from the Brussels Convention of 1924.

As noted by Lord Macmillan in Stag Line Ltd v Foscolo, Mango & Co Ltd [1932] AC 328, 350:

It is important to remember that the Act of 1924 was the outcome of an International Conference and that the rules in the Schedule have an international currency. As these rules must come under the consideration of foreign Courts it is desirable in the interests of uniformity that their interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather that the language of the rules should be construed on broad principles of general acceptation.

The basic rule, which should not be forgotten, is that the choice of forum rests with the plaintiff. The Court so chosen may decline to proceed with the case; in this instance on the ground of forum non conveniens. However, the factors connecting this case to Hong Kong, or for that matter New York, are not clearly more significant than those connecting it with Canada. Given that the impact of a foreign forum selection clause has been significantly reduced by s 46 of the MLA, and that there has been no allegation of proceedings in any other Court, unlike in both the OT Africa (see CMI1038) and The Cougar Ace (see CMI1104) cases, in the exercise of the Court's discretion under s 50 of the Federal Courts Act, the motion for a stay should be dismissed.