Joint stock company Nanyo-Bussan, a Japanese importer, purchased crude sugar from a Brazilian exporter, Institute de Alcar and Alcohol. Institute de Alcar and Alcohol selected the respondent [jokoku appellee], whose head office is located in Amsterdam, Netherlands and has an office in Japan, as a consignor and concluded a contract of sea carriage, and had a bill of lading issued from the respondent, received it, and transferred it to Nanyo-Bussan.

The respondent loaded crude sugar on board MS Chisadane, which the respondent owns, and shipped it to Osaka from the port of Santos in Brazil. However, the respondent failed to ensure that the ship was seaworthy and cargoworthy at the time of the departure. As a result, the cargo was damaged by seawater; the damage was worth JPY 1,6 million or more. Thus, the respondent became liable for damages based upon breach of contract or tort. The appellant paid insurance of JPY 1,376,180 to Nanyo-Bussan on the basis of its insurance contract on the goods on carriage and acquired a subrogated right of damages against the respondent.

The appellant sued the respondent in the District Court in Kobe, where the respondent has an office. The respondent argued that the Kobe District Court did not have jurisdiction. In the bill of lading there was a clause in English that provided: 'all litigation arising from the present bill of lading shall be initiated at the court in Amsterdam, and unless the carrier initiates litigation in another jurisdiction or voluntarily accepts jurisdiction of other courts, no other court may have jurisdiction on any other litigation' .

The original instance court ruled that the exclusive jurisdiction clause was valid and effective, regardless of whether the litigation for the claim was based on breach of contract or tort. In light of the International Convention for the Unification of Certain Rules of Law on the Bills of Lading and the Law on the International Carriage of Goods by Sea which implements the Treaty in Japan, the standard clause on court jurisdiction on the bill of lading should be found invalid if it is used for the purpose of circumventing the application of public order rules which are intended to prevent abuses of standard clauses on exemption of liability by the carriers, or if it contributes in a unilateral manner for the carrier as an entrepreneur to abuse its economic superiority and profit the carrier in excess of a reasonable scope. However, under the present circumstances, the agreement was not against public order.

The original instance court therefore accepted the defence of the respondent and dismissed the case. Appellant appealed.

Held: Appeal dismissed.

A clause which excludes the jurisdiction of the Japanese courts and designates a court of a specific foreign country as the court of first instance is valid under the law on international litigation of Japan, in principle, only in cases where (a) the given case does not fall within the exclusive jurisdiction of Japanese courts, and (b) the designated court has jurisdiction on the case in the light of the law of that country (The Supreme Tribunal, judgment of October 18, 1916 case (o) No.473; Minshu 22-1916).

An agreement which gives exclusive jurisdiction of first instance to the court which has ordinary jurisdiction for cases involving the defendant should be acknowledged as valid in principle. It takes into account the generally accepted rule that the 'plaintiff follows the tribunal of the defendant', and the consideration that, in cases where the defendant is an international carrier of goods by sea, its business policy to limit the jurisdiction on disputes arising from international transactions to the court of a specific country is worthy of protection unless the agreement is excessively unreasonable and is against the rules of public policy. Therefore, the clause in the present case which designates the court of the location of the main office of the respondent as the court of exclusive jurisdiction cannot, even by taking into account the points raised by the representatives of the appellant, be regarded as invalid for being against public policy. The ruling of the original instance court which is in line with this is justifiable, and the argument of the representatives cannot be accepted.