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High Court of Australia |
COMPAGNIE DES MESSAGERIES MARITIMES v. WILSON [1954] HCA 62; (1954) 94 CLR 577
Arbitration
High Court of Australia
Dixon C.J.(1), McTiernan(2), Fullagar(3), Kitto(4) and Taylor(5) JJ.
CATCHWORDS
Arbitration - Agreement designating tribunal - Bill of lading - Conflict with statute - Sea-Carriage of Goods Act 1924, s. 9 (2) - Arbitration Act 1902 (N.S.W.), ss. 3, 6, 9, 12, 13.
HEARING
Sydney, 1954, September 6, 7; November 18. 18:11:1954DECISION
November 18.2. These two aspects are not in my opinion severable for the purpose of s. 9 (2) of the Sea-Carriage of Goods Act 1924. The purpose of that provision was to clear away intended contractual impediments to the jurisdiction of Australian courts in such cases. At common law no contract could oust or lessen the jurisdiction of the courts of the Crown. But for the purpose of such an enactment as s. 6 of the Arbitration Act 1902 and for some other purposes a positive agreement to refer to arbitration or not to revoke a submission was not necessarily regarded as deprived of all legal effect because there was found associated with it a definite intention express or implied to exclude the courts of law. It was sought on behalf of the appellant to use the analogy and to limit the operation of s. 9 of the Sea-Carriage of Goods Act 1924 so that it would not destroy wholly the condition of the bill of lading. The contention was that it left the condition with sufficient effect as a positive agreement to litigate in the French courts to justify the use of s. 6 of the Arbitration Act 1902, notwithstanding that in its negative aspect, that is as a stipulation against litigating elsewhere, it was deprived of all effect and became utterly null in its application to Australian courts. So to apply s. 9 (2) of the Sea-Carriage of Goods Act 1924 would in my opinion defeat its object. For it can hardly be doubted that its object was to insure that Australian consignees of goods imported might enforce in Australian courts the contracts of sea-carriage evidenced by the bills of lading which they held. Section 9 (2) is expressed in the strongest words and makes a stipulation or agreement falling within its terms illegal, null, void and of no effect. (at p583)
3. The double aspect which no doubt the condition now under consideration exhibits is but the consequence of a single stipulation, and that stipulation clearly falls within the language of the section. It is therefore without any effect and can afford no foundation for the use of s. 6 of the Arbitration Act 1902. (at p583)
4. The appeal should be dismissed. (at p583)
McTIERNAN J. I concur in the judgment prepared by the Chief Justice. I also am of opinion that the appeal should be dismissed with costs. (at p583)
FULLAGAR J. The facts leading up to this appeal may be shortly stated. Under a bill of lading dated 10th July 19518 a quantity of steel fence posts was consigned from Dunkirk to the respondent at Sydney by a ship owned by the appellant company. The bill of lading was in the French language. Two clauses only are material, and an agreed translation of these is before us. The first (cl. 16) provides: - "All legal actions arising out of the interpretation or performance of the present bill of lading will be judged by the court in the town or place indicated in the bill of lading, the shippers or claimants formally accepting its competence." By a later clause (which need not be set out) it is provided that the court to which the clause quoted refers is the Commercial Court of Marseille or the Court of the Seine at the option of the claimant. The translation is inelegant, and probably not quite accurate, but nothing turns on this, for it is clear that there is an agreement that any legal proceeding involving any alleged breach of contract on the part of the shipowner is to be brought in one or other of the two French courts designated. (at p583)
2. On 17th September 1952 the respondent commenced an action against the appellant company in the Supreme Court of New South Wales, claiming 2,000 pounds damages for short delivery of the goods consigned to him. The company is incorporated in France, but is registered as a foreign company under the Companies Act of New South Wales, and the writ in the action was served on it at the office maintained by it in Sydney. On 25th June 1953 the appellant company issued a summons asking for an order that the action be stayed on the ground that the parties had agreed that any such claim as that made by the respondent should be made in one of the two French courts named in the bill of lading. The summons came on for hearing before Kinsella J., who refused the application. An appeal to the Full Court was dismissed, and the company now appeals by special leave to this Court. (at p584)
3. In giving his reasons for refusing to stay the action Kinsella J. quoted a passage from the judgment of MacKinnon L.J. in Racecourse Betting Control Board v. Secretary for Air (1944) Ch 114 at the close of which his Lordship said: - "I can see no valid reason why the parties here should not be held to their bargain. Accordingly I direct the action to be stayed" (1944) Ch, at p 126 . (Cf. Hanessian v. Lloyd Triestino Societa Anonima di Navigazione (1951) 68 WN (NSW) 98 ). Kinsella J. then said that he would adopt his Lordship's words and apply them to the case before him, unless he were precluded from doing so by s. 9 (2) of the Sea-Carriage of Goods Act 1924 of the Commonwealth. His Honour was of opinion that he was so precluded, and the Full Court took the same view. (at p584)
4. Section 9 of the Sea-Carriage of Goods Act is in the following terms: - "(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." (at p584)
5. The difference in content between the two sub-sections seems to be due to the fact that the rules in the schedule are, by s. 4, made applicable to the carriage of goods from an Australian port to an ex-Australian port, but not to the carriage of goods from an ex-Australian port to an Australian port. No attack was made on the constitutional validity of s. 9, and it seems clearly enough to be a law with respect to trade and commerce with other countries, and therefore within the power conferred upon the Parliament by s. 51 (i.) of the Constitution. (at p585)
6. 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. But s. 9 (2) of the Act is a law made by the Parliament of the Commonwealth, and must, under s. 5 of the Constitution Act, be applied by the Supreme Court of New South Wales in all cases to which it is, in terms, relevant. (at p585)
7. It is impossible, in my opinion, to construe cl. 16 of the bill of lading as meaning merely that, if either party sues in one of the designated courts, the other party will not challenge the competence of the court. The contract means that, of course, but it means more. It means that any lawsuit in which due performance of the contract comes in question shall be brought in one or other of the two designated courts and in no other. And it seems to me clear that cl. 16, so construed, is a "stipulation or agreement purporting to oust" the jurisdiction of all Australian courts with respect to any claim based on breach of the contract of carriage. The respondent by his action makes such a claim. His writ having been duly served in New South Wales, the Supreme Court of New South Wales has jurisdiction to entertain the action, and is prima facie bound to entertain it. Where, however, an action is brought on a contract containing an arbitration clause, the court has a statutory power to stay the action under s. 6 of the Arbitration Act 1902 (N.S.W.), and it has been held that that provision is applicable to cases where the contract provides for submission not to a lay arbitrator but to a foreign court: see The Cap Blanco (1913) P, at p 135 and cases there cited, and also Huddart Parker Ltd. v. The Ship Mill Hill (1950) 81 CLR, at p 508 . The appellant company's application for a stay is made, and could only be made, under the statute, and it relies on cl. 16 of the bill of lading. Apart from cl. 16 no ground for staying the action is suggested. But cl. 16 is made void by s. 9 (2) of the Commonwealth Act, and the only possible basis of the application is thus destroyed. The application, therefore, as the Full Court held, was rightly refused by Kinsella J. (at p585)
8. The argument for the company on this appeal consisted, as I understood it, fundamentally of a denial of the proposition that cl. 16 was a stipulation or agreement purporting to oust the jurisdiction of Australian courts. It was said that such clauses must have been held void at common law if they had been regarded as purporting to oust the jurisdiction of the English courts, and they were not held void. On the contrary, although such a clause could not be pleaded in bar of an action at law or made the subject of an injunction in equity, it was enforceable by an action for damages for breach, if either party to the contract commenced an action in contravention of it. Reference was made to a number of reported judgments, including that of Fletcher Moulton L.J. in Doleman & Sons v. Ossett Corporation (1912) 3 KB 257, at pp 267-269 and that of Rich, Dixon and McTiernan JJ. in Anderson v. G. H. Michell & Sons Ltd. (1941) 65 CLR, at pp 548, 549 . One passage from the former judgment may be quoted. Fletcher Moulton L.J. says : - "Very early in the history of arbitration there arose the question whether a party to a contract containing an arbitration clause was precluded thereby from appealing to a court of law to enforce his rights under the contract. The answer which the courts have to this question admits of no doubt. They decided that no provision in a contract which ousted the jurisdiction of the courts of law could be valid, but that a clause agreeing to refer disputes to arbitration was valid because it did not oust the jurisdiction of the courts" (1912) 3 KB, at p 267 . (The italics are, of course, mine.) (at p586)
9. It is, of course, true that the English courts before the passing of s. 11 of the Common Law Procedure Act 1854 (which was the original predecessor of s. 6 of the Arbitration Act 1902 (N.S.W.)) did not regard as absolutely void a provision in a contract requiring disputes to be determined by an arbitrator or by a foreign court. It may even be suggested that their attitude to such a provision - whether or not it was due to the reasons suggested by Lord Campbell in Scott v. Avery [1856] EngR 810; (1856) 5 HLC 811, at p 853 [1856] EngR 810; (10 ER 1121, at p 1138) - was in some degree anomalous. Various expressions are used. For example, in Kill v. Hollister [1799] EngR 17; (1746) 1 Wils KB 129 (95 ER 532) it is said that "the agreement of the parties cannot oust this court". In Thompson v. Charnock (1799) 8 TR 139 (101 ER 1310) Lord Kenyon C.J. said : - "An agreement to refer all matters in difference to arbitration is not sufficient to oust the Courts of Law or Equity of their jurisdiction" (1799) 8 TR 139, at p 140 (101 ER at p 1310) . In Halsbury's Laws of England, 2nd ed., vol. I, p. 35, it is put that "the courts will not allow their jurisdiction to be ousted." Fletcher Moulton L.J. himself in Doleman & Sons v. Ossett Corporation (1912) 3 KB 257 immediately after the passage quoted above, puts the position in a slightly different way when he says : - "In other words they decided that the jurisdiction of the courts to compel a defendant to appear before them, and their jurisdiction to pronounce finally and conclusively on the rights of the parties after due hearing, were left untouched by such a clause, or by the appointment of a specific arbitrator to decide the matter, or even by proceedings having been commenced under such a submission" (1912) 3 KB, at p 267 . (at p587)
10. But the answer to the appellant's argument is, I think, plain enough. When the courts said that such a clause as that now under consideration was "not sufficient to oust the courts of their jurisdiction", or that "their jurisdiction was left untouched by such a clause" or even that "such a clause was valid because it did not oust the jurisdiction of the courts", they did not mean that such a clause did not purport to oust their jurisdiction. They were not dealing with any question of construction at all. Such clauses do purport to oust the jurisdiction of all courts, or of particular courts, in the only way in which parties to a contract could purport to do that thing. When parties to a contract say : - "All disputes between us shall be determined by such and such a tribunal", they are saying that, if a dispute arises between them, the claimant will seek a determination of it by the designated tribunal, and that the other party will not object to the jurisdiction of that tribunal. But they are also saying that, as between them, no other tribunal shall have jurisdiction to determine disputes. And what the English courts, before 1854, were really saying was that they would recognize such a clause as binding and give effect to it except so far as it purported to oust a jurisdiction which they otherwise possessed. Thus, if one party proceeded before a tribunal other than the designated tribunal, they would entertain an action for damages at the suit of the other party - a risk which, having regard to the measure of damages, "the claimant could lightly encounter" (Anderson v. G. H. Michell & Sons Ltd. (1941) 65 CLR, at p 549 ). And, if a dispute proceeded to a determination by the agreed tribunal, they would recognize the award or judgment as valid and binding. But, so far as such a clause purported to place beyond their reach disputes otherwise within their competence, they refused to give effect to it, and would entertain an action or suit in disregard of such a clause, until the new statutory power was given by the Common Law Procedure Act 1854. That is, in my opinion, the whole substance of the matter. (at p587)
11. Clause 16 of the bill of lading in the present case does "purport" to oust the jurisdiction of Australian courts. To that extent it would, apart from s. 6 of the Arbitration Act 1902, be ignored by the courts of New South Wales, That section gives power to stay an action brought in breach of such a clause as cl. 16. But a stay can only be granted if cl. 16 is valid and binding, and a law of the Commonwealth, which is binding on the courts of New South Wales, says that cl. 16 is void. (at p588)
12. It is unnecessary to consider in this case whether s. 9 (2) makes cl. 16 wholly void or void only in so far as it purports to oust jurisdiction. (at p588)
13. The appeal should, in my opinion, be dismissed. (at p588)
KITTO J. I have had the advantage of reading the judgments prepared by the Chief Justice and my brethren Fullagar and Taylor JJ. I entirely agree with their Honours and there is nothing that I would wish to add for myself. (at p588)
TAYLOR J. This is an appeal by special leave from an order of the Full Court of the Supreme Court of New South Wales dismissing an appeal from the dismissal by a judge in chambers of an application by the appellant for a stay of proceedings in an action in which the respondent sought to recover damages from the appellant for failure to deliver at its destination part of a consignment of cargo which had been shipped at Dunkirk on one of the appellant's vessels for carriage to Sydney. (at p588)
2. The application for a stay was based upon provisions contained in the bill of lading in the following terms : "Rule 16. All litigation concerning the interpretation or the performance of the present Bill of Lading shall be adjudged by the tribunal of the place indicated in the Bill of Lading, of which tribunal the shippers and claimants declare formally that they accept the competence. (at p588)
3. Particular conditions. (at p588)
4. IX. With express reference to Rule 16 and in the terms of that Rule, competence is attributed for all litigation arising out of the interpretation or the performance of the present Bill of Lading, to the Commercial Court of Marseille or to that of the Seine at the choice of the claimant." (at p588)
5. The question whether there were any special circumstances which should, apart from any other considerations, induce the court to refuse to stay the action does not appear to have been debated upon the original application, for what was, in effect, a preliminary objection was raised by the respondent. For the purposes of this objection the respondent relied upon s. 9 (2) of the Sea-Carriage of Goods Act 1924 which provides as follows : "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." (at p589)
6. It was common ground between the parties that, even in the absence of such an enactment as s. 9 (2), contractual provisions such as those contained in the bill of lading in question could not deprive the local courts of jurisdiction. Perhaps it may be said that this proposition is so well established that it is unnecessary to cite authority for it. It is, however, upon this proposition that the argument of the appellant ultimately seized to justify its application in the face of s. 9 (2). Consideration of such cases as Law v. Garrett (1878) 8 Ch D 26 ; Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Ltd. (1903) 1 KB 249 ; Kirchner & Co. v. Gruban (1909) 1 Ch 413 ; The Dawlish (1910) P 339 and The Cap Blanco (1913) P 130 it was said, establishes that stipulations such as those in question in the present case do not oust the jurisdiction of the local courts but are treated in substance as submissions to arbitration to which effect is given by staying proceedings in the local courts in the absence of special reasons for refusing to adopt such a course (see also the discussion in Huddart Parker Ltd. v. The Ship Mill Hill [1950] HCA 43; (1950) 81 CLR 502 ). On that basis it is said that stipulations such as these do not oust the jurisdiction of the local courts which may, at their discretion, either entertain an action founded upon a contract containing such stipulations or stay further proceedings in the action and thereby refuse to entertain it. But at the same time it was urged upon us that contractual stipulations which purport to oust the jurisdiction of the local courts have always been regarded as "void" or "illegal" or "unenforceable". The appellant's argument therefore maintains that, quite apart from the effect of s. 9 (2), the stipulations under consideration in this case would be regarded as void, but that, notwithstanding this characterization of them, some effect would be given to them for they would be regarded as if they constituted a submission to arbitration. (at p589)
7. The effect of the appellant's argument appears to me to assert that contractual stipulations such as these are, quite apart from the effect of the section, at one and the same time void and yet not devoid of all legal significance. It is, of course, clear that stipulations which purport to oust the jurisdiction of the courts have been described variously as void, illegal, invalid and unenforceable and have been said to be "contrary to the general policy of the law" and "against public policy", but, nevertheless, they have been treated as submissions to arbitration and given effect to as such. One of the many examples which may be given is to be found in The Cap Blanco (1913) P 130 where Sir Samuel Evans said: "There remains to be considered clause 14 of the bill of lading, which provides that any disputes concerning the interpretation of the bill of lading are to be decided in Hamburg according to German law . . . The authorities cited, namely, Law v. Garrett (1878) 8 Ch D 26 ; Austrian Lloyd Steamship Co. v. Gresham Life Assurance Society Ltd. (1903) 1 KB 249 ; Logan v. Bank of Scotland (No. 2) (1906) 1 KB 141 and Kirchner & Co. v. Gruban (1909) 1 Ch 413 appear to me to establish the proposition that such a clause is to be treated as a submission to arbitration within the meaning of s. 4 of the Arbitration Act 1889. The tribunal at Hamburg is not specified, but a fair businesslike reading of the contract means that such disputes are to be tried by the competent court in Hamburg, and in accordance with German law. It is conceivable that the parties agreed to that clause in the bill of lading in order expressly to avoid a trial here under the jurisdiction which I decide exists in this court. In dealing with commercial documents of this kind, effect must be given, if the terms of the contract permit it, to the obvious intention and agreement of the parties. I think the parties clearly agreed that disputes under the contract should be dealt with by the German tribunal, and it is right to hold the plaintiffs to their part of the agreement. Moreover it is probably more convenient and much more inexpensive, as the disputes have to be decided according to German law, that they should be determined in the Hamburg court. Although, therefore, this court is invested with jurisdiction, I order that the proceedings in the action be stayed, in order that the parties may litigate in Germany, as they have agreed to do" (1913) P, at pp 135, 136 . (at p590)
8. Again, in Czarnikow v. Roth, Schmidt & Co. (1922) 2 KB 478 Scrutton L.J. said: "I am of opinion that r. 19 of the rules of the Refined Sugar Association in so far as it purports to prevent a party to an arbitration before the Association from exercising his right under the Arbitration Act to ask for a special case for the opinion of the court on a question of law is contrary to public policy and so unenforceable. In countless cases parties agree to submit their disputes to arbitrators whose decision shall be final and conclusive. But the courts, if one of these parties brings an action, never treats this agreement as conclusively preventing the courts from hearing the dispute. They consider the merits of the case, including the fact of the agreement of the parties, and either stay the action or allow it to proceed according to the view they form of the best method of procedure; and they have always in my experience declined to fetter their discretion by laying down any fixed rules on which they will exercise it. If they allow the action to proceed they pay no further attention, and give no legal effect, to any further proceedings in the arbitration" (1922) 2 KB 478, at pp 487, 488 . (at p591)
9. An illustration of the same principle is to be found in our own courts in Huddart Parker Ltd. v. The Ship Mill Hill [1950] HCA 43; (1950) 81 CLR 502 where Dixon J. (as he then was) said: "The provision standing as s. 5 of the Victorian Arbitration Act 1928 has been interpreted as covering an agreement referring matters to the jurisdiction of a foreign court: see per Sir Samuel Evans P. in The Cap Blanco (1913) P 130, at p 135 and the cases cited by his Lordship. It is a result which seems to take little account of the definition of the word 'submission' (s. 27 of the Act of the United Kingdom) but it is sufficiently well settled" (1950) 81 CLR, at p 508 . (at p591)
10. It is on the strength of such authorities as these that the appellant relies to establish that, quite apart from the provisions of s. 9 (2), stipulations such as those under consideration in this case would not operate to oust the jurisdiction of the local courts but would be treated as constituting a submission to arbitration. Yet, it is asserted, the stipulations would properly be characterized as void. To me, these two propositions cannot, in their literal sense, stand together for, if the stipulations are void, they can have no effect at all. The true explanation seems to me to be that stipulations such as these wear two aspects; they purport to oust or lessen the jurisdiction of the local courts and at the same time constitute a submission to arbitration. In so far as they purport to do the former they are void or unenforceable in this country, but in so far as they constitute a submission to arbitration the authorities show that effect is given to them as such. To my mind this is the key to the fallacy in the appellant's argument for it is contended, firstly, that, for the reasons already given, the stipulations do not oust or lessen the jurisdiction of the local courts and that, therefore, s. 9 (2) does not apply to them and, further, that, even if it does, s. 9 (2) has no greater or different effect upon them than the pre-existing law which characterized such stipulations as void. But the short answer to the first limb of this argument is that s. 9 (2) applies to stipulations which purport to oust or lessen the jurisdiction and not only to stipulations which have that effect. There are, of course, no such stipulations as the latter. The answer to the second limb is that the effect of s. 9 (2) is to render such stipulations "illegal, null and void and of no effect". In my opinion, this carries the matter much further than the pre-existing law which regarded such stipulations as void or ineffective only in so far as they purported to oust the jurisdiction of the local courts. Apart from the provisions of s. 9 (2) the only effect they would have had would have been as submissions to arbitration. Now s. 9 (2) says that such stipulations are to be illegal, null and void and of no effect. I do not think that the section could more plainly say that no longer are they to have this effect, and accordingly I am of opinion that the appeal should be dismissed. (at p592)
ORDER
Appeal dismissed with costs.
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