Choice of Jurisdiction

Introduction

In the past, the courts of all nations have jealously guarded their jurisdictions and have looked unfavourably on clauses in contracts which called for suit elsewhere. In consequence, courts properly seized with a dispute, have usually refused motions calling for the stay of proceedings.

Recently, however, motions for stay have been received more sympathetically, so that a whole new body of forum non conveniens law has sprung up. Admiralty too has had a tradition of being much more open to jurisdiction clauses in bills of lading and to the principle of forum non conveniens.[1]

Choice of jurisdiction is one of the three major branches of conflict of laws,[2] and is of major importance in maritime law, because of the mobility of ships (the usual defendant) and the fact that carriage by sea very often involves more than one jurisdiction. Just as it is imperative that maritime law be uniform and international and that choice of law rules be similar throughout the world,[3] so is it essential that choice of jurisdiction rules used by various seafaring nations be the same. Unfortunately that is not the case today.

To fully understand forum non conveniens and the discretionary right of the trial judge, one must appreciate that forum non conveniens has been used by both courts of Equity and of common law,[4] while it has been known much earlier in some civil law regimes[5] and in Admiralty law,[6] which latter has its closest connection with the civil law.[7]

The present article describes choice of jurisdiction rules and the principle of forum non conveniens in Admiralty in the United States, the United Kingdom, Canada and France in respect to carriage of goods[8] under bills of lading. Also examined is the effect of the Hague Rules, the Visby Rules,[9] the Hamburg Rules[10] and the Multimodal Convention[11] on jurisdiction clauses and on the principle of forum non conveniens. Finally, consideration is given to the very special Admiralty problem of declining jurisdiction when an in rem arrest of a ship has been made.

Choice of Jurisdiction – Six Steps to Follow

Choice of jurisdiction problems may be settled by the following six steps taken in order.

Firstly, the court seized with the case must decide if it has jurisdiction[12] by virtue of the legislation which created it.[13] Only if it has jurisdiction may it proceed; otherwise, of course, it must dismiss the suit, out of hand. In some jurisdictions, however, a court which may not have jurisdiction on the merits may have jurisdiction by statute to decide a question of stay.[14]

Secondly, the court must look to the law which applies to the case before it, to determine if there is a direction in that law as to jurisdiction. For example, the Australian Carriage of Goods by Sea Act 1991[15] holds invalid any clauses in most sea carriage documents ousting Australian jurisdiction.

Thirdly, the court must decide if the other jurisdiction, to which it is called upon to defer, is appropriate and whether the balance of convenience favors the case being heard there, i.e. if it is reasonable.

Fourthly, if there is a jurisdiction clause in the contract (the bill of lading), the terms and specific wording of that clause must be considered carefully. If the jurisdiction clause is not in the bill of lading (or other immediate evidence of the contract), but in some document (such as a charterparty), the incorporation by reference and notice of the incorporation must be considered carefully, to verify that such incorporation is complete and valid.

Fifthly, the court’s consideration will also be affected if the suit has been commenced by an action in rem and an arrest of a ship, which arrest normally gives jurisdiction in the place of the arrest.

Sixthly, if the new jurisdiction is deemed to be convenient and proper in the circumstances, the court will stay the suit by an order which will preserve the rights of the parties. Otherwise the court will retain the suit in its own jurisdiction and will refuse the motion for stay.

International Carriage of Goods Conventions and Choice of Jurisdiction

The Hague Rules 1924

The Hague Rules 1924[16] have no provision dealing with jurisdiction or arbitration of cargo claims. Nevertheless, both types of clauses have generally been held valid by courts in bill of lading disputes, provided they are clear and unambiguous. Such clauses ordinarily call for suit or arbitration in the jurisdiction most convenient to the carrier, very often in the place of the carrier’s principal place of business.[17] Bills of lading under the Rules are often not signed by the shippers, consignees or endorsees, who therefore do not have the jurisdiction/arbitration provisions brought specifically to their attention, unless they have a regular course of dealing with the carrier and are then presumed to be aware of the fact that such a clause is typically found in such a document.

The Hague/Visby Rules 1968/1979

The Hague/Visby Rules 1968/1979,[18] like the original Hague Rules, contain no provisions on jurisdiction or arbitration. Again, however, such clauses are generally upheld by courts and may be set up against parties to the bill of lading or similar document of carriage, whether or not those parties have really taken cognizance of their terms.

3) The Hamburg Rules 1978
The Hamburg Rules[19] at art. 21(l) set out rules governing where suit may be taken and limiting the right of contracting parties or of the courts to agree to other jurisdictions. In particular, art. 21(1) authorizes the cargo claimant, at his option, to take suit before the court of: 1) the principal place of business or (if there is no such place) the habitual residence of the defendant; 2) the place where the contract of carriage was made if the defendant has a place of business, branch or agency there the contract through which the contract was made; 3) the port of loading; 4) the port of discharge; and 5) any additional place designated for that purposes in the contract of carriage by sea.

Art. 21(2) solves the difficult problem of jurisdiction being acquired by the arrest of the ship in rem. The arrest is valid but, at the petition of the defendant, the suit must be transferred to an acceptable jurisdiction defined in art. 21(1) upon the defendant providing adequate security to ensure payment of any subsequent judgment.

Art. 21(5) permis the parties, by agreement, to designate the place of suit after a claim under the contract of carriage by sea has arisen.

A number of countries have enacted national legislation in an effort to give effect to the Hamburg Rules options as to jurisdiction, but in some cases with certain national qualifications. The Nordic countries (Denmark, Finland, Norway and Sweden), for example, while still adhering to the Hague/Visby Rules, nevertheless adopted a common maritime code in 1994.[20] Under this Code, the options as to places for suit are similar to those permitted by the Hamburg Rules, but they exist only if the port of loading or the agreed or actual port of discharge is located in one of those four countries. In addition, the jurisdictional provisions do not apply if they would violate any provision of either the Brussels Convention 1968[21] (binding Denmark) or the Lugano Convention 1988,[22] both of which conventions make the domicile of the defendant the major criterion of jurisdiction.[23]

The Multimodal Convention 1980

The Multimodal Convention, 1980[24] has similar provisions at art. 26, except in respect to actions in rem. The cargo claimant enjoys the option of suing the multimodal transport operator within the jurisdiction of: 1) the latter’s principal place of business or habitual residence; 2) the place where the multimodal transport contract was made, provided that the defendant has there a place of business, branch or agency through which the contract was made; or 3) the place of taking the goods in charge for international multimodal transport; or 4) the place of delivery of the goods; or 5) any other place designated for that purpose in the multimodal transport contract and evidenced in the multimodal transport document.

By art. 26(3), the parties may agree on a place for instituting an action after a claim has arisen.

Jurisdiction Clauses Invalid under National Law

Clauses invoking foreign jurisdiction may be without effect by the terms of local Hague or Hague/Visby legislation or by the terms of the international conventions. For example, sect. 11 of the Australian Carriage of Goods by Sea Act 1991,25 as amended by the Carriage of Goods by Sea Regulations 1998,26 reads:

“11 (1) All parties to: (a) a sea carriage document27 to which, or relating to a contract of carriage to which, the amended Hague Rules28 apply, 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),29 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 sea carriage document to which, or relating to a contract of carriage to which, the amended Hague Rules apply, 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.”[30]

This legislation is very similar to sect. 9 of Australia’s former Sea-Carriage of Goods Act 1924, [31] and has received a similar interpretation.[32]

A number of other countries, such as New Zealand[33] and South Africa,[34] have enacted similar nationalistic legislation on jurisdiction clauses in bills of lading and other sea carriage documents, prohibiting the ouster of local jurisdiction.

Notes

1 Canada Malting Co. v. Paterson Steamships Ltd. 285 U.S. 413 at pp. 420-421, 1932 AMC 512 at p. 515 (1932); United States Merchants’ & Shippers’ Ins. Co. v. A/S Den Norske Afrika Og Australie Line, 65 F.2d 392 (2 Cir. 1933); The Cali (Swift & Co. v. Compania Colombiana del Caribe) 339 U.S. 684 at p. 697, 1950 AMC 1089 at p. 1099 (1950); Perusahaan Umum v. Tel Aviv 711 F.2d 1231 at p. 1235, 1985 AMC 67 at pp. 71-72 (5 Cir. 1983).
2 The other two branches are choice of law and recognition of foreign judgments. See Tetley, International Conflict of Laws, 1994 at pp. 791 and 867.
3 Ibid., at pp. 865-868, showing the significant progress that has been made towards international uniformity of conflict of law rules through international conventions and national legislation based on such conventions, as well as the yet more recent movement towards international conventions on procedure. The use of a consistent conflict of law methodology would be another major boon to transnational harmony in private international law. See Tetley, ibid. at pp. 37-43.
4 Canada Malting Co. v. Paterson Steamships Ltd. 285 U.S. 413, at pp. 422-423, 1932 AMC 512 at p. 516 (1932), which passage was quoted in Gulf Oil Corp. v. Gilbert 330 U.S. 501 at p. 504 (1947).
5 See Lord Diplock in The Abidin Daver [1984] 1 Lloyd’s Rep. 339 at p. 344, where he refers to “the Scottish legal doctrine of forum non conveniens”, as does Lord Reid in The Atlantic Star [1973] 2 Lloyd’s Rep. 197 at p. 200 and Lord Wilberforce at p. 207, who mentions Société du Gaz de Paris v. S.A. Navigation (Les Armateurs Français) [1926] S.C. (H.L.) 13, (1925) 23 L.L. Rep. 209, where the House of Lords recognized forum non conveniens as a doctrine of general application in Scotland. See also the reference to “Scottish authorities” in Antares Shipping v. The Capricorn, [1977] 2 S.C.R. 422 at p. 451. See also American Dredging Co. v. Miller 510 U.S. 443 at p. 450, 1994 AMC 913 at p. 918 (1994), citing Piper Aircraft Co. v. Reyno 454 U.S. 235 at p. 248 note 13, 1982 AMC 214 at p. 223 note 13 (1981), in recognizing that forum non conveniens “originated in Scotland, and became part of the common law of many States.”
6 The Belgenland 114 U.S. 355 at p. 365-366 (1885); The Jerusalem 13 Fed Cas. 559 (No. 7293) (C.C.D. Mass. 1814); The Maggie Hammond 76 U.S. (9 Wall.) 435 at p. 457 (1870). See American Dredging Co. v. Miller 510 U.S. 443 at p. 449, 1994 AMC 913 at p. 918 (1994), where three of five U.S. Supreme Court justices, although deciding that forum non conveniens was not a characteristic feature of admiralty law, nevertheless agreed that “… within federal courts it [forum non conveniens] may have been given its earliest and most frequent expression in admiralty cases.”
7 Tetley, “The General Maritime Law – The Lex Maritima” (1994) Syracuse J. Int’l L. & Comm. 107; reprinted [1996] ETL 469; Tetley, “A Definition of Canadian Maritime Law” (1996) 30 U.B.C.L.Rev. 137; Tetley, Maritime Liens & Claims, 2 Ed., 1998, Chap.1 at pp. 7-60; Tetley, “Maritime Law as a Mixed Legal System (with Particular Reference to the Distinctive Nature of American Maritime Law, Which Benefits from Both Its Civil and Common Law Heritages)” (1999) 23 Tul. Mar. L.J. 317; Tetley, International Maritime and Admiralty Law, 2003, at pp. 9-24 and 473-474.
8 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, signed at Brussels, August 25, 1924, and in force June 2, 1931.
9 Protocol to Amend the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, signed at Brussels, February 23, 1968, and in force June 23, 1977.

10 United Nations Convention on the Carriage of Goods by Sea, signed at Hamburg March 31, 1978, and in force November 1, 1992.
11 United Nations Convention on International Multimodal Transport of Goods, signed at Geneva, May 24, 1980, not in force.
12 There is no intention in this article to go into questions regarding the jurisdiction conferred upon various courts by national legislation.

13 The first principle of Lord Brandon in The El Amria [1981] 2 Lloyd’s Rep. 119 at p. 123 (H.L.) reads: “assuming the claim to be otherwise within its jurisdiction…”
14 The House of Lords, in William Glyn’s v. Astro Dinamico [1984] 1 Lloyd’s Rep. 453 at p. 456, held that it had jurisdiction to entertain an application for a stay (in virtue of sect. 49(3) of the Supreme Court Act, 1981, U.K. 1981, c. 54), but that, in so doing, it was not deciding whether it had jurisdiction to determine the case on its merits. There are two distinct kinds of jurisdiction therefore: “the first is jurisdiction to decide the action on its merits, and the second is jurisdiction to decide whether the Court has jurisdiction of the former kind.” See Wilkinson v. Barking Corporation [1948] 1 K.B. 721 at p. 725 (C.A.). See also comments by Laskin, C.J. in Antares Shipping v. The Capricorn [1977] 2 S.C.R. 422 at pp. 439-440. See also Canada’s Federal Court Act, R.S.C. 1985, c. F-7, sect. 50: “(1) The Court may, in its discretion, stay proceedings in any cause or matter, (a) on the ground that the claim is being proceeded with in another court or jurisdiction; or (b) where for any other reason it is in the interest of justice that the proceedings be stayed.”

15 No. 160 of 1991 (Cth.), sect. 11(1) and (2), as amended by the Carriage of Goods by Sea Regulations 1998, Statutory Rules 1998, No. 174.
16 International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, adopted at Brussels, August 25, 1924, and in force as of June 2, 1931 (commonly known in English-speaking countries as the “Hague Rules”). See the official French text reproduced in Tetley, Marine Cargo Claims, 3 Ed., Les Éditions Yvon Blais, Inc., Montreal, 1988 at pp. 1111-1120, and an English translation, ibid. at pp. 1121-1129.
17 See, e.g., the BIMCO Liner Bill of Lading (Conlinebill 2000”), as amended, of November 2000 at clause 4. See also BIMCO’s non-negotiable Liner Sea Waybill (LINEWAYBILL”), issued by BIMCO, August 22, 1997 at clause 3. For the texts of these two forms, see Tetley, International Maritime and Admiralty Law, 2003, Appendices “P” and “Q”, at pp. 861-862 and 863-864 respectively. See also two sample clauses in S. Mankabady, ed., The Hamburg Rules on the Carriage of Goods by Sea, Sijthoff, Leyden/Boston, 1978 at p. 98.

18 Protocol to Amend the International Convention for the Unification of Certain Rules Relating to Bills of Lading, adopted at Brussels, February 23, 1968 (in force June 23, 1977) (commonly known as the “Visby Protocol 1968” and the Protocol to Amend the International Convention for the Unification of Certain Rules Relating to Bills of Lading as modified by the Amending Protocol of 23rd February 1968, adopted at Brussels, December 21, 1979 (in force February 14, 1984) (commonly known as the “Visby S.D.R. Protocol 1979”). The Hague Rules 1924, as amended by the Visby Protocol 1968 and the Visby S.D.R. Protocol 1979, are commonly known as the “Hague/Visby Rules 1968/1979”.
19 United Nations Conventions on the Carriage of Goods by Sea, signed at Hamburg on March 31, 1978, and in force November 1, 1992.

20 This common Nordic Maritime Code came into force on October 1, 1994. The numbering of the articles differs, however, as between the Danish and Norwegian versions of the Code, on the one hand, and the Finnish and Swedish versions, on the other. See, for example, the Swedish Maritime Code, 2 Ed., updated to June 30, 2000, published in Swedish and English by the Axel Ax:son Johnsons Institut för sjörätt och annan transporträtt, nr 22, Jure AB, Stockholm, 2001. 21 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, adopted at Brussels on September 27, 1968 (O.J.E.C. L. 299/32, 31.12.1972; see English text in O.J.E.C. L. 304/36, 30.10.1978), as subsequently amended, and as later replaced for all European Union states, except Denmark, effective March 1, 2002, by E.C. Regulation 44/2001 of December 22, 2000 (O.J.E.C. L 12/1, 16.1.2001). 22 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, adopted at Lugano, September 16, 1988, (O.J.E.C. L. 319/9, 25.11.1988), which governs jurisdiction and the recognition and enforcement of judgments in civil and commercial matters as between the states of the European Union and those of the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland). 23 See Swedish Maritime Code, Chap. 13, sect. 60. See also Tetley, “Arbitration & Jurisdiction in Carriage of Goods by Sea and Multimodal Transport – Can we have international uniformity?” [1998] ETL 735 at pp. 753-754; Allan Philip, “Scope of Application, Choice of Law and Jurisdiction in the New Nordic Law of Carriage of Goods by Sea” (1996) Il Diritto Marittimo 308 at pp. 319-321, referring to arts. 310 and 311 of the Danish Maritime Code. 24 United Nations Convention on International Multimodal Transport of Goods, signed at Geneva on May 24, 1980, not in force. 25 No. 160 of 1991 (Cth.)

26 Statutory Rules 174 of 1998, in force July 1, 1998, paras. 6.1 and 6.2. The Carriage of Goods by Sea Regulations 1998 amending the Carriage of Goods by Sea Act 1991, were authorized by the Carriage of Goods by Sea (Amendment) Act 1997, No. 123 of 1997, Schedule 1, para. 7(2) of which authorized the addition of a “Schedule of Modifications” to the 1991 statute as amended. This Schedule of Modifications is Schedule 1A of the 1998 Regulations.
27 The term “sea carriage document” is defined in Schedule 1A (Schedule of Modifications) of the Carriage of Goods by Sea Regulations 1998, at art. 1(1)(g), to mean any of the following: a bill of lading; or 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 a bill of lading that, by law, is not negotiable; or 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. 28 The “amended Hague Rules” refers to the Hague/Visby Rules 1968/1979, as amended for Australia by the Schedule of Modifications (Schedule 1A) of the Carriage of Goods by Sea Regulations 1998. 29 Subsect. 10(1)(b)(iii) refers to contracts of carriage of goods by sea “… contained in or evidenced by a nonnegotiable 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 [i.e. the Hague/Visby Rules 1968/1979] are to govern the contract as if the document were a bill of lading.”

30 The Australian Carriage of Goods by Sea Act 1991 was amended by the Carriage of Goods by Sea (Amendment) Act 1997, No. 123 of 1997 (Cth.), so as to add sect. 11(3) to the 1991 statute, whereby an arbitration clause or agreement is permissible (even though it may preclude or limit the jurisdiction of an Australian court over a cargo claim), but only on condition that the arbitration is conducted in Australia.
31 No. 22 of 1924. See Tetley, Marine Cargo Claims, 3 Ed., 1988, at pp. 783-784, note 16; Tetley, International Conflict of Laws, 1994 at p. 153, note 80. See also Wilson v. Compagnie des Messageries Maritimes [1954] 1 Lloyd’s Rep. 229 (N.S.W. Sup. Ct.); in appeal [1954] 2 Lloyd’s Rep. 544 (High C. of Aust.): A French bill of lading for a shipment from France to Australia called for suit in France. The Supreme Court of New South Wales, upheld by the Australian High Court, declared that a clause calling for actions to be tried in a French Court was invalid. See, however, John Churcher Pty Ltd. v. Mitsui & Co. (Australia) Ltd. (1974) 24 F.L.R. 191; [1974] 2 N.S.W.L.R. 179 (N.S.W. Sup. Ct.) where a written contract for the sale of goods was not considered as being a “document relating to the carriage of goods” under the former sect. 9(1) of the Act.
32 The Federal Court of Australia has been held that sect 11 of the Carriage of Goods by Sea Act 1991, like sect. 9 of the former 1924 statute as interpreted in the Wilson decision (supra), renders of no effect a clause in a bill of lading issued under a voyage charterparty which called for arbitration of cargo claims in London, England. See Hi-Fert Pty. Limited v. Kiukiang Maritime Carriers (The Kiukiang Carrier) [1998] 159 A.L.R. 142 at pp. 164-165 (Fed. C. Aust.). See also Akai Pty Ltd. v. The People’s Insurance Co. Ltd. (1996) 141 A.L.R. 374 (Aust. High C.), where an exclsive English jurisdiction clause in an insurance policy was not enforced because the English court would not apply a mandatory and otherwise applicable Australian statute on insurance contracts.

33 See New Zealand’s Maritime Transport Act 1994, No. 104 of 1994, sect. 210(1) and (2), which preclude the ouster of New Zealand jurisdiction by foreign jurisdiction clauses in bills of lading, similar documents of title or nonnegotiable documents covering shipments to and from New Zealand, although that statute does permits arbitration of cargo claims outside, as well as inside, New Zealand, thus being slightly more liberal than the corresponding Australian statute which allows only Australian arbitration.
34 See South Africa’s Carriage of Goods by Sea Act 1986, Act 1 of 1986, sects. 3(1) and 3(2), which permit any person carrying on business in the Republic, as well as the consignee or holder of any bill of lading, waybill or like document for the carriage of goods inbound to South Africa, to bring an action on the bill, waybill or document before the competent court in the Republic, “[n]otwithstanding any purported ouster of jurisdiction, exclusive jurisdiction clause or agreement to refer any dispute to arbitration”. See generally Tetley, “Arbitration & Jurisdiction in Carriage of Goods by Sea and Multimodal Transport – Can we have international uniformity?” [1998] ETL 735.