Date: 20061222
Docket: T-2185-06
and T-2142-06
Ottawa, Ontario,
December 22, 2006
PRESENT: The Honourable Mr. Justice Shore
ADMIRALTY ACTION IN REM against THE SHIP
MAERSK DEFENDER also
known as the SHIP VOYAGER SEA and IN PERSONAM
BETWEEN:
MARITIMA DE ECOLOGIA, S.A. de
C.V.
Plaintiff
and
THE OWNERS AND ALL OTHERS
INTERESTED IN THE SHIP MAERSK
DEFENDER ALSO KNOWN AS THE VOYAGER SEA, I.S. ATLANTIC
CORPORATION INC., and SECUNDA MARINE
SERVICES LTD.
Defendants
ORDER
The Defendants’ Motions
WHEREAS the requests for relief in these
Motions can be summarized as follows:
- I.S. Pacific requests that both the First
and Second Actions in rem be struck out;
- I.S. Pacific requests that the Vessel
be released from arrest without bail;
- Secunda Marine requests that the
First and Second Actions in personam be struck out as against it;
- I.S. Pacific requests that the
Second Action in personam be struck out as against it;
- I.S. Atlantic requests that the First and Second
Actions be struck out as against it or in the alternative, stayed in
favour of the London Arbitration.
Background of Federal Court Proceedings:
WHEREAS, the following is a history
of the Federal Court Proceedings:
- Action T-2142 was issued on December
4, 2006. This purports to be an action in rem and in personam
against I.S. Atlantic and Secunda Marine Services Ltd. and the Vessel
which, on December 14, 2006 was owned by Maersk. This will be referred to as
the First Action.
- The Plaintiff issued the First Action
three days after; it appointed an arbitrator, initiating the London
Arbitration.
- Paragraph 13 of the First Action
states that the action is brought solely for the purpose of obtaining
interim protective orders, including injunctions and security, in
connection with a London Arbitration; however, the Statement of Claim in
the Fist Action at paragraph 1 states that the Plaintiff is claiming: 1)
interim and interlocutory injunctions requiring specific performance of
the Charterparty; or alternatively damages in lieu of specific
performance; 2) damages; 3) interest; 4) condemnation of the Vessel
and 5) costs.
- On December 8, 2006, the Plaintiff
brought an ex parte motion in the First Action, without any notice
to any of the Defendants, seeking specific performance of the Charterparty
and a range of other injunctive and mandatory orders, all of which were
denied.
- Action T-2185 was issued on December
12, 2006 (“Second Action”). The Second Action seeks the same relief as the
First Action, however, I.S. Pacific, the current owner of the Vessel, is
named as an additional Defendant.
- As with the First Action, the Second
Action states at paragraph 14 that the action is brought solely for the
purpose of obtaining interim protective orders including injunctions and
security in connection with the London arbitration.
- As with the First Action, the
Statement of Claim states that the Plaintiff is claiming: 1) interim
and interlocutory injunctions requiring specific performance of the
Charterparty; or alternatively damages in lieu of specific performance; 2)
damages; 3) interest; 4) condemnation of the Vessel and 5) costs.
- On December 12, 2006, the Plaintiff
obtained a Warrant to arrest the Vessel in the Second Action. In the
Affidavit to Lead Warrant, counsel for the Plaintiff swears that the
claims sought to be satisfied by the Arrest of the Vessel are: 1) an order
of specific performance; 2) damages for breach of the Charterparty;
and 3) an order for possession of the Vessel. The Affidavit to Lead
Warrant does not mention the London Arbitration.
- When the Vessel was arrested, it was
owned by I.S. Pacific, who had purchased it from Maersk that day.
The Actions In Rem
WHEREAS, the only party before the Court
that appears to have or ever had any ownership interest in the Vessel is I.S.
Pacific, a Defendant in the Second Action. I.S. Pacific purchased the Vessel
on December 12, 2006 from Maersk, an entity which is not a party to either the
First Action or the Second Action.
The First Action and the Second Action, to the
extent that they are purported to be in rem, are to be struck out and
the Vessel be released from arrest.
Is the Vessel itself subject of the
Action?
WHEREAS, in order for this Court to
exercise jurisdiction in rem against a ship, the ship itself must be the
subject of the action. Section 43(2) of the Federal Courts Act, R.S.C.,
1985, c. F-7 states:
|
(2) Subject to subsection (3),
the jurisdiction conferred on the Federal Court by section 22 may be
exercised in rem against the ship, aircraft or other property that is
the subject of the action, or against any proceeds from its sale that have
been paid into court.
|
(2) Sous réserve du paragraphe (3),
elle peut, aux termes de l'article 22, avoir compétence en matière réelle
dans toute action portant sur un navire, un aéronef ou d'autres biens, ou sur
le produit de leur vente consigné au tribunal
|
Even
though the Actions name a number of parties, both the Fist and the Second
Actions relate to an alleged anticipatory breach of the Charterparty by I.S. Atlantic, an entity that appears to
have never owned the Vessel.
Simply because the Vessel is named in the
Charterparty, does not make the Vessel the “subject of the action” even if it
was currently owned by I.S. Atlantic. In Paramount Enterprises International, Inc. v. An
Xin Jiang (The),
[2000] F.C.J. No. 2066 (C.A.) (QL), the plaintiff
attempted to bring an action, in rem, against cargo that it alleged it
had a contract to transport. The Court of Appeal held that the cargo could not
be said to be the “subject of the action” and therefore the Court did not have
jurisdiction to entertain an action in rem. At paragraph 28 of the
decision, the Court of Appeal explained:
Paramount's
action in rem against the Beston cargo is based on an allegation of a
contractual nature that Beston did not perform the charter-party. It is true
that this contract related to that cargo, but the only nexus existing between
the action and the cargo is the fact that it was this cargo which would have
been transported if the contract had been carried out. The contract was not
carried out, the carriage never began, the cargo was not subject to a maritime
lien and Paramount was never in
possession of the cargo. The cargo as such did not cause any damage, it did not
receive any benefit and it was not involved in any incident relating to the
action. The action for breach of contract, if it is to succeed, will succeed
regardless of whether the cargo was carried or not and, if it was carried,
regardless of the ship carrying it. Allowing seizure of the cargo in the case
at bar would be to allow the seizure of any property owned by a defendant even
where no property is the subject of the action.
Both of these Actions are for breach of the
Charterparty by I.S. Atlantic. The Charterparty has not been carried out, no
maritime lien exists and I.S. Atlantic has never owned the Vessel.
If the Actions for breach of the Charterparty are to succeed, they will succeed
regardless of who owns or operates the Vessel. Accordingly, it cannot be said
that the Vessel is the “subject of the action” within the meaning of section
43(2) of the Federal Courts Act. Further, even if I.S. Atlantic did own
the Vessel, it could not be said that the Vessel is the “subject of the
action”.
More recently, in Kremikovtzi Trade v.
Phoenix Bulk Carriers Ltd., 2006 FCA 1, [2006] F.C.J. No. 9 (C.A.) (QL),
the Court of Appeal questioned the ruling in Paramount, however, it
applied the reasoning as binding authority on this Court. Leave to Appeal to
the Supreme Court of Canada has been granted but has not yet been heard.
Accordingly, the decision in Paramount is binding on this Court and the facts of these Actions
cannot be distinguished.
The Federal Courts Act also provides that
an action in rem cannot be brought unless the owner of the vessel at the
time the action is brought is the same party that owned the vessel when the
cause of action arose. Section 43(3) of the Federal Courts Act provides:
|
(3)
Despite subsection (2), the jurisdiction conferred on the Federal Court by
section 22 shall not be exercised in rem with respect to a claim
mentioned in paragraph 22(2)( e), ( f), ( g), ( h),
( i), ( k), ( m), ( n), ( p) or ( r)
unless, at the time of the commencement of the action, the ship, aircraft or
other property that is the subject of the action is beneficially owned by the
person who was the beneficial owner at the time when the cause of action
arose.
|
(3) Malgré le paragraphe (2),
elle ne peut exercer la compétence en matière réelle prévue à l'article 22,
dans le cas des demandes visées aux alinéas 22(2) e), f), g),
h), i), k), m), n), p) ou r),
que si, au moment où l'action est intentée, le véritable propriétaire du
navire, de l'aéronef ou des autres biens en cause est le même qu'au moment du
fait générateur.
|
The
Plaintiff initiated the London Arbitration against I.S. Atlantic on December 1, 2006.
Accordingly, the cause of action arose on that date, at the latest. On December
1, 2006 and when the First Action was started on December 4, 2006, Maersk owned
the Vessel. Finally, when the Second Action was started on December 12, 2006,
it appears that I.S. Pacific owned the Vessel.
The Plaintiff’s claims all arise out of
allegations that I.S. Atlantic breached the Charterparty. I.S. Atlantic did not appear to own the
Vessel when that cause of action arose and did not appear to own the Vessel
when either the First Action or the Second Action was brought. As the Court of
Appeal explained in Mount Royal/Walsh Inc. v. Jensen Star (The), [1990]
1 F.C. 199, [1989] F.C.J. No. 450 (C.A.) (QL), the term “beneficial owners” can
only mean a party who has title to the Vessel. Accordingly, this Court does not
have jurisdiction over an in rem action against the Vessel.
In respect of I.S. Pacific and Vessel, both the
First Action and the Second Action, to the extent that they purport to be in
rem, are struck out.
Subsequent to the Second Action in rem
(the Action under which the Vessel was arrested) is struck out, the Court
orders the release of the Vessel without bail pursuant to the Federal Courts
Rules, SOR/98-106, subsection 488(1) which provides:
|
488 (1) On motion, the
Court may, at any time, order the release of arrested property.
(2) Where, pursuant to
subsection 43(8) of the Act, a ship that is not the subject of an action has
been arrested, any owner or other person interested in the ship may bring a
motion to the Court for the release of the ship, and if it is found that the
ship is not beneficially owned by the person who is the owner of the ship
that is the subject of the action, the Court shall order its release without
the taking of bail.
(3)
Where on a motion under subsection (2) the Court is satisfied that the action
in which the ship has been arrested is for a claim referred to in any of
paragraphs 22(2)(a) to (c) of the Act, the Court may order the
release of the ship without the taking of bail.
|
488 (1)
La Cour peut, sur requête, ordonner la mainlevée de la saisie de biens à tout
moment.
(2) Lorsqu’un
navire autre que celui contre lequel l’action est intentée a été saisi en
vertu du paragraphe 43(8) de la Loi, le propriétaire ou toute autre personne
qui a un droit sur le navire peut présenter une requête à la Cour en vue
d’obtenir la mainlevée de la saisie du navire. Si la Cour constate que ce
navire n’appartient pas au véritable propriétaire du navire en cause dans
l’action, elle ordonne la mainlevée de la saisie du navire sans exiger le
dépôt d’un cautionnement.
(3) À la suite d’une
requête présentée aux termes du paragraphe (2), la Cour peut ordonner la
mainlevée de la saisie du navire sans exiger le dépôt d’un cautionnement si
elle est convaincue que l’action dans le cadre de laquelle le navire a été
saisi est d’un type visé à l’un des alinéas 22(2)a) à c) de la
Loi.
|
THIS COURT ORDERS that
The Vessel is not the subject of a proper in rem
action and therefore, the Vessel is to be released from arrest without bail.
Cause of Action in Personam
WHEREAS, the First Action is one in personam
against I.S. Atlantic and Secunda Marine. The Second Action is in
personam against I.S. Atlantic, I.S. Pacific and Secunda Marine. Both
Actions are identical and seek identical relief with the exception that the
Second Action names I.S. Pacific.
There may be a cause of
action in regard to the Charterparty but that is another matter.
Stay of Proceedings
WHEREAS, subsequent to
consideration in respect of a stay of proceedings, the First and Second in
personam Actions are not struck out, they should both be stayed in favour
of the London Arbitration.
Section 50 of the Federal
Courts Act, provides that the Court may stay proceedings in any matter on
the ground that the claim is being proceeded with in another jurisdiction. (Fibreco
Pulp Inc. v. Star Shipping A/S (2000) 251 N.R. 291 2000 CarswellNat 1231
(Fed.C.A.). Prothonotary John Hargrave exercised his discretion in favour of
arbitration in London where the alternative would split the case among the
multiple jurisdictions.)
The Supreme Court of Canada
in Z.I. Pompey Industrie v. ECU-Line N.V., [2003] 1 S.C.R. 450 (QL)
stated that courts must give effect to contractual arbitration clauses and
decline to exercise jurisdiction where one is present.
The Plaintiff invoked the
arbitration procedure under the Charterparty and both parties have appointed
arbitrators. The Plaintiff has clearly stated that it is seeking to have the
issue of whether I.S. Atlantic has breached the Charterparty determined in the
London Arbitration and not in this Court.
THIS COURT ORDERS that
both of the Personam Actions be stayed.
“Michel M.J. Shore”
Email this Content