Nissho Iwai Co. v. Shanghai Ocean Shipping Co., docket T-2039-98

Date: 20000620

Docket: T-2039-98

BETWEEN:

     NISSHO IWAI COMPANY LIMITED, TOSHOKU LIMITED,

     CARGILL JAPAN LIMITED, NICHIMEN CORPORATION,

     SHOWA SANGYO COMPANY LIMITED,

     YOSHIHARA OIL MILL LIMITED and NIKKA FATS & OILS

     COMPANY LIMITED

    

     Plaintiffs

     - and -

     SHANGHAI OCEAN SHIPPING COMPANY

     Defendant

     REASONS FOR ORDER

GIBSON J.

INTRODUCTION

[1]      These reasons arise out of an application on behalf of the Defendant for an order pursuant to section 50 of the Federal Court Act¹ and Rule 208 of the Federal Court Rules, 1998² that this action be stayed in the interest of justice in that, it is alleged, Canada is not a convenient forum.

BACKGROUND

[2]      The bulk carrier Ning Hai was voyage chartered by Cargill Limited, a Canadian company, to load a cargo of 17,850 metric tonnes of canola at Vancouver for delivery to ports in Japan. Loading of the cargo was completed on the evening of the 29^th of September, 1996. For reasons alleged by the Plaintiffs to be relevant to this action, the Ning Hai did not depart Vancouver until the 19^th of October, 1996, twenty days after completion of loading.

[3]      Almost two weeks later, in the early morning hours of the 2^nd of November, the Ning Hai grounded off Ketoy Island, one of the Kurile Islands, in Russian waters north of Japan. By the 8^th of November, the Ning Hai was broken and under water except for the vessel"s cranes. The Plaintiffs allege that the cargo was a total loss.

THE PARTIES

[4]      The Plaintiffs are all corporations incorporated under the laws of Japan with offices and places of business in Japan.

[5]      The Defendant is a corporation incorporated under the laws of the People"s Republic of China with an office and place of business in the People"s Republic of China. In their statement of claim, the Plaintiffs allege that the Defendant provided the officers and crew that manned the Ning Hai on its last voyage.

[6]      I find that none of the Plaintiffs and the Defendant have a substantial connection to Canada.

THE PLAINTIFFS" CLAIM

[7]      The Plaintiffs allege that they are the owners of the last cargo. They further allege that the grounding of the Ning Hai was caused by the incompetence of its officers and crew, that the Defendant, as provider of the officers and crew, owed the Plaintiffs a duty of care to provide competent and qualified officers and crew, that the Defendant breached that duty of care and, more particularly, that the Defendant:

a. Provided incompetent and unqualified officers and crew to man Ning Hai, failed to train properly the deck officers in the navigation of the vessel or ensure that the deck officers were properly so trained and failed to investigate and evaluate properly and carefully the qualifications, experience, background and accident records of the officers and crew;

b. Permitted continuing bad practices of the officers in the navigation of the vessel, including the failure of the vessel"s officers to plan and follow courses properly and establish and verify the vessel"s position regularly, notwithstanding that it knew of the continuing bad practices or had the means of so knowing.

[8]      In the result, the Plaintiffs claim against the Defendant substantial general and special damages, pre-judgment and post-judgment interest on the damages and their costs of the action.

FORUM NON CONVENIENS

[9]      In Amchem Products Inc. v. British Columbia (Workers" Compensation Board)³, Mr. Justice Sopinka, writing for the Court, reviewed the state of the law on forum non conveniens. At page 915, he wrote:

The law of Canada and other common law countries on this subject evolved from the law of England which was most recently re-stated by the House of Lords in Spiliada Maritime Corp. v. Cansulex Ltd., [1987] A.C. 460.

[10]      Mr. Justice Sopinka summarized the rule deriving from the Spiliada decision in what he described as the "as of right" cases, and I am satisfied that this is such a case, in the following terms at page 916 and 917:

In the "as of right" cases in which the defendant was served in the jurisdiction, the burden of proof that a stay should be granted was on the defendant who was required to show that there is another forum which is clearly more appropriate for the trial of the action. This so-called "natural forum" is the one with which the action has the most real and substantial connection. If this first condition is established, as stay will be granted unless the plaintiff establishes special circumstances by reason of which justice requires that the trial take place in [Canada]. Mere loss of a juridical advantage will not amount to an injustice if the court is satisfied that substantial justice will be done in the appropriate forum.

[11]      Mr. Justice Sopinka continued at page 920:

The weight to be given to juridical advantage is very much a function of the parties" connection to the particular jurisdiction in question. If a party seeks out a jurisdiction simply to gain a juridical advantage rather than by reason of a real and substantial connection of the case to the jurisdiction, that is ordinarily condemned as "forum shopping". On the other hand, a party whose case has a real and substantial connection with a forum has a legitimate claim to the advantages that that forum provides. The legitimacy of this claim is based on a reasonable expectation that in the event of litigation arising out of the transaction in question, those advantages will be available.

[12]      Finally, Mr. Justice Sopinka wrote at page 921:

The burden of proof should not play a significant role in these matters as it only applies in cases in which the judge cannot come to a determinate decision on the basis of the material presented by the parties. While the standard of proof remains that applicable in civil cases, I agree with the English authorities that the existence of a more appropriate forum must be clearly established to displace the forum selected by the plaintiff.      [Underlining appears in the original]

POSITIONS OF THE PARTIES

[13]      Counsel for the Applicant/Defendant urges that this action has a "real and substantial connection" to the People"s Republic of China and not to Canada and that therefor, the PRC is the "natural forum". He urges that this action is about a grounding of a ship which occurred in the Kurile Islands, thousands of kilometres from Vancouver, or any other point in Canada. He urges it is about how a ship could hit what is a tiny, known and identifiable point of land on a huge expanse of ocean on a usual ocean route. It is about what happened in the last hours or minutes before the vessel went aground and not about what happened, or was observed, during the time the Ning Hai was in Vancouver harbour. He urges the action is about training and employment standards in China, the base of operations of the officers and crew of the Ning Hai.

[14]      The Defendant acknowledges the existence of a time-bar that is long past before the Courts in the People"s Republic of China. At the same time, the Defendant undertakes to waive any reliance on the time-bar and presents expert evidence that the courts in the People"s Republic of China will accept such a waiver. Counsel urges that by far the greater number of critical witnesses are based in China.

[15]      Counsel for the Respondents/Plaintiffs urges that a range of "connecting factors" identify Canada as a convenient forum and establish a "real and substantial connection to Canada". Counsel points out that the cargo, the loss of which is at the base of this action, was purchased in Canada and loaded in Canada. He points to a range of persons in Canada who had an opportunity to observe the competence or incompetence of the officers and crew of the Ning Hai in the days leading up to the commencement of the fateful voyage and urges that these persons will be essential witnesses at trial.

[16]      Counsel for the Respondents/Plaintiffs has filed expert evidence to the effect that the courts in the People"s Republic of China will not accept a waiver of time-bar.

[17]      Finally, counsel urges that a range of "juridical advantages" such as the availability of discovery of documents and of examination for discovery, and the recoverability of certain costs in this Court as well as the substantially greater court costs in the People"s Republic of China weigh in favour of the selection of Canada as the most convenient forum.

ANALYSIS AND CONCLUSION

[18]      I find that, on the totality of the evidence before the Court on this motion, the real and substantial connection of this action is to the People"s Republic of China and not to Canada. On the face of the Plaintiffs" statement of claim, the fundamental issues to be adjudicated relate to the incompetence or competence of the officers and crew of the Ning Hai, all of whom are most closely connected to the People"s Republic of China and none of whom have any connection to Canada, and, if it can be established that the Defendant owed the Plaintiffs a duty of care to provide competent and qualified officers and crew for the Ning Hai, whether the Defendant breached that duty of care. Substantially all, if not all of the evidence as to steps taken by the Defendant to fulfill any such duty of care, will have to come from the People"s Republic of China. It will certainly not come from Canada.

[19]      There are certain connecting factors that favour Canada as a convenient forum. It was not in dispute before the Court that this action was commenced in Canada within the relevant time limitation. That would certainly not be the case in respect of the People"s Republic of China. That being said, the Defendant has offered a waiver of reliance on the time-bar in the People"s Republic of China and a stay of this action can be made conditional on that waiver and its acceptance by the appropriate courts in the People"s Republic of China. While assessment of quantum of damages, if it comes to that, will undoubtedly require evidence from Canada, I find that assessment to be a secondary issue.

[20]      The availability of discovery of documents and examinations for discovery before this Court, apparently advantages not afforded by the courts in the People"s Republic of China, are significant advantages. I am satisfied that they are not advantages that outweigh the real and substantial connection of this matter to the People"s Republic of China. The same must be said for the differential in the cost of conducting litigation between this country and the People"s Republic of China and the differences regarding cost awards.

[21]      The Defendant is clearly most closely connected to the People"s Republic of China. The Plaintiffs are, in terms of the centrality of their businesses, situated more closely to the People"s Republic of China and, I am satisfied, have no substantial connection to Canada.

[22]      For the foregoing reasons, this application will succeed. A stay on the basis of forum non conveniens will be granted conditional on the waiver of any time-bar associated with recommencement of this proceeding in the People"s Republic of China or any other forum chosen by the plaintiffs or any of them and on the acceptance of that waiver by the court in the People"s Republic of China or other forum.

[23]      The Applicant/Defendant is entitled to its costs of this motion, as taxed on the ordinary scale.

                             (Sgd.) "Frederick E. Gibson"

                             Judge

June 20, 2000

Vancouver, British Columbia

     FEDERAL COURT OF CANADA

     TRIAL DIVISION

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                  T-2039-98

STYLE OF CAUSE:          Nissho Iwai Company Limited et al

                     v.     

                     Shanghai Ocean Shipping Company

PLACE OF HEARING:          Vancouver, British Columbia

DATE OF HEARING:          June 12, 2000

REASONS FOR ORDER OF      GIBSON, J.

DATED:                  June 20, 2000

APPEARANCES:

Mr. Chris Giaschi              FOR PLAINTIFFS

Mr. D.G. Morrison              FOR DEFENDANT

SOLICITORS OF RECORD:

Giaschi & Margolis

Barristers & Solicitors

Vancouver, BC              FOR PLAINTIFFS

Bull Housser & Tupper

Barristers & Solicitors

Vancouver, BC              FOR DEFENDANT

__________________

¹      R.S.C. 1985, c. F-7.

²      S.O.R./1998-106.

³      [1993] 1 S.C.R. 897.