Docket: T-2371-14
Citation:
2014 FC 1205
Ottawa, Ontario, December 12, 2014
PRESENT: The Honourable Mr. Justice Harrington
ADMIRALTY ACTION IN REM AND IN PERSONAM
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BETWEEN:
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BBC CHARTERING CARRIERS
GmbH & Co. KG
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Plaintiff
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and
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JINDAL STEEL & POWER LIMITED, AND THE OWNERS AND ALL OTHERS
INTERESTED IN THE CARGO OF PRIME HOT ROLLED STEEL PLATES LOADED ON THE SHIP
“MV KURT PAUL”
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Defendants
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ORDER AND REASONS
(Delivered from the Bench at Ottawa, Ontario, 12 December 2014,
the Court reserving the right to
correct errors in grammar,
if any, and complete citations)
[1]
The Court is faced with a motion by Jindal Steel
& Power Limited to have the arrest of certain cargo covered by bill of
lading number BBCH1106008VH08 by the plaintiff, set aside on the basis that
this Court lacks jurisdiction in rem.
[2]
The motion is made pursuant to Rule 221 of the Federal
Courts Rules. Normally, a motion that pleadings should be struck as not
disclosing a cause of action is heard without the benefit of affidavit
evidence. However, when the failure to disclose a cause of action pertains to
the jurisdiction of the Court, affidavit evidence is allowed (MIL Davie Inc.
v Hibernia Management and Development Co. 226 NR 369 (FCA), [1998] FCJ No
614 (QL). Nevertheless, the Court is not called upon to determine the merits of
the dispute but rather to determine whether it is plain and obvious that the
plaintiff does not have a cause of action in rem within the jurisdiction
of this Court (Hunt v Carey Canada Inc., [1990] 2 S.C.R. 959, [1990] SCJ No
93 (QL)).
[3]
The dispute arises under a voyage charter party
in the well known Gencon form between the plaintiff as owner (in fact, time
charterer) and Jindal as voyage charterer. Although the charter party calls for
London arbitration, the jurisdiction of this Court is not ousted. Under the Commercial
Arbitration Act and the Code which is a schedule thereto, a plaintiff may
seek interim measures from this Court, which is the case here.
[4]
The plaintiff claims demurrage at discharge and
other expenses. It relies on the lien clause, clause 8 of the charter party,
which provides that it has a lien on the cargo for freight, dead freight,
demurrage, claims for damages, and all other amounts due under the charter
party.
[5]
Jindal was the shipper under bills of lading
issued, which were subject to the charter party. The uncontradicted evidence is
that the bills of lading had been negotiated and Jindal no longer has control
over the cargo.
[6]
Jindal’s argument is that the lien contemplated
by clause 8 of the charter party is a possessory lien and that BBC Chartering
has lost possession as it discharged the cargo. The difficulty I have with that
argument is that the demurrage clause, clause 7, includes demurrage at the
discharge port. How can demurrage, which is time in excess of the agreed
laytime, accrue unless the cargo has been discharged and, in these
circumstances, unless the plaintiff has lost possession of the cargo?
[7]
At this stage of the proceedings, the
controlling case is that of Mr. Justice Muldoon in Textainer Equipment
Management B.V. v Baltic Shipping Company, 84 FTR 108, [1994] FCJ No 1267
(QL). It is certainly arguable that the plaintiff has at least an equitable
charge on the cargo and would be entitled to arrest same.
[8]
Consequently, the motion to set aside the arrest
and to dismiss the action in rem is dismissed.
[9]
The Court is also faced with a motion on behalf
of the plaintiff BBC Chartering Carriers GmbH & Co. KG to enforce an
agreement to provide security for London arbitration. The dispute arises form
the fact that the bank guarantee offered has a two-year time limit which is
unsatisfactory to BBC. I agree. Security stands as payment for a final judgment
or arbitration award as the case may be. Security which lapses after two years
is not security at all. However, I need not deal with that motion and I am
adjourning it sine die.
[10]
The fact of the matter is that the cargo under
bill of lading number 8 remains under arrest and can only be released if bail
is given. Under Rule 486 of the Federal Courts Rules, the parties are
free to agree, including an agreement to release the cargo in favour of
security placed in London arbitration. However, failing that, the sufficiency
of any security is to be determined by the Court under Rule 486(4). As I
understand it, the parties have agreed that the amount of security should be
$200,000. Unless the parties reach an agreement themselves, this Court will not
release that cargo unless there is a guarantee by a Canadian chartered bank.
That guarantee may have an expiration date but must, in that case, include an
evergreen clause, which is to say it will be automatically renewed from time to
time. If the bank decides not to renew, the guarantee must provide that
$200,000 will be deposited with the Federal Court Registry. Otherwise, the
security may be in a form of bond by a surety company, again in accordance with
Rule 486, or cash deposit into the Registry.
[11]
Costs shall be in the cause.
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