Date: 20080619
Docket: A-420-07
Citation: 2008 FCA 219
CORAM: LINDEN J.A.
SHARLOW
J.A.
TRUDEL
J.A.
BETWEEN:
MITSUI O.S.K. LINES, LTD.,
MOB COUGAR (PTE) LTD AND YUE YEW LOON
Appellants
and
MAZDA CANADA INC.
Respondent
REASONS FOR JUDGMENT
LINDEN J.A.
[1]
This is an
appeal from a decision dismissing an application to stay this action, which was
brought pursuant to subsection 50(1) of the Federal Courts Act, R.S.C.,
c. F-7, on the basis that the applicant had failed to persuade the Court that
Canada was forum non conveniens [2007 FC 916].
FACTS
[2]
The basic
facts are unusual but not disputed. This civil action for damages arises out of
the loss of 4,813 Mazda automobiles and 110 Isuzu trucks and salvage costs when
THE COUGAR ACE, the ship carrying them from Japan to New Westminster, B.C., Tacoma,
Washington and Port Hueneme, California, took on a severe list of 60 degrees on
July 24, 2006 while engaged in a routine ballasting operation on the high seas.
Mazda Canada Inc., the Plaintiff, eventually lost 1563 automobiles that it had
purchased, and Mazda Motors of America Inc. (Mazda USA) lost the rest of the Mazda vehicles (The
Isuzu trucks that were lost were owned by another party). The ship, owned by
MOB Cougar (PTE) Ltd., and chartered to MITSUI O.S.K. Lines Ltd. (Mitsui), was
eventually towed to Portland, Oregon where the damaged vehicles
were unloaded, inspected and later scrapped.
[3]
Mazda Canada instituted this action in
this Court, in rem against the ship and in personam against the
owner, MOB COUGAR (PTE) Ltd., (Singapore), the Charterer, Mitsui O.S.K. Lines
Ltd., (Japan), the Master and second
engineer (Myanmar) and the Chief Engineer (Singapore). The in rem action has not been
served; the Owner, Charterer and Chief Officer have been served; the Master and
Second Engineer have not been served.
[4]
Mitsui then
sued in Japan, seeking a declaration of
non-liability for the accident. It alleges that the loss was caused by an error
of management of the ship which operates as a complete defence under the Hague-Visby
Rules. It denies that the ship was not seaworthy and that the crew was not
properly trained, as alleged by Mazda Canada
in its action.
[5]
In
addition, Mazda USA sued in the U.S. District
Court of Oregon, but that action was dismissed based on the jurisdiction clause
in the contract. That clause 28 reads as follows:
28. LAW AND
JURISDICTION
The contract
evidenced by or contained in this Bill of Lading shall be governed by Japanese
law except as may be otherwise provided for herein. Unless otherwise agreed,
any action against the Carrier thereunder must be brought exclusively before
the Tokyo District Court in Japan. Any action by the Carrier to enforce
any provision of this Bill of Lading may be brought before any court of
competent jurisdiction at the option of the Carrier.
[6]
This case,
we are informed, is now under appeal to the Circuit Court of Appeals of the 9th
Circuit. In the meantime, however, Mazda USA has sued Mitsui in Japan. Since the trial of this action, the two
cases being brought in Japan were consolidated, that is
the Mitsui declaration action and the Mazda U.S.A. claim. They appear to be
proceeding expeditiously. An action has also now been commenced for the loss of
the Isuzu trucks in Japan.
Overview of the Law
[7]
The
accepted standard of review for discretionary decisions like this one is that
the Court will not lightly interfere. In Chinese Business Chamber of Canada
v. Canada, 2006 FCA 178, the Court stated:
The Court may
substitute its discretion for that of the Motions Judge if she gave
insufficient weight to all the relevant considerations. In addition, the Court
may intervene if the Motions Judge’s conclusion was predicated upon an
incorrect determination with respect to a question of law, or palpable and
overriding error of fact.
(See also VISX inc. v. Nidek Co., [1996] F.C.J. No.
1721 (C.A.); Cottrell v. Chippewas of Rama Mnjikaning First Nation Band,
2007 FCA 288; Holt Cargo Systems Inc. v. ABC Containerline N.V. (Trustee
of), (2001 SCC 90 at para. 98; Cunningham v. Kwikwetlem Indian Band,
2008 FCA 149). This, of course, does not mean that appellate courts will normally
re-weigh all the evidence to see if they agree with the decision on the merits.
However, where errors of law are discovered, a certain amount of reevaluation
may be required.
[8]
The
principles of law governing this matter are relatively well-settled now. It is
clear that subsection 46(1) of the Marine Liability Act S.S. 2001, c.6
eclipses the former Canadian law in cases where parties by contract choose the
jurisdiction in which the case will be tried. Such a clause in a contract of
carriage is no longer controlling in Canada,
but it may be considered as one of the factors to consider in deciding whether
an allegation of forum non conveniens is made out ((OT Africa Line
Ltd. v. Magic Sportswear Corp., 2006 FCA 284).
[9]
Subsection
46(1) allows a Canadian plaintiff to sue in Canada despite a clause like Clause 28 in this
contract, if certain conditions are met. Subsection 46(1) reads as follows:
|
46.
(1) If a
contract for the carriage of goods by water to which the Hamburg Rules do not
apply provides for the adjudication or arbitration of claims arising under
the contract in a place other than Canada, a claimant may institute judicial
or arbitral proceedings in a court or arbitral tribunal in Canada that would
be competent to determine the claim if the contract had referred the claim to
Canada, where
(a)
the actual port of loading or discharge, or the intended port of loading or
discharge under the contract, is in Canada;
(b)
the person against whom the claim is made resides or has a place of business,
branch or agency in Canada; or
(c)
the contract was made in Canada.
(2) Notwithstanding subsection (1), the parties to a contract
referred to in that subsection may, after a claim arises under the contract,
designate by agreement the place where the claimant may institute judicial or
arbitral proceedings.
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46. (1)
Lorsqu’un contrat de transport de marchandises par eau, non assujetti aux
règles de Hambourg, prévoit le renvoi de toute créance découlant du contrat à
une cour de justice ou à l’arbitrage en un lieu situé à l’étranger, le
réclamant peut, à son choix, intenter une procédure judiciaire ou arbitrale
au Canada devant un tribunal qui serait compétent dans le cas où le contrat
aurait prévu le renvoi de la créance au Canada, si l’une ou l’autre des
conditions suivantes existe :
a)
le port de chargement ou de déchargement — prévu au contrat ou effectif — est
situé au Canada;
b)
l’autre partie a au Canada sa résidence, un établissement, une succursale ou
une agence;
c)
le contrat a été conclu au Canada.
(2)
Malgré le paragraphe (1), les parties à un contrat visé à ce paragraphe
peuvent d’un commun accord désigner, postérieurement à la créance née du
contrat, le lieu où le réclamant peut intenter une procédure judiciaire ou
arbitrale.
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[10]
This
provision in subsection 46(1) merely opens the door for Canadian plaintiffs,
allowing an action to be instituted. However, the Court may still decline the
jurisdiction on the basis of forum non conveniens. (OT Africa, supra).
Section 46(1) applies here because the intended port of discharge of the
vehicles was New
Westminster,
B.C. The Plaintiff may therefore institute proceedings here, but forum non
conveniens arguments remain available to the Defendants.
[11]
The Trial
Judge correctly understood these principles and sought to apply them, taking
into account the established law governing the issue of forum non conveniens
derived from Spar Aerospace Ltd. v. American Mobile Satellite Corp,
2002 SCC 78 (relying on the Quebec Court of Appeal decision Lexus Maritime
Inc. v. Oppenheim Forfait GmbH, [1998] A.Q. No. 2059). That case set out a non-exhaustive
list of ten factors to be weighed by the Court in making this determination:
a) the parties’ residence, and that of
witnesses and experts;
b) the location of the material
evidence;
c) the place where the contract was
negotiated and executed;
d) the existence of proceedings pending
between the parties in another jurisdiction;
e) the location of the defendants’
assets;
f) the applicable law;
g) advantages conferred upon the
plaintiff by its choice of forum, if any;
h) the interests of justice;
i) the interests of the parties;
j) the need to have the judgment
recognized in another jurisdiction.
[12]
To stay an
action because of forum non conveniens in Canada, it must be established that another
forum is clearly more appropriate. In the case of Amchem Products Inc. v. British Columbia (Workers Compensation Board), [1993] 1 S.C.R. 897, para.
33 (relying on Spiliada Maritime Corp. v. Cansulex Ltd., [1987] A.C. 460)
Justice Sopinka stated that “the existence of a more appropriate forum must be clearly
established to displace the forum selected by the plaintiff.” Similarly, Lord
Goff in [1987] 1 Lloyd’s Rep. 1 explained that the applicant must “establish
that there is another available forum which is clearly and distinctly
more appropriate.” [Emphasis added]
[13]
Justice
Lebel of the Supreme Court of Canada in Spar Aerospace relying on the
Quebec Civil Code, article 3135, Spiliada and Amchem declares
that in applying article 3135, which he indicates is consistent with the common
law requirements, “the judge’s discretion to decline to hear the action on the
basis of forum non conveniens is only to be exercised exceptionally”
[Emphasis added]. He cites for support inter alia to Talpis and Castel’s
article, “Interpreting the Rules of Private International Law” in Reform of
the Civil Code, Vol. 5B, (1993), as follows:
The
plaintiff’s choice of forum should only be declined exceptionally, when the
defendant would be exposed to great injustice as a result.
[14]
While some
might wonder what the words “clearly”, “distinctly” or “exceptionally” add to the
obligation of the defendant to convince the court on the balance of
probabilities that the Judge should decline jurisdiction in the forum chosen by
the plaintiff, those words have been employed in the cases, perhaps to
emphasize that the plaintiff’s choice of forum should not be lightly interfered
with. Therefore, it must be clear that the jurisdiction chosen by the plaintiff
is inappropriate compared to another obviously superior jurisdiction. As Lord
Carswell explained, in another context, there is only one standard of civil
proof, balance of probabilities, but “in some contexts a court or tribunal must
look at the facts more critically and more anxiously than in others before it
can be satisfied of the requisite standard.” (See Re Doherty [2008]
U.K.A.C. 33, para. 28).
Analysis
[15]
The Trial
Judge set out to consider these ten factors, expressing the view that six of
them were “fairly neutral”, that is a), b), c), e), f) and j). He also
discussed g) and i) but not d) nor h). He added 3 other factors which he
thought should be examined: (1) the public policy of section 46(1), which he
found would aid Mazda Canada; (2) Clause 28, to which he did not give much
weight; and (3) the in rem procedure which he felt helped Mazda Canada. In the end, balancing all
these factors he refused to grant the stay. Having considered the analysis of
the Trial Judge, I have concluded that his discretion was, in all the
circumstances, not properly exercised and must be reversed. He made errors of
law requiring this Court to reassess his reasoning. He undervalued some factors
(a), d), f)) to which he should have given greater weight. He placed weight on
some factors which he should not have placed weight on. Also, there are
important new facts in relation to factor a) that arose following his decision
so that he was unable to take them into account. In short, Japan, not Canada, is clearly the most appropriate forum
for this litigation. A stay should be granted. Let me now elaborate on this
overview.
[16]
The most
significant factor that affects this Court’s decision is the ongoing
proceedings between the parties in Japan,
item d) on the list, which was largely ignored by the Trial Judge. First, an
action has been launched by the appellant in Japan for a declaration of
non-liability which includes as parties Mazda Canada, as well as Mazda U.S.A. That this action was started
after the Canadian one, in my view, is not of any importance. Second, there is a
civil action being pursued by Mazda U.S.A. in Japan for its losses, which has now been
consolidated with the declaration proceeding. (This same action had also
earlier included a claim for the losses of Mazda Canada, but that part of the claim was later
withdrawn by Mazda Canada.) Mazda U.S.A.’s claim was
launched because a law suit that it had started in the Oregon District Court
for cargo that was lost and salvage costs was dismissed in favour of the
Japanese Court on forum non conveniens grounds. (This decision is
currently on appeal in the 9th Circuit Court of Appeal.) Third, more
recently, a claim on behalf of the underwriters of the 110 Isuzu trucks that
were lost was launched in Japan, which will likely be consolidated with the
other two claims that are currently proceeding in Japan. (See Affidavit of Tetsuro Nakamura
dated January 15, 2008.)
[17]
It seems
to this Court that these three complex and costly matters are proceeding
expeditiously in Japan and will continue to do so. The
Respondent was originally made a party to the Mazda U.S.A. action but then, for
its own reasons, withdrew its claim in favour of attempting to proceed in Canada, in another complex and
costly proceeding. These new facts, many of which were not known to the Trial
Judge, weigh very heavily in favour of Japan as the most appropriate forum for the
adjudication of all these claims in order to avoid parallel proceedings.
International comity would be served by this course. Japan is an important trading partner of Canada and the Japanese legal system
is respected internationally, even though its discovery procedures may be less
fulsome than ours. In my view, therefore, the Trial Judge gave this factor
insufficient weight.
[18]
Another
significant factor to be considered is factor a) the residence of the parties,
the witnesses and the experts. This litigation, which involves many millions of
dollars, will require numerous potential witnesses and experts from several
countries other than Canada, that is – Japan, U.S.A., Singapore, Myanmar and the Philippines. The overwhelming majority of
the witnesses are not likely to be from Canada. Witnesses, most of whom are likely to
be from Japan, will be needed to describe the facts concerning the dry docking
of the vessel, the loading and inspection of the vessel prior to the voyage,
and the preparation for the voyage and the ballasting. The employees of the
appellants Mitsui and Mazda Japan who attended in Alaska and Portland to deal with the aftermath of
the incident as well as others from different countries will be needed at the
trial. Witnesses from Japan, none of whom were crew, will
be required to explain the corporate structures of Mitsui and Mazda Japan, where they “reside”, and their
relationship with each other. Those from Japan who supervised Seatrade Ship
Management Pte Ltd., a Singapore company who supplied the crew
and others involved will likely testify. There will also be a few crew witnesses
to describe the facts of the ballasting incident who are located in Singapore, Myanmar and the Philippines, closer to Japan than Canada. There will be experts from
the U.S.A., mainly testifying about the
aftermath and the damages. Very few witnesses from Canada will be needed, mainly to describe the
contract with Mazda Canada and the losses it incurred. Wherever
this trial is held, witnesses will have to be called from different countries
and the costs will be significant for all of the parties; a trial in Japan will likely be the least costly overall.
Note that the underwriters of both Mazda Canada and Mazda USA are the same, ACE
USA, of Philadelphia,
USA. Also, though English is
supposed to be the language of the shipping industry, most witnesses would need
translators wherever the trial unfolds. This factor of residence of witnesses,
therefore, weighs very heavily in favour of Japan, but the Trial Judge found it to be a
“fairly neutral” one, erroneously giving it insufficient weight, in my view.
[19]
Another
factor undervalued significantly by the Trial Judge was the potential treatment
of the applicable law, factor f). This action, if it were to proceed in Canada, would have to apply Japanese
law in accordance with Clause 28 of the contract of carriage. This is a weighty
element to consider. (See OT Africa, supra). The Trial Judge downplayed
this factor, referring to the fact that he was unaware of any differences
between the Japanese and Canadian law on the issues involved in the case. There
are, in this case, complicated legal questions that have not yet been resolved
in Japan that should be decided in this litigation: the issue of due diligence
in relation to the seaworthiness of the vessel prior to the voyage and its
relationship to the issue of the defence of error in the management of the
vessel under the Hague-Visby Rules. The legal treatment of the
limitation clause with regard to the amount of damages must be unravelled. By
handling these issues in Japan in Japanese by Japanese
Judges and lawyers a more accurate picture of the complex legal issues of
Japanese law will emerge. This would be preferable to dealing with these
matters by affidavits translated into English, by Judges totally unaware of the
actual Japanese jurisprudence and its legal system. Moreover, all of these
issues will form a significant aspect of the litigation that will proceed in Japan in any event, and will be resolved
there. It makes little sense to engage in the same complex exercise in Canada, risking different results. The
Trial Judge, in my view, gave insufficient weight to this factor.
[20]
Another
factor that was not properly weighed was the advantage to the plaintiff (g). The
Trial Judge was persuaded that significantly greater damages would be available
to the plaintiff in Canada than in Japan
because Canada has adopted the 1996 protocol to the Convention on Limitation of
Liability for Marine Claims of 1976, whereas Japan did not. It is, however, unclear whether
the Japanese law or Canadian law would be applied to determine this issue in
the Canadian
Court. In any
event, there is authority that the availability of higher damages in a
jurisdiction is not a factor justifying the refusal of a stay, provided that
substantial justice could be done in that jurisdiction (see: Spiliada
Maritime Corp. v. Cansulex, [1987] A.C. 460; “Herceg Novi” and “Ming
Galaxy”, [1998] 2 Lloyd’s Rep. 454.)
[21]
The
reasoning of the Trial Judge on the other factors listed in Spar Aerospace
(supra) is unimpeachable, that is, factors b), c), e) and i).
[22]
The Trial
Judge considered some factors which were not on the Spar Aerospace list,
which is permissible because that is not an exhaustive list. He took into
account (1) the public policy of Canada,
(2) the action in rem and (3) the jurisdiction clause. As for (1), in my
view, the Trial Judge was legally wrong to reason that subsection 46(1) evinced
a policy that would favour Canadian plaintiffs in their choice of a forum.
Subsection 46(1) merely gives Canadian litigants a chance to choose Canada initially, where heretofore
they were automatically barred from doing so by the usual jurisdiction clauses employed
in most shipping contracts. The wording of the legislation and the
jurisprudence based on it make it clear that subsection 46(1) does not grant
Canadian courts jurisdiction; it only allows Canadian courts, if chosen
by the plaintiff pursuant to subsection 46(1), to consider whether
Canada is the most appropriate forum employing the usual forum non
conveniens factors. (See OT Africa, supra.)
[23]
As for
(2), the Trial Judge’s reasons about the advantages of the Canadian in rem
procedure is beside the point, because that procedure is available, for what it
is worth, only if Canada assumes jurisdiction, but not if it does not.
[24]
As for (3),
the use of the jurisdiction clause in the post subsection 46(1) world, the
Trial Judge was correct to say that it would still be relevant and “cannot be
ignored”, but it should be given “little weight”. He was right to say it does
“not tip the scales in Japan’s favour”. In this case,
however, the clause is not one of those offensive ones that gives jurisdiction
to a Court that has little or no connection to the contract, which often
treated Canadians so unfairly. On the contrary, here there exists a
long-standing relationship between the parties, who have dealt with one another
over many years on the basis that the Japanese courts will have jurisdiction in
a context where Japan has a close connection to the
arrangements made. In these circumstances, the jurisdiction clause is a factor
that deserved to be given more weight favouring Japan, where it might not deserve such weight
if the links with Japan were more tenuous.
[25]
In
conclusion, Japan is clearly the most appropriate forum to hear this case, as
it is the one most closely connected to the parties and the facts of the case,
the vessel was inspected, loaded and departed from Japan, Japanese law applies
to the litigation, two (probably three) consolidated actions will be conducted
there dealing with the same issues, the same law, and the same witnesses, and Japan
was the jurisdiction contracted for by the parties.
[26]
Consequently,
the discretion of the Trial Judge was not exercised properly in accordance with
the legal principles, it did not give sufficient weight to several factors and
it gave too much weight to other factors as described above.
[27]
The appeal
will be allowed, the decision will be set aside and this action will be stayed.
One set of costs for the appellants.
"A.M. Linden"
“I
agree,
K. Sharlow J.A.”
“I
agree,
Johanne Trudel J.A.”
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