Date: 19990507
Docket: T-2035-98
ADMIRALTY ACTION IN REM AGAINST THE SHIP "MARIANA"
BETWEEN:
THYSSEN CANADA LIMITED
SECURITAS BREMER ALLGEMEINE VERS. A.G
Plaintiff
- and -
MARIANA MARITIME S.A.
SEBILAN COMPANIA NAVIERA S.A.
SUNLIGHT COMPANIA NAVIERA S.A., AND
Owners AND ALL OTHERS INTERESTED IN THE SHIP "MARIANA",
(EX "ANAMELIA"), NIKOLAOS PRINIAS, DINISIOS SKIAVOUNOS,
MICHAIL DASKALAKIS, ISIDOROS KARAMOUZOS
Defendants
REASONS FOR ORDER AND ORDER
BLAIS, J.
[1] This is a notice of application for referral to arbitration and for stay of proceedings pursuant to section 50 of the Federal Court Act, Rules 324 and 359 of the Federal Court Rules, 1998, sections 2 and 5 of the Commercial Arbitration Act filed by the defendant Mariana Maritime S.A.
BACKGROUND
[2] In April 1998, Thyssen Canada entered into negotiations with Ferrostaal to purchase approximately 18,000 metric tons of hot rolled coils to be supplied by Romanian mills for shipment to Windsor, Ontario, in May 1998. Payment was to be by irrevocable letter of credit opened by a first class Canadian or U.S. bank in favour of Ferrostaal, payable at sight.
[3] On or about April 14, 1998 Thyssen Canada agreed to purchase 18,000 metric tons of hot rolled coils from Ferrostaal. The terms of payment and delivery were: "CFR Free Out Windsor, Ontario, Canada". Bill of lading (No. 1) dated at Constanza, May 31, 1998, signed by the Master of Mariana, Captain Nikolaos Prinias, acknowledged receipt in good order and condition of 513 coils of hot rolled carbon steel coils having a weight of 8,950.70 metric tons aboard the Mariana.
[4] A bill of lading (No. 2) dated at Constanza, June 8, 1998, signed by the Master of Mariana, Captain Nikolaos Prinias, acknowledged receipt in good order and condition on board the Mariana of 298 coils of hot rolled carbon steel coils having a weight of 5,207.260 metric tons.
[5] 191 Coils stowed in No. 3 hold were part of the second shipment loaded on board the Mariana at Constanza, June 7 and 8, 1998.
[6] On June 9, while transiting the Bosphorus in Turkey, a fire broke out in the vessel's No. 3 hold. The plaintiff alleged that the steel coils were damaged during the fire and the firefighting operation.
[7] On October 28, 1998, the plaintiff filed a statement of claim for the damages to the cargo.
[8] And finally, the defendant Mariana Maritime S.A. filed this motion for an order referring the parties to arbitration in London, England, and staying the proceedings herein.
ARGUMENTS OF DEFENDANT:
[9] The defendant suggests, that pursuant to sections 3 and 50(1)(b) of the Federal Court Act, R.S.C. 1985, c. F.-7 as amended, the Federal Court of Canada has inherent jurisdiction to stay proceedings in any cause when it is in the interest of justice to do so.
[10] Pursuant to sections 5 and 6 of the Commercial Arbitration Act, R.S.C. 1985, 2nd Supp., c.-17, an application for a referral of parties to resolve disputes by way of an arbitration process are to be brought by way of application before this Honourable Court.
[11] The code, to which reference is made in the said articles 5 and 6, is the Commercial Arbitration Code.
[12] Pursuant to article 8 of the Commercial Arbitration Code, this Honourable Court must refer the parties to arbitration upon application.
[13] The defendant suggests that the contract between Thyssen Canada Limited and Mariana Maritime S.A. is contained in the bill of lading No. 2. Clause 1 thereof provides: "All terms and conditions, liberties and exceptions of the Charter Party, dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated." The details of the charter party were not filled in on the overleaf side of the bill of lading.
[14] There were two charter parties concerning the Mariana. The first charter party was made between the first defendant and Hawknet and second was a sub-charter governing the voyage for which the claims are made.
[15] It is submitted that both charter parties were expressly made subject to English Law and London arbitration.
[16] It is submitted that it is clear under both Canadian and English Law, that the holder of a bill of lading which specifically incorporates the arbitration clauses in a charter party, is bound thereby even if the bill of lading does not identify the charter party.
[17] It is also submitted that even if the plaintiff Thyssen establishes that the Hamburg Rules are in force in Romania, the country of shipment, the bill of lading calls for the application of the Hague Rules. Under the Canadian Law, the terms of the contract prevail.
ARGUMENTS OF PLAINTIFF
[18] Thyssen received bills of lading Nos. 1 and 2, dated May 31, 1998, and June 8, 1998, respectively as part of the commercial transaction whereby Ferrostaal received payment for the coils, pursuant to terms of the letter of credit. Thyssen ultimately presented the bills of lading to agents of Mariana to obtain delivery of the goods at Windsor, Ontario.
[19] Thyssen was not at any time a voyage charterer, time charterer or demise charterer of the Mariana and had no dealings with the owners of the Mariana or Hawknet for carriage of the steel.
[20] It is submitted that before article 8 of the Commercial Arbitration Code applies, pursuant to article 7, there is a condition that an "agreement to arbitrate" must be proved.
[21] It is submitted that the owners" bills of lading Nos. 1 and 2 that were signed by Captain Prinias, Master of the Mariana, are dated May 31, 1998 and June 8, 1998, respectively. The additional clauses "JE1", on which owners rely, is dated Constanza, June 10, 1998, two days after the last bill of lading was issued. The charter party on which reliance by owners is placed can have no relevance to the agreement contained in bills of lading Nos. 1 and 2, as the charter party was not in existence until two days after bill of lading No. 2 was signed, on June 8, 1998.
[22] It is submitted that the claim against owners of Mariana arises out of the obligations assumed by the owners, pursuant to the bills of lading, or in tort by reason of the negligence of the owners, their master, servants or agents. It is submitted that the claim is not a dispute arising out of the voyage charter between Hawknet and Metalexport Import S.A.
[23] It is submitted that there is simply no agreement to arbitrate to which Thyssen or owners are a party by definition of article 7 of the Commercial Arbitration Code.
[24] It is submitted that the front of the bill of lading contains no special typewritten words to identify the relevant charter party. There is no identification of any charter party at all. The only possible reference is at the bottom of the printed form where the following printed form wording appears:
Freight payable as per
CHARTER-PARTY DATED
FREIGHT ADVANCE
Received on account of freight
Time used for loading
_________days _________hours.
[25] It is finally submitted that the plaintiff pleads and relies upon the Hamburg Rules, as applied by force of law in the State of Romania, as the contracting state at the port of loading. Clauses 21 and 22, both allow for hearing of the case at the port of discharge.
ANALYSIS
[26] The Court accepts that, pursuant to articles 7 and 8 of the Commercial Arbitration Code, the Federal Court must refer the parties to arbitration if there exists an arbitration agreement between the parties, Thyssen and Mariana. In order to determine the existence of such an agreement, the Court has to address the following questions:
| 1. Do bills of lading incorporate an arbitration clause? |
| 2. Is there a contract between Thyssen and Mariana contained in the bills of lading ? |
[27] The Mariana was chartered to Hawknet on a New York produce exchange form charter party dated May 25, 1998, for a period of 60-65 days. Towards the end of May, the vessel was ordered by Hawknet to Constanza, Romania, to load a consignment of steel coils for Canada. Two bills of lading were issued. The first bill, dated May 31, 1998, was for 513 coils of steel. The second, dated June 8, 1998, was for 298 coils of steel. Both bills were on the 1994 congenbill form.
[28] A look at the bills of lading shows that no date or definitive identification of a particular charter party was entered on the bills. The bills state at clause 1:
| All terms and conditions, liberties and exceptions of the Charter Party dated as overleaf, including the Law and Arbitration Clause, are herewith incorporated. |
|
[29] Despite the fact that the Hamburg Rules might have the force of law in Romania, article 22 of the said Hamburg Rules indicates that:
| 1. Subject to the provisions of this article, parties may provide by agreement evidenced in writing that any dispute that may arise relating to carriage of goods under this Convention shall be referred to arbitration. |
|
| 2. Where a charter-party contains a provision that disputes arising thereunder shall be referred to arbitration and a bill of lading issued pursuant to the charter-party does not contain a special annotation providing that such provision shall be binding upon the holder of the bill of lading, the carrier may not invoke such provision as against a holder having acquired the bill of lading in good faith. |
|
[30] Therefore, clause 1 appearing on the bills, is determinative in concluding that there is an agreement to refer disputes to arbitration and that it supersedes the application of the Hamburg Rules.
[31] In determining whether there is a contract between Thyssen and Mariana contained in the bills of lading, the following reasoning is applied.
[32] The absence of a date of the charter party is not unusual.
[33] It is not either an obstacle to the incorporation of a charter. Counsel for the plaintiff suggests that when you have a document with many blanks which have not been filled in, the corporation clause cannot apply.
[34] I refer to the San Nicholas case where Lord Denning stated:
| But the question is the effect of the incorporation clause which has several blanks which have not been filled in. Mr. Gilman says that, as a result of those blanks, the incorporation clause is worth nothing. It is meaningless. It is not possible, he says, to incorporate a charter which is not identified in any way.... |
|
| I cannot for a moment agree with that contention. It seems to me plain that the shipment was carried under and pursuant to terms of the head charter. The blanks were left because the master and the other people in Recife did not know its date and the parties to it so as to be able to fill them in. The head charter was the only charter to which the shipowners were parties: and they must, in the bill of lading, be taken to be referring to that head charter... |
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| But it is the duty of the Court to seek to give an intelligent meaning to a commercial document of this kind. I would hesitate long before holding that the mere omission to include the date of a charter-party in a bill of lading negatives an intention to incorporate the terms of that charter-party in to the bill of lading.1 |
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[35] Both the head charter and the sub charter are subjected to English Law and London arbitration. The additional clauses to charter party that were filed with a mention dated Constanza, June 10, 1998, also consider additional clauses 18 to 49, that were filed with an annex to the charter party between Hawknet Limited and Metalexport Import S.A. where the clause 35 is dated Constanza, May 31, 1998, and this document was filed by the plaintiff.
[36] In my opinion, the sub-charter was incorporated.
[37] Pursuant to Mr. Jonathan Elvey's affidavit, it is my opinion that the two bills of lading incorporated English Law and London arbitration clause in respect of which charter is incorporated.
[38] Lord Denning MR said in The Annefield [1971] All E.R. 394 at page 406:
| ...The present case is, in my view, clearly distinguishable, in that there were added to the usual general words of incorporation in the two bills of lading the further specific words "including the arbitration clause". The addition of these words must, as it seems to me, mean that the parties to the bills of lading intended the provisions of the arbitration clause in the charter party to apply in principle to disputes arising under the bills of lading; and, if it is necessary, as it obviously is, to manipulate or adapt part of the wording of that clause in order to give effect to that intention, then I am clearly of the opinion that this should be done. |
|
[39] In my opinion, even if the charter parties are not mentioned on the bill of lading, this Court could decide that they are incorporated, pursuant to clause 1 of the same bill of lading, and this bill of lading could be read as if the charter parties were mentioned on it.
CONCLUSION
[40] In my opinion, clause 1 of the bill of lading has the effect to incorporate the arbitration clause included in the charter parties relating to the bill of lading. There remains no discretion for the judge to apply article 8 of the Arbitration Code and to issue a stay of the proceedings in the case at bar.
[41] In my opinion, it is clear that the holder of a bill of lading which specifically incorporates the arbitration clauses in a charter party, is bounded by this arbitration clause.
[42] The bill of lading calls for the application of the Hague Rules. Under Canadian law, the term of the contract prevails.
[43] For those reasons, the action is stayed, pursuant to section 50 of the Federal Court Act, and the parties are at liberty to institute arbitration proceedings in London.
[44] Costs in the cause.
Pierre Blais
Judge
OTTAWA, ONTARIO
May 7, 1999
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1 The San Nicholas [1976] 1 Lloyd"s Rep. 8.
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