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Précis: The risk of a limitation period defence in the US Courts constituted a strong cause to avoid the effect of an exclusive jurisdiction clause.
Facts: The plaintiff was an importer of fruits and vegetables from Central and South America. The cargo was carried by the defendant from a port in Central America to Wilmington, Delaware and then carried by truck to Toronto, Canada. The cargo arrived damaged and the plaintiffs commenced an action against the shipping line. The carriage of the cargo was pursuant to a service contract, which incorporated a “non-negotiable express release bill of lading”. The bill of lading contained an exclusive jurisdiction clause in favour of the US Courts. The defendant brought a motion to stay the action based on the exclusive jurisdiction clause.
Decision: The motion for the stay based on the exclusive jurisdiction clause was denied.
Held: The Marine Liability Act, s.46 has the effect of removing the discretion of the Federal Court to grant a stay of proceedings based on an exclusive jurisdiction clause when the requirements of s.46 are met. However, it does not oust the Court’s discretion to grant a stay when s.46 is not clearly in issue. The defendants argued that the service contract did not constitute a contract for carriage of goods by water under the Marine Liability Act and the bill of lading was not a “true” bill of lading and therefore s.46 did not apply. The plaintiff argued that the bill of lading and the service contract were sufficient to constitute a contract for the carriage of goods by water and furthermore that it had a strong cause for the denial of the motion for the stay of proceedings, namely that it would be out of time to commence an action in the United States. While the defendant submitted that it would not rely on the limitation period defence if the action were brought in the United States District Court, its position, “while admirable”, would not be binding upon the foreign court and was of limited benefit. The issue of whether the bill of lading was a true bill of lading and the interpretation of the service contract was not necessary to dispose of the motion for stay based on the plaintiff’s establishing that it had strong cause for the denial of the motion.