View source for 1. Jebsens International (Australia) v Interfert Australia: 2. Norden A/S v Beach Building & Civil Group

DMC/SandT/12/22

'''Australia'''

'''1.Jebsens International (Australia) Pty Ltd and Anor v Interfert Australia Pty Ltd and Ors (2011) 112 SASR 297 25 August 2011 (Anderson J)'''

Counsel for plaintiffs: S Horgan SC, N Rochow SC and P Britten-Jones, instructed by Mellor Olsson as agents for Holman Fenwick Willan  

Counsel for first defendant: B Doyle, instructed by Cowell Clarke

Counsel for the second, third and fourth defendants:  B Roberts, instructed by Philip Farlam Legal Consulting

               
'''2.Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd [2012] FCA 696, 29 June 2012 (Foster J)'''

Counsel for applicant: GJ Nell SC and JA Soars, instructed by James Neill

Counsel for Respondent: A Morris QC and L Jurth, instructed by Worcester & Co

'''Summary'''

These two decisions considered the same question, namely whether a voyage charterparty is a “ sea carriage document “ as those words appear in section 11 of the Australian Carriage of Goods by Sea Act 1991(COGSA). 

The Supreme Court of South Australia in Jebsens ruled that it was not and the Federal Court of Australia in Norden held that it was. The consequence of each answer was that in Jebsens the maritime arbitral awards made in arbitration proceedings in London were enforceable in Australia, whereas in Norden similar arbitral awards were not enforceable in Australia. The decision in Norden is under appeal.

This case note has been contributed by Peter McQueen, FCIArb, Arbitrator and Mediator: www.petermcqueen.com 

'''Facts'''

Section 11(1) of COGSA is a mandatory choice of law clause, by which all parties when entering into contracts relating to export shipments are taken to have intended to contract in accordance with Australian law. Section 11(2) of COGSA maintains the preservation of the jurisdiction of Australian courts in respect of agreements, wherever made and where evidenced by specified documents relating to both export and import shipments. By section 11(2) those agreements have no effect so far as they purport to preclude or limit the application of Australian law in respect of export shipments and the application of the jurisdiction of Australian courts in respect of both export and import shipments.

When section 11(1) was originally introduced in 1991 its operation was limited to “a bill of lading, or similar document of title” and did not apply to a charterparty which was not itself a document of title. In 1998 amendments were made to sections 11(1)(a) and 11(2)(c)(i) by omitting the words “a bill of lading, or similar document of title” and by substituting the words “a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia” and “a sea carriage document relating to the carriage of goods from any place outside Australia to any place in Australia” respectively. 

The words “sea carriage document” appearing in these amendments are not defined in COGSA.  Rather they are defined by way of regulation, with the introduction into COGSA in 1998 of the “amended Hague Rules” by Schedule IA.  Article 1(1)(g) of the amended Hague Rules defined those words.  That definition is:

“(i)	a bill of lading; or

(ii)	a negotiable document of title that is similar to a bill of lading and that contains or evidences a contract of carriage of goods by sea; or

(iii)	a bill of lading that, by law, is not negotiable; or

(iv)	a non-negotiable document (including a consignment note and a document of the kind known as a sea waybill or the kind known as a ship’s delivery order) that either contains or evidences a contract of carriage of goods by sea.”

That definition applies when those words are used in the amended Hague Rules but does not apply to COGSA itself.

The case in Jebsens arose out of claims for unpaid freight arising from the carriage of a cargo of fertiliser from Tampa, USA to Australian ports on the “Nord Trust” under a voyage charterparty. The charterparty called for arbitration in London with disputes to be governed by English law. The award creditor in respect of the two awards, which were made in accordance with the arbitration clause in the charterparty, sought their enforcement in Australia and the Court ruled that both awards were enforceable.  

The case in Norden arose out of a claim for demurrage arising from the carriage of a cargo of coal from Dalrymple Bay, Australia to Chinese ports on the “Ocean Baron” under a voyage charterparty. The arbitration clause called for arbitration in London with disputes to be governed by English law.  The award creditor in respect of the two awards, which were made in accordance with the arbitration clause in the charterparty, sought their enforcement in Australia and the Court ruled that they were not enforceable.

'''Judgments'''

In Jebsens the Court ruled that the voyage charterparty was not a “sea carriage document” within the ambit of section 11 of COGSA and further that it was not a “sea carriage document” within the definition contained in the amended Hague Rules. It was reasoned that “COGSA in its current form deals with the rights of persons holding bills of lading or similar instruments. A charterparty is a document of a different genus. A charterparty is not a sea carriage document simply because it is a document containing a contract for the carriage of goods by sea. The charterparty is the relevant document, not the bill of lading. The arbitration was concerned with the charterparty.” (page 298).The Court therefore ruled that both awards were enforceable in Australia pursuant to the International Arbitration Act 1974(IAA).  

In Norden the Court held that the voyage charterparty was a “sea carriage document” within the ambit of section 11 of COGSA. The Court found that as from 1997 the legislature was intending by the various amendments to broaden the class of documents governed by sections 11 (1)(a) and 11(2)(b) of COGSA. Further the Court gave the words of definition in Article 1(1)(g)(iv) of the amended Hague Rules “a meaning reflective of ordinary English usage” and that, as the relevant charterparty “is a contract of carriage of goods by sea it “contains or evidences” such a contract” , and “is, therefore a “sea carriage document” within the meaning of section 11(1)(a).”  The Court noted that “the same result would have been arrived at by simply construing the phrase “sea carriage document” in section 11(1)(a), without recourse to Art 1 (1)(g)(iv) of the amended Hague Rules.” (paras 141 and 142) 

Accordingly the Court in Norden found that the arbitration clause in the relevant charterparty had no effect, given that its purpose was to preclude or limit the jurisdiction of Australian courts (para 143) by the operation of sections 11(1)(a) and 11(2)(b) of COGSA. It concluded that the award creditor could not rely upon that arbitration clause as the source of the arbitrator’s jurisdiction and power to make the two awards and that therefore neither award could be enforced in Australia pursuant to  the IAA (para 146), the effect of COGSA being that the arbitrator had neither jurisdiction nor power.

The Court in Norden noted that the Supreme Court of South Australia in Jebsens had come to a contrary conclusion with which it respectfully disagreed.

'''Comment'''

These two conflicting decisions create uncertainty as to the enforceability in Australia of a foreign maritime award which results from a claim arising under a voyage charterparty relating to an Australian export or import shipment of cargo. 

Given that this uncertainty will continue for some time, parties will need to consider when determining which arbitration seat to include in the arbitration clause in such voyage charterparties, whether they are prepared to risk the unenforceability in Australia of an award made in accordance with an arbitration clause which stipulates a non-Australian seat. That risk can be eliminated by the inclusion in the arbitration clause of an Australian arbitration seat. In that regard it should be noted that, by section 11(3) of COGSA, the conduct of arbitration in Australia is expressly allowed.

It is doubted whether the conflict will be resolved by court decision. Resolution can be best  provided by amendment to COGSA in order to reflect the policy of the legislature as to which sea carriage documents are to come within the ambit of section 11 of COGSA. In that regard it is noted that the uniform Sea-Carriage Documents legislation, which has been enacted in the Australian States and Territories, limits the definition of “sea-carriage document” to a bill of lading, a sea way bill or a ship’s delivery order.