T-1397-77
United Nations and Food and Agriculture Organi
zation of the United Nations (Plaintiffs)
v.
Atlantic Seaways Corporation and Unimarine S.A.
(Defendants)
and
Vilamoura Corp. S.A. (Third Party)
Trial Division, Dubé J.—Montreal, January 28;
Ottawa, January 31, 1980.
Jurisdiction — Maritime law — Motion by third party to
have third party proceedings suspended or dismissed by reason
of arbitration clause in charterparty — Actual carriage of
goods totally effected outside Canada — Bill of lading direct
ed disputes to be governed by Canadian law and to be deter
mined by Federal Court of Canada — In main action on
appeal the Court held that the action was within the jurisdic
tion of the Court — For purpose of determining jurisdiction,
third party proceedings must be considered separate actions —
Provision in charterparty providing for arbitration of disputes
in New York — Expediency to govern jurisdiction — Evidence
relevant to main action and third party proceedings — Motion
denied.
MOTION.
COUNSEL:
No one appearing for plaintiffs.
John T. Morin for defendant Atlantic Sea
ways Corporation.
No one appearing for defendant Unimarine
S.A.
Marc de Man for third party.
SOLICITORS:
McMillan, Binch, Toronto, for plaintiffs.
Campbell, Godfrey & Lewtas, Toronto, for
defendant Atlantic Seaways Corporation.
McTaggart, Potts, Stone & Herridge,
Toronto, for defendant Unimarine S.A.
Stikeman, Elliott, Tamaki, Mercier & Robb,
Montreal, for third party.
The following are the reasons for order ren
dered in English by
Dusk J.: This is a motion by the third party to
have the third party proceedings instituted by
defendant Atlantic Seaways Corporation ("Atlan-
tic") suspended or dismissed by reason of the
arbitration clause found in the charterparty be
tween Atlantic and itself.
The first issue raised by counsel for the third
party was the jurisdiction of this Court in the
matter. None of the parties to this action is
Canadian. The plaintiffs ("United") are owners of
a cargo of wheat which was shipped on their
behalf on board the vessel Valiant, of Liberian
registry, for carriage from New Orleans, Loui-
siana, to the port of Hodeidah in the Yemen Arab
Republic. The United Nations has its headquarters
in the City of New York and the Food and
Agriculture Organization maintains its head office
in Rome. Atlantic is a Liberian corporation with
head office at Monrovia and Unimarine S.A. is a
Panamanian corporation. The third party
Vilamoura Corp. S.A., the charterer, is also a
Panamanian corporation. The actual carriage of
goods was totally effected outside Canadian
waters. The bill of lading was issued by the master
of the vessel at New Orleans. It contains a clause
which reads as follows:
2. Governing Law and Jurisdiction. The contract evidenced by
this bill of lading shall be governed by Canadian law and
disputes determined in Canada by the Federal Court of Canada
to the exclusion of the jurisdiction of any other Courts.
An earlier challenge [[1978] 2 F.C. 510] to the
jurisdiction of this Court was made by the defend
ants in the main action and the Trial Judge dis
missed the action on the ground [at page 512] that
"the parties cannot by consent confer on a court
jurisdiction which does not exist." The Court of
Appeal [[1979] 2 F.C. 541], however, held that
this Court has jurisdiction. It said [at page 550]
that "The terms of the Federal Court Act which
confer jurisdiction in personam in respect of cargo
claims contain no qualification, express or implied,
based on the place where the cause of action
arises."
Le Dain J., on behalf of the Court, held [at page
552] "that the jurisdiction of the Court ration
materiae in an action in personam in respect of a
claim for damage to cargo extends to a cause of
action arising outside Canada." The learned Judge
then addressed himself [at page 552] to the ques
tion "whether the claim [of the plaintiffs] can be
said to be made under or by virtue of Canadian
maritime law or other law of Canada in relation to
a matter falling within the subject of navigation
and shipping."
Pursuant to two 1977 Supreme Court of Canada
decisions,' in order for the Federal Court to have
jurisdiction in a particular case there must be
applicable and existing federal law, whether stat
ute, regulation or common law. The learned Judge
then looked at clause 1 of the bill of lading which
stipulates that where the carriage is from a port in
the United States the bill of lading is to have effect
subject to the provisions of the United States
Carriage of Goods by Sea Act, 1936. He examined
clause 2, above referred to, submitting all disputes
to the Federal Court of Canada to be governed by
Canadian law.
He concluded [at page 556] that "once it is
determined that a particular claim is one which
falls within one of the categories of jurisdiction
specified in section 22(2) of the Federal Court Act
the claim must be deemed to be one recognized by
Canadian maritime law and one to which that law
applies, in so far as the requirement in the Quebec
North Shore Paper and McNamara Construction
cases is concerned." He therefore held that the
claim is one that is made under or by virtue of
Canadian maritime law, and is therefore within
the jurisdiction of the Court.
The third party action instituted by Atlantic is
based on a contract of charterparty entered into
between itself as owner of the vessel and the third
party Vilamoura, the charterer. By clause 2 of the
said time charter, fumigation is to be for the
account of the charterer after a continuous charter
of six months. Clause 8 provides that charterers
are to load and stow at their risk and expense.
I Quebec North Shore Paper Co. v. Canadian Pacific Lim
ited . [1977] 2 S.C.R. 1054 and McNamara Construction
(Western) Limited v. The Queen [1977] 2 S.C.R. 654.
Clause 11 provides that charterers are to provide
instructions and sailing directions.
Atlantic believes that by virtue of that charter
and the active role played by the third party in the
loading, stowage and carriage of the plaintiffs'
cargo it has a good prima facie case to claim
contribution or indemnity from it.
Clause 17 of the charterparty provides as
follows:
That should any dispute arise between Owners and Charter-
ers, the matter in dispute shall be referred to three persons at
New York, one to be appointed by each of the parties hereto,
and the third by the two so chosen; their decision or that of any
two of them, shall be final, and for the purpose of enforcing any
award, this agreement may be made a rule of the Court. The
Arbitrators shall be commercial men.
It is trite law that for the purpose of determin
ing jurisdiction, third party proceedings must be
considered as separate actions distinct from the
main action. Jurisdiction which would not other
wise exist cannot be extended by the mere joining
of a third party to the main action. 2
Jurisdiction as to a third party issue must be
considered on its own merits. Bluntly put, would
this Court entertain a separate action by the for
eign owner of a foreign vessel against a foreign
charterer based on a time charter entered into in
New York City, providing for arbitration of any
dispute in that City, for an alleged breach of that
charter (failure to properly fumigate the vessel)
arising from the carriage of goods in a voyage
conducted entirely outside Canadian waters?
At first blush one would be tempted to answer in
the negative. However, the same principles and
criteria applied by the Court of Appeal to the
main action would govern the third party situation
as well, under the same heads of jurisdiction which
2 The Queen v. Canadian Vickers Limited [1976] 1 F.C. 77.
include carriage of goods and the use or hire of a
ship.
The main distinction, of course, between the
main action and the third party proceedings is that
in the former the parties agreed by way of clause 2
of the bill of lading to have their disputes deter
mined by this Court, whereas in the latter the
parties undertook in clause 17 of the charterparty
to have their disputes resolved by arbitrators in
New York. But consent or dissent do not make or
break jurisdiction.
Normally full effect should be given to arbitra
tion clauses and parties should be bound by them
unless it appears, on the balance of convenience,
that the matter should be resolved by the Court
already seized with the matter.'
In my view, it is more expedient to have the
whole matter heard by the Court already entrusted
with the competence so to do, as parties from
different jurisdictions are involved. Many of the
witnesses from abroad will conceivably adduce
evidence relevant to both the main action and the
third party proceedings. The admiralty laws of
Canada and of the United States stem from the
same sources. Both key documents, the bill of
lading and the time charter, may be subjected to
the same scrutiny. A multiplicity of actions would
be avoided. Time and expenses would be saved. No
party would suffer any prejudice.
Under the circumstances the motion will be
denied with costs in the cause.
ORDER
Motion denied. Costs in the cause.
3 Vide Distillers Co. Ltd. v. M.V. "Agelos Raphael" [1978]
1 Lloyd's Rep. 105.
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