Comtois International Export Inc. v. Livestock Express BV et al.,

• Jurisdiction: Federal Jurisdiction (Canada)
• Court: Federal Court (Canada)
• Citation: (2013), 444 F.T.R. 110 (FC),2013 FC 1239
• Date: 27 November 2013

Comtois Intl. Export v. Livestock Express (2013), 444 F.T.R. 110 (FC)

MLB headnote and full text

[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

.........................

Temp. Cite: [2014] F.T.R. TBEd. FE.004

Action Réelle et Personnelle en Matière d'Amirauté

Comtois International Export Inc. (demanderesse) v. Livestock Express BV et Horizon Ship Management Company et Ziraat Finansal Kiralama as et Les Propriétaires et toutes les personnes intéressées dans le Navire Orient I et le Navire Orient I (défendeurs)

(T-2775-12; 2013 CF 1239; 2013 FC 1239)

Indexed As: Comtois International Export Inc. v. Livestock Express BV et al.

Federal Court

Morneau, Prothonotary

December 10, 2013.

Summary:

The defendant Livestock Express BV brought a motion to essentially obtain an order under s. 50(1)(b) of the Federal Courts Act, staying an action for damages undertaken by the plaintiff Comtois International Export Inc. in favour of arbitration in England on the basis of an arbitration clause contained in a booking note concluded between the parties. At issue was: (1) whether s. 46 of the Marine Liability Act, S.C. 2001, allowed Comtois to institute its action in Canada, notwithstanding the arbitration clause contained in the booking note; and (2) alternatively, if s. 46 of the Act did not apply here, whether Livestock Express' requested stay of proceedings "should not be granted on the basis of compelling reasons to justify continuing the recourse instituted in Canada as well as the substantial risk of denial of justice by making it impossible for Comtois to pursue its action in Canada."

A Prothonotary of the Federal Court held that s. 46 of the Act did not apply. However, the court granted the motion and denied the stay of proceedings on the alternative ground that Comtois had discharged its heavy burden of establishing the existence of strong cause to stay an action, leading the court to conclude that it would not be reasonable or just to require it to adhere to the terms of the arbitration clause contained in the booking note.

Admiralty - Topic 8005

Practice - General - Marine Liability Act - The defendant Livestock Express brought a motion to essentially obtain an order under s. 50(1)(b) of the Federal Courts Act, staying an action for damages undertaken by the plaintiff Comtois in favour of arbitration in England on the basis of an arbitration clause contained in a booking note concluded between the parties - At issue, inter alia, was whether s. 46 of the Marine Liability Act allowed Comtois to institute its action in Canada, notwithstanding the arbitration clause contained in the booking note - A Prothonotary of the Federal Court held that the fact that Mr. Robinson of Sea Air, on Comtois' behalf, requested and obtained certain additions or amendments to the booking note to be approved, was an indication that the booking note could not be viewed, as Comtois suggested, as a non-negotiable contract of adhesion, a take-it-or-leave-it contract, even though ultimately the booking note had to be agreed to on the same day - Thus, it was appropriate to conclude that the booking note was not covered by s. 46 of the Act - See paragraphs 6 to 16.

Arbitration - Topic 2504

Stay of proceedings - Arbitration clause - Enforcement of - The defendant Livestock Express brought a motion to essentially obtain an order under s. 50(1)(b) of the Federal Courts Act, staying an action for damages undertaken by the plaintiff Comtois in favour of arbitration in England on the basis of an arbitration clause contained in a booking note concluded between the parties - A Prothonotary of the Federal Court granted the motion and denied the stay of proceedings on the alternative ground that Comtois had discharged its heavy burden of establishing the existence of strong cause to stay an action, leading the court to conclude that it would not be reasonable or just to require it to adhere to the terms of the arbitration clause contained in the booking note - There was nothing linking the case to England - The court found that "the factual evidence and the vast majority of the parties' fact and expert witnesses reside in Canada and not in England at least." - Holding the arbitration in England would result in prohibitive costs for Comtois - The power imbalance between the parties was a relevant factor - See paragraphs 27 to 41.

Courts - Topic 4032.1

Federal Court of Canada - Jurisdiction - Federal Court - Stay of proceedings - General - Section 50(1) of the Federal Courts Act provided that "The Federal Court of Appeal or the Federal Court may, in its discretion, stay proceedings in any cause or matter (a) on the ground that the claim is being proceeded with in another court or jurisdiction; or (b) where for any other reason it is in the interest of justice that the proceedings be stayed." - The case of Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al. (2003 S.C.C.) quoted from The "Eleftheria" (1968 Adm. Div.) for a non-exhaustive statement of the factors or circumstances to be taken into account to determine whether or not strong cause existed to stay an action - The respondent on a motion for a stay of proceedings under s. 50(1)(b) argued that it was necessary to distinguish between an arbitration clause, such as the one in the present case, and a jurisdiction clause which referred a matter to the courts of other jurisdictions - In the respondent's view, considering article 8 of the Commercial Arbitration Code and its mandatory nature in relation to an arbitration clause, only a jurisdiction clause allowed for the analysis of the factors in The "Eleftheria" - A Prothonotary of the Federal Court disagreed - No such distinction was to be made for the purposes of the court's discretion under s. 50 - See paragraphs 18 to 26.

Shipping and Navigation - Topic 1888

Carriage of goods - Charterparties - Arbitration clauses - [See Admiralty - Topic 8005 and Arbitration - Topic 2504].

Cases Noticed:

T. Co. Metals LLC v. Ship Federal EMS et al. (2012), 440 N.R. 249; 2012 FCA 284, consd. [para. 8].

Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al., [2003] 1 S.C.R. 450; 303 N.R. 201; 2003 SCC 27, appld. [para. 18].

Ship Eleftheria, Re, [1969] 1 Lloyd's Rep. 237 (Adm. Div.), appld. [para. 19].

Thyssen Canada Ltd. v. Mariana Maritime S.A. et al., [2000] 3 F.C. 398; 167 F.T.R. 105 (T.D.), not folld. [para. 23].

Ship M/V Seapearl and Patmos Navigation Co. v. Seven Seas Dry Cargo Shipping Corp., [1983] 2 F.C. 161; 43 N.R. 517 (F.C.A.), refd to. [para. 25].

Nestlé Canada Inc. et al. v. Ship Viljandi et al. (2002), 230 F.T.R. 99; 2002 FCT, refd to. [para. 32].

Statutes Noticed:

Commercial Arbitration Act, R.S.C. 1985 (2nd Supp.), c. 17, art. 8 [para. 20].

Federal Courts Act, R.S.C. 1985, c. F-7, sect. 50 [para. 24].

Marine Liability Act, S.C. 2001, c. 6, sect. 46(1) [para. 7].

Counsel:

Hugo Babos-Marchand, for the plaintiff;

Jean-Marie Fontaine, for the defendants.

Solicitors of Record:

Davies Ward Phillips & Vineberg, Montreal, Quebec, for the plaintiff;

Borden Ladner Gervais, Montreal, Quebec, for the defendants.

This case was heard at Montreal, Quebec, on November 27, 2013, by Morneau, Prothonotary, of the Federal Court, who delivered the following decision on December 10, 2013.