Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al., (2003) 303 N.R. 201 (SCC)

• Judge: McLachlin, C.J.C., Gonthier, Iacobucci, Major, Bastarache, Binnie and LeBel, JJ.
• Court: Supreme Court (Canada)
• Case Date: October 02, 2002
• Jurisdiction: Canada (Federal)
• Citations: (2003), 303 N.R. 201 (SCC);2003 SCC 27;[2003] SCJ No 23 (QL);[2005] CarswellQue 5110;303 NR 201;30 CPC (5th) 1;121 ACWS (3d) 793;[2003] ACS no 23;JE 2003-892;240 FTR 318;224 DLR (4th) 577;[2003] 1 SCR 450

Pompey Ind. v. Ecu-Line N.V. (2003), 303 N.R. 201 (SCC)

MLB headnote and full text

[French language version follows English language version]

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

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Temp. Cite: [2003] N.R. TBEd. MY.003

Ecu-Line N.V. (appellant) v. Z.I. Pompey Industrie, Société Lyonnaise de Messageries Nationales, John S. James Co., Polyfibron Technologies Inc., Ellehammer Packaging Inc., and all others having an interest in the cargo laden on board the M.V. "Canmar Fortune" (respondents)

(28472; 2003 SCC 27; 2003 CSC 27)

Indexed As: Pompey (Z.I.) Industrie et al. v. Ecu-Line N.V. et al.

Supreme Court of Canada

McLachlin, C.J.C., Gonthier, Iacobucci, Major, Bastarache, Binnie and LeBel, JJ.

May 1, 2003.

Summary:

Ecu-Line was to carry cargo by sea from Antwerp to Seattle under a bill of lading, including a forum selection clause, naming Antwerp as the chosen forum. The cargo was carried by sea from Antwerp to Montreal, but carried from Montreal to Seattle by rail. The cargo owners sued for damages in Canada, claim­ing that the cargo was dam­aged while in transit by rail. Ecu-Line moved for a stay of proceedings under s. 50 of the Federal Court Act, on the basis that the bill of lading required disputes to be determined exclusively by the courts in Antwerp.

A Prothonotary of the Federal Court of Canada, Trial Division, in a decision report­ed 179 F.T.R. 254, dismissed the motion for a stay. The Prothonotary applied the "strong cause" test for a stay of proceedings as set out in The "Eleftheria", [1969] 1 Lloyd's L.R. 237 (Adm. Div.), but held that the factors raised were just short of what had to be presented in order to override the forum selection clause. However, the Prothonotary held that the bill of lading had come to an end in Montreal and for that reason there was no forum selection clause upon which Ecu-Line could rely. Ecu-Line moved to set aside the Prothonotary's order and for an order grant­ing a stay of proceedings.

The Federal Court of Canada, Trial Divi­sion, in a decision reported 182 F.T.R. 112, dismissed the motion. The court held that the Prothonotary was correct in applying the test set out in The "Eleftheria", but this did not preclude him from concluding that the bill of lading (and the forum selection clause) ended in Montreal. Ecu-Line appealed.

The Federal Court of Appeal, in a decision reported 268 N.R. 364, dismissed the appeal. The Court of Appeal held that The "Elefthe­ria" did not govern the case. Rather, given the evolution of English and Canadian juris­prudence since 1969, the court held that the proper test was the tripartite test employed for the purposes of obtaining interlocutory injunctions as set out in American Cyanamid (House of Lords 1975). Ecu-Line appealed again.

The Supreme Court of Canada allowed the appeal, holding that the decisions of the Prothonotary, the motions judge and the Court of Appeal were clearly wrong. The proper test on an application under s. 50 of the Federal Court Act for a stay of proceed­ings involving a forum selection clause in a bill of lading was the "strong cause" test as set out in The "Eleftheria" (i.e., as opposed to the tripartite test for interlocu­tory injunc­tions set out in American Cyanamid (House of Lords 1975)). The court stated that the "strong cause" test remained relevant and effective and no social, moral or economic changes justified the departure advanced by the Court of Appeal. Further, there were strong public policy reasons for upholding the "strong cause" test. In the result, the court issued a stay of proceedings in favour of Ecu-Line.

Conflict of Laws - Topic 728

Jurisdiction - Jurisdiction excluded by contract - Stay of proceedings - When available - The Supreme Court of Canada held that in the absence of applicable legisla­tion, for instance s. 46(1) of the Marine Liability Act, the proper test for a stay of proceedings pursuant to s. 50 of the Feder­al Court Act to enforce a forum selection clause in a bill of lading remained the "strong cause" test as stated in The "Eleftheria", [1969] 1 Lloyd's L.R. 237 (Adm. Div.) (i.e., as opposed to the tripar­tite test for interlocutory injunc­tions set out in American Cyanamid (House of Lords 1975)) - See paragraphs 1, 18 to 29 - The Supreme Court restated the test as follows: "once the court is satisfied that a validly concluded bill of lading otherwise binds the parties, the court must grant the stay unless the plain­tiff can show suffi­ciently strong reasons to support the con­clusion that it would not be reasonable or just in the circumstances to require the plaintiff to adhere to the terms of the clause. In exer­cising its discretion, the court should take into account all of the circumstances of the particular case ... Disputes arising under or in connection with a contract may not be regarded by a court in determining whether 'strong cause' has been shown that a stay should not be granted" - See paragraph 39.

Conflict of Laws - Topic 728

Jurisdiction - Jurisdiction excluded by contract - Stay of proceedings - When available - Ecu-Line agreed to carry cargo by sea from Antwerp to Seattle under a bill of lading, including a forum selection clause, naming Antwerp - The cargo was carried by sea from Antwerp to Montreal and from Montreal to Seattle by rail - The cargo owners sued for damages in Canada, claiming that the cargo was damaged during rail transit - Ecu-Line moved for a stay of proceedings (Federal Court Act, s. 50), based on the forum selection clause - A prothonotary held that the factors raised were just short of what was necessary to override the forum selection clause - How­ever, the prothonotary held that the bill of lading ended because of the deviation in Montreal and there was thus no forum selection clause upon which Ecu-Line could rely - The Supreme Court of Canada held that the appropriate test for a stay of proceedings under s. 50 of the Federal Court Act involving a bill of lading with a forum selection clause was the "strong cause" test as set out in The "Eleftheria" - The court saw no reason to disturb the prothonotary's conclusion that the factors presented were just short of the "strong cause" test - However, the prothonotary erred in considering the validity of the contract, which was a matter best left to the decision maker in the forum agreed upon - The court issued a stay of proceed­ings in favour of Ecu-Line.

Conflict of Laws - Topic 728

Jurisdiction - Jurisdiction excluded by contract - Stay of proceedings - When available - Section 46(1) of the Marine Liability Act which came into force on August 8, 2001, had the effect of removing from the Federal Court its discretion under s. 50 of the Federal Court Act to stay proceedings because of a forum selection clause where the requirements of s. 46(1)(a), (b) or (c) were met - The Supreme Court of Canada noted that s. 46 did not apply to judicial proceedings com­menced prior to its coming into force - The court briefly discussed the scope of s. 46 and commented, inter alia, that s. 46(1) in no way mandated a prothonotary to consider the merits of a case - See para­graphs 37 and 38.

Conflict of Laws - Topic 2402.1

Admiralty - Choice of forum by parties - [See all Conflict of Laws - Topic 728 ].

Conflict of Laws - Topic 9284

Practice - Stay of proceedings - Where court lacks or declines jurisdiction - [See all Conflict of Laws - Topic 728 ].

Courts - Topic 2583

Registrars and prothonotaries - Appeals from - Scope of review - The Supreme Court of Canada stated that "discretionary orders of prothonotaries ought to be dis­turbed by a motions judge only where (a) they are clearly wrong, in the sense that the exercise of discretion was based upon a wrong principle or a misapprehension of the facts, or (b) in making them, the prothonotary improperly exercised his or her discretion on a question vital to the final issue of the case ... An appellate court may interfere with the decision of a motions judge where the motions judge had no grounds to interfere with the pro­thonotary's decision or, in the event such grounds existed, if the decision of the motions judge was arrived at on a wrong basis or was plainly wrong ..." - See para­graph 18.

Courts - Topic 4033.3

Federal Court of Canada - Jurisdiction - Trial Division - Stay of proceedings - Contractual agreement to submit dispute to foreign jurisdiction - [See all Conflict of Laws - Topic 728 ].

Courts - Topic 4082

Federal Court of Canada - Jurisdiction - Federal Court of Appeal - Appeals from judgments of Trial Division - Scope of review - [See Courts - Topic 2583 ].

Shipping and Navigation - Topic 1950

Carriage of goods - Bills of lading - Forum selection clauses - [See second Conflict of Laws - Topic 728 ].

Cases Noticed:

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

American Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396; [1975] 1 All E.R. 504 (H.L.), refd to. [para. 1].

Captain v. Far-Eastern Steamship Co., [1979] 1 Lloyd's Rep. 595 (B.C.S.C.), refd to. [para. 8].

Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers, Local 832 and Labour Board (Man.), [1987] 1 S.C.R. 110; 73 N.R. 341; 46 Man.R.(2d) 241, dist. [para. 15].

Manitoba (Attorney General) v. Metropolitan Stores (MTS) Ltd. - see Metropolitan Stores (MTS) Ltd. v. Manitoba Food and Commercial Workers, Local 832 and Labour Board (Man.).

Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425; 149 N.R. 273 (F.C.A.), refd to. [para. 18].

Jian Sheng Co. v. Great Tempo S.A., [1998] 3 F.C. 418; 225 N.R. 140 (F.C.A.), leave to appeal refused [1998] 3 S.C.R. vi; 236 N.R. 388, refd to. [para. 18].

Morguard Investments Ltd. et al. v. De Savoye, [1990] 3 S.C.R. 1077; 122 N.R. 81; 76 D.L.R.(4th) 256, refd to. [para. 20].

Holt Cargo Systems Inc. v. ABC Containerline N.V. (Bankrupt) et al., [2001] 3 S.C.R. 907; 280 N.R. 1, refd to. [para. 20].

Amchem Products Inc. et al. v. Workers Compensation Board (B.C.), [1993] 1 S.C.R. 897; 150 N.R. 321; 23 B.C.A.C. 1; 39 W.A.C. 1, refd to. [para. 21].

RJR-MacDonald et Imperial Tobacco Ltd. v. Canada (Procureur général), [1994] 1 S.C.R. 311; 164 N.R. 1; 60 Q.A.C. 241, refd to. [para. 22].

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. 24].

Anraj Fish Products Industries Ltd. et al. v. Hyundai Merchant Marine Co. et al. (2000), 262 N.R. 270 (F.C.A.), refd to. [para. 24].

Sarabia v. Ship Oceanic Mindoro (1996), 84 B.C.A.C. 8; 137 W.A.C. 8; 26 B.C.L.R.(3d) 143 (C.A.), leave to appeal refused [1997] 2 S.C.R. xiv; 216 N.R. 400; 95 B.C.A.C. 154; 154 W.A.C. 154, refd to. [para. 24].

Maritime Telegraph & Telephone Co. v. Pre Print Inc. (1996), 147 N.S.R.(2d) 148; 426 A.P.R. 148; 131 D.L.R.(4th) 471 (C.A.), refd to. [para. 24].

Morrison v. Society of Lloyd's (2000), 224 N.B.R.(2d) 1; 574 A.P.R. 1 (C.A.), leave to appeal refused, [2000] 2 S.C.R. vii and ix; 263 N.R. 391; 228 N.B.R.(2d) 402; 588 A.P.R. 402, refd to. [para. 24].

Trendtex Trading Corp. v. Credit Suisse, [1981] 3 All E.R. 520; [1982] A.C. 679 (H.L.), refd to. [para. 24].

Ship Bremen v. Zapata Off-Shore Co. (1972), 407 U.S. 1, refd to. [para. 24].

Advanced Cardiovascular Systems Inc. v. Universal Specialties Ltd., [1997] 1 N.Z.L.R. 186 (C.A.), refd to. [para. 24].

Carnival Cruise Lines Inc. v. Shute (1991), 499 U.S. 585, refd to. [para. 28].

Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer (1995), 515 U.S. 528, refd to. [para. 29].

Mackender v. Feldia A.G., [1967] 2 Q.B. 590; [1966] 3 All E.R. 847 (C.A.), refd to. [para. 31].

Fairfield v. Low (1990), 71 O.R.(2d) 599 (H.C.), refd to. [para. 32].

Ash et al. v. Lloyd's Corp. et al. (1992), 60 O.A.C. 241; 9 O.R.(3d) 755 (C.A.), leave to appeal refused [1992] 3 S.C.R. v; 144 N.R. 400; 59 O.A.C. 160, refd to. [para. 32].

Drew Brown v. Ship Orient Trader, [1974] S.C.R. 1286, refd to. [para. 32].

Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423; 247 N.R. 97; 126 O.A.C. 1, refd to. [para. 33].

Syncrude Canada Ltd. et al. v. Hunter Engineering Co. and Allis-Chalmers Canada Ltd. et al., [1989] 1 S.C.R. 426; 92 N.R. 1, refd to. [para. 33].

Incremona-Salerno Marmi Affini Siciliani (I.S.M.A.S.) s.n.c. et al. v. Ship Castor et al. (2002), 297 N.R. 151 (F.C.A.), refd to. [para. 37].

Statutes Noticed:

Federal Court Act, R.S.C. 1985, c. F-7, sect. 50(1) [para. 6].

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

Authors and Works Noticed:

Michell, M. Paul, Forum Selection Clauses and Fundamental Breach: Z.I. Pompey Industrie v. ECU-Line N.V., The Canmar Fortune (2002), 36 Can. Bus. L.J. 453, pp. 471 to 472 [para. 21].

Peel, Edwin, Exclusive jurisdiction agreements: purity and pragmatism in the conflict of laws, [1998] L.M.C.L.Q. 182, pp. 189, 190 [para. 21].

Tetley, William, Marine Cargo Claims (3rd Ed. 1988), p. 99 [para. 30]; para. 8 [para. 8].

Counsel:

H. Peter Swanson, for the appellant;

George J. Pollack and Jean-Marie Fontaine, for the respondents.

Solicitors of Record:

Bernard & Partners, Vancouver, British Columbia, for the appellant;

Davies, Ward, Phillips, and Vineberg, Montreal, Quebec, for the respondents.

This appeal was heard on October 2, 2002, before McLachlin, P.C.J., Gonthier, Iacobucci, Major, Bastarache, Binnie and LeBel, JJ., of the Supreme Court of Canada. The following decision of the court was delivered in both official official languages by Bastarache, J., on May 1, 2003.