Ship Mahkutai (Ship Owners) v. Ship Mahkutai (Cargo Owners), (1996) 197 N.R. 214 (PC)

• Case Date: April 22, 1996
• Jurisdiction: Canada (Federal)
• Citations: (1996), 197 N.R. 214 (PC)

Ship Mahkutai v. Ship Mahkutai (1996), 197 N.R. 214 (PC)

MLB headnote and full text

The owners and/or demise charterers of the ship or vessel "Mahkutai" (Indonesian Flag) (appellants) v. The owners of cargo lately laden on board the ship or vessel "Mahkutai" (Indonesian Flag) (respondents) (and cross-appeal)

(Privy Council Appeal No. 39 of 1994)

Indexed As: Ship Mahkutai (Ship Owners) v. Ship Mahkutai (Cargo Owners)

Judicial Committee of the Privy Council

London, England

Lord Goff of Chieveley,

Lord Jauncey of Tullichettle,

Lord Nicholls of Birkenhead,

Lord Hoffmann and

Sir Michael Hardie Boys

April 22, 1996.

Summary:

The owners of an Indonesian vessel (the shipowners) entered into a time charter with Sentosa, another Indonesian company. Sentosa entered into a voyage charter with Jabarwood for the carriage of a cargo of plywood from Indonesia to China. Sentosa's bill of lading contained a clause which gave Indonesian courts jurisdiction over any dis­putes. The bill of lading also contained a Himalaya clause which gave Sentosa's ser­vants, agents and sub-contractors the benefit of all exceptions, limitations, etc., as if such provisions were expressly made for their benefit. When the shipment arrived in China, Jabarwood claimed that part of cargo in one hold had been damaged by sea water. The ship proceeded on to Hong Kong to discharge other cargo. When the ship reached Hong Kong, Jabarwood sued for damages on the grounds of breach of con­tract, breach of duty or negligence, and caused the ship to be arrested. The ship­owners obtained the ship's release by pro­viding security in the form of a bank guarantee. The shipowners applied for a stay of proceedings either on the ground of the bill of lading's exclusive jurisdiction clause or on the ground of forum non conveniens. Jabarwood submitted that the shipowners could not invoke the exclusive jurisdiction clause because they were not parties to the bill of lading.

The trial court granted the stay on the ground that the shipowners, while not parties to the bill of lading, were entitled to invoke the exclusive jurisdiction clause either as a contractual term or as one of the terms on which the goods were bailed to them. The court also ordered that the guarantee be discharged. Jabarwood ap­pealed.

The Hong Kong Court of Appeal, Bokhary, J.A., dissenting, in a decision reported [1994] 1 H.K.L.R. 212, allowed the appeal. The Court of Appeal ruled that the shipowners were not parties to the bill of lading and that there was no bailment on terms including the exclusive jurisdiction clause. The appeal against the order for the surrender of the guarantee was unanimously dismissed; but subsequently that order was stayed, and the security remained in place. The shipowners appealed. Jabarwood cross-appealed against the part of the decision relating to the security provided by the shipowners.

The Judicial Committee of the Privy Council dismissed the appeal. The cross-appeal did not have to be dealt with as the parties agreed that should the appeal fail, Jabarwood would be entitled to continue to hold the guarantee.

Bailment - Topic 4421

For benefit of bailor and bailee - Particu­lar relationships - Hire of carriage - Gen­eral - Shipowners chartered a vessel to Sentosa on a time charter - Sentosa sub-chartered the vessel to Jabarwood on a voyage charter - Sentosa's bill of lading issued to Jabarwood contained a clause giving Indonesian courts exclusive juris­diction - The bill of lading also contained a Himalaya clause which gave Sentosa's servants, agents and sub-contractors, the benefit of all exceptions and limitations as if such provisions were expressly made for their benefit - The cargo was damaged by sea water - Jabarwood sued in Hong Kong and had the ship arrested - The shipowners applied for a stay by, inter alia, invoking the principle of bailment on terms (i.e., the exclusive jurisdiction clause) - The Judicial Committee of the Privy Council declined to grant the ship­owners a stay of proceedings - See para­graphs 34 and 35.

Conflict of Laws - Topic 2402.1

Admiralty - General - Choice of forum by parties - Shipowners chartered a vessel to Sentosa on a time charter - Sentosa sub-chartered the vessel to Jabarwood on a voyage charter - Sentosa's bill of lading issued to Jabarwood contained a clause giving Indonesian courts exclusive juris­diction - The bill of lading also contained a Himalaya clause which gave Sentosa's servants, agents and sub-contractors, the benefit of all exceptions and limitations as if such provisions were expressly made for their benefit - The cargo was damaged by sea water - Jabarwood sued in Hong Kong and had the ship arrested - The shipowners applied for a stay on the ground of, inter alia, the bill's exclusive jurisdiction clause - The Judicial Com­mittee of the Privy Council declined to grant the shipowners a stay of proceedings - See paragraphs 25 to 33.

Conflict of Laws - Topic 2402.1

Admiralty - General - Choice of forum by parties - [See Bailment - Topic 4421 ].

Contracts - Topic 9050

Rights and liabilities of strangers to con­tract - Particular contracts - Bill of lad­ing, carrier's - [See first Conflict of Laws - Topic 2402.1 ].

Shipping and Navigation - Topic 2604

Carriage of goods - Liability - Limita­tions - General - Himalaya clause - [See first Conflict of Laws - Topic 2402.1 ].

Words and Phrases

Provision - The Judicial Committee of the Privy Council considered the mean­ing of the word "provision" as found in a bill of lading's Himalaya clause - See para­graphs 28 to 31.

Cases Noticed:

New Zealand Shipping Co. v. Satterth­waite (A.M.) & Co.; Ship Eurymedon, [1975] A.C. 154 (P.C.), dist. [para. 2].

Ship Eurymedon - see New Zealand Shipping Co. v. Satterthwaite (A.M.) & Co.; Ship Eurymedon.

Port Jackson Stevedoring Pty. Ltd. v. Salmond and Spraggon (Australia) Pty. Ltd.; Ship New York Star, [1981] 1 W.L.R. 138 (P.C.), reving. [1979] 1 Lloyd's Rep. 298 (Aust. H.C.), dist. [paras. 2, 21].

Ship New York Star - see Port Jackson Stevedoring Pty. Ltd. v. Salmond and Spraggon (Australia) Pty. Ltd.; Ship New York Star.

Elder, Dempster & Co. v. Paterson, Zochonis & Co., [1924] A.C. 522 (H.L.), reving. [1923] 1 K.B. 420 (C.A.), dist. [paras. 2, 10].

Scruttons Ltd. v. Midland Silicones Ltd., [1962] A.C. 446 (H.L.), consd. [para. 7].

Wilson v. Darling Island Stevedoring and Lighterage Co. (1956), 95 C.L.R. 43 (Aust. H.C.), consd. [para. 12].

Johnson Matthey & Co. v. Constantine Terminals Ltd. and International Express Co., [1976] 2 Lloyd's Rep. 215, refd to. [para. 14].

Ship Forum Craftsman, Re, [1985] 1 Lloyd's Rep. 291 (C.A.), refd to. [para. 14].

Adler v. Dickson, [1955] 1 Q.B. 158 (C.A.), refd to. [para. 15].

Ship Himalaya - see Adler v. Dickson.

Dresser U.K. Ltd. v. Falcongate Freight Management Ltd.; Ship Duke of Yare, [1992] Q.B. 502 (C.A.), refd to. [para. 16].

Ship K.H. Enterprise (Cargo Owners) v. Ship Pioneer Container, [1994] 2 A.C. 324; 166 N.R. 207 (P.C.), dist. [para. 16].

Ship Pioneer Container, Re - see Ship K.H. Enterprise (Cargo Owners) v. Ship Pioneer Container.

Brandt v. Liverpool, Brazil and River Plate Steam Navigation Co., [1924] 1 K.B. 575 (C.A.), refd to. [para. 23].

London Drugs Ltd. v. Brassart and Vanwinkel (1992), 143 N.R. 1; 18 B.C.A.C. 1; 31 W.A.C. 1; 97 D.L.R. (4th) 261 (S.C.C.), not folld. [para. 23].

London Drugs Ltd. v. Kuehne & Nagel International Ltd. - see London Drugs Ltd. v. Brassart and Vanwinkel.

Trident General Insurance Co. v. McNiece Brothers Pty. Ltd. (1988), 165 C.L.R. 107 (Aust. H.C.), refd to. [para. 23].

Thomas and Co. v. Portsea Steamship Co., [1912] A.C. 1 (H.L.), consd. [para. 30].

Authors and Works Noticed:

Palmer, N.E., Bailment (2nd Ed. 1991), pp. 1610 to 1625 [para. 22].

Counsel:

Mr. Gross, Q.C., for the appellants;

Mr. Aikens, Q.C., for the respondents.

Agents:

Not disclosed.

This appeal and cross-appeal were heard at London, England, before Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Nicholls of Birkenhead, Lord Hoff­mann and Sir Michael Hardie Boys of the Judicial Committee of the Privy Council.

On April 22, 1996, the advice of the Ju­dicial Committee of the Privy Council was delivered by Lord Goff of Chieveley.