The curious treatment of choice of venue for international shipping in Canada

Robin Squires
Lawyer, BLPC, Canada
rsquires@barnablelaw.ca

International shipping and transportation lawyers are often concerned with conflicts of law. The extent to which a court will enforce an agreement as to jurisdiction, venue, and law to be applied is a common first question to consider. If you have an arbitration or choice of venue clause in your agreement and your dispute involves Canada, then your clause may not be enforceable. This article will explain why that is the case.

Canadian transportation lawyers are very familiar with the content of this article, and I cannot try to suggest that I am the first, or even one of the first, to write about it. However, my clients remain generally surprised when I explain to them that an arbitration or choice of venue clause in Canada may not matter. I have tried to draft this article in a way that simplifies as much as possible the approach taken in Canada.

To begin, it is important to quickly review the separation of powers in Canada between the federal government and provincial or territorial governments. Generally speaking, transportation matters that cross provincial or national boundaries are subject to federal jurisdiction. For the purpose of this article, I will focus on international maritime contracts. For any questions about contracts for other modes of transportation and how Canadian law may apply to them, please contact me.

The Marine Liability Act

In Canada, international maritime contracts for the carriage of goods are generally governed by the Marine Liability Act. The Marine Liability Act was implemented 25 years ago to consolidate a number of laws that dealt with liability in the maritime context. The Marine Liability Act includes section 46, which is the key focus of this article. The impact of section 46 is to allow claimants for cargo damage to commence proceedings in Canada despite the inclusion of a choice of venue clause.

Section 46 applies when:

• there is a contract for the carriage of goods by water; and
• the goods are or were intended to be loaded or unloaded in Canada;
• the person against whom a claim is made resides or has a place of business, branch or agency in Canada; or
• the contract was made in Canada.

Since section 46 came into effect in 2001, the issue that has received the most attention in Canadian jurisprudence is: What constitutes a contract for the carriage of goods by water?

Beginning with what the court has determined is not a contract for the carriage of goods by water will lead us to the answer to the question. According to the courts, the following are not caught by section 46:

• Charter parties (see T Co Metals LLC v Federal Ems (Vessel) 2012 FCA 284 (CanLII));[1]
• Waybills and forms of bills of lading that are not documents of title (see Arc-en-Ciel Produce Inc v BF Leticia (Ship) 2022 FC 843 (CanLII));[2]
• Contracts of affreightment (see Atlantic Cement Carriers Ltd v Atlantic Towing Ltd 2002 FCT 761 (CanLII));[3]
• Contracts for stevedoring services (see QSL Canada Inc v Cliffs Mining Company 2023 FC 1429 (CanLII));[4]
• An oral contract for hourly use of a tug and barge to transport materials (see Mercury XII (Ship) v MLT-3 (Belle Copper No 3), 2013 FCA 96 (CanLII)).[5]

Section 46 applies to those bills of lading that are documents of title, as they are defined by our courts. Factors that support a determination that a contract of carriage is a bill of lading to which section 46 applies are the title of the document, issuance in triplicate, whether presentation is required for delivery of the cargo, and the intention of the parties.[6]

Forum non conveniens

If section 46 does not apply, then generally the contractual provision will be enforced unless there is a strong reason to ignore the parties’ choice of venue. Similarly, if section 46 applies, the court can still decide that Canada is not the most convenient choice of venue. These determinations are made using the established factors for forum non conveniens, requiring a party to show ‘strong cause’ that the prevailing venue is not appropriate. The strong-cause test in Canada requires a consideration of all the circumstances of a particular case, including convenience of the parties; fairness between the parties; the interests of justice; the connection of the case with another venue; the location of witnesses and evidence; any time bar that may prevent the claim in a particular jurisdiction; the difficulty in enforcing a judgment in the foreign jurisdiction; applicable delays in another jurisdiction; and so on.[7]

Practical considerations

I commonly see section 46 issues in circumstances where there is a charter party under which the charterer then engages with cargo interests to move goods to Canada. The goods are transported under a bill of lading issued by ship owners. If there is damage to the cargo, the cargo interests may commence proceedings in Canada against the ship owners under the bill of lading. In that way, owners may be dragged into proceedings in Canada when all of their commercial considerations up until then assumed that arbitration closer to home would govern any disputes, and owners have no other direct connection to cargo interests.

The practical takeaways from the above are the following. If you have a matter that involves a maritime shipment to Canada, consider:

• Does the contract of carriage include a choice of venue/mandatory arbitration clause?
• Is the contract of carriage a ‘true’ Bill of Lading?
• Does section 46 of the Marine Liability Act apply?
• Are there factors that strongly support another venue?

For assistance with any of the above matters, please feel free to contact the author.

Notes