Mitsui O.S.K. Lines Ltd. v. Mazda Canada Inc.

In Admiralty Practice, Stays of Proceedings on (Updated )

The Cougar Ace took on a list of 60 degrees while en route to Canada and the U.S.A. from Japan. As a consequence, a large number of automobiles destined for Canada and U.S.A. were damaged. All of the automobiles were subject to a contract of carriage that contained a jurisdiction clause in favour of Japan and a choice of law clause selecting Japanese law. This action was commenced by the Plaintiff to recover damages for those automobiles destined to be unloaded at Canadian Ports. A separate action was commenced in the U.S.A. in respect of the automobiles bound for U.S.A. ports but that action was dismissed based on the jurisdiction clause. Although the dismissal of the American action was under appeal, a separate action was commenced in Japan in respect of the U.S.A. bound automobiles. An action was also commenced in Japan in respect of some damaged trucks and the ship owner also commenced proceedings in Japan for a declaration of non-liability. The ship owner brought this application for an order enforcing the jurisdiction clause and for a stay of the Canadian proceedings. The Plaintiff argued, in reliance on s. 46 of the Marine Liability Act , that it was entitled to bring the action in Canada notwithstanding the jurisdiction clause. At first instance (2007 FC 916), the motions Judge noted that s. 46 permits certain actions to be brought in Canada notwithstanding a jurisdiction clause but does not override the court’s discretion to grant a stay of proceedings based on forum non conveniens factors. He then considered the various factors that are often considered and held that it had not been clearly established that Japan was a more appropriate forum than Canada. Factors that seemed to be of particular relevance to his decision included that Canada was the intended port of discharge, that the limitation amount would be higher in Canada and that the public policy behind s. 46 favoured Canada.

On appeal, the Federal Court of Appeal agreed with the motions Judge that jurisdiction clauses were no longer controlling but are now merely one of many factors to take into account in deciding the forum non conveniens issue. However, the Court of Appeal held that the motions Judge had made errors of law in his assessment of the various factors by undervaluing some and overvaluing others. Specifically, the court found that the motions Judge failed to attach sufficient weight to: the fact that there were three actions in Japan that were proceeding expeditiously; the fact that the residence of most witnesses would be Japan; the fact that applicable law was Japanese law; and, the fact of the jurisdiction clause in favour of Japan. The Court of Appeal also said it was unclear that greater damages would be available in Canada than in Japan and, in any event, suggested that this was not a reason justifying a refusal of a stay. The Court also said the motions Judge was wrong to reason that s. 46 evinced a policy in favour of Canada. In result, the appeal was allowed and the action was stayed. An application for leave to appeal to the Supreme Court of Canada was subsequently dismissed.