Arc-En-Ciel Produce Inc. v. MSC Belle (Ship) 2020 FC 23

In Other Practice Topics, Stays of Proceedings on

Facts: The defendant sought to stay the within proceedings on the basis of a jurisdiction clause referenced in its standard bill of lading incorporated in the service contract which called for proceedings to be instituted in the United States District Court. The dispute arose from a contract the defendant had with the plaintiff for a shipment of fruits and vegetables from Costa Rica to Ontario. The defendant argued that since the bill of lading was an “express” bill of lading, it was not a “true” bill of lading which evidenced the contract of carriage, the effect of which being the MLA did not apply. The defendant also argued that the transport of the cargo was subject to the service contract, and the jurisdiction clause in the service contract should therefore be upheld. The plaintiff argued the bill of lading was incorporated in the service contract and was sufficient to cover the transport as a “contract for carriage of goods by water”, and that it would be prejudiced if the action was stayed as proceedings in the United States would be time barred.

Decision: Motion dismissed.

Held: The Court found that s. 46(1) of the MLA can be engaged when contractual documents refer to a jurisdiction other than Canada provided that, among other things, the defendant has a place of business or an agency in Canada. With the defendant having an agent in Canada, s. 46(1)(c) was satisfied. The Court held that the service contract was a contract for the carriage of goods by water, and in the absence of the Hamburg Rules having in force in Canada s. 46 applied.  However, the Court noted that an existence of a jurisdiction clause does not automatically mean a stay will be granted as the Court retains discretion under s. 50 of the Federal Courts Act to stay a proceeding or not. The affidavit evidence filed in the matter did not address the location of the witnesses or the application of American law should the stay be granted. Therefore, the Court held the plaintiff had shown a “strong cause” for denial of the stay motion.