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, the effect 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.           

The Trial Judge gave mixed reasons in dismissing the motion, holding s. 46(1)(b) of the MLA was engaged as the defendant had an agent in Canada and concluding that the contract was a “contract for the carriage of goods by water” within the meaning of s. 46, but further holding that it was premature to make such a finding as the applicability of s. 46 was left best to trial and that it was not necessary to decide the nature of the contract. The Trial Judge then turned to s. 50 of the Federal Courts Act to consider an alternate ground for the stay, concluding the plaintiff had shown a “strong cause” for the Court to exercise its discretion to deny the stay. The defendant appealed.

Decision: Appeal allowed.

Held: S. 46 MLA determines what test the Court will apply on a stay motion. If s. 46 applies then the forum non conveniens test applies, and if not the strong cause test applies. These are two distinct tests with different evidential burdens. It is an error of law to decline to determine the application of s. 46 and refuse a grant of stay, as one of the purposes of s. 46 is to bring certainty to questions of jurisdiction. The Federal Court recognized the defendant had the burden to show strong cause why the forum selection clause should not be enforced, but instead analyzed the evidence from the forum non conveniens test (despite the appellant abandoning this argument in the Federal Court). The matter was remitted back down to the Federal Court to determine if s. 46(1) MLA applies to the claim.