In this case, Smithbridge Guam and Smithbridge Group Pty Ltd (the “plaintiffs”) discussed with Swire for the carriage of cranes and related equipment from Tauranga, New Zealand, and Brisbane, Australia, respectively, to Guam. The plaintiffs signed a Booking Note on 27 May 2024. The Booking Note, on page 2, contained the “Full Terms of the Carrier’s Bill of Lading Form” (“the Bill of Lading Terms”). Within these, there existed the suppression clause:
“It is hereby agreed that this contract shall be performed subject to the terms contained in Page 1 and 2 hereof which shall prevail over any previous arrangements and which shall in turn be superseded (except as to deadfreight) by the terms of the Bills of Lading”.
Clause 3 of the Booking Note provided:
Liability for Carriage Between Ports of Loading and Port of Discharge
(a) The International Convention for the Unification of Certain Rules of Law relating to Bills of Lading signed on 25 August 1924 (the “Hague Rules”) as amended by the Protocol signed at Brussels on 23 February 1968 (the “Hague-Visby Rules”) and as enacted in the country of shipment shall apply to this Contract.
Clause 4 of the Bills of Lading Terms provided for the London arbitration. Other than these, the Booking Note contained numbered boxes similar to those in the amended CONGENBILL 2016 form. Special terms in Clause 13 also contained some wording used in charter parties. Other communications between the parties also contained some language indicating a contract similar in nature to a voyage charter party.
The vessel Pacific Endeavour loaded cargo in New Zealand in late May 2024, for which Swire issued bills of lading in respect of the cargo. The Pacific Endeavour subsequently sailed to Brisbane. During the loading operation, the cargo, a crane, was dropped and became a constructive total loss. As such, Swire only issued the bill of lading in respect of component parts.
Swire served the Notice of Arbitration while the plaintiffs sought an anti-suit / anti-arbitration injunction.
The statutory framework
It is pertinent to note that section 11(2)(b) of the Carriage of Goods by Sea Act 1991 (Cth) provides:
“An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to: (b) preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a bill of lading or a document in subparagraph 10(1)(b)(iii), relating to such carriage of goods ...”
Section 10(1)(b)(iii) of the Carriage of Goods by Sea Act 1991 (Cth) states:
“The amended Hague Rules only apply to a contract of carriage of goods by sea that ... (b) is a contract ... (iii) contained in or evidenced by a non-negotiable document (other than a bill of lading or similar document of title), being a contract that contains express provision to the effect that the amended Hague Rules are to govern the contract as if the document were a bill of lading”.
So, the main issue is whether the Booking Note is a document falling within the ambit of section 11(2)(b) of the Carriage of Goods by Sea Act 1991 (Cth).
Characterisation of the Booking Note
Considering the overall structure of the Booking Note and the parties’ communication, Derrington J concluded at [53]:
“In my view, the Booking Note is properly characterised as a contract of affreightment or a voyage charter party”.
The plaintiffs also relied on the suppression clause, maintaining that the parties intended for the bill of lading to be issued. On this, Derrington J found at [40]:
“A suppression clause can only be effected by the issue of a bill of lading in the specified term as has been agreed in the Booking Note”.
She found that, had the bill of lading been issued for the crane in question, it would have been in the same form as the other bills of lading in evidence, and those bills of lading were dissimilar to the Bill of Lading Terms on page 2 of the Booking Note.
She concluded at [41]:
“In the present case, it is tolerably clear that the parties did not intend for the bills of lading, when issued, to operate as anything more than a receipt ... The Swire Bills do not conform to the Bill of Lading Terms contemplated by the Booking Note and the correspondence between the parties as to the type of shipping documents that were required did not suggest that either party was operating on the basis that the bills would in fact be issued in conformity with the suppression clause”.
The requirement for express wording
As to whether the Booking Note is a document as per section 10(1)(b)(iii) of the Carriage of Goods by Sea Act 1991 (Cth), Derrington J emphasised the phrase “as if the document were a bill of lading” in this provision, and found at [70]:
“Understood in this context, the requirement to include the words ... can be seen as more than a matter of mere form. It has the effect of ensuring the Australian Hague Rules in their entity are incorporated in the relevant contract”.
She relied on the English authority of Steyn J in Browner International Ltd v Monarch Shipping Co Ltd (The “European Enterprise”) [1989] 2 Lloyd’s Rep 185 and concluded at [71]:
“Given the context and purpose of s.10(1)(b)(iii), I am compelled to come to the same conclusion in respect of that subparagraph as did Steyn J in respect of the analogous English provision. Consequently, the absence of an express provision required by the subsection means that the Booking Note is not a document of the kind mentioned in subparagraph (iii)”.
Of course, in this context, Derrington J considered the language of Clause 3 of the Booking Note.
Outcome and commercial implications
As such, Derrington J reversed the earlier order of Stewart J and granted a stay of the Australian proceedings as per section 7(2) of the International Arbitration Act 1974 (Cth).
Nowadays, a jurisdictional challenge becomes in its own an expensive litigation. The parties in this case came before Derrington J just to determine whether the case should be heard in Australia or should be determined by the arbitral tribunal in London. Now, assuming that neither party will challenge Derrington J’s judgment before the Full Court of the Federal Court of Australia, they still need to argue the merits on the liability for the loss of the crane. Of course, sometimes, jurisdictional challenges are only raised as mere delaying tactics. Long before the actual loss is compensated, the legal expenses may have already exceeded the initial claim. Therefore, absolute clarity in drafting contractual documents is required. From my experience in practice, though, parties in the shipping business often prepare documents in a rush, and at times they do not pay as much attention to documents. In-house legal counsels are sometimes called in when everything is somewhat too late.