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Australia – Good News For International Arbitration In Charterparty Disputes.

11 October, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Shipping, Maritime & Aviation

 

Dampskibsselskabet Norden A/S v. Gladstone Civil Pty Ltd  [2013] FCAFC 107


Earlier, we reported on a decision where the Australian Federal Court refused to enforce a London arbitration award. The dispute in the case related to a demurrage claim arising out of a voyage charterparty for the carriage of coal from Australia to China. The charterparty contained an apparently clear London arbitration clause. Owners were successful in the arbitration and sought to have the Award recognised and enforced in Australia.

 

S.11 of the Australian Carriage of Goods by Sea Act 1991 (“ACOGSA”) renders void any provision in a “sea carriage document” that seeks to exclude the jurisdiction of the Australian courts over any dispute relating to the carriage of goods to or from Australia. Here, the issue was whether the voyage charterparty was a sea carriage document within the meaning of s.11. The Federal Court held that it was and therefore that the arbitration agreement in the charterparty was ineffective. The Court accordingly refused to enforce the arbitration award.


On appeal, the Australian Court has now, by a majority of 2:1, overturned the first instance decision. The majority concluded that a voyage charter is not a sea carriage document within the meaning of s.11 ACOGSA. The arbitration agreement in the charterparty is, therefore, valid and effective and the London arbitration award is enforceable in Australia.
Amongst other things, the Court highlighted the following  relevant considerations:


1. There is a distinction between a charterparty, which is a  contract for the hire of a ship, and a sea carriage  document, which is a contract for the carriage of cargo.


2. This distinction is reflected in the amended Hague Rules,  which do not define “sea carriage document” to include charterparties; rather, the focus is on documents having  similar characteristics to a bill of lading.


3. The Rules do not apply to the carriage of goods by sea under a charterparty unless a sea carriage document is issued for their carriage. It is that sea carriage document issued under the charterparty that will then attract the application of the Rules (rather than the charterparty itself).


4. “Sea carriage document” is not defined in ACOGSA. It makes sense, however, to give that term the same meaning in ACOGSA as in the amended Hague Rules. The Rules have the force of law in Australia, subject to the operation of ACOGSA, and it must have been the intention of the Australian legislators that the terms used in ACOGSA should be used consistently with those in the Rules.

 

Comment

 

This judgment is clearly good news for parties to voyage charterparties or any contract of affreightment that concerns the carriage of goods to or from Australia. If an arbitration agreement in their contract is otherwise valid and effective, they do not run the risk that the Australian courts will refuse to enforce their awards on the basis of s.11 ACOGSA

 

Ince & Co

 

For further information, please contact:


Bob Deering, Partner, Ince & Co
[email protected]


Reema Shour, Ince & Co
[email protected]

 

Homegrown Shipping, Maritime & Aviation Law Firms in Australia

 

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