OT Africa Line Ltd v Magic Sportswear Corporation, Blue Banana, Eastern Marine Underwriters Inc, CNA Canada Holdings Inc, Subrogateway Inc

[2004] EWHC 2441 (Comm)
Langley J
November 2004

The High Court upheld an exclusive jurisdiction clause, thereby giving itself jurisdiction to hear a dispute. Exceptional circumstances would have been required for the English court to have stayed proceedings. The fact of a conflict with Canadian statute law was not sufficient.

The claim arose out of an alleged short delivery of goods carried by the Claimant ("OTAL") from New York to Monrovia. OTAL was an English company with offices in Toronto. The First Defendant, Magic, was the shipper. The Second Defendant, Blue Banana, was the receiver. The Third and Fourth Defendants were the insurers of the cargo ("the insurers"), both of which were Toronto-based companies. The bill of lading contained an exclusive jurisdiction clause stipulating that any dispute under the contract would be governed by English law in the English High Court. However, Section 46(1) of the Canadian Maritime Liability Act 2001 provided that a claim may be made in the Canadian courts, in respect of a contract which had been made in a place other than Canada, where certain conditions were satisfied. The conditions were satisfied in the present case.

Relying on the Canadian Maritime Liability Act, proceedings were commenced against OTAL by the insurers (exercising rights of subrogation) in Canada. The following month, OTAL issued proceedings in England against Magic and Blue Banana (the insured) seeking a declaration that the cargo shortage claim was false, and an anti-suit injunction in respect of the Canadian proceedings, relying on the exclusive jurisdiction clause. The injunction was granted, but the Canadian court proceeded nonetheless, holding that it had jurisdiction to hear the claim. OTAL then joined the insurers as Defendants to the English proceedings, claiming that they had committed the tort of procuring a breach of contract by Magic and Blue Banana by procuring those companies to commence proceedings in Canada in breach of the exclusive jurisdiction clause. The damage relied upon was the cost of the legal proceedings in England. OTAL also sought another anti-suit injunction (this time against the insurers) and a third party costs order against the insurers. The insurers sought a stay of the English proceedings.

• The tortious claim for procuring a breach of contract was rejected. In view of the fact that Canadian law permitted the insurers to bring the proceedings in Canada in the names of Magic and Blue Banana, it was fanciful to say that Canadian law would also outlaw such conduct as tortious. The Judge went on to comment, however, that were it not for this hurdle, the claim may have succeeded: there was a sufficient "separation of interests" between the insurers and the insured, and there was a good arguable case that the costs of the English proceedings were recoverable as damages. He also noted that there would have been no reason not to grant the third party costs order against the insurers: the insurers, as they controlled and funded the litigation, were arguably the interested parties in both England and Canada.
• Permission to serve out of the jurisdiction on the insurers was not set aside because the insurers, as controllers and funders, were interested in the litigation in England and in Canada.
• The insurers' request for a stay of the English proceedings was rejected. Where England was stipulated to be the exclusive jurisdiction under a contract between the parties, it would require exceptional circumstances for an English court not to hear a dispute arising under that contract. There was an insufficient connection between the claim and Canada to constitute such circumstances (i.e. that Canada was the country where the contract was made, the freight was payable and OTAL had an office). None of these matters were of any relevance to the dispute. The clash of jurisdictions created by the exclusive jurisdiction clause and the Canadian Maritime Liability Act 2001 did not give rise to sufficiently exceptional circumstances.
• The anti-suit injunction against the insurers was granted: it was a fair inference that, unless themselves restrained, the insurers would pursue the proceedings in Canada in breach of the existing anti-suit injunction against Magic and Blue Banana.