CONTENTS
In our Annual Report for 2012, at page 10, we commented on the Australian judgment that had changed the recognition of foreign arbitration clauses in voyage charters in Australia and noted that the decision, which had been widely criticised, was subject to appeal with judgment expected imminently.
By way of reminder, in Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd [2012] FCA 696, the Federal Court of Australia refused to enforce a London arbitration award obtained by vessel owners against an Australian charterer on the grounds that the foreign jurisdiction clause, pursuant to which the London arbitration proceedings had been commenced, was unenforceable by reason of section 11 of the Australian COGSA (please see the Annual Report for more detail).
On 18 September 2013, the Federal Court of Australia Full Court reversed the decision and concluded that a voyage charter was not a “sea carriage document” for the purposes of section 11 of the Australian COGSA. The arbitration agreement in the voyage charter was not therefore void and the London arbitration award was enforceable in Australia.
The Court’s reasoning was driven by a number of factors including: (1) the traditional line drawn between charterparties (generally a contract for hire of a ship) on the one hand and sea carriage documents (contracts for the carriage of cargo) on the other; (2) a clear and longstanding acceptance that international commercial disputes, including those arising out of charterparties, may be referred to international arbitration; and (3) an acceptance that while the interests of shippers are more evidently appropriate for statutory protection, experienced owners and charterers did not require the same protection.
This recent judgment is more consistent with the expectations of the international shipping community. The decision will allow voyage charterers and owners to continue to refer their disputes to international arbitration.
