SONNAR (NIG) LTD & ANOR (APPELLANT)
v.
PARTENREEDRI M.S. NORWIND & ANOR (RESPONDENT)
(1987) All N.L.R. 548
Division: Supreme Court of Nigeria
Date of Judgment: 13th November, 1987
Case Number: (SC.38/1980)
Before: Bello, C.J.N., Eso, Nnamani, Uwais, Kawu, Oputa, Belgore, J.J.S.C
This matter arose by way of application made by the 1st respondent for stay of action against him on the ground that the cause of action arose out of a contract of carriage of goods which is subject to a foreign jurisdiction as evidenced by the Bill of Lading signed by both parties to the agreement.
The facts of the case which are not in dispute are as follows:
The appellants claimed general and special damages amounting to N417,524.00 (four hundred and seventeen thousand five hundred and twenty four naira only), against the respondents for breach of contract, which they claimed had arisen out of non-delivery of 25,322 bags of parboiled long grain rice which were shipped from Bangkok, Thailand to Lagos.
Both the appellants and respondent entered into an agreement which is evidence by the Bill of Lading, Clause 3 of the Bill which provides.
"Any dispute arising under this Bill of Lading shall be decided in the country where the 'carrier' has his principal place of business and the law of such country shall apply except as provided elsewhere herein."
Now the 1st respondent are shipowners based in Germany, the 2nd respondent, a shipping company, are issuing agents based in Liberia and the 3rd respondent are a rice company based in Thailand. The carrier's principal place of business is Germany.
The Federal High Court after hearing the application granted a stay of execution on the ground that Clause 3 of the Bill of Lading clearly states where the dispute should be decided and that the appellant has not shown enough reason why the court should exercise its discretion and decide to hear the matter. The court further stated that the appellant has not shown that it would be prejudiced if the matter is heard in Germany.
Being satisfied with this judgment the appellant appealed to the Court of Appeal but the Court of Appeal dismissed the appeal and upheld the Federal High Court's decision.
The appellant now appealed against this decision on 2 grounds:
(1) "That the Court of appeal misdirected itself in law in failing to consider adequately the implication of the unchallenged opinion of German Courts would not accept jurisdiction in this case on the grounds that under German Law the Shipowners are not the carriers.
(2) The Court of Appeal erred in law in holding that the parties should abide by their contract when to do so would lead to a manifest absurdity not in contemplation of the parties."
HELD:
1. Bills of Lading are contracts on international Standard and the reasoning in the case of The Makefjele (1976) 2 Lloyds L.R. 29 which states that:
"When a clause of this kind is introduced into a contract it must be supposed that the parties consider that, in general trial in the places mentioned in the clause is more convenient than trial elsewhere"
cannot be faulted.
2. It is dangerous for a court to base its decision mainly on a public policy because it would amount to another means of avoiding the rules, law and procedure which govern a matter and create uncertainty in the law.
3. The policy of the court to hold parties to the bargain they have entered but this is not an inflexible rule, the court has a discretion whether to do so or not "The Elefitheria (1969) Lloyds L.R. 237.
4. The present case transcends mere balance of convenience, a total loss of action by the appellant would result if effect is given to the principle of Pact Servanda because action would be already time barred in Germany.
5. Where the granting of a stay would spell injustice to the plaintiff as "where the action is already time barred in the foreign court and the grant of stay would amount to permanently denying the plaintiffs any redress" the justice is better served by refusing a stay than by granting one.
APPEAL Allowed
Cases Referred to
1. Adesanya v. Palm Line Ltd. (1967) LLR 18 at 20
2. Allied Trading Co. Ltd. v. G.B.N. Lines (1985) 2 N.W.L.R. 74.
3. Berkshire, The (1974) 1 Lloyd's Rep. 185
4. Baunwol Manufacture Von Call Scheller v. Fumes (H.L.) (1893) A.C. 8
5. Carlill v. Carbolic Smoke Ball Co. (1893) 1 Q.B. 256
6. Carvalho v. Hull, Blyth Ltd. (1979) 1 W.L.R. 1228
7. Chaparral, The (1968) 2 Lloyd's Rep. 158 at 162
8. Compagnie D'Armement Maritina S.A. v. Compagnie De Navigation S.A. (1971) A.C. 572
9. Eleftheria, The (1969) 1 Lloyd's
10. Fehmarn, The (1969) 1 Lloyd's Rep. 511, (1958) 1 ALL E.R. 33 at 335, (1957) 2 ALL E.R. 707 at 710 Transport Ltd. (1973) Q.B. 400
Statutes Referred to
1. Bill of Lading Act 1858 of the U.K.
2. Carriage of Goods by Sea Act Cap. 29 of 1958 Laws of the Federation
3. Evidence Act Cap. 62 of 1958 Laws of the Federation
L.N. Mbanefo for Appellants
Chief Jimmi Oduba with him Femi Atoyebi and Dapo Adebayo for Respondents
Eso, J.S.C. The facts of this case are not in dispute. Before stating the application which was brought by the Defendants before the Federal High Court Lagos, coram S.A. Sowemimo J., which is now the subject matter of this appeal, I will state those facts, only as they are relevant to this appeal.
The Plaintiffs, Sonnar Nigeria Ltd. and Publico Impex Traders, claimed general and special damages amounting to N417,524.00 against the Defendants for breach of contract, which they claimed had arisen out of non-delivery of 25,322 bags of parboiled long grain rice, which were shipped from Bangkok, Thailand to Lagos on board a vessel, M.V. Nordwind, which belonged to the Defendants.
Now, the first Defendants, Partenreedri M.S. Nordwind, are shipowners and they are based in Germany. The second Defendants, Banbridge Shipping Company, are based in Liberia. The latter were the issuing Agents of the Bills of Lading which were relevant to this case. The third Defendants, Chaiyapon Rice Company, are based in Thailand, from where the rice in question was shipped. They were the suppliers of the rice which is the subject matter of this case.
Both the Plaintiffs and Defendants entered into an agreement which is evidenced by the Bill of Lading. Clause 3 of the Bill is relevant to this case. It provides-
"Any dispute arising under this Bill of Lading shall be decided in the country where the 'carrier' has his principal place of business and the law of such country shall apply except as provided elsewhere herein."
This then is the agreement between the parties and the country applicable herein is Western Germany.
As I said, the goods, which were shipped from Thailand, were not delivered and the Plaintiffs claimed, jointly and severally, against the Defendants, general and special damages as I had earlier indicated. The Writ was served on the Defendants in Germany, Liberia and Thailand respectively. After service, Mr Oduba of learned Counsel, was briefed to represent the three Defendants while Mr P.N. Mbanefo, of learned Counsel, has been representing the Plaintiffs all along. It was he, that filed the writ of summons.
On 23rd April 1980, Mr Oduba filed an application on behalf of the first Respondents to stay the action against him on the grounds that the cause of action arose out of a contract of carriage of goods, which is subject to a foreign jurisdiction. Learned counsel relied upon the agreement which is evidenced by the Bill of Lading which I earlier referred to. Mr Mbanefo's reaction was to file a counter-affidavit, which states, inter alia-
"4. That the allegation therein contained in paragraph 5 that there is only one Bill of Lading relevant to this Suit is incorrect and that there are in fact twenty relevant Bills of Lading.
5. That the jurisdiction clause quoted in paragraph 5 aforesaid is correct, and that Clause 17 of the said Bills of Lading the 1st Defendant/applicant (a German company carrying on business in Germany) is the Carrier.
6. That I am informed by Messrs Holman Fenwick & William (our instructing Solicitors in London) and verily believe that under German Law the Owner of the M.V.A. "Nordwind" cannot be considered as the Carrier.
7. That there is exhibited hereto and marked Exhibit "P.M.M. 1" a copy of letter from German lawyers Dres. Lebuhn & Puchta addressed to Messrs Holman Fenwick & Willan aforesaid and dated 30th July 1971.
8. That there is annexed hereto and marked Exhibit P.M.M. 2 a copy of the Charterparty relevant to this suit."
Then Mr Oduba brought a further affidavit, but as the pertinent paragraphs of this further affidavit were struck out by the Court, as offending section 86 of the Evidence Act, on the application of Mr Mbanefo, I need not set out that affidavit in this judgment for it is no longer relevant.
On 7th May 1981, the Federal High Court took arguments on the motion. The applicants' that is, the 1st Defendants' main contention was that the parties entered into a contract as per the Bill of Lading, they were bound by the terms and conditions of the contract and the forum for litigation in respect of the action would be Western Germany and not Nigeria. Learned Counsel Mr Oduba relied on the case of The Berkshire 1974 1 Lloyd's Rep. 185 and Eleftheria v. Eleftheria (Owners) [1970] p. 94.
For his part, Mr Mbanefo conceded that the Bill of Lading required that the principal place of business of the carrier shall have jurisdiction but contended that the mere fact of the existence of such a clause does no oblige the Court to stay proceedings and order the parties to go to another jurisdiction. The Court has a discretion, notwithstanding the clause, as to whether it would try the action in this country or stay proceedings. He listed the instances where a Court in Nigeria would not stay proceedings as-
(i) When the evidence in the case is in this country;
(ii) Where the court of foreign jurisdiction cannot entertain the suit on the ground of procedural difficulties such as its being time-barred;
(iii) Where on the balance of convenience, it is better for the Nigerian Court to exercise jurisdiction; and
(iv) Where the applicant does not in all genuiness want the case to be tried in the foreign country but would only seek procedural advantage in this country.
The Federal High Court (Sowemimo J.) went painstakingly into the matter, and held-
"Since there is uncontradicted evidence that the 1st Defendant has its principal place of business in Germany, and the dispute is one which arises under the bills of Lading, it follows that, under Clause 3 the parties have agreed to refer any dispute to the Court where the 1st Defendant has its place of business which is Germany. I do not agree with the contention of Learned counsel for the Plaintiffs that the jurisdiction Clause is not sufficiently equivocal to enable the court to say that the German Law is anticipated. It is clear on the reading of Clause 3 which states that any dispute between the parties shall be deiced in the country where the carrier has his principal place of business and the law of such country shall apply. And since the 1st Defendant as the carrier has its principal place of business in Germany, it follows that it is the German Court that should decide the dispute and in German Law."
As regards whether or not the court should exercise its discretion by staying the proceedings in so far as the matter relates to the 1st Defendant, the Court set out the case made by the 1st Plaintiffs that German law will not consider the owner of the vessel as carrier. This assertion by Plaintiffs was based on an information given by their instructing solicitors in London, Messrs Holman Fenwick & Willan, after receiving a letter from some German Lawyers known as Dres. Libuhn & Puchta.
I think it is appropriate to reproduce, herein, the opinion of the German lawyers or that part of it that is relevant to the determination of this case. It reads
"Messrs Holman Fenwick & Willan,
Marlow House,
Lloyds Avenue,
London EC 3N 3AL
Your Ref.: MAC/112
Dear Sirs,
NORDWIND
We wish to refer to our telex dated 23rd July, 1979 and now succeeded in getting copy of the resp. charterparty from P + I Club representatives, Messrs Class W. Brons which we enclose hereto. As you will learn it is a New York Produce Form. Clause 8 provides for signature of Bill of Lading through Captain. Clause 55 of the rider provides for charterers authorisation to sign full liner terms B/L on behalf of Master, but no addition allowing time charterer to include identity of carrier clause in the Bill of Lading. Following recent Hamburg court decision owner cannot be considered as carrier under German Law.
Please revert if we can be of further assistance.
Yours faithfully,
DRES. LEBUHN PUCHTA
(Sgd.) (Dr Breitzke)"
One important point, which was relied upon by the 1st Defendants' counsel, was one of forum-hunting by the Plaintiffs. On this allegation, paragraph 3 of the further affidavit of Mr Oduba reads-
"My clients the 1st Defendants/Applicants have informed me through their Protection and indemnity club, the West of England Associate, and I verily believe the same to be true, that the instructing solicitors Messrs Holman Fenwick & Willan referred to in paragraph 6 of the counter-affidavit of L.N. Mbanefo aforesaid have been "forum hunting" on behalf of the Plaintiffs. There is now produced, shown to me and marked JO4, copy of relevant part of a letter written by the said Messrs Holman Fenwick & Willan to the said West of England Association to this effect."
The letter which the Plaintiffs' instructing solicitors have written in regard thereto reads-
"The West of England Ship Owners Mutual Protection
& Indemnity Association
(Luxembourg)
1 Popys Street,
London EC3
Dear Sirs,
"NORDWIND" BILLS OF LADING dd. 26/8/78:
We act for Publicon Impex Traders Limited of Hong Kong and Sonnar (Nigeria) Limited of Nigeria who were the shippers/receivers/owners of a cargo of 80,000 bags (4,000 tons) of Parboiled Long Grain Rice which was shipped in apparent good order and conditions on the M.V. "NORDWIND" at Bangkok, Thailand under Bills of Lading, number 1 to 20, dated the 26th August, 1978.
The Bills of Lading, copies of which are enclosed, were signed "for the Master."
You will note from the reverse sides of the Bills of Lading that they provide, inter-alia, that any dispute arising thereunder should be decided in the country where the carrier has his principal place of business.
The Bills of Lading also provide, by Clause 17, that the contract evidenced by the Bill of Lading is made between the Merchant and the Owner of the Vessel. It is in this respect that a problem has arisen.
As we understand, advice which has been received in the German court would not enforce the Bills of Lading as a contract between our clients and the owners, but would identify the carrier as Barbridge Shipping Limited of Liberia. Furthermore, they would not enforce Clause 17 in the absence of express provision in the relevant Charter party allowing this. On the other hand Liberian Law would identify the carrier as the Owner and would enforce Clause 17. We are however advised by our Nigerian correspondent lawyers that their Courts would enforce this contract against the Owner and would not hesitate to ignore the jurisdiction clause as being repugnant to the Hague Rules, to which the Bills of Lading are expressly subject. Our clients may also issue proceedings in Bangkok.
Before our clients take any steps in this direction it appears to us that you may be prepared to agree with English jurisdiction and English Law as being applicable in this case to save the no doubt excessive costs which would be entailed in bringing proceedings in Nigeria."
The learned Judge, having referred to these letters containing the opinions and the "forum-hunting" by the Plaintiffs' instructing solicitors, Messrs Holman Fenwick & Willan concluded that if the action were to be tried in this country, either the Plaintiffs or the 1st Defendants might wish to bring at least one German lawyer from Germany to give expert evidence on German Law. He added-
"Definitely the German law cannot be ignored if the case is tried in this country."
He then held, adopting the reasoning in the case of "The Eleftheria", supra, that there is no evidence to support the submission of learned Counsel for the Plaintiffs that the whole evidence to prove the case is in Nigeria. He termed it a mere speculation. He held further that there has been no suggestion that the Plaintiffs would be prejudiced by having to sue in the foreign court. Nor is there a risk of the Plaintiffs not obtaining fair trial in the foreign court. The Plaintiffs, he concluded, had not discharged the onus which lies on them. He granted a stay of proceedings.
The Plaintiffs appealed to the Court of Appeal. In the Court of Appeal, coram Uthman Mohammed, Kutigi and Kolawole JJ.C.A., the issue of the jurisdiction in the Nigerian Court was again fully used by both learned Counsel. The principal issue which was therefore dealt with by the Court was that where such a clause, as was contained in the Bill of Lading, existed, but, nevertheless, the action was filed in the Nigerian Court, the Nigerian Court is not bound to stay the proceedings but that it would have a discretion whether or not it would do so. It was that discretion which the Appellants contended should be exercised judicially after the Judge had carefully balanced the factors which favoured or militated against a stay of the action.
Having carefully examined the submission of both learned Counsel, Kolawole J.C.A., who delivered the judgment of the Court said-
"In my view, there was a question as to foreign law raised by the appellants in their affidavit with reference to the bill of lading and the opinions of experts who were acquainted with the German law became important. No such opinion was tendered before the learned judge; consequently no strong reason was shown why he should have refused to exercise his discretion to grant the stay. I am of the view that on the authorities, the Nigerian Courts will assume the law in any foreign country including that in Germany to be the same as the law in Nigeria if no evidence is tendered before it."
Referring to the so called "Brandon tests" in the Eleftheria, the learned Justice of the Court of Appeal said:
"Mr Mbanefo had submitted in his brief on the second test that the learned judge failed to acknowledge that German law differed from Nigerian law in a very material respect, but there is no evidence of the difference. Learned counsel further submitted that German law should not interprete the jurisdiction clause in the Bill of Lading as giving jurisdiction to the German court and that a reference of the dispute to a German court would end in frustration. From the case of Ogunro v. Ogedengbe (supra) that submission is fallacious. To that extent the Adolf Warski case does not support the appellants' case.
Similarly, the case of Carvalho v. Hull, Blyth Limited (1979) 1 W.L.R. 1228 is distinguishable from the present case. There was every justification for the English courts to assume jurisdiction in that case and to refuse a stay because of the peculiar intervening circumstances of change of government, constitution and court system in Angola, the country of the parties' choice for the determination of their disputes. I am of the view that it is not sufficient for the appellants to allege that the learned judge did not apply the tests laid down by Brandon J. (as he then was) in "The Eleftheria" without any attempt to adduce some evidence, no matter how slim, to show in what way the tests were not applied or were misapplied."
Kolawole, J.C.A. further argued that there was no evidence that the Respondents were not genuine and that merely seeking procedural advantages is primary in their consideration. Nor was there any shred of evidence, concluded the Judge, that the Appellants would be prejudiced if they have sued in a foreign Court or would be deprived of security for their claims, or mandate to enforce any judgment which is obtained in their favour or would be faced with a time-bar which is not applicable in Nigeria. He concluded, dismissing the appeal-
"I think the sensible approach is that where parties have agreed to submit all their dispute under a contract to the exclusive jurisdiction of a foreign court, we should require very strong reasons to induce us to permit one of them to go back on his words My Lords, having given this matter some serious thought, the grounds of appeal so ably canvassNed before us have failed. For the various reasons which I have given, I would affirm the decision of Sowemimo J. dated July 7, 1981 which seems to me quite unassailable, and dismiss the appeal with costs assessed at N250.00 against the appellants jointly and severally."
It was from this decision, that the Plaintiffs have appealed to this Court, relying on two simple grounds of appeal to wit-
(1) That the Court of Appeal misdirected itself in law in failing to consider adequately the implications of the unchallenged opinion of German Lawyers that the German Courts would not accept jurisdiction in this case on the grounds that under German Law the Shipowners are not the carriers.
(2) The Court of Appeal erred in law in holding that the parties should abide by their contract when to do so would lead to a manifest absurdity not in contemplation of the parties."
Both learned Counsel filed excellent Briefs and, for this, I must commend their industry, for this has made the whole exercise of the determination of this delicated issue much easier. The issue is, put simply, what should be the attitude of the Court in this country, where there has been a foreign jurisdiction clause inserted in a contract between parties?
Mr Mbanefo opened his Brief by accepting the trite principle of law that "Pacta Sunt Sevanda" Elementary and trite this must be, for upon this basis rests the entire law of contract. It if is otherwise, that is, pacts in agreements are not to be obeyed, there would be chaos in that area of law. Law would lose its reasoning and solemn pacts would be reduced to the "law of children." Contractual obligations presume the notion that pacts therein are meant to be obeyed.
With this, as the accepted basis for his real contention that the courts in this country are not bound, notwithstanding this doctrine of law, and a pact giving jurisdiction to a foreign court, to stay proceedings, when the action is filed here, it is easy to follow the arguments preferred by Mr Mbanefo in his Bride and in his oral arguments before us.
Learned counsel relied heavily on The Eleftheria 1969 Vol. 1 Lloyds L.R. 237 and the famous tests laid down by Brandon J. as he then was, in that case.
I intend to come to these tests later. Meanwhile I would first state the issues placed by Mr Mbanefo in his Brief for our consideration. He said-
"The issues which arise in this appeal are:
Under Ground 1
(1) The effect of the plaintiffs' unchallenged assertion regarding the German law.
(2) The weight to be attached to the plaintiffs' assertion regarding German law.
(3) The applicability of the "Brandon Tests" to the assertion.
Under Ground 2
(4) Whether the likely result of an indiscriminate reference to a foreign court ought to be taken into account."
Having referred to the affidavit evidence, Mr Mbanefo argued that if Plaintiffs' assertion therein, on foreign law, had been challenged in the Defendants' affidavit, then the learned Judge would have been under obligation to call for oral evidence and parties would have had to bring their experts on German law, in order to comply with section 57 of the Evidence Act. There was no challenge to this assertion and the learned Judge ought to have accepted it especially as the Defendants failed in their duty to negative the assertion with regard to German law.
Learned counsel then dealt with