Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmbH & [2024] HCA 4 | Case summary

G J Nell SC with J K Kennedy for the first respondent (instructed by Aus Ship Lawyers)

Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmbH & [2024] HCA 4 | Case summary | Zoe

GAGELER CJ, GORDON, STEWARD, GLEESON AND JAGOT JJ. This appeal concerns the proper construction of Art 3(8) of the "Australian Hague Rules", incorporated into Australian law by s 8 of the Carriage of Goods by Sea Act 1991 (Cth)[1] ("the COGSA"). By s 10(1) of that Act, the Australian Hague Rules apply to a contract of carriage of goods by sea, relevantly, from a port in Australia to another port in Australia. Article 3(8) provides that any "clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to ... goods ... or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect".
The appellant ("Carmichael", the shipper) contracted with the second respondent ("OneSteel") for the manufacture and supply of head‑hardened steel rails. OneSteel manufactured the rails and, pursuant to a booking note between the first respondent ("BBC", the carrier) and an agent for Carmichael, it was arranged for the rails to be shipped by sea from the Port of Whyalla in South Australia to the Port of Mackay in Queensland. BBC prepared a stowage plan for the rails on the ship. OneSteel's subcontractor loaded the rails onto the ship. A mate's receipt for the goods loaded on the ship was issued and the ship departed from the Port of Whyalla. On the same day, BBC issued a bill of lading for the rails to Carmichael's agent. When the ship arrived in the Port of Mackay the goods on board were unloaded. It was discovered that a collapse of the stowed goods had damaged the rails to the extent they became unusable. The rails were sold as scrap.
The bill of lading contained cl 3, "Liability under the Contract", and cl 4, "Law and Jurisdiction". It is sufficient to record that cl 4 provided that "any dispute arising under or in connection with this Bill of Lading shall be referred to arbitration in London" and "English law is to apply" to the arbitration. BBC commenced an arbitration proceeding in London under the bill of lading in relation to the damage to the rails. Carmichael filed an originating application in the Federal Court of Australia claiming damages. By an interlocutory application in the proceeding commenced by the originating application, Carmichael sought to restrain any arbitration in connection with the consignment of the rails. BBC then filed an interlocutory application of its own seeking a stay of the proceeding.
The competing interlocutory applications were referred for hearing before the Full Court of the Federal Court of Australia. The question for the Full Court was whether the arbitration clause in cl 4 of the bill of lading was rendered inoperative by Art 3(8) on the basis that there existed a risk that BBC's liability would be relieved or lessened in the arbitration and was therefore void.
The Full Court, on the basis of an undertaking by BBC, dismissed Carmichael's interlocutory application and ordered that Carmichael's proceeding in the Federal Court of Australia be stayed in favour of arbitration in London.[2] The undertaking by BBC that the Full Court accepted included, relevantly, "to admit in the London arbitration that the amended Hague Rules in Schedule 1A to the Carriage of Goods by Sea Act 1991 (Cth) as applied under Australian law apply to the Bill of Lading No. WHYMAC01 dated 17 December 2020 and the plaintiff's claims against the first defendant thereunder, and to maintain that admission and position in the London arbitration". The Full Court also declared by consent as follows:

This Court granted Carmichael special leave to appeal. Carmichael contends that the Full Court erred in holding that cl 4 of the bill of lading, the arbitration clause, is valid when, according to Carmichael, it ought to have been held void under Art 3(8) of the Australian Hague Rules[3] "on the basis that there existed a risk that [BBC's] liability would be relieved or lessened as a consequence of one or more of" three specified matters. Those matters are: (a) the risk that the London arbitrators will consider themselves bound to interpret Art 3(2) of the Hague‑Visby Rules[4] as imposing a delegable responsibility on BBC in accordance with English law, in which event Carmichael would lose the chance of having Art 3(2) interpreted as imposing a non‑delegable responsibility on BBC in accordance with Australian law; (b) the risk that the London arbitrators will construe the clause paramount, cl 3 of the bill of lading, as incorporating only Arts 1 to 8 of the Hague Rules[5] rather than the Hague‑Visby Rules under Australian law,[6] thereby substantially reducing the package limitation defence;[7] and (c) the expense and practical difficulty of requiring Carmichael to pursue its claim against BBC through arbitration in London.
For the following reasons the Full Court did not err in deciding that, in the circumstances (including the undertaking given by BBC and the declaration made by the Full Court), Carmichael had not established that the conduct of the arbitration, in accordance with cl 4 of the bill of lading, would be such as to lessen the liability of BBC other than as is provided for by the Australian Hague Rules.
Carmichael's appeal fails because: (a) for the purpose of deciding BBC's application for a stay (and, accordingly, Carmichael's application to restrain the continuation of the arbitration), Art 3(8) of the Australian Hague Rules, on its proper construction, operates on the ordinary civil standard of proof - on the balance of probabilities - and not on some lesser standard such as a mere possibility, a real risk, a reasonably arguable case, or a prima facie case; (b) Art 3(8) of the Australian Hague Rules is to be applied in the circumstances at the time the court decides their application, which, in this case, included (and includes) BBC's undertaking to, and the declaration made by, the Full Court; and (c) Carmichael has not proved on the balance of probabilities that cl 4 of the bill of lading relieves BBC from liability or lessens such liability within the meaning of Art 3(8) of the Australian Hague Rules. It should also be recorded that Carmichael would have failed in this appeal on any of the lesser standards of proof it posited; it is only if Art 3(8) is engaged by mere speculation that a carrier's liability might be lessened that Carmichael could succeed, but (as the Full Court correctly concluded) mere speculation of this kind is impermissible.

Article 3(8) of the Australian Hague Rules operates on any clause "relieving [a] carrier ... from liability" or "lessening such liability otherwise than as provided in these Rules". In deciding if Art 3(8) is engaged, a court must ask itself, at the time it is called upon to do so, in all the circumstances as found, whether any clause relieves a carrier from liability or lessens such liability otherwise than as provided in the Australian Hague Rules. The circumstances as found may include past, present, and future circumstances. The relevant issue is the standard of proof a court is required to apply in finding past, present, and future circumstances.
That question is to be answered within the framework established by s 7(2) and (5) of the International Arbitration Act. This is because the impugned clause, cl 4 of the bill of lading, is an arbitration agreement and the proceeding in the Federal Court consists of Carmichael's originating application for damages and interlocutory application to restrain the arbitration, and BBC's interlocutory application to stay Carmichael's proceeding under s 7(2).
If, as is the case here, the parties to the proceeding are parties to an arbitration agreement and the proceeding involves the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration, s 7(2) of the International Arbitration Act provides that the court "shall" stay the proceedings. By s 7(5), however, the court "shall not" stay the proceedings if, relevantly, it "finds" the arbitration agreement null and void. Section 7(5) does not say that the court shall not stay the proceedings if it finds that the arbitration agreement might be null and void,[9] there is a real risk that the arbitration agreement is null and void, it is reasonably arguable that the arbitration agreement is null and void, or that there is a prima facie case that the arbitration agreement is null and void.
For an Australian court to "find" an arbitration agreement null and void under s 7(5) of the International Arbitration Act, it must be able to do so as a matter of law based on agreed, admitted, or proved facts. Consistently with s 140(1) of the Evidence Act 1995 (Cth), facts are ordinarily to be proved in a civil proceeding on the balance of probabilities. This applies to the finding of past, present, and future facts. The interlocutory nature of an order under s 7(2) of the International Arbitration Act provides no reason for adopting a lesser standard of proof in making a finding under s 7(5). No less than an interlocutory anti‑suit injunction, an order staying proceedings under s 7(2) "is effectively a final determination as to where the matter or some particular aspect of it is to be litigated".[10]
This construction of s 7(5) of the International Arbitration Act, requiring a finding to be made on the ordinary civil standard of balance of probabilities, is reinforced by reference to Art II of the New York Convention. Article II(1) provides that "[e]ach Contracting State shall recognize an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship". Article II(3), reflected in s 7(2) and (5) of the International Arbitration Act, provides that "[t]he court of a Contracting State, when seized of an action in a matter in respect of which the parties have made an agreement within the meaning of this article, shall, at the request of one of the parties, refer the parties to arbitration, unless it finds that the said agreement is null and void, inoperative or incapable of being performed".[11] The verb "finds" in Art II(3) assumes that, in accordance with customary international law, the burden of proof rests on the party asserting the fact that the arbitration agreement is void.[12] The Supreme Court of Canada, in considering Art II(3), approved the statement that "[i]f regard is had to the goal and purpose of the New York Convention, it will be concluded that where there is doubt, the interpreter should opt for the solution that tends to ensure that arbitration agreements are binding".[13] Carmichael's case reverses that position.
Contrary to Carmichael's submissions in this appeal, neither the text, context, or purpose of Art 3(8) of the Australian Hague Rules, nor any relevant authority, indicates that the Article is to be construed as if it incorporates some standard of proof such as a possibility, a real risk, a reasonably arguable case, or a prima facie case that a clause will or might relieve a carrier from liability or lessen such liability otherwise than as provided in the Australian Hague Rules.

The text of Art 3(8) is not neutral about the applicable standard of proof, as Carmichael would have it. Article 3(8) does not refer to a clause that might relieve a carrier from liability or might lessen such liability depending on future unknown and unpredictable possibilities (as opposed to future probabilities which, if found, are facts, even if they have not yet occurred). Nor does Art 3(8) use any other words indicating that, in construing the Article, a court may engage in speculation about future unknown and unpredictable circumstances.
Article 3(8) refers to a clause "relieving the carrier ... from liability" or "lessening such liability". Although by s 8 of the COGSA the Australian Hague Rules, including Art 3(8), have the force of law in Australia, the Australian Hague Rules "form part of an international convention which must come under the consideration of foreign as well as" Australian courts.[14] Accordingly, it is "desirable in the interests of uniformity that their interpretation should not be rigidly controlled by domestic precedents of antecedent date, but rather that the language of the rules should be construed on broad principles of general acceptation".[15]
The Australian Hague Rules also give effect to Australia's accession to the international instruments specified in s 7(1) of the COGSA and therefore are to be interpreted in accordance with the Vienna Convention on the Law of Treaties (1969)[16] ("the Vienna Convention"), including Art 31(1) that requires interpretation "in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose".[17] Article 31(3)(c) of the Vienna Convention also requires construction of a treaty to take into account "[a]ny relevant rules of international law applicable in the relations between the parties".
In the common law world, the standard of proof for civil proceedings ("on the balance of probabilities" as now embodied in s 140(1) of the Evidence Act) emerged by the beginning of the 19th century in contradistinction to the criminal standard of proof of beyond reasonable doubt.[18] In civil or continental law systems, in contrast, there has traditionally been a single standard of proof, commonly formulated as the "full conviction" (or "personal conviction", or "near certainty") standard.[19] Further, the commonly applied standard of proof "in the context of international tribunals generally" is the "preponderance of evidence" standard (a standard at least as onerous as "on the balance of probabilities").[20]
The relevant point for present purposes is that, within this overarching conceptual context of the applicable standard of proof in civil proceedings, references to a clause "relieving" a carrier from liability or "lessening such liability" are to be understood as referring to facts able to be found in accordance with the requisite degree of confidence, at the least on the preponderance of the evidence. They are not to be understood as meaning some lesser standard, howsoever it might be formulated, still less mere speculation based on unknown and unpredictable future contingencies.

The last sentence of Art 3(8), that a benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability, does not assist Carmichael's textual argument. This sentence is a deeming provision. It is deeming a clause under which a carrier may claim the benefit of a shipper's insurance of the goods to engage Art 3(8) whether or not it can be said that such a clause is one "relieving the carrier ... from liability" or "lessening such liability".
Carmichael relied on the travaux préparatoires of the Hague Rules to support its contextual argument. The travaux record that a question was raised whether a benefit of insurance clause, explained to be a clause entitling a "shipowner having met [their] liability ... to take over any insurance the cargo owner may have effected on [their] cargo", was a clause within the meaning of Art 3(8). The travaux state that "[w]e are all quite clear that we mean to prohibit such a clause".[21] This, it must be said, indicates only that it was intended to deem such a clause to be within the scope of Art 3(8) and does not advance Carmichael's case.
A subsequent section of the travaux records Sir Norman Hill stating that a benefit of insurance clause was not one found in any British bills of lading but was "used very largely in the United States and ... very great exception has been taken [to it]". Mr Louis Franck then said that "as far as I am concerned and continental jurisprudence will be concerned, that clause would be considered as being void under paragraph 8, because it certainly is lessening and diminishing the liability which is on the shipowner". Mr Franck also said "[t]here is no doubt that the general principle would already cover it, but the observation ... was that as in the [United States] there has been doubt on that, we ought to apply the old saying: 'Things which go without saying go even better if you mention them', and that is the reason for it".[22]
If anything, this exposes the existence of real doubt about the status of a benefit of insurance clause under Art 3(8) - a clause unused in Britain, a source of very great exception (inferentially, to shippers/cargo owners) in the United States, and a clause accepted to lessen a carrier's (shipowner's) liability in continental countries - and the intention to remove that doubt by a deeming provision.
Further, Carmichael's argument - that, as a benefit of insurance clause is "intrinsically conditional" (in that whether the clause would lessen the carrier's liability depends on the carrier succeeding in obtaining an indemnity from the shipper's insurer), it means that Art 3(8) applies to future contingent possibilities (in contrast to future probabilities) - is misconceived. Mr Franck explained in the travaux that the reason such a clause was treated in continental law as lessening the carrier's (shipowner's) liability was the right it gave the carrier to seek indemnity from the shipper's (cargo owner's) insurer under a policy of insurance paid for by the shipper, not the carrier.[23] That is, the relevant right is a presently existing right to claim indemnity, the purpose and effect of which is to lessen the carrier's liability.

The parties referred to many authorities in support of their competing contentions. No current authority supports Carmichael's case.
Akai Pty Ltd v People's Insurance Co Ltd ("Akai [No 1]")[27] does not assist Carmichael. In referring to Agro Co of Canada Ltd v The "Regal Scout",[28] Toohey, Gaudron, and Gummow JJ in Akai [No 1] said that it "was held that a clause in a bill of lading which gave exclusive jurisdiction to a foreign court was void on proof that the foreign court would not impose liability on the carrier for negligent loss of or damage to the cargo".[29] The relevant words here are "on proof". The "Regal Scout" was decided on the basis of disputed expert evidence and by reference to the civil standard of proof (that is, as the law "would", not "might", apply). As Cattanach J also said, "I am obligated to accept the fact of Japanese law as it presently is and not as it may become at a future time".[30]
Further, Akai succeeded because the Court was satisfied that "an English court would not apply the [Insurance Contracts Act 1984 (Cth)] as part of the lex causae",[31] with the consequence that Akai would lose the benefit of s 54 of the Act (advantageous to Akai), so that, under s 52 of that Act, the choice-of-forum clause was nullified. No risk-assessment based on future unknown and unpredictable possibilities (as opposed to findings of future probabilities) was undertaken. Rather, the approach of Lord Diplock in The Hollandia was applied.[32] Carmichael's submissions, referring to Akai's position that once it "asserted" a juridical advantage it was for the respondent to "show" that s 54 would be applied in the foreign forum, reflect Akai's arguments before the Court, not the reasoning of the Court.[33]
Carmichael's warning that the lesson of Akai Pty Ltd v People's Insurance Co Ltd ("Akai [No 2]")[34] should be heeded is misplaced. That case turned on the fact that the defendant had never submitted to the jurisdiction of any Australian court. As will be explained, the Full Court must have had that circumstance in mind as its reasoning places significant weight on BBC's undertaking, and its declaration, ensuring the same circumstance in Akai [No 2] cannot be repeated in this case.
Carmichael's attempted comparison between the operation of Art 3(8) of the Australian Hague Rules and the power to "grant an injunction to restrain a person from commencing or continuing foreign proceedings", enlivened if "the foreign proceedings ... interfere with or have a tendency to interfere with proceedings pending in that court",[35] must be rejected. There is no analogy available between a court construing and applying a provision voiding a clause and a court acting to protect its own processes and proceedings.
Baghlaf Al Zafer Factory Co BR for Industry Ltd v Pakistan National Shipping Co [No 2] ("Baghlaf [No 2]")[36] concerned a statutory limitation period that could not be waived in the foreign forum. In Baghlaf Al Zafer Factory Co BR for Industry Ltd v Pakistan National Shipping Co ("Baghlaf [No 1]"),[37] faced with a contract containing an exclusive-jurisdiction clause in favour of the courts of Pakistan, the Court of Appeal granted a stay of the proceedings in England on the basis of the defendants' undertaking to waive any time-bar in Pakistan.[38] A provision applying to the statutory limitation period in Pakistan, however, was not amenable to waiver on its face. While Carmichael, understandably, focused on Lord Justice Waller's statement in Baghlaf [No 2] that "the position is very unclear"[39] in respect of the provision applying in Pakistan, other statements disclose the reality of the circumstances confronting the Court of Appeal. Lord Justice Waller said that it had become "progressively more obvious that it was impossible to waive the limitation period in Pakistan",[40] in circumstances where the proceedings had been commenced within time in the United Kingdom. The defendants had also not denied the impossibility of waiver.[41] Further, the Pakistan court would have to resolve the issue and the plaintiff "would" (not might) "have an uphill struggle and ... would be by no means certain of success".[42] The question of enforcement of the exclusive-jurisdiction clause by the Court of Appeal was also ultimately one of discretion.[43] Critical to the exercise of that discretion was the fact that the applicable provision in Pakistan was not discretionary but would have to be applied by Pakistan's courts in accordance with its terms.[44]
In substance, Baghlaf [No 2] is an example of a provision which, as Lord Diplock put it in The Hollandia, "ex facie [on its face] ... purports to lessen the liability of the carriers for such loss or damage otherwise than is provided in the Hague‑Visby Rules".[45] A provision which the foreign forum must apply and which ex facie relieves or lessens liability (in common with an admission, agreement, or proof) satisfies the civil standard of proof as to future probable events. This is because a provision can be described as having an ex facie effect only if it indisputably or manifestly does so.
Lord Diplock's observation in The Hollandia concerning the potential interaction between a choice-of-law and an arbitration clause during an arbitration[46] does not support Carmichael's case on the applicable standard of proof. The purported risk which Carmichael identified of an arbitration clause being valid one moment and void the next, depending on the conduct of the arbitration, does not mean that the party contending for a stay of proceedings must prove that there is no possibility of invalidity of the arbitration clause by operation of Art 3(8). Lord Diplock's primary point was that an arbitration clause is different from a choice-of-law clause because an arbitration clause leaves it "to the arbitrator to determine what is the 'proper law' of the contract in accordance with accepted principles of conflict of laws and then to apply that 'proper law' to the interpretation, and the validity of the contract and the mode of performance and the consequences of breaches of contract".[47]
In Indussa Corp v SS Ranborg,[48] the United States Court of Appeals identified a problem in forecasting the result of litigation in a foreign court where there was conflicting expert evidence about the substance and application of the foreign law.[49] The Court, in obiter dicta, said that "requiring trial abroad might lessen the carrier's liability since there could be no assurance that it would apply [the provisions] in the same way as would an American tribunal ... and s 3(8) can well be read as covering a potential and not simply a demonstrable lessening of liability".[50] The decision, however, depended on the Court's conclusion that "Congress meant to invalidate any contractual provision in a bill of lading for a shipment to or from the United States that would prevent cargo able to obtain jurisdiction over a carrier in an American court from having that court entertain the suit and apply the substantive rules Congress had prescribed".[51] Even then, the Court qualified this conclusion in a footnote saying "[o]ur ruling does not touch the question of arbitration clauses in bills of lading which require this to be held abroad. The validity of such a clause in a charter party, or in a bill of lading effectively incorporating such a clause in a charter party, has been frequently sustained".[52]
In any event, the United States Supreme Court disapproved Indussa in Vimar Seguros y Reaseguros, SA v M/V Sky Reefer.[53] The Court (Stevens J dissenting) said that Art 3(8), by its terms, "establishes certain duties and obligations, separate and apart from the mechanisms for their enforcement".[54] Further, the Court said that "[i]f the question whether a provision lessens liability were answered by reference to the costs and inconvenience to the cargo owner [shipper], there would be no principled basis for distinguishing national from foreign arbitration clauses".[55] The Court rejected jurisdictional parochialism and applied "contemporary principles of international comity and commercial practice".[56] These principles weighed against "construing COGSA to nullify foreign arbitration clauses because of inconvenience to the plaintiff or insular distrust of the ability of foreign arbitrators to apply the law".[57] The Court could not determine, at the interlocutory stage, if Japanese law would apply and whether its application would or would not lessen the carrier's liability. The Court said that "mere speculation that the foreign arbitrators might apply Japanese law which, depending on the proper construction of COGSA, might reduce respondents' legal obligations, does not in and of itself lessen liability under COGSA s 3(8)".[58] In so concluding, the Court did take into account that US courts retained jurisdiction over the recognition of any arbitral award, but the ratio is that Art 3(8) does not operate by reference to possibilities. So much is apparent from the Court's observation that, if satisfied that the impugned provisions did operate as a prospective waiver of rights, it would have had no hesitation in applying Art 3(8).[59]
Carmichael also relied on academic criticism of Sky Reefer and support for the dissent of Stevens J. In the context of international trade and the competing interests of shippers (cargo owners) and carriers (shipowners), it would be surprising if Sky Reefer had not generated robust debate. That does not mean the decision lacks a principled foundation or is out of step with the approach in other jurisdictions. To the contrary, the approaches in Sky Reefer and The Hollandia are complementary.
Carmichael's reliance on Belgian authorities does not advance its case. The domestic law context in Belgium is different from that in Australia. The domestic law provision giving effect to Art 3(8), in Belgian law, means that "a jurisdiction clause in general ... can only be considered valid when the Belgian judiciary has the reasonable assurance that the foreign court ... will ... apply Article 91 of [Belgium's] Maritime Act, taking into account the shades of interpretation given to it by Belgian case law".[60]
Nor does Carmichael's reliance on single-judge decisions of other jurisdictions assist, several of which, in any event, primarily concern choice-of-forum provisions. Even then, Carmichael's characterisation of those cases as supporting its position is unpersuasive as the courts in each case appear to have applied a version of Lord Diplock's reasoning in The Hollandia on the basis that the foreign provisions, on their face, lessened the carrier's liability.[61]
It follows that Carmichael's submissions on the construction of Art 3(8) of the Australian Hague Rules must be rejected, including its submissions that once a shipper shows that a clause, if enforced, may potentially lessen the carrier's liability, then the clause is to be held void unless the carrier demonstrates that the risk will not eventuate.

Carmichael submitted that the undertaking and declaration did not assist BBC's case as: (a) BBC has no assets in Australia against which the undertaking may be enforced; and (b) the undertaking and declaration concern the application in the arbitration of the Australian Hague Rules as applied under Australian law and not the application in the arbitration of the Australian Hague Rules as interpreted under Australian law.
Carmichael's first contention, that BBC has no assets in Australia against which the undertaking may be enforced, involves speculation that BBC, having given its undertaking to the Full Court, will, and will be permitted in the arbitration to, act contrary to its undertaking in the arbitration in some way. As explained above, that speculation is impermissible.
Carmichael's second contention, distinguishing between the Australian Hague Rules as applied and as interpreted under Australian law, also involves speculation. Senior counsel for BBC accepted, in the hearing of the appeal, that the undertaking meant that BBC undertook to admit in the arbitration that the Australian Hague Rules as applied and as interpreted under Australian law applied. To avoid any suggestion that BBC had not submitted to the jurisdiction of the Federal Court, the Full Court also made the declaration with the consent of BBC. Given this, Carmichael accepted in the hearing of the appeal that if its construction of the undertaking as excluding the Australian interpretation of Australian law was incorrect, the only risk to it was of "rogue" arbitrators acting contrary to the agreement of the parties and, thereby, contrary to s 46 of the UK Arbitration Act (discussed below). This exemplifies the "insular distrust" rightly eschewed in Sky Reefer.
The terms of the undertaking and declaration, to the effect that the Australian Hague Rules as applied under Australian law apply in the arbitration, bear only one possible meaning. The words "as applied" necessarily carry with them the meaning "as interpreted". The Australian Hague Rules cannot be applied under Australian law unless they are interpreted in accordance with Australian law.
The undertaking and declaration are facts relevant to the operation of Art 3(8). To the extent Carmichael submitted they could not be considered because they had come into existence only after BBC had relied on cl 4 of the bill of lading to commence the arbitration in London, the submission cannot be accepted. Lord Diplock's statement in The Hollandia that "the time at which to ascertain whether a choice of forum clause will have an effect that is proscribed by article III, paragraph 8 should be when ... the carrier seeks to bring the clause into operation and to rely upon it"[62] does not mean that, in this case, the Full Court was (or this Court is) confined to the facts as they existed at the time BBC commenced the arbitration in reliance on cl 4 of the bill of lading (that is, before the giving of the undertaking and the making of the declaration). The facts are those admitted, agreed, or found (or those which are ex facie apparent) at the time the court is deciding if Art 3(8) is engaged or not.
The remoteness of Carmichael's concern about the efficacy of the undertaking and declaration is reinforced by s 46 of the UK Arbitration Act, the terms of which are set out above. It may be accepted that cl 4 of the bill of lading provides that "English law is to apply" in the arbitration. But the common position of Carmichael and BBC (including BBC by reason of the undertaking and declaration) is that the Australian Hague Rules as applied in Australia apply in the arbitration to Carmichael's claims against BBC. Neither party suggested any cogent reason why this would not constitute "the law chosen by the parties as applicable to the substance of the dispute" within the meaning of s 46(1)(a) of the UK Arbitration Act, superseding the choice of law in cl 4 of the bill of lading, and binding the arbitrators.[63] Therefore, no question of two leges causae arises in respect of the law applicable to the substance of the dispute.
Section 33(1)(b) of the Civil Jurisdiction and Judgments Act 1982 (UK) does not suggest to the contrary. BBC did not merely ask the Full Court to "dismiss or stay the proceedings on the ground that the dispute in question should be submitted to arbitration or to the determination of the courts of another country" as set out in s 33(1)(b). BBC consented to the making of the declaration. On the face of it, s 33(1)(b) is inapplicable.[64] Carmichael did not prove or persuasively explain why the arbitrators would not treat BBC's consent to the declaration as evidence of BBC's irrevocable agreement with Carmichael as to the applicable law. Nor did Carmichael prove or persuasively explain why, if BBC attempted to resile from the terms of the declaration and that meant BBC's potential liability (on the balance of probabilities) would be relieved or lessened, Carmichael could not apply to the Federal Court of Australia to lift the stay of Carmichael's proceeding due to the changed circumstances.

Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmbH &

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