Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmbH & Co. KG

Federal Court of Australia (Full Court)|2022-10-12|Before: Stewart JJ

Introduction 1 These reasons for judgment concern two interrelated interlocutory applications. As to the first, the plaintiff, Carmichael Rail Network Pty Ltd as trustee for the Carmichael Rail Network Trust, seeks to restrain the commencement or maintenance of any proceedings brought in connection with a consignment of goods carried by the first defendant, BBC Chartering Carriers GmbH &Co KG, from Whyalla, in South Australia, to Mackay, in Queensland on board the ship BBC Nile, otherwise than in an Australian court. Carmichael Rail contends that on a proper construction of s 11(2) of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA 91), or by application of s 10(1)(b)(ii), it has a statutory right to an anti-suit injunction against BBC. This is the first occasion on which the construction of s 11(2) has been litigated. 2 The second application is brought by BBC, pursuant to s 7(2) of the International Arbitration Act 1974 (Cth) (IAA), for a stay of the whole of Carmichael Rail's claim against it, commenced by originating application on 12 August 2022. By statement of claim filed on that date, Carmichael Rail claims damages in contract for breach of Arts 3(1) and (2) in Sch 1A to COGSA 91 and in bailment and for negligence. As against the second defendant, OneSteel Manufacturing Pty Ltd, Carmichael Rail claims damages for breach of contract and negligence. OneSteel appeared on the hearing of the applications but took no active role. The resolution of BBC's application depends wholly on the conclusion reached in relation to Carmichael Rail's application for an anti-suit injunction. 3 On 16 August 2022, Carmichael Rail was granted an interim injunction restraining BBC from taking any further steps in the arbitration that it had commenced in London or from commencing any other arbitration in relation to the subject matter of the proceeding until both interlocutory applications had been determined. 4 On 31 August 2022, the Chief Justice directed under s 20(1A) of the Federal Court of Australia Act 1976 (Cth) that the proceeding be heard by the Full Court exercising original jurisdiction. 5 For the reasons below, the proceeding commenced in this Court must be stayed in favour of arbitration in London. The interim injunction granted on 16 August 2022 must be discharged.

Background 6 For present purposes, the parties were agreed as to the circumstances which gave rise to the applications. These were deposed to in an affidavit of Frazer Hunt, solicitor for Carmichael Rail, filed on 12 August 2022 which was read without objection, save for paragraph 15 of that affidavit which was admitted as a summary of the alleged facts causing the stow collapse referred to below, but not as the truth of those facts. Relevantly, Mr Hunt deposed: On 19 December 2019, Carmichael Rail and OneSteel entered into a contract for the manufacture and supply by OneSteel of 21,647 tonnes of 60k head hardened steel rails to Carmichael Rail. On 6 August 2020, Carmichael Rail and OneSteel entered into a "Goods and Services Agreement" for the transport of the goods by OneSteel from the Whyalla Facility to a vessel of Carmichael Rail's nomination at the loading berth of the Port of Whyalla, and for the loading of the goods onto that vessel, including the supply of rail lifting gear for the purpose of loading and unloading the goods. On 19 June 2020, a booking note was executed by BBC and by Norwest Group Logistics Pty Ltd (NGL) on behalf of Carmichael Rail for the carriage of a cargo of steel from Whyalla to Mackay by sea. On 13 November 2020, a stowage plan was prepared by BBC. Between 9 and 17 December 2020, OneSteel, through its subcontractor Qube Bulk Pty Ltd, loaded the goods onto the ship. On 17 December 2020, the Master issued a Mates Receipt and the BBC Nile departed the Port of Whyalla. On 17 December 2020, a bill of lading (WHYMAC01) (BOL) was issued by BBC to NGL, with Carmichael Rail named as consignee, for the shipment of 8,669 lengths of hardened steel rail. The BOL identified the port of loading as "Whyalla, Australia" and the port of discharge as "Mackay, Australia". On 24 December 2020, the BBC Nile arrived at the Port of Mackay where the Master issued a Notice of Readiness. On 25 December 2020, members of the crew observed that a collapse had occurred in hold 1 of the ship on the starboard side, as a result of which the steel rails stowed in that hold were damaged to such an extent as to become non-compliant with the specifications for their use in railway construction. The damaged steel achieved a salvage value of AUD656,998.51 when the damaged rails were sold as scrap. Between 21 December 2021 and 17 June 2022, the parties agreed to extensions of the time bar up until 24 September 2022. By email received on 2 August 2022, BBC gave notice to Carmichael Rail, through Mr Hunt, that it had commenced arbitral proceedings in London under the BOL in relation to the damage done to the goods while on board the BBC Nile. 7 Carmichael Rail's application for an anti-suit injunction followed on 12 August 2022. 8 The critical provisions of the BOL are clauses 3 and 4. 3. Liability under the Contract (a) Unless otherwise provided herein, the Hague Rules contained in the International Convention for the Unification of Certain Rules Relating to Bills of Lading, dated Brussels the 25th August 1924 as enacted in the country of shipment shall apply to this Contract. When no such enactment is in force in the country of shipment, the corresponding legislation of the country of destination shall apply. In respect of shipments to which there are no such enactments compulsorily applicable, the terms of Articles I-VIII inclusive of said Convention shall apply. In trades where the International Brussels Convention 1924 as amended by the Protocol signed at Brussels on 23rd February 1968 ("The Hague-Visby Rule") apply compulsorily, the provisions of the respective legislation shall be considered incorporated in this Bill of Lading. Where the Hague Rules or part of them or the Hague-Visby Rules apply to carriage under this contract, the applicable rules, or part of them, shall likewise apply to the period before loading and after discharge where the Carrier (or his agent) have custody or control of the cargo. Unless otherwise provided herein, the Carrier shall in no case be responsible for loss of or damage to deck cargo and/or live animals. … 4. Law and Jurisdiction Except as provided elsewhere herein, any dispute arising under or in connection with this Bill of Lading shall be referred to arbitration in London. The arbitration shall be conducted in accordance with the London Maritime Arbitrators Association (LMAA) terms. The arbitration Tribunal is to consist of three arbitrators, one arbitrator to be appointed by each party and the two so appointed to appoint a third arbitrator. English law is to apply.

The legislative regime 9 COGSA 91 was enacted following a review of Australia's marine cargo liability regime. A recitation of the history of COGSA 91 is found in the judgment of Rares J in Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd [2013] FCAFC 107; 216 FCR 469 at [29]-[38]. 10 Relevantly for present purposes, as set out in s 3, the object of COGSA 91 is to introduce a marine cargo liability regime that is "up-to-date, equitable and efficient", "compatible with arrangements existing in countries that are major trading partners of Australia", and "takes into account developments within the United Nations in relation to marine cargo liability arrangements". This object was envisaged in s 3(2) to be achieved, as a first step, by replacing the Sea-Carriage of Goods Act 1924 (Cth) (repealed) with provisions giving effect to the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading, opened for signature on 25 August 1924 (Hague Rules), as amended by the Protocol to Amend the International Convention for the Unification of Certain Rules Relating to Bills of Lading, opened for signature on 23 February 1968 (Visby Protocol) and the Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924, as Amended by the Protocol of 23 February 1968, opened for signature 21 December 1979 (SDR Protocol). These provisions, referred to collectively as the "amended Hague Rules", were enacted as Schedule 1 to COGSA 91. 11 A second step was also envisaged in s 3(2), being the replacement of the amended Hague Rules with provisions that would give effect to the United Nations Convention on the Carriage of Goods by Sea, opened for signature on 31 March 1978 (Hamburg Rules), should the Minister so decide after conducting a review. 12 Following a review conducted in 1995-1996 under the auspices of the Department of Transport and Regional Development, the Carriage of Goods by Sea Amendment Act 1997 (Cth) (COGSA Amendment Act) was passed. The Hamburg Rules were not enacted. Rather, the COGSA Amendment Act provided for regulations to amend COGSA 91 to add a schedule of modifications that would modify the text set out in Sch 1 to the Act. Schedule 1A to COGSA 91 was inserted by the Carriage of Goods by Sea Regulations 1998 (Cth) (COGSA Regulations) which were proclaimed on 30 June 1998. Schedule 1A modifies the amended Hague Rules to deal with some of the issues that had been dealt with by the Hamburg Rules and to situate the Rules clearly in the Australian legal context. The modified Rules in Sch1A continue to be referred to in COGSA 91 as the amended Hague Rules but to avoid confusion, we refer to them throughout as the Australian Rules. 13 Section 8 of COGSA 91 gives the Australian Rules the force of law in Australia, subject to s 10. 14 Section 10 defines the scope of application of the Australian Rules: (1) The [Australian] Rules only apply to a contract of carriage of goods by sea that: (a) is made on or after the commencement of Schedule 1A and before the commencement of Part 3 [the proposed application of the Hamburg Rules]; and (b) is a contract: (i) to which, under Article 10 of the [Australian] Rules, those Rules apply; or (ii) subject to subsections (1A) and (2)--for the carriage of goods by sea from a port in Australia to another port in Australia [inter-State carriage]; or (iii) contained in or evidenced by a non-negotiable document (other than a bill of lading or similar document of title), being a contract that contains express provision to the effect that the [Australian] Rules are to govern the contract as if the document were a bill of lading … (1A) If a contract for the carriage of goods by sea referred to in subparagraph 10(1)(b)(ii) is contained in, or evidenced only by, a consignment note, the [Australian] Rules apply to the contract only if paragraph 5 of Article 10 of those Rules so requires. (2) The [Australian] Rules do not apply in relation to the carriage of goods by sea from any port in any State or Territory in Australia to any other port in that State or Territory [intra-State carriage]. (Emphasis added.) 15 The effect of ss 8 and 10, together with Art 10(4) of the Australian Rules, is that the Rules apply mandatorily by force of statute to a contract for the carriage of goods by sea from one Australian port to another port in Australia, unless those two ports are in the same State or Territory. Article 3(8) of the Australian Rules provides: Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, or in connexion with, goods arising from negligence, fault, or failure in the duties and obligations provided in this article or lessening such liability otherwise than as provided in the convention, shall be null and void and of no effect. A benefit of insurance in favour of the carrier or similar clause shall be deemed to be a clause relieving the carrier from liability.

CARMICHAEL RAIL'S application for an anti-suit injuction

Does s 10(1)(b)(ii) of COGSA 91 invalidate one or both of the choice of law and jurisdiction clauses? 16 The BOL evidences a contract for carriage of goods by sea from Whyalla to Mackay. The port of shipment is in South Australia. The port of discharge is in Queensland. By s 10(1)(b)(ii) of COGSA 91, the Australian Rules apply to the contract of carriage in the BOL. 17 Carmichael Rail submitted that both the choice of law and the arbitration clauses, in clause 4 of the BOL, are void as they are contrary to the mandatory law of the forum (ie, s 10(1)(b)(ii) and Art 3(8)) because they have the real potential to lessen BBC's liability otherwise than what it would be under the Australian Rules. It posited three ways in which BBC's liability might be lessened. First, an English Arbitral Tribunal might take the view that by clause 3 of the BOL's terms and conditions, being the clause paramount, only Arts I-VIII of the Hague Rules apply, with the consequent applicability of lower limitation amounts than would apply under the Australian Rules. Secondly, even if the Tribunal did apply the Australian Rules, there is a real risk that the Tribunal will apply the English interpretation of those rules, particularly as concerns Art 3(1) and (2) (seaworthiness and proper care of cargo), as in Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (Jordan II) [2004] UKHL 49; [2005] 1 Lloyd's Rep 57, rather than adopting the dicta of Sheller JA in Nikolay Malakhov Shipping Co Ltd v Seas Sapfor Ltd (1998) 44 NSWLR 371. Carmichael Rail, quite properly, resiled from an initial submission that the application of Art 4(5) (package limitation) might yield a different calculation as between English and Australian law. Thirdly, as an English-seated arbitration, Australian law would need to be "proved" through evidence, rather than as a matter of argument directed to a court versed in Australian law. 18 Carmichael Rail drew direct support for its overall submission on this part of the case from the decision of the House of Lords in The Hollandia [1983] 1 AC 565; [1983] 1 Lloyd's Rep 1. The Hollandia concerned a choice of law clause in a bill of lading for the carriage of goods from Scotland to the Netherlands Antilles which provided for the law of the Netherlands, and specified a maximum liability per package which was less than that provided for by the Hague-Visby Rules as stipulated in the Schedule to the Carriage of Goods by Sea Act 1971 (UK) (COGSA 71). COGSA 71 provided that "The provisions of the Rules, as set out in the Schedule to this Act, shall have the force of law" (s 1(2)) "… in relation to and in connection with the carriage of goods by sea in ships where the port of shipment is a port in the United Kingdom…" (s 1(3)). 19 Lord Diplock, with whom their other Lordships agreed, held that the condition of the bill of lading, which prescribed a lower per package maximum limit of liability on the part of the carriers than that applicable under the Hague-Visby Rules was, ex facie, a clause of the contract that purported to lessen the liability of the carriers for such loss or damage within the meaning of Art 3(8) and was therefore "rendered null and void and of no effect" (at 573). 20 The bill of lading also contained a choice of forum clause nominating the exclusive jurisdiction of the Court of Amsterdam. As to that clause, Lord Diplock characterised it as not ex facie offending against Art 3(8), but rather as a provision that is subject to a condition subsequent. Thus, it comes into operation only upon the occurrence of a future event that may or may not occur, being a dispute between the parties as to their respective legal rights and duties under the contract, and which they are unable to settle by agreement (at 574-5). His Lordship said (at 575): If the dispute is about duties and obligations of the carrier or ship that are referred to in that rule and it is established as a fact (either by evidence or as in the instant case by the common agreement of the parties) that the foreign court chosen as the exclusive forum would apply a domestic substantive law which would result in limiting the carrier's liability to a sum lower than that to which he would be entitled if article IV, paragraph 5 of the Hague-Visby Rules applied, then an English court is in my view commanded by the Act of 1971 to treat the choice of forum clause of no effect. (Emphasis added.)

The construction of the clause paramount 21 As to Carmichael Rail's first concern, BBC has made a formal admission that the Australian Rules as applied under Australian law apply to the BOL and has proffered an undertaking that it will maintain that position in the arbitration. 22 Nevertheless, Carmichael Rail remains concerned that the Tribunal would need to determine for itself what law would apply and there is a real risk that it would hold that English law applies because any mandatory law of Australia denying the choice of English law will not be part of the lex fori or picked up by the chosen proper law for the Tribunal to apply. It was submitted that the Tribunal might well take the view that the clause paramount only causes Arts I-VIII of the Hague Rules to apply, necessarily resulting in lower limits of liability. 23 While both parties were agreed that English law governed the BOL, there was no agreement as to the consequence of the application of English law to the construction of the clause paramount. That clause envisages three potential liability regimes: (1) The Hague Rules as enacted in the country of shipment (Australia), or the corresponding legislation in the destination country (Australia): the first two sentences of clause 3(a) of the BOL. Parenthetically, we observe that the Hague Rules simpliciter are no longer enacted in Australia. Australia denounced the Hague Rules by instrument of denunciation deposited on 16 July 1992. (2) Articles I-VIII of the Hague Rules where no such enactments are compulsorily applicable: the third sentence of clause 3(a) of the BOL. (3) The Hague-Visby Rules in trades where they apply compulsorily and in accordance with the provisions of the legislation that makes them so apply: the fourth sentence of clause 3(a) of the BOL. 24 Carmichael Rail contended that the choice of English law means that the Tribunal will not apply the Australian Rules, relying on Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd's Rep 236 at 245. BBC contended that the first possibility referred to in the clause paramount includes reference to a modified version of those Rules in force at the place of shipment, including the Hague-Visby Rules, relying on Yemgas FZCO v Superior Pescadores SA (The Superior Pescadores) [2016] EWCA Civ 101; [2016] 1 Lloyd's Rep 561. Consequently, BBC contended that as the Australian Rules are based on the Hague-Visby Rules, they would be regarded as a modified version of the Hague Rules under English law. There is also the possibility that the fourth sentence of the clause paramount incorporates the Australian Rules into the BOL contract, cf, Trafigura Beheer BV v Mediterranean Shipping Co SA (The MSC Amsterdam) [2007] EWCA 944 (Comm); [2007] 2 Lloyd's Rep 622. 25 As both parties are agreed that the Australian Rules do apply to the BOL, either as a matter of construction of the clause paramount or by virtue of BBC having proffered an undertaking consistent with Carmichael Rail's position that that is so, or because the clause paramount derogates from Art 3(8), it is both unnecessary and undesirable to reach a conclusion as to the proper construction of the clause paramount under English law. 26 In the circumstances of that agreement between the parties, it is appropriate for the Court to make a declaration that the Australian Rules apply to the BOL, regardless of where or under what law the dispute is ultimately determined. 27 BBC accepted that it was appropriate for the Court to make a declaration in such terms. That being the case, under English private international law rules BBC will be regarded as having submitted to the jurisdiction of this Court, it having consented to a declaration of right as between the parties: Adams v Cape Industries plc [1990] Ch 433 at 461 per Scott J. Nothing in s 33(1) of the Civil Jurisdiction and Judgments Act 1982 (UK) gainsays the proposition that by consenting to orders dealing with the parties' rights inter se, BBC has submitted to the jurisdiction, notwithstanding its primary position that a stay should be granted. For those reasons we are satisfied that the envisaged declaration will be effective as creating an issue estoppel that will apply in the arbitration in the sense that the Privy Council explained in Gol Linhas Aereas S.A v MatlinPatterson Global Opportunities Partners (Cayman) II L.P [2022] UKPC 21; [2022] 2 Lloyd's Rep 169 at [34]. However, the requirement of an undertaking by BBC as to the applicability in the London arbitration of the Australian Rules as applied under Australian law as a condition of the stay of the domestic proceeding will further ensure that BBC will not be able to lessen its liability in the arbitration from that which it would be under the Australian Rules in the domestic proceeding. There should therefore be such a condition attached to a stay of the proceeding.

English interpretation of Australian Rules 28 Carmichael Rail's second concern, namely that the Tribunal applying the Australian Rules would nevertheless interpret those Rules in accordance with English law, with the consequence being that BBC's liability would be lessened otherwise than as provided in the Australian Rules, also falls away given the terms of BBC's undertaking. As mentioned, BBC has admitted that the Australian Rules: as applied under Australian law apply to the Bill of Lading and [Carmichael Rail's] claims against [BBC] thereunder and undertakes that it will maintain that admission and position in the London arbitration. 29 Carmichael Rail was invited to provide brief supplementary submissions in response to BBC's undertaking. It did so on 4 October 2022. To the extent that those submissions went beyond a response to the terms of the undertaking and sought to reagitate issues as to the construction of s 11 of COGSA 91, they have been disregarded. 30 Carmichael Rail submitted that BBC had "chosen its words very carefully" in failing to undertake "that the Australian law interpretation of the Rules shall apply". In the present context, nothing turns on the use of the word "applied" rather than "interpreted". It is clear that the admission made by BBC is that Australian law is to be used when determining the relevant duties and liabilities as provided for by the Australian Rules as they apply to the BOL. 31 Given BBC's admission and undertaking, the question as to whether there would be any materially different outcome on the facts of this case, applying the law of England on the one hand and that of Australia on the other, that would be such as to lessen BBC's liability other than as provided for by the Australian Rules, is moot. 32 Nevertheless, Carmichael Rail is concerned that there remains some residual risk that the Tribunal might apply a different version of Australian law from that which it contends leads to its preferred application of the Australian Rules. As expressed in its submissions, this concern relates primarily to the ultimate resolution of any liability on the part of Carmichael Rail under Art 3(2) for BBC's complaints about the manner in which the goods were loaded, stowed, and trimmed in the No. 1 hold, given the FIOST (Free In and Out Stowed and Trimmed) terms on which the goods were shipped by which the cargo owner, OneSteel, shifted responsibility for the loading, stowing, and trimming of the cargo to Qube. Carmichael Rail contended that, under Australian law, Art 3(2) imposes on BBC a non-delegable obligation to load, stow, trim and discharge the cargo and, accordingly, while it may contract out of the performance of those obligations, it cannot contract out of responsibility for them. 33 Carmichael Rail relies for this contention on the obiter dicta of Sheller JA in Nikolay Malakhov. That case was concerned with circumstances where the carrier undertook to discharge goods at a different port consequent upon a legitimate deviation and whose agent did so negligently. The Court of Appeal held (per Sheller and Cole JJA, Handley JA dissenting) that by the carrier agreeing to deliver the goods to the port of discharge, it undertook to do so in accordance with Art 3(2). Contrary to the circumstances that pertained in Nikolay Malakhov, BCC did not undertake to load or discharge the cargo. Clause 10 of the BOL permitted that to be "otherwise agreed or noted herein". The FIOST term was expressly incorporated on the face of the BOL. Sheller JA referred to the possibility of circumstances such as arise in the present case saying, at 388, "It is unnecessary to consider whether this obligation could legitimately have been lessened if the consignee had agreed to be responsible for discharging the goods." 34 The position in English law, as affirmed in The Jordan II, is that Art 3(2) does not define the scope of the carrier's obligations but merely defines the terms upon which whatever obligations are undertaken by the carrier are to performed: Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402; [1954] 1 Lloyd's Rep 321 and affirmed in G H Renton & Co Ltd v Palmyra Trading Corporation of Panama (The Caspiana) [1957] AC 149; [1956] 2 Lloyd's Rep 379. In Pyrene, Devlin J was of the view that the Hague Rules did not prevent the parties to a contract of carriage from determining which part each was to play in the loading and discharging operations: at 418. The interpretation of Art 3(2) which his Lordship settled on as being consistent with the object of the Rules was thus that whatever loading the carrier does do, he shall do properly and carefully: Pyrene at 417. 35 Consequently, under English law, a FIOST clause, which specifies the party who has agreed to bear responsibility for the loading, discharging and stowing operations, is not invalid by reason of Art 3(8) because the terms of a FIOST clause are not inconsistent with the provisions of Art 3(2). This view is to be contrasted with the interpretation adopted in the United States. In Associated Metals & Minerals Corp v M/V Arktis Sky (The Arktis Sky) 978 F. 2d 47 (2nd Cir 1992), the United States Court of Appeal for the Second Circuit held that Art 3(2) imposed positive obligations on the carrier and that any clause which purported to relieve the carrier of responsibility for the consequences of bad loading, stowing, trimming or discharging would be struck down by Art 3(8). 36 In The Jordan II, their Lordships expressly disclaimed expressing any opinion on the correctness of the interpretation adopted by Devlin J in Pyrene (per Lord Nicholls at [2] and Lord Steyn, delivering the leading judgment, at [32]). Their Lordships did, however, note the unequivocal ratio decidendi in The Caspiana, the subsequent acceptance of that authority both in the United Kingdom and in other Commonwealth jurisdictions (at [12]-[13]) and that, since the decision in The Caspiana, no English textbook writers have challenged its correctness (at [21] referring to Scrutton on Charterparties (Sweet & Maxwell, 20th ed, 1996, pp 430-431); Contracts for the Carriage of Goods by Land, Sea and Air (LLP, 1993-2000, para 1.1.3.5); Treitel QC and Reynolds QC, Carver on Bills of Lading (Sweet & Maxwell, 1st ed, 2001, [9-114]-[9-115])). More recent editions of those texts have not demurred from their previous commentary: see Scrutton on Charterparties (Sweet & Maxwell, 24th ed, 2020, [9-143]); Treitel QC and Reynolds QC, Carver on Bills of Lading (Sweet & Maxwell, 4th ed, 2017, [9-123]-[9-125]). Professor Stephen Girvin attributes the result in the Jordan II to "the authorities of nearly 50 years' standing, by respected English commercial judges, and the principle of certainty in commercial transactions": Girvin, Carriage of Goods by Sea (OUP, 3rd ed, 2022, [27.44]). 37 There has, however, been some criticism of its consequences, at least in relation to the effect of a FIOST clause on the consignee or indorsee of a bill of lading, even when the charterparty is incorporated (Gaskell, "Shipowner Liability for Cargo Damage Caused by Stevedores -The Coral" [1993] LMCLQ 170; Gaskell, Asariotis & Baatz, Bills of Lading Law and Contracts (London: LLP, 2000) 8.28-8.29; Baughen, Shipping Law (London: Cavendish Publishing, 3rd ed, 2004) 121). This is not the present situation. 38 Professor Davies has argued that the English view of Art 3(2) drains it of most of the significance which it was intended to have. He asserts that the American view, which permits the carrier to contract out of the performance of the functions of loading, stowing and discharging, but not responsibility for them, preserves the original intention behind Art 3(2) while still permitting the parties to make the most convenient commercial arrangements for performance: "Two Views of Free In and Out, Stowed Clauses in Bills of Lading" (1994) 22 Australian Business Law Review 198, 206: see also, Martin Davies and Anthony Dickey, Shipping Law (Thomson Reuters, 4th ed, 2016, [12.310]) and James Allsop, "Maritime Law: The Nature and Importance of its International Character" (2010) 84 Australian Law Journal 681 at 689-9. 39 Similarly, albeit not in the context of a FIOST clause, Rares J has held that in construing the Australian Rules, they "do not contain a defence of, or exception of liability for, contributory negligence by a shipper or owner of cargo": Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] FCA 2014; 245 ALR 125 at [84]. Thus, "A carrier which does not comply with its obligations to discharge [or load] properly and carefully in accordance with Article 3 r 2 acts at its peril": Hilditch at [83]. 40 The High Court of Singapore has also distinguished The Jordan II on the basis that it involved clear words which transferred the responsibility for the cargo operations from the shipowner to the defendant. By contrast, in the case before the High Court, the fis l/s/d (free in stowed l/s/d/liner out hook) clause was held to be insufficiently clear on its own to transfer the risk of loading operations from the shipowner to the defendant: Subiaco v Baker Hughes [2010] SGHC 265; [2011] 1 SLR 129 per Ang J. 41 Ultimately, the construction of the terms of the BOL, including the FIOST clause, is a matter for the Tribunal. In the absence of full argument on the construction of those terms and given BBC's undertaking and its reflection of the common position of the parties, it is academic whether there is, or should be, any different consequence under Art 3(2) as between the law of England and that of Australia in respect of the effect of this FIOST clause in the BOL, and which might result in a lessening of BBC's liability. 42 Further, it was vaguely suggested by Carmichael Rail that the difference as between the Supreme Court of the United Kingdom in Volcafe Ltd v Cia Sud Americana de Vapores SA (trading as CSAV) [2019] AC 358 and the High Court of Australia in Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The Bunga Seroja) [1998] HCA 65; 196 CLR 161 as to the correct approach to the burden of proof when considering a claim under Art 3(1) would lessen BBC's liability under the Australian Rules. Prior to the decision in Volcafe, Chief Justice Allsop had made the somewhat prescient observation in relation to the onus or burden of proof that the operation of Art 3 and Art 4 of the Hague-Visby Rules is "not straightforward" and "not finally settled": WK Marble & Granite Pty Ltd v CASA China Ltd [2007] FCA 1382; 244 ALR 396 at [6]. Subsequent to Volcafe, the English High Court has cast doubt on whether the decision alters the burden of proof in relation to Art 3(1) or is confined to Art 3(2): Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) [2019] EWHC 481 (Admlty); [2019] 1 Lloyd's Rep 595. That particular issue was not pursued on appeal: [2020] EWCA Civ 293; [2020] 2 Lloyd's Rep 565 at [12]. 43 Again, in the absence of a full hearing on the factual matters underpinning Carmichael Rail's claim, this Court cannot speculate on whether particular findings of fact might raise potential differences as between English law and Australian law as to the approach to Art 3(1) or (2). That would be to speculate beyond any legitimate bounds. 44 In any event, as we have already observed, BBC's admission that the BOL is governed by the Australian Rules, as applied under Australian law, obviates the need to determine whether or not Australian and English law differ materially in their application to the facts specific to this matter, and which have not yet been determined. In such circumstances, Carmichael Rail has not established that the conduct of the arbitration, in accordance with the terms of the BOL, would be such as to lessen the liability of BBC other than as is provided for by the Australian Rules.

The need to "prove" Australian law 45 Carmichael Rail's third concern is that as there will be an English-seated arbitration, Australian law would need to be "proved" through evidence. While this circumstance may increase Carmichael Rail's costs of the arbitration, that is not a matter to which Art 3(8) is directed. Article 3(8) is concerned solely with whether a clause, covenant or agreement relieves or lessens a carrier's liability arising from "negligence, fault, or failure in the duties and obligations provided" in Art 3. Where the relative costs of dispute resolution fall are simply not within the scope of Art 3(8). 46 For these reasons, the choice of law and jurisdiction clause is not rendered void by virtue of s 10(1) of COGSA 91 read with Art 3(8) of the Australian Rules.

The construction of s 11(2) 47 Section 11 of COGSA 91 is headed "Construction and jurisdiction". It provides: (1) All parties to: (a) a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia; or (b) a non-negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii), relating to such a carriage of goods; are taken to have intended to contract according to the laws in force at the place of shipment. (2) An agreement (whether made in Australia or elsewhere) has no effect so far as it purports to: (a) preclude or limit the effect of subsection (1) in respect of a bill of lading or document mentioned in that subsection; or (b) preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of a bill of lading or a document mentioned in subsection (1); or (c) preclude or limit the jurisdiction of a court of the Commonwealth or of a State or Territory in respect of: (i) a sea carriage document relating to the carriage of goods from any place outside Australia to any place in Australia; or (ii) a non-negotiable document of a kind mentioned in subparagraph 10(1)(b)(iii) relating to such a carriage of goods. (3) An agreement, or a provision of an agreement, that provides for the resolution of a dispute by arbitration is not made ineffective by subsection (2) (despite the fact that it may preclude or limit the jurisdiction of a court) if, under the agreement or provision, the arbitration must be conducted in Australia. 48 Article 1(1)(g) of the Australian Rules defines a "sea carriage document" to mean: (i) a bill of lading; or (ii) a negotiable document of title that is similar to a bill of lading and that contains or evidences a contract of carriage of goods by sea; or (iii) a bill of lading that, by law, is not negotiable; or (iv) a non-negotiable document (including a consignment note and a document of the kind known as a sea waybill or the kind known as a ship's delivery order) that either contains or evidences a contract of carriage of goods by sea. 49 As has already been discussed above, there is no dispute that the terms of the BOL provided for disputes to be determined in London by arbitration on LMAA terms. Carmichael Rail contended that this provision is invalid because of the operation and effect of s 11(2) of COGSA 91 and that the dispute must be determined by a court of the Commonwealth or of a State or Territory. This contention depends on whether the inter-State carriage of goods under a bill of lading falls within the scope of s 11(2)(b). 50 Carmichael Rail submitted that a proper reading of the term "bill of lading" in s 11(2)(b) necessarily includes one that relates to inter-State carriage of goods. Alternatively, Carmichael Rail submitted that it would be appropriate to read additional words into s 11(1)(a) or s 11(2)(b) to fill the apparent gap in those sections. 51 The principles applicable to questions of statutory construction, which require consideration of the text, content, and purpose, are well established: see, in particular, s 15AA of the Acts Interpretation Act 1901 (Cth); Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 at [69]; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 at [39]; Certain Lloyd's Underwriters v Cross [2012] HCA 56; 248 CLR 378 at [25]-[26]; SZTAL v Minister for Immigrations and Border Protection [2017] HCA 34; 262 CLR 362 at [14]; Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner (The Bay Street Appeal) [2020] FCAFC 192; 282 FCR 1. 52 In The Bay Street Appeal, the Chief Justice expressed the approach in this way, at [4]: The principle is clear: Meaning is to be ascribed to the text of the statute, read in its context. The context, general purpose and policy of the provision and its consistency and fairness are surer guides to meaning than the logic of the construction of the provision. The purpose and policy of the provisions are to be deduced and understood from the text and structure of the Act and legitimate and relevant considerations of context, including secondary material.

The legislative history 53 Before turning to the text of s 11(2)(b), it is instructive to consider the legislative history. The origin of COGSA 91 ss 11(2)(a) and (b) is found in s 6 of the Sea-Carriage of Goods Act 1904 (Cth) (repealed) (1904 Act). Section 6 provided for the invalidity ("illegal, null and void, and of no effect") in "any bill of lading or document relating to the carriage of goods from any place in Australia to any place outside Australia" of (1) a choice of law clause which had the effect of being contrary to the provision that the parties are deemed to have intended to contract according to the laws at the place of shipment, and (2) a jurisdiction clause purporting to oust or lessen the jurisdiction of Australian courts. There can be no doubt that inter-State carriage was not caught by the section or the 1904 Act as a whole. 54 It is noteworthy that the provisions of the 1904 Act dealing with the allocation of liability between cargo and carrier applied in relation to ships carrying goods from "any place in Australia to any place outside Australia or from one State to another State" (s 4(1)). That is to say, inter-State, but not intra-State, carriage was covered for that purpose. 55 The first substantive debate on the Sea-Carriage of Goods Bill 1904 (Cth) (1904 Bill) took place in the Senate on 23 November 1904. In the Second Reading Speech, the Attorney-General, Senator Sir Josiah Symon KC, said (Commonwealth, Parliamentary Debates, Senate, 23 November 1904, p 7286): The purpose of this Bill, which, although very short, is of importance, is very simple; but the Bill, in carrying out that purpose, involves on the one hand considerations largely commercial, and of great interest to not merely the producers of the community, but to all shippers, and on the other hand involves a consideration of matters which are of a comparatively technical nature. In one sentence, the object of the measure is to prevent ship-owners from escaping liability for their own negligence. At present they give almost universally a contract for the carriage of goods which, by various stipulations, exempts them from liability. (Emphasis added.) 56 In referring to a deputation he had received, Sir Josiah Symon reported (Commonwealth, Parliamentary Debates, Senate, 23 November 1904, p 7287): Mr Wettenhall stated that - The Norddeutscher Lloyd Co., which traded to America, and was governed by the laws of that country, was the only company which accepted the liability, but there was another clause in its bills of lading under which the shipper had to agree to take any action under German law. That is a state of things which I think will have to be stopped. This gentleman said - On one occasion when a consignment was injured, complaint was made to the company, and the shippers were politely invited to proceed with their suit in the Courts of Germany. (Emphasis added.) 57 He continued: They protect their own law courts. I doubt very much whether they have the power to oust the jurisdiction of the Courts of the Commonwealth in the matter. But assuming that they have that power, I think we must also take steps to prevent that which is simply an evasion of what we all desire should be fair conditions under which this export trade should be continued. (Emphasis added.) 58 It cannot be concluded from any of these passages that there was a clear legislative intent, at least in 1904, to ensure that foreign choice of law and jurisdiction clauses were to be foreclosed with respect to inter-State carriage. To the contrary, it is clear that the Parliament was concerned with preventing carriers from contracting out of their liability for negligence. This was made pellucid by Sir Josiah Symon who said (Commonwealth, Parliamentary Debates, Senate, 23 November 1904, p 7288): The only effect of what we propose to do in this Bill - and I believe effectually - is to prevent shipowners, from contracting themselves out of their own liability for negligence as carriers. There is no injustice. 59 It was observed by Senator Clemons that carriers had always avoided their responsibility even in inter-State trade and so clause 3 [which was enacted as s 4] "emphasizes what the Attorney-General has said…that this legislation is of a kind which must be Federal, and clause 3 shows that it is to apply only to goods shipped from any place in Australia to any place outside Australia, or from one State to another": (Commonwealth, Parliamentary Debates, Senate, 23 November 1904, p 7292-3). 60 The debates revolved very clearly around whether parties would be free to agree amongst themselves as to the law by which they were bound. The possibility of a foreign jurisdiction clause being illegal had not been expressly denied as impossible during the debate - it was the possibility of a foreign choice of law clause that was said to be illegal in Australia. Senator Best had commented (Commonwealth, Parliamentary Debates, Senate, 23 November 1904, p 7297): The point which I wish to emphasize is this: Whether it is positive law, or simply law which is ascertained and created by precedent, it is laid down in this case that if the parties intend that their transaction shall be regulated by a particular law, then, that having been once asserted, it will be governed by that law. Consequently, I wish to point out that, notwithstanding the passing of this Bill, it may be possible for a German company to say to a shipper, "We are prepared to carry your goods at a very low freight" - they may tempt producers in this way - "and we will exercise every care, but we must not be punished if by any chance it is held that we are negligent. We can give our personal assurance that we will be as careful as we can, but we cannot hold ourselves liable, even if our servants may be negligent; and you must agree with us that we are to be bound by the German law so far as this contract is concerned." Senator Sir JOSIAH SYMON - They cannot do that. Senator TRENWITH. - Would not this Bill make such an agreement illegal in Australia? Senator BEST - Illegal in Australia. Yes. Of course, the Attorney-General has intimated his intention to alter the Bill in that direction. I welcome that suggestion and desire to make the measure stronger in every way. (Emphasis added.) 61 Section 6 of the 1904 Act was the consequence of these debates. Sir Josiah Symon said (Commonwealth, Parliamentary Debates, Senate, 24 November 1904, p 7392): Two points were very strongly put - with which, so far as the legal interpretation is concerned, I agree - by Senator Best and Senator Keating. Other honorable senators also referred to them. One is as to the imposition of a penalty, and the other is the point which was more especially emphasized by Senator Keating, as to declaring by this Bill that the law to be applied to the construction of a contract entered into by the parties to a bill of lading is the law of the Commonwealth. To carry out that idea I propose to insert after clause 4 the following new clause: All parties to any bill of lading or document relating to the carriage of goods from one place in Australia to any place outside Australia shall be deemed to have intended to contract according to the law of the Commonwealth, and any stipulation or agreement to the contrary or purporting to oust or lessen the jurisdiction of the Courts of the Commonwealth or of a State in respect of a bill of lading or a document shall be illegal, null and void, and of no effect. I think that will be absolutely effective - indeed, I have no doubt that it will be. It is like a vice. (Emphasis added.) 62 The 1924 Act also applied the rules on the allocation of liability, being the Hague Rules, to shipments out of Australia and to inter-State shipments (s 4(1)). However, like the 1904 Act, it invalidated, first, choice of law clauses that operated contrary to the deeming provision that parties intended to contract subject to the law of the place of shipment and, secondly, foreign jurisdiction clauses only in respect of "any bill of lading or document relating to the carriage of goods from any place outside Australia to any place in Australia" (s 9(1)). Unlike the 1904 Act, it also invalidated foreign jurisdiction clauses in respect of shipments into Australia (s 9(2)), a provision that is carried through to the present in s 11(2)(c)(i) of COGSA 91. We were not taken to any of the Parliamentary debates leading to the enactment of the 1924 Act but there can be no suggestion that foreign jurisdiction clauses in respect of inter-State carriage were invalidated under the 1924 Act. 63 The 1924 Act was replaced by COGSA 91 with the express object of introducing a regime of marine cargo liability that is up-to-date, equitable and efficient, compatible with arrangements existing in countries that are major trading partners of Australia and takes into account developments within the United Nations in relation to marine cargo liability arrangements. To achieve this object, COGSA 91 enacted provisions giving effect to the Hague Rules, as amended by the Visby and SDR Protocols, and as modified in accordance with regulations made under s 7. These provisions applied to shipments out of Australia and to inter-State shipments (s 10(1)). COGSA 91 also invalidated any choice of law clause contrary to the deeming provision that parties intended to contract subject to the law of the place of shipment (s 11(2)(a)) and foreign jurisdiction clauses (s 11(2)(b)) "in respect of a bill of lading or a document mentioned in subsection (1)". Subsection (1) mentioned "a bill of lading, or a similar document of title, relating to the carriage of goods from any place in Australia to any place outside Australia" (s 11(1)(a)). Once again, there can be no suggestion that foreign choice of law and jurisdiction clauses in respect of inter-State carriage were invalidated. 64 Nothing in the materials leading to the enactment of COGSA 91, or the amendments to s 11 of that Act, discloses any legislative consideration that the parties to a sea carriage document, including a bill of lading, should be unable to contract out of the jurisdiction of Australian courts in respect of inter-State carriage of goods. While this omission seems inconsistent with the express provisions of s 11(2)(b) and (c), in respect of carriage of goods by sea outbound from, and inbound to, Australia, the question is whether the Court can construe s 11 also to apply to a bill of lading or other sea carriage document for inter-State carriage of goods that precludes or limits the jurisdiction of an Australian court. It is anomalous that s 11 does not provide so expressly. In the second reading speech for what became the 1997 Act, the Minister said (in respect of what would become s 11(3)) (Commonwealth, Parliamentary Debates, Senate, 25 June 1997, p5228): Industry has concerns that under the existing legislation, arbitration has not been available as an option for resolving disputes. The act will now make it clear that arbitration in Australia does not offend section 11 of the COGSA. 65 Once again, however, the Minister's explanation did not deal expressly with the topic of whether s 11 was concerned at all with whether the jurisdiction of Australian courts could be precluded or limited in respect of contracts for inter-State carriage of goods by sea. There is no evident rationale as to why the Parliament enacted s 11 to exclude inter-State carriage of goods by sea from the same outcome that it provides in respect of contracts for international carriage of goods by sea. 66 The COGSA Amendment Act made only one amendment to the effect of ss 10 and 11. It inserted s 11(3) which provides that an arbitration agreement is not made ineffective by s 11(2) if, under the agreement, the arbitration must be conducted in Australia. Although the attention of the Parliament was obviously directed to Australian-seated arbitrations, no amendment was made to ss 11(1) or 11(2), which continued to be applicable only to carriage out of or into Australia and not to inter-State carriage. Notably, provision was made for the amendment of Pt 2 of the Act by regulation (s 7(3)). 67 The regulatory power was used twice in 1998. Relevantly, by the COGSA Regulations, s 11(1)(a) was amended by omitting the wording "a bill of lading, or a similar document of title" and substituting it with "a sea carriage document to which, or relating to a contract of carriage to which, the [Australian] Rules apply". The amendment can be represented as follows using the familiar devices of strikethrough and underline: 11 Construction and jurisdiction (1) All parties to: (a) a bill of lading, or a similar document of title, a sea carriage document to which, or relating to a contract of carriage to which, the [Australian] Rules apply, relating to the carriage of goods from any place in Australia to any place outside Australia; or (b) a non-negotiable document of a kind mentioned in subparagraph 10(l)(b)(iii), relating to such a carriage of goods; are taken to have intended to contract according to the laws in force at the place of shipment. 68 Once again, the type of carriage caught by the provisions in s 11(1) was carriage out of Australia and not inter-State carriage. Sections 11(2)(a) and 11(2)(b) were not amended. They remained applicable to "a bill of lading or a document mentioned in subsection (1)". 69 The second set of regulations in 1998 (Carriage of Goods by Sea Regulations 1998 (No 2) (Cth)) was directed at fixing some drafting errors in the first set of regulations, including in s 11(1)(a). The existing s 11(1)(a) as amended by the COGSA Regulations was substituted by the following: (a) a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia; or 70 This amendment: (1) reinstated the imposition of a geographical limitation to the operation of s 11(1)(a) and (b), namely its application to outbound shipments, consistent with the terms in which s 11(1)(a) had been enacted originally in 1991 - and also in the terms of its predecessor, s 9 of the 1924 Act; and (2) extended the types of documents henceforth caught by s 11(1)(a), and therefore also s 11(2)(b), beyond merely a bill of lading or similar document of title to include the wider range of documents to be called "sea carriage documents" consistent with the purpose of the amendments introduced by the COGSA Amendment Act. 71 Once again, the text of s 11(2)(a) and (b) remained unchanged. 72 The problem that was created by the 1998 amendments is that where s 11(1)(a) had previously referred to "a bill of lading, or similar document of title", the amended provision now refers to "a sea carriage document", being a compendious expression defined in the Australian Rules in Art 1(1)(g) as covering both a bill of lading and a similar document of title. However, s 11(2)(a) and (b) continued to refer to "a bill of lading or a document mentioned in subsection (1)". In Director of Public Prosecutions (Nauru) v Fowler [1984] HCA 48; 154 CLR 627 at 630, Gibbs CJ, Murphy, Wilson, Deane and Dawson JJ held that where it is apparent that a simple grammatical mistake in legislation has occurred, and a strict reading of the provision would lead to absurdity, a court is entitled to attribute to the provision the meaning that it was obviously intended to have. The legislative intention that s 11(2)(a) and (b) be limited by the type of document referred to in s 11(1)(a) remains clear, notwithstanding the infelicitous "a" before "document" in s 11(2)(a) and (b) which should be understood as "other". 73 There is nothing in the materials explaining the amendments in 1997 and 1998 that says anything about extending the applicability of the invalidating provisions in s 11(2)(a) and (b) in respect of choice of law and jurisdiction, respectively, to inter-State shipments. Indeed, the expressed purpose of s 11(2) was to preserve "the jurisdiction of Australian courts, to apply to all relevant sea carriage documents" (emphasis added): Explanatory Statement, Carriage of Goods by Sea Regulations 1998, Statutory Rules 1998 No 174. "All relevant sea carriage documents" were those referred to in subsections (1) and (2) - those relating to outbound and inbound carriage.

Does s 11(2), on its face, invalidate clause 4 of the BOL? 74 The ultimate question to be determined is whether, properly construed, the inter-State carriage of goods under a bill of lading falls within the scope of s 11(2)(b). 75 Section 11(1) is a mandatory choice of law provision for outbound shipments from Australia. It provides that all parties to a sea carriage document (and a non-negotiable document as described in s 10(1)(b)(iii)) relating to the carriage of goods from any place in Australia to any place outside Australia are taken to have intended to contract according to the laws at the place of shipment. In such circumstances, the law of the place, including the Australian Rules, will apply to the contract of carriage: Dampskibsselskabet; Hi-fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) [1998] FCA 1485; 90 FCR 1. 76 It is plain that the Australian Rules apply to the inter-State carriage of goods by sea: COGSA 91 ss 8 and 10(1) and Art 10(4) of the Australian Rules. Whether it is possible to contract out of the Australian Rules in respect of inter-State carriage is governed by s 11(2). 77 Section 11(2)(a) is directed to outbound carriage from Australia pursuant to a sea carriage document or a non-negotiable document as described in subsection (1)(a) and (b). It prohibits contracting out of the mandatory choice of law provision contained in s 11(1). It is irrelevant to the present circumstances. 78 Section 11(2)(b) and (c) prohibit contracting out of the jurisdiction of Australian courts. Carmichael Rail contended that three types of agreements are contemplated by s 11(2)(b) and (c): (1) bills of lading (s 11(2)(b)); (2) documents mentioned in subsection (1), being sea carriage documents relating to outbound carriage and non-negotiable documents expressly providing for the Australian Rules to govern the contract (s 11(2)(b)); and (3) sea carriage documents relating to inbound carriage and non-negotiable documents expressly providing for the Australian Rules to govern the contract (s 11(2)(c)). 79 The question for determination is whether bills of lading generally, and in addition to those documents mentioned in s 11(1), are indeed within the ambit of s 11(2) such that the purported restriction on the exercise of the jurisdiction of Australian courts by the BOL is of no effect. 80 It will be recalled that s 11(2)(a) and (b) are concerned with "a bill of lading or a document mentioned in subsection (1)". The construction for which Carmichael Rail contended depends upon two things: whether the words "a bill of lading" have any work to do and whether any effect is given to the use of the disjunctive "or" in subsection (2). 81 Subsection (1) does not refer to bills of lading simpliciter. It refers to two types of documents: (1) sea carriage documents for outbound carriage - as already observed, such documents include bills of lading, in addition to negotiable documents of title that are similar to bills of lading, non-negotiable bills of lading and sea waybills or ship's delivery orders that contain or evidence a contract of carriage of goods by sea (Australian Rules, Art1(1)(g)); and (2) non-negotiable documents (other than bills of lading or similar documents of title) by which the Australian Rules expressly govern the contract of carriage as if it were a bill of lading. 82 Given that bills of lading for outbound carriage are already included within the concept of "sea carriage documents", prima facie it would seem that the inclusion of the separate reference to "bills of lading" must embrace a wider class of bills than merely those for outbound carriage as referred to in subsection (1). Such a construction is consistent with the use of the disjunctive. The section embraces either a bill of lading - in its broadest sense - or a document mentioned in subsection (1). This interpretation has the further consequence that meaning is ascribed to all the words in the text. Nevertheless, the legislative purpose of the provision must be examined. 83 Recourse to the legislative history set out above reveals that from the Bill that led to the 1904 Act until the last of the amendments in 1998, there was simply no consideration of making the choice of law and jurisdiction invalidating provisions applicable to inter-State shipments. There is no possibility of finding as a point of historical fact that the Parliament intended such an outcome; it was simply not considered. 84 It is therefore not an available approach to find that the amendments by regulation in 1998 reveal any legislative intention, by leaving s 11(2)(a) and (b) unamended and amending s 11(1)(a), to expand the reference to "bill of lading" in s 11(2)(a) and (b) from a bill of lading relating to the carriage of goods from a place in Australia to a place outside of Australia to all bills of lading in respect of carriage to and from anywhere. 85 There is an additional difficulty in adopting such an approach to the meaning of "bill of lading" in s 11(2)(a) and (b). That is the anomalous results that it creates. Those difficulties are as follows. 86 First, intra-State shipments will be caught. Although such shipments are excluded from being subject to the relevant liability rules (s 10(2)), and were so excluded from the 1924 Act (s 4(2)) and the 1904 Act (s 4(1)), they would be caught for the purposes of invalidating foreign jurisdiction provisions insofar as they were covered by a bill of lading. That would be contrary to the scheme of the legislation which is to leave intra-State shipments to State legislatures. Also, the purpose behind the invalidating provisions is to prevent parties circumventing the applicability of the liability rules, and no such purpose exists insofar as intra-State shipments are concerned as the applicability of the liability rules is left to State legislatures. 87 Secondly, bills of lading in respect of shipments with no connection to Australia would be caught. Thus, in an arrest of a ship in rem in Australia for loss of or damage to cargo on a shipment from, say, China to the Netherlands, with an English law and London arbitration clause in a contract evidenced by a bill of lading, the London arbitration clause would be invalidated by s 11(2)(b) clearing the way for the substantive merits to be tried in the action in Australia. Such an outcome is beyond anything comprehended or intended by the regime. 88 Thirdly, although "bill of lading" in s 11(2)(a) and (b) should obviously be given the same meaning, in s 11(2)(a) bill of lading can only refer to a bill of lading relating to the carriage of goods from any place in Australia to any place outside Australia. That is because s 11(2)(a) only applies to a bill of lading containing an agreement that purports to preclude or limit the effect of s 11(1) which applies only to carriage of goods from any place in Australia to any place outside Australia. Thus, "bill of lading" would capture different documents in paragraph (a) from those in paragraph (b) which is contrary to the intended scheme. 89 Fourthly, only bills of lading would be so widely caught by s 11(2)(a) and (b) and not other sea carriage documents in circumstances where there is no justification in policy or legislative intent for such different treatment. Indeed, a principle underlying the 1997-1998 amendments to COGSA 91 is that bills of lading and other sea carriage documents are generally treated the same. 90 In short, it is abundantly clear that prior to the 1998 amendments, inter-State shipments were not caught by the invalidating provisions in relation to choice of law and jurisdiction; there is nothing to indicate any intention in those amendments to change that position; infelicitous leftover wording was created by the amendment of one subsection from referring to two types of documents to referring to one compendious type without amending two paragraphs of another subsection that refer to the first subsection. Resolving that infelicity by reading "bill of lading" unqualified by any route of carriage would create far more difficulty than it solves, and the infelicity is easily remedied by reading "a" preceding "document" in s 11(2)(a) and (b) as "other". 91 Thus, s 11(2)(b) does not prevent a party to a bill of lading or other document encompassed by the term "sea carriage document" relating to the inter-State carriage of goods by sea from contracting out of a foreign choice of jurisdiction clause.

Should words be read into s 11(1)(a)? 92 In the event that the conclusion above was reached, Carmichael Rail nevertheless contended that it would be appropriate to read s 11(1)(a) with additional words as follows, "… the carriage of goods from any place in Australia to any other State or Territory or any place outside Australia". 93 Alternatively, it was submitted that it would be appropriate to read s 11(2)(b) with additional words as follows: "… in respect of a bill of lading or a document mentioned in subsection (1) or section (10)(1)(b)(ii);". 94 Carmichael Rail submitted that this is a paradigm case for reading words in on the basis that the legislative history is decisive on the point. It points to the Parliamentary debates leading up to the enactment of the 1904 Act, the relevant provisions of which have not materially changed in the interim, which it said left "no doubt" that the legislative intent was to confer a complete protection for all Australian shippers (with the exception of intra-State shippers for constitutional reasons). 95 Although the Parliamentary debates set out earlier reveal quite clearly that s 6 was intended to close whatever "loophole" might be thought to remain in the Bill being debated - that loophole, which was required to be made "airtight and watertight", was the inability of a shipowner or carrier to contract out of its liability for negligence. This was equally so in relation to contracts for outbound carriage and contracts for inter-State carriage. There was no discussion in the debates about the closure of any supposed loophole relating to foreign jurisdiction clauses in contracts for inter-State carriage. No doubt such was thought to be unnecessary once the Senators thought that it was clear that a foreign choice of law clause would be illegal in Australia and contracting out of the jurisdiction of Australia would not arise in inter-State shipments. 96 Carmichael Rail submitted that this was either: (1) a correct understanding of the mandatory and overriding effect of what became ss 4 and 5 of the 1904 Act - in which case the words proposed to be read in to s 10(1)(b)(ii) should be so read; or (2) an incorrect understanding of the effect of those provisions, in which case it truly is a possibility that the Parliament overlooked, and would have provided for had the matter arisen, consistently with the legislative desire to close every "loophole". 97 It contended this submission is confirmed by Sir Josiah Symon's observations on the amendments (Commonwealth, Parliamentary Debates, Senate, 30 November 1904, p 7592): [N]ot only do we declare the provisions null and void, as is done by the Navigation Bill, but also, owing to the suggestions made in the course of the very interesting and instructive debate, we have added provisions which will make it absolutely impossible, in my judgment - I hope I am not mistaken - for any ship-owner to escape from his obligation to exclude these exemptions from his bills of lading. Every shipper, even the most ignorant shipper, will know that when he gets his bill of lading, that liability for ordinary care is incurred by the ship-owner, that there can be no exemption, and that if he attempts to put in an exemption of that kind, he will be liable to a penalty. (Emphasis added.) 98 That observation was made in the context of debate during the Third Reading Speech in which opposition to the Bill had been expressed, particularly on behalf of the Navigation Commission. Prior to the passage extracted above, Sir Josiah Symon, in response to a question as to whether shipowners preferred the provisions of the Bill or the Navigation Bill said: If all the shipowners in Australia came forward, and asked that this provision exempting them from liability for their own gross carelessness should not be struck out of their bills of lading, I would not be disposed to pay much attention to it. I say that it is a monstrous injustice that the provisions should ever have been in the bills of lading. I do not care whether they refer to perishable products or not; no man should be permitted to stipulate that he shall not be liable for his own carelessness. I should not have been surprised if the ship-owners had said that they preferred the provisions of the Navigation Bill as it stands, because at the end there is a loop-hole for them, and the shipper would never know where he was because, under the Navigation Bill clauses, the provisions of a contract are only to be null and void if the Court before which any question in relation to them is tried, decides that they are not just and reasonable. 99 It being clear that the intention of the Parliament in 1904 was to make "watertight" the inability to contract out of liability for gross carelessness, neither of Carmichael Rail's alternative conclusions is open. 100 It is impossible to understand why the Parliament has expressly provided, in s 11(3), that arbitration in Australia, when goods are shipped from or loaded in an Australian port, does not offend 11(2)(b) or (c), including in respect of a non-negotiable bill of lading within the meaning of s 10(1)(b)(iii), yet has not done the same in respect of inter-State carriage. It follows that parties to a contract for inter-State carriage of goods by sea cannot be prevented from arbitrating overseas where they have agreed to do so, thereby ousting the jurisdiction of an Australian court. Nevertheless, it is likely that this is the result of historical oversight or inattention rather than an unarticulated legislative policy. 101 In Re Bolton; Ex Parte Beane [1987] HCA 12; 162 CLR 514 at 546, Gaudron J, with the substance of whose reasons Mason CJ, Wilson and Dawson JJ agreed (at 517) said: It is a well-established rule of construction that absurdity and inconvenience are to be avoided. As was stated by Brett M.R. in Reg. v. The Overseers of the Parish of Tonbridge (54): "… if the inconvenience is not only great, but what I may call an absurd inconvenience, by reading an enactment in its ordinary sense, whereas if you read it in a manner in which it is capable, though not its ordinary sense, there would not be any inconvenience at all, there would be reason why you should not read it according to its ordinary grammatical meaning." 102 Mason CJ, Wilson and Dawson JJ added at 518: The words of a Minister must not be substituted for the text of the law … It is always possible that through oversight or inadvertence the clear intention of the Parliament fails to be translated into the text of the law. However unfortunate it may be when that happens, the task of the Court remains clear. The function of the Court is to give effect to the will of Parliament as expressed in the law. (Emphasis added.) 103 However regrettable or absurd the apparent overlooking of inter-State contracts for carriage of goods by sea is in s 11 of COGSA 91, the will of the Parliament as expressed in that law does not allow the Court to stretch that legislative expression far beyond the text of the Act. 104 The words that Carmichael Rail proposed to be added either to s 11(1) or (2)(b) would not be consequent upon a conclusion that there has been a simple, grammatical or drafting error which defeats the object of the provisions. Such an addition cannot be made to fill a gap that appears to have been disclosed in COGSA 91, at least on the facts of this case, because to do so would require an insertion which is "too big, or too much at variance with the language in fact used by the legislature": Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; 253 CLR 531 at [38] quoting Western Bank Ltd v Schindler [1977] Ch 1 at 18 per Scarman LJ. 105 The Parliament has not considered it necessary to, or perhaps more likely been aware that it should, fill the gap apparently created in s 9(1) and (2) of the 1924 Act and repeated in its successor, s 11(1) and (2) of COGSA 91. It is not for the Court to fill that gap. 106 For these reasons, Carmichael Rail's application for an anti-suit injunction against BBC must fail.

BBC'S APPLICATION FOR A STAY 107 Section 7 of the IAA provides, relevantly: (2) Subject to this Part, where: (a) proceedings instituted by a party to an arbitration agreement to which this section applies against another party to the agreement are pending in a court; and (b) the proceedings involve the determination of a matter that, in pursuance of the agreement, is capable of settlement by arbitration; on the application of a party to the agreement, the court shall, by order, upon such conditions (if any) as it thinks fit, stay the proceedings or so much of the proceedings as involves the determination of that matter, as the case may be, and refer the parties to arbitration in respect of that matter. … (5) A court shall not make an order under subsection (2) if the court finds that the arbitration agreement is null and void, inoperative or incapable of being performed. 108 There is no dispute that Carmichael Rail and BBC are parties to an "arbitration agreement" within the meaning of s 3(1) of the IAA. Also, that agreement is a foreign arbitration agreement within the meaning of s 7(1)(a) of the IAA. That is because the procedure under it, being the curial law or law of the seat, is governed by English law which is the law of a Convention country, namely the United Kingdom. There is no dispute that the matter falls within the terms and scope of the arbitration agreement and is capable of settlement by arbitration within the meaning of s 7(2). Further, for the reasons already given in respect of Carmichael Rail's anti-suit injunction, the arbitration agreement is not null and void. 109 There is no residual discretion in the Court to refuse a stay in the present circumstances. Once the prerequisites in s 7(2) are satisfied, a stay is mandatory: Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; 169 CLR 332 at 343-344 per Brennan and Dawson JJ, with whom Toohey J agreed, and 350 per Deane and Gaudron JJ.

Disposition 110 For these reasons, Carmichael Rail's application for an anti-suit injunction must be refused and its interlocutory application filed on 12 August 2022 must be dismissed. Order 1 made on 16 August 2022 should be discharged. Further, the whole of Carmichael Rail's claim against BBC in this proceeding must be stayed in favour of arbitration in London pursuant to s 7(2) of the IAA and the Court should declare that, by the consent of the parties, the Australian Rules as applied under Australian law apply to the BOL, wherever the parties' dispute is to be determined. 111 Also, as mentioned, against the possibility that the declaration is not given full effect in the arbitration, the stay of the proceeding should be made subject to a condition, as provided for by s 7(2) of the IAA, that BBC give, and continue to honour, an undertaking that it will maintain its admission in the London arbitration that the Australian Rules, as applied under Australian law, apply to the BOL and Carmichael Rail's claims. 112 Carmichael Rail and BBC have also agreed that in the event that the proceeding is stayed in favour of the arbitration, the stay should be subject to a condition that BBC undertakes not to take in the London arbitration any time bar defence that was not otherwise available to the first defendant as at 12 August 2022 (being the date when this proceeding was commenced). 113 There is no reason why the costs should not follow the event. I certify that the preceding one hundred and thirteen (113) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Rares, SC Derrington and Stewart.

Sea Act 1991(Cth)ss 3, 7, 8, 10, 11(1), 11(2), Sch

Sea Amendment Act 1997(Cth)

Sea Regulations 1998(Cth)

International Arbitration Act 1974(Cth)ss 3(1), 7(1), 7(2)

Legislation: Acts Interpretation Act 1901 (Cth) s 15AA Carriage of Goods by Sea Act 1991 (Cth) ss 3, 7, 8, 10, 11(1), 11(2), Sch 1, Sch 1A Arts 1(1)(g), 3(1), 3(2), 3(8), 4(5), 10(4) Carriage of Goods by Sea Amendment Act 1997 (Cth) Carriage of Goods by Sea Regulations 1998 (Cth) Carriage of Goods by Sea Regulations 1998 (No 2) (Cth) Federal Court of Australia Act 1976 (Cth) s 20(1A) International Arbitration Act 1974 (Cth) ss 3(1), 7(1), 7(2) Sea-Carriage of Goods Act 1904 (Cth) ss 4, 6 (repealed) Sea-Carriage of Goods Act 1924 (Cth) ss 4, 9 (repealed) Carriage of Goods by Sea Act 1971 (UK) s 1 Civil Jurisdiction and Judgments Act 1982 (UK) s 33(1) International Convention for the Unification of Certain Rules of Law relating to Bills of Lading. Opened for signature 25 August 1924. [1956] ATS 2. Protocol to Amend the International Convention for the Unification of Certain Rules Relating to Bills of Lading. Opened for signature 23 February 1968. 1412 UNTS 121. Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, 25 August 1924, as Amended by the Protocol of 23 February 1968. Opened for signature 21 December 1979. [1993] ATS 23. United Nations Convention on the Carriage of Goods by Sea. Opened for signature 31 March 1978. 1695 UNTS 3.

Cases cited: Adams v Cape Industries plc [1990] Ch 433 Alize 1954 v Allianz Elementar Versicherungs AG (The CMA CGM Libra) [2019] EWHC 481 (Admlty); [2019] 1 Lloyd's Rep 595 Associated Metals & Minerals Corp v M/V Arktis Sky (The Arktis Sky) 978 F. 2d 47 (2nd Cir 1992) Certain Lloyd's Underwriters v Cross [2012] HCA 56; 248 CLR 378 Construction, Forestry, Maritime, Mining and Energy Union v Australian Building and Construction Commissioner [2020] FCAFC 192; 282 FCR 1 Dampskibsselskabet Norden A/S v Gladstone Civil Pty Ltd [2013] FCAFC 107; 216 FCR 469 Director of Public Prosecutions (Nauru) v Fowler [1984] HCA 48; 154 CLR 627 Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503 Furness Withy (Australia) Pty Ltd v Metal Distributors (UK) Ltd (The Amazonia) [1990] 1 Lloyd's Rep 236 G H Renton & Co Ltd v Palmyra Trading Corporation of Panama (The Caspiana) [1957] AC 149; [1956] 2 Lloyd's Rep 379 Great China Metal Industries Co Ltd v Malaysian International Shipping Corpn Bhd (The Bunga Seroja) [1998] HCA 65; 196 CLR 161 Gol Linhas Aereas S.A v MatlinPatterson Global Opportunities Partners (Cayman) II L.P and others [2022] UKPC 21; [2022] 2 Lloyd's Rep 169 Hi-fert Pty Ltd v Kiukiang Maritime Carriers Inc (No 5) [1998] FCA 1485; 90 FCR 1 Hilditch Pty Ltd v Dorval Kaiun KK (No 2) [2007] FCA 2014; 245 ALR 125 Jindal Iron and Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (Jordan II) [2004] UKHL 49; [2005] 1 Lloyd's Rep 57 Nikolay Malakhov Shipping Co Ltd v Seas Sapfor Ltd (1998) 44 NSWLR 371 Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; 194 CLR 355 Pyrene Co Ltd v Scindia Navigation Co Ltd [1954] 2 QB 402; [1954] 1 Lloyd's Rep 321 Re Bolton; Ex Parte Beane [1987] HCA 12; 162 CLR 514 Subiaco v Baker Hughes [2010] SGHC 265; [2011] 1 SLR 129 SZTAL v Minister for Immigrations and Border Protection [2017] HCA 34; 262 CLR 362 Tanning Research Laboratories Inc v O'Brien [1990] HCA 8; 169 CLR 332 Taylor v The Owners - Strata Plan No 11564 [2014] HCA 9; 253 CLR 531 The Hollandia [1983] 1 AC 565; [1983] 1 Lloyd's Rep 1 Trafigura Beheer BV v Mediterranean Shipping Co SA (The MSC Amsterdam) [2007] EWCA 944 (Comm); [2007] 2 Lloyd's Rep 622 Volcafe Ltd v Cia Sud Americana de Vapores SA (trading as CSAV) [2019] AC 358 WK Marble & Granite Pty Ltd v CASA China Ltd [2007] FCA 1382; 244 ALR 396 Yemgas FZCO v Superior Pescadores SA (The Superior Pescadores) [2016] EWCA Civ 101; [2016] 1 Lloyd's Rep 561

At a glance

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Judgment (14 paragraphs)

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Legislation Cited (8)

Cases Cited (17)

Cited By (1)