Consideration
55 The task of statutory construction commences with a consideration of the text itself: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (Northern Territory) (2009) 239 CLR 27 at 46-47 [47] per Hayne, Heydon, Crennan and Kiefel JJ. Their Honours held that historical considerations and extrinsic materials could not be used to displace the clear meaning of the text and that the actual language used by the legislature was the surest guide to its intention. Importantly, they said that the meaning of the text may require the consideration of the context, including the general purpose and policy of a provision, in particular the mischief it sought to remedy. The context includes the legislative history and extrinsic materials: FCT v Consolidated Media Holdings Ltd (2012) 293 ALR 257 at 268 [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ. Moreover, as McHugh, Gummow and Heydon JJ said in McNamara v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 646 at 661 [40], what a court says or decides in construing one statute does not necessarily control the construction of another, even where the identical language is used in the section being considered.
56 The objects of COGSA, identified in s 3(1), related to providing a regime for marine cargo liability. That involved regulating the relationship between persons who contract to carry cargo by sea, being, on the one hand, the person who provides, or undertakes to provide the ship, and on the other hand, the person who desires goods to be carried on a ship from one place to another. The objects in s 3(1) were not concerned directly with regulating the relationship between persons who were contracting for the hire of ships. The subject matter of COGSA was a regime for marine cargo liability including the implementation of the Hague Visby Rules and, as was envisaged too hopefully, as events have turned out, the Hamburg Rules. Each set of rules explicitly negated its application to charterparties (Art 5 of the Hague Visby Rules in Sch 1 of COGSA and Art 2(3) of the Hamburg Rules, in Sch 2 of COGSA). Indeed, ever since the 1924 Act gave effect to the Hague Rules, Art 5 had the force of law in Australia so that the regime for marine cargo liability that those Rules prescribed did not apply to charterparties.
57 The meaning of the expression "sea carriage documents" as used in COGSA must be ascertained from that Act as a whole, including the modified Hague Rules in Sch 1A. The expression was introduced into the legislation by the 1998 regulations made under the "Henry VIII clause" in s 7(2)(a). Significantly, Art 3(3) of Sch 1A required the carrier, master or agent of the carrier, to issue the shipper, on its request, with a sea carriage document after the goods had been delivered. Generally, a charterparty is highly unlikely to meet the requirements of Art 3(3), not least because it deals with the hire of the ship as opposed to evidencing the receipt of goods on board by the ship (or into the charge of the carrier, master or agent of the carrier).
58 The purpose for which Art 3(3) requires a sea carriage document to be issued is similar to that of a bill of lading, although now it need not be negotiable. It evidences that the carrier or ship has possession of the goods for the purpose of carrying them by sea and providing a means for a consignee to demonstrate its entitlement to receive delivery of the goods at the port of destination.
59 The use of the words "relating to the carriage of goods from any place in Australia to any place outside Australia" in s 11(1)(a) of COGSA, was to identify the port of loading and a destination as features of a sea carriage document to which s 11 applied. However, those words did not change the intended function of a sea carriage document as a means of enabling a consignee or holder to use it as evidence of its contractual or legal right to receive the goods at the port of destination. The definitions of "contract of carriage", "carriage of goods by sea" and "sea carriage document" in Art 1(b), (e) and (g) of Sch 1A are predicated on the distinction drawn by Arts 1(c), 5, 10(6) and (7) between the functions of a contract of carriage and a charterparty for the purposes of the modified Hague Rules and COGSA.
60 Ordinarily, a voyage charter, like most charterparties, is a contract for the hire of a ship. Slot charters for space on a container ship are exceptions, and there may be others. In a voyage charter, the owners agrees to perform one or more designated voyages in return for the payment of freight and, when appropriate, demurrage. The parties to a voyage charter will make their own agreement as to how the costs of and responsibility for cargo handling will be allocated: Julian Cooke et al, Voyage Charters (Informa, 3rd ed, 2007) at 3-4 [1.1]-[1.2]. After discussing the evolution of international conventions relating to the carriage of goods by sea from the Hague Rules through to the United Nations Convention on Contracts for the International Carriage of Goods Wholly or Partly by Sea (done at New York on 11 December 2008 and known as the Rotterdam Rules), Gauthier JA, with whom Pelletier and Manville JJA concurred, said in Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa (The Federal Ems) (2012) 223 ACWS (3d) 12; 2012 FCA 284; 2013 AMC 319 (Federal Court of Appeal, Canada, 8 November 2012) at [59]-[61]:
"[59] Charter-parties are normally described as contracts of hire of a ship. In French they are referred to as "contrats d'affrÈtement" (See William Tetley, Marine Cargo Claims 4th edition (Cowansville, Quebec: Editions Yvon Blais, 2008) at page 350, note 24). There are three main types of charter-parties.
(i) the bareboat or demise charter, which provides for the hire of an unmanned ship;
(ii) the time charter-parties, which are contracts for the hire of a fully manned ship for a specific duration. These include the more recent type of time charter, referred to as a slot-charter, where for example a carrier will hire from a competitor specific space or a slot (containership) for a specific time period;
(iii) the voyage charter-parties, which are used to hire a specific ship or type of ships for one or more voyages.
[60] As pointed out by John Wilson in Carriage of Good by Sea 6th edition (Essex: Pearson Education Limited, 2008) at page 3, it is common knowledge that:
A charter-party is a contract which is negotiated in a free market, subject only to the laws of supply and demand. While the relative bargaining strengths of the parties will depend on the current state of the market, shipowner and charterer are otherwise able to negotiate their own terms free from any statutory interference. In practice, however, they will invariably select a standard form of charter-party as the basis of their agreement, to which they will probably attach additional clauses to suit their own requirements. These standard forms have a variety of origins. Some have developed over a number of years in association with a particular trade, such as grain, coal or ore, while others have been designed by individual firms with a monopoly in a particular field, such as the transport of oil. A considerable number which have appeared during the past century, however, are the products of the documentary committees of such bodies as the United Kingdom Chamber of Shipping, the Baltic and International Maritime Conference and the Japanese Shipping Exchange, on many of which both shipowner and charterer interests are represented.
The existence of these standard forms is of considerable advantage in international trade where the parties may be domiciled in different countries and their negotiations hampered by language problems. In such circumstances, parties conversant with the terms of a standard form are unlikely to be caught by an unusual or unexpectedly onerous clause, and accordingly can concentrate their attention on the essential terms covering such matters as freight, laytime and demurrage rates.
[61] One can readily see that the imbalance in the bargaining power that is the mischief that led to the development of the various international regimes discussed above did not exist in relation to charter-parties. The liner trade (common carriers operating regular services in certain areas, using the sea carriage documents covered by the various international regimes) is simply quite different from the tramp trade (chartered vessels). There was thus no policy to restrict the freedom to contract of parties to such agreements." (emphasis added)
61 Voyage charters are commonly called "contracts of affreightment", no doubt because of the more direct connection they make between the carriage of specific cargo by the owner for the charterer and the earning of freight as the hire for the voyage: Voyage Charters (3rd ed) at [1.2]; see too D. Rhidian Thomas, The Evolving Law and Practice of Voyage Charterparties (Informa, 2009) at vii.
62 As Prof Thomas stated, the laytime and demurrage provisions of a voyage charter are two of its most distinctive provisions. But, as each of the text writers explained, the co-existence of a bill of lading, usually issued by the master in favour of the charterer as shipper, in respect of the very cargo that the voyage charter contemplates will be carried, can produce confusion: see e.g. Thomas op cit at viii and in Ch 10: Bills of Lading and Voyage Charters by Prof Francis Reynolds QC at 201-202 [10.4]-[10.6]; cf The "Tychy" [1999] 2 Lloyd's Rep 11 at 18 per Clarke LJ with whom Otton and Walker LJJ agreed; see too: Scrutton on Charterparties (Sweet & Maxwell, 22nd ed, 2011) Art 3 at [1-012], [1-014]. Nicholas Gaskell, R Asariotis and Y Baatz in Bills of Lading: Law and Contracts (Informa, 2000) at 28 [1.63] said, generally, of all forms of charterparty:
"The charterparty relates to the use of a ship: the bill of lading relates to a particular cargo to be carried on a ship. The charterparty does not have the receipt or document of title functions of a bill of lading, but the two documents do share the function of being evidence of the contracts between the respective parties." (emphasis added)
63 In addition s 3(1)(b) of COGSA contemplated that the statutory regime would be compatible with arrangements existing in Australia's major trading partners. The ready availability of international arbitration to resolve disputes between owners or disponent owners and charters arising under charterparties is a fundamental feature of the shipping trade that has been entrenched for decades. It is underpinned by the 1958 Convention on Recognition and Enforcement of Foreign Arbitral Awards, known as the New York Convention and the UNCITRAL Model Law on International Commercial Arbitration, each of which, largely, has been given force of law in Australia by the IAA and one or both of which is or are in force in most nations with which Australia trades.
64 The objects of the IAA recognise and encourage the widely shared modern policy of recognising and encouraging private arbitration as a valuable method of settling disputes arising in international commercial relations: TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of Federal Court of Australia (2013) 295 ALR 596 at 609-610 [45] per Hayne, Crennan, Kiefel and Bell JJ. There, French CJ and Gageler J approved the following observations of Allsop J in Comandate Marine Corp v Pan Australia Shipping Pty Ltd (2006) 157 FCR 45 at 94-95 [192]-[193] as explaining the international commercial significance of an arbitral award (295 ALR at 600 [10]):
"The New York Convention and the [UNCITRAL] Model Law deal with one of the most important aspects of international commerce - the resolution of disputes between commercial parties in an international or multinational context, where those parties, in the formation of their contract or legal relationship, have, by their own bargain, chosen arbitration as their agreed method of dispute resolution. The chosen arbitral method or forum may or may not be the optimally preferred method or forum for each party; but it is the contractually bargained method or forum, often between parties who come from very different legal systems. An ordered efficient dispute resolution mechanism leading to an enforceable award or judgment by the adjudicator, is an essential underpinning of commerce …
The recognition of the importance of international commercial arbitration to the smooth working of international commerce and of the importance of enforcement of the bilateral bargain of commercial parties in their agreement to submit their disputes to arbitration was reflected in both the New York Convention and the [UNCITRAL] Model Law."
65 It is unlikely that, when it enacted ss 7(2)(a) and 11(3) of COGSA, the Parliament intended that agreements for international arbitration in voyage or other charterparties would be deprived of force or effect unless the arbitration occurred in Australia. The purpose of s 11(3) was to allow arbitration in Australia of marine cargo liability claims, not disputes arising under charterparties. Had the Parliament intended COGSA to make a sweeping change to the ways in which arbitration agreements in charterparties operated it would have needed to say so in clear terms. Section 11 cannot be read as depriving international arbitration clauses in charterparties made anywhere in the world of force or effect, just because the charter relates to the carriage of goods from overseas to Australia.
66 Over 10% of the world's trade by volume comes into or leaves Australia by sea. Much of that trade is carried by ships under charters that, as an ordinary incident of the shipping industry, will contain international arbitration clauses that were freely negotiated by sophisticated, professional parties. Those parties could bargain at arms length for the terms of their charterparties, including for resolution of disputes arising under them: cf TCL [2013] HCA 5 at [10], [45]; Canada Moon 2012 FCA 284 at [61]. They would not have anticipated that their agreement for international arbitration had been eliminated "by a sidewind" involving the combination of the ship carrying cargo from Australia overseas and s 11 of COGSA: cf Webb Distributors (Aust) Pty Ltd v Victoria (1993) 179 CLR 15 at 37 per Mason CJ, Deane, Dawson and Toohey JJ.
67 The purpose of s 7(2)(a) was to allow for more recent innovations in documentation used to arrange carriage of goods by sea to be covered under a regime close to the Hague Visby Rules. At the time that s 7(2)(a) was enacted, all the Australian Governments and Parliaments were concerned to facilitate developments in the marine cargo trade that had moved away from the carrier (be it the ship owner or charterer) providing the shipper of goods with the traditional bill of lading or other document of title. Charterparties have never been used for the purposes of bills of lading or the documents described as "sea carriage documents" in Art 1(1)(g) of Sch 1A of COGSA or s 5 of the Sea-Carriage Documents Act 1997 (NSW) or its analogues. Indeed, so much is plain from the exclusion of charterparties from the operation of the Hague Rules, the Hague-Visby Rules and the modified Hague Rules in Art 5 of each of them.
68 The insertion of the new expression "a sea carriage document relating to the carriage of goods by sea" in s 11 and the amendments to ss 7, 10 and 11 effected in 1997 and 1998 must be considered in the context that at no point were charterparties discussed in the extrinsic materials as documents that the amendments were intended to affect by the operation of s 11 of COGSA. Moreover, the terms of Arts 5, 10(6) and (7) reinforced the clear understanding of the drafters of the 1998 Regulations that charterparties were, in general, outside the new marine cargo liability regime that the 1997 and 1998 legislative changes affected. Article 10(6) and (7) provided for a negotiable sea carriage document - i.e. a document having the effect of a bill of lading - issued under a charterparty to be governed by the modified Hague Rules in Sch 1A, but only while, and so far as, it regulated the relationship between its holder and the carrier of the goods. This was also consistent with the definition of "contract of carriage" in Art 1(6). These Articles read with Art 5 recognised that unless such a negotiable bill of lading had been issued, the charterparty alone would govern the relationship between a carrier and a charterer, including in respect of the carriage of the charterer's goods and that, as a consequence, COGSA would have no application to the relationship. As explained above, voyage charterparties involve the parties to them in a relationship covering the hire of the ship and the carriage of the charterer's cargo.
69 In The Blooming Orchard [No 2] 22 NSWLR 273, Carruthers J held that a clause providing for London arbitration in an earlier form of the Americanized Welsh Coal Charter for a voyage from Australia to Turkey was of no effect by force of s 9 of the 1924 Act, being the predecessor of s 11 of COGSA. In my opinion, that decision was wrong and contrary to principle. His Honour recognised that the second reading speech for the Bill that became the 1924 Act did not refer to charterparties and only referred to bills of lading (22 NSWLR at 278F-G). However, he considered that the words "a document relating to the carriage of goods by sea from any place in Australia to any place outside Australia" could not be read down. Of course, the charterers rely on a similar, but different, expression (with the interpolation of "sea carriage" before "document") being used in s 11(1)(a) of COGSA.
70 Carruthers J held that the expressions used in s 9(1) of the 1924 Act were plain words, that "make complete sense of the subsection and accord with commonsense and the realities of commercial life". However, the realities of commercial life and the evident purpose of s 9(1) of the 1924 Act, as well as that of s 11 of COGSA, respect the free negotiation of charters by commercial parties in the international shipping trade. Those statutory provisions sought to protect shippers and consignees of cargoes carried by sea to or from Australia from being forced to litigate or arbitrate, away from Australia, claims against the contractual or actual carrier of their goods. The shipper will have no substantive say, and the consignee, or party to whom a bill of lading or negotiable sea carriage document is transferred no say at all, in the terms and conditions in such a document. The Commonwealth statutory analogues enacted at the turn of the twentieth century, and later the Hague Rules and their successors evolved from the Harter Act 1893 (US). Those statutes and international conventions sought to protect the owners of cargoes from the harsh consequences of the actions of shipowners and carriers of goods creating virtual contracts of adhesion in bills of lading, and now sea carriage documents.
71 The purpose of s 11 of COGSA is to protect, as part of a regime of marine cargo liability within the object of s 3, the interests of Australian shippers and consignees from being forced contractually to litigate or arbitrate outside Australia. That purpose does not extend to protection of charterers or shipowners from the consequences of enforcement of their freely negotiated charterparties subjecting them to the well recognised and usual mechanism of international arbitration in their chosen venue.
72 There is no substance to the charterers' reliance on El Greco 140 FCR at 326-327 [142]-[144]. The terms of s 11 do not give effect to an international convention; indeed the construction advanced by the charterers would subvert the purposes of the 1958 New York Convention, the Model Law and the IAA.