ELECTION
29 Comandate Marine initiated its claim for security prior to commencing the arbitration on 14 June 2006. After that it also pursued that claim. However, in its writ in rem against the Boomerang I, Comandate Marine sought no relief either in respect of its claim for security for the purposes of the arbitration or for a stay under the International Arbitration Act 1974 (Cth). Rather, it only sought damages for breach of the charter party and sought no relief at all in respect of the arbitration.
30 When Pan appeared unconditionally as defendant in those proceedings on 24 June, it submitted to the jurisdiction of the Court and waived any irregularity. As Gibbs J noted in Caltex Oil (Australia) Pty Limited v The Dredge 'Willemstad' (1976) 136 CLR 529 at 539, only a defendant can enter an appearance. He said that in an action in rem, the persons who may become defendants, if they choose to appear, are the owners and others interested in the ship, including charterers (see too: Republic of India v India Steamship Co Ltd (No 2) [1998] AC 878 at 908B-909A, 909F-910F per Lord Steyn with whom Lords Browne-Wilkinson, Hoffmann, Cooke of Thorndon and Hope of Craighead agreed and s 31 of the Admiralty Act 1988 (Cth)).
31 The effect of Comandate Marine commencing the Boomerang 1 proceedings in rem was to put before the Court all elements of the justiciable controversy between the parties to, initially, the in rem proceedings, and, later, the in personam proceedings. Once Pan had appeared, the single controversy between it and Comandate Marine could be litigated in those proceedings, or indeed, in both proceedings as Gummow and Hayne JJ made clear in Re Wakim; Ex parte McNally (1999) 198 CLR 511 at 585 [140] (see too at 586 [142], 587-588 [147]). They said (198 CLR at 585 [140]):
'What is a single controversy "depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationship" (Fencott (1983) 152 CLR 570 at 608, per Mason, Murphy, Brennan and Deane JJ). There is but a single matter if different claims arise out of "common transactions and facts" or "a common substratum of facts" (Philip Morris (1981) 148 CLR 457 at 512, per Mason J), notwithstanding that the facts upon which the claims depend "do not wholly coincide" (Fencott (1983) 152 CLR 570 at 607, per Mason J, Murphy, Brennan and Deane JJ) .'
32 In addition, it is a principle of private international law that a foreign plaintiff, not otherwise subject to the jurisdiction of the Court, who brings proceedings in the Court submits itself, by necessary implication, to any counterclaim which would operate as a defence to the proceeding or could be relied on as a set off or a cross claim arising out of the same subject matter which would reduce or extinguish the plaintiff's claim. That submission to jurisdiction extends to a cross claim founded on or arising directly out of the same subject matter, even if it may result in a judgment against the plaintiff on the cross claim, where that ought be tried to do justice between the parties (Marlborough Harbour Board v Charter Travel Co Ltd (1989) 18 NSWLR 223 at 232B-233A per Hope JA, Clarke and Meagher JJA agreeing applying National Commercial Bank v Wimbourne (1979) 11 NSWLR 156 at 174E-G per Holland J; see too Wool International v Sedgwick Ltd (No 4) (unreported FCA 1172 October 1997 per Beaumont J at 10-11)).
33 It is clear that when the matter came before the Full Court on 27 June 2006, Pan was the defendant to Comandate Marine's proceedings. The only claims in Comandate Marine's proceedings at that time were those in the writ it had issued and pursuant to which the Boomerang I had been arrested.
34 The question arises as to whether by seeking the particular relief which it did and pursuing the arrest of the Boomerang I for the purposes of the claim for that relief made in the writ, Comandate Marine made an election not to arbitrate at London the dispute it had brought to this Court.
35 The consequences of an election may well be serious to the party electing, and in particular, election involves the abandoning of a right that is available: Immer (No 145) Pty Limited v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26 at 39 per Deane, Toohey, Gaudron and McHugh JJ. Their Honours held that a party can be only held to have elected if it had so communicated its election to the other party in clear and unequivocal terms. An election arises when a party is confronted with and makes a choice between the exercise of alternative and inconsistent rights. The party is not obliged to elect at once, but when it takes a step which is consistent only with one of those rights the law attributes to it an election to abandon the other right (182 CLR at pp 38-39). It is necessary, however, for the party alleged to have elected, to have been aware at least of the facts giving rise to the two courses of action (182 CLR at 40). As their Honours pointed out (182 CLR at 41):
'The true nature of election is brought out in this sentence from the seminal work of Spencer Bower and Turner, The Law Relating to Estoppel by Representation (3rd ed (1977) p 313): "It is of the essence of election that the party electing shall be 'confronted' with two mutually exclusive courses of action between which he must, in fairness to the other party, make his choice."'
36 Their Honours said that the confrontation which, in turn, produces the necessity of making a choice can also involve the concept that one affirms an agreement and abandons the right to rescind. Abandonment can be more readily inferred in certain circumstances than others (182 CLR at 42). And, as Kitto J commented in Tropical Traders Ltd v Goonan (1964) 111 CLR 41 at 55:
'Not that election is a matter of intention. It is an effect which the law annexes to conduct which would be justifiable only if an election had been made one way or the other.' (see too at 182 CLR at 42)
37 Comandate Marine argued that the making of a choice between having disputes determined by arbitration or curially was not an election by a party to an arbitration agreement. It relied on what Austin J had said in ACD Tridon v Tridon Australia [2002] NSWSC 896 at [58], [68]-[69]. He held that mere delay in invoking a reference to arbitration by a party to an arbitration agreement, who had been sued by the other party in curial proceedings, was not an election or waiver: see too Australian Granites Ltd v Eisenwerk Hensel Bayreuth Dipl-ing Burkhardt GmbH [2001] 1 Qd R 461 at 469 [25]. But that is quite distinct from the position, here, where the party asserting the binding obligation to arbitrate later initiated the Boomerang I's arrest without, at that time, seeking or foreshadowing a claim for curial assistance in those proceedings in enforcing the arbitration agreement.
38 Ordinarily, an arbitration agreement will give rise to the Court holding the parties to an exclusive procedure to be followed by both parties for the resolution of any dispute to which the agreement applies: PMT Partners Pty Ltd (In liq) v Australian National Parks and Wildlife Service (1995) 184 CLR 301 at 312-313 per Brennan CJ, Gaudron and McHugh JJ. There is no reason why the parties cannot agree afterwards to use litigation, rather than follow the arbitration agreement in which case the agreement, becomes 'inoperative' within the meaning of s 7(5) of the International Arbitration Act 1974 (Cth): Australian Granites Ltd v Eisenwerk Hensel Bayreuth Depl.-ing Burkhardt GmbH [2001] 1 Qd R 461 at 466-467 [15]-[16] per Pincus JA with whom Thomas JA and Shepherdson J agreed; Zhang v Shanghai Wool and Jute Textile Co Ltd [2006] VSCA 133 at [12]-[13] per Chernov JA with whom Ashley JA and Bongiorno AJA agreed.
39 Comandate Marine also relied on what Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ said concerning 'waiver' in Berowra Holdings Pty Ltd v Gordon [2006] HCA 32 of [38]-[39]. In particularthey said:
'It is one thing to speak of the waiver of a legal, equitable or statutory right or privilege. However, once it is appreciated that the court has jurisdiction and that its procedural rules have been engaged, concepts such as "waiver" (and acquiescence and estoppel) are confusing and imprecise. This was pointed out by Dawson J in Verwayen (1990) 170 CLR 394 at 456) and Lord Browne-Wilkinson in Roebuck v Mungovin ([1994] 2 AC 224 at 235-236. See also Giumelli v Giumelli (1999) 196 CLR 101 at 122 [38]). The conduct of pending proceedings by a party is relevant upon an application by that party for the exercise in its favour of a power of the court. The outcome of such an application depends not upon the exercise of the right of a litigant or upon its denial, but upon the exercise of a discretionary power given to the court. The decision of the court often will depend upon many different factors (see Ketteman v Hansel Properties [1987] AC 189 at 220 per Lord Griffiths). An outcome favourable to one party cannot be described adequately in terms of the waiver of the legal, equitable or statutory rights of the unsuccessful party.' (emphasis added)
40 Again, their Honours were dealing an argument about waiver by a defendant to proceedings which, at the first opportunity, had not taken a point open to it to say that the proceedings were incompetent. As the words emphasised show, the issue there was as to the legal consequence of conduct of a party in proceedings which were already pending, as distinct from the consequences which might result the conduct of from a person who exercises a choice by commencing curial proceedings.
41 'Waiver' is commonly a term used to describe 'election': Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622 at 633 per Mason, Brennan, Deane and Dawson JJ, but, as their Honours say 'election' or 'waiver' in the sense of a choice between inconsistent rights is different to the concept of estoppel. 'An election, unlike estoppel is concerned with what a party does and not what he causes the other party to do' (165 CLR 622 at 633). No prejudice need be shown by the party seeking to hold the other to an election.
42 Comanate Marine argues that by bringing its in rem proceedings it invoked the Admiralty jurisdiction of the Court, including all its powers under s 29 of the Admiralty Act 1988 (Cth). It says that the arrest of the Boomerang I has been set aside, and so no question now arises about an order under s 29 in the proceedings which it commenced. But it says that had the vessel remained under arrest, the court could have granted a stay and made orders for security under s 29.
43 There can be no doubt that Comandate Marine knew of the provisions of cl 45(b) requiring all disputes arising out of the contract to be arbitrated at the time of the issue of its writ in rem. By seeking only the relief which it did in the writ in rem, Comandate Marine communicated, unequivocally, in my opinion, a choice that it was litigating in this Court an action for damages for breach of the charter party. Of course, the Court could give relief in that action. No relief was sought in aid of the arbitration. In the classic judgment of Parker J in Matthews v Smallwood [1910] 1 Ch 777 at 786-787 (in a passage approved by Knox CJ, Isaacs and Starke JJ in Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 325 (their Honours' emphasis)) said:
'It is also, I think, reasonably clear upon the cases that whether the act, coupled with the knowledge, constitutes a waiver is a question which the law decides, and therefore it is not open to a lessor who has knowledge of the breach to say 'I will treat the tenancy as existing, and I will receive the rent, or I will take advantage of my power as landlord to distrain; but I tell you that all I shall do will be without prejudice to my right to re-enter, which I intend to reserve.' That is a position which he is not entitled to take up. If, knowing of the breach, he does distrain, or does receive the rent, then by law he waives the breach, and nothing which he can say by way of protest against the law will avail him anything.'
44 Although both his Lordship and the High Court used the term 'waiver', the concept to which they were referring has been treated in later cases as an election, as was made clear in Sargent v ASL Developments Ltd (1974) 131 CLR 634 at 642, 646 per Stephen J (with whom McTiernan ACJ agreed), per Mason J at 656-657.
45 Comandate Marine's answer to this was to say that the presence of s 29 in the Admiralty Act 1988 (Cth) forms part of the jurisdiction of the Court which it had invoked by commencing its writ in rem. That is so. However, at that time it did not seek relief under s 29 and, quite contrary to its contractual promise that it would arbitrate all disputes arising under the charter party in London, it sought relief from this Court by way of the award of damages.
46 Comandate Marine relied upon two authorities, one English and one in this Court in support of its position. In The 'Jalamatsya' [1987] 2 Lloyd's Rep 164, Sheen J held that a party to arbitration proceedings which had already been commenced could apply to the Court for the arrest of a vessel in order to obtain security for the arbitration. His Lordship noted that s 26 of the Civil Jurisdiction and Judgments Act 1982 (UK), which is in relevantly similar terms to s 29 of the Admiralty Act 1988 (Cth) for present purposes, envisaged just such a course. He relied on obiter dicta by Robert Goff LJ, giving the judgment of himself, Waller and Slade LJJ in The 'Andria' now renamed 'Vasso' [1984] QB 477; [1984] 1 Lloyd's Rep 235 to that effect. Sheen J said that s 26 had been enacted:
'… to enable claimants (I use a neutral expression) to obtain security if they proceeded by way of arbitration rather than by action. In my judgment s 26 applies whether or not an arbitration has already been commenced. It follows that if an arbitration has been commenced, and if the claimants in the arbitration have not obtained security for any possible award, then they can quite properly issue a writ in rem if they know that a ship belonging to the respondents in the arbitration is coming within the jurisdiction, and they may arrest that ship in order to obtain security.' ([1987] 2 Lloyd's Rep at 165)
47 Accordingly his Lordship held that there had been no abuse of the process of the Court in arresting the ship. Significantly, his Lordship said that the claim endorsed on the writ in that case was a claim which was within the Admiralty jurisdiction of the High Court of Justice in England which could be invoked by serving a writ in rem upon the ship and accordingly it could be arrested. Regrettably, the report is silent as to what the claim was or whether it sought security for the arbitration.
48 In Allonah Pty Limited v The Ship 'Amanda N' (1989) 21 FCR 60, Sheppard J followed Sheen J's decision. In that case, similarly, a consent arbitration was proceeding at the time the vessel was arrested. Again, there is no indication in the report of the claims made in the writ in consequence of which the vessel was arrested. However, his Honour set out what Sheen J had said and concluded that the same approach should be adopted in the construction of s 29 of the Admiralty Act 1988 (Cth) (21 FCR at 64). He continued:
'In my opinion the use of the words, "should be determined by arbitration", has nothing to say on the question whether the arbitration has already commenced or is to commence in the future.'
49 In The 'Bazias 3' [1993] QB 673, Lloyd LJ (with whom Ralph Gibson and Butler-Sloss LJJ agreed) granted a stay of proceedings brought in admiralty in order to enable arbitration to proceed but continued the arrest of two vessels under s 26 in order to provide security for any award in the arbitration. Significantly, his Lordship recited that the proceedings in rem sought security for the plaintiff's counterclaim in the arbitration proceedings (see [1993] QB at 678G-H and see also the recital of facts at 675C-D).
50 What s 29 is referring to is the question whether the dispute should be determined by arbitration in the sense that that is the appropriate method whereby the dispute between the parties is to be resolved. There is an issue about that in this case. In The 'Andria' now renamed 'Vasso' [1984] QB 477 at 490, Waller, Slade and Robert Goff LJJ said, that in English law as it stood prior to the enactment of s 26:
'… the Court's jurisdiction to arrest a ship in an action in rem should not be exercised for the purposes of providing security for an award which may be made in arbitration proceedings. That is simply because the purpose of the exercise of the jurisdiction is to provide security in respect of the action in rem, and not to provide security in some other proceedings, for example, arbitration proceedings. The time may well come when the law on this point may be changed: see s 26 of the Civil Jurisdiction and Judgments Act 1982, which has however not be brought into force. But that is not yet the law. It follows that, if a plaintiff invokes the jurisdiction of the Court to obtain the arrest of a ship as security for an award in arbitration proceedings, the Court should not issue a warrant of arrest.'
51 Earlier, their Lordships identified the issue as arising in the context of an argument about jurisdiction and abuse of process. They rejected the contention that if the purpose of a plaintiff in seeking the arrest of a ship in an action in rem was simply to obtain security for an award in arbitration proceedings, the court had no jurisdiction ([1984] QB at 488E-G). Rather they held that in such a case, before s 26 came into force, the plaintiff's conduct was an abuse of process ([1984] QB at 490E-G), but said, obiter dicta,that once s 26 came into force it would be a permissible course. They also cited ([1984] QB at 490B) Brandon J's decision in The 'Cap Bon' [1967] 1 Lloyd's Rep 543 (see at 548) as authority for the proposition that a party who actively pursued proceedings in respect of the same claim both in the Court and in arbitration, could be required by the Court, in the exercise of its inherent power, to elect in which forum it would pursue its claim because the Court proceedings could be regarded as vexatious or an abuse of process. Brandon J observed that the plaintiff had a right to do either ([1967] 1 Lloyd's Rep at 548: see too: The 'Tuyuti' [1984] QB 838 at 850 where Robert Goff LJ referred to this approach as a principle of law). Neither the Lords Justices, nor Brandon J, considered the question of whether the party by so acting may have elected between or waived its right to pursue one rather than the other course.
52 Here, the Court had jurisdiction to grant Comandate Marine all the relief it sought in the writ in rem when it issued the warrant of arrest.
53 Pan argues that a general maritime claim for security for the arbitration proceedings pursuant to s 29 could have been available to Comandate Marine under s 4(3)(f) of the Admiralty Act 1988 (Cth) as a claim arising out of the charter party. By s 4(3)(u), a claim for the enforcement of or arising out of an arbital award made in respect of a claim within s 4(3)(f) is also a general maritime claim.
54 As Sheen J and Sheppard J reasoned, the enactment of s 29 of the Admiralty Act 1988 (Cth) and its analogue permit the arrest of a vessel so that security will be available to satisfy any award made in an arbitration proceeding which the parties to the writ, when the defendant appears, are contractually bound to submit to arbitration or have already begun to arbitrate. But such an arrest, in my opinion can only be justified if the relief sought from the Court is not inconsistent with the obligation to arbitrate. Comandate Marine submitted that its dominant, but not sole, purpose in bringing the proceedings in rem was to seek security for the arbitration. It said that if the Court did not stay the proceedings or refer them to arbitration, the proceedings would continue. Thus, the Court could grant the actual and only relief sought in the writ, namely the arrest which was made and damages, interest and costs.
55 It would not be inconsistent for a party to an arbitration agreement seeking to enforce its rights in an arbitration to commence in rem proceedings in which it claimed relief under s 29 of the Admiralty Act 1988 (Cth) so as to have security available to satisfy any arbitral award. And, as Allsop J has remarked, it is important to recognize that impediments should not be placed in the path of the free use of the in rem procedure under the Admiralty Act 1988 (Cth): Tisand v The 'Cape Moreton' (2004) 141 FCR 29 at 38 [44].
56 In the present case, where the arbitration has commenced and Comandate Marine wishes to enforce the obligations of the parties to arbitrate, it could have commenced in rem proceedings seeking an order under s 29 that they be stayed or dismissed on the ground that Pan was bound to arbitrate in London after Pan provided security. Comandate Marine invoked the jurisdiction of the Court to hear and determine a case for damages for breach of the charter party by seeking in its writ in rem only the arrest and damages and made no claim for security or to enforce the obligation to arbitrate. Indeed, Comandate Marine submitted that while its dominant purpose in commencing its proceedings in rem was to obtain security for the arbitration, it also intended to pursue the relief it claimed in that writ of stay of Pan's proceedings were refused. That submission sought to keep all Comandate Marine's options open without prejudice.
57 Comandate Marine also pointed to Art 9 of the UNCITRAL Model Law on International Commercial Arbitration which by force of s 16(1) and the International Arbitration Act 1974 (Cth) has the force of law in Australia. The Model Law is set out in Sch 2 of that Act. Article 9 of the Model Law provides:
'It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure of protection and for a court to grant such measure.'
58 As noted above, Comandate Marine's proceedings in rem contained no such request. And, Art 8(1) of the Model Law, relevantly requires a court in which an action is brought in a matter which is the subject of an arbitration agreement to refer the parties to arbitration, if a party so requests no later than when submitting its first statement on the substance of the dispute.
59 Russell on Arbitration (22nd ed) at 610 [A5-018] refers to Art 8(1) having the same effect as English law; i.e. the party seeking to enforce the arbitration agreement must apply to the court without delay for a stay of the proceedings (op cit at 296 [7-005]). The position is similar under s 53(2) of the Commercial Arbitration Act 1984 (NSW) which applies here by force of s 79 of the Judiciary Act 1903 (Cth).
60 Comandate Marine did not apply to have its proceedings referred to arbitration when they were before this Court or the High Court. I am of opinion that Comandate Marine's conduct in bringing its proceedings in rem was incompatible with the arbitration agreement, and that Art 8(1) and Art 9 of the Model Law do not avail it.
61 Comandate Marine is in a similar position to that of the landlord in the example given by Parker J in Matthews v Smallwood [1910] 1 Ch at 786-787. By pleading the writ in the way which it did, Comandate Marine exercised a right of action given by the Admiralty Act 1988 (Cth) to litigate the breach of the charter party as a general maritime claim under s 4(3)(f) of the Admiralty Act 1988 (Cth) in this Court. I am of opinion that in choosing to claim only that relief when it invoked the jurisdiction of the Court, Comandate Marine could not do that without prejudice to any right it might otherwise have had to seek security for the arbitration under s 29 at a later stage. It made no such claim in the writ and it procured the arrest of the vessel for the purposes of the particular relief which it claimed in the writ. The way in which Comandate Marine framed its claim in the writ nailed its colours to the mast as much as the warrant for arrest later was nailed (notionally or actually) to the mast of the Boomerang I. Having invoked the jurisdiction of the Court to procure the arrest of the vessel in order to pursue the only claims it pleaded, it is not open to Comandate Marine now to say that it did so without prejudice to any right later to apply for security under s 29 of the Admiralty Act 1988 (Cth).
62 In its report: Civil Admiralty Jurisdiction (Report No 33, 1986) Law Reform Commission (Australia), the Commission recommended the introduction of what has become s 29 so as to enable the Admiralty jurisdiction to be used to obtain and retain security even though the merits of the dispute are to be determined elsewhere, if the subject matter of the dispute lies within Admiralty jurisdiction. The Commission noted that such a solution would do most to ensure that the award of the tribunal that decides upon the merits is satisfied, and hence that a just result would be obtained. It noted that the law had a strong interest in compliance with arbitral awards duly made, and in achieving co-operation between courts and arbitrators to this end. However, the Commission desired, in the solution it proposed, that the Court should retain a discretion to stay or to exercise jurisdiction to decide the merits (ALRC 33 [189]). That discretion was to arise in the Court being able to take into account all relevant circumstances although the Commission noted that, as at 1986, English and South African courts required the plaintiff to demonstrate why the assistance of a court was required in retaining security, although there were shades of difference between the readiness of the respective jurisdictions to assist in respect of claims otherwise unconnected with the forum: The Tuyuti [1984] QB 838 at 851; Katagum Wholesale Commodities v The MV Paz 1984 (3) SAf LR 261 at 268, 270 (Natal Provincial Division of the Supreme Court of South Africa).
63 Neither party argued that the analysis of the present question should be approached on the basis that there had been a contract of abandonment such as in Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 915-916. There, Lord Diplock considered that abandonment of a contract, which was still executory, involved the formation of a contract of abandonment in which each party promised to release the other from performance of all further obligations, including the obligation to pay damages for past breaches, arising under the executory, and now abandoned, contract. Lord Brandon of Oakbrook, who gave the leading speech (see [1983] 1 AC 900C per Lord Diplock) said that the question of whether a contract has been abandoned or not is one of fact ([1983] 1 AC at 913F). He continued ([1983] 1 AC at 914A-C):
'The concept of the implied abandonment of a contract as a result of the conduct of the parties to it is well established in law : see Chitty on Contracts, 23rd ed. (1968), vol 1, p 577, para 1231, and cases there cited. Where A seeks to prove that he and B have abandoned a contract in this way, there are two ways in which A can put his case. The first way is by showing that the conduct of each party, as evinced to the other party and acted on by him, leads necessarily to the inference of an implied agreement between them to abandon the contract. The second method is by showing that the conduct of B, as evinced towards A, has been such as to lead A reasonably to believe that B has abandoned the contract, even though it has not in fact been B's intention to do so, and that A has significantly altered his position in reliance on that belief. The first method involves actual abandonment by both A and B. The second method involves the creation by B of a situation in which he is estopped from asserting, as against A, that he, B, has not abandoned the contract : Pearl Mill Co v Ivy Tannery Co Ltd [1919] 1 KB 78.'
64 This contractual analysis is inapposite here, but their Lordships' approach shows that, notwithstanding that arbitration proceedings have been regularly commenced and that both parties are bound to their pursuit, the conduct of one party or both parties can bring about the legal consequence that the parties' obligations to arbitrate in the arbitration proceedings have become abandoned or inoperative or incapable of being performed.
65 In international trade and commerce, it is critical that the courts respect and enforce arbitration agreements where they exist in accordance with, in particular, the New York Convention and legislation designed to give effect to it such as the International Arbitration Act 1974 (Cth). This is because in international trade and commerce, the parties generally will not wish to be subject to serendipity of where a ship may be arrested, an action begun or damage occur to determine a forum of any litigation between them or the substantive law to be applied to their dispute. The parties will be conscious that an accident or fortuity may occur at any point in a voyage or flight and very different legal results may flow depending on which law and which forum determine their dispute. It is for this reason that arbitration clauses such as cl 45(b) invoking arbitration in London under English law have been a popular recourse for parties in international trade for over a century. Nowadays other centres of commercial arbitration, including Australia, are recognized as providing sound and fair fora and laws for the resolution of disputes in international trade or commerce.
66 However, the Court should be astute to uphold and enforce agreements such as those in cl 45(b) rather than to display a form of judicial prejudice or xenophobia against the parties' chosen method or place of dispute resolution. Refusal to enforce agreements to arbitrate in international transactions is capable of undermining the reasonable but significant expectations of the international commercial community and the confidence which it and, indeed, local business people place in the readiness of courts to hold people to their bargains: see e.g.: Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528 at 538 (1995); Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc 473 US 614, 638 (1985); Scherk v Alberto-Culver Co 417 US 506, 516 (1974); Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 343 per Brennan and Dawson JJ, 354 per Toohey J agreeing (cf: Nanisivik Mines Ltd v F.C.R.S. Shipping Ltd (1994) 113 DLR (4th) 536 at 541-542 (Federal Court of Appeal).
67 But, just as parties may choose to invoke arbitration as the method by which their disputes will be resolved by use of an arbitration agreement such as in cl 45(b), so they may also choose to give up their rights to use that method or they may so conduct themselves that the choice will be attributed to them by the doctrine of election.
68 When Comandate Marine chose to begin its in rem proceedings in the form which it utilized, it brought about the consequence that it was taken to have elected not to pursue its arbitration proceedings. It may have chosen another method to seek security by framing the relief it sought in its writ in a different way, but it did not do so. The English authorities on which Comandate Marine relied, and to which Sheppard J referred, did not consider the question of whether the party seeking security had made an election. For that reason I think those authorities are distinguishable.
69 Because Comandate Marine elected to litigate the dispute and Pan has too, the arbitration agreement in cl 45(b) has been, in substance, abandoned or for the purposes of s 7(5) of the International Arbitration Act 1974 (Cth) rendered inoperative or incapable of being performed.