By Frazer Hunt, Partner, and Lorna Anderson, Associate

The High Court of Australia has granted Carmichael Rail Network Pty Ltd (CRN) special leave to appeal the decision of Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GmbH & Co. KG (The BBC Nile) ] [2022] FCAFC 171. For background, you can read our case note on the primary decision here.

Special leave was granted for the High Court to consider when a foreign jurisdiction clause (like the kind in BBC Chartering Carriers GmbH & Co (BBC) bill of lading that states disputes are to be resolved in London arbitration) should be held void as contrary to Article 3(8) of the Hague Visby Rules. Specifically, to invalidate the arbitration clause, must the shipper prove that the conduct of the foreign proceeding will lessen the liability of the carrier OR is it sufficient for the shipper to identify ways in which a lessening of liability might reasonably occur in the foreign proceedings.

Art 3(8) of the Hague-Visby Rules (given effect in Australia, with some modifications, in Sch 1A of the Carriage of Goods by Sea Act 1991 (Cth)), provides that:

“Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to, 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 these Rules, shall be null and void and of no effect.” 

CRN submitted that it is enough to identify the liability-lessening risk created by the foreign proceeding. It is then for the carrier to prove that that risk will not materialise. On the other hand, BBC, submitted that CRN needs to prove that the foreign arbitration clause will lessen the carrier’s liability for it to be void, which it had not.

On appeal, we anticipate that the High Court will have regard to the conflicting international decisions such as Indussa Corp v S S Ranborg 377 F 2d 200 (2nd Cir, 1967), Vimar Seguros y Reaseguros, SA v M/V Sky Reefer 515 US 528 (1995) and Jindal Iron & Steel Co Ltd v Islamic Solidarity Shipping Co Jordan Inc (Jordan IT) [2004] UKHL 49; [2005] 1Lloyd’s Rep 57, to determine whether Art 3(8) applies narrowly (BBC’s position) or broadly (CRN’s position). In doing so, the High Court will also likely have regard to whether Art 3(8) creates a delegable or non-delegable duty on behalf of the carrier/vessel to load, handle, stow, carry, keep, care for and discharge the goods carried.

If CRN’s appeal is successful, they will be entitled to an anti-suit injunction restraining BBC from taking any further steps in the London arbitration. In turn, CRN’s claims against BBC and OneSteel will be heard together in Australia. On the other hand, if the appeal is not granted, CRN will need to pursue its claim against BBC in London arbitration and separately against OneSteel in Australia – an absurd outcome, given that the claim concerns an interstate voyage between Whyalla, South Australia, and Mackay, Queensland. Either way, the appeal will provide important guidance on how Article 3(8) of the Hague Visby Rules should be applied in respect of foreign jurisdiction clauses.