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Newsletter > January 2003

S. 46(1) of Marine Liability Act Not Applicable to Proceedings Commenced Before Its Enactment

The “Katsuragi” v. Incremona-Salerno Marmi Affini Siciliani (I.S.M.A.S.), 2002 FCA 479

Cargo owners brought a claim against the owners and operators of the vessels “Castor” and “Katsuragi”, for damage caused to a cargo of polished granite carried in a container from Catania, Italy to Surrey, British Columbia.

A bill of lading was issued on December 21, 1999 at Milan. Clause 25 of the bill of lading provided that all claims or disputes arising thereunder shall be governed by German law and determined by the courts of Hamburg to the exclusion of the jurisdiction of all other courts.

The plaintiffs filed their Statement of Claim on December 15, 2000. The defendants filed motions under section 50 of the Federal Court Act for an order staying the proceedings on the basis of the jurisdiction clause contained in the bill of lading, but the stay applications had not been heard by the time subsection 46(1) of the Marine Liability Act came into force on August 8, 2001.

Section 46(1) of the Marine Liability Act provides:

46. (1) If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where

(a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada;

(b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or

(c) the contract was made in Canada.

The effect of the subsection is to remove from the Court its discretion under section 50 of the Federal Court Act to stay proceedings on the ground of a jurisdiction or arbitration clause where the requirements of paragraphs 46(1)(a), (b) or (c) are met.

On December 4, 2001, a Motions Judge held that subsection 46(1) applied to the proceedings. He concluded that its application was neither retroactive nor retrospective, nor did it interfere with vested or crystallized rights. He held that, although all of the relevant facts giving rise to the claim had occurred prior to the coming into force of subsection 46(1), the motions for an order staying the respondents’ proceedings were facts of a continuing nature which had not ended or been accomplished prior to August 8, 2001. Hence, his conclusion that subsection 46(1) of the Act applied to the proceedings because its application was not retroactive nor retrospective.

The Federal Court of Appeal reversed the ruling. While the court agreed that the provision does not have retroactive effect, the court said that the only facts relevant to the determination of the temporal application of subsection 46(1) are those identified in the statute, namely the date of institution of the proceedings and the date on which the subsection came into force. Consequently, the stay applications cannot be seen as ongoing facts or facts of a continuing nature which had not been disposed of prior to August 8, 2001. Since the applications for a stay are neither identified nor mentioned in the statute, they are clearly irrelevant in determining whether the subsection applies to these proceedings.

In the present instance, subsection 46(1), if applied to the proceedings commenced on December 15, 2000, would reach into the past and declare that the rights of the parties as of that date are to be taken to be something other than they then were. Simply put, when the respondents commenced their action against the appellants on December 15, 2000, they could not institute proceedings in Canada in disregard of the jurisdiction clause in the bill of lading, even though the port of discharge was a Canadian port. The respondents did commence proceedings in Canada, but these proceedings were open to a challenge by the appellants by way of an application for a stay under section 50 of the Federal Court Act. The outcome of the stay applications is not a foregone conclusion, but in the light of the relevant case law, it is likely that the applications would be allowed and that the respondents would be forced to commence proceedings in Germany.

The court took the view that subsection 46(1) is a substantive provision. It was argued that the subsection does not affect substantive rights but, rather, procedural rights, and the rule against retroactive operation does not apply. The court rejected this proposition.

Even if this were a procedural provision the court held that there is no retroactive effect associated with the immediate application of procedural enactments. The rule, simply stated, is that there are no vested rights in procedural matters. There is consequently no survival of the earlier act, and the new one is, from the moment of its commencement, applicable to the regulation of future procedural steps.

The court discussed the distinction between substantive and procedural enactments. A new statute bringing substantive modification is applicable to a pending case if it retroactively modifies the law applicable on the day of the tort, the contract, the crime, etc. A pending case, even under appeal, can therefore be affected by a retroactive statute, and even by one enacted while proceedings are pending in appeal.

Procedural enactments do not govern the law that the judge declares to have existed: they only deal with the procedures used to assert a right, and with the rules for conduct of the hearing. It is normal that a statute dealing with trial procedure will govern the future conduct of all trials carried out under the authority. This is not retroactivity but simply immediate and prospective application.

Thus, procedural statutes, from the time of their coming into force, apply to regulate future procedural steps. They are given an immediate and general effect, but they are not given retroactive effect.

Subsection 46(1) does not apply to judicial proceedings commenced prior to its coming into force. The conditions set out in the subsection that “[i]f a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial … proceedings in a court … in Canada”, are not readily applicable to proceedings commenced prior to the coming into force of the statute.


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