Case number: 178
Article number: model arbitration law / 8(1)
Thessaurs issue:
Country of decision: Canada
Year of decision: 1996
Type of decision: Judicial decision

Case 178: MAL 8(1)

Canada: British Columbia Supreme Court (Huddart J.)
31 January 1996
Siderurgica Mendes Junior S.A. v. "Icepearl"(The)
Original in English
Unpublished



Siderurgica (SMJ) shipped a cargo of steel wire on the "Icepearl", which was time-chartered by Norsul International S.A. and owned by Icepearl Shipping Co. The bills of lading were endorsed to Mitsui & Co. (Canada) Ltd., a charterer of part of the vessel. The goods arrived in Vancouver damaged by salt water. SMJ and Mitsui sued Norsul on the bill of lading, claiming damages in contract or tort, or for breach of duty as bailee. Norsul applied for a stay of proceedings and referral to arbitration in New York pursuant to Article 8 of the Commercial Arbitration Act, Revised Statutes of Canada, 1985 (2nd Supplement), Chapter 17, which enacts Article 8(1) MAL. An arbitration clause was contained in the charter-party signed by Mitsui and Norsul. The bills of lading included a clause purporting to supersede all previous agreements.



The court applied a line of Canadian and English cases to the effect that an endorsement like that used in the bills of lading did not incorporate the arbitration clause contained in the charter- party. An obligation to arbitrate had to be found in a separate agreement between SMJ or Mitsui and Norsul. As SMJ was not a party to any other agreement with Norsul, no stay could be granted on that ground with respect to that plaintiff.



However, the court then found that, despite the fact that Mitsui sued on the bills of lading, and not the charter-party, the agreement to arbitrate in the charter-party was binding. In addition, the court found that Mitsui and Norsul had agreed that any dispute between them would be referred to arbitration in New York and thus the arbitration clause was enforceable separately from any other provisions of the charter-party. The supersession clause in the bills of lading did not, therefore, prevent Norsul and Mitsui from being bound by the arbitration clause in the charter-party between them.



The court also found that Norsul had not waived its right under the arbitration agreement since it did not submit its application later than the submission of its first statement on the substance of the dispute. The action, by both SMJ and Mitsui, was stayed pending the arbitration between Norsul and Mitsui.