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Case 72: MAL 8(1)
Canada: Federal Court of Canada, Trial Division (Strayer J.)
22 March 1994
Continental Resources Inc. v. East Asiatic Co. (Canada) et al.
Original in English and French
Unpublished
A dispute arose out of a charterparty for loss of cargo, and the plaintiff sued the defendants
in court. The defendants requested that the matter be referred to arbitration since the charterparty contained an arbitration clause and sought a stay of the proceedings pursuant to article 8 (1) MAL. The plaintiff argued that the arbitration clause did not preclude the continuance of litigation since the plaintiff had a claim, based on a bill of lading, against the ship and the shipowners, who were not bound by the arbitration clause contained in the charterparty since they were not parties to to the charterparty. The defendant argued that the bill of lading incorporated the terms and conditions of the charterparty, including the arbitration clause, by general reference.
The court held that it was bound to submit the matter to arbitration since the dispute
was within the scope of the arbitration agreement and the defendant had not filed its
first statement of defence on the substance of the dispute (article 8(1) MAL). The court
exercising its discretion under section 50 of the Federal Court Act granted a stay of the
proceedings. It was noted that the criteria followed by the court in exercising its
discretion included the likelihood of injustice to the defendant if the action proceeded
and the unlikelihood of injustice to the plaintiff if it did not. It was also noted that,
even if the plaintiff had a claim in tort not covered by the arbitration agreement, the
court could still exercise its discretion and grant a stay of proceedings pending
arbitration, and the plaintiff could seek the stay to be lifted if after arbitration it
still had a claim.
Additional Information published in later CLOUT issue (on "9 February 2000"):
Abstract published in English: [1996] Model Arbitration Law Quarterly Reports, Vol. 2, issue 2, 61
Text of the court decision published in English: [1996] Model Arbitration Law Quarterly Reports, Vol. 2, issue 2, 64
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