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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Unpublished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.
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