Dispute over charterer's liability to pay demurrage at both
loading and discharging ports
Dampskibsselskabet Norden A/S (DKN) entered into a voyage
charterparty with the charterer Gladstone Civil Group Pty Ltd
(formerly Beach Building & Civil Group Pty Ltd) for the
carriage of coal from Australia to China. The terms of the voyage
charterparty required the parties to submit to arbitration in
London in the event of any dispute arising out of the voyage
A dispute arose in respect of the charterer's liability to
pay demurrage at both the loading and discharging ports. DKN was
successful at arbitration in the UK and obtained an award against
the charterer for demurrage charges of US$824,663.18 plus interest
and costs. DKN then sought to have the arbitral award entered and
enforced in Australia.
Application for enforcement of arbitral award dismissed at
At first instance, Foster J dismissed DKN's application for
enforcement of the arbitral award. In his judgment, his Honour
placed emphasis on the earlier decisions in BHP Trading Asia
Ltd v Oceaname Shipping (1996) 67 FCR 211 and "The
Blooming Orchard" (No. 2)  NSWLR 273, which held that a
charterparty was a document relating to the carriage of goods under
the earlier Sea-Carriage
of Goods Act 1924.
His Honour held that the voyage charterparty was a "sea
carriage document" and that the arbitration clause in the
voyage charterparty was invalid by operation of
section 11(2) of COGSA, as it purported to preclude or limit
the jurisdiction of an Australian court in respect of a "sea
carriage document relating to the carriage of goods from any place
in Australia to any place outside Australia".
Appeal allowed, voyage charterparties not "sea carriage
The Full Federal Court (Mansfield and Rares JJ agreeing,
Buchanan J dissenting) allowed DKN's appeal, rejecting the
trial judge's construction of the definition of "sea
Mansfield and Rares JJ, in separate but concurring judgments,
considered that the amended Hague Rules incorporated in COGSA
maintained the traditional distinction between a charterparty and
marine cargo liability based on a sea carriage document.
Their Honours pointed to Articles 10(6) and 10(7) of the amended
Hague Rules, which specifically contemplate application of the
Hague Rules in circumstances where a "sea carriage
document" is issued as distinct from a charterparty. The point
of distinction in those provisions, it was held, would be a nullity
if a charterparty was construed as a sea carriage document.
Rares J construed the definition of "sea carriage
documents" in light of COGSA as a whole, including the
modified Hague Rules in the Schedule to the Act. His Honour traced
the legislative history of marine cargo liability and concluded
that section 11 of COGSA was designed to protect the interests of
Australian shippers and consignees, which could otherwise be forced
contractually to litigate or arbitrate outside Australia.
That protection does not extend to shipowners and charterers who
enter into freely concluded bargains, which subject them to the
well recognised mechanisms of international arbitration.
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