Case: Ethiopian Oil Seed &amp; Pulses Export Corporation v Rio del Mar Foods Inc [1990] 1 Lloyd's Rep 86
Outcome: considered
noted above, Comandate Marine's proceedings in rem contained no such request. And, Art 8(1) of the Model Law, relevantly requires a court in which an action is brought in a matter which is the subject of an arbitration agreement to refer the parties to arbitration, if a party so requests no later than when submitting its first statement on the substance of the dispute. 59 Russell on Arbitration (22 nd ed) at 610 [A5-018] refers to Art 8(1) having the same effect as English law; i.e. the party seeking to enforce the arbitration agreement must apply to the court without delay for a stay of the proceedings (op cit at 296 [7-005]). The position is similar under s 53(2) of the Commercial Arbitration Act 1984 (NSW) which applies here by force of s 79 of the Judiciary Act 1903 (Cth). Comandate Marine did not apply to have its proceedings referred to arbitration when they were before this Court or the High Court. I am of opinion that Comandate Marine's conduct in bringing its proceedings in rem was incompatible with the arbitration agreement, and that Art 8(1) and Art 9 of the Model Law do not avail it. Comandate Marine is in a similar position to that of the landlord in the example given by Parker J in Matthews v Smallwood [1910] 1 Ch at 786-787. By pleading the writ in the way which it did, Comandate Marine exercised a right of action given by the Admiralty Act 1988 (Cth) to litigate the breach of the charter party as a general maritime claim under s 4(3)(f) of the Admiralty Act 1988 (Cth) in this Court. I am of opinion that in choosing to claim only that relief when it invoked the jurisdiction of the Court, Comandate Marine could not do that without prejudice to any right it might otherwise have had to seek security for the arbitration under s 29 at a later stage. It made no such claim in the writ and it procured the arrest of the vessel for the purposes of the particular relief which it claimed in the writ. The way in which Comandate Marine framed its claim in the writ nailed its colours to the mast as much as the warrant for arrest later was nailed (notionally or actually) to the mast of the Boomerang I . Having invoked the jurisdiction of the Court to procure the arrest of the vessel in order to pursue the only claims it pleaded, it is not open to Comandate Marine now to say that it did so without prejudice to any right later to apply for security under s 29 of the Admiralty Act 1988 (Cth). In its report: Civil Admiralty Jurisdiction (Report No 33, 1986) Law Reform Commission (Australia), the Commission recommended the introduction of what has become s 29 so as to enable the Admiralty jurisdiction to be used to obtain and retain security even though the merits of the dispute are to be determined elsewhere, if the subject matter of the dispute lies within Admiralty jurisdiction. The Commission noted that such a solution would do most to ensure that the award of the tribunal that decides upon the merits is satisfied, and hence that a just result would be obtained. It noted that the law had a strong interest in compliance with arbitral awards duly made, and in achieving co-operation between courts and arbitrators to this end. However, the Commission desired, in the solution it proposed, that the Court should retain a discretion to stay or to exercise jurisdiction to decide the merits (ALRC 33 [189]). That discretion was to arise in the Court being able to take into account all relevant circumstances although the Commission noted that, as at 1986, English and South African courts required the plaintiff to demonstrate why the assistance of a court was required in retaining security, although there were shades of difference between the readiness of the respective jurisdictions to assist in respect of claims otherwise unconnected with the forum: The Tuyuti [1984] QB 838 at 851; Katagum Wholesale Commodities v The MV Paz 1984 (3) SAf LR 261 at 268, 270 (Natal Provincial Division of the Supreme Court of South Africa). Neither party argued that the analysis of the present question should be approached on the basis that there had been a contract of abandonment such as in Paal Wilson &amp; Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 at 915-916. There, Lord Diplock considered that abandonment of a contract, which was still executory, involved the formation of a contract of abandonment in which each party promised to release the other from performance of all further obligations, including the obligation to pay damages for past breaches, arising under the executory, and now abandoned, contract. Lord Brandon of Oakbrook, who gave the leading speech (see [1983] 1 AC 900C per Lord Diplock) said that the question of whether a contract has been abandoned or not is one of fact ([1983] 1 AC at 913F). He continued ([1983] 1 AC at 914A-C): 'The concept of the implied abandonment of a contract as a result of the conduct of the parties to it is well established in law : see Chitty on Contracts , 23 rd ed. (1968), vol 1, p 577, para 1231, and cases there cited. Where A seeks to prove that he and B have abandoned a contract in this way, there are two ways in which A can put his case. The first way is by showing that the conduct of each party, as evinced to the other party and acted on by him, leads necessarily to the inference of an implied agreement between them to abandon the contract. The second method is by showing that the conduct of B, as evinced towards A, has been such as to lead A reasonably to believe that B has abandoned the contract, even though it has not in fact been B's intention to do so, and that A has significantly altered his position in reliance on that belief. The first method involves actual abandonment by both A and B. The second method involves the creation by B of a situation in which he is estopped from asserting, as against A, that he, B, has not abandoned the contract : Pearl Mill Co v Ivy Tannery Co Ltd [1919] 1 KB 78.' This contractual analysis is inapposite here, but their Lordships' approach shows that, notwithstanding that arbitration proceedings have been regularly commenced and that both parties are bound to their pursuit, the conduct of one party or both parties can bring about the legal consequence that the parties' obligations to arbitrate in the arbitration proceedings have become abandoned or inoperative or incapable of being performed. In international trade and commerce, it is critical that the courts respect and enforce arbitration agreements where they exist in accordance with, in particular, the New York Convention and legislation designed to give effect to it such as the International Arbitration Act 1974 (Cth). This is because in international trade and commerce, the parties generally will not wish to be subject to serendipity of where a ship may be arrested, an action begun or damage occur to determine a forum of any litigation between them or the substantive law to be applied to their dispute. The parties will be conscious that an accident or fortuity may occur at any point in a voyage or flight and very different legal results may flow depending on which law and which forum determine their dispute. It is for this reason that arbitration clauses such as cl 45(b) invoking arbitration in London under English law have been a popular recourse for parties in international trade for over a century. Nowadays other centres of commercial arbitration, including Australia, are recognized as providing sound and fair fora and laws for the resolution of disputes in international trade or commerce. However, the Court should be astute to uphold and enforce agreements such as those in cl 45(b) rather than to display a form of judicial prejudice or xenophobia against the parties' chosen method or place of dispute resolution. Refusal to enforce agreements to arbitrate in international transactions is capable of undermining the reasonable but significant expectations of the international commercial community and the confidence which it and, indeed, local business people place in the readiness of courts to hold people to their bargains: see e.g.: Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528 at 538 (1995); Mitsubishi Motors Corp v Soler Chrysler-Plymouth Inc 473 US 614, 638 (1985); Scherk v Alberto-Culver Co 417 US 506, 516 (1974); Tanning Research Laboratories Inc v O'Brien [1990] HCA 8 ; (1990) 169 CLR 332 at 343 per Brennan and Dawson JJ, 354 per Toohey J agreeing (cf: Nanisivik Mines Ltd v F.C.R.S. Shipping Ltd (1994) 113 DLR (4 th ) 536 at 541-542 (Federal Court of Appeal). But, just as parties may choose to invoke arbitration as the method by which their disputes will be resolved by use of an arbitration agreement such as in cl 45(b), so they may also choose to give up their rights to use that method or they may so conduct themselves that the choice will be attributed to them by the doctrine of election. When Comandate Marine chose to begin its in rem proceedings in the form which it utilized, it brought about the consequence that it was taken to have elected not to pursue its arbitration proceedings. It may have chosen another method to seek security by framing the relief it sought in its writ in a different way, but it did not do so. The English authorities on which Comandate Marine relied, and to which Sheppard J referred, did not consider the question of whether the party seeking security had made an election. For that reason I think those authorities are distinguishable. Because Comandate Marine elected to litigate the dispute and Pan has too, the arbitration agreement in cl 45(b) has been, in substance, abandoned or for the purposes of s 7(5) of the International Arbitration Act 1974 (Cth) rendered inoperative or incapable of being performed. WAS THERE AN AGREEMENT IN WRITING? Pan argues that Art II r 2 of the New York Convention requires there to be either an arbitral clause in a contract or an arbitration agreement which is either signed by the parties or contained in an exchange of letters or telegrams. Pan says that where the contract was formed, as it argues the charter party was in this case, either by acts or conduct, Art II r 2 is not satisfied. Pan says that each of the provision of the bank guarantee or the delivery of the vessel was an act or amounted to conduct which brought the contract into existence. In support of the argument it relies on decision of the Supreme Court of Italy in Robobar Limited v Finncold SaS (1995) Year Book Comm. Arb'n XX 739 at 740. The Court held that where a purchase confirmation had been sent by the party seeking to rely on the arbitration clause to which the other party had not responded, there was no doubt that none of the formalities in Art II in the New York Convention had been met because the clause was only contained in the confirmation to which the other party had not agreed by letter or telegram. Pan also relied on a decision of the Court of Appeal of the Federal Republic of Germany in a case between a Dutch seller and a German buyer ((1997) Year Book Comm. Arb'n Vol II, 237 at 238). The Court of Appeal held that a declaration in writing of both sides to the contract was required. A one sided confirmation did not suffice and the lack of declaration in writing by the other party could not be cured by that party's appearance in the arbitration. In this matter, however, the critical telex of 20 April 2006 commenced by being in form a confirmation, but ended with a request being made to both parties to confirm that the above recap was in line with the negotiations agreed so far. The next relevant correspondence was the telex later that day noting that the bank guarantee had been received and indicating when delivery would occur. I think this does fall within the positions contemplated by the Supreme Court of Italy and the German Court of Appeal, as being ones in which the contract was not formed or contained in an exchange of letters or telegrams. And, In Zambia Steel &amp; Building Supplies Ltd v James Clark &amp; Eaton Ltd [1986] 2 Lloyd's Rep 225 at 234, Ralph Gibson LJ said: 'It is clear to me that the [New York] Convention by Art II par 2 did not impose upon the contracting state an obligation to recognise an agreement in writing to submit to arbitration unless it is signed by the parties or unless the agreement is contained in an exchange of letters or telegrams in the sense that the assent to be bound by both parties is given in writing by such document.' The Manitoba Court of Appeal noted in Proctor v Schellenberg [2003] 2 WWR 621 at 628 [18] that Art IV r 1(b) of the New York Convention requires a party seeking to obtain recognition and enforcement of an award, to provide '[t]he original agreement referred to in article II or a duly certified copy thereof'. They said that '... there had to be a record to evidence the agreement of the parties to resolve the dispute by arbitral process', in concluding that facsimile transmissions were sufficient to be or form part of an 'agreement in writing'. In A.J. van den Berg's The New York Arbitration Convention of 1958 (1981) at 196-198, 206, 277 the learned author notes that Art II r 2 excludes oral or tacit acceptance and concluded (at 197, 227) that, as at 1981 there had been only one '... exception to the unanimous judicial affirmation that tacit acceptance does not comply with Art II r 2', that being a decision of the Court of First Instance of Rotterdam. The learned author said that this decision was not in conformity with either the text of Art II r 2 or the intent of its drafters, and noted that the decision had been rightly criticised. Significantly, he referred to the history of Art II r 2 which confirmed that the drafters of the New York Convention wished to exclude from its scope oral or tacit acceptance of a written proposal to arbitrate. In his article 'Is the need for writing as expressed in the New York Convention and the Model Law out of step with commercial practice ? ' (1996) International Arbitration vol 12, no 1, p 27 at 32 Neil Kaplan QC affirmed Prof van den Berg's interpretation. Mr Kaplan referred to discussions that he had had with Prof Pieter Sanders, the Dutch delegate in the drafting of the Convention, who had given him the actual minutes of the delegate's consideration of Prof Sanders' proposal to add to the draft of Art II r 2 the following words: 'Confirmation in writing by one of the parties (which is kept) without contestation by the party.' (UN DOC E/CONF. 26L.54) The English and USSR delegates at the drafting session objected to that proposal and it was rejected (van den Berg: op cit at 196; Kaplan: op cit 32-33). Earlier, as Kaplan J, he had held in the High Court of Hong Kong in H Smal Limited v Goldroyce Garment Limited [1994] 2 HKC 526 (HCMP000 908/1994) that there was no basis for arguing that an arbitration agreement could be established by a course of dealing or the conduct of the parties under Art VII of the Model Law (see Schedule 2 to the International Arbitration Act 1974 (Cth)). Kaplan J said that he had looked at the UNCITRAL reports in relation to Art VII and was quite satisfied that it could not be complied with unless there was a record in which the defendant, in writing, assented to the agreement to arbitrate (see at [12]). It has been recognized that a national courts, in the interest of uniformity, should construe rules formulated by an international convention, especially rules formulated for the purpose of governing international transactions such as the hire of vessels or the carriage of goods, in a normal manner, appropriate for the interpretation of an international convention, unconstrained by technical rules of English or domestic law, or by English or domestic legal precedent, but on broad principles of general acceptation: Shipping Corporation of India Ltd v Gamlen Chemical Co Australasia Pty Ltd [1980] HCA 51 ; (1980) 147 CLR 142 at 159 per Mason and Wilson JJ adopting Lord Wilberforce's speech in James Buchanan &amp; Co Ltd v Babco Forwarding and Shipping (UK) Ltd [1978] AC 141 at 152 and see too: Vimar Seguros y Reaseguros SA v M/V Sky Reefer 515 US 528 at 537 (1995) per Kennedy J (Renquist CJ, Scalia, Souter, Thomas and Ginsberg JJ agreeing). Mason and Wilson JJ went on to say (147 CLR at 159): 'It is important that we should adhere to this approach when we are interpreting rules which have been formulated for the purpose of regulating the rights and liabilities of parties to international mercantile transactions where great store is set upon certainty and uniformity of application.' (see too Great China Metal Industries Ltd v Malayasian International Shipping Corporation Berhad [1998] HCA 65 ; (1988) 196 CLR 161 at 186 [71] per McHugh J) It is also important in construing international conventions, that the views taken by courts, particularly the Supreme Courts of nations, are kept in mind so that there can be consistency in interpretation. And, I am conscious that in s 3(1) of the International Arbitration Act 1974 (Cth) the definition of 'arbitration agreement' is that it is an agreement of the kind referred to in Art II r 2. As a matter of construction under Australian law, I would have no hesitation in concluding that the definition was inclusive one. However, I think that the drafting of the definition in Art II r 2 invokes a concept of certainty that the arbitration clause or arbitration agreement is itself signed or contained in an exchange of letters or telegrams. The pre-contractual exchanges of telexes and emails cannot themselves convert into separate or free-standing agreements in the present case unless and until the vessel was actually agreed to be fixed. It was only upon the agreement to fix the vessel that it could be said to be under charter. And as Capt Piperakis said, he had imposed an absolute condition that a bank guarantee be provided. The owners were not prepared to deliver the vessel, on the evidence before me, unless and until the bank guarantee had been received and it was at that point that they agreed that they were contractually bound. That agreement, which thus brought cl 45(b) into existence as an agreement to arbitrate, was manifested by Comandate Marine's conduct either in accepting the bank guarantee or later delivering the vessel. At common law a recap telex can be found to contain a charter party, including an arbitration clause which is incorporated by reference to an earlier telex or other communication, even though both parties have not executed it: The Epsilon Rosa [2003] 2 Lloyd's Rep 509 at 514 [21] per Tuckey LJ (May and Brooke LJJ agreeing). But as Tuckey LJ pointed out ([2003] 2 Lloyd's Rep at 515 [29]) one cannot generalize in these cases. The act of acceptance, which formed the contract, was the provision of the bank guarantee. And, it is common ground that a formal charter party incorporating all of the agreed terms was to be prepared later by Prime on behalf of Comandate Marine. Both parties were under a duty to co-operate to bring about the final form of their agreement in writing ( Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Limited [1979] HCA 51 ; (1979) 144 CLR 596 at 607 per Mason J applying Butt v M'Donald (1896) 7 QLJ 68 at 70-71 per Griffith CJ). No doubt cl 45(b) was part of the agreement between Pan and Comandate Marine. But that does not, of itself, comply with Art II r 2. Rather, the critical part of the conduct by which the contract was formed was the provision by a third party of the bank guarantee which brought the contract into existence. So, the contract (being or including the arbitration agreement) was not made by being signed by the parties or contained in an exchange of telexes or emails. The contract included the conduct of the provision of the bank guarantee which fell outside the scope of Art II r 2. And, because there is no evidence of any further written communication relied on as amounting to a document capable of being part of an exchange of 'letters or telegrams' including telexes or emails, then this series of communications does not satisfy the requirements of Art II r 2. A contract can be made by conduct evidencing a manifestation of assent to an offer: Empirnall Holdings Pty Limited v Machon Paull Partners Pty Limited (1988) 14 NSWLR 523 at 534-535 per McHugh JA (Samuels JA agreeing at 531). Accordingly, I am of opinion that the telex from Prime to Mr Colaco headed 'FINAL RECAP' was an offer by Comandate Marine to charter the vessel on the terms there set out and incorporated by reference which was capable of acceptance only by the provision of the bank guarantee. For the reasons I have given, based on the fairly settled interpretation of Art II r 2 that tacit acceptance is insufficient, on the evidence I find that at the present time there is no 'agreement in writing' for the purposes of Art II r 2 of the New York Convention. COMANDATE MARINE'S ALTERNATIVE CLAIM FOR STAY UNDER S 53 OF THE COMMERCIAL ARBITRATION ACT 1984 (NSW) Comandate Marine argued, that if an agreement in writing for the purposes of s 7(2) of the International Arbitration Act 1974 (Cth) were not found, I should grant a stay pursuant to s 53 of the Commercial Arbitration Act 1984 (NSW). The Commercial Arbitration Act 1984 (NSW) provides that an arbitration agreement '... means an agreement in writing to refer present or future disputes to arbitration' (see s 4(1)). By s 53(1) the Court may stay the proceedings if it is satisfied that there is no sufficient reason why the matter should not be referred to arbitration in accordance with the agreement and that the applicant was at the time when the proceedings were commenced and still remains ready and willing to do all things necessary for the proper conduct of the arbitration. Having regard to the fact that Comandate Marine commenced its proceedings in rem, as I have found, without seeking to enforce any claim to arbitrate in those proceedings, I am of opinion that the evidence establishes that Comandate Marine was not then ready and willing to do all things necessary for the proper conduct of the arbitration. However, its application for stay is made in Pan's proceedings. At the time when Pan's proceedings were commenced, Comandate Marine was pursuing the arbitration proceedings and still seeks to do so now. I do not think that makes the commencement of the proceedings in rem irrelevant. By s 53(2) , the leave of the Court is required in the proceedings which have been commenced where the applicant for stay has delivered pleadings or taken any other steps in the proceedings other than the entry of an appearance. Although Comandate Marine's proceedings in rem were in separate proceedings, they form, as I have held, part of the same 'matter' for the purposes of ss 75 and 76 of the Constitution , and I am not minded to exercise any discretion in favour of Comandate Marine having regard to its conduct in taking the in rem proceedings in the circumstances which I have found. SCOPE OF THE ARBITRATION CLAUSE Comandate Marine argued that the claims brought under ss 51A , 52 and 55A of the Trade Practices Act 1974 (Cth) and seeking relief under ss 82 and 87 , including relief setting aside ab initio the charter party and preventing Comandate Marine from enforcing against the plaintiff any arbitral award were 'colourable'. It was not put that the claims were an abuse of the process of the Court. Rather, it was put in oral argument that there had been a misuse of s 12 of the Admiralty Act 1988 (Cth) because the very complaints the subject of the claims under the Trade Practices Act 1974 (Cth) were, in essence, the same as the breaches of contract relied on by Pan. Comandate Marine, in written submissions asserted that the Trade Practices Act 1974 (Cth) claims had been made for the improper purpose of fabricating jurisdiction. I do not think this argument has any substance. Part V of the Trade Practices Act 1974 (Cth), in which s 52 is found, sets out a statutory norm of conduct to which corporations must conform in trade or commerce. The task of the Court is to apply such norms where they arise in litigation even where the outcome is not materially different to applying the common law of negligence as in Travel Compensation Fund v Tambree [2005] HCA 69 ; (2005) 80 ALJR 183 at 191 [29] per Gleeson CJ or of passing off as in Campomar Sociedad Limitada v Nike International Ltd [2000] HCA 12 ; (2000) 202 CLR 45 at 83 [97] . In the latter case, the whole court approved what Mason J had said in Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44 ; (1982) 149 CLR 191 at 205 (see 202 CLR at 83 [97]), in the following terms: 'Likewise, the operation of s 52 is not restricted by the common law principles relating to passing-off. If, as I consider, the section provides the public with wider protection from deception than the common law, it does not follow that there is a conflict between the section and the common law. The statute provides an additional remedy .' (emphasis added) I am of opinion that the statutory remedy relied on by Pan is additional to whatever contractual remedies may be available to it and that there is no basis for the attribution to Pan of any improper purpose to fabricate jurisdiction. The Parliament of the Commonwealth has enacted the Trade Practices Act 1974 (Cth) under the trade and commerce power in s 51(i) of the Constitution . There is nothing in the evidence to suggest that Pan has not properly and regularly invoked the Court's jurisdiction. Pan's pleading raises an issue of substance as to whether or not Comandate Marine engaged in misleading or deceptive conduct. I am satisfied that this is truly part of the one controversy which the Court has been asked to quell (cf: D'Orta Ekenaike v Victorian Legal Aid [2005] HCA 12 ; (2005) 79 ALJR 755 at 761 [32] ). The only arguable limitation in the Admiralty Act 1988 (Cth) which might be seen as restricting the jurisdiction or powers any court invested with jurisdiction under that Act is to be found in s 13. But, on examination, s 13 does not affect the jurisdiction which a court, including this Court, has from sources other than the Admiralty Act 1988 (Cth) itself. Rather, s 13 provides that the Act does not confer on or invest jurisdiction on or in a court in a matter which is not of a kind mentioned in ss 76(ii) or (iii) of the Constitution . In ascertaining the scope of jurisdiction which the Federal Court may exercise, s 13 thus provides some guidance. It contemplates that matters of a kind mentioned in ss 76(ii) and (iii) of the Constitution can be within the jurisdiction of the Court. Section 76(iii) ('of Admiralty and maritime jurisdiction') is a clear source of power to enact the Admiralty Act 1988 (Cth) itself and define maritime claims as well as associated matters of Admiralty and marine jurisdiction in ss 4 and 12 . And s 76(ii) provides that the judicial power of the Commonwealth is invoked in any matter 'arising under any laws made by the Parliament'. The purpose of s 13 is to limit, in the construction of the Act, the conferral of jurisdiction by the Act to matters within the power of the Parliament and the judicial power of the Commonwealth. It is not to limit the other powers of a court on or in which the Act confers or invests jurisdiction. Clearly enough, s 86 of the Trade Practices Act 1974 (Cth) is a law made by the Parliament which confers jurisdiction on this Court independently of the jurisdiction conferred on it by the Admiralty Act 1988 (Cth). It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words: Owners of "Shin Kobe Maru" v Empire Shipping Co Inc [1994] HCA 54 ; (1994) 181 CLR 404 at 421; see too Mansfield v Director of Public Prosecutions for Western Australia [2006] HCA 38 at [7] - [10] per Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ. Once the jurisdiction of this Court has been invoked, the Court should exercise it ( Re Wakim; Ex parte McNally [1999] HCA 27 ; (1999) 198 CLR 511 at 588 [149] ), even if it be to protect itself and its processes against their abuse: cf: Batistatos v Roads and Traffic Authority [2006] HCA 27 [3]-[15] per Gleeson CJ, Gummow, Hayne and Crennan JJ: see too: Elbe Shipping SA v The Ship 'Global Peace' [2006] FCA 954 at [138] per Allsop J, see too at [62]-[76]. Comandate Marine also argued that a limitation was imposed on courts exercising jurisdiction conferred by the Admiralty Act 1988 (Cth) by s 31. But s 31(1) provides that the liability on a judgment of a relevant person (defined by s 3(1) as a person who would be liable were the proceedings in personam brought against that person) who has entered an appearance in a proceeding on a maritime claim commenced as an action in rem against a ship or property is not limited to the value of the ship or other property. The section confirms the amplitude of the jurisdiction rather than restricts it. Next, Comandate Marine argued that a relevant person who appears in proceedings commenced by a writ in rem cannot be sued in proceedings in personam in this Court in respect of matters outside the relief claimed in the writ in rem on a cause of action other than a maritime claim within the meaning of s 4 of the Admiralty Act 1988 (Cth) or on associated matters of admiralty and marine jurisdiction within the meaning of s 12 of that Act. Here, part of the 'matter', within the meaning of ss 76(ii) and (iii) of the Constitution , is the controversy between the parties under the Trade Practices Act 1974 (Cth) which Pan has pleaded. The judicial power of the Commonwealth is exercised in resolving such 'matters'. Here, the controversy involves claims under two Acts of the Parliament each of which specifically and independently, one of the other, confers jurisdiction on this Court. Accordingly, I am of opinion that this Court does have jurisdiction to hear and determine such an in personam proceeding as this. That is not to say, however, that the ship or property the subject of the writ in rem will be available, necessarily, to answer any judgment for any in personam claim against a relevant person, such as one under the Trade Practices Act 1974 (Cth), which is neither a maritime claim or an associated matter within the meaning of ss 4 or 12 . I am of opinion that the Admiralty Act 1988 (Cth) cannot be construed as in any way limiting the jurisdiction of this Court to hear and determine any matter within its jurisdiction. Rather, appositely to the present proceedings, there may be a question at the trial as to the availability of the bank guarantee which Comandate Marine provided as security in lieu of the ship Comandate to satisfy a claim made by Pan which is not within ss 4 or 12 of the Act. Pan's claim in personam for relief under the Trade Practices Act 1974 (Cth) is not invalid and its proceedings in personam are not invalidated by that claim: s 51 of the Federal Court of Australia Act 1976 (Cth). The Court, at the final hearing, can address any injustice which might arise if Comandate Marine wishes then to agitate such matters, including whether the security provided should be available to satisfy any claim under the Trade Practices Act 1974 (Cth). The Trade Practices Act 1974 (Cth) provides Pan with remedies different to any remedy that could be awarded in pursuance of its contract claims. Indeed, one of the remedies it seeks is the avoidance of the contract, not pursuant to contractual principles, but by force of an order under s 87 of the Act: Murphy v Overton Investments Pty Limited [2004] HCA 3 ; (2004) 216 CLR 388 at 409 [52] . And, the High Court has emphasized that the remedies under the Trade Practices Act 1974 (Cth) are designed to give effect, in cases of contravention of s 52 , to the prescribed standards of conduct which are embodied in that section where activities occur in trade or commerce: Campomar Sociedad Limitada v Nike International Limited [2000] HCA 12 ; (2000) 202 CLR 45 at 83 [97] ; Travel Compensation Fund v Tambree [2005] HCA 69 ; (2005) 80 ALJR 183. International trade including the entry into charter parties for vessels, is quintessentially within the trade and commerce clause of the Constitution (s 51(i)). And, par 15 of the amended statement of claim pleads specifically that the relevant conduct occurred in Australia because the communications and representations were received by Mr Colaco in Australia (see Voth v Manildra Flour Mills Pty Limited [1990] HCA 55 ; (1990) 171 CLR 538 at 568 per Mason CJ, Deane, Dawson and Gaudron JJ; Sydbank Soenderjylland A/S v Bannerton Holdings Pty Ltd (1996) 68 FCR 539 at 547A-548D per Beaumont, Drummond and Sundberg JJ). Next, Comandate Marine argued that I should not follow the decision of the Full Court in The 'Kiukiang Career' ( Hi-Fert Pty Limited v Kiukiang Maritime Carriers Inc (No 5) (1998) 90 FCR 1). In that case the relevant clause provided that 'any dispute arising from this charter' would be settled in a London arbitration. Obviously, it is important to recognize that in every contract the proper construction of that contract depends upon the words which the parties used having regard to contractual matrix within which the contract was entered or made. Emmett J who delivered the leading judgment (with whom Branson J expressly agreed) considered a number of authorities including some which dealt with the words used in this arbitration clause (cl 45(b)): viz: 'arising out of'. Emmett J said that a claim arising out of a contravention of the Trade Practices Act 1974 (Cth) during the performance of an agreement could be a claim arising out of the agreement (90 FCR at 21G). But, he made the critical distinction that where there was a dispute in respect of conduct which was antecedent to the contract such a dispute could not be said to arise from the contract in question (90 FCR at 22A-B) and he observed that it did not arise out of the charter party (90 FCR at 22B-C). In Francis Travel Marketing Pty Limited v Virgin Atlantic Airways Ltd (1996) 39 NSWLR 160 Gleeson CJ (Meagher and Sheller JJA agreeing) held that conduct claimed to be in breach of s 52 of the Trade Practices Act 1974 (Cth) which occurred wholly during the currency of an agreement arose out of the agreement, notwithstanding that statutory remedies were invoked, so that the whole matter was capable of settlement under the arbitration clause. Where it is claimed that a misrepresentation induced entry into an agreement, the fact that during the performance of an agreement it emerges that the pre-contractual conduct was misleading or deceptive or otherwise in contravention of s 52 of the Trade Practices Act 1974 (Cth) does not bring a statutory claim within the expression 'arising out of this contract'. Gleeson CJ had distinguished the reasoning of Beaumont J in Allergan Pharmaceuticals Inc v Bausch &amp; Lomb Inc (1985) 7 ATPR SS40 -636 on the basis that in that case the agreement to the parties was merely part of the background to the alleged contraventions of the Act and therefore the dispute did not arise out of the agreement. In the case before the Court of Appeal of New South Wales, the alleged contravention of the Act arose out of a representation that occurred during the currency of the agreement, as did the subsequent conduct relied on to establish the contravention (39 NSWLR at 166F-G). As Brennan and Dawson JJ noted in Tanning Research Laboratories Inc v O'Brien [1990] HCA 8 ; (1990) 169 CLR 332 at 344 (with whom Toohey J agreed at p 354) in respect of an arbitration clause that related to disputes 'arising out of' or relating to the agreement or the breach thereof (169 CLR at 337) '... the matter to be referred to arbitration cannot extend to issues which could not arise in proceedings between [the parties] or which are unrelated to the contract containing the arbitration clause: Allergan Pharmaceuticals Inc v Bausch &amp; Lomb Inc (1985) 7 ATPR SS40-636 at 47,173'. In Union of India v EB Abby's Rederi AS ('The Evje') [1975] AC 797 Lord Morris of Borth-y-Gest, reasoned that a dispute was one 'arising out of' a charter party where the charter party contained a clause providing that general average was to be payable according to the York/Antwerp Rules 1950 and to be settled in London. He said that a disputed claim for general average contribution which might involve disputes concerning matters and questions referred to in that clause would essentially and clearly arise out of the charter party because the claim related to events during its operation ([1975] AC 807H-808B, 808G, Lord Reid at 804E, and Lord Simon of Glaisdale agreed at 816C). Lord Salmon reasoned to similar effect ([1975] AC at 816F-8). In Ethiopian Oil Seed &amp; Pulses Export Corporation v Rio del Mar Foods Inc [1990] 1 Lloyd's Rep 86 at 97, Hirst J took the view that the words 'arising out of' covered every dispute except a dispute as to whether there was ever a contract at all. He held that the words should be given a wide interpretation of that kind so as to give effect to the parties' presumed intention not to have two sets of proceedings. And, in Incitec Ltd v Alkimos Shipping Corporation [2004] FCA 698 ; (2004) 138 FCR 496 at 503-504 [32] - [37] Allsop J held that the clear tide of judicial opinion as to arbitration clauses, where the fair reading of them is not confined, was to give width, flexibility and amplitude to them (see [2004] FCA 698 ; 138 FCR 496 at 504 [36] ). Allsop J agreed with what French J had said about the construction issue in Paper Products Pty Ltd v Tomlinsons (Rochdale) Ltd (1993) 43 FCR 439. There, French J said of a clause providing for disputes 'arising under this agreement' that neither a trade practices claim nor claims for breach of warranty and negligent misstatement: '... can be said to arise out of the agreement. They all arise out of matters which are antecedent to the contract even though they may involve questions which also go to its performance. No authority has been cited to me which would support the wide construction of the clause contended for by Tomlinsons and certainly the natural meaning of the words does not support their extension to disputes arising out of matters antecedent to the agreement.' (43 FCR at 448) In my opinion French J's reasoning, although directed to a different form of words, is apposite here in respect of the Trade Practices Act 1974 (Cth) claims. In the The 'Playa Laga' [1983] 2 Lloyd's Rep 171 at 183, Stephenson and Ackner LJJ and Sir Sebag Shaw said that the words 'all disputes arising out of this contract' are less precise than they looked. They pointed out that in strictness disputes arise not out of a contract but out of conflicting views taken by the parties to the contract as Lord Sumner had said in Produce Brokers Co Ltd v Olympia Oil and Cake Co Ltd [1916] 1 AC 314 at 328. The English Court of Appeal said that there were two stages which must be gone through in order to achieve a solution, first consideration of what was the nature of the dispute and secondly whether that dispute was within the scope of the arbitration clause. Their Lordships, obiter, observed that where contractual and tortious disputes were so closely knitted together on the facts, that the agreement to arbitrate on one can probably be construed as covering the other, the dispute falls within the arbitration clause ([1983] 2 Lloyd's Rep at 183). And, in Allergan Pharmaceuticals Inc v Bausch &amp; Lomb Inc (1985) 7 ATPR SS40 -636 at 47,173-47,174 Beaumont J held that it was not enough to point to the contract as part of the background to allegations of contraventions of Pt V of the Trade Practices Act 1974 (Cth). The latter causes of action arose pursuant to statute and existed independently of contract. He said that they were consumer protection provisions which in no way depended upon any private agreement for their source. And, conduct for the purposes of Pt V of that Act would be established, if at all, irrespective of the contractual relations with the immediate parties. Beaumont J said: 'In short, an alleged contravention of Pt V of the Trade Practices Act 1974 is not, as a matter of characterization, a "controversy or claim arising out of or relating to (the) Agreement" for the purposes of ... that contract.' I agree with Beaumont J's analysis. However, in Walter Rau Neusser Oel und Fett AG v Cross Pacific Trading Ltd [2005] FCA 1102 at [56] Allsop J suggested that the phrase 'arising out of' in an arbitration agreement reflected the practical, rather than theoretical, meaning to be given to the word 'contract' out of which disputes may arise. He said this could involve practical commercial considerations such as formation, extent and scope. Allsop J recognized that this wider construction was contrary to that of the Full Court in The 'Kuikang Career' (1998) 90 FCR 1 (see [2005] FCA 1102 [68]). I am of opinion that the Full Court's construction is correct for the reasons given above and in any event, like Allsop J, I am bound by it. Comandate Marine argued that the decision of the majority of the High Court in Coventry v Charter Pacific Corporation Ltd [2005] HCA 67 ; (2005) 222 ALR 202 indicated that The 'Kiukiang Career' 90 FCR 1 was no longer good law and it should not be followed. I do not accept that argument. The construction of the operation of ss 82 and 86 of the Bankruptcy Act 1966 (Cth) with which Coventry v Charter Pacific Corporation Ltd [2005] HCA 67 ; (2005) 222 ALR 202 was concerned involved the rules for set off in bankruptcy and the statutory construction of the expression 'arising by reason of a contract'. Thus Gleeson CJ, Gummow, Hayne and Callinan JJ held that a claim for damages for fraudulent misrepresentation brought by one contracting party against another or a claim for misleading or deceptive conduct which induced the party misled to make a contract with the other were, for the purposes of the Bankruptcy Act 1966 (Cth), claims 'arising by reason of a contract' (222 ALR at 219 [71]). The claim that misleading and deceptive conduct induced the entry into a contract necessarily was a claim which arose 'by reason of the contract', because if the thing complained of, namely the entry into the contract, had not occurred there would be no contract which could then be proved under s 82(2) of the Bankruptcy Act 1966 (Cth). Here, the claim under the Trade Practices Act 1974 (Cth) however, did not 'arise out of the contract', because that expression necessarily suggests that the contract was the source of the claim. Rather most of the essential elements of the cause of action under that Act existed before the contract came into existence, although elements of the performance of the contract, or non performance of the contract will have become relevant. Next Comandate Marine argued that a grant of the anti-anti-suit injunction to enable Pan to litigate its claims under the Trade Practices Act 1974 (Cth) amounted 'to the court aiding a party to commit a breach of contract'. The exercise by the Court of its jurisdiction to make orders pursuant to statutory powers where a party has engaged in conduct which is misleading or deceptive in breach of the statutory norms provided by the Parliament, is simply an instance of the Court enforcing the law. If Comandate Marine were found to have engaged in any misleading or deceptive conduct in contravention of the Trade Practices Act 1974 (Cth), it would not be entitled to rely upon its strict contractual rights to defeat the statutory power of the Court to grant remedies to Pan flowing from that contravention. ESTOPPEL Comandate Marine argued that somehow an estoppel arose preventing Pan from denying that there was an agreement in writing for the purposes of Art II r 2 of the New York Convention. I do not understand how that could be. The facts are objective. The evidence of Mr Athanassiou and Capt Piperakis is perfectly clear that each of them recognized that there was no actual charter party document in final form in existence at the time contractual relations commenced between the parties and that such a document was to be brought into existence later (cf Masters v Cameron [1954] HCA 72 ; (1954) 91 CLR 353 at 360). No conduct of Pan induced some other state of mind. There was nothing misleading and nothing unconscionable in Pan taking the stance it did about the matter. I see no substance in the argument. ANTI-ANTI-SUIT INJUNCTION Comandate Marine argued that I should not grant an injunction because it was in the public interest to hold parties to their contracts to arbitrate. I am of opinion that this argument ignores the fact that the Court's jurisdiction to give relief under the Trade Practices Act 1974 (Cth) is of considerable importance and reflects the public interest expressed in the enactment of statutes by the Parliament of the Commonwealth of Australia as laws that are to govern commercial behaviour in this country. I remain of the opinion I expressed in my earlier judgment ( Pan Australia Shipping Pty Ltd v The Ship 'Comandate' [2006] FCA 881). However, Comandate Marine, by its counsel, offered an undertaking to the Court that if it were found that s 7(2) of the International Arbitration Act 1974 (Cth) did not require a stay of the Trade Practices Act 1974 (Cth) claims, to consent to the London arbitration determining all issues raised between the parties under the latter Act in respect of any conduct of the parties to which that Act would apply as a matter of Australian law relating to formation and/or entry into of the charter and/or relating to the conduct of the parties in connection with the performance of the charter as being disputes within cl 45(b) and as part of the existing dispute referred to the London arbitration. Comandate Marine, by its counsel, also proffered an undertaking to the Court to agree that the arbitrators would have such jurisdiction, and it undertook not to prevent the arbitrators exercising that jurisdiction in determining the whole of the dispute between the parties. Pan does not want London arbitrators to determine its claim under the Trade Practices Act 1974 (Cth). Comandate's undertaking cannot extend the jurisdiction of the arbitrators. There is no power in s 7(2) to refer to arbitration or to stay claims under the Trade Practices Act 1974 (Cth) that do not otherwise fall within the agreement to arbitrate. The Court has power only to stay the proceedings to the extent that they relate to what is properly within the arbitration clause ( Tanning Research Laboratories Inc v O'Brien [1990] HCA 8 ; (1990) 169 CLR 332 at 344). While it may be convenient for the parties to have their whole dispute litigated in one forum, they cannot be forced to do so in a case like the present where the whole dispute does not arise out of the charter party. Given that there is now no dispute that Comandate Marine would seek to obtain against Pan an injunction from the High Court of Justice in England restraining its prosecution of these proceedings, if the whole dispute were not arbitrated in London, it seems to me that for the reasons that I gave on 22 June 2006 the injunction must be continued. BALANCE OF CONVENIENCE RE WITNESSES Capt Piperakis said that there was a number of potential witnesses for the owners who were in Greece or elsewhere than in Australia. The Master and crew, when not at sea, might be located at various places in the northern hemisphere. The vessel's classification society representatives were in Greece, Singapore and Sri Lanka. The vessel had dry docked in Sri Lanka in December 2005 and there were also the ship's agent and surveyor located there. The owners' and charterers' Singapore agents may be needed together with the repairers in Singapore who repaired the vessel following a collision it had in Melbourne in June 2006. Capt Piperakis said that it would cause him personal and financial inconvenience to have to travel to Australia to attend a hearing in the matter whereas it would be relatively simple for him to travel to London. It is likely that quite a number of witnesses who will be required to be called are persons from Australia who will give evidence as to the observations by the Australian Maritime Safety Authority Officers and others in the Australian ports as to the condition of the Comandate at various times together with Australian surveyors. It will also be likely that evidence will be called from witnesses based in Singapore and Sri Lanka as to the dry docking in Sri Lanka in 2005, the delivery and later repairs in Singapore this year. There may be some need for persons to come from Greece although I think that Capt Piperakis' evidence indicated that he was proceeding on an assumption that the existence of a contract at all may be in dispute. I do not think that that assumption is any longer correct, although it was certainly a matter that had been flagged by Pan in the interlocutory hearing on 22 June 2006. While the Master and crew are likely to be witnesses as to the vessel's condition, it will not make much difference where the hearing is so far as convenience to them is concerned. Wherever they are in the world either they will have to come away from whatever vessel they are on at the time or use electronic communication to give evidence at any hearing. The critical aspects of the claims of unseaworthiness and defective condition of the vessel together with the evidence as to the incurring of the damage to the hull are likely to be given by Australian witnesses and members of the ship's company. Pan had identified from the documents produced on subpoena at this early stage at least 12 different witnesses, 10 from the Authority, who may be required to give evidence. Of course, certain parts of the evidence may become uncontroversial as the case progresses but the impression I have is that leaving aside witnesses who will need to come from Sri Lanka and Singapore, on the material before me the likelihood is that most of the material witnesses other than the ship's company will be from Australia. There does not appear to be any relevant connection to London other than the requirement in cl 45(b) that the seat of the arbitration be there. CONCLUSION I order that Comandate Marine's motion be dismissed with costs. It follows that the interim injunction which I granted on 13 July 2006 until further order will continue undisturbed. I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate: Dated: 22 August 2006 Counsel for the Plaintiff: Dr AS Bell with Mr S Free Solicitor for the Plaintiff: Ebsworth &amp; Ebsworth Counsel for the Defendant: Mr AW Street SC with Mr NJ Owens Solicitor for the Defendant: Norton White Date of Hearing: 13 and 14 July 2006 Date of Judgment: 22 August 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1112.html