⦿ CASE SUMMARY OF:
Sonnar (Nig.) Ltd & Anor. v. Partenreedri M. S. Nordwind Owners of the Ship M. V. Nordwind & Anor. (1987) – SC
– Foreign court;
– Bill of lading;
– Contract of adhesion;
– Stay of proceedings;
– Pacta sunt servanda;
1. Sonnar (Nig.) Ltd;
2. Rubicon Impex Traders Ltd.;
1. PARTENREEDRI M. S. NORDWIND OWNERS OF THE SHIP M. V. NORDWIND;
2. CHAIY APORN RICE COMPANY LTD.
(1987) 9-11 S.C 121;
(1987) NWLR (Pt. 66)520;
(1987) All N.L.R 548
⦿ LEAD JUDGEMENT DELIVERED BY:
⦿ LAWYERS WHO ADVOCATED
* FOR THE APPELLANT
– Mr. Mbanefo;
* FOR THE RESPONDENT
– Mr. Oduba;
⦿ FACT (as relating to the issues)
The Plaintiffs, Sonnar Nigeria Ltd. and Pubico Impex Traders, claimed general and special damages amounting to N417,524.00 against the Defendants for breach of contract, which they claimed had arisen out of non-delivery of 25,322 bags of parboiled long grain rice, which were shipped from Bangkok, Thailand to Lagos, on board a vessel, M. V. Nordwind, which belonged to the Defendants. Now, the first Defendants, Partenreedri M.S. Nordwind, are ship-owners and they are based in Germany. The second Defendants, Banbridge Shipping Company, are based in Liberia. The latter were the Issuing Agents of the Bills of Lading which were relevant to this case. The third Defendants, Chaiyapon Rice Company, are based in Thailand, from where the rice in question was shipped. They were the suppliers of the rice which is the subject matter of this case. Both the Plaintiffs and the Defendants entered into an agreement which is evidenced by the Bill of Lading. Clause 3 of the Bill is relevant to this case. It provides – “Any dispute arising under this Bill of Lading shall be decided in the country where the “carrier” has his principal place of business and the law of such country shall apply except as provided elsewhere herein.” This then is the agreement between the parties and the country applicable herein is Western Germany.
As I said, the goods, which were shipped from Thailand, were not delivered and the Plaintiffs claimed, jointly and severally, against the Defendants, general and special damages as I had earlier indicated. The writ was served on the Defendants in Germany, Liberia and Thailand respectively. After service, Mr. Oduba of learned counsel, was briefed to represent the three Defendants while Mr. P.N. Mbanefo, of learned counsel, has been representing the Plaintiffs all along. It was he that filed the writ of summons.
On 23rd April, 1980, Mr. Oduba filed an application on behalf of the first Respondents to stay the action against him on the grounds that the cause of action arose out of a contract of carriage of goods, which is subject to a foreign jurisdiction. Learned counsel relied upon the agreement which is evidenced by the Bill of Lading which I earlier referred to.
Mr. Mbanefo’s reaction was to file a counter-affidavit.
The learned trial Judge, concluded that if the action were to be tried in this country, either the Plaintiffs or the 1st Defendants might wish to “bring at least one German lawyer from Germany to give expert evidence on German law. He added – “Definitely the German law cannot be ignored if the case is tried in this country”. He then held, adopting the reasoning in the case of “The Eleftheria” supra, that there is no evidence to support the submission of learned counsel for the Plaintiffs that the whole evidence to prove the case is in Nigeria. He termed it a mere speculation. He held further that there has been no suggestion that the Plaintiffs would be prejudiced by having to sue in the foreign court. Nor is there a risk of the Plaintiffs not obtaining fair trial in the foreign court. The Plaintiffs, he concluded, had not discharged the onus which lies on them. He granted a stay of proceedings.
The Plaintiff appealed to the Court of Appeal, which dismissed the appeal.
The Court of Appeal concluded, dismissing the appeal – “I think the sensible approach is that where parties have agreed to submit all their dispute under a contract to the exclusive jurisdiction of a foreign court, we should require very strong reasons to induce us to permit one of them to go back on his words…My Lords, having given this matter some serious thought, the grounds of appeal so ably canvassed before us have failed. For the various reasons which I have given, I would affirm the decision of Sowemimo J. dated July 7, 1981 which seems to me quite unassailable, and dismiss the appeal with costs assessed at N250.00 against the appellants jointly and severally.”
The Plaintiff, herein Appellant, has appealed further to this Supreme Court.
What should be the attitude of the Court in this country, where there has been a foreign jurisdiction clause inserted in a contract between parties?
⦿ ARGUMENTS OF PARTIES
* FOR THE APPELLANT
Mr. Mbanefo, before concluding his Brief, introduced two very strong elements which are, at least, of great jurisprudential interest. They are – (1) whether the likely result of an indiscriminate reference to a foreign court ought to be taken into account; and (2) whether or not there should be public policy considerations. As regards the first, counsel urged that there is nothing solemn about obligations arising out of what he termed “contracts of adhesion” that is, where the parties have not been anywhere near a negotiating table. He was equating contracts arising out of Bills of Lading with obligations entered into in circumstances that may lead to questioning the contractual intent of parties. His submission on public policy is even more interesting in that he questioned the bona fides of foreigners when they insert clauses in their Bills of Lading drawing cases to their own courts. He said “But where foreigners insert clauses in their Bills of Lading drawing cases to their own courts, the motives are usually nothing more than that they have more confidence in their own courts and that it is easier to sit at home and litigate. By remitting cases to their courts, our courts are merely playing into their hands at the expense and frustration of the Nigerian plaintiff”.
*FOR THE RESPONDENT
The main contention of Mr. Oduba is around the latin maxim Pacta Servanda Sunt. He submitted – “The Respondents further contend that it is also beyond argument that the onus is heavily on the party in breach (here the Appellants) to satisfy the Court as to why he should not be held to his bargain by going to sue in the agreed venue, in this case, Germany. In doing this, the party in breach must establish that it is just and proper to refuse a stay. He must show more; a stronger case rather than a mere balance of convenience. See The CHAPARRAL (1968) 2 Lloyd’s Rep. 158. In other words, it is the party in breach, in this case, the Plaintiff/Appellants who should provide the Court with the materials with which the Court can exercise its discretion in their favour. The tests to be followed in exercising a discretion to grant a stay of proceedings have been well laid down by Mr. Justice Brandon (as he then was): THE ELEFTHERIA (1970) P.94 at 99-100. The tests therein enumerated, usually now referred to as “The Brandon Tests” have acquired wide acceptability and our Court of Appeal adopted it in: G.B.N. LINE & ORS. v. ALLIED TRADING CO. LTD (Unreported) SUIT NO. FCA/128/83 of 26/4/84 at page 9. The tests have also been adopted with approval by the learned authors of THE CONFLICT OF LAWS: DICEY & MORRIS 10TH ED. VOL. 1 page 256.”
⦿ HOLDING & RATIO DECIDENDI
The following orders are hereby made:
(a) The appeal is allowed.
(b) The proceedings brought by the Plaintiffs against the Defendants in this case shall proceed to be heard by the Federal High Court up to determination of the action.
(c) Costs are awarded against the first Defendants in favour of the Plaintiffs as follows – (i) N100.00 being costs in the High Court (ii) N250.00 being costs in the Court of Appeal (iii) N300.00 being costs in this Court.
i. And so, the important question that we are left with in this case is upon what facts is the Court in Nigeria to assume jurisdiction, despite a clause in the Bill of Lading, which positively adopts Germany as the place of litigation, in regard to any dispute arising under the Bill of Lading?
1. There is the statement before the Court which purports to emanate from some German lawyers that there exists a decision in Hamburg, Germany, that German law would not consider the owner of the vessel in this case as carrier. In other words the action would not be maintainable against the Defendants if it is taken in Germany. That statement, however slim, remains uncontroverted.
2. If the case is struck out now in the Nigerian Court, and the Plaintiffs’ only recourse would be to take action in Germany, the action would already be time barred. Both counsel have admitted to us, and this is of extreme importance to my determination, that the action was filed on 22nd November, 1979, while the cause of action arose on 25th November, 1978. In other words, the action, as per the Bill of Lading, has become time-barred since 25th November, 1979.
ii. In Adesanya v. Palm Line Ltd. 1967 Lagos L.R. 18, Adefarasin J. as he then was, declined to stay proceedings where the plaintiff in that case would be deprived of a remedy altogether. But so would the Plaintiffs in this case. If the action is struck out or stayed in the Nigerian Court, the Plaintiffs would be barred for ever from litigating their claim. If this is what Mr. Mbanefo had referred to as public policy, it could have been understandable. During the course of the argument in this case, this court felt very concerned about this aspect of the case. The following dialogue went on between the Court and Mr. Oduba learned counsel for the Respondent.
iii. It is true that in “The Eleftheria (1969) 1 LloydsL.R. 237, Brandon J, in his powerful judgment, emphasised the essentiality of giving full weight to the prima facie desirability of holding the plaintiffs to their agreement. He also enjoined upon the Courts to be careful not just to pay lip service to the principle involved and then fail to give effect to it because of a mere balance of convenience. I think, with respect, what we have in this case transcends. mere balance of convenience. It is a total loss of action by the Plaintiffs, if effect is given herein to the principle of Pacta Servanda Sunt, having regard to the peculiar circumstances of this case. As it was observed in the course of the argument of this case by this Court, justice could not be served in this case by holding the Appellants to their pact of having the action taken only in the German Court.
⦿ SOME PROVISIONS
⦿ RELEVANT CASES
The tests set out by Brandon J. in “The Eleftheria” are as follows – (1) Where plaintiffs sue in England in breach of an agreement to refer disputes to a foreign Court, and the defendants apply for a stay, the English Court, assuming the claim to be otherwise within the jurisdiction, is not bound to grant a stay but has a discretion whether to do so or not. (2) The discretion should be exercised by granting a stay unless strong cause for not doing so is shown. (3) The burden of proving such strong cause is on the plaintiffs. (4) In exercising its discretion the Court should take into account all the circumstances of the particular case. (5) In particular, but without prejudice to (4), the following matters, where they arise, may be properly regarded: (a) In what country the evidence on the issues of fact is situated, or more readily available, and the effect of that on the relative convenience and expense of trial as between the English and foreign Courts. (b) Whether the law of the foreign Court applies and, if so, whether it differs from English law in any material respects. (c) With what country either party is connected and how closely. (d) Whether the defendants genuinely desire trial in the foreign country, or are only seeking procedural advantages. (e) Whether the plaintiffs would be prejudiced by having to sue in the foreign Court because they would (i) be deprived of security for that claim; (ii) be unable to enforce any judgment obtained; (iii) be faced with a time-bar not applicable in England; or (iv) for political, racial, religious or other reasons be unlikely to get a fair trial.” To these I would add, with all respect – “where the granting of a stay would spell injustice to the plaintiff as – where the action is already time barred in the foreign court and the grant of stay would amount to permanently denying the plaintiffs any redress.”
Lord Denning, M.R., in The Fehmarn (1958) 1 All E.R. 333 at p.335: “The next question is whether the action ought to be stayed because of the provision in the bill of lading that all disputes are to be judged by the Russian Court. I do not regard this provision as equal to an arbitration clause, but I do say that English Courts are in charge of their own proceedings and one of the rules which they apply is that a stipulation that all disputes should be judged by a tribunal of a particular country is not absolutely binding. Such a stipulation is a matter to which the Courts of this country will pay much regard and to which they will normally give effect, but it is subject to the overriding principle that no one by his private stipulation can oust these Courts of their jurisdiction in a matter that properly belongs to them. I would ask myself therefore: is this dispute a matter which properly belongs to the Courts of this country?”.
⦿ NOTABLE DICTA
A Court of Appeal does not lightly interfere with the discretion of a trial court. It does, only, where it is shown that the trial court has acted, on some wrong principles of law or a misapprehension of the facts or that the exercise is patently wrong. – Eso JSC. Sonnar v. Partenreedri (1987)
The contracts of adhesion referred to by Mr. Mbanefo are usually contracts where the parties are not equal. They are usually contained in standard forms of contract a “take it or leave it” sort of transaction. They are indeed modern in origin as Lord Diplock observed in Instore v. A. Schroeder Music Publishing Co. Ltd. 1974 1 W.L.R. 1308. These contracts are concentrated in relatively few hands and the terms are usually not negotiated between the parties thereto. The party with the bargaining power dictates the terms. The weaker party is presented with a form and asked to “sign here”. He does of course. Nothing happens until trouble arises. The goods might get lost and the weaker party is told “Look here you have no claim, you signed here or did you not?” In England, the Law Commission has looked into the matter and taken care of it. In this country, there could be a recourse to the common law for, in Gillespee Bros. and Co. Ltd. v. Roy Bowles Transport Ltd. 1973 Q.B. 400 Lord Denning suggested the reasonableness test. An objective test of reasonableness could easily be an answer to the problem posed by contracts of the nature that imports inequality in the parties. However, in so far as the law of Bills of Lading is concerned, these are contracts on international standard and I think one could hardly fault the reasoning of the Court in The Makefjell supra. “When a clause of this kind is introduced into a contract it must be supposed that the parties consider that, in general, trial in the places mentioned in the clause is more convenient than trial elsewhere”. – Eso JSC. Sonnar v. Partenreedri (1987)
With respect, attractive and tempting as the submission in regard to public policy is, it is dangerous for a court to base its decision mainly on public policy, which indeed would be another means of avoiding the rules, law and procedure which govern a matter. Public policy is usually equated with public good. To ask a Court to decide only as a result of public policy or public good, goes beyond the measure of liberalism in the application of the law or even viewing a matter from the socio-economic context of law. Who is to determine what constitutes public policy? To rely on public policy or public good simpliciter, is to give room to uncertainty in the law. – Eso JSC. Sonnar v. Partenreedri (1987)
For while a judge is expected to remain objective, impartial, experienced and full of erudition, these attributes cannot be found in one who seeks total sanctuary for his decision, in public policy. I am not saying that the question of public policy should be wholly excluded. No it should not. For even then, it is against public policy to produce uncertainty in the law: What I am saying is that public policy is not to be relied upon wholly to fathom a decision. Surely, public policy is an unruly horse and judges are not such masters of equestrial ability to take on such experience for, as was said in Um Poh Chao v. Camden and others (1979) 2 All E.R. 910 at 914. – “The judge, however wise, creative, and imaginative he may be, is cabin’d, cribb’d, confin’d, bound in, not as Macbeth, to his’ saucy doubts and fears’ but by evidence and arguments of the litigants”. – Eso JSC. Sonnar v. Partenreedri (1987)
Two decisions from the Australian Courts disregarded the law chosen by the parties as the proper law see Golden Acres Ltd. v. Queensland Estates Ltd. (1969) St. R. Qd 378 and Queensland Estate Ltd. v. Collas (1971) St. R. Qd 75; see also Freehold Land Investment Ltd. v. Queensland Estate Ltd. (1970) 123 C.L.R. 418. All these cases affirm the principle that the foreign law chosen by the parties as the proper law of the contract must have some relationship to and must also be connected with the realities of the contract considered as a whole. – Oputa JSC. Sonnar v. Partenreedri (1987)
When it is said that parties make their own contracts and that the Courts will only give effect to their intention as expressed in and by the contract, that should generally be understood to mean and imply a contract which does not rob the Court of its jurisdiction in favour of another foreign forum. – Oputa JSC. Sonnar v. Partenreedri (1987)
Where a domestic forum is asked to stay proceedings because parties in their contract chose a foreign Court and a foreign law to apply, it should be very clearly understood by our Courts that the power to stay proceedings on that score is not mandatory. Rather it is discretionary power which in the ordinary way, and in the absence of strong reasons to the contrary will be exercised both judiciously and judicially bearing in mind each parties right to justice. – Oputa JSC. Sonnar v. Partenreedri (1987)
In my view a foreign law or a foreign court will not be chosen when the result will be to shut up a Nigerian Plaintiff with a plea of time bar. A stay of proceedings that will produce such a result must not be countenanced by our Courts. The Nigerian Courts should regard the time bar as something fundamental enough to make it disregard the selection of a foreign law or a foreign Court. The protection of the interest of a Nigerian Plaintiff and the need to give a fair hearing (where a foreign forum would strike out his case as time barred) should as a matter of public policy weigh heavily against a stay of proceedings in any case. – Oputa JSC. Sonnar v. Partenreedri (1987)