Topic – Exclusive Jurisdiction Clauses , Forum non Conviniens.
Facts –
Fay booked a cruise of the Greek Islands on a ship owned by Oceanic. Before paying he was shown a brochure which said the transportation of passengers was governed by terms and conditions printed on the ticket which could be inspected at a Sun Line office.
Fay did not read this part of the brochure and the travel agent did not have any tickets he could inspect. The agent provided Fay with an exchange order which he could use to obtain a ticket in Athens.
Clause 13 of the ticket provided that any action against Oceanic must be brought in Athens and the jurisdiction of other courts was excluded.
Fay sustained an injury during the voyage and claimed negligence against Oceanic in the NSW Supreme Court (NSW is where he had purchased the ticket).
The application was refused at first instance and on appeal to the Court of Appeal – a further appeal was made.
Issues –
When was the contract made?
If made in Australia, was it a already a contract of carriage or contract to later provide an offer for a contract of carriage in Greece?
Was the exclusive jurisdiction clause incorporated into the contract of carriage?
Did the Defendant do all that was reasonably necessary to notify the Plaintiff of the exemption clause?
Judgement –
When the Contract made?
The Defendant claims there was no contract in Sydney because it reserved the right to cancel cruises. This right gives them discretion as to consideration, making their promise illusory.
The Defendant also insists that the exemption clause is similar to the one in MacRobertson Miller Airline Services v Commissioner of State Taxation (WA), 53 [3.40], 113 [6.55.
However, in MacRobertson the court regarded the exemption clause as showing that the carrier “undertakes no executory obligation which creates rights in an obligee.
This does not apply here – the Defendant does incur contractual obligations through the exchange order
The exchange order also specified contractual rights of the Defendant (such as refusing refunds in case of a passenger cancellation)…if no contract was made through the exchange order, the Defendant could not rely on this right.
Therefore, these contractual rights and obligations indicate that a contract was entered into already in Australia, through the exchange order.
Was the contract made in Sydney already a Contract of carriage?
It hardly seems possible that the Plaintiff, upon paying a fair in Australia, only expected to be provided with a mere offer (and not already a formed contract) of carriage upon reaching Greece, even less so an offer which contains exemption clauses of which he was not previously aware of when paying his fair.
“The arrangements contemplated at the time of the issue of the exchange order for exchanging that document for a ticket cannot reasonably support the hypothesis that when issued the ticket might be a mere offer containing exemption clauses which should bind the plaintiff only upon subsequent acceptance”
“Apart from the insufficiency of opportunity for the passenger who is boarding a vessel to read the conditions printed on the ticket and to elect whether to accept them, the election could be made only after travelling to Greece and obtaining the ticket, and the terms of the exchange order would require a passenger who then elected to decline the offer to forfeit the fare already paid”
Rather, the Plaintiff purchased an option to initiate an already made contract of carriage, based on the terms he agreed to when buying the exchange order
“The better analysis of the transaction is that the defendant was bound to issue a ticket in exchange for the exchange order in performance of a contract of carriage already made, but the defendant was given no right to introduce new conditions of carriage by printing them on the ticket. The payment of the fare may rightly be regarded as the price of an option to acquire a ticket, but the option was not to acquire a mere piece of paper. It was an option to acquire a voucher or certificate of entitlement to be carried on terms already agreed — not on terms which the parties had yet to agree on”.
Exclusive Jurisdiction Clause
In this case, the exclusive jurisdiction clause read: ‣ ‘Notwithstanding anything to the contrary contained herein, any action against the Carrier must be brought only before the courts of Athens Greece to the jurisdiction of which the Passenger submits himself formally excluding the jurisdiction of all and other court or courts of any other country or countries which court or courts otherwise would have been competent to deal with such action’
The general rule is that where the parties to a contract agree that the courts of a foreign country shall have exclusive jurisdiction to decide disputes arising under the contract or out of its performance, the courts of this country regard that agreement as a submission of such disputes to arbitration and will, in the absence of countervailing reasons, stay proceedings brought here to decide those disputes.
But when a clause purporting to confer exclusive jurisdiction on the courts of a foreign country to determine claims arising under or out of the performance of a contract of carriage is found in a ticket issued to a passenger who, in this country, has paid his fare for carriage on a ship, aircraft, or vehicle operated by the defendant, a preliminary question must be decided: is the clause a term of the contract of carriage? — i.e., threshold question — whether the jurisdiction clause was even a part of the contract?
Here, as the contract of carriage was made when the exchange order was issued and as the exclusive jurisdiction clause contained in cl. 13 of the ticket was not then known to Dr. Fay and as insufficient was done to bring such a clause to his attention, that clause was not a part of the contract.
As it was not a part of the contract, the plaintiff was not bound by it.
On the other hand, Brennan J also considered the position if the exclusive clause had been a part of the contract at
He pointed out if the plaintiff was bound by the clause (as it was a part of the contract), the plaintiff’s case should be determined by Athenian courts unless “a strong bias in favour of maintaining the special bargain” could be proved.
N.B. principles regarding stay on basis of exclusive jurisdiction clause are distinguishable from those relating to stay on basis of forum non conveniens
Reasonable Steps to Notify
In the case of a ticket (rather than a signed document), an exemption clause (from liability of loss) will only be deemed incorporated if the Offeror took all reasonable steps to notify the Offeree of the clause.
“…where an exemption clause is contained in a ticket or other document intended by the carrier to contain the terms of carriage, yet the other party is not in fact aware when the contract is made that an exemption clause is intended to be a term of the contract, the carrier cannot rely on that clause unless, at the time of the contract, the carrier had done all that was reasonably necessary to bring the exemption clause to the passenger’s notice
