Abstract: Australian law has its root in the common law of England. But, with the change of the time, Australian law has also evolved according to the needs of the society. It has taken its own instance on many aspects of Private International Law and has refused to follow the common law anarchy prevalent in other common law countries. One of such aspect on which the Australian Law has carved its own niche is the doctrine of forum non convenience. Initially it followed the English doctrine but then the courts took a different course on the doctrine. Following a different approach from what the others follow especially in the field of private international law is not much appreciated. However, being an independent and strong nation the justice delivery system in Australia has, as far as possible, preferred to be more dutiful towards its own people by preferring to settle their disputes in the country’s forum by giving a new color to the doctrine.
Key words- appropriate forum, clearly inappropriate forum, Forum Non Conveniens, Private International Law.
The Australian Courts have the power to refuse the exercise of jurisdiction against the defendant who has been served with the originating process outside Australia, on the application made by the defendant that the service outside Australia was not authorized by the court Rules or that the respective court is not a convenient forum for the trial of proceedings against him. The second ground is generally referred to as Forum Non Convenience ground. The defendant can make an application to the court that the forum selected by the plaintiff is not a convenient or appropriate forum as some other forum is more appropriate forum, so the proceedings be stayed in the forum selected by the plaintiff. The court may decline to exercise its jurisdiction either by way of staying the proceedings or by way of transferring them to another court in a different jurisdiction. The power of transfer is for the time being, restricted to transfers between the state and territory supreme Courts and Federal courts. The act dealing with the transfer of proceedings is the Cross-Vesting Acts of States and Territories and the Common Wealth Cross-Vesting Act[1]. The basic purpose for the stay or transfer of proceedings to other courts is to ensure proper justice to the parties and to avoid parallel proceedings in two courts of different jurisdictions on the same issues so that different versions of judgments by two different courts might be avoided on the same issue. There is a long list of cases in Australia dealing with the issues of forum non conveniens lying down different tests for arriving at the conclusion of forum non convenience.
Forum non conveniens principle was first adopted in Australia by the Australian High Court in 1908 in the case of Maritime Insurance co. Ltd. v. Geelong Harbor Trust Commissioners.[2] In this case the court applied the criteria of “Vexation and oppression” test approach to arrive at the conclusion of forum non conveniens. The vexation and oppression test was taken from decision of Logon v. Bank of Scotland decision of the House of Lords. As per the “vexation and oppression” test approach the Australian court would grant relief from a suit if the exercise of jurisdiction by the Australian court would bring injustice to the defendant.[3]
The Australian Courts for all most more than half of 20th century followed the English law on the grant of stay in favour of defendant. Under the said rules, the defendant had to prove that the continuance of proceedings would cause an injustice to him, as they were oppressive or vexatious or the proceedings were an abuse of the process of the court. Also if the stay was granted in favour of him, it would not cause an injustice to the plaintiff. The English law till that time was in favour of the plaintiff.
However it was the case of Oceanic Sun Line Shipping Co. v. Fay[4] where the Australian High Court rejected the English law and attempted to develop a distinct approach to forum non conveniens. The case is based on tortuous liability and the contract of carriage. In this case the majority of judges rejected the English law of forum non convenience, except for Justice Wilson and Toohey. Before going further the brief facts of the case are that respondent is a resident of Queensland. The appellant is a company that is incorporated in Greece, which conducts Mediterranean cruises on its ships under the name of “Sunline Cruises” in collaboration with another company. The respondent was a passenger on the Greek ship having cruise of Aegean Sea. He suffered serious injuries while taking part in trap shooting on the ship board. The ship was then sailing in the Greek waters when the respondent suffered the injuries. The respondent then brought the proceedings against the appellants in the Supreme Court of New South Wales, claiming damages for negligence. He obtained leave to serve his claim on the appellant at its principle place of business in Athens (Greece). The leave was granted and the appellant then entered a conditional appearance. The appellant by a notice of motion sought to have the statement of claim set aside or struck on the grounds that the Supreme Court of New South Wales lack jurisdiction to entertain the suit and that Greece is the appropriate jurisdiction for the initiation of claim. The appellant based his arguments on the ground that the ticket given to the respondent to board on the ship contained a foreign jurisdiction clause, which meant that Greece is an exclusive jurisdiction to deal with the disputes if any arisen between the respondent and the appellant, also, the contract was made in Athens when the ticket to board the ship was issued to the respondent. But the majority of the Court of Appeal found that the contract was made in Sydney (Australia), when the appellant’s agent issued an Exchange Order entitling the respondent to obtain a ticket from the appellant in Athens before boarding the ship. The Exchange Order contained all the relevant information relating to the name of the ship, sailing date, time of sailing and of embarkation, posts of departure and arrival, names and cabin number, fare charged, nationality of the respondent and his wife, etc. The majority held that the Exchange Order constituted a contract between the parties. So, the contention of the appellant that the contract was made in Athens when the ticket was issued to the respondent was rejected by the majority. Hence, it was held that the exclusion clause did not apply for the contract was made before the issuance of the ticket which carried with itself the exclusive jurisdictional clause. The contract was made when the exchange order was issued to the respondent in lieu of the ticket in Sydney.
Analysis of the court- Difference of opinion on the principle of Forum Non Convenience by the Justices deciding the appeal.
Justice Wilson and Toohey JJ (dissenting opinion) .-Allowing the Appeal, Justice Wilson and Toohey, held that the present law of England has undergone a major change after the decision of the Atlantic Star (1974) case. The law stated by Lord Goff of Chieveley in Spiliada case is the present law of England according to which where jurisdiction has been found as of a right that is where the defendant has been served with the proceedings within the jurisdiction the defendant may now apply to the court to exercise its jurisdiction to stay the proceedings on the ground which is usually called forum non conveniens. As per Lord Goff, the plea of the defendant to stay the proceedings should not be allowed by the court to sustain unless the court is the Court is satisfied that there is some other tribunal, having competent jurisdiction, in which the case may be tried more suitably for the interests of all the parties and for the ends of justice.
Lord Wilson and Toohey pointed out in order to maintain consistency between the courts of different countries and in Australia, it is cogent to adopt the principles laid down in Spiliada case. The forum non conveniens doctrine which is part of law of Scotland and USA has also been adopted as law in England after the Spiliada case. It is also the law of Canada, then why not it be part of Australian law. The Spiliada approach should be a guiding law in Australia, whenever the question of stay of proceedings is raised in the Australian Courts by the foreign defendant, when there is more appropriate forum available in the foreign country.
So, Justice Wilson and Toohey concluded that the proceedings in the Supreme Court of New South Wales should be stayed in the interest of both the parties and to the ends of justice. The Hon’ble Justice found that the alleged tort was committed in Greece, the appellant company is incorporated in Greece, carries on business there, the proper law to which both the parties agreed was that of Greece. Although the contract of Carriage was made in New South Wales, but this one factor cannot outweigh number of factors which are in favour of appellant. So, the appeal was allowed by the judges.
Brennan J.- According to Justice Brennan, the law before the Atlantic Star Case is the true law to be applied in case involving stay of proceedings in Australia. His honour points to the law as laid down in the cases of Maritime Insurance Co. Ltd. v. Geelong Harbor Trust Commissioners (1908), St. Pierre v. South American Stores (Gath & Chaves), Ld (1938), and Cope Allman (Australia) Ltd. v. Celermajer (1968). The Hon’ble Justice truly agreed with the statement of Gibbs J. delivered in the case of Cope Allman (Australia) Ltd. v. Celenger (1968) 11 FIR where Gibbs J. stated that while dealing with the stay application the court should see that in granting stay it does not do injustice and on the other hand the court ought to interfere whenever there is such vexation and oppression that the defendant objecting the exercise of jurisdiction, is subjected to injustice. Then, Brennan Justice cited the principles laid down by Scots J in St. Pierre v. South American Stores, citing them as the best know statement for dealing with power of stay by the court. According to the said principle (1) A mere balance of convenience is not a sufficient ground for depriving a plaintiff of the advantages of prosecuting his action in English Court if it is otherwise properly brought. The right of access to the King’s Court must not be lightly refused. (2) In order to justify a stay two conditions must be satisfied, one positive and the other negative: (a) the defendant must satisfy the Court that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of the Court in some other way; and (b) the stay must not cause an injustice to the plaintiff.
In order to satisfy the first condition, the defendant has to show oppression, Vexation or other abuse of process in order to seek stay. By showing just that balance of convenience favours litigation in some other forum the defendant is burden of proof is not discharged. The principle favour the policy that, “any plaintiff bonafide seeing relief to have unrestricted access to the seat of judgment and that is a policy which prevails unless oppression, vexation or other abuse of process is shown”. According to him the term “Vexation” and “Oppression” should be construed according to their ordinary meaning. He rejected the new approaches reflected in the cases of Atlantic Star, Macshannon and Spiliada cases which favoured the approach that a stay should only be granted on the principle of forum non convenience where the court is satisfied that there is some other tribunal or forum available in another country having competent jurisdiction, and is appropriate forum for the trial of the action i.e. the forum in which the case may be tried more suitably for the interest of all the parties and the ends of justice . According to him the new English approach cannot be adopted in Australia as that approach is inconsistent with the function and duty of Australian Courts. The job of the courts of this country is to enforce the rights and liabilities of the parties according to the law of the forum and to enforce the jurisdictional rights of the plaintiff unless the invocation of jurisdiction is oppression, vexations or otherwise in abuse of process. Dismissing the appeal, his honor held that English new approach cannot be applied and the plaintiff is therefore entitled to have his case heard and determined by Supreme of New South Wales. The invocation of jurisdiction by the plaintiff is not oppressive, vexatious or abuse of process. He emphasized that the formulation laid down in the case of ‘St.Pierre’, by Scott. J. is and should remain the law of Australia and the words ‘oppression’ and ‘vexatious’ should be understood according to their ordinary meaning.
Deane J.-Justice Deane was of the view that a party who has regularly invoked the jurisdiction of a competent court has a prima facie right to insist upon its exercise and to have his claim heard and determined. The prima facie right to access the jurisdiction of the court should be displaced only by a statute. He agreed with the traditional approach for granting a stay as laid down in the case of Maritime Insurance Co., where it was held that the power of the court whose jurisdiction has been regularly invoked to dismissed or stay the proceeding on the ground that it should have been brought in some tribunal in another country is limited to the cases where the court is persuaded that it is such a unsuitable or inappropriate forum for their determination that this continuance would work a serious injustice that it would be oppression and vexatious to the defendant. The ‘clear inappropriateness’ of the local forum may justify the dismissal or stay of proceedings. The mere fact that some foreign tribunal would represent a more appropriate forum will not work. It was him who articulated the word ‘clearly inappropriate’ to be used by the court while applying the doctrine of forum non convenience in Australia. He emphasized on the traditional approach based on common law rules to be a right approach for refusing or granting a stay. Under the traditional approach the test is whether a continuation of the proceeding would be vexatious and oppressive by reasons of the inappropriateness of the local forum. The Hon’ble Justice dismissed the appeal on the ground that appellant has failed to establish that Supreme Court of New South Wales, is in all circumstances a clearly inappropriate forum.
Gaudron J.-According to him the determination of the question whether stay should be granted or not, the court has to see that if the rights and liabilities of parties are entirely to be determined by the application of foreign substantive law, the forum selected by the plaintiff will be clearly inappropriate notwithstanding that the defendant is domiciled, resident or carries on business within the jurisdiction of the court where the plaintiff has filed the case against him. The forum selected by the plaintiff will also be inappropriate if the defendant is also amendable to the jurisdiction of a forum whose laws govern the matter in issue (substantive law) and that country is the country with which the matter in issue has its closest connection. But, the selected forum should not be seen as inappropriate if it is fairly arguable that the substantive law of the forum is applicable in the determination of rights and liabilities of the parties. The lordship in this case found that the substantive law of New South Wales is applicable in the determination of the rights and liabilities of the parties, so he dismissed the appeal of the appellants for the grant of stay of proceedings.
So, the majority in Oceanic case rejected the English view of forum non conveniens taken in the case of Spiliada. But, due to different views of the judges in this case, no clear conclusion came out or a settled principle on the issue of stay of proceedings on the basis of forum non conveniens.
The case which ultimately brought out the distinctive doctrine of forum non convenience in Australia was the case of Voth v. Manildra Flour Mills Pty Ltd,[5] which ultimately settled the law on the question of stay of proceedings. The case also deals with the commission of torts. The two respondents (plaintiffs) are companies incorporated and resident in New South Wales. They are members of a group of companies, known as the “Manildra Group”, which carry on business related to the manufacture and sale of starches and starch products. The activities of the Group extend beyond Australia. At all material times the first respondent was the principal operating company in the Group. The Group’s operating company there was Manildra Milling Corporation (“MMC”), a corporation established under the laws of the State of Kansas. MMC is a wholly-owned subsidiary of the second respondent and it was to MMC that the appellant, in the ordinary course of his professional practice, provided accounting, auditing and related services. The appellant (defendant) is an accountant who is a citizen and resident of USA, practicing in the state of Missouri. ‘Manildra group’ sold starch products to MMC which resold them in USA. As a result, MMC became indebted to the first respondent and became obliged to pay it, or credit it with, interest. During the period in question, the Internal Revenue Code (IRS) of the United States imposed upon the first respondent liability to income tax in respect of the interest income derived by it from MMC and also imposed an obligation upon MMC to deduct and withhold the tax upon interest paid by it to the first respondent. MMC did not make the required deductions and payments of withholding tax nor did the appellant firm notice this omission. Later on, appellant’s firm discovered the omission. It was decided that the withholding tax and penalty interest should be paid to the IRS. The first respondents filled case against the appellant that the appellant acted without due care in failing to draw the attention of MMC, and of the other companies in the Manildra Group, to the requirement to pay withholding tax on MMC’s interest payments to the first respondent. That omission had two relevant consequences for the respondents in relation to liability to Australian income tax. First, the interest in question was treated as assessable income of the first respondent, when it should have been treated as exempt income. This resulted in an overpayment by the first respondent which, it is alleged, is irrecoverable. Secondly, the second respondent in some of the years in the relevant period, if matters had been dealt with properly, would have shown tax losses and would have been able to carry those losses forward into future years. Apart from that damage, the respondents allege that the first respondent incurred liability to the IRS for penalty interest. So, the respondents (plaintiffs) decided to sue the appellant (defendant) in the court of New South Wales, claiming damages for professional negligent. The respondents contended that the Supreme Court of New South Wales has jurisdiction to entertain the action because they suffered some or all of the relevant damage in that State. The appellant contended that the Supreme Court of New South Wales lacked jurisdiction to entertain the action and stay should be granted or the action should be dismissed, but the contention of the appellant was rejected both at first instance and by the Court of Appeal.
Analysis of the court- Opinion of various Justices on the issue in the case.
Mason C.J., Deane, Dawson and Gaudron JJ,- held that the court while deciding the application of stay and dismissing the action or setting aside service ex -juris, should follow the test of “clearly inappropriate forum” set out by Deane J. in Oceanic Sun Case. The test states that the jurisdiction of the court which has been invoked to dismiss or stay the proceedings on the ground that the suit should have been brought in some tribunal in another country is limited to case, where the court is persuaded that it is such an unsuitable or inappropriate forum for the determination that the continuance of the case would work as a serious injustice to the defendant in the sense that it would be oppressive and vexatious to the defendant. The ‘clear inappropriateness’ of the local forum may justify the dismissal or a stay. The mere fact some foreign tribunal would represent a “more appropriate forum” will not work. However, the Hon’ble Justice also held that in arriving at the conclusion of “inappropriateness” the connecting factors and the legitimate personal or judicial advantage” as laid down by Lord Goff in Spiliada’s case may provide valuable assistance to the court while dealing with such applications. They agreed with the law laid down in the cases of Oceanic Sunrise to the extent that –
- A plaintiff who has regularly invoked the jurisdiction of a court has a prima facie right to insist upon its exercise.
- The traditional power to stay proceedings which have been regularly commenced, on inappropriate forum grounds, is to be exercised in accordance with the general principle empowering a court to dismiss or stay proceedings which are oppressive, vexatious or an abuse of process and the rationale for the exercise of the power to stay is the avoidance of injustice between parties in the particular case.
- The mere fact that the balance of convenience favours another jurisdiction or that some other jurisdiction would provide a more appropriate forum does not justify the dismissal of the action or the grant of a stay, and
- That the jurisdiction to grant a stay or dismiss the action is to be exercised “with great care” or “extreme caution”.
The respective judges disagreeing with the decisions of the Court of Appeal allowed the appeal of the appellant to stay the action by taking into account that (1) the action has a substantial connection with the law of Missouri (2) the relevant acts and Omissions took place predominantly in Missouri (3) the appellant resides and works in Missouri (4) a large part of damage which the appellant caused to the respondents were referable to United States Taxation law and (5), the greater part of the evidence in any trial of the action was to be found in Missouri.
The Hon’ble Judges also took into account the factors which favored the plaintiff such as (1) the plaintiff are residents of New South Wales (2) the legitimate personal juridical advantage to the plaintiff which includes : (a) Concession of limitation bar to the plaintiff because if the plaintiff sues the defendant in same suit in Missouri, the defendant has the opportunity to resist the suit due to an effective limitation bar that exists under the law of Missouri, (b) In Missouri, the costs to be awarded in favour of a successful plaintiff may not include attorney fee, and (c) the damages to be awarded by way of interest are less advantageous to the plaintiff as compared to the amount that may be awarded by the Supreme Court of New South Wales. However, the court held that as far as first juridical advantage to the plaintiff is concerned the court may impose a condition while granting stay to the defendant, that the defendant will not plead any defence relating to limitation in Missouri if the respondents file the proceedings in Missouri and secondly as far as second and third juridical advantages to the plaintiff are concerned they are not that important so as to compel the courts to refuse the stay of application, when compared with overall considerations.
On these bases the Hon’ble Judges allowed the appeal. They set aside the order made by Court of Appeal and ordered that the action be stayed.
Toohey. J- Justice Toohey was the patrician of doctrine of forum non conveniens. According to him doctrine of forum non conveniens should determine whether the cause should be stayed or not. The doctrine is to be applied to the facts of the case. It requires the court to search for the appropriate forum with which the action has the most real and substantial connection. It recognizes that in the modern world, particularly in the modern commercial world, there may be more than one forum available to a plaintiff to litigate. According to him there is no dearth of opportunities which are available to the plaintiff to institute his cause of action. Where the dispute is of international character, there should not be any limitation or restriction imposed on the right of the plaintiff to choose the venue for the action. But, it should also be kept in mind that fairness and equity requires that a defendant should be able to challenge the venue selected by the plaintiff. In such situation the doctrine of forum non conveniens plays an important role. According to him the test of “inappropriateness” as propounded by Justice Deane for deciding the grant of stay question must look into the appropriateness of the local forum and not necessarily to any other forum. It should carry with it the possibility that the forum in which the proceedings are commenced may be held clearly inappropriate, without arriving at any conclusion as to the appropriateness of another forum. According to him the question of ‘onus’ plays an important role in deciding the application of the grant or refusal of stay. Where the onus lies on the defendant, whether by reason of the common law or rules of court, and the doctrine of forum non conveniens is applicable, it will not be easy for a defendant to obtain a stay of proceedings or an order setting aside service out of the jurisdiction. As it is clear, the search is for the more appropriate forum, a search which does not require a comparison of the merits and demerits of the alternative forum, except perhaps where ‘legitimate personal or juridical advantage’ comes into play.
The Hon’ble Judge allowed the appeal for the stay of proceedings but the reasons on the basis of which the stay was allowed by him were different from Mason C.J, Deane, Dawson and Guarrdon JJ., who allowed the appeal on the basis of “inappropriate test”, whereas his lordship allowed the appeal on the basis of ‘forum non conveniens’. The lordship held that the cause of complaint was committed in Missouri although some of the damage was sustained in New South Wales. Missouri is forum which is more appropriate and with which the cause of action has most the real and substantial connection.
Brennan J. The Hon’ble Judge also supported the ’clearly inappropriate test’ for the determination of grant of stay application. However, his outcome was different from the decision arrived at by the other judges. According to him to arrive at the correct decision it is first necessary to appreciate the nature of claims which the respondent-plaintiff has made. The Hon’ble Judge dismissed the appeal on the ground that the plaintiff were residents of Australia, the misrepresented advice induced the plaintiff to prepare the relevant mistake return of income in Australia. The conduct of the defendant whether it consisted in a communication of false advice to the Plaintiffs or a failure to correct false advice, occurred in New South Wales. Hence New South Wales is the appropriate forum for hearing and determining the cause of action. Accordingly, in this case the majority decision allowed the appeal and granted the stay on the application made by the appellant, but the reasoning with which they gave the decision differed.
In both the cases namely the Oceanic Sunrise and Voth the Australian law moved away from the traditional test of Vexatious and oppressive to clearly inappropriate while deciding the application the stay of application. At para 32 in the case of Voth v. Manildra Flour Mills Pty Ltd,[6] the court laid down an important distinction between then “clearly inappropriate forum” test and the traditional test based on vexation or oppression or an abuse of process. The distinction goes like this, “The content of the “clearly inappropriate forum” test is more expansive than the traditional test applied by Brennan J. The former test, unlike the latter, recognizes that in some situations the continuation of an action in the selected forum, though not amounting to vexation or oppression or an abuse of process in the strict sense, will amount to an injustice to the defendant when the bringing of the action in some other available and competent forum will not occasion an injustice to the plaintiff. Thus, in order to obtain a legitimate advantage, the plaintiff may commence an action in the selected forum though the subject-matter of the action and the parties have little connection with that forum and the defendant may be put to great expense and inconvenience in contesting the action in that forum. On the application of traditional principles, a stay would be refused in such a case, notwithstanding that the selected forum was a clearly inappropriate forum. Since the traditional test is apt to produce such an extreme result, the “clearly inappropriate forum” test is to be preferred to the traditional test.”
Conclusion :- The Australian approach on the doctrine of Forum Non Conveniens seems to be forum-centric. It gives more weightage to the right of the plaintiff to have his case heard and decided in Australia which inturn encourages the practice of forum shopping on the part of plaintiff. Also, the Australian approach on the doctrine is different from what the other common law countries follow, the decisions given on the basis of the interpretation of the doctrine not only gets criticism but also poses the problem of recognition and enforcement in other countries. Most of the other countries follow the UK model of interpretation of doctrine. In UK and other law countries the courts while deciding to assume or not to assume the jurisdiction look into the ‘appropriateness of other forum’, by balancing the factors favoring both the plaintiff and the defendant and them come to the conclusion. But, the doctrine in Australia is somewhat narrower in application which starts with finding its own appropriateness rather than taking into consideration the factors favoring the other forum also.
This Article is written by Dr. Poonamdeep Kaur, Assistant Professor, Rayat Bahra College of Law, Hoshiarpur. This article is an invited manuscript for the current issue.
References
[1] Available at : www.consult.govspace.gov.au (last visited on March 25, 2018).
[2] [1908] HCA 37.
[3] Ronald A. Brand & Scott R. Jablonski, Forum non Conveniens-History, Global Practice, and Future under the Hague Convention on Choice of Court Agreements 87( Oxford University Press, New York, 2007).
[4] (1988) 165 CLR 197.
[5] (1990) 65 ALJR 83 (HC).
[6] (1990) 65 ALJR 83 (HC).