Enforcement of awards in Australia – Foreign voyage charterparty arbitration clauses now enforceable

October 2013

The Australian Federal Court has overturned on appeal the decision in Dampskibsselskabet Norden A/S v Beach Building & Civil Group Pty Ltd [2012] FCA 696 which held that a voyage charterparty is “a sea carriage document” for the purpose of Australian COGSA 1991 Sections 11(1)(a) and 11(2)(a) and therefore law and arbitration clauses and International Awards produced thereunder were void and unenforceable in Australia. The decision last year had attracted some criticism and was discussed in an earlier article on the Steamship Mutual website: http://www.steamshipmutual.com/publications/Articles/Norden1212.htm 


However, on appeal it was held that a voyage Charterparty is not a “sea carriage document” for the purposes of s11 of the Carriage of Goods by Sea Act 1991 (COGSA 1991) and therefore foreign Awards, in this particular case a London Arbitration award, are enforceable in Australia.


The full text of the appeal court’s decision can be found at: http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2013/2013fcafc0107 


The decision has clarified and highlights the line between a voyage Charterparty involving a contract for the hire or use of a ship, and a sea carriage document such as a Bill of Lading.


The Court considered that disputes involving charterparties (including voyage charterparties) have historically been settled by arbitration and that parties to these charters have freedom of contract and should have the ability to agree where their disputes are to be heard. The Federal Court acknowledged that this policy of allowing freedom of contract is also reflected under Australian Law elsewhere by the adoption of the New York Convention and UNICITRAL Model Law.


However, owners and charterers need not have the same protection as intended for parties to Bills of Lading and Way Bills, i.e. other “sea carriage documents” where the position is protected under the Carriage of Goods by Sea Act 1991 (“COGSA”).


The Court considered that interpreting Voyage Charterparties as equivalent to Bills of Lading, thus rendering their law and arbitration provisions ineffective, would run against the stated objects of COGSA itself (Section 3) and was not, they held, intended by Australian Parliament.


The Federal Court has therefore resolved the contradiction between COGSA and the New York Convention incorporated domestically in Australia which states that international awards are to be enforced in the same way as domestic awards.


Parties to a charterparty (whether time or voyage) therefore can breathe more easily and have had confirmed they do indeed have freedom of contract and can choose their law and arbitration provisions. They can obtain arbitration awards in London or elsewhere and, if otherwise compliant with principles on enforceability, can enforce the same in Australia.


This is a welcome clarification to the position under voyage charters and reverses what was considered a difficult decision to reconcile as to the definition of sea carriage documents with international understanding, but also the definition within COGSA 1991 itself and other statutes permitting enforcement of such Awards.


We are grateful to Simon Wolsey of MFB Solicitors for this article.