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[2020] QSC 318
In this case, Davis J had to construe an exclusive jurisdiction clause in a contract and consider whether to exercise his discretion to stay or dismiss a claim brought contrary to that clause. In adopting the recent approach of the New South Wales Court of Appeal concerning whether inconvenience in a forum is a consideration, his Honour held that, even if it is strictly relevant, it “will hardly be weighty” in the exercise of the discretion given it would effectively relieve one party from its obligations on account of factors which were in existence when the contract was agreed.
Davis J
2 November 2020
The parties entered into a written contract which established a scheme for the promotion of a computer betting game. [4]. The plaintiffs alleged a breach of the contract on account of the implementation of the scheme at Crown Casino in Melbourne. [9]. They commenced proceedings in the Supreme Court of Queensland.
Governing Law of the contract
The contract included a clause headed “Governing Law” which provided, relevantly, that:
“Any dispute or issue arising hereunder, including any alleged breach by any party, shall be heard, determined and resolved by an action commenced in Macau.” [8].
The defendant applied to dismiss the claim based on the exclusive jurisdiction clause, submitting that the dispute should be heard in the courts of Macau. The plaintiffs submitted that the Court, in exercising its discretion, should not make any order preventing the proceedings from continuing in the Supreme Court of Queensland [13].
Justice Davis recalled that whether a contract specifies a particular country’s legal system to be the proper law of the contract is ultimately a question of construction. His Honour also noted that Brennan J (as his Honour then was) in Oceanic Sunline Special Shipping Company Inc v Fay (1988) 165 CLR 197 considered that submission to the exclusive jurisdiction of the tribunals of a particular country indicates an intention that the law of that country be the proper law. [24], [25].
His Honour considered that the heading suggested the clause was intended to deal with the governing law of the contract. Considering that following that heading, the courts of Macau were exclusively nominated, Davis J ultimately found that the clause should be interpreted as manifesting an intention that disputes be determined in Macau and by application of the law of Macau. [26], [27], [28].
Exercise of discretion to stay or dismiss the claim
His Honour considered that the two key issues for determination in the case were:
“(a)what are the relevant considerations in determining whether or not to curtail the proceedings brought contrary to the exclusive jurisdiction clause; and
(b)what is the result here of consideration of those factors?” [15].
His Honour noted that the starting point, as described in Akai Pty Ltd v People’s Insurance Co Ltd (1996) 188 CLR 418 must be in firm favour of the bargain between the parties. [57]. The onus of proving that the governing law clause ought not be enforced was upon the plaintiffs. [49].
In addition to their contention that the governing law was Australia (which Davis J had already rejected) the plaintiffs also claimed that none of the parties has any connection to Macau. [53]. In particular, the plaintiffs submitted that “having to litigate in Macau, rather than Australia, plainly will cause great expense and inconvenience to it and to third parties who will be called to give evidence for the plaintiffs”. [51].
As noted by his Honour, the parties in this case differed on their view of the circumstances relevant to the discretion to grant or not grant a stay of proceedings brought in breach of an exclusive jurisdiction clause. [58]. The plaintiffs relied upon Brandon J’s decision in The Eleftheria [1970] P 94 that, in exercising its discretion, the Court should take into account all the circumstances of the particular case including, relevantly, relative convenience and expense of the trial and, whether the plaintiffs would be prejudiced by having to sue in the foreign court. [58].
However, Davis J outlined “doubts” which have been cast in both England and Australia as to whether inconvenience and procedural disadvantages in the nominated jurisdiction are indeed relevant considerations. [59]. In particular, his Honour noted the recent New South Wales Court of Appeal decision of Australian Health & Nutrition Association Ltd v Hive Marketing Group (2019) 99 NSWLR 419 and, specifically, statements by Bell P. In that case, Bell P had adopted the approaches of Waller J in British Aerospace plc v Dee Howard Co [1993] 1 Lloyd’s Rep 368, and Allsop J (as his Honour then was) in Incitec Ltd v Alkimos Shipping Corp (2004) 138 FCR 496. That approach considered that if the operation of the exclusive jurisdiction clause causes inconvenience to a party which bound itself to the clause, that inconvenience is a direct consequence of the bargain and can generally be “set to one side”. [61].
Justice Davis described Bell P’s adoption of these statements of principle as “not inconsistent” with any decision of the High Court. Indeed, in his Honour’s view, Bell P’s approach is wholly consistent with statements in Akai. Moreover, his Honour noted that there is no Queensland authority which is inconsistent with the approach. [63].
However, Davis J noted that his judgment in the present case was not ultimately a matter of whether issues of inconvenience are or are not relevant considerations. [64]. His Honour considered that the parties must be taken to have considered, when they entered to the contract, “the commercial wisdom” of agreeing to the clause. His Honour identified “an apparent lack of logic” in starting from the proposition that parties are bound by their agreement, but then exercising a discretion to “effectively relieve” one party from its obligations on account of factors which were in existence and could have been considered by the parties. Therefore, even if it is strictly relevant to consider certain factors, Davis J held that those factors “can hardly be weighty in the exercise of discretion where one party seeks to deny the other the benefit of the covenant”. [65].
Justice Davis noted that the parties, and the subject matter of the contract had a connection with the law of Australia, and that the contract was signed in Australia. The contract also clearly contemplated at least partial performance in Australia. [66]. Therefore, the parties must have either foreseen or could have foreseen a potential breach in Australia. Notwithstanding this, the parties still agreed to litigate any dispute in Macau pursuant to the laws of Macau. [67]. His Honour noted that a submission that the defendant was seeking some procedural or other advantage by litigating the dispute in Macau should be rejected on the basis that to do so would be nothing more than taking the benefit of the commercial bargain as negotiated. [68].
Ultimately, Davis J found there was nothing to suggest that the plaintiffs could not obtain proper remedies in the courts of Macau according to the law of Macau. Rather, the evidence revealed that damages were available in Macau and that there was an effective legal system to hear the dispute. His Honour found no evidence that litigation in Macau would frustrate the plaintiffs’ pursuit of a proper remedy. [69]. Therefore, his Honour held that the defendant should not be denied the right to enforce the governing law clause.
Contrary to the submissions of the plaintiffs, his Honour considered that there was little, if any, evidence as to the impact of the COVID-19 pandemic upon litigation in Macau. However, his Honour did accept that if the pandemic developed “so as to effectively prevent, or unduly frustrate” litigation in Macau, that would be a discretionary consideration in favour of allowing the plaintiffs to litigate in Queensland. [70].
In terms of whether a stay or dismissal of the claim was the appropriate remedy, his Honour considered that the prospects of there being a change in circumstances which would justify revisiting the exercise of discretion were “highly speculative”. Therefore, the claim was dismissed. [74].
K Anderson