IN THE HIGH COURT OF FIJI AT SUVA
CIVIL JURISDICTION

Civil Action No. 158 of 2002

BETWEEN:

KHANS SHIPPING COMPANY LTD of Shed No. 16 M.P.A.F. Complex, Rona Street, Walu Bay, Suva.
PLAINTIFF

AND:

HIGH COMMISSION FOR THE GOVERNMENT OF TUVALU of 16 Gorrie Street, Suva
FIRST DEFENDANT

AND:

GOVERNMENT OF TUVALU of Tuvalu islands.
SECOND DEFENDANT

Appearances: Mr H. Nagin for the plaintiff
 Mr K. Muaror for the defendant

Date of Hearing: Written Submissions of the plaintiff filed on 12 March 2003
Written Submissions of the defendant filed on 4 February, 2003 and 31 March 2003 

Date of Judgment: 12 May 2011

Judgment of: Justice A.L.B.Brito-Mutunayagam

JUDGMENT

1.	By Originating Summons dated 18th day of March, 2002 the plaintiff has sought the following reliefs:-

(i)	A declaration that the Charter contract entered between the plaintiff and the defendant is a valid charter contract.

(ii)	A declaration that the plaintiff has fulfilled its part of the obligation under the charter contract and ought to be compensated in accordance with the hire arrangement agreed upon by the parties.

(iii)	An Order that the defendant pay the agreed amount of $777,902.34 inclusive of 8% interest until 18th March, 2002 thereafter same rate of interest accruing on the arrears from 18th day of March, 2002 until final resolution of this case.

2.	Issue of Jurisdiction
The defendant disputed the jurisdiction of this Court and asserted that these proceedings should have been instituted in the High Court of Tuvalu, on the premise that the contract was performed in Tuvalu.

On 31st October, 2002 counsel for the defendant had made application that the Court rule on the issue of jurisdiction: the Judges' notes of that day depicts that there was no objection by counsel for the plaintiff. Justice Mr Jitoko had made "Order that the issue of jurisdiction be tried first. (Order 33 r3"),"and parties to file submissions. It was not open then for the plaintiff to subsequently contend, in its written submissions filed pursuant to that Order, that there was that no application made by the defendant to dispute the issue of jurisdiction in terms of Order 12 Rule 8 of the High Court Rules 1988 . The issue of jurisdiction is thus before the Court.

3.	The Law governing the contract
The charter agreement between the plaintiff and the second defendant was entered into at the office of the High Commission of Tuvalu in Suva, Fiji. Since the said agreement does not state the governing law, the Court is to required to determine the proper law governing the contract. 

 3.1 The plaintiff' case
 The plaintiff contended that the proper law governing the contract was the law of Fiji, as the agreement was signed in Fiji and the parties had agreed that the charter rate of the vessel was to be paid in Fijian currency. 

The plaintiff, in its written submissions, has cited Peninsular and Oriental Steam Navigation Co Ltd v Shand (1865) 3 Moo PCCNS 272 and R v International Trustee for Protection of Bondholders Akt (1937)2 AER 164, in support of the contention that the proper law governing the charterparty was the law of the country where the agreement was signed.

The plaintiff has quoted the following excerpts from a passage of Lord Atkin in R v International Trustee for Protection of Bondholders Akt (supra), at page 166:

 "The legal principles which are to guide an English court on the question of proper law of a contract are now well settled. It is the law which the parties intended to apply. Their intention will be ascertained by the intention expressed in the contract, if any, which will be conclusive. If no intention be expressed, the intention will be presumed by the court from the terms of the contract and the relevant surroundings circumstances. In coming to its conclusion, the court will be guided by rules which indicate that particular facts or conditions lead to a prima facie inference, in some cases as almost conclusive inference, as to the intention of the parties to apply a particular law, e.g., the country where the contract is made".(emphasis added).

The plaintiff reinforced its contention that the proper law of the contract was the law of Fiji on the basis that the parties had agreed for payment to be made in Fiji currency. 

 3.2 The defendant's case
The defendant asserted that since the charter was to be performed in its entirety in Tuvalu, the laws of Tuvalu were applicable.

 The defendant, in its written submissions, referring to the cases cited by the plaintiff stated that Turner LJ in Peninsular and Oriental Steam Navigation Co Ltd v Shand (supra), recognized that there were "exceptions and limitations on (the) applicability" of "the general rule., that the law of the country where the contract is made governs as to the nature, the obligation, and the interpretation of it". Reliance was also placed on In re Missouri Steamship Co (1889)42 Ch D 321, which affirmed the general principle and the exceptions. 

 The defendant draws attention to Lord Atkin's passage in R v International Trustee for Protection of Bondholders Akt (supra), which declared that the "rules (such as) the country where the contract is made, the country where the contract is to be performed, ....the country under whose flag the ship sails in which goods are contracted to be carried. .... only serve to give prima facie indications of intention: they are all capable of being overcome by counter indications, however difficult it may be in some cases to find such."(emphasis added).

The case of Mount Albert Borough Council v Australasian Temperance & General Mutual Life Assurance Society Ltd (1937) 4 All ER 206, has also been cited by the defendant, in support of the proposition that "matters such as lex loci contractus or lex loci solutions (are not) "conclusive rigid or arbitrary criteria" to determine the proper law of the contract, and the matter depends "on the intention of the parties, to be ascertained in each case on the consideration of the terms of the contract, the situation of the parties and generally on all the surrounding facts (emphasis added).

The defendant submitted that the test to be applied is "by reference to which the contract was made or that with which the transaction has its closest and most real connexion"(emphasis added),as stated by the House of Lords in Compagnie d'Armement Maritime SA v Compagnie Tunisienne de Navigation SA (1970) 3 AER 71 and the Court of Appeal in Coast Lines Ltd v Hudig & Veder Chartering NV (1972) 1 AER 451.

Finally, the defendant cited Chatenay vs The Brazilian Submarine Telegraph Co Ltd (1891) 1 QB 79, for the proposition that if a contract is to be carried out in another country, the law of that country applies.

4.	The Determination
The principles to be derived from the series of cases cited by the plaintiff and defendant is that the proper law of the contract could be determined by reference to that with which the transaction has its closest and most real connexion.

I do not derive any assistance from the case of Chatenay vs The Brazilian Submarine Telegraph Co Ltd (supra), cited by the defendant. This case dealt with a power of attorney executed in Brazil to buy and sell shares in England. The law applicable was necessarily held to be the laws of England.

In Coast Lines Ltd v Hudig & Veder Chartering NV (supra), Lord Denning MR stated that the circumstance that the shipowners were English was as important as the circumstance that the charterparty was signed in Rotterdam by Dutch charterers for performance in the Netherlands. Megaw LJ (op cit at page 458) stated the charterparty was only in "that somewhat technical sense... 'made' there..The fact that the freight and demurrage were expressed in sterling deserves slightly greater weight, although again, it is not a strong factor in the light of the evidence........I would go so far as to say that in a charterparty case the flag of the vessel is likely normally to be important. But it must be considered along with the other relevant factors.."." The Court held that English law was the proper law of the contract.
The form and place of payment were also held to be matters of "very considerable importance" by Singleton L.J. in The Assunzione 1954 (1) AER, at page 291 .

The charter agreement in the matter before the Court was signed in Fiji .The ship was a Fijian ship. The agreement provided that the charter rate of the vessel was to be paid in Fijian currency. The contract was performed in Tuvalu.

In my judgment, on a consideration of all aspects of the transaction, the system of law with which the transaction had its closest and most real connection are the laws of Fiji. 

5.	Order
For the aforesaid reasons, I hold that the parties intended that the proper law of contract to be the law of Fiji. Accordingly, this Court has jurisdiction to hear and determine this matter. The defendants' objection to the jurisdiction of the Court is dismissed with costs summarily assessed at $500.

A.L.B.Brito-Mutunayagam
JUDGE

At Suva
12 May, 2011