Vita Food Products Revisited
(Which Parts of the Decision Are Good Law Today?)
William Tetley, Q.C.*
Synopsis
Introduction
I.
The Questions Raised by Vita Food Products
A. Carriage of Goods Questions
B. Conflict of Law Questions
H. The Various Decisions
A. The Facts
B. The Trial Court
C. The Appeal Court
D. The Privy Council
E. Lord Wright and The Torni
F. Lord Wright and Section 1 of the Newfoundland Act
III. The Two Maritime Law Questions
Is the Bill of Lading Valid Even Without the Paramount Clause?
A.
B. Are Not the Hague Rules Mandatory?
IV. The Response to Vita Food Products
A. Criticism by the Authorities
B. Authorities in Support of Vita Food Products
C. Response in the Courts
V.
Vita Food Products and the Visby Rules
VI. Application of Vita Food Products in Canadian Courts
*Of the Faculty of Law, McGill University. I wish to express gratitude to William Laurence
B.A., LL.B. and Robert C. Wilkins B.A., B.C.L. for reading, correcting and adding to this text.
McGill Law Journal 1992
Revue de droit de McGill
To be cited as: (1992) 37 McGiU L.J. 292
Mode de citation: (1992) 37 R.D. McGill 292
1992]
CASE COMMENTS
VII. The Rome Convention, 1980
A. New Conflict Rules in Contract
B. The “Vita Food Products Reservation”
C. Public PolicylOrdre Public
D. Conclusion
VIII. What Can Be Learned from Vita Food Products?
Introduction
A.
B. Carriage of Goods by Sea Questions
C. Conflict of Law Questions
Conclusion
Introduction
Fifty-two years ago the Privy Council rendered its important decision in
Vita Food Products Inc. v. Unus Shiptging Co. (The Hurry On),’ ruling on var-
ious matters and in particular that the intention of the parties overcame the man-
datory nature of the Hague Rules2 in a question of choice of law.
Certain findings of the decision were the subject of considerable criticism,3
whilst other parts have become important authority for the propositions they
invoked. Its ghost even arises in recent decisions where one or other of its ques-
1[1939] A.C. 277, 1939 AMC 257, [1939] 2 D.L.R. 1, [1939] 1 All E.R. 513, [1939] 1 W.W.R.
433, 63 LI.L. Rep. 21 (P.C.) [hereinafter Vita Food Products].
2International Convention for the Unification of Certain Rules of Law Relating to Bills of Lad-
ing, signed at Brussels, 25 August 1924 and entered into force 2 June 1931, (1931) 120 L.N.T.S.
155 reproduced in W. Tetley, Marine Cargo Claims, 3d ed. (Montreal: Yvon Blais, 1988) at 1121
[hereinafter Hague Rules or Rules].
The Hague Rules are the basic international convention for carriage of goods by sea under bills
of lading. Most of the world’s shipping nations, including Canada and the United States, have
adopted the Hague Rules.
The Protocol to Amend the International Convention for the Unification of Certain Rules of Law
Relating to Bills of Lading [hereinafter Visby Rules], reproduced in Tetley, ibid. at 1132, adopted
23 February 1968 in Brussels, are an amendment to the Hague Rules so that nations which have
adopted the Visby Rules are subject to what is known as the Hague/Visby Rules. Most shipping
nations have adopted the Visby Rules with the unfortunate exceptions of Canada and the United
States. The Visby Rules are (a) the Visby Protocol of Brussels, 23 February 1968 to the Hague Rules
of 1924 and (b) the Protocol Amending the International Convention for the Unification of Certain
Rules of Law Relating to Bills of Lading, 21 December 1979, reproduced in Tetley, ibid. at 1139
[hereinafter S.D.R. Visby Protocol], which converted the gold francs of Visby 1968 into Special
Drawing Rights.
3See discussion infra, notes 24 to 38, 54-62, 110-13. See also W. Tefley, Address (Canadian Bar
Association Annual Meeting, Quebec City, 1960) at 244; refined and reproduced in W. Tetley,
Marine Cargo Claims, 1st ed. (Toronto: Carswell, 1965) at 273 et seq.
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tionable or questioned findings is followed, albeit discreetly and without cita-
tion.4
In consequence, it would seem to be useful at this time to take another look
at what was actually decided, especially in order to determine which parts of the
decision have not been followed, which parts have been rectified by intema-
tional convention (the Hague/Visby Rules) and which parts are still good law.
The answers to the foregoing questions are particularly important to such
nations as the United States and Canada, which have not adopted the Visby
Rules, and to the United Kingdom, in light of its compliance with the Rome
Convention on the Law Applicable to Contractual Obligations, 1980.1 It is note-
worthy that when acceding to the Convention, the United Kingdom made a res-
ervation with respect to mandatory rules which might be called the “Vita Food
Products Reservation.”6
I. The Questions Raised by Vita Food Products
The Vita Food Products decision is important today and often cited for two
carriage of goods questions it raises, as well as for eleven conflict of law ques-
tions it considered, either directly or indirectly, and for which in any event it is
known and on occasion cited as authority.
A. Carriage of Goods Questions
a) Is a bill of lading issued in a Hague Rules jurisdiction valid despite the
absence of a paramount clause in that bill of lading? b) Are the Hague Rules of
mandatory application to a bill of lading which does not contain a paramount
clause?
B. Conflict of Law Questions
a) What is the importance of the express intention of the parties in questions of
choice of law? b) Must the law chosen by the parties be bonafide? c) Must the
law chosen by the parties be legal? d) Must the law chosen by the parties con-
form to public policy? e) May the parties choose a totally unconnected law? f)
May the parties choose a law other than the mandatory law of the place of con-
tracting? g) When the parties choose “English law,” may they ignore the man-
datory Hague Rules of “English law?” h) Will a contract be construed or inter-
preted by the lex loci contractus or by its proper law? i) May the doctrine of
4The Komninos S, [1991] 1 Lloyd’s Rep. 370 (C.A.). See infra, note 105.
580/934/EEC [hereinafter Rome Convention, 1980]. Adopted by the E.E.C. at Rome, 19 June
1980 and in force as of I April 1991 for Belgium, Denmark, France, Germany, Greece, Italy, Lux-
emburg and the United Kingdom.
6Being a reservation to art. 7(1) of the Rome Convention, 1980. See infra note 82.
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CHRONIQUES DE JURISPRUDENCE
“renvoi” be applied when determining the law of the contract? j) Should not a
conflict rule bring uniformity and certainty and the avoidance of forum shop-
ping? k) Is there a distinction between public policy/public order (ordre public),
force of law and mandatory rules?
II. The Various Decisions
A. The Facts
The claim in Vita Food Products arose from damage to a shipment of fish
carried on a Canadian ship, The Hurry On, from Newfoundland to New York,
under bills of lading issued in Newfoundland in 1935. The cargo was damaged
off the coast’ of Nova Scotia, Canada, and suit was brought in Nova Scotia
where the carriers were domiciled. Newfoundland, which was a Dominion of
the British Commonwealth of Nations at the time and not yet a province of Can-
ada, had adopted the Hague Rules in 1932, as the Newfoundland Carriage of
Goods by Sea Act7 while Canada had not yet adopted the Rules.! Section 3 of
the Newfoundland Act contained the normal Hague Rules stipulation, requiring
an express statement (paramount clause) in each bill of lading:
3. Every bill of lading, or similar document of title, issued in this Dominion which
contains or is evidence of any contract to which the Rules apply shall contain an
express statement that it is to have effect subject to the provisions of the said Rules
as applied by this Act.
The bills of lading did not contain the required paramount clause, however,
old ones having been used in error.9 Instead, the bills stipulated: “This contract
shall be governed by English law.””0
It is also noteworthy that s. 1 of the Newfoundland Act reads as follows:
1. Subject to the provisions of this Act, the Rules shall have effect in relation to
and in connection with the carriage of goods by sea in ships carrying goods from
any port in this Dominion to any other port whether in or outside this Dominion.
B. The Trial Court
Chisholm C.J., at trial” in Nova Scotia, held that the absence of the para-
mount clause, required by s. 3 of the Newfoundland Act, did not invalidate the
7Statutes of Newfoundland, 1932, c. 18 [hereinafter Newfoundland Act].
8Canada did have its own Water-Carriage of Goods Act, 1910, c. 61, a precursor of the Hague
Rules. Canada adopted the Hague Rules by the Water Carriage of Goods Act, 1936, c. 49.
9[1939] A.C. 277 at 284, 1939 AMC 257 at 258, [1939] 2 D.L.R. I at 3, 63 LI.L. Rep. 21 at
25.
at 25.
10[1939] A.C. 277 at 286, 1939 AMC 257 at 260, [1939] 2 D.L.R. I at 4-5, 63 L1.L. Rep. 21
“[1938] 2 D.L.R. 372 at 382, 1938 AMC 159 at 163.
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bills of lading. He added that the Newfoundland Act applied because of s. 1 and
the rights of the parties must be decided under the Act. This judgment of the
court of first instance would seem to be correct. Unfortunately, the judgment
was appealed.
C. The Appeal Court
On appeal, the Supreme Court of Nova Scotia”2 held that the failure to
include the paramount clause made the bills illegal, and the claimant could not
plead an illegal contract. Although both parties were in delicto, the defendant
had the right to plead illegality as a defence.
D. The Privy Council
The Privy Council, in a celebrated judgment rendered by Lord Wright,
came to a different decision altogether. It agreed with Chisholm C.J. that the
requirement of s. 3, that bills of lading “shall contain” a paramount clause, was
directory and not mandatory. The bills of lading were, therefore, not illegal
within or outside Newfoundland. The Privy Council then went on to decide that
the law which was applicable was not the Newfoundland Act, but the law of
England, for which the parties had expressly contracted. Lord Wright put it as
follows:
In their Lordships’ opinion, the express words of the bill of lading must receive
effect, with the result that the contract is governed by English law … the proper
law of the contract “is the law which the parties intended to apply.’ 13
In this way the Privy Council disregarded, or at least did not discuss,
whether the Act itself was mandatory. The mandatory nature of s. 1 of the New-
foundland Act (which is a section to be found in all Hague Rules acts) was
disregarded.
E. Lord Wright and The Torni
Later on in the judgment, when discussing The Torni,4 in which the
English Court of Appeal had held that the Hague Rules applied no matter what
the parties declared, Lord Wright stated: “the decision is contrary to the princi-
ples on which they have proceeded in the previous part of this judgment… .”,
A study of the previous part, however, only indicates that the Court had decided
121bid.
131[1939] A.C. 277 at 289-90, 1939 AMC 257 at 263, [1939] 2 D.L.R. 1 at 7-8, 63 LI.L. Rep.
21 at 27.
14[1932] P. 78, 43 LI.L. Rep. 78 (C.A.).
15[1939] A.C. 277 at 299, 1939 AMC 257 at 271, [1939] 2 D.L.R. I at 15, 63 LI.L. Rep. 21 at
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CASE COMMENTS
that the bills of lading were not invalid because s. 3 was not mandatory; whether
the Act was mandatory by virtue of s. 1 was ignored.
F. Lord Wright and Section 1 of the Newfoundland Act
A number of other references to the judgment can illustrate how the Privy
Council failed to take into account the significance of s. 1 of the Newfoundland
Act. At one point, Lord Wright acknowledged that: “[i]n their Lordships’ judg-
ment s. 1 is the dominant section”‘ 6 with respect to s. 3. One would likely con-
clude from this that a determination, by the Privy Council, that s. 3 was only
directory could not automatically decide whether s. 1 was also directory. This
was also seemingly accepted by the Privy Council: “the mandatory provision of
s. 3, which cannot change the effect of s. 1 … …. Although the directory nature
of s. 3 should have had no effect on the nature of s. 1, the Privy Council failed
to consider whether s. 1 was itself directory or imperative. Seemingly then, the
nature of s. 3 decided the issue with respect to s. 1.
At another point in the judgment, Lord Wright discussed the situation of
a bill of lading which covers a shipment from one Newfoundland port to another
port in Newfoundland. He stated that: “[iln such a case s. 1, by its own force,
imports the rules … …. The Privy Council, however, confined the force of law
effect in s. 1 to that situation. Section 1 refers to “the carriage of goods… from
any port in this Dominion to any other port whether in or outside this Domin-
ion” (emphasis added). There was no reason, based upon the wording in s. 1,
to impose a restriction on the force of law nature of the Newfoundland Act. To
do so was, in fact, to misconstrue the plain meaning of s. 1.
Later on, however, even the above acknowledgement of the force of law
nature of s. 1 seems to be forgotten. Having determined that s. 3 is merely
directory, Lord Wright applied this conclusion to the entire Newfoundland Act:
Sect. 3 is in their Lordships’ judgment directory. It is not obligatory, nor does fail-
ure to comply with its terms nullify the contract contained in the bill of lading.
This, in their Lordships’ judgment, is the true construction of the statute….1 9
The Privy Council’s inconsistent approach to s. 1 was also made manifest
when Lord Wright said that Newfoundland law could not supersede the parties’
16[1939] A.C. 277 at 289, 1939 AMC 257 at 263, [1939] 2 D.L.R. 1 at 7, 63 LI.L. Rep. 21 at
17[1939] A.C. 277 at 289, 1939 AMC 257 at 263, [1939] 2 D.L.R. 1 at 7, 63 LI.L. Rep. 21 at
27. This citation also illustrates the almost Orwellian use of words by Lord Wright. He acknowl-
edges that s. 3 is “mandatory” but mandatory “directory,” not mandatory “imperative.”
11[1939] A.C. 277 at 294, 1939 AMC 257 at 267, [1939] 2 D.L.R. 1 at 11, 63 LI.L. Rep. 21 at
27.
29.
19[1939] A.C. 277 at 295, 1939 AMC 257 at 268, [1939] 2 D.L.R. 1 at 12, 63 LI.L. Rep. 21 at
30 (emphasis added).
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express choice of English law.2″ This does not accord with the force of law
nature of s. 1, or even the limited force of law accepted at one point by the Privy
Council.
M. The Two Maritime Law Questions
A.
Is the Bill of Lading Valid Even Without the Paramount Clause?
The first finding of the Privy Council in respect to maritime law would
seem to be correct –
that the absence of a reference to the Hague Rules does
not invalidate the bill of lading. In other words, the stipulation in s. 3 of the
Newfoundland Act (equivalent to s. 4 of the present Canadian Carriage of
Goods by Water Act) that every bill of lading shall contain a clause paramount,
is directory and not mandatory. The Visby Rules settle the question at article 10,
where the Rules are specifically declared to be of force of law, so that the need
for a paramount clause is eliminated.
B. Are Not the Hague Rules Mandatory?
Was the Privy Council correct at this point, however, in its second mari-
time law finding that the Hague Rules themselves were not mandatory? It would
appear that the Privy Council, upon deciding that s. 3 was directory and not
mandatory, was in error when it came to the conclusion that the Rules them-
selves were therefore not mandatory.
There was a strong argument in 1939, when Vita Food Products was
decided, and it is generally accepted today, that the Rules are mandatory. The
Rules themselves, in my view, make this abundantly clear:
i) The purpose of the Rules is to make the law fixed and known to shippers and
carriers wherever they are throughout the world. As Scrutton L.J. stated in The
Torni,22 the ability to contract out of the Rules would “upset the whole applecart
… of the countries who have agreed to it … .. For this reason, s. 1 of the New-
foundland Act (like s. 2 of the present Canadian Act)’ states that:
[t]he Rules … shall have effect in relation to and in connection, with the carriage
of goods by sea….
Section 1 above, it should be observed, does not refer merely to ship-
ments in which bills of lading contain a clause paramount or even to shipments
20[1939] A.C. 277 at 291-92, 1939 AMC 257 at 265, [1939] 2 D.L.R. 1 at 9, 63 LI.L. Rep. 21
at 28.21R.S.C. 1985, c. C-27, s. 4 [hereinafter COGWA]. See also the American Carriage of Goods
by Sea Act, adopted in 1936, at s. 13, 46 U.S.C., s. 1312 [hereinafter COGSA].
22[1932] P. 78 at 83, 43 LI. L. Rep. 78 at 81 (C.A.).
23Supra, note 21.
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CHRONIQUES DE JURISPRUDENCE
where a bill of lading is issued. Rather, it covers all “carriage of goods by
sea.”
ii) Article 5 of the Hague Rules states that any bill of lading issued under a char-
terparty “shall comply with the terms of this Convention.” This seems impera-
tive enough, imposing as it does the “terms” of the Rules and not merely s. 4,
which refers to the paramount clause. Can it not be concluded that all bills of
lading not issued under a charterparty are also bound by the terms of the Rules?
iii) Article 3(8) of the Hague Rules specifically declares:
Any clause, covenant, or agreement in a contract of carriage relieving the carrier
or the ship from liability … in the duties and obligations provided in this Article
… shall be null and void.
Thus, it would seem that a clause invoking “English law” is invalid as relieving
the carrier of responsibility under the Rules.
iv) Article 2 of the Hague Rules states also that under “every contract of car-
riage … the carrier … shall be subject to the responsibilities and liabilities …
hereinafter set forth.” This, too, seems imperative.
IV. The Response to Vita Food Products
A. Criticism by the Authorities
The inadequacies to be found in Vita Food Products have not gone unno-
ticed, the decision having been subjected to considerable criticism, some of it
severe.
i) H.C. Gutteridge a and 0. Kahn-Freund’ wrote case comments about Vita
Food Products soon after the decision was rendered. Both writers expressed the
concern that the Privy Council had failed to appreciate the intent behind the
Hague Rules. As Gutteridge argued, the aim of achieving uniformity of legis-
lation amongst shipping nations could certainly not be attained if contractants
were able to avoid by express choice an otherwise applicable law:
But there is no disguising the fact that it seems, nevertheless, to recognize the pos-
sibility of “contracting out” of the provisions of international unified law which
as regards the Hague Rules is a matter of very great importance to the mercantile
community throughout the world. 6
Kahn-Freund likewise worried:
The formidable difficulties which have to be overcome by international “legisla-
tion” are clearly demonstrated by this case. The scope given to the choice of law
24H.C. Gutteridge, (1939) 55 L.Q.R. 323.
20. Kahn-Freund, (1939) 3 Modem L.R. 61.
26Supra, note 24 at 326.
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by the parties would seem to make it possible that b’ selecting a foreign system
the operation of the Hague Rules can be excluded. 2
A third case comment appeared at this time in the Columbia Law Review.28
Criticism here was sharper, referring to “an unwarranted extension of the ‘intent
of the parties’ doctrine.”’29 This comment joined the other two in concurring that
the goals behind the Hague Rules would be rendered illusory by enabling the
parties to choose the governing law:
Y
In view of the above, the English decision might be termed alarming, giving as it
does what might be called a literal interpretation to the intent doctrine, by pro-
claiming that the parties can freely select the law which will determine not only
the construction, but the validity of their contract, and that the English courts will
apply it even though the contract might be illegal under the lex loci contractus3
0
ii) The year 1940 witnessed the first criticism of Vita Food Products by J.H.C.
Morris. 31 Since then, his disagreement with the decision has appeared in other
writings.3 2 Morris shares the idea that if the Hague Rules were meant to receive
universal application, then it makes little sense for a court in a country adhering
to the Rules to allow them to be circumvented. To prevent the Rules from
becoming worthless, they would have to predominate over the parties’ choice
of law:
The fact that the Rules are made applicable to outward shipments should be suf-
ficient to let in the law prevailing at the port of shipment no matter what law may
have been selected by the parties. 33
iii) Joining in the opposition to Vita Food Products was W.W. Cook. He realized
that the effect of the decision could be to detract seriously from the value of the
Hague Rules:
27Supra, note 25 at 66. Note, however, that Kahn-Freund nevertheless commented that the Vita
Food Products case was “the greatest contribution to clarity in this field [English private interna-
tional law] which the courts have made for a long time and it is incidentally of outstanding com-
mercial importance” (ibid. at 61). Kahn-Freund also seems to have misunderstood the decision,
since, at one point in his commentary, he states: “[t]he Judicial Committee found that s. 3, the
so-called paramount section, need not be complied with in order to make the Act applicable. The
Hague Rules apply although they are not expressly mentioned” (ibid. at 66). In fact, what the Privy
Council decided was that s. 3 need not be complied with in order to make the bills of lading valid
(not in order to make the Act applicable). Nor did the judgment decide that the Hague Rules
applied.
(1940) 56 L.Q.R. 320.
28Anon. (1940) 40 Col. L.R. 518.
291bid. at 519.
30Ibid. at 522.
31J.H.C. Morris & G.C. Cheshire, “The Proper Law of a Contract in the Conflict of Laws”
32See J.H.C. Morris, “The Choice of Law Clause in Statutes” (1946) 62 L.Q.R. 170 at 177; The
Conflict of Laws, 3d ed. (London: Stevens, 1984) at 272; “The Proper Law of a Contract: A Reply”
(1950) 3 I.L.Q. 197, responding to EA. Mann, “The Proper Law of the Contract” (1950) 3 I.L.Q.
60.33Supra, note 31 at 328.
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CASE COMMENTS
In substance the suggestion is that in such a case it ought to be held “contrary to
the public policy” of any forum for the parties to choose a law which would nullify
the Hague Rules when those rules have been adopted by the states with which the
transaction is factually connected. With this the present writer agrees. 34
iv) Falconbridge shared the concern of the other writers that a great disservice
had been rendered the movement towards uniformity:
The Privy Council, having held that the bill of lading was not void for illegality
either in Newfoundland or in Nova Scotia, might reasonably have held that it was
subject to the Carriage of Goods by Sea Act, 1932, notwithstanding the omission
of the clause paramount, so as to give the protection of the statutory provisions…,
instead of the contractual provisions, but on the contrary the Privy Council held
that the defendant had successfully contracted itself out of the statutory provisions
and was protected by the contractual provisions. It would seem to be regrettable
that the Privy Council has without apparent necessity seriously impaired the effi-
cacy of the effort made in various countries to give effect to an international con-
vention, but presumably, if the partial wrecking of the convention resulting from
the reasoning of the Privy Council is regarded as a real grievance by persons
engaged in the shipping and carriage of goods by sea, the damage can be repaired
by the necessarily slow process of uniform amending legislation.3 5
v) Carver’s Carriage by Sea is also quite critical when referring to Vita Food
Products:
It would be most unsatisfactory if the effect on a contract of municipal legislation
adopting the Hague Rules depended on where proceedings happened to be
brought.
36
vi) Cheshire’s Private International Law is particularly critical as well:
The significant and surprising implication of this reasoning is that had the Rules
imposed liability for negligence, the Privy Council would have disregarded them
and in reliance on the exemption clause would have found the shipowners blame-
less. Another surprising implication of the reasoning is that it condoned the avoid-
ance of the Hague Rules, though these have been carefully designed to bring about
uniformity in the maritime law of civilised nations.3 7
vii) Dicey & Morris on the Conflict of Laws makes a further contribution to the
opinion that the nature of the Hague Rules means they should be preferred over
a contractual choice of law:
Press, 1942) at 426.
34V.W. Cook, The Logical and Legal Bases of the Conflict of Laws (Cambridge: Harvard U.
35J.D. Falconbridge, Essays on the Conflict of Laws, 2d ed. (Toronto: Canada Law Book, 1954)
at 401. See also J.G. McLeod, The Conflict of Laws (Calgary: Carswell, 1983) at 475: “In addition,
the reasoning of the Privy Council had the effect of condoning the avoidance of the Hague Rules,
which had been drafted to achieve uniformity in international maritime law.”
36R. Colinvaux, ed., Carver’s Carriage by Sea, vol. I, 13th ed. (London: Stevens and Sons, 1982)
at para. 573.
37p.M. North, ed., Cheshire’s Private International Law, 11th ed. (London: Butterworths, 1987)
at 453.
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The logic of the conflict of laws was here at variance with the need for the uni-
fication of commercial law. Should not a contract designed to frustrate this unifi-
cation be regarded as contrary to English public policy?38
B. Authorities in Support of Vita Food Products
Not all commentators are opposed to the decision. It is submitted, however,
that some of the agreement with Vita Food Products stems from a failure to
appreciate that the Hague Rules apply by force of law.
i) Mann’s support of Vita Food Products was unequivocal. He called the deci-
sion “one of the greatest cases in English law decided by one of the strongest
judicial committees ever formed.”39 Unfortunately, Mann did not elaborate at
all.
ii) Wolff’s approval of Vita Food Products resulted from an opinion that the
Rules were not mandatory:
This decision seems to be correct, because the law of Newfoundland – which
would probably have been applied if the parties had not chosen English law –
does not apparently contain any compulsory rule incompatible with English law.40
Wolff thus failed to understand the real nature of s. 1 of the Newfoundland Act.
iii) Malcolm Clarke made the following statement about Vita Food Products:
Once it is accepted that the normal conflicts rules for contracts were relevant to
the case, then the decision of the Board was, if not inevitable, certainly justifi-
able.41
It is important to note, however, a previous statement that “the Convention as
in force in Newfoundland, was ill-equipped to do battle.”42 Clarke’s opinion also
seems to depend upon the view that the Hague Rules as they existed in New-
foundland were not imperative.
iv) Castel agreed with Vita Food Products, as is shown by his use of the judg-
ment to justify the following statement:
However, if a cargo is shipped from a port of a country other than Canada which
has adopted The Hague Rules, the Act [the Canadian Carriage of Goods by Water
Act] does not apply and the parties may contract out of the rules by selecting as
the proper law of the contract a system of law other than that of the port of ship-
ment.
4Y
and Sons, 1987) at 1284-85.
Mann, supra, note 32.
38L. Collins, ed., Dicey and Morris on the Conflict of Laws, vol. 2, 11th ed. (London: Stevens
39F.A. Mann, “Uniform Statutes in English Law” (1983) 99 L.Q.R. 376 at 397 n. 98. See also
40M. Wolff, Private International Law, 2d ed. (Oxford: Clarendon Press, 1950) at 418.
41M. Clarke, Aspects of the Hague Rules: A Comparative Study in English and French Law (The
421bid.
43j.-G. Castel, Canadian Conflict of Laws, 2d ed. (Toronto: Butterworths, 1986) at 542.
Hague: Nijhoff, 1976) at 23.
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Wolff, Clarke, and Castel share the disciplined tendency of many lawyers (and
even many academics) to abide by the decisions of the Privy Council and to set
out what the law is (as interpreted by the highest authority –
the Privy Council/
House of Lords) rather than how the Court should have decided. Nor do Wolff,
Clarke and Castel seem to have appreciated the application by force of law of
the Hague Rules, as provided for in s. 1 of the Newfoundland Act. The provi-
sions apply to “the carriage of goods by sea” –
v) Scrutton on Charterparties44 follows the Privy Council on the mandatory
nature of the Hague Rules. This position is interesting, if not extraordinary, in
light of Scrutton’s conversion from an opponent of the Hague Rules at their
inception to a proponent of them in The Torni, when he was a Lord Justice in
Appeal and had said that the ability to contract out of the Rules would “upset
the whole applecart… of the countries who have agreed to it … .4
there is no qualification.
Scrutton, in his eleventh edition 4 of 1923, opposed the proposed adoption
by the U.K. Parliament of the Hague Rules, which would impose a standard on
merchants who could not contract out of that standard. Scrutton wished the con-
tract of carriage by sea to be subject only to the common law and the free bar-
gaining of the parties. He concluded, in his preface to the eleventh edition:
Should this work reach another edition, it may be necessary to consider in detail
the rules, if any, enacted by Parliament. We sincerely hope, however, that the mat-
ter may remain as it now rests, on the bargaining of parties free to contract.47
When the Hague Rules were adopted in 1924, Scrutton gave up the editing
of his own celebrated text. It was only in The Torni,48 nine years later, that he
showed that he understood and approved the mandatory nature of the Hague
Rules.
The editors of the fourteenth edition,49 the fifteenth edition,”0 the sixteenth
edition,5 the seventeenth edition,52 and the eighteenth edition,53 were not true to
44A.A. Mocatta, M.J. Mustill & S.C. Boyd, Scrutton on Charterparties and Bills ofLading, 18th
ed. (London: Sweet & Maxwell, 1974) at 11 n. 77, 511 n. 3.
(London: Sweet & Maxwell, 1923) at iii-vi.
45Supra, text accompanying note 22.
46T.E. Scrutton & F.D. McKinnon, Scrutton on Charterparties and Bills of Lading, 11th ed.
47Ibid. at vii.
4″Supra, note 22.
49W.L. McNair & A.A. Mocatta, Scrutton on Charterparties and Bills of Lading, 14th ed. (Lon-
don: Sweet & Maxwell, 1939) at 478-80 n. “k.”
don: Sweet & Maxwell, 1948) at 449 n. “d.”
5W.L. McNair & A.A. Mocatta, Scrutton on Charterparties and Bills of Lading, 15th ed. (Lon-
51W.L. McNair & A.A. Mocatta, Scrutton on Charterparties and Bills of Lading, 16th ed. (Lon-
don: Sweet & Maxwell, 1955) at 464 n. “o.”
52W.L. McNair, A.A. Mocatta & M.J. Musfill, Scrutton on Charterparties and Bills of Lading,
17th ed. (London: Sweet & Maxwell, 1964) at 403 n. “q.”
53A.A. Mocatta, M.J. Mustill & S.C. Boyd, Scrutton on Charterparties and Bills of Lading, 18th
ed. (London: Sweet & Maxwell, 1974) at 413 n. 44.
McGILL LAW JOURNAL
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their master (in a demonstration of originality) and made the following state-
ment in favour of the ratio decidendi of Vita Food Products:
Unless deterred by fear of criminal proceedings, it seems that a shipowner, issuing
a bill of lading in this country for delivery of goods in a foreign port, may neglect
to insert any such express statement and so avoid the application of the Rules if
sued in a foreign port, unless the foreign court, applying the law of Great Britain
and Northern Ireland as being the proper law of the contract, should hold that the
Rules are thereby incorporated.
The nineteenth (and present) edition of Scrutton drops the question
altogether.
C. Response in the Courts
The Vita Food Products decision has also encountered judicial opposition,
having been ignored, distinguished, circumvented, and even opposed.
i) In Shackman v. Cunard White Star Ltd an American court ignored Vita Food
Products completely and held:
Were this clause Ithe paramount clause] absent, the above paragraph of the Car-
riage of Goods by Sea Act would still be a part of the bill of lading.54
ii) In Dominion Glass Co. v. The Ship Anglo Indian,5 in a shipment from Mon-
treal to Vancouver via the Panama Canal, clause 26 of the bill of lading invoked
“English Law,” clause 24 invoked the Water-Carriage of Goods Act of Canada
of 1910 (which -was not in force) and a stamped clause invoked the Canadian
Water Carriage of Goods Act, 1936. Vita Food Products was referred to, but not
followed, by Kerwin J.:
This being an action in Canada with reference to a bill of lading issued in Canada,
the law of Canada must be applied notwithstanding the inclusion in the bill of lad-
ing of clause 26.56
Rand and Taschereau JJ., dissenting on another matter, nevertheless con-
curred with Kerwin J. and held.
It is then urged that by an express stipulation in the bill of lading the contract is
to be governed by English law which must be taken to be what is called the proper
law of the contract Whatever effect might be given to such a stipulation in a court
outside of Canada, within this country we are bound by the provisions of the
Water Carriage of Goods Act of 1936.57
In effect, the Supreme Court of Canada disregarded the Vita Food Products
decision.
5431 F. Supp. 948 -t 950, 1940 AMC 971 at 973 (S.D.N.Y. 1940).
55[1944] S.C.R. 409, f1944] 4 D.L.R. 721.
56[1944] S.C.. 409 at 417, 11944] 4 D.L.R. 721 at 727.
57[1944] S.C.R. 409 at 432-33, [1944] 4 D.LR. 721 at 741 (emphasis added).
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CASE COMMENTS
iii) In Ocean Steamship Co. v. Queensland State Wheat Board,” the Vita Food
Products decision was circumvented. A shipment of wheat was carried under
bills of lading from Australia to Liverpool and Glasgow, and clause 1 of the bill
of lading invoked the Australian Sea-Carriage of Goods Act, 1924s9 (the Hague
Rules), while clause 16 declared: “The contract evidenced by this bill of lading
shall be governed by the law of England.” It was held by the Court of Appeal
that the provision as to English law was null and void in virtue of s. 9 of the
Australian Act, which specifically provides that parties to a contract relating to
the carriage of goods from any place in Australia to any place outside Australia
shall be deemed to have intended to contract according to the law in force at the
place of shipment and any contrary agreement is voidW
Section 9 of the Australian Act thus does contain more forceful language
than s. 1 of the Newfoundland Act. Nevertheless, both s. 9 (Australia) and s. 1
(Newfoundland) are force of law provisions, and should be applied in a similar
fashion to defeat attempts to derogate from the national versions of the Hague
Rules.
iv) Denning L. in Boissevain v. Weil gave a much better conflict rule than had
Lord Wright in Vita Food Products and directly opposed the finding in Vita
Food Products:
Notwithstanding what was said in Vita Food Products v. Unus Shipping Co., I do
not believe that parties are free to stipulate by what law the validity of their con-
tract is to be determined. Their intention is only one of the factors to be taken into
accoun
61
Today, although intention can be considered as only one contact (or connecting
factor) amongst many in arriving at the proper law of the contract, it is my view
that “express choice” of the parties is binding unless contrary to public policy/
order, a mandatory law or was made to evade the law.
v) In the Morviken, Lord Diplock expressed his malaise with “the wide ranging
dicta” in Vita Food Products by stating that it was
no longer necessary to embark upon what I have always found to be an unreward-
ing task of ascertaining precisely what those dicta meant.6Z
V. Vita Food Products and the WVsby Rules
The Visby Rules solve the problem of the mandatory nature of the Hague
Rules raised by Vita Food Products, by confining at article 10 that the Hague
11[1941] 1 K.B. 402, [1941) 1 All ER. 158 (CA.).
59No. 22 of 1924 [hereinafter Australian Act].
60[1941] 1 K.B. 402 at 412, 415, [19411 1 All E.R 158 at 161, 164-.
61[1949] 1 K.B. 482 at 491 (C-A.).
62[1983] 1 Lloyd’s Rep. I at 9 (H.L.).
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[Vol. 37
Rules have the force of law.’ The U.K. Carriage of Goods by Sea Act’ is to the
same effect.
VI. Application of Vita Food Products in Canadian Courts
The significance of Vita Food Products in Canadian courts relates to two
aspects: express choice of law and restrictions upon it; and the imperative or
directory nature of a statutory provision.
In George C. Anspach Co. Ltd v. C.N.R. Co.,’ the Ontario High Court fol-
lowed Vita Food Products in finding that the proper law of the contract was the
law which the parties intended or may be presumed to have intended to apply.
An express choice of law, however, will be subject to the mandatory rules of the
place of contract. In this manner, Vita Food Products was followed by the Brit-
ish Columbia Supreme Court in Nike Infomatic Systems Ltd. v. Avac Systems
Ltd,67 and applied by the Federal Court of Appeal in United Nations v. Atlantic
Seaways Corp.” Since then, the Vita Food Products approach to the express
choice of law in a contract has been applied,69 discussed, 0 and noticed,7′ by the
Alberta Court of Queen’s Bench, as well as considered by the British Columbia
Supreme Court.72
In other words, the dictum set out in Vita Food Products that a contract
made in contravention of a statute might still be upheld unless serious grounds
were involved, 3 was applied by the British Columbia Court of Appeal74 and the
63Supra, note 2. See also The “Morviken,” ibid., The Benarty, [1984] 2 Lloyd’s Rep. 244, [1984]
3 W.L.R. 1082 (C.A.), commented upon by Francis Reynolds, “Foreign Tonnage Limitation Not
a Ground for Refusing Stay of Action” [1984] L.M.C.L.Q. 545; The Anders Maersk, [1986] 1
Lloyd’s Rep. 483 (Hong Kong Supreme Court).
64(1971) U.K., c. 19, ss 1(2), 1(3), 1(6).
65The most important Canadian decision commenting on Vita Food Products was of course
Dominion Glass Co. Ltd. v. The Anglo Indian, supra, note 55.
661950] O.W.N. 274 (H.C.).
67(1979), 16 B.C.L.R. 139, 8 B.L.R. 196 (S.C.) [hereinafter Nike].
61[1979] 2 F.C. 541, 99 D.L.R. (3d) 609, 28 N.R. 207 (C.A.) [hereinafter Atlantic Seaways].
69Greenshields Inc. v. Johnston, [1981] 3 W.W.R. 313, 28 A.R. 1, 119 D.L.R. (3d) 714 (Q.B.),
aff’d [1982] 2 W.W.R. 97, 17 Alta. L.R. (2d) 318, 131 D.L.R. (3d) 234, 35 A.R. 487 (C.A.) [here-
inafter Greenshields].
70Bank of Montreal v. Snoxell (1982), 143 D.L.R. (3d) 349, 44 A.R. 224 (Q.B.) [hereinafter
71Skeggs v. Whissell (1985), 63 A.R. 348 (Alta. Q.B.) [hereinafter Skeggs].
72Avenue Properties v. First City Development Corp. (1985), 65 B.C.L.R. 301 (S.C.), rev’d
(1986), 7 B.C.L.R. (2d) 45, [1987] 1 W.W.R. 249, 32 D.L.R. (4th) 40 (C.A.) [hereinafter Avenue
Properties].
Snoxell].
73[1939] A.C. 277 at 293, 1939 AMC 257 at 266, [1939] 2 D.L.R. I at 10-11, 63 LI.L. Rep. 21
at 29.74Ardekany v. Dominion of Can. General Ins. Co. (1986), 7 B.C.L.R. (2d) 1, [1987] 1 W.W.R.
57, 32 D.L.R. (4th) 23 (C.A.).
1992]
CHRONIQUES DE JURISPRUDENCE
Ontario District Court,” as well as being considered by the Ontario High
Court.76
Another application of Vita Food Products in Canada has been with respect
to the question of whether a mandatory provision is imperative or directory. The
Courts of Appeal in Ontario’ and British Columbia7s have applied the dictum
approved in Vita Food Products that the real intention of the legislature is to be
ascertained by a consideration of the “whole scope of the statute.”79 The Man-
itoba Court of Queen’s Bench referred to the same dictum in finding that one
must look at the “general scope and object” of a statute to determine whether
it is mandatory or directory.”0
VII. The Rome Convention, 1980
A. New Conflict Rules in Contract
The question of the forum recognizing the mandatory nature of foreign law
requires proper rules of conflict of law or a proper conflict of law convention
or statute.
The Rome Convention on Contractual Obligations is law today in the
United Kingdom.”‘ By art. 3(1) a contract shall be governed by the law chosen
by the parties, either expressly or demonstrated with reasonable certainty by the
terms of the contract or the circumstances of the case. Thus the term in the bill
of lading in Vita Food Products: ‘This contract shall be governed by English
law” would more than comply with the express intention requirement of art.
3(1) of the Rome Convention, 1980.
Article 3(3), however, of the Rome Convention, 1980 forbids the deroga-
tion from the “mandatory rules” of a country “where all the other elements rel-
evant to the situation at the time of the choice are connected … .. But not “all
the other elements” in Vita Food Products pointed to Newfoundland, as the ship
was Canadian and the shipment was to the United States. This illustrates the
very limited application of art. 3(3).
Article 7(1), nevertheless, gives the court discretion to apply the mandatory
rules of a third country (neither the forum nor the place of the lex causae) with
7 5Fauman v. Cooke (1986), 41 M.V.R. 60 at 68 (Ont. Dist. Ct.).
76Shakur v. Pilot Insurance Co., [1988] I.L.R. 1-2349, 33 C.C.L.I. 272 (Ont. H.C.).
7 7Re Bank of Western Canada, [1970] 1 O.R. 427 (C.A.).
78Stephen v. Stewart (No. 1), [1943] 3 W.W.R. 580, [1944] 1 D.L.R. 305, 59 B.C.R. 410 (C.A.).
79[1939] A.C. 277 at 293, 1939 AMC 257 at 266, [1939] 2 D.L.R. 1 at 10, 63 LI.L. Rep. 21 at
29, citing Lord Campbell in Liverpool Borough Bank v. Turner (1860), 2 De G.. & J. 502 at 508,
45 E.R. 715 at 718 (Ch.).
‘0R. v. Zorn (1986), 47 M.V.R. 62 at 67, 45 Man. R. (2d) 218 at 222 (Man. Q.B.).
“1Contracts (Applicable Law) Act 1990 (U.K.), c. 36.
McGILL LAW JOURNAL
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which the situation has a close connection. Thus, very probably, the Hague
Rules would be applied in a modem Vita Food Products situation, if an analo-
gous case arose today in a European country party to the Rome Convention,
1980.
B. The “Vita Food Products Reservation”
Unfortunately, the United Kingdom version of the Rome Convention,
1980,82 specifically excludes art. 7(1). This is perhaps an English harkening
back to Lord Wright’s Vita Food Products findings that a Nova Scotia court
would not have been obliged to regard the bills of lading in question in the same
way as a Newfoundland court. Thus the mandatory rules of what would be the
law of the closely connected third jurisdiction can be ignored by a United King-
dom court.
C. Public PolicylOrdre Public
Nor could ordre public be raised by art. 16 of the Rome Convention, 1980,
because it is ordre public of the forum which must be violated. In Vita Food
821biad s. 2(2). The basic reasons for the U.K.’s rejection of art. 7(1) of the Rome Convention,
1980 were summarized by David Jackson in “Mandatory Rules and Rules of ‘Ordre Public”‘ in
P.M. North, ed., Contract Conflicts (Amsterdam: North-Holland, 1982) 59 at 73:
Objections voiced against the provision are that it gives greater effect to a law of a
close connection than the law of the closest connection, that it will create indefensible
uncertainty and that courts are ill equipped to analyse the nature and purpose of a for-
eign legal rule.
See also P.M. North, “The E.E.C. Convention on the Law Applicable to Contractual Obligations
(1980): Its History and Main Features,” in ibid., 3 at 19-20; C.G.J. Morse, “The E.E.C. Convention
on the Law Applicable to Contractual Obligations” (1982) 2 Yearbook of European Law 107 at
147.
On the other hand, P. Lagarde, ‘The European Convention on the Law Applicable to Contractual
Obligations: An Apologia” (1981) 22 Virg. J. Int. L. 91 at 103, stresses the importance of art. 7(1):
The basic idea stems from an awareness of the necessary unity existing between the
legal policies of the various States. An international contract is always connected with
several countries. Although the law of the country with which it has the most real con-
nection should usually prevail, certain rules of other countries with which the situation
has a significant connection should not necessarily be eliminated. That is particularly
true in the case where these rules are so important that a State requires their application
for all contracts, whether or not that State’s law is the proper law.
0. Lando, “The EEC Convention on the Law Applicable to Contractual Obligations” (1987) 24
C.M.L.R. 159 at 213-14, while recognizing that art. 7(1) makes for uncertainty, nevertheless argues
that this is the price that must be paid for achieving the goal of moving away from “national ego-
ism” in choice of law rules and allowing foreign legislation to operate when it is necessary and
reasonable to do so, even if it is not part of the proper law.
Lando likewise points out (ibid. at 210) that provisions similar to art. 7(1) are included in the
Hague Agency Convention, 1978 (at art. 16) and in the Hague Convention on the Law Applicable
to Trusts etc, 1984 (at art. 16(2)). See also A. Philip, “Mandatory Rules, Public Law and Choice
of Law,” in P.M. North, ed., ibid. at 104.
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CASE COMMENTS
Products, the forum was Nova Scotia, Canada and the mandatory Hague Rules
which were violated were not of the forum but of Newfoundland. As well the
Hague Rules are today considered as mandatory, but not of ordre public, a dis-
tinction not clearly recognized in 1939 when Lord Wright rendered his decision.
D. Conclusion
The Rome Convention, 1980 does solve the Vita Food Products mandatory
rules dilemma, but the exclusion of art. 7(1) by the 1990 U.K. statute would
leave a U.K. court with the option of ignoring mandatory rules of a closely con-
nected third country.
VIII. What Can Be Learned from Vita Food Products?
A.
Introduction
The decision in Vita Food Products not only decided a number of ques-
tions, some correctly and some incorrectly, but also raised others which are very
pertinent today both in respect to carriage of goods and conflicts of law.
B. Carriage of Goods by Sea Questions
1.
Validity of the Bill of Lading Without the Paramount Clause
Vita Food Products decided, and it is generally agreed today, that the bill
of lading is valid under the Hague Rules whether or not it contains a paramount
clause.”3
2.
Are the Hague Rules Mandatory Without a Paramount Clause?
In places, Vita Food Products seems to imply, if not stand for, the principle
that the Hague Rules are not mandatory when the bill of lading does not contain
a paramount clause. This finding is now discredited.8″
C. Conflict of Law Questions
a) The importance of the express intention of the parties was emphasized in Vita
Food Products and was a step forward from the classic lex loci contractus
principle:
In their Lordships’ opinion, the express words of the bill of lading must receive
effect, with the result that the contract is governed by English law … the proper
law of the contract is the law which the parties intended to apply.85
83Supra, text accompanying note 21.
84Supra, text accompanying notes 54 to 62.
85Supra, note 13.
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The decision went too far, however, in ignoring the mandatory law of the
place of the contract and the place of shipment. As well, when the Court rec-
ognized “English law” expressly chosen by the parties, it ignored that the Hague
Rules are a mandatory part of “English law.”86
b) The choice (intention expressed) of another law must be bona fide: “the
intention expressed is bona fide and legal … ..,. In effect, there must be an
express and clear choice and this principle enunciated in Vita Food Products is
important and correct. No doubt the choice was bona fide or in good faith or
innocent, being the result of bills of lading issued in error, but was there any real
“intention expressed”? The intention was far from clear, as the bill of lading was
old and used in error 8 and, like every bill of lading, was not signed by the ship-
per or consignee and was no doubt issued after shipment.8 9
c) The choice of another law must be “legal.”9 This is another properly
expressed principle, but was not followed in Vita Food Products. In effect, the
choice made in Newfoundland of English law was illegal, being contrary to the
mandatory nature of the Newfoundland version of the Hague Rules, as Lord
Wright, himself, acknowledged:
A court in Newfoundland would be bound to apply the law enacted by its own
Legislature, if it applied, and thus might treat the bills as illegal…. 91
d) The choice of a foreign law will be respected by the courts, “provided there
is no reason for avoiding the choice on the ground of public policy.”92 Once
again, Lord Wright correctly expounded an important conflicts of law principle,
but then failed to apply it as he should have done. He did not recognize, as
Scrutton L.J. had in The Torni,93 the public policy character’ of the Hague
Rules, being, as they are, international norms, aimed at establishing uniform
standards and regulations governing the carriage of goods by sea in the major
shipping nations of the world. Rather, he interpreted “public policy” in the tra-
ditional, narrow, not to say “provincial” manner, limiting the concept to the pub-
lic policy of the forum. Thus, he was at peace with himself in concluding that,
86Infra, text accompanying note 105.
87[1939] A.C. 277 at 290, 1939 AMC 257 at 264, [1939] 2 D.L.R. I at 8, 63 LI.L. Rep. 21 at
27.88Supra, note 9.
89For the bill of lading as contract, see Tetley, supra, note 2 at 216-18.
90Supra, note 87.
91[1939] A.C. 277 at 292; 1939 AMC 257 at 265, [1939] 2 D.L.R. 1 at 9-10, 63 LI.L. Rep. 21
at 28.
92[1939] A.C. 277 at 290, 1939 AMC 257 at 264, [1939] 2 D.L.R. 1 at 8, 63 LI.L. Rep. 21 at
28.93Supra, note 22.
94Today, we would probably speak of the “mandatory” rather than “public policy” character of
the Hague Rules. In 1939, when Vita Food Products was decided, however, the distinction bet-
ween”‘mandatory rules” and “public policy/public order” was not clearly recognized.
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CHRONIQUES DE JURISPRUDENCE
whereas a court in Newfoundland might rightly have treated the bills of lading
in question as illegal on grounds of public policy, a Nova Scotia court need not
have taken the same view. 95
e) Today, in some legal systems, the parties are not usually permitted to choose
a totally unconnected law, despite Lord Wright’s dictum that:
[c]onnection with English law is not, as a matter of principle, essential.96
The law chosen must have some bearing on the contract of the parties or provide
some benefit to the parties.
f) May the parties choose their own law, despite the mandatory nature of the law
in force at the place of contracting? And, more important, will a foreign court
recognize as applicable that law chosen by the parties?
Evasion of the law includes the avoidance of an otherwise mandatory law,
through the use of an express choice of law clause in a contract. The evasion
doctrine, which is part of the civil law, does not appear formally in the English
common law:
English private international law does not have any general doctrine by which a
person’s intentions are reprobated because they have chosen to evade the applica-
tion of the rules of one legal system by resort to another one.97
In practice, however, common law jurisdictions usually refuse attempts to
evade mandatory laws by express choice in contracts, on the grounds that the
choice must be bona fide and legal. For example, six Canadian judgments
accepted the “bona fide and legal” requirements that are found in Vita Food
Products in cases of express choice of law.98 The Canadian judicial consensus
as to the meaning of “bona fide” was well set out in Atlantic Seaways:
But the chief qualification of the freedom to choose the proper law of the contract,
and the meaning to be attributed to the words “bona fide and legal” in the dictum
of Lord Wright, would seem to be that the proper law must not have been chosen
to evade a mandatory provision of the law with which the contract has its closest
and most real connection. 99
Four of the six cases indicate that a bona fide choice is one not done to escape
a mandatory law.” In the other two judgments, “bonafide” was not defined by
95Supra, note 91.
96[1939] A.C. 277 at 290-91, 1939 AMC 257 at 264-65, [1939] 2 D.L.R. 1 at 8-9, 63 L1.L. Rep.
21 at 28. See Lando, supra, note 82 at 169.
97J.G. Collier, Conflict of Laws (Cambridge: Cambridge U. Press, 1987) at 147.
98Snoxell, supra, note 70; Greenshields, supra, note 69; Atlantic Seaways, supra, note 68; Nike,
supra, note 67; Skeggs, supra, note 71; Avenue Properties, supra, note 72.
99 [1979] 2 F.C. at 555; 99 D.L.R. (3d) at 621; 28 N.R. at 221.
lSnoxell, supra, note 70; Greenshields, supra, note 69; Atlantic Seaways, supra, note 68; Nike,
supra, note 67.
McGILL LAW JOURNAL
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the court.’ 1 One can conclude that at least with respect to contracts, the evasion
doctrine is being applied by Canadian common law courts.
It is also noteworthy that “the mandatory rules of the law of another coun-
try with which the situation has a close connection” may be recognized by art.
7(1) of the Rome Convention, 1980. See as well art. 3079 of the Civil Code of
Quebec,12 adopted in December 1991, which is to the same effect. It is also
noteworthy, however, that the U.K. Contracts (Applicable Law) Act 1990,103
which adopted the Rome Convention, 1980 into English law, has excluded art.
7(1) of the Rome Convention, 1980 as stated above.
g) Vita Food Products, by invoking “English law” as the choice of the parties,
fails to take into account the fact that the Hague Rules were at that time a part
of “English law,” in the form of the then U.K. Carriage of Goods by Sea Act
1924.” Also ignored was the fact that the English Carriage of Goods by Sea
Act 1924 was mandatory and should have been applied to the bill of lading con-
tract by Lord Wright’s own reasoning. English law to Lord Wright seems to be
English “common” law, and not English statute law or even mandatory English
statute law. 0 5
The assumption that “English law” did not include the mandatory U.K.
Carriage of Goods by Sea Act (the U.K. version of the Hague Rules) because
the Act only applies outward from an English port is to ignore the whole nature
of incorporation by reference of a law. Any incorporation by reference of a law
must be done, making necessary adjustments mutatis mutandis.'”
’01Skeggs, supra, note 71; Avenue Properties, supra, note 72.
102Bill 125, Civil Code of Quibec, Ist Sess., 34th Leg. Qu6., 1990 (assented to 18 December
1991, S.Q. 1991, c. 64 but not yet in force).
103Supra, note 81. This exclusion (at s. 2(2) of the Act) seems to be intended to maintain in
English law, the principal finding of Vta Food Products.
’04(1924) 14 & 15 Geo. 5, c. 22 (repealed).
l05Lord Wright’s thinking in this regard is still reflected in contemporary English cases. For
example, in The Komninos S, supra, note 4, the Court of Appeal decided that English law was the
proper law of a contract of carriage of a cargo from Greece to Italy, because the bill of lading,
issued in Greece, provided that all disputes should be referred to “British Courts.” Nevertheless,
the Court held that the U.K.’s Carriage of Goods by Sea Act, 1971 (giving effect to the Hague]
Visby Rules) did not apply to the contract merely on the strength of that choice of forum clause.
Nor could it apply on any other basis, since the shipment was not from a U.K. port, and since
Greece, where the bill of lading was issued and from which the goods were shipped, was not a
party to the Hague!Visby Rules. In consequence, the carrier was entitled to rely on English law
(meaning English common law) which permitted exemption clauses in the bill, which would have
been invalid had the Hague! isby Rules applied. (In my view, this finding is incorrect and very
unfortunate).
16See Hugessen J. in The Mercury Bell, [1986] 2 F.C. 454 at 468-69, to the effect that when
the lexfori is applied in place of unproven foreign law, it includes not only the common law of
the forum but also statutes forming part of “the general law of the country” and that, in applying
that law, “the court must make necessary adjustments; in legal jargon, the law is read nutatis
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CASE COMMENTS
When the carriage of goods by sea contract takes the major step of
by-passing a mandatory law of the place of contract and shipment to incorporate
other laws by two very general words “English law,” one would expect that
incorporation would include the mandatory Carriage of Goods by Sea Act of
English law.
To assume that only “English common law” is meant is a very large
assumption. It can also be argued that, like the U.K. Carriage of Goods by Sea
Act, “English common law” only applies to English shipments.
h) Will the lex loci contractus or the proper law of the contract or the law of
the forum be used to interpret and construe the contract? Lord Wright made it
quite clear that:
The proper law of the contract does indeed fix the interpretation and construction
of its express terms and supply the relevant background of statutory or implied
terms.
0
7
He also held that it is the proper law of the contract which “defines its nature,
obligation and interpretation.”‘ 8 Today this rule is generally accepted.
Lord Wright, unfortunately, lost sight of the fact that the “proper law of the
contract” to be applied in interpreting the contract and defining its obligatory
content, includes the public policy of that proper law. Had he truly applied the
principle of contract law which he was purporting to uphold, he would have
applied the Hague Rules to the interpretation of the bills of lading concerned,
since those Rules were and are part and parcel of the public policy of the proper
(English) law of merchant shipping in respect of all outbound shipments.
i) Does renvoi apply to the determination of the proper law of a contract? Lord
Wright seems to apply the conflict rules of the proper law rather than the forum
where he stated:
Hence English rules relating to the conflict of laws must be applied to determine
how the bills of lading are affected….109
This has been described by Falconbridge” as a “lapsus calami’, criticized
by J.H.C. Morris,”‘ and indirectly rejected in Re United Railways of The
inutandis.” In my view, the same principles should be followed when a contract incorporates a for-
eign law by reference, as in the Vta Food Products case. The Court of Appeal, in The Komninos
S, supra, note 4, inferred a choice of “English law” as the proper law of the contract from a bill
of lading clause that merely called for submission of disputes to “British Courts,” and yet could
not bring itself to take the additional (and more logical) step of concluding that “English law”
included the English legislation giving the force of law to the Hague!Visby Rules.
107[1939] A.C. 277 at 291, 1939 AMC 257 at 264, [1939] 2 D.L.R. 1 at 9, 63 LI.L. Rep. 21 at
‘0’[19391 A.C. 277 at 292, 1939 AMC 257 at 265, [1939] 2 D.L.R. 1 at 9, 63 LI.L. Rep. 21 at
28.
28.
‘oglbid. (emphasis added).
10Supra, note 35 at 404.
“lThe Conflict of Laws, supra, note 32 at 270 and 475.
REVUE DE DROIT DE McGILL
[Vol. 37
Havana and Regla Warehouses Ltd. (“the principle of renvoi finds no place in
the field of contract”).” 2 Dicey & Morris concludes politely that the dictum
from Vita Food Products “must now be taken to have been overruled.””.. The
Rome Convention, 1980, at article 15, also excludes renvoi altogether in respect
to contract.”‘
Renvoi is the reference by the forum to the conflict rules of a foreign state.
The purpose of renvoi is the application by the forum of the same law as would
have been applied by the foreign state. It is submitted that the renvoi dictum
espoused in Vita Food Products is in error, not merely because it can result in
judicial ping-pong between the forum and the foreign state, but because mer-
chants seek certainty in their transactions and it is reasonable to assume that
they include in their contracts only clauses which they understand. To consider
a choice of law clause as incorporating foreign conflict rules imparts uncertainty
to a business relationship. The parties could not in general be expected to fore-
see the different results that could be generated by an application of foreign con-
flict rules.
j) Should not a conflict decision bring uniformity and certainty to the conflict
of laws? Unfortunately, Lord Wright takes quite the opposite view when he
points out that if suit were brought in Newfoundland, that court would apply its
own law:
A court in Newfoundland would be bound to apply the law enacted by its own leg-
islature, if it applied, and thus might treat the bills as illegal just as the Supreme
Court of the United States… .115
Thus Lord Wright and his main proposition support uncertainty and forum
shopping.
k) Is there a distinction between “mandatory,” “force of law” and “public
policy/order” (ordre public)?
A subtle question is raised by Vita Food Products and subsequent deci-
sions. Is there a distinction to be made amongst the three terms: “mandatory,”
“force of law” and “public policy/public order”? The distinction was not clearly
recognized when Vita Food Products was decided, but is of greater significance
today.
112[1960] Ch. 52 at 115 (C.A.). See also Amin Rasheed Shipping Corp. v. Kuwait, [1984] A.C.
50 at 61-62 (H.L.).
” 3Supra, note 38, vol. 1 at 82 n. 48. As support, Amin Rasheed Shipping Corp., ibid., is cited,
as well as Re United Railways of The Havana And Regla Warehouses Ltd., [1960] Ch. 52 at 96-97,
115 (C.A.), and Rosencrantz v. Union Contractors Ltd. (1960), 23 D.L.R. (2d) 473 (B.C.S.C.). See
also Ocean Steamship Co. v. Queensland, [1941] 1 K.B. 402 (C.A.).
‘I4 Supra, note 5, art. 15.
115[1939] A.C. 277 at 292, 1939 AMC 257 at 265, [1939] 2 D.L.R. 1 at 9, 63 LI.L. Rep. 21 at
1992]
CHRONIQUES DE JURISPRUDENCE
Generally, it can be concluded that “mandatory” and “force of law” are the
same,11 6 at least in respect to carriage of goods by sea. The Visby Rules, at article
10, have the force of law, but only confined what had already been declared
at article 3(8), namely that the Hague Rules are mandatory and that no agree-
ment can relieve or lessen the carrier’s liability under the Hague Rules or the
Hague/Visby Rules.
Public order is a broad general standard of social, and often moral, conduct
and any act which is beneath that standard may be rescinded by the courts of
a civil law jurisdiction.
Public policy consists of fundamental principles of justice, including nat-
ural justice in a common law jurisdiction.
Public policy is presumably concerned with justice, while public order is
presumably concerned with high moral conduct in a civilized society. When
compared and scrutinized in actual decisions, however, public policy and public
order do not appear to be too different.
Mandatory rules, on the other hand, are compulsorily applicable norms,
prescribed by law, to govern some act or operation, but which do not lay down
any general standard of social behaviour related to morality or reflect any par-
ticular requirement of fundamental justice.
Modem authorities and conventions usually distinguish between manda-
tory rules and public policy/order. The Rome Convention, 1980, for example, at
arts 3(3), 7 and 16, distinguishes between mandatory rules and public order.
The U.K. Contracts (Applicable Law) Act 1990,117 which adopted the Rome
Convention, 1980 into English law, also distinguishes public order from manda-
tory rules, but, by its s. 2(2), has excluded art. 7(1) of the Convention from its
provisions, thereby permitting U.K. courts to avoid even having to consider the
possible applicability of the mandatory rules of closely connected law.’ 8
Conclusion
A review today of Vita Food Products illustrates how far English (and by
extension Canadian and Commonwealth) conflict law has evolved since 1939
and how so many accepted conflict rules of 1939 are no longer authority. Nev-
ertheless, Vita Food Products still validly stands for the principle that the
absence of the paramount clause in a bill of lading does not result in nullity of
the bill of lading contract. The decision also stands for the proposition that
express choice of the parties is a major consideration in the choice of contract
“Supra, note 5, art. 3(3).
1″Supra, note 81.
” 8 This exclusion unfortunately seems to follow the finding in Vita Food Products.
McGILL LAW JOURNAL
[Vol. 37
law, as seen in the Restatement Second1 9 at s. 187 and in Rule 180 of Dicey and
Morris.120
Thereafter, however, the decision contains confusing dicta which are now
considered wrong or half-truths. (It was Stephen Leacock who said a half-truth
is like half a brick; it has more effect because it flies further). In the half-truth
category is the validity of the choice of a totally unconnected law. Totally incor-
rect is the ignoring of a mandatory foreign law, although art. 7(1) of the Rome
Convention, 1980 has been excluded from English law’ 2′ and thus echoes Lord
Wright’s dictum. General conflict of law thinking is, however, in the other
direction.
In summary, one can say that although Vita Food Products was a landmark
decision in its day, it has been by-passed by more recent decisions, by legisla-
tion and treaties and by modem conflict of law theory. Nevertheless, it is still
with us in some of its aspects and will remain so in the future.
lishers, 1971), adopted by the American Law Institute at Washington, D.C., May 23, 1969.
119Restatement (Second) of the Conflict of Laws (St. Paul, Minn.: American Law Institute Pub-
120Supra, note 38 at 1161-62.
121Supra, note 81, s. 2(2).
