1975.11.28

1970 (O) 297

Minshu Vol.29, No. 4, at 572

A Case where the Supreme Court ruled on the Requirements for the Validity of the Agreement on the Exclusive Jurisdiction of a Foreign Court based upon the Bill of Lading and found the Agreement to be valid

Claim of Damages

Judgment of the Third Petty Bench, dismissed

Osaka High Court

1. An agreement on the international court jurisdiction does not need to be effected in a document signed by both parties, but is sufficient if it is based upon a document prepared by one of the parties explicitly designating a court of a specific foreign country.
2. An agreement on international court jurisdiction which excludes the jurisdiction of the Japanese court and designates a foreign court to have an exclusive jurisdiction in a specific cross-border case is, in principle, valid, insofar as the given case does not fall within the exclusive jurisdiction of the Japanese court and the foreign court which has been designated has jurisdiction on the case by the law of the given foreign country, and reciprocity is not required in relation to the judgments of the court of this foreign country.
3. In a litigation based upon the claim of damages by the consigner vis a vis the carrier based upon international sea carriage contract, an agreement on exclusive international court jurisdiction which designates the court in the Netherlands where the head office of the defendant - an international sea carrier - cannot be regarded as null and void for being against public policy merely by the fact that it was based upon the standard form clause on jurisdiction printed on the bill of lading issued by the defendant and that the cost of the consigner would increase and more efforts would be needed by complying with this agreement.

The appeal in the present case shall be dismissed.
The Cost of appeal shall be borne by the appellant.

On the ground of appeal item 1 of the representatives of the jokoku appellant, Seizo Yoshida, Ryuji Sona, and Fumio Akagi:

In the present case, the appellant asserted the following facts:
(1) Joint stock company Nanyo-Bussan (hereinafter, 'Nanyo-Bussan'), a Japanese importer, purchased crude sugar from a Brazilian exporter, Institute de Alcar and Alcohol (hereinafter, 'the Institute'). The Institute selected the jokoku appellee, whose head office is located in Amsterdam, Netherlands and has an office in Japan, as a consignor and concluded a contract of sea carriage, and had a bill of lading issued from the appellee, received it, and handed it to Nanyo-Bussan.
(2) The appellee loaded crude sugar on board MS Chisadane [correct spelling?] which the appellee owns, and shipped it to Osaka from the port of Santos in Brazil. However, the appellee failed to place the ship under the state of seaworthiness and cargoworthiness at the time of the departure, and as a result, many baggages were damaged by seawater; the damage was worth 1,6 million yen or more. Thus, the appellee became liable for damages based upon non-performance of the carriage contract or tort. The appellant paid insurance of 1,376,180 yen to Nanyo-Bussan on the basis of the insurance contract on the goods on carriage and acquired the substitute right of damages vis a vis the appellee.
The appellant, based upon the above, claimed damages of the same amount as the insurance payment plus the penalty for delay calculated on the statutory interest rate for commercial transactions and brought the case to the District Court in Kobe, where the appellee has an office. The appellee, in the pre-hearing defence, argued that in the bill of lading in the present case, there was a clause in English that 'all litigations arising from the present bill of lading shall be initiated at the court in Amsterdam, and unless the carrier initiates litigation in another jurisdiction or voluntarily accepts jurisdiction of other courts, no other court may have jurisdiction on any other litigation' (hereinafter, 'the Standard Clause'), and since the clause comprises an agreement on exclusive international judicial jurisdiction, in the present case, Amsterdam City Court has exclusive jurisdiction and Kobe District Court does not have jurisdiction.
The original instance court accepted the facts as asserted as above in (1) as well as the facts asserted by the appellee concerning the Standard Clause and ruled that:

(1) while the validity of the agreement on the international judicial jurisdiction in the present case should be determined by the law of international civil procedure of Japan as lex fori, there is no sufficient evidence to prove that the Institute declared its intention not to agree with the Standard Clause, or objected to this clause afterwards. Therefore, it is obvious that the Standard Clause on jurisdiction in the present case is valid as an agreement between the appellee and the Institute to the effect that the jurisdiction of Japanese courts is excluded and the court in Amsterdam is designated as a court of exclusive jurisdiction for the first instance, regardless of whether the litigation for the claim of damages for the loss which occurred during the process of carriage under the contract of carriage is based upon non-performance of obligation or tort.
(2) the agreement to the above effect should be understood as valid in principle, insofar as it concerns a case which does not fall within the jurisdiction of Japanese courts and the foreign court has jurisdiction under the law of the given foreign country. The present case does not fall within the jurisdiction of Japanese courts, and apparently, the court in Amsterdam has statutory jurisdiction over similar cases vis a vis the appellee, and therefore, the present agreement on the exclusive court jurisdiction is valid. The mere fact that there is no signature by the Institute which is the consignor on the bill of lading does not affect the validity of the agreement.
(3) in the light of the International Convention for the Unification of Certain Rules of Law on the Bills of Lading and the Law on the International Carriage of Goods by Sea which implements the Treaty in Japan, the standard clause on court jurisdiction on the bill of lading should be found invalid if it is used for the purpose of circumventing the application of public order rules which are intended to prevent abuses of standard clauses on exemption of liability by the carriers, or if it contributes in a unilateral manner for the carrier as an entrepreneur to abuse economic superiority and profit the carrier in excess of the reasonable scope. However, under the present circumstances, it is insufficient to find the agreement to be against public order.
(4) because the nature of the legal relationship which is the object of the agreement allows the parties to determine its content freely, the validity of the agreement on jurisdiction by the standard clause in the present case also extends to the appellant, who is the specific successor to the Institute.

Based upon the above, the original instance court accepted the defence of the appellee as cited above and dismissed the case.

1. Representatives of the appellant argue that agreements on international court jurisdiction should also be in writing as is the case with the agreements of jurisdiction as provided by Article 25 of the Code of Civil Procedure. However, since there is no written rule on the form of agreements on international court jurisdiction, the matter should be decided by Reason with reference to the meaning of the provisions of the Code of Civil Procedure. Considering the fact that the meaning of the said provision is to make the intention of the parties clearer, a majority of foreign legislation does not necessarily require a written form to agreement on jurisdiction nor signature of the consignor on the bill of lading, and in the light of the stability of international transactions which should be speedy, it is reasonable to conclude that as the form of agreements on international court jurisdiction, it is sufficient if a court of a specific country is expressly designated on a document which has been prepared by one of the parties, and the existence of the agreement and its content are clear, and it is not needed to have both the offer and acceptance made by documents signed by the parties. The argument of the representatives cannot be accepted.
2. The representatives argue that it is not clear that the present standard clause is an agreement on exclusive court jurisdiction. However, in the present case, both the court in Amsterdam where the main office of the appellee is located, and the court in Japan where the appellee has an office, have statutory jurisdiction. It is evident that the Standard Clause is meant to leave the former and exclude the jurisdiction of other courts, it is appropriate to regard it as an agreement of exclusive court jurisdiction. The ruling of the original instance court to the same effect is justifiable.

On the ground of appeal 2 by the representatives of the jokoku appellant:

1. An agreement on exclusive international court jurisdiction which excludes the jurisdiction of the Japanese courts and designates a court of a specific foreign country as the court of first instance is valid under the law on international litigation of Japan, in principle, only in cases where (a) the given case does not fall within the exclusive jurisdiction of Japanese courts, and (b) the designated court has jurisdiction on the case in the light of the law of that country (The Supreme Tribunal, judgment of October 18, 1916 case (o) No.473; Minshu 22-1916).
The representatives argue that it is also required that the foreign court in question should have found a similar agreement on jurisdiction to be valid. However, the reason why the above-cited (b) is required is because if the foreign court does not have jurisdiction over the case and does not accept the case, the parties not only cannot realise the purpose of the agreement on jurisdiction, but also will lose an opportunity to have the case heard in both courts. Therefore, if the court in the designated foreign country has jurisdiction over the given case, the requirement of (b) is met, and it is not necessarily needed that the agreement on exclusive international court jurisdiction is valid under the given foreign law. In the present case, the court in Amsterdam has statutory jurisdiction over the present case, and therefore, the fact that the original instance court did not refer to the above argument is not unlawful.
2. The representatives argue that in order to find an agreement on exclusive international court jurisdiction to be valid, mutual guarantee [reciprocity] as provided by Article 200, subparagraph 4 of the Code of Civil Procedure is required. However, it is generally possible to enforce a judgment of a foreign court in the given foreign country, and even if the enforcement of the given foreign judgment is not possible due to the lack of reciprocity, unlike instances where the requirement (b) is lacking, the realisation of the rights is not entirely denied. Agreement on jurisdiction usually concerns the hearing procedure and not the enforcement procedure, but the parties, when making the agreement, may take into account the effectiveness of enforcement in the given foreign country. The choice of jurisdiction may result in an increased cost for enforcement, but such an increase is an accompanying effect of the agreement on jurisdiction. Therefore, in order to acknowledge the validity of the agreement on jurisdiction which excludes the jurisdiction of Japanese courts, reciprocity, which is a requirement for the enforcement of the foreign judgment in question, is not required. Even by such an interpretation, the effect normally intended by the parties to such an agreement can be attained. The argument cannot be accepted.

On ground 3 of the arguments by the representatives of the jokoku appellant:

The ruling of the original instance court on this point is also justifiable. The original instance court has acknowledged, by reasonably examining the meaning of the Standard Clause, the intention of the parties concerning the legal relationship which is the object of the agreement on jurisdiction as stated in the judgment. The original instance court did not deny the concurrence of the claim based upon non-performance of obligation and the claim on tort, but merely ruled that the law of international litigation of Japan serves as the governing law as lex fori, when ruling on the preliminary defence concerning the effect of the agreement on jurisdiction in question in excluding the court jurisdiction of Japan in relation to the present litigation. The argument has failed to understand the judgment of the original instance court correctly, and merely criticizes the judgment on a unique view, and therefore, cannot be accepted.

On ground 4 of the arguments by the representatives of the jokoku appellant:

An agreement on the exclusive international court jurisdiction which gives exclusive jurisdiction of first instance to the court which has ordinary jurisdiction for cases involving the defendant is, by taking into account the generally accepted rule that the 'plaintiff follows the tribunal of the defendant' and the consideration that in cases where the defendant is an international carrier on sea, its business policy to limit the jurisdiction on disputes arising from international transactions to the court of a specific country is worth protection, unless the given agreement is excessively unreasonable and is against the rules of public policy, should be acknowledged as valid in principle. Therefore, the Standard Clause in the present case which designates the court of the location of the main office of the appellee as the court of exclusive court jurisdiction cannot, even by taking into account the points raised by the representatives of the appellant, be regarded as invalid for being against public policy. The ruling of the original instance court which is in line with this is justifiable, and the argument of the representatives cannot be accepted.
Therefore, in accordance with articles 401, 95, and 89 of the Code of Civil Procedure, the justices unanimously decide as the main text of judgment.

The Third Petty Bench of the Supreme Court

JusticeTAKATSUJI Masami
JusticeSEKINE Kosato
JusticeAMANO Buichi
JusticeSAKAMOTO Yoshikatsu
JusticeERIGUCHI Kiyoo