Clearly inappropriate

THE recent decision of Regie National des Usines Renault SA v Zhang [2002] HCA 10 (14 March 2002) illustrates how reluctant the Australian courts are to decline jurisdiction, even where a more appropriate forum exists to hear the dispute. Mr Zhang, an Australian resident and citizen, suffered an injury in New Caledonia while driving a hired Renault car. He returned to Australia and began proceedings against Renault in the Supreme Court of New South Wales, claiming that his injuries in New Caledonia were caused by the negligent manufacture and/or design of the Renault car he was driving.

Originating process was served on Renault in France, with Mr Zhang relying on Part 10 Rule 1A(e) of the Supreme Court Rules permitting the originating process to be served outside Australia on the basis that the damage was suffered inside the state and was caused by "a tortious act or omission wherever occurring".

Similar to legislation in other state courts in Australia and other jurisdictions, including the UK, Part 10 Rule 1A of the Supreme Court Rules confers jurisdiction on the court not by reference to traditional criteria, such as the presence or service on the defendant in the jurisdiction, but by reliance on more remote criteria, often referred to as "long arm" law.

Marine lawyers should also be aware of the jurisdiction of Australian courts over disputes under sea carriage documents (excluding charter parties) relating to the carriage of goods to or from Australia. Section 11 of the Carriage of Goods by Sea Act 1991 renders choice of forum clauses in such documents to be of no effect. Accordingly, the Australian courts have jurisdiction to determine most claims involving cargo shipped to or from Australia.

Once the defendant is served with the originating process, they can apply to set aside the service of the proceedings on various grounds, including that the Supreme Court is "an inappropriate forum for the trial of the proceedings" i.e. forum non conveniens. As to what constitutes an "inappropriate forum", the English Court of Appeal in Spiliada Maritime Corporation v Cansulex Limited adopted a "more appropriate forum" test where the court conducts a balancing exercise, looking for the forum in which the case may be tried more suitably for the interests of all the parties and the ends of justice.

However, the Australian courts have adopted a stricter test where the defendant must prove that the Australian court is a "clearly inappropriate forum" and that continuation of the proceedings before that court would be oppressive or vexatious - Voth v Manildra Flour Mills Pty Limited.

In the Zhang case, Renault applied to the Supreme Court to exercise its discretion to decline jurisdiction on the basis that Renault was a French company, had no office or employees in Australia and the law applicable to the case would be French law as applied in New Caledonia. The first judge who heard the application found in favour of Renault and dismissed the proceedings. However, the New South Wales Court of Appeal found in favour of Zhang and allowed the proceedings to continue. The High Court of Australia unanimously dismissed Renault's appeal and allowed the proceedings to continue in the Supreme Court of NSW.

The majority of the High Court of Australia (five judges to two) decided that the "clearly inappropriate forum" Voth test, (which was decided prior to the relevant rules coming into force) applied to the exercise of the court's discretion to decline jurisdiction, even though the Supreme Court Rules required the defendant to persuade the court that it is "an inappropriate forum" rather than "a clearly inappropriate forum". However, in applying its discretion in the Zhang appeal, the majority of the High Court used the following words as to how the Voth test should be applied: "It was not a question of striking a balance between competing considerations. Rather it was the task of the Renault companies as applicants on the motion to demonstrate that a trial in New South Wales would be productive of injustice, because it would be oppressive in the sense of seriously and unfairly burdensome, prejudicial or damaging, or vexatious, in the sense of productive of serious and unjustified trouble and harassment".

The Zhang case illustrates just how difficult it will be for defendants to persuade the Australian courts to exercise their discretion to decline jurisdiction, even if a more appropriate forum exists elsewhere to hear the dispute. In the context of any commercial litigation, including maritime cases, it will be almost impossible to persuade the courts otherwise.