Federal Court of Australia enforces London arbitration agreement despite COGSA challenge

Smithbridge Guam Inc v Swire Shipping Pte Ltd [2026]

In Smithbridge Guam Inc v Swire Shipping Pte Ltd [2026] FCA 884, the Federal Court of Australia upheld a foreign maritime arbitration agreement and referred the parties to arbitration in London notwithstanding s 11(2)(b) of the Carriage of Goods by Sea Act 1991 (Cth) (COGSA).

Overview

In a decision handed down on 9 July 2026, the Federal Court of Australia applied s 7(2) of the International Arbitration Act 1974 (Cth) (IAA) to refuse an application for a permanent anti-arbitration or anti-suit injunction and to order a stay of the plaintiff’s claims before the Federal Court to enforce the parties’ arbitration agreement.

In doing so, the Federal Court declined to apply s 11(2)(b) of the COGSA to render ineffective an arbitration agreement in a booking note involving the international carriage of goods by sea, notwithstanding the contention that the agreement limited the jurisdiction of Australian courts.

Justice Derrington held that the booking note, while incorporating bill of lading terms, constituted a contract of affreightment or a voyage charterparty and was not a “sea carriage document” within the meaning of the COGSA and the Australian Hague Rules.

The decision confirms that the Australian courts will carefully consider the substance of shipping documents and will uphold foreign maritime arbitration agreements that are not part of a document regulated by the COGSA and the Australian Hague Rules.

Background

In 2024, Smithbridge Guam Inc (Smithbridge) entered into a contract with Swire Shipping Pte Ltd (Swire) for the shipment of a mobile crane from Brisbane to the Port of Guam in Micronesia.

The contract took the form of a booking note which incorporated bill of lading terms and a dispute resolution clause providing for arbitration seated in London under the London Maritime Arbitrators Association Rules (LMAA) and governed by the laws of England (the Booking Note).

In June 2024, during loading of the vessel in Brisbane, the crane was dropped and damaged to the point where it became a constructive total loss. The crane never left Brisbane and a bill of lading for the shipment was never issued.

The damage to the crane led to a dispute between Smithbridge and Swire:

• Smithbridge claimed entitlement to damages from Swire for breach of its duties of care pursuant to Sch 1A of the COGSA as bailee of the damaged crane, under the contract and/or at common law.
• Swire disputed liability for the constructive total loss of the damaged crane and claimed for the detention of its vessel, the Pacific Endeavour.

Parallel proceedings

The parties separately commenced arbitral and court proceedings:

• On 23 February 2026, Swire served a Notice of Arbitration on Smithbridge in London and appointed an arbitrator (the London Arbitration).
• On 4 March 2026, Smithbridge filed an originating motion in the Federal Court of Australia and statement of claim, together with an interlocutory application for an anti-arbitration or anti-suit injunction.
• On 5 March 2026, the Federal Court of Australia granted a temporary ex parte injunction which restrained Swire from continuing, prosecuting or taking any step in the London Arbitration, commencing any further arbitration against Smithbridge, or taking further steps in any arbitration or other proceeding seeking to restrain Smithbridge from taking any steps in the Federal Court proceedings.
• On 5 March 2026, Smithbridge appointed its own arbitrator in the London Arbitration without prejudice to its objection to the jurisdiction of the arbitral tribunal.
• On 26 March 2026, Swire applied for a stay of the Federal Court proceedings pursuant to s 7(2) of the IAA.

Key Issue

The key issue before the Federal Court was whether the arbitration agreement contained in the Booking Note was rendered ineffective by s 11(2)(b) of the COGSA because it purported to preclude or limit the jurisdiction of Australian courts.

COGSA and the Australian Hague Rules

COGSA operates to incorporate the amended Hague Rules[1] which appear at Schedule 1A of COGSA, into Australian law (the Australian Hague Rules).

The Australian Hague Rules apply to certain contracts for carriage of goods by sea to govern the rights and responsibilities of shippers and carriers.

Critically for the purposes of this case, s 11(2)(b) of the COGSA provides that an agreement (whether made in Australia or elsewhere) has no effect so far as it purports to preclude or limit the jurisdiction of a court of the Commonwealth of Australia or of a State or Territory in respect of a bill of lading, a sea carriage document relating to the carriage of goods from any place in Australia to any place outside Australia, or other similar documents.

To determine whether s 11(2)(b) of the COGSA applied, the Federal Court therefore needed to decide whether the Booking Note fell within one of these protected categories.

The proper characterisation of the Booking Note

Derrington J concluded that the Booking Note was not a contract which limited the operation of the Australian courts within the meaning of s 11(2)(b) of the COGSA for the following reasons:

• Properly characterised, the Booking Note was a contract of affreightment or a voyage charterparty. It was not a bill of lading, a sea carriage document or other document to which the Australian Hague Rules applied mandatorily.
• The inclusion of bill of lading terms and a supersession clause which provided for the terms of the Booking Note to be superseded by the terms of the future bill of lading when issued, did not have the effect of making the Booking Note a “sea carriage document” under the Australian Hague Rules.
• While the Booking Note included terms purporting to incorporate the Australian Hague Rules, it did not expressly provide that the Rules were to govern the contract "as if the document were a bill of lading" and therefore had not been voluntarily brought within the operation of COGSA or the Rules by agreement between the parties.

The arbitration agreement contained in the Booking Note was therefore not rendered ineffective by s 11(2)(b) of the COGSA.

The decision demonstrates that the applicability of the COGSA's anti-ouster provisions cannot be assumed merely because a contract relates to international carriage of goods by sea. The Court will first determine whether the relevant document falls within the statutory categories protected by s 11. If it does not, the conventional principles favouring enforcement of arbitration agreements under the IAA are likely to apply.

Swire’s application for a stay under s 7(2) of the IAA

Swire applied pursuant to s 7(2) of the IAA to stay the Federal Court proceedings which Swire contended had been commenced in breach of the parties’ arbitration agreement.

There was no dispute that the Booking Note included an arbitration agreement within the meaning of s 3(1) of the IAA or that the dispute between the parties fell within the terms and scope of the arbitration agreement and was capable of settlement by arbitration within the meaning of s 7(2) of the IAA.

As the seat of the arbitration was in England and the arbitration agreement was governed by English law, being the law of a New York Convention country, Derrington J also accepted that the agreement constituted a foreign arbitration agreement for the purposes of the IAA.

In those circumstances, Her Honour applied the Australian High Court's decision in Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 which established that once the prerequisites of s 7(2) of the IAA are met, a stay is mandatory; the Court has no residual discretion to refuse a stay and must give effect to the parties' agreement to arbitrate.

Derrington J therefore ordered the stay of the whole of Smithbridge’s claim against Swire in the Federal Court and refused Smithbridge’s application for a permanent anti-arbitration or anti-suit injunction.

Conclusion

The Court’s decision confirms that the COGSA will not automatically render ineffective every foreign arbitration agreement in a shipping contract. While important, the anti-ouster provisions in the COGSA are not all-encompassing and the Court will carefully consider whether the contract falls within the statutory regime.

For parties negotiating shipping contracts, the case highlights the continued importance of contractual drafting, the legal characterisation of shipping documents, and the importance of seeking appropriate advice as to the enforceability of a maritime arbitration agreement before a dispute arises.

For arbitration practitioners, the decision serves as a further reminder that Australian courts will generally hold parties to their bargain and enforce foreign-seated arbitration agreements unless a clear statutory basis exists for intervention.