US AND UK PASSENGERS ALLOWED TO PARTICIPATE IN AUSTRALIAN CLASS ACTION DESPITE EXCLUSIVE JURISDICTION CLAUSES - KARPIK V CARNIVAL PLC (THE RUBY PRINCESS) (STAY APPLICATION) [2021] FCA 1082

In another interlocutory judgment arising from the Ruby Princess, on 10 September 2021, Justice Stewart of the Federal Court of Australia refused Carnival plc’s application to stay proceedings against US and UK overseas passengers seeking to participate in the Australian class action. The class action was brought by the passengers of Ruby Princess cruise ship who contracted COVID-19 and the executors of the deceased passengers together with the close family members of the passengers) alleging negligence and breaches of the Australian Consumer Law by Carnival plc, the time charterer of the vessel, and Princess Cruise Lines Ltd, the operator of the vessel (‘Respondents’).

The Respondents sought to stay the proceedings against 696 US passengers and 159 UK passengers (out of a total 2651 passengers) on board of Ruby Princess on the basis that:

1. the jurisdiction and choice of law clauses contained in the US and UK contracts for carriage required any disputes in relation to those contracts to be determined by US or UK courts and in case of the US passengers, that they agreed not to participate in any representative proceedings, referred to as ‘class action waiver’; or

2. Australian Courts were a ‘clearly inappropriate forum’ to hear the claims of foreign nationals.

Justice Stewart found that the exclusive jurisdiction clauses in favour of US District Courts for the Central District of California and the class action waiver clause contained in the terms and conditions of cruise tickets purchased by the US nationals were not incorporated into the contract for carriage of passengers on board because:

• the US passengers were not provided with a copy of the terms and conditions that included jurisdiction and choice of law clauses until a month after the contract was formed, that is, after making a booking and paying the price for the tickets; and

• the booking confirmation emails sent by the Respondent did not give any warnings about the exclusive jurisdiction clauses and the class action waiver clause, which were found to be onerous or unusual.

Importantly, in obiter, Justice Stewart found that the class action waiver clause was an unfair contract term in contravention of the Australian Consumer Law.

Further, Justice Stewart found that allowing the stay would lead to a fractured litigation with almost identical claims being heard in the US, UK and Australia.

The alternative ‘clearly inappropriate forum’ ground for ordering stay of proceedings did not succeed because:

• the wrongful conduct complained of being a failure to protect from COVID 19 risks occurred in NSW;

• the claims under the Australian Consumer Law that form part of the claim are required to be decided in accordance with Australian Law; and

• the claims of 1,796 Australian passengers will proceed in Australia.

This decision highlights the need to review standard terms and conditions to take into account the Australian Consumer Law. The attention of customers need to be drawn to any onerous or unusual clauses, and whether terms may be construed as unfair needs to be considered by corporations. Customers should be provided with copies of the terms and conditions immediately before the conclusion of any relevant contract.