Gill (Malaya) CJ (delivering the judgment of the Court):

The appellants, Globus Shipping & Trading Co. (Pte.) Ltd., were defendants in an action against them by the respondents, Taiping Textiles Berhad, as plaintiffs in the Magistrate's Court at Penang. The action was dismissed on the ground that the Court had no jurisdiction to adjudicate on the plaintiffs' claim. The plaintiffs appealed to the High Court. Arulanandom J allowed the appeal, setting aside the Magistrate's decision and remitting the case for trial. The defendants then appealed to this Court. We dismissed the appeal and now state our reasons.

The plaintiffs' claim in the action was for a sum of $1,076.58 as damages for breach of contract by the defendants as carriers for reward of a cargo of cotton from Karachi to Penang by their vessel known as 'Cherry Venture'. The contract was contained in a bill of lading dated 20 November 1972 whereby the defendants acknowledged the shipment on board their vessel in apparent good order and condition 508 bales of Pakistan Raw Cotton for carriage to and delivery at Penang to the plaintiffs for an agreed freight. When the cargo was duly delivered to them as indorsees of the bill of lading, the plaintiffs found that there was a net shortage of 750.96 lbs of cotton from seven bales that 997.00 lbs of cotton were badly dirt stained and slightly wet and that four bales of cotton were short landed.

It was in respect of those shortages and the damage to they cotton that the brought the action for damages in the Magistrate's Court at Penang. Clause 3 of the Bill of Lading provided as follows:

Any dispute arising under the Bill of Lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply.

The defendants' principal place of business is in Singapore, but they have Hai Thong Shipping Co. of 127 Penang Street, Penang as their agents in Penang. The plaintiffs' principal place of business is in Kuala Lumpur but they have forwarding agents to act for them in Penang.

At the trial of the action before the learned Magistrate Counsel for the defendants took the preliminary objection, which was also one of the defences raised, that by reason of cl 3 of the bill of lading the Court had no jurisdiction to hear the case, citing the Singapore case of Azimullah V. Master Of Ss "halldor" & Ors. as the authority for such objection. Counsel for the plaintiffs, on the other hand, submitted that the Court had jurisdiction to determine the claim on the ground that although the plaintiffs were in Kuala Lumpur they had forwarding agents in Penang. As authority for his proposition he cited the case of The Fehmarn [1957] 2 All ER 707.

Having heard those arguments on the preliminary objection and taken a few days to consider the matter, the learned Magistrate gave a decision that in his opinion the Court had no jurisdiction to determine the plaintiffs' claim. Accordingly, he made an order striking out the claim with costs. However, in his grounds of judgment, which he wrote subsequently, he stated that in striking out the claim the Court exercised its jurisdiction in favour of the defendants and gave effect to the jurisdiction clause in the contract. He arrived at that conclusion in his grounds of judgment after stating therein the facts of the two cases which were cited to him and after referring to what Choor Singh J said in the Azimullah case, [1965] 1 MLJ 248, namely that the question of jurisdiction in a dispute of this nature is a matter which is entirely in the discretion of the Court which is called upon to decide the dispute.

The submissions at the hearing of the appeal in the High Court before Arulanandom J were very brief, and his Lordship had no hesitation in allowing the appeal rightaway. As he stated in his grounds of judgment, while the learned Magistrate had said that he exercised his discretion, there was nothing to indicate why the discretion was exercised