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Written by Peter Carter

September 13, 2021

The Ruby Princess departed Sydney on 8 March 2020 for New Zealand and returned on 19 March becoming the catalyst for the worst COVID-19 outbreak in the first phase of the pandemic. Carnival – the giant US cruise boat operator of Princess, Carnival and P&O cruises – was exonerated by the NSW Commission of Enquiry notwithstanding the ship’s crew were aware of the outbreak before they docked let loose more than 2600 infected passengers into the community.

A class action against Carnival by passengers alleges it even knew of the likelihood of a Covid outbreak before setting off for New Zealand and that that the cruise should have been cancelled for that reason. The claims are in negligence and for breaches of statutory warranties under the Australian Consumer Law.

Nearly 700 of their number purchased their cruise in North America on “US terms” ie according to ticket conditions that only allow lawsuits against Carnival to be filed in California and that prohibit those passengers joining any class action.

Carnival petitioned the Federal Court in Sydney to stay the claims of all “US terms passengers” in the class action so they could be heard in the US with US law applied.

Carnival class actionAt the outset Justice Angus Stewart decided in relation to Patrick Ho – a resident of Canada and the representative of all US terms passengers in the stay proceedings – that the exclusive jurisdiction and class action waiver clauses were not incorporated into his cruise contract because they were contained in a document issued by the cruise line after the contract of carriage had in fact already been formed.

His Honour noted that each passenger’s circumstances would have to be separately examined to determine whether the same conclusion could be drawn in their cases.

He went on to make other findings in case an appeal court decided he had erred on the incorporation of contract terms point.

Justice Stewart was not prepared to hold that the exclusive US jurisdiction clause was of itself an unfair term under the Australian Consumer Law but had no hesitation in concluding that the class-action waiver Carnival wanted to enforce was invalid for that very reason.

He ruled that in those circumstances it was preferable to have the US terms passenger claims heard in Australia specifically because they would have the advantage of class-action representation here that would be denied to them by a California court applying US law.

It was undesirable in his view that litigation dealing with “essentially identical claims” be “fractured” by being heard in two different countries with potentially different outcomes being reached.

Carnival also argued that Sydney was a “clearly an appropriate forum”. Not so, said the judge because the claims “have a substantial connection with NSW” with breaches, conduct and omissions having occurred less than 1 km away from the court at the international cruise ship terminal at Circular Quay.

Further, because the ACL applied in many respects to the claims, it was very appropriate that the proceedings – even for overseas passengers – be conducted here.

The plaintiffs had argued that the court was prevented from staying the ACL proceedings because s 138 of  the Competition and Consumer Act 2010 confers jurisdiction on the FCA in respect of all ACL matters. His Honour did not however accept the “implied prohibition” contended for.

The court reserved the issue of the law that applied to the negligence claims with Carnival asserting that they had to be determined under US maritime law.

This decision is a big win not just for for Ruby Princess passengers but for all Australian consumers. It is a powerful demonstration of just how robust our consumer protections are and how anti-consumer contract terms favoured by international conglomerates like Carnival will not be allowed to flourish here as they have elsewhere.

Karpik v Carnival plc (The Ruby Princess) (Stay Application) [2021] FCA 1082 Stewart J, 10 September 2021

Categories: Cruise ship injury , cross border claims , Holiday & Travel Law

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