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In litigation arising out of Argentinean automobile accidents involving Ford Explorers with Firestone Tires, Florida appellate court rules that trial court did not abuse its discretion by denying Defendants’ motion to dismiss for forum non conveniens, where Argentinean courts would impose 3% filing fee in this case where Plaintiffs sought large amount of damages
A series of rollover accidents occurred in Argentina, involving Ford Explorers with Firestone tires. The injured parties and the families of the deceased parties (Plaintiffs) brought suits against Ford Motor Company and Bridgestone/Firestone North American Tire, LLC (Defendants), in Florida state court. Defendants moved to dismiss on forum non conveniens grounds, arguing that the balance of convenience to the parties and witnesses would favor litigation in Argentina’s courts. The trial court denied the motions.
The District Court of Appeal of Florida reverses and remands. It finds that that the trial court did not conduct an adequate analysis of the forum non conveniens issue pursuant to Kinney System, Inc. v. Continental Insurance Co., 674 So. 2d 86 (Fla. 1996). On remand, the trial court again denied the forum non conveniens motions. Defendants again appealed. The Court of Appeal affirms the lower court’s discretionary ruling that Argentina is an inadequate and unavailable alternative forum under the circumstances.
“A Defendant seeking dismissal on forum non conveniens grounds bears the burden of persuasion as to each Kinney factor. [Cite]. The first factor the court must analyze is whether there is an available adequate alternative forum which possesses jurisdiction over the whole case. [Cite].”�
Both Plaintiffs and Defendants offered affidavits from Argentinean legal experts containing their opinions of the Argentinean courts’ jurisdiction over the case. “Upon reviewing these affidavits, the trial court determined that the existence of jurisdiction in Argentina was arguable and concluded that it could not ensure that an Argentine court would not dismiss the case for lack of jurisdiction … [Hence] the trial court’s conclusion that Appellants did not carry their burden of persuasion on this issue was not unreasonable.”�
“[Defendants]‘ experts asserted that Argentine law provides causes of action and remedies analogous to those sought by Plaintiffs in the United States, and allows for actual and foreseeable damages, as well as pain and suffering damages. However, Plaintiffs’ experts explained that Plaintiffs in Argentina are required to pay a filing fee of 3% of the damages sought in the lawsuit as a prerequisite to consideration of the case.”�
“The trial court concluded that Defendants did not satisfy their burden of persuasion as to the adequacy of the Argentine forum, finding the 3% filing fee of particular importance to its decision. We find this conclusion to be reasonable in light of the affidavits submitted by Defendants’ experts. The 3% filing fee may deprive Plaintiffs of a remedy in Argentina, particularly in cases such as these, where Plaintiffs are seeking a substantial amount of monetary damages.”� [Slip Op. 5 6].
Citation: Bridgestone/Firestone North America Tire, LLC v. Garcia, No. 4D07 1793 (Fla. App. August 6, 2008).
Filed in: 2008 International Law Update, Issue10
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In matter of first impression, Rhode Island Supreme Court formally recognizes forum non conveniens doctrine and rules that its state courts are not proper courts to decide this asbestos case filed by Canadian plaintiffs
Thirty nine Canadians (Plaintiffs) filed lawsuits in the Rhode Island courts against various companies (Defendants) that do business there (including General Electric Company), alleging their injurious Canadian workplace exposure to asbestos containing products. The Defendants moved to dismiss all cases. In May 2005, the Superior Court denied the motions to dismiss. The Judge noted that Rhode Island had not yet recognized the forum non conveniens (FNC) principle (except in child custody matters).
The Defendants successfully petitioned the Rhode Island Supreme Court (RISC) to review the denial of their motions to dismiss the 39 cases. They raised two issues. The first was whether Rhode Island should expressly recognize FNC and set a standard for the same. Secondly, assuming FNC does apply, whether the Superior Court had erroneously “exercised jurisdiction”� over the 39 Canadian Defendants.
In a matter of local first impression, the RISC now joins 46 states and the federal courts by formally recognizing the FNC doctrine. The Court first recaps the fundamentals of the doctrine. In general, it says that a court may decline to exercise subject matter jurisdiction when the Plaintiff’s chosen forum is significantly inconvenient for Defendants and where litigation in a more convenient forum would better serve the ends of justice.
“Under the [FNC] doctrine “�when an alternative forum has jurisdiction to hear [a] case, and when trial in the chosen forum would “�establish … oppressiveness and vexation to a Defendant … out of all proportion to Plaintiff’s convenience,’ or when the “�chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems,’ the court may, in the exercise of its sound discretion, dismiss the case on FNC grounds “�even if jurisdiction and proper venue are established.’ American Dredging Co. v. Miller, 510 U.S. 443, 447 48 (1994) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 (1981)).”� [Slip op. 12 13].
“Before embarking on an FNC inquiry, a court must determine the existence of proper jurisdiction and venue. See [Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (1947)]. A court should never apply [FNC] once it determines that jurisdiction is lacking. Sinochem International Co. Ltd. v. Malaysia International Shipping Corp., 127 S. Ct. 1184, 1193 (2007).”�
“Nevertheless, a court may “�dispose of an action by an [FNC] dismissal, bypassing questions of subject matter and personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.’ … Such a scenario occurs, for example, when discovery concerning personal jurisdiction would burden a defendant with expense and delay for “�scant purpose’ because a court would inevitably dismiss on the basis of [FNC] … However, in most cases, when a court can “�readily determine that it lacks jurisdiction over the cause or the defendant, the proper course would be to dismiss on that ground.’”�
“The [FNC] inquiry consists of a two prong analysis. First, the court must decide whether an alternative forum exists that is both available and adequate to resolve the disputed legal issues. Piper Aircraft Co., supra, at 255 n.22. Second, the court must determine the inconvenience of continuing in the Plaintiff’s chosen forum by weighing private and public interest factors. Id. at 255 … “�A defendant invoking [FNC] ordinarily bears a heavy burden in opposing the plaintiff’s chosen forum.’ Sinochem, supra, at 1191. It is well settled that the Defendant carries the burden of persuasion at each stage of the [FNC] inquiry. Lacey v. Cessna Aircraft Co., 862 F.2d 38, 43 44 (3d Cir. 1988).”� [Slip op. 13 14].
“If the alternative forum is not available, a court cannot dismiss on [FNC] [unless] Defendant is “�amenable to process’ in the other jurisdiction.”� Piper Aircraft Co., supra at 255 n. 22 … To guarantee availability, a court can condition [an FNC] dismissal on the defendant’s consent to submit to jurisdiction in the alternative forum.”�”Even where the alternative forum is available, a court cannot dismiss on [FNC] grounds if the alternative forum is inadequate. In performing the adequacy calculus, “�[t]he possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight,’ Piper Aircraft Co., supra, at 247, … However, “�if the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all, the unfavorable change in law may be given substantial weight …’”�
“”�[T]he bar for establishing that the alternative forum is adequate historically has been quite low. Thus, according to a number of decisions, the alternative forum is adequate as long as the plaintiff will not be deprived of all remedies or subjected to unfair treatment. A mere decrease in the amount potentially recoverable or the loss of the availability of contingent fee arrangements, the absence of the right to a jury trial, or the loss of various other procedural advantages such as the alternative forum’s restrictions on the scope or nature of discovery and the lack of a class action or other aggregation procedures normally will not prevent dismissal. Likewise, general accusations of corruption, delay, or other problems with the alternative forum’s judicial system normally will not suffice ….’ 14D Charles Alan Wright et al., Federal Practice & Procedure Section 3828.3 at 677 82 (3d ed. 2007).”� [Slip op. 14 15]
“The second prong of the [FNC] inquiry focuses on the inconvenience of continuing in the chosen forum by weighing private and public interest factors. It is not possible to catalogue all the circumstances that may or may not lead to a [FNC] dismissal. Gulf Oil Corp., supra at 508. Because the doctrine requires flexibility, central emphasis should not be placed on any one private or public interest factor. Piper Aircraft Co., supra at 249 50.”�
“�The private interests of the litigants include the following factors:’ “�Important considerations are the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; the possibility of a view of premises, if such a view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.’ Gulf Oil Corp., supra at 508.”�
“Other factors that may be relevant to the private interest assessment include the enforceability of a judgment in the alternative forum, and the advantages and obstacles to a fair trial. Gulf Oil Corp., supra, at 508. Also, a “�plaintiff may not, by choice of an inconvenient forum, “�vex,’ “�harass,’ or “�oppress’ the defendant by inflicting upon him expense or trouble not necessary to his own right to pursue his remedy.’ Id. The private interest of a plaintiff should be afforded more weight when the forum choice appears to be based on legally valid reasons such as convenience and expense.”� [Slip op. 15 16]
The U.S. Supreme Court also has identified several public interest factors: “Administrative difficulties follow for courts when litigation is piled up in congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation. In cases which touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only. …”� [Slip op. 16 17]
The Court then decides that the circumstances of the 39 cases require the application of the FNC doctrine here. The private and public interest factors support a Canadian forum: As for the private factors, none of the Plaintiffs or Defendants are Rhode Island residents. Much of the evidence is in Canada or other U.S. states. Most of the relevant events took place in Canada. The local court might have to subpoena unwilling Canadian witnesses with the procedural help of a Canadian court.
As for the public factors, a Rhode Island jury would have to hear a complicated case that has no meaningful connection with the state. Canadian law would likely apply and further burden the court. Here, the Court is unable to discern any significant nexus with Rhode Island interests.
The Court remands with instructions to dismiss the 39 cases under the FNC doctrine upon the condition that the Defendants waive any statute of limitations defense that might be available to them in the alternative forum.
Citation: Kedy v. A. W. Chesterton Co., 2008 WL 1990252; Nos. 2005 332 M.P. & 2005 319 M.P. (RI May 9, 2008).
Filed in: 2008 International Law Update, Issue5
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First Circuit overturns district court’s dismissal for forum non conveniens, holding that, all other factors being equal, the existence of concurrent litigation in a foreign state does not overcome the strong presumption that an American forum selected by an American plaintiff is the proper forum for a suit
Plaintiff Sheldon Adelson, a United States citizen, possesses substantial holdings in Interface Partners International, Ltd. (“IPI”), a Delaware corporation which was established for the purpose of making business investments in Israel, and has offices in both Massachusetts and Israel. The Defendant, an Israeli resident and citizen, was hired by IPI to be the company’s General Manager of operations in Israel. Prior to the current suit, the Defendant had previously filed two suits against the Plaintiff in the Tel Aviv District Labor Court, alleging, inter alia, that he was due compensation from IPI for his employment as well as twelve percent of the Plaintiff’s shares in a development project in Macau, China. The Plaintiff had filed a countersuit in the Israeli court. In February, 2004, the Plaintiff also brought suit in the United States District Court for the District of Massachusetts seeking a declaration of the parties’ respective rights under the oral employment contract between IPI and the Defendant. The Plaintiff also contended that the Defendant’s suits in Israel “amount[ed] to extortion and that they are inhibiting his ability to deal freely in his Macau business venture.” [¶ 18]
Following jurisdictional discovery, the Defendant made a motion to dismiss for lack of personal jurisdiction and forum non conveniens. The district court denied the motion to dismiss for lack of personal jurisdiction, but granted the motion to dismiss for forum non conveniens. This appeal ensued.
The U.S. Court of Appeals affirms the denial of the motion to dismiss for lack of personal jurisdiction, but reverses the dismissal on forum non conveniens grounds.
The Court upholds the district court’s finding that personal jurisdiction over the defendant existed. For specific jurisdiction over an alien defendant, a finding of necessary minimum contacts could be made where the defendant had entered into the contract at issue in the forum state, communicated regularly with that state during the course of his employment in a foreign State, and had business operations that were primarily channeled through the forum state. The Court further holds that, although the defendant lived and worked in Israel and was legally blind and diabetic, and that “those facts evoke sympathy for the undeniable burden placed upon the [Defendant],” the district court had acted properly when it found that no special or unusual burden existed that would counsel against a finding of jurisdiction, as neither the Defendant’s foreign location nor medical condition prevented him from traveling internationally during the course of business. [¶ 45]
The Court then turns to the Plaintiff’s appeal from the dismissal of his suit for forum non conveniens, and applying the framework supplied by the Supreme Court Gulf Oil Corp. v. Gilbert, 330 U.S. 501, and Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, overturns the district court’s decision. “Those cases and their progeny established forum non conveniens as a discretionary tool for the district court to dismiss a claim, even when it has proper jurisdiction. See Gilbert, 330 U.S. at 507. That power, however, is limited by the overarching principle that a ‘plaintiff’s choice of forum should rarely be disturbed.’ Id. at 508 Accordingly, the party moving for dismissal bears the heavy burden of establishing that an adequate alternative forum exists and that ‘considerations of convenience and judicial efficiency strongly favor litigating the claim in the second forum.’ Iragorri v. Int’l Elevator, Inc., 203 F.3d at 12.” [¶ 49]
In the past, the First Circuit recognized a strong presumption in favor of an American forum selected by American plaintiffs. Mercier v. Sheraton Int’l Inc., 981 F.2d 1345, 1355 (1st Cir. 1992) For the Plaintiff’s suit, although the Plaintiff was not himself a Massachusetts domiciliary, the Massachusetts district court was still to be deemed his “home forum” where the alternative was a foreign court, as there exists a strong federal interest in ensuring that American citizens will generally be able to enjoy an American forum to settle their disputes rather than be relegated to foreign courts.
Thus, while the district court “properly observed that [Plaintiff] is a United States citizen and that there is a ‘heavy presumption’ in favor of his choice of forum, the district court ignored that presumption because of the existence of the concurrent action in the Israeli court. Indeed, in its analysis up to that point, the district court had found that the ‘private interest factors did not weigh in favor of either party’ and that the public interest was ‘also in equipoise between the parties.’ Moreover, the court also found that [Plaintiff's] suit was neither vexatious nor oppressive. Thus, it was the existence of concurrent litigation that not only caused the balance to shift in favor of the foreign forum, but also eviscerated the presumption in favor of the plaintiff’s forum. In discussing the Israeli suit, the district court stated, ‘I see no reason why [Plaintiff] cannot fairly litigate his claim in Israel.’ The district court erred in so construing the importance of concurrent litigation within the forum non conveniens analysis.” [¶ 53]
By taking the pending Israeli cases into account, the district court “erroneously lowered” the Defendant’s burden of proving that the balance of factors justified dismissal of a suit from an American citizen’s choice of forum. “The existence of concurrent litigation is not a relevant factor to the analysis; none of the factors enumerated above invokes a comparison between the two competing fora. By focusing on the existence of parallel proceedings in a foreign court, the district court essentially converted the analysis into a determination of which of the two pending cases should go forward. Having found the public and private interest factors [related to the Defendant's motion to dismiss for forum non conveniens] to be in equipoise, the district court should have concluded that the defendant failed to overcome the heavy presumption in favor of the plaintiff’s home forum.” [¶ 54–56]
Citation: Adelson v. Hananel, No. 06 2281 (1st Cir., December 5, 2007).
Filed in: 2007 International Law Update, Issue11
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Fifth Circuit affirms forum non conveniens dismissal of Texas lawsuit in favor of forum Mexico despite allegations of bribery and other unethical conduct in Mexico; all relevant acts occurred in Mexico and aspects of the matter have already been litigated in Mexico; the fact that the opposing party has already prevailed in part in Mexico proves that it is an adequate alternative forum
The following is a dispute between a Mexican banking corporation and a South Carolina company over the proceeds from the sale of textile manufacturing equipment. A Mexican textile manufacturer, Denimtex, S.A. de C.V., purchased $30 million worth of manufacturing equipment with bank loans, and began defaulting on the loans in 2000. BBVA Bancomer, S.A. (Bancomer) held a security interest in that equipment, and DTEX, LLC claims that it owned the equipment based on a foreclosure sale by the Mexican Government. This dispute has occupied Mexican and U.S. courts since 2002. In one of the Mexican actions, Bancomer claimed that the Mexican tribunal that conducted the sale of the equipment had done so in violation of Bancomer’s rights.
The Mexican court dismissed that action, and subsequent appeals confirmed the result.
DTEX filed the present lawsuit in the Southern District of Texas, seeking damages for tortious interference with contract, intentional interference with prospective contractual relations, and conversion. There was jurisdiction over Bancomer in Texas because it has a foreign bank agency in Houston, Texas. The district court dismissed DTEX’s lawsuit based on forum non conveniens, suggesting that the matter proceed in Mexico. This appeal ensued.
The U.S. Court of Appeals for the Fifth Circuit affirms the district court because there was no abuse of discretion. In fact, the Court fully agrees with the district court’s opinion and adopts its Memorandum and Order by reference as the opinion of the Court.
The district court has broad discretion in determining forum non conveniens, and such finding may be reversed only if there is a clear abuse of discretion. The applicable standard is:
“The defendants bear the burden of proof on all elements of the forum non conveniens analysis. …”
“The ‘private interest’ factors include: ‘(I) the relative ease of access to sources of proof; (ii) availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; (iii) possibility of view of [the] premises, if view would be appropriate to the action; (iv) all other practical problems that make trial of a case easy, expeditious and inexpensive . . . enforceability of judgment [; and whether] the plaintiff [has sought to] ‘vex,’ ‘harass,’ or ‘oppress’ the defendant. [...]”
“The ‘public interest’ factors include:”
“(I) the administrative difficulties flowing from court congestion; (ii) the local interest in having localized controversies resolved at home; (iii) the interest in having a the trial of a diversity case in a forum that is familiar with the law that must govern the action; (iv) the avoidance of unnecessary problems in conflicts of law, or in application of foreign law; and (v) the unfairness of burdening citizens in an unrelated forum with jury duty.”
“The defendant carries the burden of persuading the court that a lawsuit should be dismissed on forum non conveniens grounds. … Ordinarily a strong favorable presumption is applied to the plaintiff’s choice of forum. ‘[U]nless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.’ Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).” [Slip op. 10 11]
The district court then applied the factors to the case at bar. As for the adequacy and availability of the foreign forum, both parties presented experts on Mexican law. Even though Mexican law may limit some of the damages that DTEX is claiming for the alleged tortious conduct, it does recognize DTEX’s claims. In fact, DTEX has prevailed against Bancomer in one of the Mexican cases and collected 39 million Mexican pesos.
As for the ease of access to sources of proof, DTEX’s witnesses are primarily in Mexico. Most of the alleged events occurred in Mexico. The evidence includes Mexican court transcripts, Mexican police records, the impoundment of the equipment by Mexican authorities, and DTEX’s attorneys’ fees incurred in Mexico. Most of these documents are in Spanish and translations would be expensive and time consuming. Thus, the relative ease of access to evidence favors Mexico.
As for the availability of compulsory process for unwilling witnesses, many of DTEX’s non party witnesses are Mexican, including the judicial administrator of the equipment impoundment, Mexican judges, Mexican police officers, and other Mexican court officials. The district court cannot compel the attendance by any unwilling non party witness located in Mexico. This factor favors dismissal based on forum non conveniens.
As for the cost of securing attendance of willing witnesses, since virtually all witnesses are Mexican, this factor favors dismissal.
As to other factors that facilitate the proceeding, DTEX refers to Bancomer’s alleged undue influence on Mexican government officials and other unethical actions. Furthermore, DTEX claims that litigating in Spanish is a hardship. The district court notes that DTEX purchased the equipment at issue in Mexico at an auction sponsored by the Mexican Government, and has already litigated aspects of this case in Mexico.
As for the public interest factor of administrative difficulties, all of the above mentioned factors indicate that administrative difficulties would be greatly reduced in Mexico.
As for interest of the forum in resolving the controversy, all alleged torts occurred in Mexico. Clearly, Mexican courts have a greater interest that U.S. courts in deciding whether the Mexican court system has been abused after an impoundment by the Mexican Government. DTEX’s only connection to Texas in this instance is this lawsuit.
As to the governing law, it is likely that Mexican law will apply to at least part of the controversy. Texas follows the “most significant relationship test” pursuant to the Restatement (Second) of Conflict of Laws Section 6 and Section 145. The relevant contacts include the place where the injury occurred, the domicile of the parties, and the place where the relationship of the parties is centered. All of these contacts favor Mexico.
Finally, as to the burden on the citizens, Texas should not be burdened with the Mexico centered lawsuit.
In sum, Mexico is an adequate and available forum, and both private and public interest factors strongly support dismissal based on forum non conveniens.
Citation: DTEX, LLC v. BBVA Bancomer, S.A., No. 07 20364 (5th Cir. November 21, 2007).
Filed in: 2007 International Law Update, Issue10
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Resolving circuit conflicts, the U.S. Supreme Court rules that district courts have discretion to dismiss on forum non conveniens grounds for trial abroad without having definitively decided whether it has subject matter jurisdiction over case and personal jurisdiction over defendant
Petitioner, Sinochem International Co., Ltd., a Chinese state owned importer, entered into a contract with Triorient, a U.S. corporation not a party here. It provided that Sinochem would buy steel coils from Triorient, the latter to be paid under a letter of credit by producing a valid bill of
lading. The bill would certify that Triorient had seen to the loading of the coils for shipment to China on or before April 30, 2003.
Triorient then subchartered a vessel owned by Respondent, Malaysia International Shipping Corporation, a Malaysian company, to transport the coils, and hired a stevedoring company to load the coils in Philadelphia. A bill of lading would trigger payment under the letter of credit.
At some point, Petitioner got the idea that Respondent had falsely backdated the bill of lading. It petitioned the Guangzhou Admiralty Court of China to preserve a maritime claim against Respondent and to arrest the vessel. The Chinese court had the ship arrested, and Petitioner timely filed a complaint in that tribunal. The Chinese admiralty court rejected Respondent’s
jurisdictional objections to Petitioner’s suit and a Chinese appellate court affirmed that ruling.
Shortly after the Chinese admiralty court ordered the vessel’s arrest, Respondent filed this U.S. action in the Eastern District of Pennsylvania. It claimed that Petitioner’s preservation petition to the Chinese court contained misrepresentations, and asked for damages for losses sustained due
to the ship’s arrest.
Petitioner moved to dismiss on several grounds, including lack of subject matter and personal jurisdiction and the doctrine of forum non conveniens. Under the latter, a federal district court may dismiss an action if it appears that a foreign court is the more appropriate and convenient
forum for adjudicating the controversy.
The District Court determined (1) that it had subject matter jurisdiction over the cause, (2) but that it lacked personal jurisdiction over Petitioner under Pennsylvania law (speculating that limited discovery might reveal that it could have personal jurisdiction under Fed. R. Civ. Proc. 4(k)(2)).
Ultimately, it dismissed on forum non conveniens grounds, deciding that the Chinese courts could decide the case adequately and more conveniently. On appeal, a Third Circuit panel reversed over one dissent. The majority agreed that there was subject matter jurisdiction and that limited discovery was essential to resolve the question of personal jurisdiction. It also held
that the District Court could not dismiss the case under the forum non conveniens doctrine unless and until it had determined definitively that it had both subject matter and personal jurisdiction.
To resolve a conflict in the circuit courts, the U.S. Supreme Court granted certiorari and unanimously reverses. It rules that a federal district court has discretion to respond at once to a defendant’s forum non conveniens plea, and need not rule first on any other threshold objection. In particular, a court need not resolve whether it has authority to adjudicate the cause or personal jurisdiction over the defendant if it determines that, in any event, a foreign tribunal is the more suitable arbiter of the merits.
In general, a federal court has discretion to dismiss on forum non conveniens grounds “when an alternative forum has jurisdiction to hear [the] case, and … trial in the chosen forum would establish … oppressiveness and vexation to a defendant … out of all proportion to plaintiff’s
convenience, or … the chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems. American Dredging Co. v. Miller, 510 U.S. 443, 447 448 (1994 ).”
“This form of dismissal embodies a court’s assessment of a range of considerations, most notably the convenience to the parties and the practical difficulties that can attend the adjudication of a dispute in a certain locality. Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 723 (1996).”
When a defendant invokes forum non conveniens, it ordinarily bears a substantial onus in trying to upset the Plaintiff’s initial choice of forum. “When the plaintiff has not opted to sue in its home forum, however, the presumption in the plaintiff’s favor ‘applies with less force,’ for the
assumption that the chosen forum is appropriate is then ‘less reasonable.’ Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 256 (1981).”
“Steel Co. v. Citizens for Better Environment, 523 U.S. 83 (1998), clarified that a federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject matter jurisdiction) and the parties (personal jurisdiction). See id., at 93 102. ‘Without jurisdiction the court cannot proceed at all in
any cause;’ it may not assume jurisdiction for the purpose of deciding the merits of the case. Id., at 94 (quoting Ex parte McCardle, 7 Wall. 506, 514 (1869)).”
“While Steel Co. confirmed that jurisdictional questions ordinarily must precede merits determinations in dispositional order, Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584 (1999) held that there is no mandatory ‘sequencing of jurisdictional issues.’ 526 U.S., at 584. In appropriate circumstances, Ruhrgas decided, a court may dismiss for lack of personal
jurisdiction without first establishing subject matter jurisdiction. See id., at 578.”
“Both Steel Co. and Ruhrgas recognized that a federal court has leeway ‘to choose among threshold grounds for denying audience to a case on the merits.’ Ruhrgas, 526 U.S., at 585; Steel Co., 523 U.S., at 100 101, n. 3. Dismissal short of reaching the merits means that the court will not ‘proceed at all’ to an adjudication of the cause. Thus, a district court declining to adjudicate state law claims on discretionary grounds need not first determine whether those claims fall within its pendent jurisdiction. See Moor v. County of Alameda, 411 U.S. 693, 715 716 (1973).” [1191].
“Nor must a federal court decide whether the parties present an Article III case or controversy before abstaining under Younger v. Harris, 401 U.S. 37 (1971). [Cite]. A dismissal under Totten v. United States, 92 U.S. 105 (1876) (prohibiting suits against the Government based on covert espionage agreements), we recently observed, also ‘represents the sort of ‘threshold question’ [that] … may be resolved before addressing jurisdiction.” Tenet v. Doe, 544 U.S. 1, 7, n. 4 (2005). The principle underlying these decisions was well stated by the Seventh Circuit: ‘[J]urisdiction is vital only if the court proposes to issue a judgment on the merits.’ Intec U.S.A., LLC v. Engle, 467 F.3d 1038, 1041 (7th Cir. 2006).”
“A forum non conveniens dismissal ‘den[ies] audience to a case on the merits,’ Ruhrgas, 526 U.S., at 585; it is a determination that the merits should be adjudicated elsewhere. See American Dredging, 510 U.S., at 454; Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 148 (1988).” “The Third Circuit recognized that forum non conveniens ‘is a non merits ground for dismissal.’
436 F.3d, at 359. [Cites]. A district court therefore may dispose of an action by a forum non conveniens dismissal, bypassing questions of subject matter and personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant.”
“Of course a court may need to identify the claims presented and the evidence relevant to adjudicating those issues to intelligently rule on a forum non conveniens motion. But other threshold issues may similarly involve a brush with ‘factual and legal issues of the underlying dispute.’ Van Cauwenberghe v. Biard, 486 U.S. 517, 527 530 (1988).” [1192].
“For example, in ruling on the nonmerits threshold question of personal jurisdiction, a court may be called upon to determine whether a defendant’s contacts with the forum relate to the claim advanced by the plaintiff. See, e.g., Ruhrgas, 526 U.S., at 581, n. 4 (noting that the District Court’s holding that it lacked personal jurisdiction rested on its conclusion ‘that Marathon had not shown that Ruhrgas pursued the alleged pattern of fraud and misrepresentation during the Houston meetings’).”
“The critical point here, rendering a forum non conveniens determination a threshold, nonmerits issue in the relevant context, is simply this: Resolving a forum non conveniens motion does not entail any assumption by the court of substantive ‘law declaring power.’ See id., at 584 585.”
“The Third Circuit expressed the further concern that a court failing first to establish its jurisdiction could not condition a forum non conveniens dismissal on the defendant’s waiver of any statute of limitations defense or objection to the foreign forum’s jurisdiction. Unable so to condition a dismissal, the Court of Appeals feared, a court could not shield the plaintiff against a foreign tribunal’s refusal to entertain the suit. [Cite].”
“Here, however, [Respondent] faces no genuine risk that the more convenient forum will not take up the case. Proceedings to resolve the parties’ dispute are underway in China, with [Petitioner] as the plaintiff. Jurisdiction of the Guangzhou Admiralty Court has been raised, determined, and affirmed on appeal. We therefore need not decide whether a court conditioning a forum
non conveniens dismissal on the waiver of jurisdictional or limitations defenses in the foreign forum must first determine its own authority to adjudicate the case.” [1193].
“This is a textbook case for immediate forum non conveniens dismissal. The District Court’s subject matter jurisdiction presented an issue of first impression in the Third Circuit, … and was considered at some length by the courts below. Discovery concerning personal jurisdiction would have burdened [Petitioner] with expense and delay. And all to scant purpose: The District Court inevitably would dismiss the case without reaching the merits, given its well considered forum non conveniens appraisal.’”
“Judicial economy is disserved by continuing litigation in the Eastern District of Pennsylvania given the proceedings long launched in China. And the gravamen of [Respondent's] complaint – misrepresentations to the Guangzhou Admiralty Court in the course of securing arrest of the vessel in China – is an issue best left for determination by the Chinese courts.”
“If, however, a court can readily determine that it lacks jurisdiction over the cause or the defendant, the proper course would be to dismiss on that ground. In the mine run of cases, jurisdiction ‘will involve no arduous inquiry’ and both judicial economy and the consideration ordinarily accorded the plaintiff’s choice of forum ‘should impel the federal court to dispose
of [those] issue[s] first.’ Ruhrgas, 526 U.S., at 587 588. But where subject matter or personal jurisdiction is difficult to determine, and forum non conveniens considerations weigh heavily in favor of dismissal, the court properly takes the less burdensome course.” [1194].
Citation: Sinochem Intern. Co. Ltd. v. Malaysia Intern. Shipping Corp., 127 S. Ct. 1184, 75 U.S. L. W. 4126 (U.S. 2007).
Filed in: 2007 International Law Update, Issue2
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In subrogated Canadian suit by U.S. and Liberian shippers against U. K. and other foreign ocean carriers over lost cargo, Canadian Federal Court of Appeal rules that applicable Canadian statute favoring shippers did not require litigation in Canada and that balance of convenience pointed to litigation in English courts
In this action brought in the Canadian Federal Court (CFC), the Plaintiffs are “Magic Sportswear Corporation,” a Delaware corporation, carrying on business in New York, and “Blue Banana”, a Liberian company, doing business in Monrovia. They are the shipper and consignee, respectively, of some allegedly lost cargo.
The Defendants are the ocean carriers “OT Africa Line Ltd.,” “OT Africa Line,” and the owners, charterers and others interested in the Mathilde Maersk and in the Suzanne Delmas — the two ships that were transporting the cargo in question from New York City to Liberia.
Defendant, OT Africa Line Ltd., has its headquarters office in London and other offices around the world, including a branch office in Toronto. The insurers of the Plaintiffs’ cargo having paid $30,000 under the policy on a claim by the consignee filed the present damages suit under their right of subrogation.
Like the Plaintiffs, the cargo has no nexus to Canada. On the other hand, Toronto is the home base of the insurers, the place where the bill of lading was issued and where the ocean freight was payable to one of the Defendants.
To reduce the likelihood of jurisdictional disputes, contracts for the carriage of goods by sea often designate not only the exclusive forum for settling disputes between the shipper and the carrier, but also the applicable law. Many contracts specify the High Court in London (HCL), or an arbitrator, as the exclusive forum (1) to resolve any controversies arising from the contract and (2) to apply English law. The expense and inconvenience of having to litigate a claim for lost cargo in a foreign forum can, as a practical matter, divest Canadian shippers of an effective local remedy for a breach of contract by the carrier; this may force them to compromise on terms more advantageous to the carrier.
In 2001, the Canadian Parliament addressed this issue by enacting subsection 46(1) of the Marine Liability Act, S.C. 2001, c. 6 (MLA): “If a contract for the carriage of goods by water to which the Hamburg Rules do not apply provides for the adjudication or arbitration of claims arising under the contract in a place other than Canada, a claimant may institute judicial or arbitral proceedings in a court or arbitral tribunal in Canada that would be competent to determine the claim if the contract had referred the claim to Canada, where (a) the actual port of loading or discharge, or the intended port of loading or discharge under the contract, is in Canada or (b) the person against whom the claim is made resides or has a place of business, branch or agency in Canada; or (c) the contract was made in Canada.” (The “Hamburg Rules” refer to the United Nations Convention on the Carriage of Goods by Sea [1978, 30 March 1978, 1695 U.N.T.S. 3], which entered into force internationally on November 1, 1993.
After the Plaintiffs sued in the CFC, Defendants asked the HCL to issue an anti-suit injunction to forbid the Plaintiffs from litigating their claim in Canada (or anywhere else). Defendants relied on the above choice-of-forum clause. On November 3, 2004, the HCL issued the injunction. Seven months later, the English Court of Appeal dismissed the Plaintiffs’ appeal from the anti-suit injunction.
Supported by the English judgment, Defendants moved in the CFC to stay the Plaintiffs’ action. The CFC, however, upheld the Prothonotary’s [Q.V.] denial of Defendants’ motion to stay the Plaintiffs’ action.
The Defendants took the present matter to the instant Court, the Federal Court of Appeal (FCA). Its review broadly deals with whether the HCL should resolve the dispute over the alleged cargo loss (as the contract provides), or whether the CFC should do so. The CFC concededly has jurisdiction under MLA, subsection 46(1).
This question leads the FCA to two subsidiary issues. The first is to what extent, if at all, has subsection 46(1) modified private international law principles as to the CFC’s discretion to decline to exercise its jurisdiction on the ground that another forum is more appropriate. Secondly, in making that determination, to what extent, if at all, does the CFC have to take into account foreign judgments and contractual clauses choosing a foreign tribunal as the parties’ exclusive forum?
Also relevant here is Clause 25(1) of the conditions to the Bill of Lading. It provides that: “Any claim or dispute whatsoever arising in connection with the carriage under the Bill of Lading shall exclusively be governed by English law and determined by the [HCL].”
The FCA begins by noting that, although this case does not involve a large amount of damages, it does raise issues of principle that could affect hundreds of similar claims. “English law, the proper law of the contract in this case, regards the parties’ contractual choice of forum as virtually conclusive. In contrast, subsection 46(1) permits a party to institute proceedings in Canada for breach of contract, despite the presence of a [contract] clause nominating a foreign court as the exclusive forum for the resolution of disputes under the contract, provided that the claimant establishes that the parties or the contract have one of the statutorily specified connections to Canada.” [¶¶ 12-13].
“In the present case, subsection 46(1) confers jurisdiction on the [CFC] over the Plaintiffs’ claim against Defendants because the contract was made in Canada and Defendants have a place of business in Canada. The appeal raises two issues [of law] concerning the exercise of that jurisdiction. First, does subsection 46(1) remove the discretion of the [CFC] and the [FCA] to grant a stay pursuant to subsection 50(1) of the [Canadian] Federal Courts Act, R.S.C. 1985, c. F-7, (CFCA) even if another jurisdiction is a more convenient forum (the forum non conveniens doctrine) than Canada? Defendants say that it does not, while the Plaintiffs say that it does.” [¶¶ 14-15].
As relevant to this appeal, the [CFCA] provides as follows: “The [FCA] or the [CFC] may, in its discretion, stay proceedings in any cause or matter (a) on the ground that the claim is being proceeded with in another court or jurisdiction; or (b) where, for any other reason, it is in the interest of justice that the proceedings be stayed.”
One issue the FCA has to resolve here is: “…[I]f subsection 46(1) does not deprive the Court of its discretion to stay proceedings when it is the less convenient forum, what weight, if any, should the Court give in its forum non conveniens analysis to the parties’ contractual choice of forum and to the judgments asserting the jurisdiction of the English High Court over the dispute by virtue of the exclusive jurisdiction clause?”
“Defendants say that the principles of comity and freedom of contract, commercial certainty, and the desirability of avoiding parallel proceedings in Canada and England, require that these factors be afforded considerable weight. The Plaintiffs, on the other hand, say that to give the exclusive jurisdiction clause and the English judgments any weight would defeat the purpose of subsection 46(1) of the [MLA] by depriving them of their statutory right to litigate in Canada.”
“For the reasons which follow, I am of the opinion that Defendants are right and that the Plaintiffs’ action in the [CFC] should be stayed. Accordingly, I would allow Defendants’ appeal.” [¶¶ 17-19].
“It is common ground that [subsection 46(1) confers jurisdiction on the [CFC] over the Plaintiffs’ claim in this case. … The Plaintiffs argue that subsection 46(1) not only confers jurisdiction on the [CFC] over the dispute, but also directs the Court to exercise its jurisdiction, without considering whether it, or the [HCL] is the more convenient forum for litigating it. Accordingly, they say, the [CFC] was wrong to decide otherwise. I disagree for the following three reasons.”
“First, subsection 46(1) does not state that, once one of the jurisdictional criteria in subsection 46(1) is present, the court in which the claimant has elected to proceed must exercise its jurisdiction. The subsection merely provides that, when it applies, a claimant may institute proceedings in a court in Canada that would have jurisdiction if the contract had referred the claim to Canada.”
“Second, subsection 46(1) does not expressly remove the broad discretion of the [CFC] and [this Court] under subsection 50(1) of the [CFCA] to stay a proceeding over which they have jurisdiction, but where ‘the claim is being proceeded with in another jurisdiction’ or a stay ‘is in the interests of justice’. In my opinion, it requires more specific language than that in section 46 to remove from the Courts a power fundamental to their ability to control their own process.”
“Third, it would produce anomalous results to interpret subsection 46(1) as implicitly removing the Federal Courts’ discretion in deciding to stay on the ground that another court is the more convenient forum. Suppose, for example, that, in this case, in addition to the English choice of law and exclusive forum clauses, the contract had provided for the carriage of the cargo from New York to London, the bill of lading had been issued in London, and the loss of the cargo was alleged to have occurred in London, where all the witnesses resided.”
“Since all these connecting factors favour litigating the dispute in a competing forum, England, it would make no sense to require the [CFC] to decide the dispute, simply because it has jurisdiction under subsection 46(1) [merely] on the ground that the carrier has an office in Toronto. And, if proceedings had already been commenced in England, to interpret the legislation as precluding a Canadian court from subsequently considering whether it was the less convenient forum would require the court to exclude considerations of international comity.”
“It would also be odd to conclude that subsection 46(1) requires a court in Canada to decide a dispute because the parties had agreed to a forum outside Canada, whereas if the contract had contained no exclusive jurisdiction clause, a court in Canada would have declined to exercise jurisdiction on the ground that it was not the more convenient forum.” [¶¶ 24-31]
The Plaintiffs also contended that subsection 46(1) would be largely superfluous if the [FCA] interpreted it as taking away the [CFC's] discretion to grant a stay on the ground that it was not the more convenient forum. The FCA is not persuaded.
“First, subsection 46(1) affirms the Court’s jurisdiction by specifying that claimants who satisfy one of the three connecting factors set out in paragraphs (a), (b), and (c) may pursue their claim in Canada, despite a contractual foreign exclusive jurisdiction clause. Second, the statutory bases of jurisdiction are simpler to apply than the common law’s ‘real and substantial connection’ test for determining whether the Court has jurisdiction over a claim and, arguably, [are] more easily satisfied. Third, it removes the Court’s discretion to stay solely on the ground that the parties have selected an exclusive forum outside Canada.” [¶¶ 35-36].
“Indeed, Section 46(1) would appear to establish that, in select circumstances, [the Canadian] Parliament has deemed it appropriate to limit the scope of Forum Selection Clauses by facilitating the litigation in Canada of claims related to the carriage of goods by water having a minimum level of connection to this country. Such a legislative development does not, however, provide support for the fundamental jurisprudential shift made by the Court of Appeal in the case at bar.”
“To the contrary, Section 46(1) indicates [the Canadian] Parliament’s intent to broaden the jurisdiction of the [CFC] only in very particular instances that can easily be ascertained by a Prothonotary called upon to grant a stay of proceedings pursuant to the Forum Selection Clause of a bill of lading. Section 46(1) in no way mandates a Prothonotary to consider the merits of the case.”[¶ 38].
The next issue is whether the CFC erred in exercising its discretion under Section 50 of the CFCA to refuse to stay the Plaintiffs’ action, on the ground that it was not the less convenient forum. “Preliminarily, the FCA notes that foreign law is a question of fact to be based on evidence before the court. An uncontradicted affidavit in the record by Defendants’ English solicitor declared that Plaintiff’s counsel had failed to meet a deadline and thus had forfeited its chance to appeal the anti-suit injunction to the English Court of Appeal.”
“In such a case, English law regarded the Plaintiffs as having accepted that the HCL had jurisdiction to try the claim. Moreover, English law seems settled at the highest level that the HCL should issue an anti-suit injunction essentially to ensure that the parties abide by the agreement they have made.” [¶ 47 ].
In addition, since the CFC below had misapprehended the record evidence, the FCA has to perform a convenience analysis de novo. “While Section 46 is designed to redress a perceived power imbalance between ship owners and Plaintiffs by favouring Plaintiffs, it only does so to the extent of providing claimants with the option of instituting proceedings in a Canadian forum.”[¶ 65].
The Court then addresses the effect, if any, to be given to the English judgments in this matter. “Three principal considerations favour a Canadian court’s treating the English judgments as relevant in a forum non conveniens analysis: [1] international comity,[2] the avoidance of parallel proceedings on the same matter, and [3] problems of recognition in the event that the parallel proceedings produce different results. Minimising litigation, with its attendant costs and complications, is good public policy.”
“It may seem somewhat odd to suggest that the [CFC] should take the English judgments into account in a forum non conveniens analysis in this case. After all, the English courts refused to stay Defendants’ English proceedings without, apparently, giving any weight to the judgments of the [CFC] refusing a stay to Defendants on the ground that it had not been demonstrated to be forum non conveniens. Comity should be a two-way street.”
“Two considerations may alleviate this concern. First, if the English judgments are relevant in the forum non conveniens analysis, … I have treated them as only one of several factors to be taken into account in determining how the interests of justice, practicality, and efficiency are best served. Second, the English courts [did] extend comity to the Canadian Parliament’s enactment of subsection 46(1) in that they were very mindful of the delicate problem that it posed, even though, … the English courts decided that it did not represent ‘strong reasons’ for departing from the normal rule that exclusive jurisdiction selection clauses should be given effect.” [¶¶ 70-72].
“… [T]he approach of Canadian law to comity in the context of identifying the more convenient forum was authoritatively stated by the Supreme Court of Canada in Amchem Products Inc. v. British Columbia, [1993] 3 W.W.R. 441, 14 C.P.C. (3d) 1, [1993] 1 S.C.R. 897, at 913-15. In the present case, the question is whether the English courts have, … ‘departed from our own test of forum conveniens to such an extent as to justify our courts in refusing to respect the assumption of jurisdiction by the foreign court and in what circumstances such assumption amounts to a serious injustice.’” [¶ 74]
“… I note that the Supreme Court of the United States has moved closer to the position at common law in England and Canada by regarding foreign exclusive jurisdiction clauses as presumptively valid: Vimar Seguros y Reaseguros S.A. v. M/V Sky Reefer, 515 U.S. 528 (Sup. Ct. 1995).” [¶ 76]
“In my view, the critical facts of this case are that the Plaintiffs, the consignees, the goods, and the ports of loading and discharge, have no connection to Canada. It is true that Section 46 confers jurisdiction on a competent Canadian court over the Plaintiffs’ claim, … However, it is also relevant to ask whether it would frustrate the policy underlying Section 46 for a Canadian court, on the facts of this case, to afford some respect to the English courts’ judgments by factoring them into a forum non conveniens analysis.”
“The principal policy objective of section 46 is the protection of the interests of Canadian exporters and importers, and, I would add, their insurers, by diminishing or eliminating the legal effect of a contractual clause requiring them to litigate any dispute in a foreign forum.”
“While Section 46 preserves the jurisdiction of Canadian courts in proceedings brought by foreign Plaintiffs and consignees, it does not follow that, in deciding whether to exercise its jurisdiction, a court should depart from its normal practice of affording respect to foreign judgments. On the facts of the present case, including the dominant role being played in the litigation by the Canadian insurers of the cargo, it would not frustrate Parliament’s purpose to take the English judgments into account in the course of determining the more convenient forum.”
“In short, Section 46 does not expressly provide that, when determining whether it is the more convenient forum, a Canadian court in which a claimant elects to proceed should assign no weight to the assertion of jurisdiction by a foreign court, which it has supported by an anti-suit injunction. Nor can it be said that Parliament implicitly so directed in a fact situation such as this, where, to give a foreign judgment weight, would not frustrate the policies underlying Section 46.”
“Nor do I think it fatal to the application of the comity principle that the Plaintiffs had commenced proceedings in Canada before Defendants sought an anti-suit injunction in England, since, in so doing, they were merely exercising their contractual rights according to the proper law of the contract. In any event, the Plaintiffs have not indicated whether they propose to pursue their action in the [CFC] in breach of the anti-suit injunction issued against them in England.”
“In my opinion, in the circumstances of this case, Section 46 has not ousted the principles of international comity set out in Amchem Products Inc. . Accordingly, weight should be given to the English judgments asserting their jurisdiction in order to determine if, compared to the [HCL], the [CFC] is forum non conveniens.” [¶¶ 78-83]
The FCA then considers the impact of the contract clause. “The freedom of parties in international trade to determine the terms of their contracts is a fundamental, but not absolute, tenet of Canadian commercial law and has been recognized internationally in Article 3 of the Rome Convention.”
“Hence, in the absence of either express words or an implication necessary to give effect to the policy underlying Section 46, I would include the parties’ exclusive jurisdiction clause in the factors to be considered in the forum non conveniens analysis. No mention is made of this issue in the reasons of the [CFC].” [¶¶ 85-86].
The FCA takes into account the following factors: (a) the residences of the parties, witnesses and experts; (b) the location of the material evidence; (c) the place where the parties negotiated and executed the contract; (d) the existence of proceedings pending between the parties in another jurisdiction: (e) the location of the defendant’s assets (f) the applicable law (g) any advantages conferred on the plaintiff by its choice of forum (h) the interests of justice (I) the interests of the parties: (j) and, finally, the need to have the judgment recognized in another jurisdiction.
Having identified the main elements of a forum non conveniens analysis, the FCA enters upon that analytical task. “On the facts of this case, Liberia would appear to provide the most ‘natural’ forum for the adjudication of the Plaintiffs’ claim, since the alleged loss was reported, and investigated, after the ship docked there and it is where most of the witnesses appear to reside. However, it does not follow from this that another jurisdiction, England, may not provide a more appropriate forum than the [CFC]. Since the [CFC] has assumed jurisdiction over the Plaintiffs’ claim, the burden is on Defendants to show that they should be granted a stay on the ground of forum non conveniens.” [¶¶ 90-91].
Incidentally, neither party attached significance to clause 24 of the contract of carriage. It states that, where the bill of lading covers the transportation of goods to or from ports in the U.S., it is subject to the American Carriage of Goods by Sea Act, which is incorporated into the contract.
“When considering whether the forum chosen by the plaintiff is forum non conveniens, no one factor is to be regarded as determinative. … [T]heir relative importance may depend on the context of the dispute. … [I]t would seem from the contradictory reports as to whether the cargo was short, that facts are in dispute.” [¶ 93].
The FCA then applies the above convenience factors to considering, first, the factors favouring the CFC. “I cannot attach much weight to the facts that the contract was made and the ocean freight was paid in Toronto, since they appear to be irrelevant to the issues likely to be in dispute in the cargo claim. Because the parties specified that English law was the proper law, it cannot be inferred from the fact that the contract was made here, that they intended Canadian law to apply to the interpretation and enforcement of the contract.”
“Of potentially more importance is the fact that the cargo insurers are based in Toronto. However, there is nothing in the record to indicate that, if forced to litigate in London, they would suffer great prejudice or be denied an effective remedy.”
[T]he factors connecting the dispute with England are cumulatively much more significant. “First, the English judgments implicate the principle of comity, raise the possibility of parallel proceedings, and make the recognition in England of a judgment by the [CFC] potentially problematic.”
Second, taking into account the parties’ choice of the [HCL] as the exclusive forum respects the principle of freedom of contract, promotes commercial certainty, and does not frustrate the policy objectives of Section 46.”
“Third, it is generally more convenient to litigate in a forum in the jurisdiction whose law governs the dispute. Normally, counsel prefer to argue cases, and courts to decide them, on the basis of the law with which they are most familiar. In this case, the parties have chosen English law. However, … I cannot assess precisely the significance of the applicable law factor, especially given the similarities of English and Canadian law governing the carriage of goods by sea.”
Finally, “OT Africa Line Ltd. has its head office in London, where it keeps its corporate records, books and accounts; it also may need to call one of its London-based employees to testify about the company’s practice respecting the discharge of cargo.”
“For these reasons, I am persuaded that the [CFC] is a less convenient forum than the High Court in London. In these circumstances, the interests of justice will be better served if the Plaintiffs’ action in the [CFC] is stayed. The stay is conditional on Defendants pursuing, without delay, their proceeding in the [HCL] for a declaration that they are not liable to the Plaintiffs for the partial loss of the cargo. The Plaintiffs are at liberty to ask the [CFC] to consider lifting the stay in the event that the Plaintiffs do not observe this condition.”
“Accordingly, I would allow Defendants’ appeal with costs, set aside the orders of the [CFC] and grant a stay of the Plaintiffs’ action in the [CFC] conditional on Defendants pursuing, without delay, their action in the [HCL].” [¶¶ 94-102]. The two other judges concur.
Citation: Magic Sportswear Corp. v. OT Africa Line Ltd., 2006 F.C.A. 284; 2006 Carswell Nat. 2627 (Can. Fed. Ct. App. 2006).
Filed in: 2006 International Law Update, Issue10
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Sixth Circuit vacates dismissal on grounds of forum non conveniens holding that lower court should have given U. S. citizen’s choice of forum greater deference than that of foreign party and that courts should separately consider each claim to be litigated in its analysis
In 1998 Wayne Duha (Plaintiff) agreed to move to Argentina at the request of his employer, Agrium U. S., a subsidiary of Canadian-based Agrium, Inc. (Defendant), to enhance Agrium’s Argentine subsidiary, Agroservicios Pampeanos, S.A. (ASP). Plaintiff accepted the position in reliance on certain incentives; these included not only 3,000 stock options but also additional credit for years of service to improve his benefits and any severance pay.
During his two years in Argentina, Plaintiff claims he observed ASP engaging in “shady record-keeping and business practices,” including “bribery.” Further, Plaintiff alleges that ASP was using his Michigan residence to buy equipment and supplies, to avoid having to pay tax and costs associated with letters of credit; ASP processed more than $20 million worth of goods in this way. An investigation revealed that the alleged practices were, in fact, taking place.
Shortly after Plaintiff reported these practices to his supervisors and U. S. authorities, Agrium fired him, allegedly because Plaintiff was supplying his subordinates with prostitutes as a work incentive. A human resources manager, however, had sent an e-mail to ASP management claiming that the comments referring to the prostitute were made jokingly.
While still in Argentina, Plaintiff filed for legal conciliation as required by Argentine law. Although the parties did come to a tentative settlement, the agreement fell apart when Agrium required Plaintiff to release all claims against Agrium and Agrium U. S. in addition to his claims against ASP.
In late June 2000, Plaintiff moved back to Michigan without receiving severance pay, or pay for unused vacation, or money due for business expenses incurred before his termination. Furthermore, Plaintiff alleged that Agrium had canceled his stock options.
Plaintiff agreed to go to work for a different company in September of 2000 for which he had to move to Indiana. Plaintiff claimed, however, that Agrium’s Board of Directors intervened and prevented the award of a business opportunity to Plaintiff’s new company, potentially robbing Plaintiff of a substantial commission.
Plaintiff then filed a 45-count complaint against Agrium in a Michigan federal court. The complaint dealt mainly with claims under contract and tort principles, including many allegations directly relating to his termination. Initial discovery revolved around defendants’ motion to dismiss on grounds of forum non conveniens. The court determined that Agrium possessed most of the relevant documents; and that over one hundred potential witnesses lived in Canada, the U.S. and Argentina; a handful of the most crucial witnesses resided in each of the three countries.
In dismissing the case on forum non conveniens grounds, the district court ruled on numerous public and private law factors. These included (1) that Argentina offered easier access to witnesses; (2) that only the Argentine courts could compel certain nonparty defense witnesses crucial to Agrium’s defense to testify but only in Argentina; (3) that compulsory document discovery from Argentine sources would not be available to Agrium in Michigan; (4) that Argentina has a strong interest in the alleged wrongdoing of a company domiciled there; (5) that the Foreign Corrupt Practices Act creates no private cause of action and thus does not supply a federal interest in retaining the suit; (6) that Michigan citizens stand to be less affected by a trial than Argentineans and (7) that it is likely that Argentine substantive law would apply.
In a 2 to 1 split, the U. S. Court of Appeals for the Sixth Circuit vacates and remands. It holds (1) that the district court gave the U. S. plaintiff’s choice of forum too little deference and (2) that the district court erred in dismissing many of plaintiff’s claims without including them in its forum non conveniens analysis.
For dismissal under forum non conveniens to be appropriate, the defendant must establish that the claim may be brought in an available and adequate alternate forum, and that the balance of private and public law factors, originally laid out in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), favors that disposition. Applying a clear-abuse-of-discretion standard of review, the Court decides that the district court had misapplied the Gulf Oil factors. These factors require a court (1) to give more weight to the forum choice of a U. S. plaintiff over that of a foreign party; (2) to weigh the relative ease of access to documents and witnesses; and (3) to apply the relevant convenience factors separately to each claim.
First, the Sixth Circuit holds that the district court must accord adequate deference to a U. S. plaintiff’s choice of his home forum and choose dismissal only when the defendant “‘establishes such oppressiveness and vexation as to be out of all proportion to plaintiff’s convenience, which may be shown to be slight or nonexistent.” [Slip op. 7]. Here, the lower court erroneously gave only the degree of deference generally applied to the forum selections of foreign plaintiffs.
Second, the Sixth Circuit rules that the district court did not correctly weigh the relative ease of access to documents and witnesses. To make this determination, the court applies another three variables: (1) the relative ease of access to sources of proof; (2) the availability of compulsory process for the attendance of unwilling’ witnesses; (3) and the cost of obtaining attendance of willing witnesses.
The parties have obtained the most documents in the U. S. or Canada, and these are written in English. Thus, the U. S. forum offers greater ease of access to the relevant documents. Furthermore, a trial in the U. S. would not vex and oppress Agrium because the mere shipment of the documents to the U. S. forum would not be vexatious or oppressive.
Next, the Sixth Circuit evaluates the obtainability of compulsory process. Since neither party has put on evidence tending to show the existence of recalcitrant witnesses, the court should not have given this factor much weight. While the courts have often treated compulsory process as an important factor in forum non conveniens analysis, a moving party must first show that compulsory process will be necessary.
Finally, with respect to witness travel costs, the Court rules that it should take into account only those witnesses whose relevance has been shown. Since most witnesses are located either in the U. S. or Canada, overall travel costs would be lower if the case were tried in the U.S. rather than in Argentina. Furthermore, analysis should not merely focus on the number of witnesses in each location, but on their accessibility and convenience to the forum. Since interstate travel costs considerably less than international travel, the U. S. forum is preferable.
Third, the Court addresses the district court’s dismissal of plaintiff’s additional claims less directly linked to the termination. The Court holds that, for each factually distinct claim, the district court should have conducted a separate forum non conveniens evaluation. Support for this proposition comes from the inter-district transfer of federal cases under 28 U.S.C. Section 1404. When applying the statute, federal courts have weighed the comparative convenience of analytically distinct causes of action separately, even when they appear in the same complaint.
The district court’s decision to dismiss all claims finds no additional support in the availability of other appropriate U. S. forums. Availability of such forums may support the statutory transfer of certain federal claims, but not dismissal on forum non conveniens grounds.
One Circuit Judge dissents on the ground that the majority has incorrectly applied the clear abuse-of-discretion standard. “While the majority acknowledges the proper standard of review, they have ‘lost sight of this rule,’ and improperly ‘substituted [their] own judgment for that of the district court.’” Quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981).
A forum non conveniens analysis tends to turn on its facts; therefore a court must practice restraint in overturning a lower court ruling. The district court sits closer to the facts and has an easier time deciding the case, especially in a factually intense inquiry in cases such as forum non conveniens.
Although the dissenter agrees that a citizen’s forum choice deserves more deference, the choice of filing in one’s home forum should not serve as an automatic bar against dismissal. When a district court accords a domestic plaintiff’s choice of forum “due deference” and balances the relevant factors, there is no abuse of discretion.
The dissent also finds that the district court did, in fact, give greater deference to the domestic plaintiff’s choice of forum. It points out that the court appropriately quoted Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256 n.23 (1981): “Dismissal is not ‘automatically barred’ when a plaintiff brings suit in his home forum; rather, the court should give deference to the plaintiff’s choice and dismiss only when ‘the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court.’” [Slip op. 18]
The court then carried out a proper forum non conveniens analysis by determining that an appropriate alternative forum did exist and by evaluating the relevant private and public law factors.
“The district court accorded the proper deference to the plaintiff’s choice of forum, weighed the relevant information, determined that the majority of the plaintiff’s complaint revolved around conduct in Argentina, with documents and witnesses in Argentina, and with Argentinian [sic] courts capable of adjudicating the complaint.” [Slip op. 19]
Citation: Duha v. Agrium, Inc., 448 F.3d 867 (6th Cir. 2006).
Filed in: 2006 International Law Update, Issue6
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Second Circuit reverses dismissal of property dispute for trial in Egypt on grounds of forum non conveniens and international comity holding that modest involvement of foreign law does not warrant dismissal where Canadian plaintiffs’ choice of U.S. forum is substantially justifiable
The Bigios (plaintiffs), a Jewish family, possessed large commercial holdings in Egypt, including a bottling plant, which the Nasser regime wrongfully seized. Thereafter the plaintiffs fled to Canada. After Nasser died, the Egyptian government ordered the property returned. The state-owned entity holding the property, however, refused and sold the bottling plant to a joint venture in which Coca-Cola (defendant) bought a substantial interest. Coca-Cola rejected the plaintiffs’ claims to ownership.
After an unsuccessful attempt to obtain relief in the Egyptian courts, the plaintiffs sued Coca-Cola in New York federal court. When this case first came before the Second Circuit, it saw no merit in plaintiffs’ claims under the Alien Tort Claims Act, but remanded the common law claims. It also held the “Act-of-State” doctrine inapplicable, since the issues do not negatively impact international relations. See Bigio v. Coca-Cola Co., 239 F.3d 440 (2d Cir. 2000). See 2000 International Law Update 188.
On remand, the district court dismissed plaintiffs’ claims on the grounds of international comity and forum non conveniens. Plaintiffs again took an appeal. The Second Circuit now reverses and remands.
The Circuit Court first rules that the district court had applied the wrong legal standard in dismissing the plaintiffs’ claims on international comity grounds. The Court explains that international comity may involve two distinct doctrines: first “as a cannon [sic] of construction, it might shorten the reach of a statute; second, it may be viewed as a discretionary act of deference by a national court to decline to exercise jurisdiction in a case properly adjudicated in a foreign state, the so-called comity among courts.” See In re Maxwell Comm. Corp. 93 F.3d 1036, 1047 (2d Cir. 1996).” [Slip op. 3]
Here, the lower court had mistakenly applied the test used to determine whether a court should apply a U.S. statute extraterritorially. The international comity issue raised in the instant case , however, is whether adjudication of the issues before U.S. courts “would offend ‘amicable working relationships’ with Egypt.” [Slip op. 2]
This common law suit for damages involves Canadian plaintiffs and a U.S. corporate defendant and requires a minimal application of Egyptian law. Since the Egyptian government has never voiced any objections, “resolution of this case by United States courts will ‘not likely impact on international relations’ with Egypt.” [Slip op. 3] Litigants regularly call upon U.S. courts to interpret foreign law and they usually do so without infracting principles of international comity.
The Circuit Court then evaluates the district court’s dismissal under the forum non conveniens doctrine to decide whether the lower court had misapplied the relevant legal standards. The Court finds reversal appropriate here mainly because the district court gave the plaintiffs’ choice of forum no weight at all in its discussion of the balance of conveniences.
“The more that a plaintiff, even a foreign plaintiff, chooses to sue in a United States court for ‘legitimate reasons,’ the more deference must be given to that choice … The action should be dismissed only if the chosen forum is shown to be genuinely inconvenient and the selected forum significantly preferable.” [Slip op. 3] The Court holds that plaintiffs’ reasons for suing in defendants’ own country were legitimate and substantial in light of the vicissitudes of seeking relief in Egypt.
Furthermore, since the key witnesses, the parties and the attorneys are located in either the U.S. or Canada, no genuine inconveniences exist that would make the Egyptian forum “significantly preferable.” The Court need not decide whether another forum, such as Canada, might be more appropriate since the only germane comparison in this appeal is between the U.S. and Egypt.
Dissenting in part and concurring in part, one Judge agrees that the district court had applied the wrong test in determining whether dismissal is appropriate under forum non conveniens. This Judge however, would merely vacate the judgment, leaving it entirely to the informed discretion of the district court on remand.
Citation: Bigio v. Coca-Cola Co., No. 05-2426-cv (2d Cir. May 9, 2006).
Filed in: 2006 International Law Update, Issue 5
By admin
Responding to its Article 234 referral, European Court of Justice instructs English Court of Appeal that Article 2 of Brussels Convention precludes application of English forum non conveniens principles in lawsuit where plaintiff and one defendant were domiciliaries of Contracting State
Plaintiff Owusu, who was domiciled in the United Kingdom, visited a holiday villa at Mammee Bay in Jamaica which he had rented from a Mr. Jackson (defendant), trading as “Villa Holidays Bal Inn Villas”, also a U. K. domiciliary. The agreement granted plaintiff access to a private beach. During the holiday, the plaintiff, while in seawater up to his waist, dove under water. In doing so, his head collided with a hidden sandbank; the impact fractured his fifth cervical vertebra and rendered him a tetraplegic.
Plaintiff sued defendant in the civil division of the English High Court for breach of contract. His theory was that the contract contained an implied term that the beach would be reasonably safe or free from hidden dangers. Plaintiff also brought a tort action in the same court against three Jamaican companies, including the owner of the beach in question and several hotels licensed to use it.
Defendant and the Jamaican companies did not question the English court’s jurisdiction over them. But they did ask the English court to decline to exercise its jurisdiction because, under the English law of forum non conveniens, the courts of Jamaica at the locus delicti were a more just and convenient forum in which to resolve the dispute.
The judge ruled, however, that it was not open to him to stay the action against Jackson since he and plaintiff were both domiciled in a Contracting State of the EC Judgments Convention. See Convention of September 27, 1968 on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters. [1978] O.J. L304/36, as amended by the Accession Conventions of October 9, 1978, October 25, 1982 and May 26, 1989, generally called “the Brussels Convention.”
Notwithstanding the links that the action might have with Jamaica, the judge reasoned that there was a danger that the courts of two jurisdictions would end up trying the same factual issues upon the same or similar evidence but reach inconsistent conclusions. He therefore held that the U. K. — and not Jamaica — was the appropriate forum.
Convention Art. 2 provides that: “Subject to the provisions of this Convention, persons domiciled in a Contracting State shall, whatever their nationality, be sued in the courts of that State. Persons who are not nationals of the State in which they are domiciled shall be governed by the rules of jurisdiction applicable to nationals of that State”.
Art. 5(1) and (3) of that Convention further declare that, in matters relating to a contract, an EU domiciliary may be sued in another Contracting State in the courts of the place set for the performance of the obligation in question, and, in matters relating to tort, delict or quasi delict, in the courts for the place where the alleged harmful event had taken place. Moreover, Convention Art. 21, which concerns lis pendens, seeks to forestall conflicting decisions as between courts of two or more Contracting States.
On the other hand, according to the English doctrine of forum non conveniens, a national court may decline to exercise its jurisdiction on the ground that a court in another State, which also has jurisdiction, would objectively be a more appropriate forum for the trial of the action. The search is for a forum in which the case may be tried more cost-effectively in the interests of all the parties and the ends of justice. See the leading House of Lords judgment in Spiliada Maritime Corporation v. Cansulex Ltd., [1987] A.C. 460; [1987] E.C.C. 168.
When an English court decides to invoke the doctrine of forum non conveniens, it stays its own proceedings so that it can resume the provisionally suspended proceedings should it turn out, e.g., that the foreign forum has no jurisdiction to hear the case or that the claimant cannot get effective justice in that forum. Notwithstanding the links that the action brought against the other defendants might have with Jamaica, the judge held that the United Kingdom, and not Jamaica, was the appropriate forum State.
The defendant Jackson and the third, fourth and sixth Jamaican defendants appealed that order. The Court of Appeal (Civil Division), however, decided to stay its proceedings and to refer the following two questions about Community law to the European Court of Justice pursuant to Art. 234 for a preliminary ruling: “1. Is it inconsistent with the Brussels Convention …, where a claimant contends that jurisdiction is founded on Article 2, for a court of a Contracting State to exercise a discretionary power, available under its national law, to decline to hear proceedings brought against a person domiciled in that State in favour of the courts of a non Contracting State: (a) if the jurisdiction of no other Contracting State under the Convention is in issue; (b) if the proceedings have no connecting factors to any other Contracting State?” 2. If the answer to question 1(a) or (b) is yes, is it inconsistent in all circumstances or only in some and if so which?”
A Grand Chamber of the European Court of Justice responds in the negative to the first question. “In order to reply to the first question, it must first be determined whether Art. 2 of the Brussels Convention is applicable in circumstances such as those in the main proceedings, that is to say, where the claimant and one of the defendants are domiciled in the same Contracting State and the case between them before the courts of that State has certain connecting factors with a non Contracting State, but not with another Contracting State. Only if it is will the question arise whether, in the circumstances of the case in the main proceedings, the Brussels Convention precludes the application by a court of a Contracting State of the forum non conveniens doctrine where Art. 2 of that convention would permit that court to claim jurisdiction because the defendant is domiciled in that State.” [¶ 23]
“However, the international nature of the legal relationship at issue need not necessarily derive, for the purposes of the application of Art. 2 of the Brussels Convention, from the involvement, either because of the subject matter of the proceedings or the respective domiciles of the parties, of a number of Contracting States. The involvement of a Contracting State and a non Contracting State, for example, because the claimant and one defendant are domiciled in the first State and the events at issue occurred in the second, would also make the legal relationship at issue ‘international’ in nature. That situation is such as to raise questions in the Contracting State, as it does in the main proceedings, relating to the determination of international jurisdiction, which is precisely one of the objectives of the Brussels Convention …” [¶ 26]
“Similarly, … whilst it is clear from their wording that the Brussels Convention rules on lis pendens and related actions or recognition and enforcement of judgments apply to relationships between different Contracting States, provided that they concern proceedings pending before courts of different Contracting States or judgments delivered by courts of a Contracting State with a view to recognition and enforcement thereof in another Contracting State, the fact nevertheless remains that the disputes with which the proceedings or decisions in question are concerned may be international, involving a Contracting State and a non Contracting State, and allow recourse, on that ground, to the general rule of jurisdiction laid down by Art.2 of the Brussels Convention.”
“To counter the argument that Art. 2 applies to a legal situation involving a single Contracting State and one or more non Contracting States, the defendants in the main proceedings and the United Kingdom Government cited the principle of the relative effect of treaties, which means that the Brussels Convention cannot impose any obligation on States which have not agreed to be bound by it.”
“In that regard, … the designation of the court of a Contracting State as the court having jurisdiction on the ground of the defendant’s domicile in that State, even in proceedings which are, at least in part, connected, because of their subject matter or the claimant’s domicile, with a non Contracting State, is not such as to impose an obligation on that State.” [¶¶ 29-31]
“The purpose of the fourth indent of Art. 220 of the EC Treaty (now the fourth indent of Art. 293 EC), on the basis of which the Member States concluded the Brussels Convention, is to facilitate the working of the common market through the adoption of rules of jurisdiction for disputes relating thereto and through the elimination, as far as is possible, of difficulties concerning the recognition and enforcement of judgments in the territory of the Contracting States. In fact it is not disputed that the Brussels Convention helps to ensure the smooth working of the internal market.”
“However, the uniform rules of jurisdiction contained in the Brussels Convention are not intended to apply only to situations in which there is a real and sufficient link with the working of the internal market, by definition involving a number of Member States. Suffice it to observe in that regard that the consolidation as such of the rules on conflict of jurisdiction and on the recognition and enforcement of judgments, effected by the Brussels Convention in respect of cases with an international element, is without doubt intended to eliminate obstacles to the functioning of the internal market which may derive from disparities between national legislations on the subject.” [¶¶ 32-34]
“[Thus] … Art. 2 of the Brussels Convention applies to circumstances such as those in the main proceedings, involving relationships between the courts of a single Contracting State and those of a non Contracting State rather than relationships between the courts of a number of Contracting States. It must therefore be considered whether, in such circumstances, the Brussels Convention precludes a court of a Contracting State from applying the forum non conveniens doctrine and declining to exercise the jurisdiction conferred on it by Art. 2 of that Convention.”
” … Art. 2 of the Brussels Convention is mandatory in nature and that, according to its terms, there can be no derogation from the principle it lays down except in the cases expressly provided for by the Convention. It is common ground that no exception on the basis of the forum non conveniens doctrine was provided for by the authors of the Convention, although the question was discussed when the Convention of October 9, 1978 on the Accession of Denmark, Ireland and the United Kingdom was drawn up …” [¶¶ 35-37].
“Respect for the principle of legal certainty, which is one of the objectives of the Brussels Convention, would not be fully guaranteed if the court having jurisdiction under the Convention had to be allowed to apply the forum non conveniens doctrine. According to its preamble, the Brussels Convention is intended to strengthen in the Community the legal protection of persons established therein, by laying down common rules on jurisdiction to guarantee certainty as to the allocation of jurisdiction among the various national courts before which proceedings in a particular case may be brought.”
“The Court has thus held that the principle of legal certainty requires, in particular, that the jurisdictional rules which derogate from the general rule laid down in Art. 2 of the Brussels Convention should be interpreted in such a way as to enable a normally well informed defendant reasonably to foresee before which courts, other than those of the State in which he is domiciled, he may be sued.”
“Application of the forum non conveniens doctrine, which allows the court seised a wide discretion as regards the question whether a foreign court would be a more appropriate forum for the trial of an action, is liable to undermine the predictability of the rules of jurisdiction laid down by the Brussels Convention, in particular that of Art. 2, and consequently to undermine the principle of legal certainty, which is the basis of the Convention.”
“The legal protection of persons established in the Community would also be undermined. First, a defendant, who is generally better placed to conduct his defence before the courts of his domicile, would not be able, in circumstances such as those of the main proceedings, reasonably to foresee before which other court he may be sued. Secondly, where a plea is raised on the basis that a foreign court is a more appropriate forum to try the action, it is for the claimant to establish that he will not be able to obtain justice before that foreign court or, if the court seised decides to allow the plea, that the foreign court has in fact no jurisdiction to try the action or that the claimant does not, in practice, have access to effective justice before that court, irrespective of the cost entailed by the bringing of a fresh action before a court of another State and the prolongation of the procedural time limits.”
“Moreover, allowing forum non conveniens in the context of the Brussels Convention would be likely to affect the uniform application of the rules of jurisdiction contained therein in so far as that doctrine is recognised only in a limited number of Contracting States, whereas the objective of the Brussels Convention is precisely to lay down common rules to the exclusion of derogating national rules.”
“The defendants in the main proceedings emphasise the negative consequences which would result in practice from the obligation the English courts would then be under to try this case, inter alia as regards the expense of the proceedings, the possibility of recovering their costs in England if the claimant’s action is dismissed, the logistical difficulties resulting from the geographical distance, the need to assess the merits of the case according to Jamaican standards, the enforceability in Jamaica of a default judgment and the impossibility of enforcing cross claims against the other defendants.”
“In that regard, genuine as those difficulties may be, suffice it to observe that such considerations, which are precisely those which may be taken into account when forum non conveniens is considered, are not such as to call into question the mandatory nature of the fundamental rule of jurisdiction contained in Art. 2 of the Brussels Convention, for the reasons set out above.”
“In the light of all the foregoing considerations, the answer to the first question must be that the Brussels Convention precludes a court of a Contracting State from declining the jurisdiction conferred on it by Art. 2 of that Convention on the ground that a court of a non Contracting State would be a more appropriate forum for the trial of the action even if the jurisdiction of no other Contracting State is in issue or the proceedings have no connecting factors to any other Contracting State.” [¶¶ 38-46]
As to the second question, the Court is of the view that an answer to it is not necessary to the ultimate resolution of the case before the U. K. courts. This being the limited goal of the Art. 234 reference procedure, no response is called for.
Citations: Owusu v. Jackson, Trading as “Villa Holidays Bal Inn Villas” and Others, (EU: Case C 281/02); [2005] I.L.Pr. 25; [2005] 1 C.L.C. 246; [2005] 2 All E.R. (Comm) 577; 2005 WL 474200 (ECJ).
FORUM NON CONVENIENS
In admiralty case involving parallel court proceedings in China and U.S., Third Circuit determines as matter of first impression that district court should have determined whether it had personal jurisdiction over defendant before dismissing on forum non conveniens grounds
Malaysia International Shipping Corporation (MISC), a Malaysian company, brought a fraudulent misrepresentation action against Sinochem International Company Ltd. (Sinochem), a Chinese company. In 2003, Sinochem contracted with Triorient Trading, Inc. (Triorient), a U.S. company, to buy steel coils. A letter of credit in Triorient’s favor secured the purchase as long as the coils were loaded on or before April 30, 2003. The agreement provided for arbitration of disputes according to Chinese law.
Triorient subchartered MISC’s vessel M/V Handy Roseland (Vessel) to transport the coils to China. Another company loaded the coils onto the Vessel in Philadelphia. Something went wrong, however, with the shipment. In May 2003, Sinochem petitioned a Pennsylvania federal court pursuant to 28 U.S.C. Section 1782 to let it seek evidence about the shipment for use in an “imminent foreign proceeding.” The district court permitted limited discovery.
In June 2003, Sinochem petitioned the Guangzhou Admiralty Court (GAC) to preserve a maritime claim against MISC and for the arrest of the Vessel; it claimed that MISC had fraudulently backdated the bill of lading to April 30, 2003. Chinese authorities arrested the Vessel at the Huangpu Port in China. After MISC posted a $9 million security, the Vessel was released. MISC then filed the present civil action, claiming that Sinochem had negligently misrepresented the Vessel’s fitness and suitability for the cargo.
MISC moved to dismiss the GAC action for lack of jurisdiction. The court denied MISC’s motion, and the Guangdong Higher People’s Court (HPC) affirmed. As to MISC’s argument that the GAC should have dismissed the action because MISC had filed its U.S. action first, the Court opined that the timing had no effect on the GAC’s jurisdiction because China and the U.S. are distinct sovereigns.
Meanwhile, in the U.S. proceeding, the district court found subject matter jurisdiction based on 28 U.S.C. Section 1333 [admiralty and maritime jurisdiction]. As for personal jurisdiction, the district court surmised that, with limited Section 1782 discovery, MISC could probably have identified enough U.S. contacts. The district court, however, dismissed on grounds of forum non conveniens (FNC), reasoning that the Chinese courts provided an adequate alternative forum for MISC’s negligent misrepresentation claim.
MISC appealed the FNC dismissal. The U.S. Court of Appeals for the Third Circuit agrees with the district court that admiralty jurisdiction over this case did exist, but finds that the district court should have determined whether it had personal jurisdiction over defendant before ruling on Sinochem’s FNC motion.
Sinochem first argued that there was no admiralty jurisdiction under 28 U.S.C. Section 1333(1), since the alleged tort failed to satisfy the conditions of both of “location” and “connection” with maritime activity. The Third Circuit disagrees. The “Location Test” requires a federal court to determine (1) whether the tort occurred on navigable waters or (2) whether a vessel on navigable waters caused an injury suffered on land. Here, the tort is Sinochem’s alleged misrepresentation before the GAC that MISC had backdated the bill of lading.
In determining whether the tort took place on navigable waters, the weight of authority is that a tort takes place where the injury occurs. This case meets the test. The injury that Sinochem’s alleged misrepresentation to the GAC occurred on the seizure of MISC’s Vessel on Chinese navigable waters. Thus, MISC’s complaint meets the locality prong.
Secondly, the Court rules that the alleged tort does have the potential to disrupt maritime commerce. Furthermore, Sinochem’s asking the GAC to have MISC’s Vessel arrested is a well-established method of granting an admiralty court power to exercise authority over a ship, and therefore has a substantial relationship to traditional maritime activity.
The Court then turns to the controversial issue of whether the district court should have ruled on personal jurisdiction before it handed down its FNC dismissal. The issue is of first impression in the Third Circuit whereas the other circuits are split on the point.
The Court notes that the FNC doctrine is a non-jurisdictional, non-merits procedural issue. “Should the District Court have determined whether jurisdiction existed before dismissing on [FNC] grounds? We hold yes for two reasons. First, the very nature and definition of [FNC] presumes that the court deciding this issue has valid jurisdiction (both subject matter and personal) and venue. … Though (sic) [FNC], a district court ‘may decline to exercise its jurisdiction, even though the court has jurisdiction and venue, when it appears that the convenience of the parties and the court and the interests of justice indicate that the action should be tried in another forum.’ … [...] Second, at least two other Circuit Courts, and the Supreme Court (inferentially), have determined that [FNC] dismissals are invalid if the district court does not have subject matter jurisdiction. …” [Slip op. 15-16]
” … [W]e recognize that this result may not seem to comport with the general interests of judicial economy and may, in this case, ultimately result in a waste of resources if the case is again dismissed before the substance of MISC’s claim is decided. But precedent, logic, and the very terms of the [FNC] doctrine dictate this result.” [Slip op. 19]
Citation: Malaysia Int’l Shipping Corp. v. Sinochem Int’l Co. Ltd., 436 F.3d 349 (3rd Cir. 2006).
Filed in: 2006 International Law Update, Issue 3
By admin
British Columbia Court of Appeal rules that, where U.S. court had affirmatively claimed jurisdiction over same contract dispute, comity dictated that Canadian court should stay its parallel proceeding to avoid inconsistent results and useless multiplication of expense
On January 17, 2005 Ingenium Technologies, Corp. (plaintiff) filed this action against McGraw Hill Companies, Inc. (defendant) in the British Columbia Supreme Court. A month later, defendant filed a complaint against plaintiff in a New York federal court.
Plaintiff applied for a summary dismissal of the New York action on jurisdictional grounds. It also applied for a declaration that the British Columbia Supreme Court had jurisdiction over the dispute. The New York court denied plaintiff’s motion for summary dismissal. The B. C. lower court then heard and granted the application for a declaration in respect of jurisdiction.
Plaintiff explained why it had gotten this declaration by pointing out that, while it accepted that the New York court would end up trying defendant’s complaint, plaintiff preferred to seek the same relief through the B. C. action. In granting the declaration, the lower court judge ruled that B. C. has jurisdiction simpliciter [not challenged on appeal] and also was the forum conveniens proper to resolve the dispute.
Defendant appealed and the B. C. Court of Appeal, in a divided opinion, allowed the appeal. The agreement between plaintiff and defendant as to the latter’s distribution and promotion of plaintiff’s web based software stated that the courts should interpret it under B. C. and Canadian law and should look upon it as a “B.C. contract.” Substantially all of plaintiff’s services under the contract took place in B. C., although the present site of the servers that customers used to access data is in New York. The agreement was to expire at the end of the month, but the parties could not agree on which party had control of the relationship with customers who had bought and used the software.
“The lower court judge was correct in concluding that the existence of parallel proceedings did not trump all other factors in determining the more appropriate forum for the litigation of a dispute. Rather, it must be considered in accordance with the principle of comity. She concluded, rightly in my view, that the existence of parallel proceedings … must be considered in accordance with the principle of comity and that there will necessarily be cases where parallel proceedings will not carry the day.”
“But … the lower court judge erred in attaching no significance to the fact that the United States District Court had positively asserted jurisdiction. The fact that the agreement involved was governed by the law of British Columbia was not a conclusive factor.”
The Court of Appeal holds that jurisdiction simpliciter was clear and that it should decide based on applying the Canadian approach to the nature of comity. “‘Comity’ in the legal sense is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws …’ [Hilton v. Guyot, 159 U.S. 113 (1895), at pp. 163 64, as cited by Estey J. in Spencer v. The Queen, [1985] 2 S.C.R. 278 at p. 283].” [¶ 11].
“I conclude then that comity requires that this action be stayed and I find it unnecessary to rule on McGraw Hill’s application to adduce fresh evidence. There is no suggestion that the [New York] District Court’s refusal to dismiss McGraw Hill’s complaint was made on anything other than a forum non conveniens basis that the courts of this province should respect in keeping with the principle of comity as defined by the Supreme Court of Canada.”
“Given that the action in the District Court will be tried there, I can see no purpose being served in Ingenium being permitted to advance, and ultimately try, its action here when it can do the same by prosecuting its counterclaim in New York. To do so would raise the real potential for conflicting decisions in the resolution of the dispute and markedly increase the cost of the litigation, all to no avail.” [¶ 26]
Citation: Ingenium Technologies Corp. v. McGraw Hill Companies, Inc., [2005] B.C.J. No. 1442; 2005 B.C.C.A. 358 (June 29).
Filed in: 2005 International Law Update, Issue 7
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