United States Court of Appeals,
Fifth Circuit.
No. 96-31056
Summary Calendar.
MITSUI & CO. (USA), INC., Plaintiff-Appellant,
v.
MIRA M/V, Defendant,
Euro-Baltic Lines, Inc., Defendant-Appellee.
April 28, 1997.
Appeal from the United States District Court for the Eastern
District of Louisiana.
Before SMITH, DUHÉ and BARKSDALE, Circuit Judges.
PER CURIAM:
Appellant, Mitsui & Company (USA), Inc. ("Mitsui"), appeals
dismissal of its cargo damage claim against Euro-Baltic Lines, Inc.
("Euro"). The district court correctly enforced the
forum-selection clause in the bill of lading covering the shipment.
We affirm.
FACTS:
Mitsui's cargo of steel was damaged in transit from Russia to
New Orleans aboard the M/V MIRA, chartered by Euro. The cargo was
carried pursuant to a bill of lading which Mitsui received after
the cargo was loaded, not having negotiated the terms contained
therein. The bill of lading contained both a forum-selection
clause, providing that all disputes be adjudicated in London,
England, and a choice-of-law provision, stating that if the bill of
lading covered the transportation of goods to or from the United
1
States, the Carriage of Goods by Sea Act ("COGSA") would control.
Mitsui sued Euro and the M/V MIRA for the damage to its cargo.
Mitsui later amended its suit to name two additional defendants,
Atlantic Arcturus, Inc., and Reederei Horst Zeppenfeld GmbH & Co.,
KH, the owners and managers of the MIRA.
Euro moved to dismiss on the basis of the forum-selection
clause in the bill of lading. The district court granted the
motion, dismissed Mitsui's lawsuit, and entered judgment in favor
of Euro, determining that the forum-selection clause was
enforceable pursuant to recent Supreme Court precedent. On
Mitsui's motion, the district court subsequently vacated its
judgment and once again dismissed Mitsui's claim against Euro. The
court further provided Mitsui with one hundred and twenty days
after final judgment within which to file suit in London, and
certified the appeal under Rule 54(b).1 Mitsui appealed.
DISCUSSION:
We agree with those circuits that have addressed the issue
that the enforceability of a forum-selection or arbitration clause
is a question of law which is reviewed de novo. See, e.g., Shell
v. R.W. Sturge, Ltd., 55 F.3d 1227, 1229 (6th Cir.1995); Hugel v.
Corp. of Lloyd's, 999 F.2d 206, 207 (7th Cir.1993); Riley v.
Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 956 (10th
Cir.1992). The Supreme Court has consistently held forum-selection
and choice-of-law clauses presumptively valid. Vimar Seguros v.
1
The court then ordered that Mitsui's case against the
remaining defendants be administratively closed pending the outcome
of this appeal.
2
Reaseguros, S.A. v. M/V SKY REEFER, --- U.S. ----, ----, 115 S.Ct.
2322, 2329, 132 L.Ed.2d 462 (1995) (foreign arbitration clause);
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct.
1522, 1528, 113 L.Ed.2d 622 (1991); M/S BREMEN v. Zapata Off-Shore
Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972);
see also Kevlin Serv., Inc. v. Lexington State Bank, 46 F.3d 13, 15
(5th Cir.1995). The Court in BREMEN articulated the policy
underlying the presumptive validity of these clauses:
The expansion of American business and industry will hardly be
encouraged if, notwithstanding solemn contracts, we insist on
a parochial concept that all disputes must be resolved under
our laws and in our courts.... We cannot have trade and
commerce in world markets and international waters exclusively
on our terms, governed by our laws, and resolved in our
courts.
407 U.S. at 9, 92 S.Ct. at 1913. The Supreme Court has therefore
instructed American courts to enforce such clauses in the interests
of international comity and out of deference to the integrity and
proficiency of foreign courts. Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 629, 105 S.Ct. 3346, 3355,
87 L.Ed.2d 444 (1985).
The presumption of validity may be overcome, however, by a
showing that the clause is "unreasonable under the circumstances."
BREMEN, 407 U.S. at 10, 92 S.Ct. at 1913. The burden of proving
unreasonableness is a heavy one, carried only by a showing that the
clause results from fraud or overreaching, that it violates a
strong public policy, or that enforcement of the clause deprives
the plaintiff of his day in court. Id. at 12-13, 15, 18, 92 S.Ct.
at 1914-15, 1916, 1917-18.
3
Mitsui seeks to overcome the presumption of validity and to
have the foreign forum-selection clause in the bill of lading
invalidated by arguing that: (1) the clause contravenes § 3(8) of
the COGSA; (2) the bill of lading is a contract of adhesion and
the clause should not be enforced because it was not freely
negotiated; and (3) the doctrine of forum non conveniens dictates
the matter be tried in the forum where the cargo was discharged
because to be forced to try the matter in England would effectively
extinguish Mitsui's claim. These are essentially the same
arguments raised by the appellant and ultimately rejected by the
Supreme Court in SKY REEFER. See --- U.S. at ----, 115 S.Ct. at
2324.
Mitsui correctly points out that, before SKY REEFER, federal
courts without exception invalidated foreign forum-selection
clauses under § 3(8) of COGSA.2 See, e.g., Conklin & Garrett, Ltd.
v. M/V FINNROSE, 826 F.2d 1441 (5th Cir.1987). The leading case
for invalidation was Indussa Corp. v. S.S. RANBORG, which held a
foreign forum-selection clause invalid under COGSA because
litigating in a foreign forum put a "high hurdle" in the way of
enforcing liability against shipowners or carriers via increased
inconvenience and cost and, therefore, effectively lessened
liability within the meaning of § 3(8). 377 F.2d 200, 203 (2nd
Cir.1967) (en banc). Mitsui relies heavily on Indussa and its
2
That provision states that any contractual provision which
seeks to limit a shipowner's or carrier's liability for damage or
loss to goods caused by negligence or fault is void. 46 U.S.C.
app. § 1303(8).
4
progeny.
Both Indussa 's rationale and holding were, however, rejected
by the Supreme Court in SKY REEFER, which specifically held that
foreign arbitration clauses are valid under § 3(8). --- U.S. at --
--, 115 S.Ct. at 2326-27 ("[W]e cannot endorse the reasoning or the
conclusion of the Indussa rule itself"). The Court agreed that §
3 of COGSA established clear duties which could not be abrogated by
contract, i.e., liability which could not be lessened, but
distinguished these from the mechanisms for enforcement of those
duties. Id. at ----, 115 S.Ct. at 2327. It therefore concluded
that, because the clause at issue concerned only the means of
enforcing the carrier liability, the clause was enforceable. Id.
A foreign arbitration clause involves not a question of liability
but of where it will be enforced and, as such, is valid under
COGSA. Id.
Mitsui seeks to escape the application of SKY REEFER by
arguing that its holding should be restricted to foreign
arbitration clauses only, not to foreign forum-selection clauses.
However, "foreign arbitration clauses are but a subset of foreign
forum selection clauses in general...." SKY REEFER, --- U.S. at --
--, 115 S.Ct. at 2326; Scherk v. Alberto-Culver Co., 417 U.S. 506,
519, 94 S.Ct. 2449, 2457, 41 L.Ed.2d 270 (1974). The SKY REEFER
Court did not restrict its holding to arbitration clauses only, as
the majority opinion makes clear: "nothing in [§ 3(8) ] suggests
that the statute prevents the parties from agreeing to enforce [the
obligations imposed by COGSA] in a particular forum." SKY REEFER,
5
--- U.S. at ----, 115 S.Ct. at 2327. (emphasis added). Even
Justice Stevens acknowledged in his dissent:
Of course, the objectionable feature in the instant bill of
lading is a foreign arbitration clause, not a foreign forum
selection clause. But this distinction is of little
importance; in relevant aspects, there is little difference
between the two.... The majority's reasoning ... thus
presumably covers forum selection clauses as well as
arbitration.
SKY REEFER, --- U.S. at ---- n. 7, 115 S.Ct. at 2334 n. 7 (Stevens,
J., dissenting). Thus, Mitsui's attempt to distinguish SKY REEFER
must fail.3
Mitsui next argues that the bill of lading is a contract of
adhesion which it did not negotiate and which therefore should not
bind it. In response, Euro points out that the forum-selection
provision is not uncommon in bills of lading, and thus should have
been anticipated by Mitsui, a sophisticated international
shipper/consignee well-versed in this type of transaction.
Irrespective of this fact, the district court did not err in
determining that, by filing a lawsuit for damages under the bill of
lading, Mitsui has accepted the terms of the bill of lading,
including the unnegotiated forum selection clause. All Pac.
Trading, Inc. v. M/V HANJIN YOSU, 7 F.3d 1427, 1432 (9th Cir.1993),
cert. denied, 510 U.S. 1194, 114 S.Ct. 1301, 127 L.Ed.2d 653
(1994); Kanematsu Corp. v. M/V GRETCHEN W, 897 F.Supp. 1314, 1317
(D.Or.1995). Accordingly, Mitsui is bound by the bill of lading.
3
Euro similarly points out that, because the Indussa rule
which was disavowed by the SKY REEFER Court involved a foreign
forum-selection clause rather than an arbitration clause, the
Court's decision implicitly applies to forum-selection clauses as
well.
6
Mitsui additionally contends that the forum-selection clause
is inconsistent with the choice-of-law clause providing for the
application of COGSA for goods traveling to U.S. ports. In
essence, Mitsui argues it is illogical to require foreign courts to
apply American law, so the clauses read together must actually mean
disputes arising in American ports will be adjudicated in American
courts applying COGSA, and foreign trade will be adjudicated in
English courts under English law. Id.
There is no inconsistency in these provisions. As the
district court concluded, the two clauses are not mutually
exclusive: "if the bill of lading does require that COGSA be
applied to this dispute, such an agreement is not inconsistent with
the requirement that this dispute be determined by the High Court
in London."4 (internal quotations omitted).
At bottom, Mitsui's argument is based on the principle of
forum non conveniens. It maintains that the relevant information
and witnesses are located almost exclusively in the United States
hence litigation in England will be so inconvenient and costly that
Mitsui's claim would effectively be extinguished by enforcement of
4
As an extension of this argument, Mitsui urges that the SKY
REEFER Court held as it did only because it retained jurisdiction
over review of the foreign arbitrator's decision. Mitsui misreads
SKY REEFER. In that case, the petitioner sought invalidation of a
forum arbitration clause partially because there was no guarantee
that the Japanese arbitrator would apply COGSA. There was
therefore the risk that the application of Japanese law would
"lessen liability" in contravention of the dictates of COGSA §
3(8). --- U.S. at ---- - ---- 115 S.Ct. at 2329-30. In the
instant case, there is no such risk since the parties have
contractually agreed COGSA will apply to the merits of Mitsui's
claim.
7
the clause and it should therefore be invalidated on public policy
grounds.
As the district court noted, this case does not involve a
local dispute between two American corporations. Rather, both
parties are international corporations involved in the global
transportation of goods. Id. The international character of the
parties and the transaction prohibits American parochialism. See
BREMEN, 407 U.S. at 9, 92 S.Ct. at 1912-13. Increased cost and
inconvenience are insufficient reasons to invalidate foreign
forum-selection or arbitration clauses. See, e.g., SKY REEFER, ---
U.S. at ---- - ----, 115 S.Ct. at 2327-28; Carnival Cruise Lines,
499 U.S. at 603, 111 S.Ct. at 1532. Consequently, the district
court did not err in enforcing the foreign forum-selection clause
and dismissing Mitsui's claim against Euro.
AFFIRMED.
8