UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 97-30844
MARINECHANCE SHIPPING, LTD.,
Plaintiff-Appellee,
VERSUS
FERNANDO SEBASTIAN; RAUL GALEDO,
Defendants-Appellants.
Appeal from the United States District Court
For the Eastern District of Louisiana
June 22, 1998
Before WISDOM, HIGGINBOTHAM, and JONES, Circuit Judges.
WISDOM, Senior Circuit Judge:
Fernando Sebast ian and Raul Galedo (“the seamen”) filed this admiralty suit against
Marinechance Shipping Ltd. (Marinechance) seeking damages for injuries incurred while aboard the
M/V ELLISPONTOS. In a carefully reasoned and well-researched decision, district Judge Feldman
granted Marinechance’s motion for a partial summary declaratory judgment, finding that the forum
selection clauses in the seamen’s contracts required their causes of action to be filed in the Republic
of the Philippines. We affirm.
I.
The seamen, both citizens of the Philippines, were injured in an accident aboard the M/V
ELLISPONTOS while in the navigable waters of the Mississippi River near Burnside, Louisiana.
They were transported to a hospital in Baton Rouge for treatment.
The M/V ELLISPONTOS is owned by Marinechance, a corporation with its principal place
of business in Nicosia, Cyprus. Marinechance filed this suit in the federal district court1 seeking a
declaratory judgment that any litigation arising from the accident must proceed, if at all, in the courts
of the Philippines under the law o f the Philippines. Marinechance also sought to limit its liability
under the Limitation of Liability Act.2 The district court enjoined the seamen from filing suit in the
Louisiana state courts.
The seamen filed a motion to dismiss Marinechance’s declaratory action and to lift the stay
of proceedings. A few months later, before the district court ruled upon the seamen’s motion,
Marinechance filed a motion for partial summary judgment on the declaratory action. The district
court granted a partial summary judgment in favor of Marinechance, finding that the forum selection
clauses in the seamen’s contract and the relevant laws and treaties required this suit to be maintained
in the Philippine courts. The district court did not rule upon the seamen’s motions.
The seamen appeal. This Court has jurisdiction to hear the seamen’s appeal from the
declaratory judgment under 28 U.S.C. § 1292(a)(3). The seamen’s appeal from the refusal to lift the
stay of proceedings is a different matter, however. Although this court has jurisdiction to hear
appeals from the continuance or granting of an injunction under 28 U.S.C. § 1292(a)(1), the district
court did not do either; it declined to decide the issue until the parties submitted a new motion and
briefs on the status of the issue after the court’s ruling on the declaratory judgment. Recognizing this
problem, the seamen request that this Court treat their brief as a petition for a writ of mandamus on
this issue.
II.
First, the seamen argue that the district court was required to lift the automatic stay of
proceedings under the Limitation of Liability Act because they entered into the following stipulations:
(1) they would not seek damages in excess of the limitation amount, (2) they agreed not to challenge
1
Marinechance invoked the district court’s general admiralty jurisdiction, 28 U.S.C. § 1331 (1).
2
46 U.S.C. § 181, et seq.
2
Marinechance’s right to have the federal court determine the issue of exoneration or limitations of
damages after the state-court trial on the merits, and (3) they agreed to waive any claim of res
judicata arising from the state court proceedings on the issue o f limited liability. In Texaco v.
Williams, this Court found that a stay of proceedings should be lifted so that the claimants may assert
their actions in state court under the Savings to Suitors Clause of 28 U.S.C. § 1333 if these
stipulations are made.3 The seamen’s stipulations were identical with those in Texaco.
Instead of ruling upon the seamen’s motion to lift the stay, the district court entered a
declaratory judgment in favor of Marinechance, finding that this suit must proceed, if at all, in the
Philippines. The district court noted that the parties should file a new motion and briefs on the effect
of the declaratory judgment on their request to lift the stay. In effect, however, the declaratory
judgment mooted the motion to lift the stay. The seamen argue that the district court’s declaratory
judgment should be reversed and the district court should be compelled to lift the stay of proceedings
so that this action can be maintained in the Louisiana courts. They argue that any issue of choice of
laws or choice of forum may be addressed fully in the state court. Marinechance maintains that the
district court merely exercised its discretion to control its docket by deciding an issue that was
dispositive of the case before reaching any other issues.
This Court will grant a writ of mandamus only when there is a “usurpation of judicial power”
or a clear abuse of discretion.4 In this case, the district court did not clearly abuse its discretion. The
district court possesses the inherent power to control its docket.5 This power includes the authority
to decide the order in which to hear and decide pending issues.6 The district court used its
3
Texaco v. Williams, 47 F.3d 765, 767-9 (5th Cir. 1995).
4
In re Stone, 986 F.2d 898, 901 (5th Cir. 1993).
5
See Landis v. North Am. Co., 299 U.S. 248, 254 (1936); United States Abatement Corp. v. Mobil
Exploration & Producing U.S., Inc., 39 F.3d 556, 559 (5th Cir. 1994).
6
United States Abatement Corp., 39 F.3d 556 at 559.
3
discretionary authority to handle this case in the most efficient way; the court ruled upon the
potentially dispositive issue first.
III.
The seamen also argue that the district court erred in granting a declaratory judgment because
Marinechance filed its declaratory action in anticipation of a suit in state court. They maintain that
this is a type of forum shopping condemned by this Court. Marinechance argues that the district
court properly exercised its discretion to grant declaratory relief.
A district court’s decision to grant or to deny declaratory relief is reviewed for abuse of
discretion.7 In Rowan Companies v. Griffin, this Court listed several factors to consider when
deciding whether to grant declaratory relief.
For example, declaratory relief may be denied because of a pending state court
proceeding in which the matters in controversy between the parties may be fully
litigated, because the declaratory complaint was filed in anticipation of another suit
and is being used for the purpose of forum shopping, because of possible inequities
in permitting the plaintiff to gain precedence in time and forum, or because of
inconvenience to the parties or the witnesses.8
The second situation listed is most applicable to this suit. Without question, Marinechance filed this
declaratory action in anticipation of the seamen’s suit in the state courts. The question is whether
Marinechance was engaged in forum shopping. The di strict court found that it was not.
Marinechance was not attempting to litigate its claims in federal court instead of state court, nor was
it trying to obtain a bench trial instead of a jury trial. Rather, Marinechance was seeking to enforce
its choice of forum provisions requiring the suit to be pursued in the Philippines. This declaratory
action was the most efficient means of invoking its rights under the contract.
The seamen argue that this result destroys the policies underlying the savings to suitors clause
because it deprives the seamen of their choice of a state court forum. Rule 57 of the Federal Rules
of Civil Procedure expressly states that the availability of an alternative remedy does not prevent the
7
Rowan Companies v. Griffin, 876 F.2d 26, 29 (5th Cir. 1989).
8
Id (internal citations omitted).
4
district court from granting a declaratory judgment. Even if the seamen were able to bring this action
in the state court, the Louisiana Supreme Court’s decision in Lejano v. K.S. BANDAK shows that the
same result would follow because the court would apply federal law to determine the validity of the
choice of forum provisions.9 The seamen were not denied the traditional benefits of the savings to
suitors clause.10 The district court did not abuse its discretion, then, by granting declaratory relief.
Instead, the district court’s decision ensured that Marinechance’s rights were protected at the earliest
possible time. This is the primary goal of declaratory action.11
IV.
Finally, the seamen argue that the district court erred in granting a partial summary judgment
enforcing the forum selection clauses in the seamen’s employment contracts. The seamen were
employed under a contract (the Employment Contract) approved by the Philippine Overseas
Employment Administration (POEA)12. That contract provides that:
All claims, complaints or controversies relative to the implementation and
interpretation of this overseas employment contract shall be exclusively resolved
through the established grievance machinery in the Revised Employment Contract for
9
705 So.2d 158 (La. 1997).
10
The seamen were not being deprived of a jury trial on this issue either. Whether the choice of laws
provisions in the seamen’s contracts are enforceable is determined by the court as a matter of law. The seamen
could not obtain a jury trial on this issue in either federal or state court.
11
“The remedy made available by the Declaratory Judgment Act and Rule 57 is intended to minimize
the danger of avoidable loss and the unnecessary accrual of damages and afford one threatened with liability
an early adjudication without waiting until an adversary should see fit to begin an action[.]” Wright, Miller,
& Kane, Federal Practice and Procedure: Civil 3d. § 2751 (1998).
12
The Philippine Overseas Employment Administration is a government organization created to:
a. promote and develop overseas employment opportunities in cooperation with relevant
government institutions and the private sector; b. establish the environment conducive to the
continued operations of legitimate and responsible private agents; and c. afford protection to
Filipino workers and their families, promote their interests and safeguard their welfare. To
effectuate these policy goals, the POEA regulates principals and projects, recruitment,
advertisement and placement; contract processing and travel documentation; employment
standards; the filing of grievances; and provides worker assistance and welfare services.
Cruz v. Chesapeake Shipping, Inc., 738 F.Supp. 809, 815 (D.Del 1990), aff'd 932 F.2d 218, 221 (3d Cir.
1991) (citations omitted). The POEA has been replaced by the Philippines National Labor Relations Council.
5
Seafarers, the adjudication procedures of Philippine Overseas Employment
Administration and the Philippine Courts of Justice, in that order.
The Employment Contract also states that: “[t]he terms and conditions of the revised Employment
Contract for seafarers governing the employment of Filipino seafarers approved by the POEA . . .
shall be strictly and faithfully observed.” The Revised Employment Contract for Seafarers (the
Revised Contract) includes the following provisions:
Section 28 - Jurisdiction
The Philippine Overseas Employment Administration (POEA) or the National Labor
Relations Commission (NLRC) shall have original and exclusive jurisdiction over any
and all disputes or controversies arising out of or by virtue of this Contract . . .
Section 29 - Applicable Law
All rights and obligations of the parties to this Contract, including the annexes thereof,
shall be governed by the laws of the Republic of the Philippines, International
Conventions, Treaties and covenants where the Philippines is a signatory.
The Revised Contract incorporates the Migrant Workers’ and Overseas Filipinos’ Act of 1995 which
grants the Labor Arbiters of the NLRC in the Philippines the exclusive jurisdiction to hear “the claims
arising out of an employer-employee relationship or by virtue of any law or contract involving
Philippine workers for overseas employment including claims for actual, moral, exemplary and other
forms of damages.” The Revised Contract also incorporates the treaty between the Republic of the
Philippines and the Republic of Cyprus regarding the employment of Philippine and Cypriot seamen
which states:
Any disputes arising out of the respective contract of employment between a ship
owner of one Contracting Party and a seaman of the other Contracting Party shall be
referred for settlement solely to the exclusive jurisdiction of the competent Courts or
Authorities, as the case may be, in the country of the seaman’s nationality where the
contract of employment was signed and approved.
Each of these provisions points to resolution of the seamen’s dispute with Marinechance in the
Philippines. The two questions that this Court must address are (1) whether these forum selection
6
clauses are valid and (2) whether they cover causes of action sounding in tort. To answer these
questions, we apply federal maritime law.13
A.
In M/S BREMEN v. Zapata Off-Shore, the Supreme Court held that forum selection clauses
in admiralty cases are presumptively valid and enforceable.14 Forum selection clauses are important
in international cases such as the instant case because there is much uncertainty regarding the
resolution of disputes. Ocean-going vessels travel through many jurisdictions, and could become
subject to the laws of a particular jurisdiction based solely upon the fortuitous event of an accident.
“The elimination of all such uncertainties by agreeing in advance on a forum acceptable to both
parties is an indispensable element in international trade, commerce, and contracting.”15 To overcome
the presumption that the forum selection clause is enforceable, the party challenging the clause must
make a “strong showing” that the clause is unreasonable.16
The Supreme Court refined its analysis of forum selection clauses in Carnival Cruise Lines,
Inc. v. Shute.17 This time, the Court faced a slip and fall negligence action brought by a passenger
aboard Carnival Cruise Lines's ship, TROPICALE. The ticket authorizing passage aboard the ship
contained a clause requiring all disputed cases to be filed in the state of Florida. The passenger filed
suit in the state of Washington. Carnival Cruise Lines asserted the forum selection clause as a
13
Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 590 (1991); Lejano v. K.S. BANDAK, 705 So.2d
158, 166 (La. 1997).
14
407 U.S. 1, 11 (1972). The position accepted by the BREMEN Court mirrors that articulated by the
American Law Institute. “The parties’ agreement as to the place of the action cannot oust a state of judicial
jurisdiction, but such an agreement will be given effect unless it is unfair or unreasonable.” Restatement
(Second) of Conflict of Laws § 80.
15
407 U.S.. at 13-4.
16
Id. at 15. Justice Kennedy summarized the strong presumption in favor of the enforceability of forum
selection clauses as follows: “ a valid forum selection clause is given controlling weight in all but the most
exceptional cases.” Stewart Organization v. Ricoh Corp., 101 L.Ed.2d 22, 34 (1988) (Kennedy, J.,
concurring).
17
499 U.S. 585 (1991).
7
defense. The passenger attacked the clause because it was not the product of negotiation and tended
to deprive the passenger of her day in court.18 The Court rejected these arguments. Even though the
passenger did not19 and could not bargain for this forum selection clause due to a lack of bargaining
power, the Court held that forum selection clauses in routine contracts of passage are enforceable so
long as they are reasonable.20 This type of clause is "subject to judicial scrutiny for fundamental
fairness".21 This clause limited Carnival Cruise Lines exposure to suits in multiple forums, eliminated
passenger's confusion about where to file suit against Carnival Cruise Lines, and tended to reduce
ticket prices.22 Therefore, this clause was reasonable and enforceable.23
The similarities between the present case and Carnival Cruise Lines are many. The contracts
of employment for seamen aboard international vessels are routine; the seaman individually do not
have much bargaining power. The selection of a forum in advance reduces the vessel owner's
exposure to suits in forums all over the world. Furthermore, it informs the seamen of where their
causes of action can be maintained. Where this case departs from Carnival Cruise Lines is that the
forum selection clause was imposed by an arm of the Philippine government rather than by either
18
Id. at 590.
19
The passenger entered into a contract with Carnival Cruise Lines by paying for the cruise by check
well before seeing the ticket containing the forum selection clause. Id. at 587-8.
20
Id. at 593.
21
Id. at 595.
22
Id. at 593-4.
23
Id.
8
party.24 This distinction does not alter the fact that the forum selection clause is fundamentally fair.25
We find, then, that the forum selection clauses in the seamen's contracts are enforceable.26
B.
The seamen argue that the forum selection clauses in their contract do not apply to the
seamen’s tort causes of action. The district court did not expressly consider this contract / tort
distinction that the seamen attempt to draw. We find no persuasive support for such a general
distinction.27 Instead, we must look to the language of the parties' contracts to determine which
causes of action are governed by the forum selection clauses.
24
This clause was included under the POEA's authority to protect Philippine seamen. Nevertheless, the
vessel owner, who was forced to accept this provision before hiring a Philippine seaman, may rely upon that
provision. Nothing in the Revised Contract make its provisions enforceable at the whim of the seaman.
25
The effect of POEA intervention in employment contracts is to shift the balance of power slightly in
favor of the employee in much the same way that a labor union or legislative enactment of minimum work
standards increases the level of protection for employees in the United States.
The seamen argue that this case is controlled by our decision in Randall v. Arabian Amer. Oil Co,
778 F.2d 1146 (5th Cir. 1985). In Randall, we held that a district court was not deprived of jurisdiction over
a case by a foreign country’s law calling for exclusive jurisdiction in its courts. Id. at 1150. The present case
is not similar to Randall. Although the forum selection clause at issue here is the result of governmental
intervention in the Philippines, that clause is part of the contract agreed to by the parties. The forum selection
clause here is contractual, not legislative.
26
In Cuizon v. Kedma, Ltd., the District Court for the Southern District of New York found that a
similar POEA forum selection clause was unenforceable because it was a contract of adhesion. 1997 WL
37938, *5-*6 (S.D.N.Y. 1997) We respectfully disagree with that decision. The Cuizon court focused almost
exclusively on the fact that the parties could not negotiate for this provision; it did not conduct an inquiry for
fundamental fairness This ignores the Supreme Court's decision in Carnival Cruise Lines v. Shute.
27
Although the Supreme Court did not discuss a contract / tort distinction in Carnival Cruise Lines v.
Shute, the Court rejected, by necessary implication, an across-the-board differentiation between contract and
tort causes of action when enforcing forum selection clauses. Carnival Cruise Lines was purely a tort (slip
and fall) case. 499 U.S. at 588. The Court applied the forum selection clause contained in the parties' contract
to this cause of action.
In Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190 (3d Cir. 1983), the United
States Court of Appeals for the Third Circuit rejected a contract / tort distinction. In doing so, it acknowledged
that the policies justifying application of forum selection clauses in contract cases are equally applicable to tort
causes of action arising out of that contractual relationship. Id. at 203. Any contrary conclusion would allow
a forum selection clause to be defeated by "artful pleading". Id. This points to an additional problem with
a contract / tort distinction, these causes of action tend to blur together. See e.g., M/S BREMEN v. Zapata Off-
Shore, 407 U.S. 1 (1972), in which the same events gave rise to both negligence and breach of contract actions.
9
Here, we have two forum selection clauses upon which the parties place their primary
reliance. The seamen direct our attention to the Employment Contract’s language establishing the
Philippines as the exclusive forum for disputes regarding the “implementation and interpretation of
this overseas employment contract”. They maintain that this language covers contract claims only.
Marinechance relies primarily upon the Revised Contract which makes the Philippines the exclusive
jurisdiction for “any and all disputes or controversies arising out of or by virtue of this Contract”.
Marinechance argues that this includes tort causes of action.
For present purposes, we will assume that the seamen are correct and that the forum selection
clause of the Employment Contract does not include tort causes of action.28 We find, however, that
the forum selection clause of the Revised Contract is the provision governing the appropriate forum
for tort actions. The employment contract expressly incorporates the Revised Contract; it states that
the terms of the Revised Contract shall be “strictly and faithfully observed”. Because there is nothing
in the Employment Contract to displace or modify the forum selection clause of the Revised Contract,
other than the clause that the seamen admit does not apply to tort causes of action, we find that the
language of the Revised Contract is controlling.
Several courts have considered forum selection language similar to that of the Revised
Contract and have concluded that the forum selection clauses applied to tort causes of action.
Examples of these include: Carnival Cruise Lines, Inc. v. Shute,29 in which the Supreme Court found
that “all disputes and matters whatsoever arising under, in connection with or i ncident to this
Contract” included a negligence (slip and fall) cause of action; and Lejano v. K.S. BANDAK,30 in
which the Louisiana Supreme Court found that a forum selection clauses encompassing all “[c]ases
concerning the seafarer’s service on the ship” included tort causes of action. This interpretation has
28
The district court in Cuizon v. Kedma, Ltd, considered this language in a similar case involving
Philippine seamen and concluded that it did not cover tort causes of action. 1997 WL 37938, *2 (S.D.N.Y.
1997).
29
499 U.S. 585, 587-8 (1991).
30
705 So.2d 158 (La. 1997).
10
not been universal, however. In Hodge v. Ocean Quest Int’l, Ltd, a district court interpreted an
employment contract forum selection clause stating that “[n]o claim, demand, action, proceeding,
arbitration, litigation, hearing, motion, or lawsuit , arising herefrom or with respect hereto shall
commence or be prosecuted in any jurisdiction other than the Cayman Islands” not to apply to the
employee’s tort cause of action against her employer.31 That court rested its decision squarely upon
the contract / tort distinction.32 We find that the decisions of the United States Supreme Court and
the Louisiana Supreme Court are more persuasive. There is nothing in these clauses that justifies
limiting their application to contract claims. “[A]ny and all disputes or controversies arising out of
or by virtue of this Contract” includes tort causes of action arising during the course of employment
between the seamen and Marinechance. The district court did not err in enforcing the forum selection
clause in this suit.33
V.
For the foregoing reasons, the district court’s judgment is AFFIRMED.
31
1992 WL 162609, *3 (E.D. La. 1992).
32
Id.
33
Our conclusion is bolstered by the fact that the Revised Contract provides for benefits and
compensation to injured seamen.
11