Mitsui & Co. (USA), Inc. v. Mira M/V

• Decision Date: 28 April 1997
• Docket Number: No. 96-31056,96-31056
• Parties: MITSUI & CO. (USA), INC., Plaintiff-Appellant, v. MIRA M/V, Defendant, Euro-Baltic Lines, Inc., Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 33

111 F.3d 33

1997 A.M.C. 2126

MITSUI & CO. (USA), INC., Plaintiff-Appellant, v. MIRA M/V, Defendant Euro-Baltic Lines, Inc., Defendant-Appellee.

No. 96-31056

Summary Calendar.

United States Court of Appeals Fifth Circuit.

April 28, 1997.

Rene S. Paysse, New Orleans, LA, for Plaintiff-Appellant.

Gary Alan Hemphill, Terriberry, Carroll & Yancey, New Orleans, LA, for Defendant-Appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before SMITH, DUHE 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 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 y Reaseguros, S.A. v. M/V SKY REEFER, 515 U.S. 528, ----, 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.

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 515 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 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). 515 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, 515 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, 515 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, 515 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...