Opinion
99-CIV-11959(KMW)
February 9, 2001
Plaintiff filed this action under 28 U.S.C. § 1333 to recover for damage to cargo that is alleged to have occurred during an international shipment. Defendant S.K. Shipping Co., Ltd. moves to dismiss the action for failure to bring the action in accordance with the foreign forum selection clause. Defendant Golden Management Co., Ltd. moves to dismiss, pursuant to Rule 12(b)(2), for lack of personal jurisdiction. Defendant Golden Management Co., Ltd. also joins defendant S.K. Shipping Co., Ltd.'s motion to dismiss based on the forum selection clause. For the reasons set forth below, the Court dismisses this action.
I. Background
Stemcor USA, Inc. ("Stemcor" or "plaintiff") brought this admiralty and maritime claim for damage to a shipment of 363.91 metric tons of black and galvanized steel. Plaintiff alleges that the steel was damaged during an international shipment from Taiwan to Portland, Oregon/Vancouver, Washington that took place between October and December 1998. Golden Management Co., Ltd. ("Golden Management"), which has its principal place of business in Tokyo, Japan, is the owner of the M/V Golden Prosperity, the vessel upon which the steel was shipped. S.K. Shipping Co., Ltd. ("S.K. Shipping"), which has its principal place of business in Seoul, Korea, is the corporation that managed, operated, chartered, and otherwise controlled the M/V Golden Prosperity.
The cargo was shipped pursuant to S.K. Shipping's bills of lading that stated:
32 (Jurisdiction) Any dispute arising under this Bill of Lading shall be decided in the country where the Carrier has his principal place of business, and the law of such country shall apply except as provided elsewhere herein.
Plaintiff commenced action in this case in the Southern District of New York, claiming that the shipment was delivered "seriously contaminated, damaged and impaired in value."
Complaint at ¶ 8. Plaintiff seeks $75,000 in damages.
II. Discussion
Defendant S.K. Shipping has filed a motion to dismiss for failure to bring the action in the required forum as contracted in the bills of lading. Defendant Golden Management argues that the Court must dismiss the cause of action against it for lack of personal jurisdiction. Defendant Golden Management also joins in S.K. Shipping's motion to dismiss based on the forum selection clause.
A. Enforceability of Forum Selection Clause 1. Reasonableness of the Forum Selection Clause
Foreign forum selection clauses are "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10 (1972); accord New Moon Shipping Co., Ltd. v. Man B W Diesel AG, 121 F.3d 24, 29 (2d Cir. 1997). In order to overcome this presumption of enforceability, a party which seeks to bring a suit in a forum other than the one designated by the forum selection clause must prove that: (1) the forum selection clause is invalid for fraud or overreaching; (2) the forum selection clause will deprive plaintiff of its day in court due to grave inconvenience or unfairness of the selected forum; (3) the fundamental unfairness of the chosen law will deprive plaintiff of a remedy; or (4) enforcement would contravene a strong public policy of the forum in which the action was brought. See M/S Bremen, 407 U.S. at 15-17. In addition, when the shipment is covered by Section 3(8) of the U.S. Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. § 1300 et seq., a forum selection clause is unenforceable if the substantive law to be applied lessens the carrier's liability below what COGSA guarantees. See Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 539 (1995) (case involving a foreign arbitration clause); Union Steel Co. v. M/V Sanko Spruce, 14 F. Supp.2d 682, 689 (explaining that Sky Reefer applies to foreign forum selection4 clauses) (collecting cases).
COGSA applies to bills of lading for shipments of cargo to and from a United States port in foreign trade. Section 3(8) provides as follows: "Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect." 46 U.S.C. App. § 1303(8).
The party claiming that the forum selection clause is unreasonable bears a "heavy burden" to prove that the clause should not be enforced. See New Moon, 121 F.3d at 32. On a motion to dismiss, the party must make a prima facie showing by alleging facts that, if true, would prove that the forum selection clause is unreasonable for one of the reasons set forth in the Bremen test. See id. at 28. All reasonable inferences must be drawn in the party's favor, and no disputed fact can be resolved against the party until after an evidentiary hearing. See id.
In this case, plaintiff has failed to make a prima facie showing that the forum selection clause is unreasonable. In its memorandum in opposition to the motion to dismiss, plaintiff asserts that it seeks an evidentiary hearing and the opportunity to develop facts through discovery to establish that it can maintain a claim under the Bremen test. The Court notes that plaintiff provides no case law that allows discovery or provides for an evidentiary hearing in a similar situation given that the Complaint does not allege that the forum selection clause is unreasonable.
Because plaintiff has offered no facts suggesting that the forum selection clause is invalid, the Court enforces the clause and dismisses the action against S.K. Shipping.
Because the Court concludes that it lacks personal jurisdiction over Golden Management, it need not reach the issue of whether the foreign forum selection clause is enforceable against Golden Management.
2. Arbitration Clause
Plaintiff argues that the forum selection clause is not exclusive because it provides an option to the carrier to arbitrate disputes arising under the bill of lading in New York, before and in accordance with the rules of the Society of Maritime Arbitrators and subject to U.S. law. See Plaintiff's Memorandum of Law in Opposition to the Motion of Defendant S.K. Shipping ["Pl.'s Mem. in Opp."], dated May 4, 2000, at 7. Contrary to plaintiff's assertion, the Court finds that the forum selection clause is mandatory and exclusive, regardless of the provision for arbitration. See Union Steel, 14 F. Supp.2d at 687 (deciding the same issue under the identical bill of lading). The bill of lading provides for settlement of disputes either according to the forum selection clause or arbitration. The bill of lading does not provide for any other option. Given that the parties have not chosen to arbitrate the dispute, the Court concludes that the arbitration provision does not impact the enforceability of the forum selection clause.
3. Charter Party
Plaintiff also argues that there is a charter party for the vessel, the terms of which are unknown to plaintiff, which may contain an arbitration clause that will impact on the pending litigation. See Pl.'s Mem. in Opp. at 7. Defendant S.K. Shipping has since provided a copy of the charter party. The Court finds that this arbitration clause applies to disputes arising between the owners (Baltic Ship Management) and the charterers (S.K. Shipping) only and therefore does not impact the enforceability of the forum selection clause for the dispute between Stemcor and S.K. Shipping.
B. Personal Jurisdiction Over Golden Management
Contrary to plaintiff's assertion, the Court finds that it has no personal jurisdiction over Golden Management subject to N.Y.C.P.L.R. § 302(a)(3) (McKinney 2000), a provision of New York's long-arm statute. In order to determine whether the Court may exercise personal jurisdiction over a non- domiciliary under § 302(a)(3), the Court must consider: (1) whether defendant committed a tort outside the state; (2) whether the act caused injury inside the state; (3) whether defendant expected or should reasonably have expected the act to have consequences in the state; and (4) whether defendant derived substantial revenue from interstate or international commerce. Id.
Plaintiff argues that its headquarters are in New York and that defendant should have expected that its tort would have consequences to plaintiff in the State of New York. However, under New York law, the fact that a corporation is incorporated in a particular state or maintains offices there is an insufficient basis for personal jurisdiction. See Fantis Foods, Inc. v. Standard Importing Co., Inc., 49 N.Y.2d 317, 326-27, 402 N.E.2d 122, 425 N.Y.S.2d 783 (1980) (citations omitted)("It has . . . long been held that the residence or domicile of the injured party within a State is not a sufficient predicate for jurisdiction, which must be based upon a more direct injury within the State and a closer expectation of consequences within the State than the indirect financial loss resulting from the fact that the injured person resides or is domiciled there."). Given that Golden Management is a Japanese corporation with neither a corporate presence nor any revenue generated within the State of New York and that the case arises from an international shipment from Taiwan to Portland, Oregon/Vancouver, Washington (Declaration of Steven C.C. Liu, dated May 27, 2000), the Court concludes that it does not have personal jurisdiction over defendant Golden Management.
III. Conclusion
The Court finds that the forum selection clause precludes adjudication of the claim against S.K. Shipping in the Southern District of New York and that it may not exercise personal jurisdiction over defendant Golden Management. On these grounds, the Court grants defendant S.K. Shipping's and defendant Golden Management's motions to dismiss. The Clerk of the Court is directed to close the case. Any pending motions are moot.
SO ORDERED