UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
February 21, 1980
PATERSON, ZOCHONIS (U.K.) LTD., et al., Plaintiff,
COMPANIA UNITED ARROWS, S.A., SEA QUEEN LINES, SEA QUEEN CORP., LTD., CHINA OCEAN SHIPPING COMPANY and MITSUI O.S.K. LINES, LTD., Defendants.
The opinion of the court was delivered by: SAND
Currently before the Court in this complicated maritime cargo claim proceeding is defendant Mitsui O.S.K. Lines, Ltd.'s ("Mitsui"'s) motion for an order enforcing the forum selection clause contained in Mitsui's bills of lading by "declining jurisdiction and venue and dismissing the [four] complaints against" it.
Alternatively, Mitsui seeks dismissal on the ground of forum non conveniens. The Court finds that the forum selection clause is enforceable. Consequently, plaintiffs' contractual claims against Mitsui in 77 Civ. 5129, 78 Civ. 1064, 78 Civ. 1138 and 78 Civ. 1197
are dismissed for improper venue pursuant to F.R.Civ.P. 12(b)(3). Plaintiffs' non-contractual claims against Mitsui in the same actions are dismissed on forum non conveniens grounds subject to the conditions stated herein. Because the "facts" in these actions change almost as frequently as the Court receives new papers or hears another argument, we once again begin by addressing the factual background despite the fact that we have already dealt with these matters in two previous opinions (January 30, 1980 and January 30, 1979).
These consolidated actions involve claims by some forty cargo plaintiffs, all of whom are foreign corporations seeking to recover losses stemming from the sinking of the M. V. Sea Queen I ("Sea Queen"), a vessel apparently controlled by a Hong King corporation.
The ship's cargo, some of which originated in the People's Republic of China ("PRC") but was transshipped at Hong Kong, was taken on board at Hong Kong and other Asian ports, and was intended to be discharged at Lagos, Nigeria or other unspecified West African ports. The China Ocean Shipping Company ("Cosco"), originally a defendant in these actions, arranged the transshipment and apparently issued to plaintiffs "through bills of lading" on both Cosco and Mitsui forms covering that portion of the cargo originating in PRC.
In an opinion dated January 30, 1980, this Court dismissed the complaints against Cosco under the Foreign Sovereign Immunities Act of 1976. 28 U.S.C. § 1602 et seq. The other defendants, Sea Queen's owners and operators (the "Sea Queen defendants"), have defaulted. Sea Queen apparently issued its own bills of lading for all cargo taken on board regardless of whether a Cosco or Mitsui through bill of lading covering the same cargo had already been issued.
This Court's involvement with these matters began in October, 1977 when the Sea Queen defendants filed a complaint in the Southern District of New York seeking exoneration from or limitation of liability for losses arising out of the sinking of their vessel. In addition to filing claims in the limitation proceeding, plaintiffs filed complaints in seven separate actions seeking recovery from some or all of the original defendants herein.
The limitation proceeding was eventually dismissed, and in April and May of 1979, a default judgment was granted against the Sea Queen defendants in each of the seven cargo complaints. As has already been noted, the claims against Cosco were dismissed on January 30, 1980.
There has been considerable confusion from the outset as to the basis upon which plaintiffs seek to hold Mitsui liable. Much of the confusion stems from the fact that three different types of bills of lading were issued for the cargo ultimately loaded aboard the Sea Queen: Mitsui bills which provide generally for the resolution of disputes in Tokyo, Japan; Cosco bills which provide for the resolution of disputes in PRC, and Sea Queen bills which give the "carrier" the right to litigate in New York. Adding to the confusion was plaintiffs' apparent and perhaps understandable reluctance, in light of the lack of information as to who was responsible for the issuance of which bills of lading, to specify on which bills they sought to hold Mitsui liable. Plaintiffs' earlier insistence that their claims against Mitsui were based at least partially on the Sea Queen bills led this Court to deny Mitsui's original motion for dismissal on forum non conveniens grounds.
Plaintiffs now appear to concede, albeit obliquely, that their claims rest primarily on the Mitsui bills.
Moreover, undisputed facts recently brought to the attention of the Court concerning the issuance and function of the Sea Queen bills of lading lead the Court to conclude that plaintiffs cannot base their claims against Mitsui upon those bills.
Although the parties disagree as to the nature of the relationship between the respective defendants,
it now seems clear that the Sea Queen bills were issued by Sea Queen or its agents to the various shippers or their agents. None of the plaintiffs claim to be a holder or recipient of a Sea Queen bill, and the Court concludes that those bills were never negotiated to or held by any of the plaintiffs. At least in the case of cargo originating in PRC, a "through" bill of lading covering the entire voyage was issued by Cosco, and the Sea Queen bill was issued to Cosco's agents in Hong Kong. The Sea Queen bills so issued thus served as receipts between carrier and shipper, and are not a valid basis for a cause of action by cargo plaintiffs who never held them. See, e.g., Atlantic Banana Co. v. M. V. Calanca, 342 F. Supp. 447 (S.D.N.Y. 1972) (a bill of lading issued by a carrier to a shipper who is also a charterer is a "mere receipt"). Had the plaintiffs been holders of the Sea Queen bills, and if, as seems likely, a genuine issue of fact exists as to Mitsui's role in the operation of the Sea Queen, this Court might well have allowed a suit against Mitsui on the Sea Queen bills to proceed.
See Joo Seng Hong Kong Co., Ltd. v. S. S. Unibulkfir, et al., 78 Civ. 2439 (LBS) (October 23, 1979). Given the facts currently presented to the Court, however, it is clear that plaintiffs' claims against Mitsui cannot rest upon the Sea Queen bills and must rest instead upon the Mitsui bills and the recently alleged non-contractual claims.
The Mitsui Forum Selection Clause
In an opinion dated January 30, 1979, this Court held that it would be inappropriate to enforce the Mitsui forum selection clause in a context where most of the plaintiffs predicated Mitsui's liability on the Sea Queen bills of lading and where Mitsui itself denied that its bills were relevant to plaintiffs' claims.
Mitsui was granted leave to renew its motion to dismiss if it turned out that the Mitsui bills were the sole contractual basis upon which Mitsui's liability could be predicated. It now appears that this is, in fact, the case.
We therefore address the forum selection clause contained in the Mitsui bills of lading and conclude that it is enforceable and that these actions should be dismissed for improper venue pursuant to F.R.Civ.P. 12(b)(3).
A freely negotiated forum selection clause is enforceable absent a showing by the party opposing enforcement that the clause is either unreasonable under the circumstances or the product of fraud, overreaching, mistake or coercion. The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 32 L. Ed. 2d 513, 92 S. Ct. 1907 (1972); Gaskin v. Stumm Handel, 390 F. Supp. 361 (S.D.N.Y. 1975). Plaintiffs have not made any such showing.
In order to show that the clause is unreasonable, plaintiffs must establish "that trial in the contractual forum [Tokyo, Japan] will be so gravely difficult and inconvenient that [they] will for all practical purposes be deprived of [their] day in court." The Bremen v. Zapata Off-Shore Co., 407 U.S. at 18. Plaintiffs' allegations fail to satisfy this test.
This case, which has absolutely no connection with either New York or the United States, is before this Court solely because Sea Queen's owners, who are no longer parties, chose to file a limitation proceeding here. Under the circumstances plaintiffs, all of whom are foreign corporations, are hard pressed to argue that Tokyo is so much more inconvenient than New York that they will be deprived of their day in court if forced to litigate there. Indeed, Tokyo is much closer than New York to the events surrounding and the witnesses involved in this essentially Far Eastern dispute.
Plaintiffs' assertions concerning the likelihood of delay in the Japanese courts and the convenience of New York as a forum are unconvincing and irrelevant. No evidence of delay has been presented. Moreover, the relevant issue is not whether New York is a convenient forum but whether the forum chosen by the parties is so inconvenient as to meet the Bremen test.
At oral argument, plaintiffs also raised the question of how their claims would be treated by a Japanese court. Plaintiffs were particularly concerned with whether a waiver or extension of the statute of limitations by Mitsui would be honored. Competing affidavits by experts on Japanese law have been submitted, but a supplemental affidavit by plaintiffs' expert puts him substantially in accord with defendant's expert on the waiver question. In light of both these affidavits and Mitsui's representation
that it will waive the relevant statute of limitations in Japan, the Court concludes that plaintiffs will not be put to any foreseeable, serious procedural or substantive disadvantage as a result of the enforcement of the Tokyo forum selection clause.
Ironically, the strongest potential argument for non-enforcement appears in Mitsui's papers. If Cosco's issuance of the Mitsui bills was in fact unauthorized, the Court would have serious reservations as to whether the forum selection clause could be said to have been freely negotiated between Mitsui and the plaintiffs. Plaintiffs vigorously contend, however, that Cosco's act was authorized, and that Cosco in fact acted as Mitsui's agent. The burden of establishing non-enforcement is on plaintiffs, and plaintiffs here postulate a straightforward commercial transaction between themselves and Mitsui's "agent". The Court thus concludes that the Mitsui bills were "freely negotiated", and that there is no basis for not enforcing the Mitsui forum selection clause.
Defendant Mitsui's motion to enforce its forum selection clause is granted, and the contractual claims against Mitsui in the above mentioned complaints are dismissed for improper venue.
Although this technically leaves plaintiffs' non-contractual claims before the Court, these claims too have absolutely no connection with this forum and are in fact ancillary to the main contractual claims now to be litigated in Japan. There is no doubt that both the contractual and non-contractual claims should be litigated before the same forum, and that both types of claim focus on the relationships between parties located in the Far East.
Plaintiffs non-contractual claims are thus dismissed on the ground of forum non conveniens subject to Mitsui's agreement to suit on those claims in Tokyo, Japan, and waiver of the applicable statute of limitations.
Settle order on notice.