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MUTUAL EXPORT v. WESTPAC BANKING CORP.

August 3, 1990

MUTUAL EXPORT CORPORATION, PLAINTIFF,
v.
WESTPAC BANKING CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Whitman Knapp, District Judge.

MEMORANDUM & ORDER

This action arises out of a dispute over the termination date of a letter of credit issued by defendant Westpac Banking Corporation ("Westpac") in favor of plaintiff Mutual Export Corporation ("Mutual"). Westpac moves to dismiss under the doctrine of forum non conveniens. For reasons which follow, the motion is denied.

BACKGROUND

Plaintiff Mutual, a Delaware corporation with its principal place of business in Roseland, New Jersey, is engaged in the business of chartering cargo ships in international trade. It is a wholly-owned subsidiary of Reefer Express Lines Pty, Limited ("Reefer"), a Bermuda corporation which likewise has its principal place of business in Roseland, New Jersey. Plaintiff shares its office space with Reefer, and because it has no employees of its own, it, for a fee, utilizes the services of Reefer's employees, most of whom are residents of New Jersey or New York.

In 1985, Reefer decided to sell another of its wholly-owned subsidiaries, New Guinea Express Lines (A/Asia) Pty, Ltd. ("New Guinea Express"),*fn1 to, inter alia, members of New Guinea Express's management. New Guinea Express, an Australian corporation based in Sydney, Australia, operated a shipping service between ports in Australia and New Guinea. It had entered into certain charter agreements with the plaintiff, whereby New Guinea Express sub-chartered two of plaintiff's vessels. Since the two companies no longer would be commonly owned by Reefer, the transaction transferring ownership of New Guinea Express required that a letter of credit or similar bank guarantee be issued to secure some of the charter party payments owed to plaintiff by New Guinea Express.

Defendant Westpac, an Australian corporation, is the bank from which New Guinea Express sought and ultimately obtained the letter of credit for the benefit of plaintiff. Headquartered in Sydney, defendant maintains branch offices in more than a dozen countries. One such branch occupies three floors of an office building in midtown Manhattan.

On July 5, 1985, after its employees in Australia had reviewed and approved New Guinea Express's request, defendant issued a $500,000 standby letter of credit in favor of plaintiff. New Guinea Express contemporaneously agreed to indemnify defendant for any claims arising out of the letter of credit, which, according to its terms, was to expire on June 30, 1986.

In December 1988, New Guinea Express defaulted on the charter payments it owed plaintiff. Unable to obtain payments from New Guinea Express, which had sought protection under Australia's bankruptcy laws, plaintiff looked to the letter of credit. Thus, on October 3, 1989, it requested payment of $500,000 from defendant. Defendant refused to pay, pointing to the fact that the express terms of the letter of credit provided for its expiration on June 30, 1986.

Two months later, plaintiff wrote to defendant, asserting its position that the expiration date appearing on the letter of credit was an error, and requesting that defendant extend the letter of credit to its originally intended date, July 13, 1992. The following day plaintiff presented a sight draft at defendant's New York City branch. Defendant again refused to pay, and plaintiff commenced this action.

The complaint sets forth three claims: breach of contract, reformation, and estoppel. Plaintiff asserts that June 20, 1986 was not the expiration date upon which the parties previously had agreed. It bases this contention in part on a draft of the letter of credit sent to it by New Guinea Express on June 28, 1985. The draft stated that the letter of credit was to expire "45 days after the later of the last possible day on which [either of the ships' charters] may terminate." According to plaintiff, this language contemplated an expiration date of July 13, 1992.

Plaintiff also contends that two letters from defendant to New Guinea Express, written in 1987 and 1988, long after the claimed 1986 expiration date, evidence the continued existence of the $500,000 guarantee in favor of plaintiff. Plaintiff further alleges that, but for defendant's agreement to issue a letter of credit that would expire in 1992, the sale of New Guinea Express would not have taken place.

Defendant timely filed the instant motion to dismiss for forum non conveniens, contending that this action "belongs" in Australia.

DISCUSSION

Whether an action should be dismissed for forum non conveniens involves a balancing of the private and public interests outlined in Gulf Oil Corporation v. Gilbert (1947) 330 U.S. 501, 508-09, 67 S.Ct. 839, 843, 91 L.Ed. 1055. "Unless [that] balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Id. at 508, 67 S.Ct. at 843. Although a plaintiff's citizenship should not be accorded "talismanic significance," see Alcoa S.S. Co. v. M/V Nordic Regent (2d Cir.) 654 F.2d 147, 154, cert. denied, (1980) 449 U.S. 890, 101 S.Ct. 248, 66 L.Ed.2d 116, it is clear that "[t]he balance must be even stronger when the plaintiff is an American citizen and the alternative forum is a foreign one." ...


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