conveniens. For the following reasons, Citibank's motion to dismiss for improper venue is denied.
A. Forum Selection Clause
Each of the Names signed three documents containing forum selection clauses vesting exclusive jurisdiction in the courts of England: (1) the General Undertaking, which serves as the "master gateway agreement into Lloyd's;"
(2) the Members' Agent Agreement, which gives effect to the Managing Agent's Agreement and the Agents' Agreement; and (3) the Premiums Trust Deed, which establishes the primary fund into which policyholders' premiums are deposited and provides for the existence of the LATF. However, the trust instruments from which this action arises and to which both Citibank and the Names are parties do not contain forum selection clauses.
Citibank contends that it is entitled to enforce the English forum selection clauses against the Names, despite the fact that Citibank is not a signatory to the clauses, because (1) it is a non-party "closely related" to the signatory Lloyd's; (2) it is an intended beneficiary of the promise the Names made in signing both the General Undertaking and the Premiums Trust Deed; (3) it is a promisee embraced within the group defined to constitute Lloyd's within the General Undertaking; and (4) the Names rely on the General Undertaking in suing Citibank. For the following reasons, Citibank is not entitled to enforce the English forum selection clauses.
1. Citibank Is Not "Closely Related" to Lloyd's
Under some circumstances, federal courts have permitted a non-party "closely related" to a signatory to enforce a forum selection clause. See Frietsch v. Refco, Inc., 56 F.3d 825, 827 (7th Cir. 1995); cf. Hugel v. Corp. of Lloyd's, 999 F.2d 206, 209-10 (7th Cir. 1993) ("In order to bind a non-party to a forum selection clause, the party must be 'closely related' to the dispute such that it becomes 'foreseeable' that it will be bound."); Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 514 n.5 (9th Cir. 1988). Citibank contends that it should be entitled to enforce the forum selection clause because it is "closely related" to Lloyd's.
As the court in Frietsch observed, the phrase "closely related" is not particularly illuminating. 56 F.3d at 827. However, the phrase may be given meaningful content by reference to the principle of mutuality. Id. Thus, if Plaintiffs were entitled to enforce the forum selection clause against Citibank in a suit in England, Citibank should be able to enforce the clause against the Plaintiffs. If, on the other hand, Citibank is not bound by the choice of forum provided in the various agreements entered into by Plaintiffs, it should not be able to enforce the clauses against them.
Plaintiffs have submitted an affidavit of an English barrister indicating that Plaintiffs would be unable to enforce the forum selection clauses against Citibank. Citibank contends that the principle of mutuality is irrelevant where, as here, Citibank is subject to service of process and jurisdiction in England. However, the issue is not whether the English courts would have jurisdiction over Citibank, but whether the Plaintiffs could assert the forum selection clause to defeat a motion by Citibank to dismiss on grounds of forum non conveniens. Because Plaintiffs would be unable to do so, Citibank is not entitled to enforce the forum selection clauses here.
Citibank further argues that under New York law, the lack of mutuality in a forum selection clause does not render it unenforceable, citing Karl Koch Erecting Co. v. New York Convention Ctr. Dev. Corp, 838 F.2d 656, 659-60 (2d Cir. 1988). However, the question in that case was not whether a non-party to a forum selection clause should be permitted to enforce the clause against a party to the clause, but whether a non-mutual forum selection clause to which both parties expressly agreed was enforceable at all. In addition, the Koch court's ruling rested in part on the conclusion that the forum selection clause before the court may not have lacked mutuality. Id. at 660. Here, the forum selection clause does, in fact, lack mutuality.
Moreover, setting aside the question of mutuality, the cases cited by Citibank are factually distinguishable from this case. In Frietsch and Hugel, the Seventh Circuit found non-parties who controlled the signatories to be "closely related." See Frietsh, 56 F.3d at 827-28 (finding defendant to be "closely related" to German signatories because plaintiffs alleged that defendant entirely controlled these signatories); Hugel, 999 F.2d at 209-10 (upholding district court's finding that non-party corporations owned and controlled by signatory plaintiff are so closely related to the dispute that they are equally bound by the forum selection clause). The relationship between the non-party and the signatory must be sufficiently close so that the non-party's enforcement of the forum selection clause is "foreseeable" by virtue of the relationship between the signatory and the party sought to be bound. In the cases relied upon by Citibank, the defendant seeking to avoid the application of the forum selection clause owned and controlled the signatory of the forum selection clause. In the case at bar, Citibank neither controls Lloyd's, nor is Citibank sufficiently close to Lloyd's such that it would be foreseeable to Plaintiffs that Citibank would be entitled to enforce the clause.
Finally, and perhaps most significantly, this case differs from those cited by Citibank, because here the forum selection clause included in so many of the agreements prepared by Lloyd's is conspicuously absent from the LATD, the document that controls the relationship between the parties and governs this dispute. Lloyd's has amended the LATD eight times since 1939, but has chosen not to add the English forum selection clause. The inescapable inference from the fact that Lloyd's included a forum selection clause in virtually all of the documents involving the Names' relationship to Lloyd's but omitted such a clause from the LATD is that Lloyd's did not intend to compel Citibank or the Names to litigate their disputes in England. In fact, the absence of the forum selection clause suggests that Citibank itself did not want to be bound to litigate claims against it in England.
The fact that the LATD provides that New York law will apply to all claims in connection with the LATF, although not dispositive in itself, further supports Plaintiffs' argument that the English forum selection clauses in other documents should not be read into the LATD. Absent clear language to the contrary in the document in question, it is reasonable to assume that the selection of the law of a particular jurisdiction would at least permit a court of that jurisdiction to hear cases arising under that document. Cf. Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 n. 13, 41 L. Ed. 2d 270, 94 S. Ct. 2449 (1974) ("The designation of arbitration in a certain place might also be viewed as implicitly selecting the law of that place to apply to that transaction.")
2. Citibank Is Not an Intended Beneficiary of the English Forum Selection Clauses
Citibank also contends that it should be permitted to enforce the various forum selection clauses, because it is an intended beneficiary of the Names' and Lloyd's agreement to resolve disputes in England.
In determining whether a non-party to an agreement is an intended beneficiary under New York law, the Second Circuit has relied on the Restatement of Contracts. Septembertide Publishing, B.V. v. Stein & Day, Inc., 884 F.2d 675, 679 (2d Cir. 1989). The Restatement provides that:
[A] beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties and . . . the circumstances indicated that the promisee intends to give the beneficiary the benefit of the promised performance.
Restatement (Second) of Contracts 302 (1981).
In this case, the circumstances do not indicate that Lloyd's, the promisee, intended to give Citibank the benefit of the promised performance under either the General Undertaking or the Premiums Trust Deed. Although the LATD, which was prepared by Lloyd's, contemplates the possibility of legal action between the Names and Citibank, the American Trustee, see LATD Articles Tenth and Seventeenth, it lacks an English forum selection clause. As discussed above, if Lloyd's intended to provide Citibank with the benefit of the English forum selection clause, it would have so provided in the LATD, as Lloyd's so provided in all other contractual agreements.
Citibank contends that Roby v. Corporation of Lloyd's, 996 F.2d 1353 and Bonny v. Society of Lloyd's, 3 F.3d 156 (7th Cir. 1993), compel a different result. In Bonny, the district court relied on the forum selection clause to dismiss claims against Lloyd's and also dismissed the claims against Illinois defendants who were not parties to the forum selection clause. The Seventh Circuit affirmed the dismissal of the Illinois defendants on the ground that the claims against the local defendants were "integrally related" to those against Lloyd's "such that the suit against all defendants should be kept in a single forum." 3 F.3d at 162-163. Here, there are no claims against Lloyd's or any other signatory to the forum selection clauses Citibank seeks to assert. Therefore, Bonny does not require dismissal.
In Roby, the Second Circuit dismissed claims against Lloyd's, which was clearly a party to the forum selection clause in the general undertaking, as well as claims against Lloyd's syndicates, Lloyd's Managing Agents and individual "Chairs" of the Managing Agents (who were themselves agents of the Managing Agents), none of whom were direct parties to the forum selection clause in the General Undertaking. In dismissing the claims against the syndicates, the Second Circuit stated:
The extremely broad language of the General Undertaking should make it clear that Lloyd's intent was to benefit all Lloyd's entities, particularly because potential actions against Lloyd's itself are limited in nature and the broad language of paragraphs 2.1 and 2.2 otherwise would be sorely overbroad. Moreover, paragraph 1, which is the only other substantive provision in the General Undertaking, requires Names to abide by the provisions of any other contract authorized by the Council . . . . We believe this indicates that the General Undertaking was meant to govern the Names' general obligations within the entire Lloyd's community.