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Korean Press Agency, Inc. v. Yonhap News Agency

March 23, 2006

KOREAN PRESS AGENCY, INC., PLAINTIFF,
v.
YONHAP NEWS AGENCY, DEFENDANT.



The opinion of the court was delivered by: Cedarbaum, J.

Opinion

Plaintiff, Korean Press Agency, Inc. ("KPA"), sues Yonhap News Agency ("Yonhap") for tortious interference with contract, injurious falsehood, and prima facie tort. Yonhap moves to dismiss the action on the ground that the forum selection clause in their contract requires that this action be brought in South Korea. For the reasons that follow, Yonhap's motion is granted.

BACKGROUND

Yonhap is South Korea's national news service, incorporated under the laws of the Republic of Korea. Yonhap provides more than a thousand news stories and photos each day to news outlets around the world. KPA is a New York corporation that disseminates news and information to Korean-American news organizations throughout the United States.

In 1988, KPA and Yonhap entered into an agreement that granted KPA the right to distribute Yonhap's news and photo services to clients throughout North America. The parties renewed the agreement in a contract dated January 21, 2000 (the "Agreement"). The Agreement was to run for automatically renewable terms of one year, and provided that if either party wished to terminate the Agreement, the party was required to give written notice of the termination three months in advance.

On or about December 19, 2003, KPA received notice from Yonhap that Yonhap would be terminating the Agreement effective December 31, 2003. KPA objected and informed Yonhap that it was entitled to three months notice before termination of the Agreement. KPA asserts that its ability to deliver Yonhap news and photo services was critical to maintaining its customers. Furthermore, KPA alleges that Yonhap was aware of KPA's contracts with these customers and that KPA's inability to provide its customers with Yonhap services would cause the customers to terminate their contracts with KPA. KPA alleges that Yonhap contacted KPA's customers and deliberately spread the false story that KPA was no longer entitled to distribute Yonhap news. KPA asserts that many of its customers terminated their contracts prematurely as a result of Yonhap's conduct.

KPA originally brought this action in the Supreme Court of New York County. Yonhap removed the action to this court based on diversity of citizenship. Shortly after removal, Yonhap moved to dismiss the complaint on several grounds:

(1) the forum selection clause; (2) the doctrine of merger; (3) and failure to state a claim for injurious falsehood and prima facie tort.

At oral argument, I granted Yonhap's motion to dismiss the prima facie tort claim and denied Yonhap's motion to dismiss the complaint based on the doctrine of merger. I granted KPA leave to amend the complaint to replead its claim for injurious falsehood, contingent on a decision that the forum selection clause does not prevent this action from proceeding in this court. Decision was reserved on the effect of the forum selection clause.

Although KPA does not claim breach of contract, the Agreement between KPA and Yonhap is an integral part of this action. Yonhap argues that articles 19 and 20 of the Agreement require that this action be brought in South Korea. Although the original Agreement is written in Korean, Yonhap has translated Articles 19 and 20 to read:

Article 19: This Agreement shall be governed by the laws of the Republic of Korea.

Article 20: If any disputes arise between "A" and "B", it [sic] shall be under the jurisdiction of the Seoul District Civil Court, in Seoul, Korea.

Yonhap contends that Article 20 is a mandatory forum selection clause which requires that this dispute be litigated in the Seoul District Civil Court. First, KPA responds that the Agreement does not bind it because the Agreement was signed by KPA's sole shareholder in his individual capacity. Second, KPA argues that under United States and Korean law Article 20 is a permissive, and not a mandatory, ...


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