By Louis M. Solomon
American International Group Europe
S.A. (Italy) (AIGE) v. Franco Vago International, Inc., 09 Civ. 6525 (S.D.N.Y. Nov. 2010) [enhanced version available to lexis.com subscribers], succinctly addresses several issues of international
litigation practice, specifically the enforceability of jurisdictional
provisions in bills of lading and waiver. AIGE is the subrogee of Sixty
USA, Inc. The case is a maritime case (138 cartons of women's garments), but
the international practice issues that were decided arise in international
practice cases generally.
First, there were two independent
entities issuing bills of lading. The Court held, as other cases have,
that "an upstream intermediary cannot co-opt the terms of a downstream
carrier's bill of lading, but must instead rely on the terms of its own bill of
Second, the Court addressed the
recurring issue arising from the fact that the Federal Rules of Civil Procedure
do not have a specific or even obvious rule enabling courts to address and
enforce contractual forum selection clauses at the commencement of a
litigation. As the Second Circuit has stated: "The
Supreme Court has not specifically designated a single clause of Rule 12(b) as
the proper procedural mechanism to request dismissal of a suit based upon a
valid forum selection clause, nor [has the Second Circuit]". Asoma
Corp. v. SK Shipping Co., 467 F.3d 817 (2d Cir. 2006) [enhanced version / unenhanced version available from lexisONE Free Case Law]. The District Court here noted that Rule
12(b)(1) (lack of subject matter jurisdiction) and Rule 12(b)(3) (lack of
proper venue) were both candidates The Court followed the Second
Circuit's approach in New Moon Shipping Co. v. MAN B&W Diesel, 121
F.3d 24 (2d Cir. 1997) [enhanced version ], which
"refused to pigeon-hole these claims into a particular clause of Rule 12(b)"
but instead permitted such motions early in a case and placed the "burden on
the plaintiff, who brought suit in a forum other than the one designated by the
forum selection clause, to make a 'strong showing' in order to overcome the
presumption of enforceability".
Third, the District Court applied
the four-part test endorsed by the Second Circuit and based on M/S Bremen v.
Zapata Off-Shore Co., 407 U.S. 1 (1972) [enhanced version / unenhanced version ],
focusing on whether the clause was reasonably communicated to the party
resisting enforcement; whether it was mandatory or permissive; whether the
claims and parties are covered by the clause; and whether the presumption
of enforceability was adequately rebutted (by making a strong showing that
enforcement would "unreasonable or unjust, or that the clause was invalid for
such reasons as fraud or overreaching").
Fourth, on the particular facts
here, the Court was unwilling to enforce a clear forum clause, finding that
reliance on the clause was waived by failure to raise it as a defense in an
answer or otherwise to assert it for over 11 months after commencement of the
action. The Court was unwilling to read a preservation of the
defense into the defense of personal jurisdiction, which was pleaded. The
Court determined that it would apply the law of waiver otherwise applicable to
contractual rights and found that in this case the delay was not merely the
result of "silence, oversight or thoughtlessness in failing to object"; the
party being found to waive had "availed itself of this forum by attempting to
implead third-party defendants and filing several affidavits, affirmations, and
memoranda of law with the Court". The Court acknowledged the cases
holding that the filing of a cross-claim or impleding a third party does not
necessarily waive the right to insist on a forum selection clause.
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