Forum-selection clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances. This is the correct doctrine to be followed by federal district courts sitting in admiralty.
Petitioner, a German corporation, contracted with respondent, a United States corporation, to transport an oil rig from Louisiana to the Adriatic Sea. During transportation, the rig was damaged and was towed to Tampa, Florida, where respondent filed suit. Petitioner asked the district court to enforce the forum-selection clause contained in the contract placing jurisdiction in England. Petitioner also filed a complaint,seeking exoneration or limitation of liability. The district court refused to enforce the clause. The appellate court affirmed. Petitioner sought review by certiorari of the judgment. The Supreme Court of the United States vacated the appellate court's judgment and remanded the case.
Was the forum selection clause in an international agreement between petitioner and respondent valid?
Petitioner’s filing its limitation complaint did not preclude it from relying on the forum clause. Further, the agreement was a freely negotiated international commercial agreement and whatever inconvenience respondent would suffer by being forced to litigate in the contractual forum as it agreed to do was clearly foreseeable at the time of contracting. As a result, the forum-selection clause was valid, and the case was remanded for a determination of whether enforcement was unreasonable.