Jurisdiction Over Belgian Company Based on Dispute Resolution Provision in Bill of Lading That was Applied Even to Non-Parties to Shipment, and on Company’s Contacts With the US as a Whole

The World in U.S. Courts: Summer 2017 - Personal Jurisdiction/Forum Non Conveniens

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BMW of North America LLC v. M/V Courage, US District Court for the Southern District of New York, May 17, 2017

Owners and insurers of millions of dollars of motor vehicles damaged by a fire aboard a US-bound cargo ship sued various defendants allegedly responsible for the accident. Many of the defendants in turn filed cross-claims against other defendants. One defendant, GovLog, had won a contract from the US Government for the transportation of Government employees’ vehicles back to the US, and pursuant to this contract GovLog had contracted for shipment of the vehicle that allegedly caused the fire giving rise to the damage and litigation. This link to the cause of the fire prompted many parties, both plaintiffs and defendants, to file claims against GovLog.

The Bill of Lading governing shipment of the vehicle that caused the fire provided that “[a]ny dispute arising under this [Bill of Lading] shall be decided in the U.S. Federal Court in the City of New York to the exclusive jurisdiction of which [parties including GovLog] submit themselves.” GovLog is a Belgian corporation whose principal place of business is Antwerp. It sought dismissal of the claims filed against it by the plaintiffs as well as the other defendants on grounds of a lack of personal jurisdiction and the doctrine of forum non conveniens.

The Court first found that the Bill of Lading was enforceable and applied to the defendants’ contract claims against GovLog. It then observed that the forum selection clause was “broad,” referring as it does to “any dispute” arising under the Bill of Lading. This being the case, the Court concluded that the clause would also be applied to the other defendants’ tort claims so long as they “involve the same operative facts as a parallel claim for breach of contract.” Indeed, the Court found that the agreement could be enforced against non-parties to the Bill of Lading, so long as the non-party was “closely related” to the dispute such that it becomes “foreseeable” that it would be bound.”

The Court separately considered the applicability of the clause to the plaintiffs’ claims, and found it to be a “closer question.” But it did not reach the question because it concluded that jurisdiction over GovLog could be based on Rule 4(k)(2) of the Federal Rules of Civil Procedure. That rule, known as the “federal long-arm statute,” confers jurisdiction over non-US defendants where federal claims have been alleged and the defendant lacks sufficient contacts with any single US State to be sued there but maintains sufficient contacts with the US as a whole to satisfy the requirements of the Due Process Clause of the US Constitution.

The first part of the test was satisfied by the presence of claims brought under US maritime law. The second part of the test was satisfied by GovLog’s own denial that it had sufficient contacts with any US State to support jurisdiction. That left the third requirement, which the Court found had been satisfied by ample connections between GovLog’s actions and the dispute more generally and the US: “These cases arise out of a fire allegedly caused by a vehicle belonging to an American citizen and manufactured by an American company that GovLog agreed to ship, pursuant to a contact with the U.S. Government, to the United States on a U.S.-flagged vessel, using a Bill of Lading in which GovLog agreed to the exclusive jurisdiction of a U.S. court.”

The Due Process Clause also requires that the exercise of jurisdiction over a party be “reasonable,” and the Court noted that a defendant must make a “compelling case” of unreasonableness to prevail once minimum contacts necessary to support jurisdiction had been shown. It concluded that GovLog had not met this heavy burden, citing GovLog’s consent to US jurisdiction in the Bill of Lading’s forum selection clause, the efficiency of resolving all of the claims in one forum, and the interest of the US in providing a forum for a case involving “a U.S.-flagged vessel bound for the United States that was the result of a tender process involving the United States Government.”

Finally, the Court rejected GovLog’s motion to dismiss the case on forum non conveniens grounds. It noted that GovLog’s agreement to US jurisdiction limited analysis of the doctrine to its “public interest” factors, including court congestion and local interests in the litigation. The Court found that these factors if anything supported the maintenance of jurisdiction, in part because of the significant US interests involved and the fact that the forum selection clause required at least certain of the claims to be litigated in New York.

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