United States District Court,
S.D. New York.
KT EXPORT and KT Quality Control PVT. Ltd., Plaintiffs,
v.
WOLF CANYON OF AMERICA, INC., USA; Wolf Canyon Asia Pacific Ltd., USA; Washington Mutual Bank (Wamu) and Mediterranean Shipping Company S.A., Geneva, Defendants.
No. 09 Civ. 7123(BSJ).
June 18, 2011.
Memorandum & Order
BARBARA S. JONES, District Judge.
Before the Court is a motion for summary judgment filed by MSC Mediterranean Shipping Company, S.A. (“MSC”). For the reasons set forth below, the Defendant’s motion is GRANTED.
BACKGROUND
This action arises out of an agreement between KT Export and KT Quality Control PVT. LTD. (“Plaintiffs”) to provide dehydrated white onion powder (“powder”) to the Wolf Canyon Defendants. Plaintiff’s contracted with MSC, an ocean carrier, to deliver two separate shipments of the powder from Mundra, India to Manzanillo, Mexico. (Def’s 56.1 Statement ¶ 3–5). MSC delivered both shipments to Wolf Canyon on the presentation of originals of the MSC bills of lading that were issued with respect to the First and Second shipment. (Def’s 56.1 Statement 514). Plaintiffs allege that the Wolf Canyon defendants took possession of the goods from MSC by presenting MSC with original bills of lading but that Wolf Canyon had not made payment prior to taking possession as the parties agreed. (Def’s 56.1 Statement ¶ 14). Plaintiff’s further allege that MSC should not have provided the goods to the Wolf Canyon defendants because Wolf Canyon had not made payment.
The cargo at issue in this litigation was shipped by MSC pursuant to two bills of lading. Both documents have identical terms and conditions contained on the back side of the bills of lading. The two provisions relevant to this litigation are found under the section “Law and Jurisdiction” Clause 2 of the agreement:
(a) Any claim or dispute arising from the Contract of Carriage evidenced by this B/L shall be subject to the exclusive jurisdiction of the High Court of Justice in London, and English Law shall be applied;
(b) Contrary to (a), any claim or dispute arising from the Contract of Carriage evidenced by this B/L relating to cargo carried to or from the United States of America shall be subject to the sole jurisdiction of the United States, U.S. District Court, Southern District of New York, and United States law shall be applied.
(Serrano Affidavit, Exhibit D Clause 2)
MSC moves for summary judgment on the grounds that: (1) the claims were brought in the wrong forum and are time barred, and (2) the complaint fails to state a claim upon which relief can be granted.
LEGAL STANDARD
The Supreme Court has explained that “[a] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the cause (subject-matter jurisdiction) and the parties (personal jurisdiction).” Lykes Lines Ltd. LLC v. Bringer Corp., No. 04 Civ. 4460, 2007 U.S. Dist. LEXIS 19785, at *8,2007 WL 766170 (S.D.N.Y. Mar. 12, 2007) (quoting Sinochem Int’l Co. v. Malay. Int’l Shipping Corp., 549 U.S. 422, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007)). Accordingly, before reaching the merits under Rule 56, this Court must first determine whether its jurisdiction is proper under the parties’ Forum Selection Clause.
The Second Circuit has outlined a four-part test to determine whether a forum selection clause is enforceable. Phillips v. Audio Active Ltd., 494 F.3d 378, 383–84 (2d Cir.2007). First, the clause must be “reasonably communicated to the party resisting enforcement.” Id. Second, the clause must be classified as “mandatory or permissive, i.e., to decide whether the parties are required to bring any dispute to the designated forum or simply permitted to do so.” Id. Third, the “claims and parties involved … [must be] subject to the forum selection clause.” Id. Finally, a court must “ascertain whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the … [clause] was invalid for such reasons as fraud or overreaching.” Id.
DISCUSSION
Defendants contend that the Forum Selection Clause in the Bill of Lading dictates that the instant dispute be brought in London, England and the complaint should be dismissed. The Court agrees.
1. Reasonable Communication
“The Second Circuit ‘regularly enforce[s] forum selection clauses as long as ‘the existence of the clause was reasonably communicated to the parties.’ “ TradeComet.com, LLC v. Google, Inc., 693 F.Supp.2d 370, 377 (S.D.N.Y.2010). Whether the existence of the clause was reasonably communicated to the parties is a question of law for the court. Effron v. Sun Line Cruises, Inc., 67 F.3d 7, 9 (2d Cir.1995). “A forum selection clause stated in clear and unambiguous language … is considered reasonably communicated to the plaintiff in determining its enforceability.” Novak v. Tucows, Inc., No. 06–CV–1909, 2007 U .S. Dist. LEXIS 21269, at *7,2007 WL 922306 (E.D.N.Y. Mar. 26, 2007) (quoting Vitricon, Inc. v. Midwest Elastomers, Inc., 148 F.Supp.2d 245, 247 (E.D.N.Y.2001)).
The only argument that Plaintiffs make is that the clause is “neither legible nor clear as to any applicability.” The Court construes this argument as a claim by Plaintiffs that the clause was not reasonably communicated. The Court has reviewed the Bill of Lading and its relevant provisions: Clauses 2(a) and (b) of the Law and Jurisdiction section, attached to the Serrano Affidavit as Exhibit D. The Court had no difficulty reading these provisions, although they are in fine print, and finds the relevant provisions are legible.
Plaintiffs do not dispute the authenticity of this document.
Further, the Forum Selection Clause states in clear and unambiguous language-albeit in fine print-that all suits concerning transport of cargo to or from any country outside the United States shall be under the exclusive jurisdiction of the High Court of Justice in London. Effron, 67 F.3d at 9.
As the language of the Forum Selection Clause was legible, clear and unambiguous, this Court finds that the Forum Selection Clause was reasonably communicated to Plaintiff.
2. Mandatory or Permissive
A mandatory forum selection clause is one where it “grants exclusive jurisdiction to a selected forum,” while a permissive one “only reflects the contracting parties’ consent to resolve disputes in a certain forum, but does not require that disputes be resolved in that forum.” Macsteel Intern. USA Corp. v. M/V Larch Arrow, her engines, boiler, etc., 354 Fed. App’x. 537, 538 (2d Cir.2009). “For a forum selection clause to be deemed mandatory, jurisdiction and venue must be specified with mandatory or exclusive language.” Id. (citations and quotations omitted).
The Forum Selection Clause states, “[a]ny claim or dispute arising from the Contract of Carriage evidenced by this B/L shall be subject to the exclusive jurisdiction of the High Court of Justice in London, and English law shall be applied.” (Bill of Lading, cl. 2(a).) Although the use of the word “shall” is not dispositive, it is “typically employed in mandatory selection clauses.” Salis v. Am. Exp. Lines, 566 F.Supp.2d 216, 223 (S.D.N.Y.2008). See also Seward v. Devine, 888 F.2d 957, 962 (2d Cir.1989) (interpreting the use of “shall” as mandatory venue language); Bense v. Interstate Battery System, Inc., 683 F.2d 718, 722 (2d Cir.1982) (holding that interpretation of forum selection clauses should not result in “meaningless [contracts that] would … frustrate the purpose of the parties as it is clearly set forth in the agreement”).
The Forum Selection Clause does not contain any language that indicates multiple venues, apart from an exception when cargo is shipped to or from the United States. The clause at issue contains language indicating the parties’ intent to make jurisdiction of the High Court of Justice exclusive and mandatory. Subsequently, this Court finds that the Forum Selection Clause confers mandatory and exclusive jurisdiction for resolution of any claim or dispute arising out of the shipment from India to Mexico in the High Court of Justice in London, England.
3. Application of the Forum Selection Clause
The Court finds that the claims involved in this litigation are subject to the Forum Selection Clause. Plaintiff brought this claim against Defendant for breach of contract and fraud for failing to pay for merchandise in the agreed manner. The shipments at issue sailed from India to Mexico. The Bill of Lading states that when transport is not to or from the United States, “Any claim or dispute arising from the Contract of Carriage evidenced by this B/L shall be subject to the exclusive jurisdiction of the High Court of Justice in London, and English law shall be applied.” (Bill of Lading, cl. 2(a).) Thus, Plaintiff’s claims against Defendant are subject to the Forum Selection Clause.
The Court further finds that the parties to this litigation are subject to the Forum Selection Clause. Under the plain terms of the agreement, the Shipper was the Plaintiff. Additionally, under the terms of the agreement, the Carrier was MSC. Accordingly, the parties involved in this suit are subject to any limitations contained in the Bill of Lading.
The Court finds that the parties and claims involved in this litigation are subject to the provisions contained in the Forum Selection Clause.
4. Rebutting the Presumption of Enforceability
The Court finds that Plaintiff has failed to rebut the presumption that the Forum Selection Clause is enforceable. To rebut the presumption, the Plaintiff must make “a sufficiently strong showing that enforcement would be unreasonable or unjust, or that the clause was invalid for such reasons as fraud or overreaching.” Phillips, 494 F.3d at 383–84. Plaintiff does not assert any facts indicating that enforcement of the clause would be unjust or unreasonable, or that it was the product of fraud or overreaching. Rather, Plaintiff simply argues that the clause was “neither legible nor clear as to any applicability …” (Pl.’s Mem. in Opp’n to Def.’s Mot. to Dismiss, at 13.) As discussed above Plaintiffs are wrong on both counts.
The mandatory and exclusive Forum Selection Clause contained in the Bill of Lading is valid and the Defendants are permitted to invoke it. The Forum Selection Clause clearly requires claims arising out of the transaction at issue to be brought at the High Court of Justice in London, England. Accordingly, this Court finds that Plaintiff has not met its burden of rebutting the presumption of enforceability of the Forum Selection Clause. As such, this Court does not reach the claims on the merits under Rule 56.
CONCLUSION
For the reasons set forth above MSC’s motion is GRANTED and the cause of action against MSC is DISMISSED The Clerk of the Court is directed to terminate the case.
SO ORDERED
