Opinion
01 Civ. 0456 (JSM)
April 8, 2002
Keith B. Dalen, Hill, Rifkins Hayden New York, N.Y., for plaintiffs.
Chester D. Hooper, Haight Gardner Holland Knight New York, N.Y.; Shaun F. Carroll, Nourse Bowles One Exchange Plaza, New York, N.Y., for defendants.
OPINION AND ORDER
This action arises out of a collision between the M/V Atlantic Crusader and the M/V Global Mariner in the Orinoco River in Puerto Ordaz, Venezuela, on August 2, 2000. The Global Mariner, carrying a cargo of steel from Matanzas, Venezuela to Guatemala and Costa Rica, collided with the Atlantic Crusader, which was at anchor in the harbor, and sank. Plaintiffs, who are insurers of the cargo interests and have been subrogated to the cargo claims, filed this action in this district on January 19, 2001. In addition, on January 23, 2001, the Global Mariner filed a limitation of liability proceeding in this district. Discovery in that proceeding has proceeded before Magistrate Judge Dolinger, and, as of this date, numerous depositions have been taken and documents have been produced.
01 Civ. 0577 (JSM).
The plaintiffs in this case are Guatemalan and Costa Rican corporations. The Global Mariner is a merchant vessel registered under the flag of England, and owned and operated by English and Scottish corporations. The Global Mariner's crew members were mainly English and Irish. The Atlantic Crusader is a merchant vessel registered under the flag of Cyprus, whose owners and charterers are German and Cypriot. Most of its crew members were Polish and Filipino.
These defendants are referred to collectively hereinafter as the "Global Mariner".
These defendants are referred to collectively hereinafter as the "Atlantic Crusader".
After the sinking of the Global Mariner, it entered into a contract with Smit Dolphin Shipping of Curacao, for salvage and removal of the wrecked ship and its cargo. That contract provided that any disputes regarding the salvage operation would be governed by English law and referred to arbitration in London.
No dispute has grown out of the salvage operation. There is an issue, however, as to the rights to the proceeds received for the salvaged cargo, which have been deposited into an account in this district.
Both the Atlantic Crusader and the Global Mariner were insured by English P I Clubs. Shortly after the collision, solicitors for those insurers entered into an agreement to litigate all disputes between the two vessels' owners and operators in England under English law. Pursuant to that agreement, the Atlantic Crusader filed a claim in rem against the Global Mariner in the English High Court of Justice in London on April 10, 2001.
The Atlantic Crusader defendants have now moved to dismiss this action on grounds of forum non conveniens, arguing that London would be a more appropriate forum in which to litigate this matter.
The Applicable Law
A motion to dismiss pursuant to the doctrine of forum non conveniens is addressed to the broad discretion of the district court. Scottish Air Int'l, Inc. v. British Caledonian Group, PLC, 81 F.3d 1224 (2d Cir. 1996). It is reviewed according to a several stage analysis and balancing test. The most recent Second Circuit decision that deals with the doctrine, Iragorri v. United Technologies Corp., 274 F.3d 65 (2d Cir. 2001), is not directly on point since it deals specifically with the relevance of a plaintiff's residence in the United States, but outside the district in which an action is filed, on a motion by defendants to dismiss on forum non conveniens grounds. 274 F.3d at 68-69. Here no party is a United States citizen or resident. Nevertheless, the decision clearly sets out the standards and analysis to be followed by the Court in deciding a forum non conveniens motion.
Thus, the Court begins with the general proposition that plaintiff's choice of forum is entitled to deference and will stand unless the defendant meets the burden of showing that the balance of conveniences dictates that trial in the chosen forum would be unnecessarily burdensome to defendant without countervailing benefit to plaintiff. Id. at 70-71. The degree of deference accorded plaintiff's choice varies with the circumstances of a case. Id. at 71. Plaintiff's choice of forum is usually entitled to great deference when plaintiff sues in its own home forum, since it can be presumed to be convenient to plaintiff. However, when a U.S. forum is chosen by a foreign plaintiff, it is entitled to a lesser degree of deference. The deference accorded that choice moves on a sliding scale depending on several considerations, which reflect the fact that it is less reasonable to presume that the choice of a foreign forum was made for convenience, and more likely that the selection was made for forum shopping reasons.
In determining where a suit falls on that sliding scale, "the greater the plaintiff's or the lawsuit's bona fide connection to the United States and to the forum of choice and the more it appears that considerations of convenience favor the conduct of the lawsuit in the United States, the more difficult it will be for the defendant to gain dismissal." Id. at 72. Factors that argue against forum non conveniens dismissal include the convenience of the plaintiff's residence in relation to the chosen forum, the availability of witnesses or evidence in the forum district, the defendant's amenability to suit in that district, the availability of appropriate legal assistance, and other reasons relating to convenience or expense. On the other hand, the more it appears that the forum was chosen in an attempt to gain a tactical advantage, the less deference is given to the plaintiff's choice of forum, and the easier it becomes for the defendant to show that convenience would be better served by litigation in the courts of another country. Id.
The next level of inquiry involves the analysis set out in Gulf Oil v. Gilbert, 330 U.S. 501, 67 S.Ct. 839 (1947), Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 67 S.Ct. 828 (1947), and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 102 S.Ct. 252 (1981). First, the Court must determine whether an adequate alternative forum exists. If so, it must balance two sets of factors in order to determine whether the case should be retained or be dismissed. Iragorri, 274 F.3d at 73. The first set of factors relates to the private interests, or convenience, of the litigants. These factors include
the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive.Id. at 73-74 (quoting Gulf Oil v. Gilbert, 330 U.S. at 508, 67 S. Ct. at 843).
In balancing these factors, the court is to focus on the precise issues that will be tried in the case.
The second set of factors relates to the public interest. These include the negative effect when litigation is concentrated in congested centers rather than being handled at its origin; the burden of jury duty on the citizens of a community that has no relation to the litigation; the benefit, in cases of public interest, of trying the case in the view of the community to which t relates, the local interest in having localized disputes decided at home; and the appropriateness of a forum that is at home with the law that governs the case, rather than having a court located in another forum "untangle problems in conflict of laws, and in law foreign to itself." Iragorri, 274 F.3d at 74 (citinq Gulf Oil v. Gilbert, 330 U.S. at 508-509, 67 S.Ct. at 843).
The Iragorri Court concluded that:
the greater the degree of deference to which the plaintiff's choice of forum is entitled, the stronger a showing of inconvenience the defendant must make to prevail in securing forum non conveniens dismissal. At the same time, a lesser degree of deference to the plaintiff's choice bolsters the defendant's case but does not guarantee dismissal. he action should be dismissed only if the chosen forum is shown to be genuinely inconvenient and the selected forum significantly preferable. In considering this point, the court furthermore must balance the greater convenience to the defendant of litigating in its preferred forum against any greater inconvenience to the plaintiff if the plaintiff is required to institute the suit in the defendant's preferred foreign jurisdiction.Id. at 74-75.
Balancing the Conveniences
This Court first must determine the degree of deference to be accorded plaintiffs' choice of forum. The Southern District of New York is not the home forum of any party to this action. None of the parties are found or regularly do business in this district, or even in the United States. The claim to jurisdiction in this district is based on: (1) the forum selection clause contained in the bills of lading for the Global Mariner's cargo, (2) an agreement between the Atlantic Crusader and the plaintiffs, pursuant to which the Atlantic Crusader agreed to appear in this district, and to post a bond for any judgment that might be entered against it in that proceeding, but retained the right to contest this Court's personal jurisdiction and to move for dismissal on the ground of forum non conveniens, (3) the pendency in this district of the Global Mariner's limitation proceeding, which was filed a few days after this action, and (4) the presence in this district of the account in which the proceeds from the sale of the salvaged cargo are being held.
This agreement was given in return for the plaintiffs' agreement to release the ship from arrest after they seized it when it docked in Providence, Rhode Island in January 2001. The agreement also provided that any dispute relating to the terms of the bond would be governed by New York law.
Neither witnesses nor other evidence relevant to the trial of this action would have any connection to this district, except for the highly significant fact that most of the witnesses and evidence related to this action will be present in this district in connection with the Global Mariner limitation proceeding. That proceeding has been moving along rapidly before Magistrate Judge Dolinger, who has ordered that all discovery be completed by April 26, 2002, and that all expert discovery be completed by August 9, 2002. All defendants have agreed to be sued in this district, although the Atlantic Crusader's consent was limited to an in rem appearance, and was obtained under duress of the seizure of the ship. Appropriate legal assistance is available to all parties in this District.
Thus, plaintiffs' choice of forum is entitled to at least some degree of deference, although it is true that the factors supporting that deference, with the exception of the forum selection clause in the global Mariner bills of lading (which required plaintiffs to bring this action in this district), were created by the acts of plaintiffs and the Global Mariner after the collision took place. It also is true that American law is more favorable than English law to both the plaintiffs and the Global Mariner, while English law is more favorable to the Atlantic Crusader. While this would add support to an argument that plaintiffs' choice of forum was motivated by forum shopping, rather than by appropriate considerations of convenience, the fact that the law of this forum (if applicable) would favor these parties is not in itself a reason to dismiss, any more than an unfavorable change of law is a reason not to dismiss a proper case on forum non conveniens grounds, provided that the parties can still receive some reasonable form of relief. Piper Aircraft Co. v. Reyno, 454 U.S. 235, 247, 102 S. Ct. 252, 261 (1981); In re: Maritima Aragua, 823 F. Supp. 143, 149 (S.D.N.Y. 1993).
An English court would apply the 1910 Brussels Collision Convention, which has been adopted into English law. The Convention provides that each ship is liable in damages in proportion to its relative fault with respect to the collision. American law, on the other hand, provides for joint and several liability.
Moving on to an analysis of the factors set out in Koster, Gilbert, andPiper Aircraft, it is apparent that the courts in London, which are favored by the Atlantic Crusader, and where a related proceeding between the Global Mariner and the Atlantic Crusader is pending, would provide an adequate alternative forum for this litigation. Therefore, this Court must balance both the private and the public conveniences relevant to this case. Such an analysis yields the conclusion that there is no single truly convenient place for the trial of this action.
Most significant in this analysis is the fact that most, if not all, of the evidence relevant to this case will have to be produced in this district in connection with the limitation proceeding. of course, an equal amount might have to be produced in London in the proceeding pending there between the two ships. The witnesses in this action are scattered around the world — in Venezuela, England, Ireland, Poland, the Philippines, and on ships on the high seas. There apparently is one witness who resides in San Francisco, California, but no other Americans have any connection with this case. None of the witnesses are within this district for service of process, but there is no showing that any significant number are within the jurisdiction of the London court either.
While all of the parties involved in this action have appeared in the limitation proceeding, the plaintiffs here (cargo interests) are not parties to the proceeding in London.
Thus, both London and New York are inconvenient for many of the witnesses. It is unclear whether, on balance, it would be more costly for witnesses who will be necessary at trial to travel to London or to New York. As a practical matter, this is not extremely significant as the attorneys for the parties have begun extensive investigations, and have traveled to Venezuela, Curacao, and elsewhere, to interview and depose witnesses, and to view the scene of the accident and the wreck of the Global Mariner. Moreover, it is clear that regardless of how this Court decides this motion, both the Atlantic Crusader and the Global Mariner will have to continue to litigate in both the Southern District of New York (the limitation proceeding) and the English High Court of Justice (the action between the owners of the vessels).
Review of the public interest factors is similarly inconclusive. The Southern District of New York is obviously a congested forum, but presumably London is also, and no party contends that Venezuela, which is the site of the events at issue, would be a preferable forum. There is no question of burdening the citizens of this community with jury duty in this admiralty action. Moreover, this is a purely private dispute, which is of no apparent interest to the citizens of the locality where the collision took place.
The final issue is whether trying this case would force the Court to "untangle problems in conflict of laws, and in law foreign to itself." 274 F.3d at 74. There are two sets of claims here — contract claims against the Global Mariner, and tort claims against both the Global Mariner and the Atlantic Crusader. There also is the issue of the distribution of the proceeds from the sale of the salvaged cargo.
Under the bills of lading, the contract claims against the Global Mariner are governed by the Hague-Visby Rules, which are the law of England.
The bills of lading for the cargo on the Global Mariner incorporated the terms of the Charter Party dated July 13, 2000. Clause 35 of the Charter Party stated that it would be governed and construed in accordance with English law and that disputes arising out of the Charter Party would be referred to arbitration in New York. However, that clause was modified by Clause 37, which provided:
Clause Paramount: Notwithstanding any other provision in this contract any claims for damage or loss to cargo shall be governed by the hague-visby rules and any other clause herein repugnant to the hague-visby rules shall be null and void and of no force or effect as respect to cargo claims. . . . Any arbitration clause in this contract shall not apply to claims for cargo loss or damage but such claims shall be brought in the United States District Court for the Southern District of New York, to which jurisdiction owners hereby consent.
The bills of lading also provided for settlement of General Average in London. No General Average has been declared in this case.
American law applies in the limitation proceeding. Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 933 (1953) ("It is competent therefore for Congress to enact that in certain matters belonging to admiralty jurisdiction parties resorting to our courts shall recover only to such extent or in such way as it may mark out." (quoting Butler v. Boston Savannah Steamship Co., 130 U.S. 527, 9 S.Ct. 612 (1889)). See also In re: Ta Chi Navigation (Panama) Corp., S.A., 416 F. Supp. 371, 379 (S.D.N Y 1976). Pursuant to the agreement between the parties, New York law will also apply to the distribution of the salvage proceeds.
The parties strongly disagree, however, as to which law applies to the tort claims. The governing case on the choice of law issue is Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921 (1953). In that case, the Supreme Court stated that:
Maritime law . . . has attempted to avoid and resolve conflicts between competing laws by ascertaining and valuing points of contact between the transaction and the states or governments whose competing laws are involved. The criteria, in general, appear to be arrived at from weighing of the significance of one or more connecting factors between the shipping transaction regulated and the national interest served by the assertion of authority.Id., 73 S.Ct. at 928.
The criteria to be considered in the choice of law analysis regarding a maritime tort claim are: 1) the place of the wrongful act; 2) the law of the flag ("the most venerable and universal rule of maritime law"); 3) the allegiance or domicile of the injured; 4) the allegiance of the defendant shipowner; 5) the place of contract; 6) the inaccessibility of the foreign forum; and 7) the law of the forum. Id. at 928-933.
The Lauritzen Court stated that the most commonly accepted solution with respect to tort claims generally is to apply the law of the place where the acts took place. 73 S.Ct. at 928-29. The place of the tort here is Venezuela, which apparently has the same law as the U.S. with respect to tort claims. The Lauritzen Court went on to state, however, that "the territorial standard is so unfitted to an enterprise conducted under many territorial rules and under none that it usually is modified by the more constant law of the flag." Id. at 929. The law of the flag supersedes the territorial principle because a ship is "deemed to be a part of the territory of that sovereignty [whose flag it flies], and not to lose that character when in navigable waters within the territorial limits of another sovereignty." Id. (quoting United States v. Flores, 289 U.S. 137, 155-59, 53 S.Ct. 580 (1933)). This reasoning applies most clearly, however, to events that take place completely on board a ship, as when a crew member is injured, rather than to events that involve other ships, and where the fact that the ships were in a particular location is relevant to the facts of the case.
In this case, the allegiance or domicile of both ships would point to Cypriot and German law (owners of the Atlantic Crusader) and English law (owners of the Global Mariner). All of these countries are signatories to the 1910 Brussels Collision Convention, which law the Atlantic Crusader defendants argue should apply. The cargo interests agreed to English law as governing their bills of lading, and they do not contend that the law of their own countries (Guatemala and Costa Rica) should apply to the tort claims.
The place of contract (Venezuela) is irrelevant to the Atlantic Crusader since all of the claims against it are based in tort, and it has no contractual relationship with either plaintiffs or the Global Mariner defendants. Likewise, as detailed above, inaccessibility of the foreign forum is not really a relevant factor.
The final factor in this analysis is the law of the forum. While, as stated above, American law will apply in the limitation proceeding and to the distribution of the salvage proceeds, English law (the Hague-Visby rules) will apply to the cargo claims against the Global Mariner, and English law (the 1910 Brussels Collision Convention) will apply to the action between the shipowners in London. English law also would apply in the event that a General Average were declared (which has not occurred) and to any dispute relating to the salvage operation (there is none).
In Matter of Seiriki Kisen Kaisha, 629 F. Supp. 1374, 1395 (S.D.N.Y. 1986), the court held that since division of damages is a matter of substantive law, if both vessels are subject to the same foreign law, that division must be in accord with that law. Since both the Global Mariner and the Atlantic Crusader fly the flag of countries that have adopted the 1910 Brussels Collision Convention, the Court concludes that it is that law that should apply to the tort claims in this case. As inSeiriki Kisen Kaisha, "the consequence of [this] determination [is merely] to relegate the cargo owners to the law which governed the ship on which they were content to ship their goods." Id.
That English law will be applied in this case does not dictate that the case must be dismissed on forum non conveniens grounds. In re: Maritima Aragua, S.A., 823 F. Supp. 143, 147 (S.D.N Y 1993). This Court is capable of applying that law, and, in fact, is frequently called upon to do so in the exercise of its admiralty jurisdiction.
Thus, while plaintiffs have not made out an extremely strong case for their choice of forum, defendants have not shown plaintiffs' chosen forum to be "genuinely inconvenient and the selected forum [to be] significantly preferable." Iragorri, 274 F.3d at 74-75.
The precedent closest to this one in its facts is In re: Maritima Aragua. S.A., 823 F. Supp. 143 (S.D.N.Y. 1993). That case involved a collision in Lake Maracaibo in Venezuela between two vessels piloted by Venezuelan pilots, owned by a Venezuelan corporation and a Panamanian corporation (with its principal place of business in Greece), with a Venezuelan crew on the one hand and, on the other, a crew composed of Greeks, Maldiveans, Russians, Pakistanis and a Filipino. One ship was carrying cargo from Houston, Texas to Venezuela, and the other, from Venezuela to Nicaragua. In that case, as in this one, the ship owners' insurers reached a post-collision agreement that provided that they would litigate all issues between them in London.
Later, the owners of one of the ships, the Mar Coral, filed a limitation of liability proceeding in the Southern District of New York. The owners of the Mar Coral cargo filed claims in the limitation proceeding, and then, a separate action for cargo loss and damage against the other ship, the Trade Resolve, in the Southern District. The Trade Resolve defendants then moved to dismiss on jurisdictional and forum non conveniens grounds, claiming that either Venezuela or London would be a more appropriate forum. After discussing the relevant factors, theMaritima Aragua court refused to dismiss the case, stating:
The crucial factor in the case at bar is the presence of the Limitation Proceeding brought by the owners of the Mar Coral here in New York, and which is not subject to — and would not be affected by — a successful motion to transfer the claims against the Trade Resolve Defendants to either London or Venezuela. The relevant witnesses, documents, translations, and other evidence will be litigated in this district regardless, and this factor tilts the balance of convenience in favor of this forum.Id. at 147.
With respect to the other factors, the court found that the scattered nature of the evidence did not overwhelmingly favor any one forum, although it would shift the balance slightly toward Venezuela. Id.
With respect to the public factors, the Maritima Aragua court found that, given the pendency of the limitation proceeding, judicial economy spoke in favor of New York. In making this finding, the court acknowledged that, given the agreement to litigate the issues between the ships in London, and the pendency of the limitation proceeding in this district, there was no avoiding having the ship owners litigate on two fronts. Id. at 149.
Although the choice of which law would govern the tort claims was also a problem in Maritima Aragua, the Court found that even if Venezuelan law should apply, "the need to apply foreign law is not alone sufficient to dismiss under the doctrine of forum non conveniens." Id. Ultimately, the court found that "the claims and evidence required for the Limitation Proceedings are simply too substantially similar to justify transfer of the interests to London or Venezuela." Id. at 150. The same is true in this action.
Conclusion
For the foregoing reasons, the Atlantic Crusader's motion to dismiss on forum non conveniens grounds is denied.