Kanematsu USA, Inc. v. MV OCEAN SUNRISE
2003 AMC 2200 (E.D. La. 2003)
The owner and insurer of a shipment of steel tubing sued the carrying vessel's owner for cargo damage. The vessel owner moved to dismiss the case pursuant to a forum selection clause in the bill of lading that required litigation to be brought in Japan. The motion was denied.
The District Court began its analysis with the presumption that forum selection clauses in bills of lading are valid. To rebut the presumption, the plaintiff must demonstrate the unreasonableness of the clause. A forum selection clause could be unreasonable for several reasons: 1) if it became part of the bill of lading through fraud or overreaching; 2) if the plaintiff will be deprived of his day in court because of grave inconvenience or unfairness; 3) if the chosen law is unfair and will deprive the plaintiff of a remedy; or 4) if enforcement of the clause would contravene a strong public policy. The Court also noted that a forum selection clause incorporated into a bill of lading is void if it relieves the carrier from liability or lessens the carrier's liability.
The Court referred to three Fifth Circuit cases addressing a forum selection clause designating Japan as the forum. In one case the clause was not enforced because there were certain clauses in the bill of lading that violated US COGSA and there was a risk that a Japanese court would enforce them nonetheless. In the other two cases, which were decided by the same judge, forum selection clauses were enforced because the plaintiff failed to show that the carrier's liability would be lessened if the cases were tried in Japan.
Plaintiff argued that the subject forum selection clause should not be enforced because US COGSA governs and there would be no opportunity for the District Court to review the decision of the Japanese court to make sure that the plaintiff's protections under US COGSA would be maintained. The Court rejected this argument because plaintiff did not sustain its burden of showing that the application of Japanese law would in fact deprive it of rights under US COGSA.
Plaintiff also argued that the application of Japanese law would lessen the carrier's liability in violation of US COGSA. Under US COGSA, the owner of the carrying vessel would be liable as a carrier. However, Japanese law would not recognize the vessel owner as a carrier. The District Court was persuaded by this argument and held that "a forum selection clause cannot be enforced when there is substantial uncertainty as to whether a foreign court will recognize multiple carriers when such parties would clearly be carriers under US COGSA.