Mitsui OSK Lines Ltd (the defendant), Mitsui OSK Lines (America) Inc, and King Well Express Inc (King Well) filed motions to dismiss for improper venue on 17 March 2003 and 22 May 2003 respectively. On 3 April 2003, Barbara Lloyd Designs Inc (the plaintiff) filed a motion for judgment by default. King Well filed a motion to allow service of its answer, counterclaim and cross claim on 5 May 2003.

In May 2002, the goods were purchased by the plaintiff and shipped from China to Los Angeles by sea and from Los Angeles to North Dakota by land. When received by the plaintiff, the goods were found to be damaged by moisture and mould. The plaintiff claimed that the amount of its loss was USD 29,638.91.

Best Craft & Design Co (Best Craft), the company from whom the plaintiff purchased the goods at issue, was the original shipper. King Well, a non-vessel operating common carrier (NVOCC), issued a bill of lading, dated 26 May 2002, designating Best Craft as shipper and consignee. Caretrans Freight Service (Caretrans), the plaintiff's shipping agent, was listed on King Well's bill of lading under 'For Delivery of Goods'. King Well then secured the defendant as the ocean carrier of the goods. On 28 May 2002, the defendant issued its bill of lading, designating Caretrans as shipper and consignee.

The defendant argued that by the very act of filing this lawsuit, the plaintiff was deemed to have accepted the defendant's bill of lading and was bound by the terms and conditions therein, including the Japanese forum selection clause. The plaintiff argued that King Well's bill of lading, rather than the defendant's bill of lading, should govern because King Well's bill of lading was the only bill of lading known to it. In addition, the plaintiff contended that the defendant's forum selection clause should not be enforced because it violated guarantees provided in 46 USC 1300 (COGSA). The Hague Rules were ratified in the United States in 1937 and given effect by COGSA. The defendant argued that the Japanese forum selection clause in its bill of lading should be enforced because enforcement would not violate the guarantees of ss 1303(8) of COGSA.

Held: The plaintiff's motion is denied.

Section 1303(8) of COGSA provides:

Any clause, covenant, or agreement in a contract in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect.

When a forum selection clause is incorporated into a bill of lading, the clause is null and void and of no effect if it relieves the carrier of liability or lessens its liability as established by ss 1303(8) of COGSA. The burden is on the party seeking to overcome the presumption of validity to show that the carrier's liability would be lessened under the law of the foreign forum.

Under US law, parties attempting to have foreign forum selection clauses in bills of lading invalidated must clear the COGSA 'lessening of liability' hurdle or demonstrate that enforcing the forum selection clause would be unreasonable under the circumstances. Generally, this is because a foreign forum selection clause in a bill of lading is presumed to be valid.

In order to overcome the presumption of validity of forum selection clauses, the plaintiff must demonstrate that the clause is unreasonable under the circumstances. A forum selection clause may be unreasonable if: '(1) it is the result of fraud or overreaching; (2) trial in the contractual forum will be so gravely difficult and inconvenient for the complaining party that he will for all practical purposes be deprived of his day in court; or (3) enforcement of the forum selection clause would contravene a strong public policy'.

The Court does not find the plaintiff's argument that the defendant's forum selection clause violated COGSA persuasive. The plaintiff has not presented the Court with any evidence, by affidavit or otherwise, that the law of Japan, if applied, would lessen the defendant’s liability. Therefore, the Court finds that the plaintiff has failed to show that the defendant's forum selection clause violates COGSA.

The Court recognises that the plaintiff is a small operation with little or no experience in the international business arena. Nevertheless, the Court has not been presented with any evidence that would support a finding that there was overreaching in the creation of either of the bills of lading involved in this case.