Winthrop Products Inc (the plaintiff) hired Hanjin Container Line Ltd (the defendant) to transport ocean cargo from New York to Hong Kong. The bill of lading supplied by the defendant included on its reverse side a forum selection clause stating that 'any action [under the bill of lading] shall be brought before the Seoul Civil District Court in the Republic of Korea'.

In February 1987, the defendant's ship, the Hanjin Kobe, loaded the plaintiff's cargo in New York and transported it to Keelung, Taiwan. In Taiwan, the defendant transferred the cargo to a smaller ship, the KH Enterprise, for delivery to Hong Kong. On 7 August 1987, the defendant notified the plaintiff that en route from Taiwan to Hong Kong, the KH Enterprise had collided with another vessel and had sunk with the plaintiff's cargo on board. The plaintiff waited for four years for its claim to be paid and then sued in this Court to recover USD 17,120 for the loss of cargo.

The defendant brought this motion for summary judgment to enforce the forum selection clause, or in the alternative for dismissal on the grounds of forum non conveniens.

Held: Motion denied.

The governing law, in this case, is 46 USC ss 1300 ff (COGSA). The defendant acknowledges that enforcing the forum selection clause is contrary to the majority rule in the federal courts yet attempts to analogise the recent case of Carnival Cruise Lines Inc v Shute 499 US 585 (1991). Carnival involves neither COGSA nor a forum selection clause designating a foreign locale for litigation. In that case, the Supreme Court determines that the forum selection clause does not violate a statute like COGSA and upholds the designation of Florida as the required forum for a suit brought against the foreign cruise line by residents of the state of Washington. COGSA, like the federal statute in Carnival, voids contract clauses which reduce a carrier's liability. 'Any clause, covenant, or agreement 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 Act, shall be null and void': s 1303(8). A forum selection clause which imposes on plaintiff the substantial burden of transporting its suit to a remote forum and proceeding without the benefit of US jurisdiction undoubtedly affects the liability of the carrier involved.

The applicable precedent in this case is Underwriters at Lloyds v The M/V 'Steir' 773 F Supp 523 (D Puerto Rico 1991). Steir followed a line of similar cases beginning with Indussa Corp v SS Ranborg 377 F2d 200 (2d Cir 1967) which held that bill of lading forum clauses requiring litigation in foreign jurisdictions are invalid under COGSA because they tend to reduce the liability of the carrier. The bill of lading forum clause in this case was not a negotiated term of a contract between parties of equal bargaining power. In Indussa, the Second Circuit held that Congress' intent was to void any bill of lading clause for a shipment to or from the United States which removed the transaction from the ambit of a US court and the 'substantive rules Congress had prescribed'. The plaintiff’s choice of a foreign corporation doing business in New York to ship goods to Hong Kong should not deprive it of the benefits of a US court. The Indussa Court also noted that requiring an American plaintiff to bring a suit in a foreign court would significantly lessen the liability of a carrier, particularly if the claim was a small one. Given the amount of the plaintiff’s claim (USD 17,120), requiring it to proceed in Korea would undoubtedly deter the plaintiff from continuing its action. For these reasons, the Court declines to uphold the forum selection clause.

In support of its forum non conveniens argument, the defendant cites Monsanto Intl Sales Co v Hanjin Container Lines 770 F Supp 832 (SD NY 1991), in which a forum non conveniens dismissal was granted in a suit arising from the same incident as this case. However, the Monsanto case involved foreign plaintiffs and defendants. Though Monsanto established that COGSA does not preclude a court from dismissing a COGSA claim for forum non conveniens, the decision does not require it. A forum non conveniens dismissal is a rare and unlikely occurrence when the plaintiff is a New York resident and substantial relevant information is located in the State. This case involves a New York resident plaintiff and a defendant which maintains an office in New York. The bill of lading was signed in New York and the cargo was shipped from there. The documents necessary to establish plaintiff’s prima facie case are located in New York or the New York area.

Plaintiff correctly asserts that it should not be faced with bringing its action in a foreign country simply because defendant chose to use the services of a company which is not under New York jurisdiction. Additionally, any costs for transportation of witnesses or translation of documents that defendant insists would be prohibitive if the case continues in New York, apply equally to plaintiff which would be forced to bring its USD 17,120 claim on the other side of the globe. Because granting the defendant’s motion to dismiss on the grounds of forum non conveniens would effectively deny the plaintiff its day in court, this branch of the motion also is denied.