Lloyd's Maritime and Commercial Law Quarterly
THE POSITION IN THE UNITED STATES ON FOREIGN FORUM SELECTION AND ARBITRATION CLAUSES
Robert Force *
To offset several extremely broad grants of jurisdiction to US federal courts, with jurisdiction in Admiralty cases being a prime example, US courts have devised rules and approaches to limit the scope of federal jurisdiction. As one example, US courts have adopted a very pro-enforcement approach to foreign forum selection and arbitration clauses. A review of the case law reveals that only in the most extreme situations will US courts refuse to enforce these clauses. This article also demonstrates, at least in cargo loss or damage cases, that sending the cargo claimant off to another country effectively ends the case or results in a discounted settlement. Despite the fact that in arbitration cases the district court in which suit has been filed merely stays the action pending arbitration, as a practical matter there is nothing that the court can do after the arbitrators have issued their award.
I. INTRODUCTION
Maritime jurisdiction in the United States of America is very open ended. Consequently, any maritime tort or contract case in which a US court can obtain jurisdiction over the defendant or the defendant’s property, theoretically, may be brought in that court. Various rules have been devised to prevent the exercise of extravagant jurisdiction and overtaxing the US judiciary.
Of course a federal court may, if the court in which a case has been filed is an improper venue, “transfer” a case to another federal court in which venue is proper and may likewise do so for the convenience of the parties.1 These situations rarely involve dismissal. If a defendant has been properly served with process even in an improper venue within the limitation period, transfer presents no problem of prescription. A federal court may not transfer a case to a state court, and a state court may not transfer a case to a federal court. Similarly, neither a federal nor a state court may transfer a case to a foreign court or arbitral tribunal. When a court is confronted with a valid foreign forum selection clause or where a court is asked to yield its jurisdiction to a more convenient forum, the court has no option but to dismiss the case. There is no international mechanism to which
* Niels F Johnsen Professor of Maritime Law and Director Emeritus, Maritime Law Center, Tulane University. This article was presented at Colloquium on Maritime Conflicts of Law held in Southampton, UK and co-sponsored by the Southampton University Institute of Maritime Law, the Nordisk Institute of Maritime Law and the Tulane University Maritime Law Center. A longer version of this article is published in (2011) 35 Tul Mar LJ 401.
1. 28 USC § 1404.
LLOYD’S MARITIME AND COMMERCIAL LAW QUARTERLY
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