Conti 11. Container Schiffahrts-GmbH & Co. KG M.S. v. MSC Mediterranean Shipping Company S.A.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF LOUISIANA

CONTI 11. CONTAINER CIVIL ACTION

SCHIFFARTS-GMBH & CO. KG M.S.

“MSC FLAMINA”

VERSUS No. 22-1114

MSC MEDITERRANEAN SHIPPING SECTION: “J”(3)

COMPANY S.A.

ORDER & REASONS

Before the Court is a Motion to Dismiss (Rec. Doc. 9) filed by Defendant, MSC

Mediterranean Shipping Company S.A. (“MSC”); an opposition (Rec. Doc. 12) filed by

Plaintiff, Conti 11. Container Schiffarts-GmbH & Co. KG M.S. “MSC FLAMINIA”

(“Conti”); and a reply (Rec. Doc. 15) filed by MSC. Having considered the motions and

legal memoranda, the record, and the applicable law, the Court finds that the motion

should be denied.

FACTS AND PROCEDURAL BACKGROUND

On or about November 3, 2000, Conti, a German corporation based in

Hamburg, Germany, and MSC, a Swiss corporation based in Geneva, Switzerland,

executed a Charterparty in which Conti, as owner, chartered the M/V MSC

FLAMINIA (“FLAMINIA”) to MSC, as charterer. At all pertinent times to this

litigation, Conti was the owner of the FLAMINIA. The Charterparty required that all

disputes arising out of the agreement would be submitted to arbitration in London.

Over the course of the next twelve years, the FLAMINIA called at ports around the

world, including the Port of New Orleans, carrying tens of thousands of cargo

containers from one port to another.

On June 30, 2012, the FLAMINIA arrived at the New Orleans Terminal. The

following day, three tanks of 80% divinylbenzene (“DVB80”) were loaded into the

number four hold of the vessel. Notably, if DVB80 is not properly maintained at or

below a specific temperature, it will spontaneously undergo a process called “auto-

polymerization,” which results in a rapid increase in temperature and the emission

of flammable vapors. The material data safety sheet for DVB80 requires that it be

stored at temperatures below eighty degrees Fahrenheit. Nine days before the three

tanks of DVB80 were loaded onto the FLAMINIA, they were delivered to the New

Orleans Terminal where they were stored outdoors. Once loaded onto the FLAMINIA,

the tanks of DVB80 were stowed below deck. On July 1, 2012, the FLAMINIA

departed the Port of New Orleans and, thirteen days later, on July 14, 2012, while

the FLAMINIA was transiting the Atlantic Ocean, the tanks of DVB80 exploded, and

a fire occurred aboard the vessel. This explosion and fire resulted in the deaths of

three crewmembers, extensive damage to the cargo onboard, and over $100 million

in damages to the FLAMINIA.

Litigation ensued in the Southern District of New York, including Conti’s

limitation action. The New York federal court trifurcated the case into separate trials

on causation, liability, and damages. While the litigation progressed in New York,

Conti pursued its arbitral claims against MSC in London under the Charterparty.

The arbitration panel in London held that MSC had breached the November 3, 2000

Charterparty and is liable to Conti for approximately $200 million. To date, MSC has

paid about $30 million. Conti filed the instant action seeking confirmation of the

arbitration award pursuant to The Convention on the Recognition and Enforcement

of Foreign Arbitral Awards (“the Convention”), and MSC filed the instant motion to

dismiss alleging that this Court lacks personal jurisdiction over MSC.

LEGAL STANDARD

Rule 12(b)(2) of the Federal Rules of Civil Procedure permits dismissal of a suit

for lack of personal jurisdiction. Where a defendant challenges personal jurisdiction,

the party seeking to invoke the power of the court bears the burden of proving that

jurisdiction exists. Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir.

2006). The plaintiff need not, however, establish jurisdiction by a preponderance of

the evidence; a prima facie showing suffices. Id. The court must accept the plaintiff’s

uncontroverted allegations and resolve all conflicts between the facts contained in the

parties’ affidavits and other documentation in favor of jurisdiction. Id.

A federal court must satisfy two requirements to exercise personal jurisdiction

over a nonresident defendant. Pervasive Software Inc. v. Lexware GmbH & Co. Kg,

688 F.3d 214, 220 (5th Cir. 2012). First, the forum state’s long-arm statute must

confer personal jurisdiction. Id. Second, the exercise of jurisdiction must not exceed

the boundaries of the Due Process Clause of the Fourteenth Amendment. Id. (citing

Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999)). The limits of the

Louisiana long-arm statute are coextensive with constitutional due process limits.

Jackson v. Tanfoglio Giuseppe, SRL, 615 F.3d 579, 584 (5th Cir. 2010) (citing Walk

Haydel & Assocs. v. Coastal Power Prod. Co., 517 F.3d 235, 242-43 (5th Cir. 2008)).

Therefore, the inquiry is whether jurisdiction comports with federal constitutional

guarantees. Id.

The Due Process Clause of the Fourteenth Amendment guarantees that no

federal court may assume jurisdiction in personam of a non-resident defendant unless

the defendant has certain “minimum contacts” with the forum state such that the

maintenance of the suit does not offend traditional notions of fair play and substantial

justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Sufficient minimum

contacts will give rise to either specific, “case-linked” jurisdiction or general, “all-

purpose” jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S.

915, 919 (2011).

Specific jurisdiction is confined to adjudication of “issues deriving from, or

connected with, the very controversy that establishes jurisdiction.” Id. In order to

establish specific jurisdiction, a plaintiff must show that “(1) there are sufficient (i.e.,

not ‘random fortuitous or attenuated’) pre-litigation connections between the non-

resident defendant and the forum; (2) the connection has been purposefully

established by the defendant; and (3) the plaintiff’s cause of action arises out of or is

related to the defendant's forum contacts.” Pervasive Software, 688 F.3d at 221;

accord Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–76 (1985). The defendant

can then defeat the exercise of specific jurisdiction by showing that it would be

unreasonable. Burger King, 471 U.S. at 476–77; Pervasive Software, 688 F.3d at 221–

22.

DISCUSSION

MSC argues that this Court lacks specific personal jurisdiction over it in this

arbitration award confirmation action.1 (Rec. Doc. 9-1, at 11). MSC contends that the

relevant underlying litigation in the personal jurisdiction analysis is not MSC’s

breach of the Charterparty but, rather, the issue of where foreign arbitral awards are

enforceable under the Convention. (Id. at 12). MSC relies upon the Supreme Court’s

reasoning in Vaden v. Discover Bank, 556 U.S. 49 (2009) and Badgerow v. Walters,

142 S. Ct. 1310 (2022) to assert that once an arbitration award has been issued, the

original underlying claims are no longer operative in an enforcement action. (Id. at

13). In opposition, Conti argues that MSC’s reliance on the above cases is misplaced

because those decisions regarded subject matter jurisdiction over actions to compel

and confirm domestic arbitration awards. (Rec. Doc. 12, at 16). Here, Conti contends,

the relevant inquiry is how the court should regard personal jurisdiction over actions

to confirm foreign arbitration awards. (Id. at 17). The proper personal jurisdiction

inquiry in this case, Conti asserts, “is whether the beneficiary of an award can show

he or she sustained an injury caused by the defendant’s forum activities in connection

with the claim that led to the arbitration as opposed to an injury caused by the

defendant’s forum activities in connection with the arbitration proceeding itself.” (Id.

at 12) (quoting Compania de Inversiones Mercantiles, S.A. v. Grupo Cementos de

Chihuahua S.A.B. de C.V., 970 F.3d 1269, 1287 (10th Cir. 2020)).

1 MSC also contends that this Court lacks general personal jurisdiction over it, (Rec. Doc. 9-1, at 8–

11), but Conti does not dispute this contention, (Rec. Doc. 12, at 8 n.19). Therefore, the Court will focus

solely on specific personal jurisdiction.

I. PERSONAL JURISDICTION UNDER THE FEDERAL ARBITRATION ACT

A confirmation action under the Convention “is a summary proceeding in

nature, which is not intended to involve complex factual determinations, other than

a determination of the limited statutory conditions for confirmation or grounds for

refusal to confirm.” Zeiler v. Deitsch, 500 F.3d 157, 169 (2d Cir. 2007); accord

Argentine Republic v. Nat'l Grid PLC, 637 F.3d 365, 369 (D.C. Cir. 2011). This more

limited focus means that “[t]he party opposing enforcement of an arbitral award has

the burden to prove that one of the seven defenses under the New York Convention

applies.” Zeiler, 500 F.3d at 164; see also CEEG (Shanghai) Solar Sci. & Tech. Co. v.

LUMOS LLC, 829 F.3d 1201, 1206 (10th Cir. 2016) (“As the party opposing

enforcement of the arbitral award, LUMOS bears the burden of proving that one of

the defenses applies.”). In consideration of these substantive and procedural features

of an action to confirm an arbitration award, the Tenth Circuit found that

[Th]e proper jurisdictional inquiry is whether the beneficiary of an

award can show he or she sustained an injury caused by the defendant's

forum activities in connection with the claim that led to the arbitration,

as opposed to an injury caused by the defendant's forum activities in

connection with the arbitration proceeding itself.

Compania de Inversiones Mercantiles, 970 F.3d at 1287. The Tenth Circuit found

“that contacts relating to the underlying claim (i.e., the formation and alleged

violation of the 2005 Shareholder Agreement) are pertinent.” Id. at 1285. The Due

Process Clause emphasizes that “a court may exercise specific personal jurisdiction

only if ‘the litigation results from alleged injuries’ that arise out of or relate to

activities by the defendant which were purposefully directed at the forum. Id. at 1286

(quoting Burger King, 471 U.S. at 723–73). The guidance of the Due Process clause,

the Tenth Circuit reasoned, makes more sense in the context of confirming an

arbitration award “if applied with an eye toward the underlying dispute” because

personal jurisdiction turns on due process principles, not the elements of a given

claim. Id. “[A]n action to confirm or enforce an arbitral award does not involve a

conventional ‘injury,’” and therefore, to determine whether the court has personal

jurisdiction to confirm an arbitral award, the Tenth Circuit reasoned that a federal

court should look to the underlying claim that led to the arbitration. Id.

This decision by the Tenth Circuit is in line with the decisions of at least three

other circuits. See Telcordia Tech Inc. v. Telkom SA Ltd., 458 F.3d 172, 178 (3d Cir.

2006) (analyzing contacts between the underlying dispute and the forum before

concluding that personal jurisdiction existed to confirm foreign arbitration award);

Sole Resort, S.A. de C.V. v. Allure Resorts Mgmt., LLC, 450 F.3d 100, 104 (2d Cir.

2006) (rejecting argument, in Convention proceeding seeking to vacate arbitration

award, that only contacts related to the arbitration were relevant to personal

jurisdiction); Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284

F.3d 1114, 1123-24 (9th Cir. 2002) (analyzing underlying events that led to

arbitration in evaluating personal jurisdiction in a confirmation action). Moreover,

another section of this Court, in evaluating whether the court had personal

jurisdiction over the defendant, looked to the contract underlying the arbitration

award. Italtrade Int'l, USA, L.L.C. v. Sri Lanka Cement Corp., No. 00-2458, 2002 WL

59399, at *2 (E.D. La. Jan. 15, 2002) (“The contracts giving rise to this case were not

negotiated, performed, nor in any way were they associated with the State of

Louisiana.”).

MSC, however, argues that the above decisions are foreclosed by the Supreme

Court’s recent decision in Badgerow that relied upon its reasoning years earlier in

Vaden. (Rec. Doc. 15, at 5). In Vaden, the Supreme Court held that a federal court

may “look through” a domestic arbitration petition under 9 U.S.C. § 4 to compel

arbitration to determine whether the court has jurisdiction over the petition. 556 U.S.

at 62. Section 4 states that “any United States district court which, save for [the

arbitration] agreement, would have jurisdiction under title 28, in a civil action or in

admiralty of the subject matter of a suit arising out of the controversy between the

parties.” The Supreme Court reasoned that

[t]he phrase “save for [the arbitration] agreement” indicates that the

district court should assume the absence of the arbitration agreement

and determine whether it “would have jurisdiction [ ]” without it.

Jurisdiction over what? The text of § 4 refers us to “the controversy

between the parties.” That phrase . . . is most straightforwardly read to

mean the “substantive conflict between the parties.”

Vaden, 556 U.S. at 62–63 (citing Discover Bank v. Vaden, 396 F.3d 366, 369–372 (4th

Cir. 2005). Therefore, the Supreme Court held that a federal court asked to compel

arbitration should “look through” the dispute to determine whether it has subject

matter jurisdiction over the underlying dispute. Id. at 70. Recently, the Supreme

Court in Badgerow addressed whether a federal court can “look through” the

application to confirm, vacate, or modify an arbitral award. Badgerow, 142 S. Ct. at

1311. The Supreme Court held that a federal court, in determining whether it has

subject matter jurisdiction to decide an application to confirm, vacate, or modify an

arbitral award, looks only to the application actually submitted to the court, and it

does not “look through” the application to the underlying substantive controversy

between the parties. Id. The Supreme Court reasoned that because 9 U.S.C. §§ 9 &

10, the sections of the Federal Arbitration Act that permit a party to apply to the

court to confirm, or alternatively to vacate, a domestic arbitral award, do not contain

the distinctive “look through” language that §4 did in Vaden, “a court may only look

to the application actually submitted to it in assessing its jurisdiction.” Id. at 1314.

In opposition, Conti contends that MSC’s reliance upon the Vaden and

Badgerow decisions are improper because they dealt with subject matter jurisdiction,

whereas, here, the issue before the Court is personal jurisdiction. (Rec. Doc. 12, at

17). Moreover, Conti asserts that the domestic arbitration provisions in Chapter One

of the Federal Arbitration Act (“FAA”) that the Supreme Court analyzed in Vaden

and Badgerow are unlike the Convention’s foreign arbitration provisions in Chapter

Two of the FAA. (Id.). Conti argues that the “look through” language that the

Supreme Court found lacking in §§ 9 & 10 in Badgerow, is present here in § 204. (Rec.

Doc. 12, at 17). An arbitral award confirmation action “may be brought in any such

court in which save for the arbitration agreement an action or proceeding with respect

to the controversy between the parties could be brought.” 9. U.S.C. § 204 (emphasis

added). In reply, MSC contends that § 204 applies only to venue, and therefore, does

not authorize this Court to look to the underlying claims when assessing personal

jurisdiction. (Rec. Doc. 9-1, at 14). Moreover, MSC points to the decision of the only

court to consider personal jurisdiction in the arbitration context since the Badgerow

decision: Balan v. Tesla Motors Inc., No. 19-67, 2022 WL 2192872 (W.D. Wash. June

16, 2022). (Rec. Doc. 15, at 7). In Balan, the court relied upon Badgerow’s reasoning

that an arbitration award “is no more than a contractual resolution of the parties’

dispute . . . .” Id. at *3 (quoting Badgerow, 142 S. Ct. at 1316–17). The court looked

only to the contract at issue, the arbitration award, in analyzing the defendant’s

purposeful availment. Id.

Here, the contract at issue is the arbitration award, and the arbitration

took place in San Francisco. Nothing about the arbitration relates to

Washington and [the defendant] does not appear to have performed any

type of conduct related to the arbitration that promotes business within

the State. [The plaintiff] has failed to establish that the arbitration and

outcome are sufficient for [the defendant] to have purposefully availed

himself of Washington.

Id. Thus, the court determined that it lacked personal jurisdiction over the defendant.

Id. Here, MSC urges this Court to follow the Balan court’s reasoning and only look to

the arbitration award at issue to determine whether it has personal jurisdiction over

MSC. (Rec. Doc. 15, at 7). Notably, however, both Balan and Badgerow involve

domestic arbitrations, and not foreign arbitration under the Convention, like the case

at issue here.

Therefore, the Court must analyze the language of the Convention to

determine if, and how, the Supreme Court’s reasoning in Vaden and Badgerow

applies to the Convention. The confirmation statute of the Convention, 9 U.S.C. § 207,

states that “any party to the arbitration may apply to any court having jurisdiction

under [Chapter Two] for an order confirming the award as against any other party to

the arbitration.” Therefore, the Court must take a step back and look at the

jurisdiction provisions of Chapter Two. Chapter Two of the FAA provides that “[a]n

action or proceeding falling under the Convention shall be deemed to arise under the

laws and treaties of the United States.” 9 U.S.C. § 203. Additionally, “[a]n action or

proceeding over which the district courts have jurisdiction pursuant to section 203 of

this title may be brought in any such court in which save for the arbitration

agreement an action or proceeding with respect to the controversy between the

parties could be brought . . . .” Id. at § 204 (emphasis added). Therefore, § 203 provides

federal courts with subject matter jurisdiction over actions that arise under the

Convention. This is in contrast to the domestic arbitration provisions of the FAA in

Chapter One which require the court, as held in Vaden, to look through the

arbitration agreement to the underlying dispute for subject matter jurisdiction.

Moreover, § 204, dealing with the venue for Convention proceedings, does not

have a directly comparable statute in Chapter One of the FAA. Instead, in domestic

arbitration proceedings, courts construe § 4 as the venue provision. See, e.g., Pro.

Transp., Inc. v. Am. Cas. Co. of Reading, PA, No. 3:06CV83, 2007 WL 30554, at *3

(S.D. Ind. Jan. 3, 2007). Specifically, § 4 states, “[t]he hearing and proceedings, under

such [arbitration] agreement, shall be within the district in which the petition for an

order directing such arbitration is filed.” This venue directive of § 4 is mandatory and

has been interpreted to require “a geographic link between the site of the arbitration

and the district which, by compelling arbitration or directing its scope, exercises

preliminary control.” Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Lauer, 49 F.3d

323, 327 (7th Cir. 1995). Therefore, when the parties agree to arbitrate in a particular

forum, only a district court in that forum has authority to compel arbitration under §

4. See Kawasaki Heavy Indus., Ltd. v. Bombardier Rec. Prods., Inc., 660 F.3d 988,

997 (7th Cir. 2011); Ansari v. Qwest Commc'ns Corp., 414 F.3d 1214, 1219–20 (10th

Cir. 2005); Inland Bulk Transfer Co. v. Cummins Engine Co., 332 F.3d 1007, 1018

(6th Cir. 2003). Here, the applicable statute governing venue under the Convention,

§ 204, states that venue is proper in district courts where the action could have been

brought save for the arbitration agreement with respect to the controversy between

the parties. Thus, § 204, the Convention’s venue statute, is comparable to § 4, the

domestic arbitration jurisdiction statute, which permits courts to “look through” the

agreement to the underlying dispute to find jurisdiction in which to compel

arbitration. Thus, in proceedings to compel arbitration under the Convention,

pursuant to § 203, jurisdiction is proper in any federal court, and, pursuant to § 204,

venue is proper in any district court that would have proper venue over the

underlying dispute between the parties.

While personal jurisdiction is not directly discussed in Chapter Two, it would

only make sense for the personal jurisdiction analysis under the Convention to follow

that of venue because it would lead to irrational results if the personal jurisdiction

analysis could not “look through” the arbitration agreement but the venue analysis

could. Moreover, in evaluating whether a federal court was the proper venue to

confirm international arbitration awards, courts have used personal jurisdiction

analyses. In Audi NSU Auto Union Aktiengesellschaft v. Overseas Motors, Inc., the

court reasoned that the Eastern District of Michigan was a proper venue because the

respondent was incorporated in Michigan and had its principal place of business

there. 418 F. Supp. 982, 984 (E.D. Mich. 1976). This analysis is identical to that of a

court analyzing where a corporation has general personal jurisdiction. “With respect

to a corporation, the place of incorporation and principal place of business are

‘paradig[m] . . . for general jurisdiction.’” Daimler AG v. Bauman, 571 U.S. 117, 137

(2014). Next, in 3573522 Canada Inc. v. North Country Natural Spring Water, Ltd.,

the court reasoned that the Eastern District of Pennsylvania was not the proper

venue because the parties had no significant ties to that district apart from the fact

that the arbitration occurred there. 210 F.R.D. 544, 545 (E.D. Pa. 2002). This analysis

is comparable to that of specific personal jurisdiction because specific jurisdiction is

confined to adjudication of “issues deriving from, or connected with, the very

controversy that establishes jurisdiction.” Goodyear Dunlop Tires Operations, S.A.,

564 U.S. at 919. Moreover, when it comes to corporation defendants, the venue and

personal jurisdiction analysis are tied to one another. Under 28 U.S.C. § 1391(b), a

civil action may be brought in “a judicial district in which any defendant resides, if

all defendants are residents of the State in which the district is located” For purposes

of venue, a defendant corporation “shall be deemed to reside . . . in any judicial district

in which such defendant is subject to the court's personal jurisdiction with respect to

the civil action in question.” 28 U.S.C. § 1391(c). Therefore, this overlap, in

conjunction with previous courts’ interpretation of § 204’s venue provisions, leads this

Court to find that § 204 applies to personal jurisdiction as well as venue.

However, the above evaluation is applicable to compelling arbitration, not

confirming an arbitral award, so the Court will next turn to an analysis of Chapter

One’s confirmation statute versus Chapter Two’s. Pursuant to § 9, as analyzed by

Badgerow and Balan, federal courts are not permitted to “look through” a domestic

arbitration agreement when determining either subject matter or personal

jurisdiction. Section 9 states

[i]f the parties in their agreement have agreed that a judgment of the

court shall be entered upon the award made pursuant to the arbitration,

and shall specify the court, then at any time within one year after the

award is made any party to the arbitration may apply to the court so

specified for an order confirming the award, and thereupon the court

must grant such an order unless the award is vacated, modified, or

corrected as prescribed in sections 10 and 11 of this title. If no court is

specified in the agreement of the parties, then such application may be

made to the United States court in and for the district within which such

award was made.

Because this statute lacks the “look through” language that Vaden relied upon, as

detailed above, the Badgerow and Balan court determined that in confirming

domestic arbitral awards, courts must only look to the arbitration agreement itself.

However, the confirmation statute of Chapter Two looks drastically different, and

simply states, “any party to the arbitration may apply to any court having jurisdiction

under this chapter for an order confirming the award as against any other party to

the arbitration.” 9 U.S.C. § 207. Thus, unlike the Chapter One confirmation statute,

§ 207 allows for jurisdiction over confirmation of arbitral awards to any court that

has jurisdiction under Chapter Two. This means that for subject matter jurisdiction,

any federal court is proper because arbitration agreements under the Convention are

given federal question jurisdiction, and venue is proper, per the “look through”

language of § 204, in any district that has proper venue over the underlying dispute

between the parties. Under the Convention, the same jurisdictional analysis applies

to compelling and confirming arbitral awards. Therefore, a federal court, in

determining whether it has personal jurisdiction to decide an application to compel

or to confirm an arbitral award, may “look through” the application to the underlying

substantive controversy between the parties.

II. SPECIFIC PERSONAL JURISDICTION OVER MSC

Now that the Court has determined that it may look to the underlying dispute

between MSC and Conti to determine personal jurisdiction, the Court will look to the

individual facts of this case. First, both MSC and Conti agree that to establish specific

personal jurisdiction, three factors must be satisfied: (1) that MSC purposefully

directed its activities toward Louisiana or purposefully availed itself of the privileges

of conducting activities here; (2) that Conti’s cause of action, the underlying breach

of contract dispute, arises out of or relates to MSC’s contacts with Louisiana; and (3)

that the exercise of jurisdiction is fair and reasonable. (Rec. Doc. 12, at 8); (Rec. Doc.

15, at 1–2). The primary disagreement is with respect to the second factor. MSC

argues that this Court lacks specific personal jurisdiction over it because it has no

substantial connections with this forum. (Rec. Doc. 9-1, at 14). The underlying dispute

between MSC and Conti involves a breach of contract, MSC contends, and this

contract has no relation to Louisiana. (Id. at 16). MSC asserts that the contract was

between foreign parties, MSC is Swiss and Conti is German, and the contract was

entered into in Hamburg, Germany. (Id. at 2–3). Additionally, MSC avers that the

contract envisioned performance worldwide over many years, and “encompassed for

more than these three cargo containers on this single voyage.” (Id. at 16). Finally,

MSC argues that the parties stipulated for the resolution of disputes under the

contract in London applying English law. (Id. at 3).

Next, MSC contends that it was not the specific loading of the DVB80

containers that gave rise to the breach of contract, instead,

it was the booking of the cargo in Texas, the acceptance of the DVB80

containers by MSC’s dangers goods department in [Belgium], and,

possibly, the stowage of those containers below deck per the stowage

plan developed in South Carolina that resulted in the breach of the

charter party, with the physical loading of the containers in New

Orleans being simply a downstream consequence of those actions.

(Id. at 16). In opposition, Conti argues that MSC purposefully directed the

FLAMINIA to New Orleans, and MSC purposefully directed the containers of DVB80

onto the vessel in New Orleans. (Rec. Doc. 12, at 19). The arbitration panel in London,

Conti asserts, found that the explosive cargo was improperly loaded without Conti’s

informed consent. (Id.). Because this loading happened in New Orleans, Conti avers

that this Court has specific personal jurisdiction over MSC. (Id.).

The Supreme Court recently addressed personal jurisdiction and reasoned that

“[n]one of our precedents has suggested that only a strict causal relationship between

the defendant's in-state activity and the litigation will do. As just noted, our most

common formulation of the rule demands that the suit ‘arise out of or relate to the

defendant's contacts with the forum.’” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct.,

141 S. Ct. 1017, 1026 (2021) (citations omitted). “[T]he back half, after the ‘or,’

contemplates that some relationships will support jurisdiction without a causal

showing.” Id. The essential foundation of specific personal jurisdiction is a

“relationship among the defendant, the forum, and the litigation.” Id. at 1028

(quoting Helicopteros Nacionales de Colombia, S. A. v. Hall, 466 U.S. 408, 414 (1984)).

Here, the London arbitrators’ “Reasons for and Forming Part of Second Partial

Final Award Dated 30 March 2021” began with the statement that “[i]t is not

controversial that the explosion was a consequence of the auto-polymerisation of one

or more tanks of 80% divinylbenzene (“DVB”) which had been loaded onto no. 4 at

New Orleans on 1 July 2012 (“the Cargo”),” (Rec. Doc. 12-1, at 4). After a thoughtful

and well-reasoned decision, they concluded that “MSC was in breach of clause 78 of

the Charterparty in shipping the Cargo otherwise than in accordance with the IMDG

Code.” 2 (Id. at 142). In fact, MSC admitted that it was in breach of clause 78 of the

charter, on the basis that the DVB80 was in fact prohibited cargo under the IMDG

Code. (Id. at 59). Pursuant to the reasoning in Ford Motor Co. v. Montana Eighth

Judicial District, for this Court to have specific personal jurisdiction over MSC, the

breach of clause 78 of the Charterparty must relate to MSC’s contacts with Louisiana.

MSC breached clause 78 when it loaded DVB80 onto the FLAMINIA in New Orleans.

Although the Court recognizes that the loading and shipping of the DVB80 out of

New Orleans may be a “downstream consequence” of actions taken in other forums,

the breach of contract dispute nonetheless relates to MSC’s contacts with Louisiana.

2 Clause 78 requires compliance with “IMO Regulations, any mandatory local regulations and

requirements of the vessel’s flat state and the load, discharge and trading ports/ routes of the vessel.

Every dangerous/hazardous cargo/containers must be accompanied by a container packing certificate

and special manifest delivered to vessel’s command before loading the relevant containers/cargo.” (Id.

at 7).

The DVB80 could not have been on the FLAMINIA, and subsequently caused the

explosion, if it was not loaded and shipped in New Orleans. The loading and eventual

shipping of the DVB80 out of New Orleans by MSC constitutes a relationship among

the defendant (MSC), the forum (Louisiana), and the litigation (breach of clause 78).

Therefore, because Conti’s cause of action, the underlying breach of contract dispute,

relates to MSC’s contacts with Louisiana, this Court finds that it has personal

jurisdiction over MSC to confirm the arbitral award.

III. PERSONAL JURISDICTION AND LETTERS OF UNDERTAKING

However, even if the underlying breach of contract dispute did not give this

Court specific personal jurisdiction over MSC, the Letter of Undertaking (“LOU”)

issued by MSC waives MSC’s personal jurisdiction defense. Conti argues that MSC’s

issuance of a LOU to Conti shows that MSC has submitted to this Court’s jurisdiction.

(Rec. Doc. 12, at 19–20). In the LOU, MSC’s insurer promised “to pay Conti any

judgment up to $220,000,000 issued by this Court in Conti’s favor in exchange for

Conti’s agreement not to arrest, attach, or otherwise interfere with MSC’s vessels or

initiate any other proceedings to enforce the arbitration award that is the subject of

this case.” (Id. at 20). In reply, MSC contends that Conti’s concerns about the LOU

are misplaced because it deliberately elected not to attach MSC’s property in the

Eastern District of Louisiana and instead signed the LOU. (Rec. Doc. 15, at 9). MSC

asserts, “[t]he fact that Conti has apparently decided to forego any resort to quasi in

rem jurisdiction in this case does not justify the disregard of MSC’s Constitutional

rights under the Due Process Clause.” (Id.).

In Trafigura Beheer B.V. v. M/T PROBO ELK, the Fifth Circuit found that

when a ship’s underwriters entered into a LOU, agreeing to appear as claimants in

the suit and pay any final judgments up to $775,000, they submitted to the court’s

jurisdiction by virtue of the LOU. 266 F. App'x 309, 310–11 (5th Cir. 2007).

Specifically, the LOU stated

[i]t is further intended by this undertaking that the rights of Trafigura

Beheer BV Amsterdam and of the M/T PROBO ELK and her claimant

be, and for all purposes shall be taken to be, consistent with the M/T

PROBO ELK having been arrested under process issued out of the

United States District Court for the Southern District of Texas at

Houston and released by the filing of a release bond . . . .”

Id. at 310 n.1. Moreover, the Fifth Circuit has reasoned that LOU’s are “sufficient to

perfect in rem jurisdiction in the absence of an arrest of the vessel.” Panaconti

Shipping Co., S.A. v. M/V Ypapanti, 865 F.2d 705, 707 (5th Cir. 1989) (citing

Continental Grain Co. v. Federal Barge Lines, Inc., 268 F.2d 240 (5th Cir. 1959)). “A

traditional letter of undertaking provides that, in consideration of the vessel not being

seized and released on bond, the vessel owner will file a claim to the vessel and pay

any judgment rendered against the vessel even if the vessel itself is subsequently

lost.” Id. at 707–08 (citing Cactus Pipe & Supply Co. v. M/V Montmartre, 756 F.2d

1103, 1107 (5th Cir. 1985)). In Panaconti Shipping Co., S.A. v. M/V Ypapanti, the

Fifth Circuit analyzed a stipulation to determine if it could be construed as a LOU.

Id. at 708. In construing the stipulation as a LOU, the Fifth Circuit reasoned that the

owner of the vessel waived jurisdictional defenses and agreed to litigate the dispute

in that forum. Id. Although there was “no express agreement in the stipulation to file

a formal claim of owner, [the defendant] did execute the document in the role of

‘claimant’ as well as defendant.” Id.

Considering the Fifth Circuit’s reasoning, the Court will now turn to the LOU

at issue. Here, the LOU states that

In consideration of your refraining from arresting, re-arresting,

attaching, detaining, and/or interfering in any other way with the use

or trading of any and all vessels, bunkers, funds, or other property or

asset belonging to MSC Mediterranean Shipping Company S.A.

(“MSC”), or in the same or associated control, ownership or management

of MSC worldwide, and in consideration of your agreeing not to bring

any proceedings for the enforcement of the Awards outside the English

jurisdiction in any other court other than the United States District

Court, Eastern District of Louisiana unless and until the Proceedings

are finally determined, The Standard Club UK Ltd. hereby agrees to pay

to you such sum or sums as may be awarded by final judgment after all

appeals (if any), by the United States District Court, Eastern District of

Louisiana in the Proceedings, or agreed between the parties with our

consent to be due to you from MSC in respect of the Awards, provided

always that The Standard Club UK Ltd.’s total liability hereunder shall

not exceed the sum of Two-Hundred and Twenty-Million United States

Dollars (US$220,000,000) inclusive of interests and costs.

This undertaking is given without prejudice to any and all rights or

defenses MSC, its agents or affiliates have or may have in the

Proceedings.

. . .

In the event that the United States District Court, Eastern District of

Louisiana concludes (in the Proceedings) that you are not entitled to

enforce the Awards in full, or you decide that you wish to discontinue

those proceedings and see enforcement elsewhere, you are liberty to

return this undertaking, releasing us from any obligation whatsoever

hereunder and to then seek to enforce the Awards in another

jurisdiction.

This agreement shall be governed by and construed in accordance with

US law and any dispute arising hereunder shall be subject to the

exclusive jurisdiction of the United States District Court, Eastern

District of Louisiana.

(Rec. Doc. 12-1, at 153–54). First, the LOU states that MSC agrees to pay Conti as

long as Conti refrains from bringing proceedings “in any other court other than the

United States District Court, Eastern District of Louisiana.” Second, the LOU states

that MSC “agrees to pay to [Conti] such sum or sums as may be awarded by final

judgment after all appeals (if any), by the United States District Court, Eastern

District of Louisiana in the Proceedings.” Next, the LOU contemplates that if this

Court concludes that Conti is entitled to enforce the Awards in full or seek

enforcement elsewhere, it is to return the LOU to MSC and release it from any

obligations. Finally, the LOU states that “[t]his agreement shall be governed by and

construed in accordance with US law and any dispute arising hereunder shall be

subject to the exclusive jurisdiction of the United States District Court, Eastern

District of Louisiana.”

Although MSC issued the LOU “without prejudice to any and all rights or

defenses MSC, its agents or affiliates have or may have,” taken together, the above

statements in the LOU implicitly indicate that MSC consented to the Eastern District

of Louisiana’s jurisdiction over it. The LOU repeatedly mentions the Eastern District

of Louisiana by name, and MSC (1) consents to pay Conti if it refrains from bringing

an action anywhere else but the Eastern District of Louisiana; (2) consents to pay

Conti any sums that the Eastern District of Louisiana awards; (3) requests that if the

Eastern District of Louisiana awards Conti sums, the LOU will be returned; and (4)

stipulates that any dispute arising under the LOU “be subject to the exclusive

jurisdiction of the United States District Court, Eastern District of Louisiana.”

Therefore, this Court finds that the LOU issued by MSC waives any personal

jurisdiction defense it may have, and MSC has submitted itself to the jurisdiction of

this Court.

CONCLUSION

Accordingly,

IT IS HEREBY ORDERED that Defendant, MSC Mediterranean Shipping

Company 8.A.’s, Motion to Dismiss (Rec. Doc. 9) is DENIED.

New Orleans, Louisiana, this 7th day of September, 2022.

CARL J. BA R

UNITED ST S DISTRICT JUDGE

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