stating that a forum-selection clause may be held invalid upon a showing of fraud, undue influence, or overweening bargaining power, and that a valid forum-selection clause is still unenforceable upon a showing that (1) enforcement of the clause would contravene a strong public policy of the forum in which suit was filed or (2) the balance of convenience is strongly in favor of litigation in the forum in which suit was filed, and litigation in the forum identified in the clause would be so manifestly and gravely inconvenient to the resisting party that the resisting party effectively would be deprived of a meaningful day in court
How later courts described this case
- stating that a forum-selection clause may be held invalid upon a showing of fraud, undue influence, or overweening bargaining power, and that a valid forum-selection clause is still unenforceable upon a showing that (1) enforcement of the clause would contravene a strong public policy of the forum in which suit was filed or (2) the balance of convenience is strongly in favor of litigation in the forum in which suit was filed, and litigation in the forum identified in the clause would be so manifestly and gravely inconvenient to the resisting party that the resisting party effectively would be deprived of a meaningful day in court
- holding that forum and law selection clauses are prima facie valid if (1) the parties’ choice is not a product of “fraud, undue influence, or overweening bargaining power;” (2) the choice is not “unreasonable and unenforceable if the chosen forum is seriously inconvenient for the trial of the action;” and (3) enforcement would not “contravene a strong public policy of the forum in which suit is brought”
- holding that courts must give “full effect” to “the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause” absent a showing that “enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching”
- holding that forum-selection clauses, although not “historically ... favored,” are “prima facie valid,” and declaring that “the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause”
Written by the judges who cited it.
Later courts went against this
Reported overruled in part, on other grounds by Powerex Corp. v. Reliant Energy Services, Inc., 551 U.S. 224 (2007) — not on the Supreme Court's list
407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), overruled in part on other grounds by Powerex Corp. v. Reliant Energy Services, Inc., 551 U.S. 224, 127 S.Ct. 2411, 168 L.Ed.2d 112 (2007).
Supreme Court of the United StatesJun 18, 20072 citing opinionsother groundsin partunconfirmed confidenceRead itReported overruled on other grounds by Lauro Lines S.R.L. v. Chasser, 490 U.S. 495 (1989) — not on the Supreme Court's list
407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), overruled on other grounds by Lines v. Chasser, 490 U.S. 495, 109 S.Ct. 1976, 104 L.Ed.2d 548 (1989);
Reported superseded by statute, as recognized in Outokumpu Engineering Enterprises, Inc. v. Kvaerner EnviroPower, Inc. — not on the Supreme Court's list
See The Bremen, 407 U.S. 1, 12 (1972), superseded by statute as stated in Outokumpu Engineering Enterprises v. KEPI, 685 A.2d 724, 733 n.6 (Del. Super.
Disagreed with by Pamela Maslowski v. Prospect Funding Partners LLC, Prospect Funding Holdings LLC, 2017 Minn. App. LEXIS 26 (2017)
407 U.S. at 17, 92 S.Ct. at 1917, we disagree with the federal court’s conclusion that the only relevant public policy is the forum’s policy regarding forum-selection clauses.
Limited by McDonnell Douglas Corp. v. Islamic Republic of Iran, 758 F.2d 341 (1985)
Moreover, we are persuaded that The Bremen and Scherk are also distinguishable because the forum clauses at issue in both cases used mandatory language unlike the preferential word “should” used in the BOA.
The opinion
Mr. Justice Douglas,
dissenting.
Petitioner Unterweser contracted with respondent to tow respondent’s drilling barge from Louisiana to Italy. The towage contract contained a “forum selection clause” *21 providing that any dispute must be litigated before the High Court of Justice in London, England. While the barge was being towed in the Gulf of Mexico a casualty was suffered. The tow made for Tampa Bay, the nearest port, where respondent brought suit for damages in the District Court.
Petitionérs sued respondent in the High Court of Justice in London, which, denied respondent’s motion to dismiss.
Petitioners, having previously moved the District Court to dismiss, filed, a complaint in that court seeking exoneration or limitation of liability as provided in 46 U. S. C. § 185 . Respondent filed its claim in the limitation proceedings, asserting the same cause of action as in its original action. Petitioners then filed objections ,to respondent’s claim and counterclaimed against respondent, alleging the same claims embodied in its English action, plus an additional salvage claim.
Respondent moved for an injunction against petitioners’ litigating further in the English case and the District Court granted the injunction pending determination of the limitation action. Petitioners moved to stay their' own limitation proceeding pending a resolution of the suit in the English court. That motion was denied.. 296 P. Supp. 733.
That was the posture of the case as it reached the Court of Appeals, petitioners appealing from the last two orders. The Court of Appeals affirmed. 428 F. 2d 888 , 446 F. 2d 907 .
Chief Justice Taft in Hartford Accident Co. v. Southern Pacific, 273 U. S. 207, 214 , in discussing the Limitation of Liability Act said that “the great object of the statute was to encourage shipbuilding and to induce the investment of money in this branch of industry, by limiting the venture of those who build the ship to the loss of the ship itself or her freight then pending, in cases of damage or wrong, happening without the privity or *22 knowledge of the ship owner, and by the fault.or neglect of the master or other persons on board; that the origin of this proceeding for limitation of liability is to be found in the- general maritime law, differing from the English maritime law; and that such a proceeding is entirely within the constitutional grant of power to Congress to establish courts of admiralty and maritime jurisdiction.”
Chief Justice Taft went on to describe how the owner of a vessel who, in case the vessel is found at fault, may limit his liability to the value of the vessel and may bring all claimants “into concourse in the proceeding, by monition” and they may be enjoined from suing the owner and the vessel on such claims in any other court. Id., at 215 .
. Chief Justice Taft concluded: “[T]his Court has by its rules and decisions given the statute a very broad and equitable construction for the purpose of carrying out its purpose and for facilitating' a settlement of the whole controversy over such losses as are comprehended within it, and that all the ease with which rights can, be adjusted in equity is intended to be given to the proceeding. . It is the administration of equity in an admiralty court. . .. The proceeding partakes in a way of the features of a bill to enjoin a multiplicity of suits, a bill in the nature of an interpleader, and a creditor’s bill. It looks to a complete arid just disposition of a many cornered controversy, and is applicable to proceedings in rem against the ship as well as to proceedings in personam against the owner, the limitation extending to the-owner’s property as well as to his person.” Id., at 215-216 .
The Limitation Court is a court of equity and tradi-. tionally an equity court may enjoin litigation in another court where equitable considerations indicate that the other litigation might prejudice the proceedings in the Limitation Court. Petitioners’ petition for limitation *23 subjects them to the full equitable powers of the Limitation Court.
Respondent is a citizen of this country. Moreover, if it were remitted to the English court, its substantive rights would be adversely affected. Exculpatory provisions in the towage control provide (1) that petitioners, the masters and the crews “are not responsible for defaults and/or'errors in the navigation of the tow” and (2) that “[d}amages suffered by the towed object are in any case for account of its Owners.”
Under our decision in Dixilyn Drilling Corp v. Crescent Towing & Salvage Co., 372 U. S. 697, 698 , “a contract which exempts the tower from liability for its own negligence” is not enforceable, though there is evidence, in the present record that it is enforceable in England. That policy was first announced in Bisso v. Inland Waterways Corp., 349 U. S. 85 ; and followed in Boston Metals Co. v. The Winding Gulf, 349 U. S. 122 ; Dixilyn, supra; Gray v. Johansson, 287 F. 2d 852 (CA5); California Co. v. Jumonville, 327 F. 2d 988 (CA5); American S. S. Co. v. Great Lakes Towing Co., 333 F. 2d 426 (CA7); D. R. Kincaid, Ltd. v. Trans-Pacific Towing, Inc., 367 F. 2d 857 (CA9); A. L. Mechling Barge Lines, Inc. v. Derby Co., 399 F. 2d 304 (CA5). Cf. United States v. Seckinger, 397 U. S. 203 . Although the casualty occurred on the high seas, the Bisso doctrine is nonetheless applicable. The Scotland, 105 U. S. 24 ; The Belgenland, 114 U. S. 355 ; The Gylfe v. The Trujillo, 209 F. 2d 386 (CA2).
Moreover, the casualty occurred close to the District Court, a number of potential. witnesses, including respondent’s crewmen, reside in that area, and the inspection and repair work were done there. The testimony of the tower’s crewmén, residing in Germany, is already available by way of depositions taken in the proceedings.
*24 All in all, the District Court judge exercised his discretion wisely in enjoining petitioners from pursuing the' litigation in England. *
I would affirm the judgment below.
It is said that because these parties'Specifically agreed to litigate their disputes before the London Court of Justice, the District Court, absent “unreasonable” circumstances, should have honored that choice by declining to exercise its jurisdiction. The forum-selection clause, however, is part and parcel of the exculpatory provision in the towing agreement which, as mentioned in the text, is not enforceable in American courts. For only- by avoiding litigation in the United States could petitioners hope to evade the Bisso doctrine.
Judges in this country have traditionally been hostile to attempts to circumvent the public policy against exculpatory agreements. For example, clauses specifying that the law of a foreign place (which favors such releases) should control have regularly been ignored. Thus, in The Kensington, 183 U. S. 263, 276 , the Court held void an exemption from liability despite the fact that the contract provided that it should be construed under Belgian law which was more tolerant. And see E. Gerli & Co. v. Cunard S. S. Co., 48 F. 2d 115, 117 (CA2); Oceanic Steam Nav. Co. v. Corcoran, 9 F. 2d 724, 731 (CA2); In re Lea Fabrics, Inc., 226 F. Supp. 232, 237 (NJ); F. A. Straus & Co. v. Canadian P. R. Co., 254 N. Y. 407 , 173 N. E. 564 ; Siegelman v. Cunard White Star, 221 F. 2d 189, 199 (CA2) (Frank, J., dissenting). 6A A. Corbin on Contracts § 1446 (1962).
The instant stratagem of specifying a foreign forum is essentially the same as invoking a foreign law of construction except that the present circumvention also requires the American party to travel across an ocean to seek relief. Unless we are prepared to overrule Bisso we should not countenance devices designed solely for the purpose of,evading its prohibition.
It is argued, however, that-one of the rationales of the Bisso doctrine, “to protect those in need of goods or services from being overreached by'others, who have power ,to drive hard bargains” (349 U. S., at 91), does-not apply here because these parties may have been of equal bargaining stature. Yet we have often adopted' prophylactic rules rather than- attempt to sort the core eases from the marginal ones. In any event, the other objective of the Bisso doctrine, to “discourage negligence by making wrongdoers pay damages” {ibid.) applies here and in every case regardless of the relative bargaining strengths of the parties.