A/S Dan-Bunkering Ltd. v. M/V Centrans Demeter
ORDER, DENYING Plaintiff's 26 motion for summary judgment; DISMISSING this action without prejudice under the doctrine of forum non conveniens on the condition that Aries submit itself to the jurisdiction of Hong Kong as discussed in order; and directing the clerk to retain posted security until the Court is notified that Plaintiff and Aries have satisfied the conditions incident to this dismissal. Signed by Judge Callie V. S. Granade on 3/31/2015. (mab)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ALABAMA
A/S DAN-BUNKERING LTD.,
M/V CENTRANS DEMETER, IMO
No. 9445174, her engines, freights,
apparel, appurtenances, tackle,
etc., in rem,
CIVIL ACTION NO. 14-0297-CG-N
A/S Dan-Bunkering Ltd. (“Plaintiff”) initiated this maritime action on
June 26, 2014, claiming it holds a maritime lien on the M/V Centrans
Demeter, IMO No. 9445174 (“Vessel”). (Doc. 1). Based on this lien, Plaintiff
asked the Court to authorize an arrest of the Vessel when it arrived in
Mobile, Alabama. (Doc. 1, p. 6; Doc. 4). The Court granted Plaintiff’s request,
and on July 3, 2014, the U.S. Marshall arrested the Vessel. (Doc. 8). The
Vessel’s owner, Aries Shipping Co., Ltd. (“Aries”), subsequently moved the
Court to vacate the arrest and release or reduce the security (Doc. 21), and
dismiss the complaint. (Doc. 22). Plaintiff opposed the motions, and filed a
motion for summary judgment. (Doc. 26). Aries responded and opposed the
motion for summary judgment. (Doc. 33). Plaintiff then filed its reply to
Aries’ response. (Doc. 34).
After reviewing the initial motions, the Court denied the motions to
vacate the arrest and dismiss the complaint, stayed the motion for summary
judgment, and ordered supplemental briefing on the choice-of-law issues
underlying the case. (Doc. 37, p. 16). Plaintiff and Aries filed their
supplemental briefs and corresponding replies. (Docs. 38, 39, 42, 43).
The Court previously summarized this breach of contract dispute and
the unique nature of maritime liens for necessaries under U.S. law. (Doc. 37).
In essence, Plaintiff helped fuel the Vessel in the port of Hong Kong and
never received payment for doing so. (Doc. 27, pp. 5 – 7). Plaintiff is a
company organized under the laws of Denmark. (Doc. 27, p. 5). Aries is a
Hong Kong company. (Doc. 39, p. 1). The Vessel is flagged under the laws of
Hong Kong. (Doc. 33, p. 11). The Vessel’s charterer, Zhenhua International
Shipping Co., Ltd. (“Zhenhua”), is a Chinese company. (Doc. 33, p. 11).
Plaintiff and Zhenhua entered into a bunker fuel agreement dated
November 15, 2011 (“Bunker Contract”). (Doc. 27, Exh. 1, pp. 6 – 7). Aries is
not a party to the Bunker Contract, nor did it participate in contract
negotiations. (Doc. 27, Exh. 1, pp. 6 – 7; Doc. 39, p. 2). The Bunker Contract
stated: “Our General Terms and Conditions of March 2010, which are known
to you, are to apply. Copy available on request and on our homepage
www.dan-bunkering.com.” (Doc. 27, pp. 5 – 6; Doc. 27, Exh. 1, p. 7). The
General Terms and Conditions contain a choice-of-law clause. That clause
16.1 The Bunker Contract shall be governed by the laws of
Denmark. However, the choice of law is for the sole benefit of
the Seller and the Seller may apply and benefit from any law
granting a maritime lien and/or right to arrest the Vessel in any
country as stipulated in Section 9 hereof. (Doc. 27, Exh. 1, p. 15).
The relevant portion of Section 9 reads:
9.1 … The Seller is entitled to rely on any provisions of law of
the flag state of the Vessel, the place of delivery or where the
Vessel is found and shall, among other things, enjoy full benefit
of local rules granting the Seller maritime lien in the Vessel
and/or providing for the right to arrest the Vessel. Nothing in
this Bunker Contract shall be construed to limit the rights or
legal remedies that the Seller may enjoy against the Vessel or
the Buyer in any jurisdiction. (Doc. 27, Exh. 1, p. 13)
Pursuant to the Bunker Contract, Plaintiff helped provide fuel for the
Vessel on November 18, 2011. (Doc. 27, p. 4; Doc. 39, p. 2). Plaintiff then
invoiced Zhenhua and the Vessel $593,484.00 for the fuel. (Doc. 27, p. 4; Doc.
27, Exh. 1, p. 19). The Vessel went on its way. Zhenhua made some payments
for the fuel but never paid Plaintiff in full. (Doc. 27, p. 4; Doc. 27, Exh. 2, p.
30). When the Vessel sailed into Mobile, Alabama on July 1, 2014, Plaintiff
had it arrested to enforce a maritime lien. (Docs. 4, 8, 9). Plaintiff claims it
holds a maritime lien for necessaries pursuant to U.S. law based on the
choice-of-law clause set forth above. (Doc. 27, pp. 7, 10 – 11).
After reviewing the motions and the Bunker Contract, the Court
decided it could not “begin its inquiry by assuming the contract is governed
by U.S. law and the choice-of-law clause is part of the contract. Instead, the
Court must first determine which country’s laws govern contract
formation….” (Doc. 37, p. 11). As a result, the Court ordered supplemental
briefing on the choice-of-law questions, and the doctrine of forum non
conveniens. (Doc. 37, p. 16). In the supplemental briefing, Plaintiff argues
recent federal court decisions confronting similar maritime claims are
compellingly persuasive, and U.S. law should similarly apply to its maritime
claim. (Doc. 38, pp. 2 – 5). Aries argues Hong Kong law governs questions
related to contract formation, as Hong Kong is the place with the most
significant relationship to the transaction at issue. (Doc. 39, pp. 2 – 3). Aries
further argues that the need to apply foreign law favors dismissing the case
under a forum non conveniens analysis. (Doc. 39, pp. 14 – 17).
First, the Court must determine the choice-of-law issue and decide
which country’s laws control contract formation. If United States law is
applicable, the Court may not dismiss the case on forum non conveniens
grounds. If, however, foreign law is applicable, then the Court can exercise
discretion in determining whether a forum non conveniens dismissal is
appropriate. See Perez & Compania (Cataluna), S.A. v. M/V Mexico I, 826
F.2d 1449, 1452 (5th Cir. 1987) (using forum non conveniens to dismiss action
for nonpayment of fuel supplied in Spain and used on a maritime voyage from
Spain to the United States); Forsyth Int’l (U.K.) Ltd. v. SS Penavel, 630 F.
Supp. 61, 64 (S.D. Ga. 1985) aff’d sub nom. Forsyth Int’l v. SS Penavel, 786
F.2d 1180 (11th Cir. 1986) (applying forum non conveniens to case involving
maritime liens for necessaries).
A. Determining the Law Governing Contract Formation
The Court must consider several factors to determine which country’s
laws control the formation of the Bunker Contract. See, e.g., Lauritzen v.
Larsen, 345 U.S. 571, 583 – 92 (1953) (listing seven factors to consider for
admiralty choice-of-law issues in tort cases). Generally, for a maritime
contract choice-of-law dispute, courts look for the sovereign with the “most
significant relationship” to the transaction at issue. Dresdner Bank AG v.
M/V Olympia Voyager, 446 F.3d 1377, 1382 (11th Cir. 2006). This is done by
examining (a) the place of contracting; (b) the place of negotiation; (c) the
place of performance; (d) the locus of the subject matter of the contract; and
(e) the domicile of the parties. Id. Additionally, the Restatement (Second) of
Conflicts of Law, Chapter One, Section Six, contains factors that courts
should consider in any choice-of-law analysis. Dresdner Bank AG, 446 F.3d at
1383. These factors are: (a) the needs of the international system; (b) the
relevant policies of the forum (here, U.S. law regarding maritime liens); (c)
the relevant policies of other interested states; (d) the protection of justified
expectations; (e) the policy underlying the field of law in question; (f) the
interest in predictability and uniformity; and (g) the ease in determining and
applying the relevant law. RESTATEMENT (SECOND) CONFLICTS OF LAW , Ch.
1, § 6 (1971).
Using the “most significant relationship” test, Hong Kong law controls
issues related to Bunker Contract formation. The parties to the Bunker
Contract, Plaintiff and Zhenhua, negotiated the contract terms in Hong Kong
and China. (Doc. 39, p. 4). The order confirmation identified the port of Hong
Kong as the place of performance. (Doc. 27, Exh. 1, p. 6). The subject matter
of the Bunker Contract, both the fuel and the Vessel, are tied to Hong Kong.
Plaintiff is a Danish company; Zhenhua is a Chinese company; Aries, though
not a party to the Bunker Contract, is a Hong Kong Company. The Vessel
carried the Hong Kong flag.
Additionally, the Restatement factors do not favor applying U.S. law.
Only two of the Restatement factors, the relevant policies of the forum (factor
(b)), and the ease in determining and applying the relevant law (factor (g)),
clearly weight in favor of applying U.S. law. The needs of the international
system (factor (a)), and the relevant policies of other interested states (factor
(c)), weigh in favor of applying Hong Kong law. The remaining factors do not
weigh significantly in favor of one country’s laws over the other.
In sum, the facts involved do not warrant applying U.S. law to resolve
Bunker Contract formation issues. Moreover, seizing the ship in Alabama
does not by itself require application of U.S. law. The Court therefore finds
Hong Kong law controls questions concerning the formation of the Bunker
Contract, and the incorporation of the choice-of-law clause contained in the
General Terms and Conditions.
B. Forum Non Conveniens
When a district court is faced with applying foreign law, it must
examine the traditional considerations of forum non conveniens in
determining whether dismissal is appropriate. Forum non conveniens is the
doctrine that an appropriate forum – even though competent under the law –
may divest itself of jurisdiction if, for the convenience of the litigants and
witnesses, it appears that the action should proceed in another forum in
which the action might have been brought in the first place. Piper Aircraft
Co. v. Reyno, 454 U.S. 235, 257 – 60 (1981). Application of foreign law does
not require dismissal, but “the need to resolve and apply foreign law should
point [the trial court] towards dismissal.” Sigalas v. Lido Maritime, Inc., 776
F.2d 1512, 1519 (11th Cir. 1985) (internal quotations omitted). “The party
seeking to have a case dismissed based on forum non conveniens ‘must
demonstrate that ‘(1) an adequate alternative forum is available, (2) the
public and private factors weigh in favor of dismissal, and (3) the plaintiff can
reinstate [its] suit in the alternative forum without undue inconvenience or
prejudice.’” Membreno v. Costa Crociere S.p.A., 425 F.3d 932, 937 (11th Cir.
2005) (quoting Leon v. Million Air, Inc., 251 F.3d 1305, 1311 (11th Cir.
Analyzing the private factors first, there is almost no United States
interest in this lawsuit. No party is a United States citizen, nor did any of the
events of this suit (except the seizure of the Vessel) occur in the United
States. The Vessel does not appear to sail in U.S. waters often. Zhenhua, a
Chinese company, chartered the Vessel from Aries, a Hong Kong company.
Zhenhua bought bunker fuel in Hong Kong from Plaintiff, a company
registered in Denmark that does business in China. (Doc. 39, p. 4). The
parties, witnesses, and documents are primarily in Hong Kong. Indeed, the
only private interest that supports applying U.S. law is the presumption in
favor of Plaintiff’s choice of forum, though Plaintiff is not a citizen, resident,
or corporation of this country. Wilson v. Island Seas Investments, Ltd., 590
F.3d 1264, 1270 (11th Cir. 2009) (“This presumption in favor of the plaintiffs’
initial forum choice in balancing the private interests is at its strongest when
the plaintiffs are citizens, residents, or corporations of this country.”).
Regardless of Plaintiff’s foreign affiliation, the other interests on the scale
strongly outweigh its choice of forum.
The “private interests” favor dismissing this suit, but some deference
must also be given to the “public interests” at stake. See Esfeld v. Costa
Crociere, S.P.A., 289 F.3d 1300, 1311 (11th Cir. 2002) (noting the federal
forum non conveniens analysis should include inquiry into private and public
interests); see also Dresdner Bank AG, 446 F.3d at 1383 (discussing related
policy considerations and governmental interest analysis). “[I]n deciding
whether a case should be dismissed because a foreign jurisdiction is more
suitable, federal courts necessarily must analyze the interest that the foreign
country has in the dispute.” Esfeld, 289 F.3d at 1312. The events leading to
this dispute occurred mostly in Hong Kong. The port of Hong Kong is one of
the busiest ports in the world, and Hong Kong presumably wants to ensure
that parties doing business there receive fair and lawful treatment. Hong
Kong, therefore, has an interest in having the controversy decided within its
Before a court dismisses an action for forum non conveniens, it must
ensure, at the time of dismissal, that there is an available alternative forum
for the continuation of the suit in which the plaintiff may pursue an adequate
remedy. Piper Aircraft, 454 U.S. at 255 n. 22. The Court should not retain
jurisdiction simply because the remedy available in an alternative forum is
less substantively generous. Id. at 249–55. In maritime cases, federal courts
have deemed Hong Kong (and Denmark) adequate alternative forums. VebaChemie A.G. v. M/V Getafix, 711 F.2d 1243, 1249 (5th Cir. 1983); Cook v.
Champion Shipping AS, 732 F. Supp. 2d 1029, 1038 (E.D. Cal. 2010) aff’d,
463 F. App’x 626 (9th Cir. 2011). Although Hong Kong law does not recognize
maritime liens for necessaries, its legal system recognizes causes of action for
breach of contract, open accounts, and other maritime claims. (Doc. 39, p. 15).
Denmark law also allows such claims. (Doc. 39, p. 15).
Plaintiff nevertheless argues, “this Court is the proper and only forum
to resolve Plaintiff’s claims.” (Doc. 43, p. 11). For purposes of forum non
conveniens, Plaintiff conflates available claims and available remedies. See
Piper Aircraft, 454 U.S. at 254 (discussing remedies available in the alternate
forum). Plaintiff wishes to enforce a maritime lien for furnishing necessaries,
a particular and unique claim under U.S. maritime law. If Plaintiff cannot
bring this claim, it does not mean Plaintiff is left without remedies. The Hong
Kong court may find, for example, that the choice-of-law clause is validly
incorporated into the Bunker Contract, and that a maritime lien does exist.
Or the Hong Kong court may find Zhenhua acted as an agent and bound
Aries to the contract, including the General Terms and Conditions. Or the
Hong Kong court may determine the choice-of-law clause does not apply to
Aries. Or the Hong Kong court may fashion an alternative remedy under its
substantive contract and maritime laws. Because Plaintiff can seek a remedy
in Hong Kong, the Court finds Hong Kong is an adequate alternative forum
to resolve this dispute.
It is not apparent, however, whether Hong Kong is an “available”
forum. Aldana v. Del Monte Fresh Produce N.A., Inc., 578 F.3d 1283, 1290
(11th Cir. 2009) (the foreign court must be able to “assert jurisdiction over
the litigation sought to be transferred” to be considered “available”). The
parties do not say clearly whether Plaintiff can bring an immediate action in
Hong Kong (or alternatively, Denmark). The parties do not address whether
this action is time barred, and Aries has not expressly agreed to waive any
statutes of limitations or submit itself to the jurisdiction of a Hong Kong
court to resolve matters pertaining to the Bunker Contract. Zhenhua is not a
party to this action, so its status is unclear. (Doc. 27, pp. 5 – 8). Plaintiff does
not address these issues. (Doc. 43, pp. 9 – 10). The Court therefore finds that
Aries must waive any limitations or jurisdictional defenses it may have to
make Hong Kong an available forum.
In this case, the primary issue concerns Hong Kong law, the private
and public interests favor dismissal, and there is an alternative forum better
suited to handle the facts alleged. Dismissing the action will allow the parties
to file the suit in a more convenient forum. Accordingly, this action is
dismissed on the basis of forum non conveniens.
The dismissal, however, is conditioned on Aries agreeing to proceed
with the action in Hong Kong. Conditional dismissals are permissible in
forum non conveniens cases. See, e.g., Ford v. Brown, 319 F.3d 1302, 1310
(11th Cir. 2003) (discussing conditional dismissal if defendant waives
jurisdiction and limitations defenses, and another court ultimately exercises
jurisdiction over the case); Sigalas, 776 F.2d at 1522 (affirming dismissal
order conditioned expressly on the appellees’ agreement to proceed in Greek
court); Alcoa S. S. Co. v. M/V Nordic Regent, 654 F.2d 147, 148 (2d Cir. 1980)
(en banc, affirming conditional dismissal of an admiralty action on forum non
conveniens grounds). Conditioning the dismissal does not destroy finality, nor
does it leave the case pending in the District Court. Leon v. Millon Air, Inc.,
251 F.3d 1305, 1316 (11th Cir. 2001).
After careful consideration, Plaintiff’s motion for summary judgment is
DENIED. This action is DISMISSED under the doctrine of forum non
conveniens on the condition that Aries submit itself to the jurisdiction of
Hong Kong as discussed above. The dismissal is without prejudice, and
Plaintiff may reinstitute the proceeding upon Aries’ default. The Clerk is
directed to retain the posted security until the Court is notified that Plaintiff
and Aries have satisfied the conditions incident to this dismissal.
DONE and ORDERED this 31st day of March, 2015.
/s/ Callie V. S. Granade
UNITED STATES DISTRICT JUDGE
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