Federal District Court Opinions
MALAYSIA INTERNATIONAL SHIPPING v. SINOCHEM INT’L CO.,
(E.D.Pa. 2004) MALAYSIA INTERNATIONAL SHIPPING CORPORATION
BERHAD Menara Dayaburni, Jalan Hishamuddin 50712, Kuala
Lumpur, MALAYSIA, Plaintiff v. SINOCHEM INTERNATIONAL CO.
LTD., 18, 19 F, Jinmao Tower, No. 88 Century Boulevard,
Pudong New Area Shanghai, CHINA, Defendant Civil Action No.
03-3771 United States District Court, E.D. Pennsylvania.
February 27, 2004
MEMORANDUM AND ORDER
FRANKLIN VAN ANTWERPEN, District Judge
Plaintiff Malaysia International Shipping Corporation
(MISC) has brought suit claiming that Defendant Sinochem
International Co. Ltd. (Sinochem) made negligent
misrepresentations to a Chinese Admiralty Court. Sinochem
moves to dismiss MISC’s Amended Complaint for lack of
subject matter jurisdiction, pursuant to Fed.R.Civ.P.
12(b)(1), and for lack of personal jurisdiction, pursuant
to Fed.R.Civ.P. 12(b)(2) and (b)(5). Additionally,
Defendant argues that dismissal of the Amended Complaint is
warranted for forum non conveniens and Plaintiffs failure
to observe the rules of comity. For the reasons stated
below, we will grant said motion. Page 2
I. FACTUAL BACKGROUND
This matter involves the arrest of a Malaysian vessel in
China by order of a Chinese Admiralty Court, pursuant to
the petition of a Chinese corporation, which alleges that
the Malaysian vessel owner fraudulently back-dated the bill
of lading when it loaded the Chinese corporation’s cargo.
This matter’s undisputed connection to the district of this
Court is that the cargo was loaded by an American company,
a non-party to this suit, at the Port of Philadelphia in
2003.
The undisputed facts are as follows. Defendant Sinochem, a
Chinese company, contracted with Triorent Trading, Inc.
(Triorient), an American company located in Connecticut, to
purchase a substantial quantity of steel coils. The
contract called for the coils to be shipped from the United
States to China on or before April 30, 2003, and that,
before Triorient could receive payment, inter alia, a
corresponding valid bill of lading needed to be tendered to
the bank where Defendant had opened a line of credit for
the purchase of the steel coils. (Pl.’s Br. at 3.) The
contract further expressly called for any disputes arising
out of the contract to be arbitrated under Chinese law.
(Contract, Def.’s Br. Ex. 3 at 3.)
Triorient sub-chartered the vessel on which the coils were
shipped from Plaintiff MISC, a Malaysian company and the
managing owner of the vessel (Pl.’s Br. at 2), and hired
Novolog Bucks County, Inc. (Novolog), a stevedoring company
located in Pennsylvania, to load the steel coils onto
Plaintiff’s vessel at the Port of Philadelphia. A bill of
lading was issued, acknowledging receipt of the cargo, and
the vessel set sail for China. (Pl.’s Br. at 3.) The bill
of lading was dated April 30, 2003, and lists Triorient as
the shipper and Pan Ocean Shipping Co., Ltd. (Pan Ocean) as
the carrier. Defendant was identified as the party to
notify, signifying that it Page 3 is the end receiver;
Plaintiff is not mentioned on the bill. The contract of
carriage accompanying the bill of lading calls for the
application of the Hague Rules, which implicates the
Carriage of Goods at Sea Act (COGSA) under U.S. law. The
bill of lading also incorporates a charter party,[fn1] the
terms of which Pan Ocean will not disclose; however, its
counsel states in a letter that the charter party
implicates U.S. law.
Upon arrival at the Chinese port in June 2003, Plaintiff’s
vessel carrying Defendant’s cargo was arrested by order of
the Guangzhou Admiralty Court, pursuant to a petition filed
by Defendant for preservation of a maritime claim. This
claim was based on an allegation that Plaintiff had
fraudulently backdated the bill of lading (i.e., dated the
bill of lading April 30, 2003, when it actually did not load
the shipment until May). According to Defendant, this
alleged fraud infringed its rights and caused significant
financial loss. (Civil Decision, Pl.’s Br. Ex. C and Def.’s
Br. Ex. 2.) As required by the ruling, Plaintiff paid the
ordered US $9,000,000 security bond to obtain release of
its vessel and Defendant filed a complaint in Chinese
Admiralty Court. (See Civil Decision; Def.’s Br. at 2.)
The matter involving Defendant’s Complaint, filed on July
2, 2003, that Plaintiff fraudulently backdated the bill of
lading, is currently proceeding before a judge in the
Chinese Admiralty Court. Plaintiff has contested the
jurisdiction of the Chinese court on grounds either that
the charter party incorporated in the bill of lading calls
for the application of U.S. law or that the commencement of
the instant action before this Court, on June 23, 2003,
obviates the need Page 4 for the Chinese court to
entertain the matter. (See Huang Ya Quan Affirmation and
Statement of Appeal, Pl.’s Br. Ex. A.) Rejecting this
jurisdictional objection, the Guangzhou court dismissed
Plaintiff’s application. Plaintiff has since appealed the
ruling to the Guangdong Provincial High Court, China’s
court of appeal. The High Court’s decision remains pending.
(Huang Ya Quan Affirmation, PL’s Br. Ex. A § 9.)
The Complaint filed in this Court stems from the same
incident and runs parallel to the matter before the Chinese
Admiralty Court; both matters turn on whether Plaintiff
fraudulently back-dated the bill of lading. Denying these
allegations of fraud, Plaintiff in the instant matter
claims damages resulting from Defendant’s alleged
“negligent misrepresentation [to the Chinese Admiralty
Court] of [Plaintiffs] vessel’s fitness and suitability to
load its cargo,” which resulted in substantial financial
losses due to the Chinese court’s arrest of the vessel.
(See Am. Compl. §§ 30, 34.)
Defendant has filed the instant Motion to Dismiss for lack
of subject matter and personal jurisdiction. If we find
that we have jurisdiction over this matter, Defendant
further contends that we should decline to entertain this
claim on grounds of forum non conveniens and Plaintiff’s
failure to observe the rules of international comity by
engaging in forum-shopping.
We find that we do have subject matter jurisdiction, as
this is a matter or admiralty or maritime jurisdiction. We
further find that, while Plaintiff cannot establish
personal jurisdiction over Defendant through Pennsylvania’s
long-arm statute, limited jurisdictional discovery could
establish personal jurisdiction through the federal long-arm
statute. However, the taking of such discovery will not be
necessary because we find that the Chinese Admiralty Court
is the best venue and authority to address this matter and
we thus grant the Motion to Dismiss for forum Page 5 non
convemens.
II. ANALYSIS
A. Subject Matter Jurisdiction
Defendant objects to this Court having subject matter
jurisdiction over this case and argues the absence of such
jurisdiction on three bases: (1) maritime jurisdiction; (2)
diversity; and (3) federal question through the Carriage of
Goods by Sea (COGSA) or Harter Acts. Because we conclude
that this matter falls within federal maritime jurisdiction,
we find that we do have subject matter jurisdiction, and
deny Defendant’s motion as to this argument.
Plaintiff asserts that this case is one of admiralty or
maritime jurisdiction, giving us original subject matter
jurisdiction, pursuant to 28 U.S.C. § 1333. We
agree. For a plaintiff to establish jurisdiction under
§ 1333, it must satisfy a two-prong test,
establishing both a location and a connection to maritime
activity.
With respect to location, Plaintiff must show either that
“the tort occurred on navigable water or [that the] injury
suffered on land was caused by a vessel on navigable
water.” Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513
U.S. 527, 534, 115 S.Ct. 1043, 130 L.Ed.2d 1024 (1995);
Neely v. Club Med Mgmt. Servs., Inc., 63 F.3d 166, 179 (3d
Cir. 1995).
Plaintiff easily establishes this first prong of the test,
as the Third Circuit’s finding in Neely so instructs.
There, the plaintiff filed suit in the Eastern District of
Pennsylvania, claiming violations of maritime law, after
being injured by the propellers of a scuba diving vessel
that was anchored in the coastal waters of St. Lucia.
Neely, 63 F.3d at 170. Concluding that the district court
had subject matter jurisdiction, the Third Circuit found
that “the locality test is readily satisfied, for
plaintiffs injuries occurred in navigable waters and were
caused there by a vessel.” Page 6 Id. at 179.
Contrary to some district court holdings in the Second and
Fourth Circuits, which Defendant cites in an effort to
narrow the scope of the locality test, Neely demonstrates
that the Third Circuit does not invoke an additional
element requiring that the “navigable water” be under the
jurisdiction of the United States.[fn2] Thus, the fact that
the vessel was seized in China is of no consequence. As the
seizure occurred on navigable water, at a port in China,
Plaintiffs Complaint satisfies the locality prong.
Further, to establish the requisite connection to maritime
activity, Plaintiff must show both that the general
features of the alleged negligence “had `a potentially
disruptive impact on maritime commerce,'” and that ” `the
general character’ of the `activity giving rise to the
incident’ shows a `substantial relationship to traditional
maritime activity.'” Grubart, 513 U.S. at 534 (quoting
Sisson v. Ruby, 497 U.S. 358, 364 n. 2, 365, 364, and n. 2,
110 S.Ct. 2892, 111 L.Ed.2d 292 (1990)). This matter
satisfies both of these elements.
While neither party characterizes the general features of
this matter, we note that throughout their briefs,
Plaintiff focuses on the loading of the cargo in
Philadelphia and the alleged fraudulent bill of lading as
the critical incident, while Defendant emphasizes the arrest
of the vessel in the Chinese port. For these purposes, we
need not establish which incident is the relevant activity
because the general features of both activities have a
sufficient connection with maritime activity. We look to
the Supreme Court for guidance in describing the general
character of these incidents. Page 7
In Sisson, which involved damages to a marina on Lake
Michigan, as well as vessels docked nearby, resulting from a
fire that ignited on a pleasure yacht docked there, the
Supreme Court characterized the incident for jurisdictional
purposes as “a fire on a vessel docked at a marina on
navigable waters.” 497 U.S. at 363. Following this lead, we
characterize this incident either as the improper loading of
cargo on a vessel docked at a port on navigable waters or
the arrest of a vessel docked in navigable waters. Both
scenarios have a potentially disruptive impact on maritime
commerce.
The possible effects on maritime commerce of untimely, or
otherwise improper, loading of cargo are obvious and
far-reaching. Similarly, it is clear that the seizure of a
vessel has the potential to disrupt commercial activity, as
such an arrest hinders the ability of the vessel to carry
out further commercial transactions. See Neely, 63 F.3d at
179 (finding a potential disruptive impact on maritime
commerce in part because the incident “could lead to delays
in commercial shipping”).
Furthermore, both the arrest of a vessel and the improper
loading of a vessel at a dock on navigable waters have
clear and substantial relationships to maritime activity.
Based on its desire to protect maritime commerce, which is
the fundamental purpose underlying maritime jurisdiction,
the Supreme Court has stated that all “activities
traditionally undertaken by vessels, commercial or
noncommercial,” have a substantial relationship to maritime
activity. Id. at 367 (citing Foremost Ins. Co. v.
Richardson, 457 U.S. 668, 674, 102 S.Ct. 2654, 73 L.Ed.2d
300 (1982)). As such, the Court in Sisson found that
docking a ship was an important maritime activity because,
at a marina, vessels often remained for long periods of
time and received fuel supplies. Accordingly, the storage
and maintenance of a ship at a marina had a substantial
Page 8 relationship to maritime activity. Id. Similarly,
loading a ship, which is done while the ship is docked at a
marina and which involves actions very similar to obtaining
supplies, is substantially related to maritime activity.
Furthermore, if activities undertaken by vessels have a
substantial relationship to maritime activity, it logically
follows that actions carried out to or against vessels
would also have a substantial relationship to maritime
activity. As such, the very serious act of arresting a
vessel at a port sufficiently relates to maritime activity
to establish subject matter jurisdiction.
Because this matter occurred on navigable water and has a
sufficient connection to maritime activity, we find that it
falls within the scope of admiralty or maritime
jurisdiction. As such, we appropriately have subject matter
jurisdiction over this claim.[fn3]
B. Personal Jurisdiction
Defendant next argues that we should dismiss this Amended
Complaint, pursuant to Fed.R.Civ.P. 12(b)(2), for lack of
personal jurisdiction. In furtherance of this argument,
Defendant contends that this Court lacks specific
jurisdiction because Defendant has no place of business in
Pennsylvania and has not availed itself of the privileges of
Pennsylvania commerce.
As Defendant has contested personal jurisdiction, the
burden lies with Plaintiff to demonstrate “with reasonable
particularity” the sufficiency of the non-resident
Defendant’s activities in Pennsylvania. Provident Nat’l
Bank v. Cal. Fed. Savings & Loan Assoc., 819 F.2d 434, 437
(3d Cir. 1987). We find that Plaintiff has not identified
sufficient minimum contacts to establish personal
jurisdiction, either specific or general, based on the
Pennsylvania long-arm Page 9 statute.[fn4] However, we do
find that, with limited jurisdictional discovery, Plaintiff
might be able to establish jurisdiction pursuant to the
federal long-arm statute, under Fed.R.Civ.P. 4(k)(2).
1. Pennsylvania Long-Arm Statute, Pursuant to Fed.R.Civ.P.
4(e)
Under Fed.R.Civ.P. 4(e), a federal district court has
personal jurisdiction over a non-resident defendant if a
state court would have that power. Dollar Sav. Bank v.
First Sec. Bank of Utah, 746 F.2d 208 (3d Cir. 1984).
Accordingly, we look to the Pennsylvania long-arm statute,
42 Pa. Cons. Stat. Ann. §§ 5301 et seq.
(Purdon 1981 & Supp. 1989), to determine whether facts or
circumstances exist to require Defendant to answer in this
forum. Section 5322(b) of the long-arm statute authorizes
both general and specific jurisdiction to the “fullest
extent allowed under the Constitution of the United
States.” Thus, because Pennsylvania’s “reach is coextensive
with the limits placed on states by the federal
constitution,” Vetrotex Certaineed Corp. v. Consolidated
Fiber Glass Products Co., 75 F.3d 147, 150 (3d Cir. 1996),
we apply the familiar two-part test summarized below.
The interpretation of the United States Constitution by
Pennsylvania courts does not, however, bind federal courts.
Instead, we must look to federal constitutional doctrine in
assessing Defendant’s susceptibility to personal
jurisdiction in Pennsylvania. The Fourteenth Amendment due
process clause limits the power of the state to assert
personal jurisdiction over a nonresident defendant.
Pennover v. Neff, 95 U.S. 714, 733, 24 L.Ed. 565 (1877).
The basic factors for ascertaining whether the exercise of
personal jurisdiction over a nonresident defendant is
proper were set forth in International Shoe Co. v.
Washington, 326 U.S. 310, 66 S.Ct. 154, Page 10 90 L.Ed.
95 (1945). That case held that due process is satisfied
when a nonresident defendant has such minimum contacts with
the forum state “that the maintenance of the suit does not
offend `traditional notions of fair play and substantial
justice.'” Id. at 316, 66 S.Ct. 154 (internal citation
omitted).
The Third Circuit Court of Appeals has cogently summarized
the applicable two-part inquiry:
First, the defendant must have made constitutionally
sufficient `minimum contacts’ with the forum. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174,
2183, 85 L.Ed.2d 528 (1985). The determination of whether
minimum contacts exist requires an examination of the
`relationship among the forum, the defendant and the
litigation.’ Shaffer v. Heitner, 433 U.S. 186, 204, 97
S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977), in order to
determine whether the defendant has `purposefully
directed’ its activities towards residents of the forum.
Burger King, 471 U.S. at 472, 105 S.Ct. at 2182 (quoting
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104
S.Ct. 1473, 1478, 79 L.Ed.2d 790 (1984)). There must be
`some act by which the defendant purposefully avails
itself of the privilege of conducting activities within
the forum State, thus invoking the benefits and
protections of its laws.’ Hanson v. Denckla, 357 U.S. 235,
253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958). Second,
if `minimum contacts’ are shown, jurisdiction may be
exercised where the court determines, in its discretion,
that to do so would comport with `traditional notions of
fair play and substantial justice.’ International Shoe Co.
v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95
(1945).
Vetrotex, 75 F.3d at 150-151. “Specific jurisdiction” is
invoked when the cause of action arises from, or is related
to, the defendant’s contacts with the forum, such that the
defendant “should reasonably anticipate being haled into
court there.” Helicopteros Nacionales de Colombia v. Hall,
466 U.S. 408, 414 n. 8, 415, 104 S.Ct. 1868, 80 L.Ed.2d 404
(1984).
We find that Plaintiff has failed to establish sufficient
minimum contacts. As the primary contact to Pennsylvania,
Plaintiff argues that Defendant availed itself of the
benefits of this jurisdiction when it applied for an order
from this Court allowing it to take discovery for the Page
11 purposes of foreign litigation in a related
matter.[fn5] (See Pl’s Br. at 15.) However, we agree with
Defendant that this independent action does not give rise
to personal jurisdiction, as the prior order involved a
separate matter not being litigated in this country, much
less this jurisdiction, and a different party.
While Plaintiff correctly quoted Third Circuit precedent
that parties seeking affirmative relief in a particular
court typically subject themselves to that jurisdiction for
litigating matters arising from the same subject matter,
Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd., 181 F.3d 435, 443
(3d Cir. 1999), Bel-Ray and the other cases cited both in
Bel-Ray and by Plaintiff are clearly distinguishable
because they involve proceedings between the same parties
all within the same suit.
For example, the Bel-Ray court denied the defendants’
personal jurisdiction defense because, prior to asserting
that defense, the defendants had moved for, and litigated,
summary judgment on a counterclaim. Those actions, made
within the same case and involving the same party against
whose claims they attempted to assert the personal
jurisdiction defense, effectively constituted a waiver of
that defense. Id. at 443-44.
In so finding, the Bel-Ray court relied on earlier Third
Circuit case law that “held that a defendant who
participates in the adjudication of the plaintiffs
application for a preliminary injunction without securing a
determination of his challenge to the court’s personal
jurisdiction over him submits himself to the jurisdiction of
the court. . . .” Id. (discussing Wyrough & Loser, Inc. v.
Pelmor Labs., Inc., 376 F.2d 543, 547 (3d Cir. 1967)).
Again, just as in Bel-Ray, Wvrough Page 12 involved
proceedings within the same case arising from the same
subject matter involving the same parties.
Similarly, the Supreme Court in Adam v. Saenger, which
Plaintiff also cites, found that a procedure allowing
judgment against the plaintiff, against whom the defendant
had filed a cross-claim, does not violate the due process
clause because “the plaintiff, having, by his voluntary act
[of filing a claim,] in demanding justice from the
defendant, submitted himself to the jurisdiction of the
court, there is nothing arbitrary or unreasonable in
treating him as being there for all purposes for which
justice to the defendant requires his presence.” 303 U.S.
59, 67-68, 58 S.Ct. 454, 82 L.Ed. 649 (1938).
Unlike the aforementioned cases, not only did the prior
matter involving Defendant before this Court not involve
Plaintiff or this negligence claim, but it did not even
involve a claim seeking relief from another party. See
Wyrough, 376 F.2d at 547 (reasoning that because the
hearing would resolve factual conflicts and could grant
some relief, the party’s participation in that proceeding
waived the personal jurisdiction defense as to the specific
litigation in that case). Rather, Defendant merely filed an
application to take discovery from two companies based in
Pennsylvania, who are not parties to this suit, in
furtherance of foreign litigation against another non-party
to this suit. In fact, Defendant filed the application for
the Order permitting discovery on May 15, 2003, almost one
month prior to Plaintiff’s vessel even arriving in China.
The application and corresponding order for discovery
involving parties not part of the instant suit in
furtherance of a matter not being litigated in this country
simply does not rise to the level of establishing a contact
with Pennsylvania such that Sinochem would expect to be
haled into court here on a completely different claim. Page
13
Finally, to find Defendant’s prior discovery application
and this Court’s order relevant to a determination of
personal jurisdiction in this case would be inconsistent
with other findings in this circuit. See, e.g., Paul
Yanuzzi Builders, LLC v. Music Mountain Assocs., LLC, No.
02-cv-7438, 2003 WL 925368, at *2 (E.D. Pa. Feb. 28, 2003)
(finding that the defendants did not submit to personal
jurisdiction by requesting discovery prior to raising the
defense). We find that Defendant did not establish a
minimum contact with Pennsylvania for purposes of this case
by seeking an order to take discovery in a separate matter.
As such, the sole remaining alleged minimum contact to
this jurisdiction is the fact that the cargo at issue was
loaded onto the vessel in Philadelphia.[fn6] (See Pl.’s Br.
at 16-17 (identifying Defendant’s minimum contacts alleged
to be substantial enough not to violate the Due Process
Clause)). However, this contact alone does not survive a
due process analysis, such that Defendant would reasonably
expect to be haled into court here. As such, Plaintiff has
not demonstrated that this Court has specific jurisdiction
over Defendant through Pennsylvania’s long-arm statute.
2. Federal Long-Arm Statute, Pursuant to Fed.R.Civ.P.
4(k)(2)
We do find, however, that provided limited discovery,
Plaintiff might be able to identify sufficient national
contacts to establish personal jurisdiction over Defendant
through the federal long-arm statute. However, because we
grant Defendant’s Motion to Dismiss on other grounds, we
will not order such discovery.
Under Rule 4(k)(2), a plaintiff may establish that a court
has personal jurisdiction over a Page 14 defendant if it
can show that: (1) the claim arises under federal law; (2)
the defendant does not have general jurisdiction in any
state; and (3) jurisdiction would survive a due process
analysis.[fn7]
While the Third Circuit has not ruled on whether Rule
4(k)(2) applies to matters of maritime jurisdiction, in a
case of first impression for this Circuit, the District of
the Virgin Islands relied on “its own reading of the rule,
and the similar reasoning used in the currently unanimous
body of case law on point,” to hold Rule 4(k)(2) applicable
to cases of admiralty and maritime law. Western Equities,
Ltd. v. Hanseatic, Ltd., 956 F. Supp. 1232, 1235 (D. V.I.
1997) (citing the only other opinions at the time to
address this issue, all but one of which found that Rule
4(k)(2) encompasses maritime cases). The sole opinion to
find to the contrary was reversed by the Fifth Circuit,
which held that federal law does include maritime cases, as
applied to Rule 4(k)(2). World Tanker Carriers Corp. v. My
Ya Mawlaya, 99 F.3d 717, 722-723 (5th Cir. 1996)
(discussing the federal nature of maritime law and citing
numerous cases that have stated that admiralty cases are
federal law). Since Western Equities, no case in our
Circuit has held otherwise. Thus, we follow our sister
court and find that the federal long-arm statute does apply
to admiralty cases.
With respect to the second element of the test, Defendant’s
own arguments, coupled with the absence of argument
regarding personal jurisdiction from Plaintiff, make clear
that it does not have general jurisdiction in Pennsylvania.
See Def.’s Br. at 14-16 (arguing absence of personal
jurisdiction). However, it is unclear whether any other
state may have general jurisdiction over Page 15
Defendant. Despite Defendant’s averment that it “is
incorporated and has its principal place of business in
China” (Dacheng Decl. § 8), it is uncertain whether
Defendant has “continuous and systematic contacts” with any
forum in the United States, from which general jurisdiction
would arise. General Elec. Co. v. Deutz Ag, 270 F.3d 144,
150 (3d Cir. 2001) (citing Helicopteros, 466 U.S.
at414-16); Def.’s Br. at 14. We would allow minimal
jurisdictional discovery to make this determination.
Similarly, it is uncertain whether Defendant has sufficient
minimum contacts with the United States to survive a due
process analysis. The “widely adopted” test applied by the
court in Western Equities to determine whether the
defendant had enough minimum contacts considered three
factors with respect to the defendant:
(1) transacting business in the United States; or
(2) doing an act in the United States; or
(3) having an effect in the United States by an act done
elsewhere.
Western Equities, 956 F. Supp. at 1237.
Defendant avers that its personnel work in China, that it
has no place of business in the United States, and that it
neither advertises nor solicits business in the United
States. (Dacheng Decl. §§ 8-9.) However,
Plaintiff claims that Defendant does have “enterprises in
the United States which may be related for purposes of
jurisdiction” (Pl.’s Br. at 20), and we are required to
interpret all factual disputes in a light most favorable to
the plaintiff. Toys “R” Us, Inc. v. Step Two, S.A., 318
F.3d 446, 457 (3d Cir. 2003).
Moreover, Defendant has undoubtedly transacted business in
the United States, as its contract with the
Connecticut-based Triorient demonstrates, and, according to
the contract, the cargo that Defendant purchased was to be
shipped from an American port. (See Contract, Def.’s Page
16 Br. Ex.3.)
However, the Supreme Court has made clear that a contract
alone cannot establish sufficient minimum contacts in the
home forum of the other party. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 478, 105 S.Ct. 2174, 85 L.Ed.2d
528 (1985); BP Chemicals, Ltd. v. Formosa Chemical & Fibre
Corp., 229 F.3d 254, 260 (3d Cir. 2000); see also Sunbelt
Corp. v. Noble, Denton & Assoc., Inc., 5 F.3d 28, 32 (3d
Cir. 1993) (“a nonresident’s contracting with a forum
resident, without more, is insufficient to establish the
`minimum contacts’ required for the exercise of personal
jurisdiction over the nonresident.”).
The Court further informs us that, with respect to
establishing specific jurisdiction, “[i]t is . . . prior
negotiations and contemplated future consequences [of the
contract], along with the terms of the contract and the
parties’ actual course of dealing [] that must be evaluated
in determining whether the defendant purposefully
established minimum contacts within the forum.” Burger
King, 471 U.S. at 479; BP Chemicals, 229 F.3d at 260.
Given the uncertainty with respect to possible Sinochem
enterprises that do business in the United States or any
Sinochem business that has an effect on the United States,
as well the instruction provided us by the Supreme Court in
Burger King regarding the significant aspects of
Defendant’s contract for determining jurisdiction, we would
be inclined to allow limited discovery to determine whether
Plaintiff can establish personal jurisdiction, either
through the identification of other enterprises that
Plaintiff claims could be related, or through additional
information with respect to the parties’ dealings. So long
as Plaintiff alleges facts “that suggest `with reasonable
particularity’ the possible existence of the requisite
`contacts between [the party] and the forum state, the
plaintiff’s right to conduct jurisdictional discovery
should be Page 17 sustained.” Id. at 456 (quoting Mellon
Bank (East) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217,
1223 (3d Cir. 1992)).
Plaintiff’s allegations with respect to other Defendant
enterprises in the country, as well as the undisputed facts
averred with respect to the how the contract was carried
out, render Plaintiff’s claim far from frivolous. Thus, we
would refrain from ruling on whether the federal long-arm
statute, Rule 4(k)(2), permits personal jurisdiction over
Defendant until after the parties had taken limited
jurisdictional discovery. However, as the ensuing analysis
shows, this discovery will not be necessary because we will
dismiss this matter for forum non conveniens.
C. Forum Non Conveniens
Defendant next argues that, even if we were to find the
requisite subject matter and personal jurisdiction, we
still should decline jurisdiction in this matter for forum
non conveniens, as the witnesses to this matter, many of
whom are based in Asia, reside outside this jurisdiction.
(Def.’s Br. at 17.) Preliminarily, we note that we are
required to indicate how much deference to pay to this
foreign plaintiff’s choice of forum. Consistent with our
sister court’s prior findings, “we will not lightly disturb
plaintiff’s choice of forum and will hold defendant[] to
establishing a strong preponderance in favor of dismissal.”
Lacey v. Cessna Aircraft Co., 932 F.2d 170, 179 (3d Cir.
1991) (Lacey II) (quoting Lacey v. Cessna Aircraft Co., 736
F. Supp. 662, 664 (W.D. Pa. 1990), rev’d on other grounds
by Lacey II).
To warrant a dismissal on these grounds, Defendant bears
the burden of establishing two elements: an adequate
alternative forum and that both public interest and private
factors weigh heavily towards dismissing the case. Id. at
180.
A defendant typically can satisfy the first element by
showing that it is “amenable to Page 18 process” in
another jurisdiction. Id. (quoting Piper Aircraft Co. v.
Reyno, 454 U.S. 235, 254 n. 22, 102 S.Ct. 252, 70 L.Ed.2d
419 (1981)) (citation omitted in original). As reflected in
the absence of any argument to the contrary from Plaintiff,
the existence of the parallel proceeding commenced by
Defendant in Chinese Admiralty Court easily establishes the
existence of an adequate alternative forum.
We next consider the private interest factors, which
include:
relative ease of access to sources of proof; availability
of compulsory process for attendance of unwilling, and the
cost of obtaining attendance of willing witnesses;
possibility of view of premises, if view would be
appropriate to the action; and all other practical
problems that make a trial of a case easy, expeditious
and inexpensive.
Id. at 180 (quoting Gulf Oil Corp. v. Gilbert, 330 U.S.
501, 508, 67 S.Ct. 839, 91 L.Ed. 1055 (1947)).
The main witnesses with respect to the loading of the ship
would be personnel from the stevedoring company that loaded
the cargo onto the ship and the crew members of the vessel
that sailed it to China, as well as “surveyors retained on
behalf of the various vessel interests and shipper, [and]
the local agent.” (See Pl.’s Br. at 23 (identifying some of
the witnesses.)) Additionally, Defendant’s representatives
who made the alleged misrepresentations to the Chinese
Admiralty Court would also have to be available. The only
such persons clearly associated with the United States are
the Novolog employees who loaded the cargo on the ship. The
members of the crew are Filipino[fn8] and Defendant’s
representatives are Chinese. While Page 19 Plaintiff
argues that neither the surveyors nor the local agent are
located in China, Plaintiff fails to identify their
connection to the United States.
Furthermore, while we acknowledge Plaintiff’s averments
that the Chinese system of discovery and documentation may
not be as broad or as facilitative as the American system,
we have no reason to doubt the competence and justness of
the system the Chinese courts do have in place. (See Lu Min
Reply Decl. § 6.)[fn9] Additionally, because
irrespective of our ruling here, Plaintiff still must
litigate this matter in the Chinese court, the costs
inherent in translation and interpretation would only
increase if we maintained jurisdiction. The existence of
the Chinese litigation, which would require travel to China
anyway, further negates Plaintiff’s argument with respect to
the travel costs of American witnesses.
Additionally, we must consider public interest factors in
determining forum non conveniens, which include:
the administrative difficulties flowing from court
congestion; the `local interest in having localized
controversies decided at home’; the interest in having the
trial of a diversity case in a forum that is at home with
the law that must govern the action; the avoidance of
unnecessary problems in conflict of laws, or in
application of foreign laws; and the unfairness of
burdening citizens in an unrelated forum with jury duty.
Id. (quoting Piper, 454 U.S. at 241 n. 6)).
The sole applicable public interest issue here involves
choice of law, and we find that such an analysis would
render this matter one of Chinese law. A choice of law
analysis requires, Page 20 as a threshold issue, that we
establish whether this matter implicates significant U.S.
interests. In other words, we must find one of five
factors:
1) injury to an American seaman or a seaman with America
dependents,
2) injury in American territory,
3) American defendants,
4) an American flagged ship, or
5) a contractual choice of law clause specifying American
law.
Neely, 63 F.3d at 182.[fn10] The undisputed relevant facts
reflect an absence of the first four factors.
The sole possible factor implicating U.S. interests
involves the choice of law clause, in the charter party,
which the bill of lading incorporates. (See Conditions of
Carriage for Bill of Lading, Pl.’s Br. Ex. A.) However, the
letter identifying U.S. law as the law of choice in the
charter party does not state whether the charter party
calls for U.S. law to apply specifically to this type of
negligence matter, and the context of the letter suggests
that Pan Ocean’s concession regarding American law resulted
from an inquiry from Plaintiff with respect not to this
suit or any allegations of negligence by Defendant, but
rather with respect to Plaintiffs attempts under Chinese
law to secure release of its vessel. (See Pl.’s Br. Ex. A,
Clyde & Co. letter (stating both that the carrier was
“prepared to indicate that the [charter party] provides for
New York arbitration with US law to apply,” but that their
“understanding of PRC law [] [was] that such a provision .
. .[was] unlikely indeed to induce the Chinese court to
order the release of the vessel without security.”)).
Furthermore, while we recognize that the bill of lading,
especially as it incorporates the Page 21 charter party,
calls for the application of U.S. law, we disagree with
Plaintiffs argument that it has any relevance to this
negligence matter. (See Pl.’s Br. at 29.) The allegations
of fraud underlying the negligence claim involve the
issuance of the bill of lading, not the actual conditions
of carriage, such as the handling of the cargo, to which
the choice of law provision in the bill of lading would
apply. Stated another way, Plaintiff does not allege a
violation with respect to the nature of the carrier’s
duties to be carried out pursuant to the bill of lading and
carriage contract, such as the manner of loading,
conditions in transit, or protection of the cargo.
Rather, its dispute involves solely the date on which the
cargo was loaded and whether Plaintiff fraudulently
backdated the bill of lading, thus validating the contract
for the sale of the steel coils and allowing the buyer to
withdraw monies from Defendant’s line of credit. This
matter does not implicate the choice of law clause in the
bill of lading; rather, the choice of law clause more
applicable to this matter is that of the purchase contract
of the steel coils, which calls for the use of Chinese law.
The Third Circuit has stated that one of the two main
purposes for conducting a choice of law analysis with
respect to admiralty law “is to assure that American
maritime law is not applied to incidents that lack any
significant American connection.” Neely, 63 F.3d at 181. We
find that this matter “lack[s] any significant American
connection.” While the loading of the cargo, the date of
which we concede is critical to the matter, occurred in the
United States, Plaintiff’s claim does not allege any
wrongdoing with respect to the manner in which the American
company loaded the cargo, the environment at the U.S. port
where the cargo was loaded, or the general handling of the
cargo. Indeed, no American company is a defendant, much
less a party to this matter. Page 22
Moreover, the loading of the cargo could have happened
anywhere in the world and it would not have changed the
circumstances of this litigation; the fact that it occurred
at a U.S. port by an American stevedoring company was a
function of the purchase contract with a non-party to this
matter, not alleged in this suit to have engaged in any
wrongdoing. The actual injury, the arrest of the vessel,
occurred in Chinese territory, pursuant to an order by a
Chinese court, at the request of a Chinese corporation. The
interests of the United States are not implicated here.
As such, we find that, despite the deference we pay to
Plaintiffs choice of forum, we find that Defendant has
established a strong preponderance of dismissal, as this
matter is best litigated in the Chinese Admiralty
Court.[fn11] The existence of a parallel proceeding in the
Chinese Admiralty Court negates any argument of convenience
with respect to litigating the matter here, as,
irrespective of our ruling, Plaintiff will have to litigate
this matter in China. Moreover, with the exception of the
American employees of the stevedoring company who loaded
the vessel, most, if not all, of the witnesses are based in
Asia. Finally, the Chinese Admiralty Court arrested the
Malaysian vessel at a Chinese port, pursuant to Chinese
law, at the request of a Chinese corporation; no American
companies or interests are at stake. We have no reason to
second-guess the authority of Chinese law or the competence
of its courts; this matter is appropriately Page 23
addressed there. We grant Defendant’s Motion to Dismiss and
close this case on grounds of forum non conveniens.[fn12]
III. CONCLUSION
Defendant filed the instant Motion to Dismiss, pursuant to
Fed.R.Civ.P. 12, on grounds of lack of subject matter
jurisdiction, personal jurisdiction, forum non conveniens,
and forum-shopping. We find that while we do have subject
matter jurisdiction, and may have personal jurisdiction,
because the Chinese Admiralty Court is competent and in the
best position to try this matter between Asian parties, we
grant the motion on grounds of forum non conveniens. As
such, we need not reach the issue of forum-shopping. An
appropriate order follows.
ORDER
AND NOW, this 27th day of February, 2004, after full
consideration of Defendant’s Motion to Dismiss, filed
January 5, 2004, Plaintiff’s response thereto, filed
February 4, 2004, and Defendant’s reply, filed February 17,
2004, it is hereby ORDERED that said motion is GRANTED and
this case is DISMISSED without prejudice to Plaintiff’s
right to proceed on this matter in the appropriate Chinese
Admiralty Court. This case is closed.
[fn1] Black’s defines charter party as a “contract by which
a ship, or a principal part of it, is leased by the owner,
especially to a merchant for the conveyance of goods on a
predetermined voyage to one or more places; a special
contract between the shipowner and charterer, especially
for the carriage of goods at sea.” Black’s Law Dictionary
(7th ed. 1 999).
[fn2] To state the obvious, St. Lucia is not part of the
United States, but rather its own commonwealth, having
received its independence from Great Britain in 1979. See
http://www.stlucia.go
v.lc/saint_lucia/saintluciaconstitution/the_saint_lucia_
constitution.htm
[fn3] As we find that this admiralty matter falls within
this Court’s subject matter jurisdiction, we need not
address Defendant’s objections with respect to diversity or
federal question subject matter jurisdiction.
[fn4] The analysis that follows pertains solely to specific
jurisdiction. Plaintiff does not contest Defendant’s
argument that it does not have the continuous and
systematic contacts to establish general jurisdiction, and
we think that Defendant’s clear showing of an absence of
general jurisdiction obviates the need for any such
discussion.
[fn5] While it seems to have arisen from the same subject
matter as the instant claim, this matter,
2:03-mc-00087-FVA, involved a foreign action by Defendant
against an entity not a party to this case, for which
Defendant needed records from two Pennsylvania companies,
neither of which are parties to the instant suit.
[fn6] Additionally, Plaintiff argues that Defendant’s
purchase of the cargo from Pennsylvania was a further
minimum contact. However, Plaintiff’s own pleadings
indicate that Defendant contracted with Triorient Trading,
Inc., a Connecticut corporation, to purchase the steel
coils. (See Pl.’s Br. at 18.)
[fn7] The rule states
If the exercise of jurisdiction is consistent with the
Constitution and laws of the United States, serving a
summons or filing a waiver of service is also effective,
with respect to claims arising under federal law, to
establish personal jurisdiction over the person of any
defendant who is not subject to the jurisdiction of the
courts of general jurisdiction of any state.
Fed.R.Civ.P. 4(k)(2).
[fn8] Def.’s Br. Ex. 5. While it appears as though Exhibit 5
may not include the entire list of crew members — it
is p. 2 of a facsimile and the names through the bottom of
the sheet suggest that there could be a continuation
— we accept it as the full list, as Plaintiff does
not contest it and Lu Min avers to it. (See Lu Min Decl.
§ 13.)
[fn9] While we recognize that the declaration of Plaintiff’s
witness describes China’s discovery procedure more
negatively than that of Defendant’s witness (Compare Huang
Ya Quan Unsworn Decl. § 15 with Lu Min Reply Decl.
§ 6), and we are required to interpret factual
disputes in favor of Plaintiff, the non-moving party, we do
not find their statements to be inconsistent.
[fn10] Upon meeting this threshold, we would have to
determine whether it would reasonable, under the
circumstances, to apply American law. Id. For purposes of
our analysis, we need not make this finding, as it would
not affect our determination regarding forum non
conveniens.
[fn11] Aside from legal argument, we are confident that the
Chinese Admiralty Court can competently and justly handle
this matter. Plaintiff does not contest that the Chinese
Admiralty Court is a well-established court, which handles
more than 2000 cases per year, the majority of which
involve non-Chinese parties, or that the presiding judge on
this matter has nineteen years of judicial experience. (Lu
Min Decl. §§ 19, 21.) Additionally, while
there seems to be some disagreement as to the extent of
Chinese discovery and evidentiary practice relative to that
in the United States, the Chinese system appears to have
competent and orderly practice and procedure capable of
justly addressing matters involving foreign entities.
(Compare Huang Ya Quan Affirm. §§ 14-15, 17
with Lu Min Decl. §§ 6-8 (debating China’s
discovery practice and its evidentiary procedure regarding
witness testimony.)) Moreover, neither party should face
any prejudice regarding discovery available in the United
States because, as Defendant has utilized in a related
matter before the Chinese court, our system permits the use
of the American discovery process for the purpose of
foreign litigation.
[fn12] Because we dismiss this case for forum non
conveniens, we need not reach Defendant’s arguments
regarding the rules of international comity and
forum-shopping.