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Supreme Court Decision Update - Sinochem International Co. Ltd. v. Malaysia International Shipping Corp.

greatWall.jpgToday’s other Supreme decision is Sinochem International Co. Ltd. v. Malaysia International Shipping Corp. (PDF of the opinion). It’s a unanimous opinion penned by Justice Ginsburg and, like today’s first opinion, it’s about procedure. Here, the Supremes are looking at what’s know as forum non conveniens.

QuizLaw Analysis: We’ll get into it in detail below, but forum non conveniens is basically where a party says there’s a different court which is the more appropriate forum for a lawsuit to be heard, and so that party is asking this court to use its discretion to refuse to hear the case. And in today’s decision, the Supremes say that a federal court can exercise its discretion to respond to such an argument at any time, and need not first look at whether it even has jurisdiction over the case. Fun stuff, this civil procedure!

Run this forum non conveniens by me once more, will you? As Justice Ginsburg explains it in the first sentence of her opinion:

This case concerns the doctrine of forum non conveniens, under which a federal district court may dismiss an action on the ground that a court abroad is the more appropriate and convenient forum for adjudicating the controversy.

With respect to federal courts, this doctrine only applies when the other forum is abroad (as opposed to state law, when the doctrine may apply as to a court that’s merely in another state). Anyway, the question today is whether the court has to first decide it has jurisdiction over the case before tossing a case based on forum non conveniens?

And how did this case get here? To understand this, we have to head out to China. In 2003, a Chinese importer, Sinochem International Co. Ltd., entered into a contract with Triorient Trading, Inc., a US corporation, for the sale and purchase of steel coils. Triorient charted a ship owned by the other party in this case, Malaysia International Shipping Corporation. In 2003, a bill of lading was generated for steel coils which were loaded onto the ship at the Port of Philadelphia. This led to various legal action before Chinese admiralty courts, initiated by Sinochem, which claimed that Malaysia International had backdated the bill of lading. The ship was arrested and detained, and Malaysia International fought the lawsuit by arguing that the Chinese admiralty court didn’t have jurisdiction over the matter - this argument was rejected by the Chinese court and was also rejected on appeal.

Meanwhile, Malaysia International sued Sinochem here in the states, filing a federal action in Pennsylvania, arguing that the petition which Sinochem first filed in China contained negligent misrepresentations and so Malaysia International wanted compensation for the harm it suffered from the ship being wrongfully detained. Sinochem fought this lawsuit on several grounds, including that there was no subject-matter jurisdiction, no personal jurisdiction, and with a forum non conveniens argument.

So what happened in District Court? The court heard Sinochem’s motion to dismiss and determined that it did have subject matter jurisdiction (because this was a maritime case) but that it did not have personal jurisdiction over Sinochem, a Chinese company. However, the court felt that discovery might show that it did have such personal jurisdiction over Sinochem (for the real legal wonks out there, it basically thought discovery could show sufficient national contacts). But the court declined to allow such discovery, granting Sinochem’s request for a forum non conveniens dismissal on the grounds that “the case could be adjudicated adequately and more conveniently in the Chinese courts.” The District Court based this decision on the fact that there were not any significant US interests in the case and that “the nub of the controversy was entirely foreign: The dispute centered on the arrest of a foreign ship in foreign waters pursuant to the order of a foreign court.” Plus, there were already proceedings taking place in China, and the District Court had no reason to second guess what was going on there.

And on appeal? The Third Circuit agreed that there was subject matter jurisdiction, but it went a step further on the personal jurisdiction question, saying that there couldn’t be a decision on whether there was personal jurisdiction until there was some discovery. And the Third Circuit ruled that the District Court couldn’t dismiss the case under forum non conveniens “unless and until it determined definitively that it had both subject-matter jurisdiction over the cause and personal jurisdiction over the defendant.” So the Third was saying that the District Court had to allow that discovery and resolve the personal jurisdiction issue before it throw the case out for forums non conveniens.

And since there’s a Circuit-split on this issue of whether you have to decide jurisdictional matters first, the Supremes decided to step in and resolve things once and for all.

So what does Justice Ginsburg have to say for herself? As mentioned, she authored a unanimous opinion and she begins by explaining a little about the dismissal of a case on forum non conveniens grounds. Specifically, she notes that a federal court can do so at its discretion when some other forum has jurisdiction to hear the case and where the court thinks that would be more convenient. The court can look at a “range of considerations” here, including convenience to the parties and practical matters about the different locations. And while a defendant trying to dismiss a case for forum non conveniens has a pretty high burden (because of the idea that plaintiffs have a right to have the case heard in the forum of their choosing), that burden is a bit less when the plaintiff hasn’t filed suit in its own home forum (as was the case here).

Justice Ginsburg next notes that federal courts generally have to settle jurisdictional questions before getting to the merits of a case. However, the court can decide these jurisdictional questions (that is, non-merit matters), in any order that is appropriate. And the key here is that:

A forum non conveniens dismissal “den[ies] audience to a case on the merits,” [citation]; it is a determination that the merits should be adjudicated elsewhere.

In fact, the Third Circuit even recognized that such a dismissal “is a non-merits” dismissal.

All of which means that the court can throw a case out for forum non conveniens before getting to any jurisdictional questions, either subject-matter or personal. Justice Ginsburg acknowledges that there may be overlap between a forum non conveniens dismissal and merit-based decisions, particularly because the court has to consider what evidence will be necessary to prosecute or defend the claims of the lawsuit. But this is merely a “brush with ‘factual and legal issues of the underlying dispute.’” And there are other non-merit decisions which may also have such a brush - for example, a personal jurisdiction analysis may require the court to look at what actions a party has had in particular location - yet we allow the court to still consider these non-merit decisions separate and apart from any merit-based considerations:

The critical point here, rendering a forum non conveniens determination a threshold, nonmerits issue in the relevant context, is simply this: Resolving a forum non conveniens motion does not entail any assumption by the court of substantive “law-declaring power.”

So that’s it, right? Essentially, yes. But Justice Ginsburg goes on to clarify why the Third Circuit messed up. It relied on a 1947 Supreme decision which said that “the doctrine of forum non conveniens can never apply if there is absence of jurisdictions” and that when the doctrine comes into play, “it presupposed at least two forums in which the defendant is amenable to process.” But Ginsburg says that this language was not well-crafted, and if you look at the actual context of the case, it’s clear that there’s no conflict here. For example, it’s totally true that the doctrine can’t apply if there’s no jurisdiction - if the court decides it lacks jurisdiction, then at that point the case is gone, so of course the court can’t turn around and dismiss under forum non conveniens, because it lacks jurisdiction.

So that’s it, right? Again, yes, but not quite. Justice Ginsburg would like to explain that “[t]his is a textbook case for immediate forum non conveniens dismissal.” She offers such an explanation, concluding that the District Court made a good decision and that the Third Circuit therefore needs to be reversed.