Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-07191/USCOURTS-caDC-99-07191-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 5, 2000 Decided June 30, 2000

No. 99-7180

Rosemarie Marra and

Marrecon Enterprises, S.A.,

Appellants/Cross-Appellees

v.

Vaso Papandreou, et al.,

Appellees/Cross-Appellants

Consolidated with

99-7191

Appeals from the United States District Court

for the District of Columbia

(96cv01535)

David G. Leitch argued the cause for appellants/crossappellees. With him on the briefs were John G. Roberts, Jr.

and Catherine E. Stetson.

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Joseph L. Barloon argued the cause for appellees/crossappellants. With him on the brief were Richard L. Brusca

and Rachel Mariner.

Before: Silberman and Rogers, Circuit Judges, and

Buckley, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge Silberman.

Silberman, Circuit Judge: The district court dismissed

Rosemarie Marra's breach of contract action against the

Greek government, concluding that a forum-selection clause

in the contract compelled her to sue in Greece. Marra

appeals, arguing that the Greek government's actions officially "revoking" the contract as a whole bar it from relying on

the forum-selection provision. We affirm.

I.

In 1994 the Greek Ministry of Tourism announced an

international tender for licenses to operate ten casinos in

specified locations throughout Greece. A group of investors,

including appellant, formed a consortium that submitted a $44

million bid for a license to operate a casino in Flisvos, a

location just outside of Athens. The consortium submitted

the highest bid for the Flisvos site, and then-Minister of

Tourism Dionyssis Livanos issued an official resolution granting the license to the consortium. The license gave the

consortium the right to construct and operate a luxury casino

complex in partnership with the Greek government, which

would receive in exchange both an annual fee and a percentage of the casino's profits each year; after thirty years,

ownership of the complex would pass from the consortium to

the Greek government. The license also contained a forumselection clause which (according to the translation offered by

Marra and accepted by the district court) provided as follows:

[A]ny dispute or disagreement between the State or the

National Tourism Organization and the [consortium] arising from the application of this license, the interpretation

or performance of its terms, the extent of the rights and

obligations of the State and the holder of the license, and in

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general any matter that may occur concerning a license,

shall be settled by the Greek courts.

Marra v. Papandreou, 59 F. Supp. 2d 65, 76 (D.D.C. 1999)

("Papandreou II").

Shortly after the consortium secured the license, matters

began to go awry. According to Marra, local political opposition against the construction of a casino at Flisvos developed,

prompting Minister Livanos to resign and the Greek government to begin negotiations with the consortium towards

relocating the planned casino complex to a different site near

Athens. These political complexities were compounded when

Prime Minister Andreas Papandreou resigned because of

illness, and a new administration took office while relocation

negotiations were underway. For reasons that are not entirely clear from the record, the new administration was

unfavorably disposed to the consortium's project, and began

exploring avenues for "recalling" the license. These efforts

resulted in Minister Livanos's successor, appellee Vaso Papandreou, issuing a resolution identifying legal defects in the

licensing process, and accordingly "revok[ing], from the time

it came into effect" the Ministry of Tourism's earlier action

granting the Flisvos license to Marra and her partners.

While most of the partners in the consortium began legal

proceedings in Greece challenging the legality of the license

revocation, Marra--who owned a nine percent interest in the

consortium--pursued a different strategy. She sued in the

district court, seeking $1.6 billion in damages from Vaso

Papandreou and other Greek government entities ("the Greek

government") for breach of contract and unlawful expropriation of property. The Greek government moved to dismiss

Marra's claim, arguing, among several alternative grounds for

dismissal, that it was immune from suit under the Foreign

Sovereign Immunities Act, 28 U.S.C. ss 1330, 1602-1611.

Marra responded that the Greek government's attempts to

secure American investment in its casinos brought it within

the "commercial activity" exception to the FSIA. See id. at

s 1605(a)(2). The district court permitted Marra limited

jurisdictional discovery--including the right to depose senior

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Greek government officials--to determine whether the FSIA

exception was applicable. The Greek government filed a

petition for a writ of mandamus in this court, asking us to

vacate the district court's discovery order.

We granted the Greek government's petition. See In re

Papandreou, 139 F.3d 247 (D.C. Cir. 1998) ("Papandreou I").

While we agreed with the district court that the information

sought from the Greek officials was potentially relevant to

determining the validity of the Greek government's FSIA

defense, see id. at 252-53, we noted that a "district court

authorizing discovery to determine whether [FSIA] immunity

bars jurisdiction must proceed with circumspection, lest the

evaluation of the immunity itself encroach unduly on the

benefits the immunity was to ensure." Id. at 253. Since the

Greek government had asserted several other defenses that

were either "jurisdictional or ha[d] jurisdictional overtones,"

id. at 254, we directed the district court to consider such

"alternative non-merits routes to dismissal" before reaching

the FSIA issue. Id. at 256. We also observed that, if the

district court were to dismiss Marra's suit on forum non

conveniens grounds, any such dismissal "could not ... be

subject to conditions, e.g., a condition that defendants promise

to submit to the jurisdiction of another court." Id. at 256 n.6.

Following our decision in Papandreou I, the Greek government moved to dismiss Marra's complaint on the grounds that

her suit was barred by the license's forum-selection clause,

and that the District of Columbia was a forum non conveniens

for Marra's action. Applying the standard set forth in The

Bremen v. Zapata Off-Shore Oil Co., 407 U.S. 1 (1972), the

district court concluded that the forum-selection provision

was enforceable, and that its terms compelled Marra to file

her suit in Greece. See Papandreou II, 59 F. Supp. 2d at 77.

The court also rejected Marra's argument that the Greek

government's revocation of the Flisvos license "estopped" it

from relying on a forum-selection clause within that license.

The district court observed that Marra's position, if accepted,

would "put[ ] the cart before the horse," requiring it to

adjudicate the merits of the Greek government's substantive

defense in order to determine whether the Greek government

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could rely on the forum-selection clause. Id. at 70. Accordingly, the district court dismissed Marra's suit, but added two

conditions to the dismissal to ensure that its decision did not

prejudice Marra's ability to refile her suit in Greece: the

Greek government would have to waive any applicable statute

of limitations if Marra filed suit in Greece within six months

of the dismissal, and would have to appoint an agent in the

United States to receive service of process in the suit. See

id. at 77. Marra appeals the district court's dismissal of her

case. The Greek government cross-appeals, arguing that the

conditions imposed by the district court violated our mandate

in Papandreou I.

II.

A.

We have a threshold question: did the district court have

jurisdiction to dismiss the case based on the forum-selection

clause? In Papandreou I we directed the district court to

consider alternative defenses before adjudicating the Greek

government's FSIA defense. But we recognized the district

court's discretion to do so was limited by Steel Co. v. Citizens

for a Better Environment, 523 U.S. 83 (1998), in which the

Supreme Court held that a federal court must establish its

jurisdiction to hear a case before adjudicating its merits. We

concluded that Steel Company compelled the district court to

address only "non-merits routes to dismissal," Papandreou I,

139 F.3d at 256; see also Ruhrgas AG v. Marathon Oil Co.,

526 U.S. 574, 585 (1999) (courts have discretion to "choose

among threshold grounds for denying audience to a case on

the merits"), and considered whether four alternative defenses advanced by the Greek government met that definition.

We thought that three of these defenses--standing, personal

jurisdiction, and forum non conveniens--were "jurisdictional"

in the Steel Company sense, while the fourth--the Act of

State doctrine--was not. See Papandreou I, 139 F.3d at

255-56.

So we now must decide whether the district court's disposition of the case on forum-selection clause grounds was such a

"non-merits route to dismissal." To be sure, we did not state

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that the three threshold defenses discussed in Papandreou I

were the only options available to the district court. But it

could be argued that a forum-selection clause inquiry requires

a court to make "an assumption of law-declaring power," id.

at 255, in a manner that, for instance, a forum non conveniens

inquiry does not. For while the validity of a forum-selection

clause can turn on factors traditionally associated with forum

non conveniens--such as whether the chosen forum is "seriously inconvenient for the trial of the action," see The Bremen, 407 U.S. at 16--a court must also address issues that

would be conventionally understood as going to the "merits"

of a contract dispute. Indeed, in the decision under review

the district court examined whether Marra had entered into

the license's forum-selection clause voluntarily.1 See Papandreou II, 59 F. Supp. 2d at 70-71; see also The Bremen, 407

U.S. at 15 (forum-selection clause is valid unless opposing

party can show "that enforcement would be unreasonable and

unjust, or that the clause was invalid for such reasons as

fraud or overreaching").

But there is considerable weight on the other side of the

scale as well. A forum-selection clause is understood not

merely as a contract provision, but as a distinct contract in

and of itself--that is, an agreement between the parties to

settle disputes in a particular forum--that is separate from

the obligations the parties owe to each other under the

remainder of the contract. See Northwestern Nat'l Ins. Co.

v. Donovan, 916 F.2d 372, 376 (7th Cir. 1990).2 Thus when a

court determines that a forum-selection clause is enforceable,

it is not making "an assumption of law-declaring power" vis-a-

__________

1 The district court concluded that Marra had voluntarily entered

into the forum-selection provision, a conclusion that she does not

challenge in this appeal.

2 This notion of "severability," first endorsed by the Supreme

Court in the arbitration clause context, see Prima Paint Corp. v.

Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), was extended to

forum-selection provisions in Scherk v. Alberto-Culver Co., 417 U.S.

506, 519 n.14 (1974). See also Haynsworth v. The Corporation, 121

F.3d 956, 963 (5th Cir. 1997).

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vis other provisions of the contract. While this does not

resolve the Steel Company inquiry--it could still be said that

a court exercising a law-declaring power with respect to the

forum-selection provision is problematic--it focuses the question on the clause itself, removing any implication that the

district court in assessing the forum-selection clause necessarily also is reaching the "merits" of the parties' substantive

claims about the Flisvos license as a whole. Moreover, while

the forum-selection clause defense is a creature that has

evaded precise classification,3 most courts and commentators

have characterized it as a venue objection analogous to a

forum non conveniens motion or motion for transfer of venue

under 28 U.S.C. s 1404(a). See 15 Wright, Miller & Cooper,

Federal Practice and Procedure s 3803.1 (2d ed. 1986); cf.

Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22 (1988)

(forum-selection clause considered as a factor in a section

1404(a) motion); Commerce Consultants Int'l, Inc. v. Vetrerie

Riunite S.p.A., 867 F.2d 697 (D.C. Cir. 1989) (affirming

district court's dismissal of a case for improper venue under

Fed. R. Civ. P. 12(b)(3) after defendants raised forumselection clause defense). This analogy to venue is sensible

enough; as Judge Posner has observed, a forum-selection

clause is best understood as a potential defendant's ex ante

agreement to waive venue objections to a particular forum.

See Donovan, 916 F.2d at 375-76. Accordingly while the

district court's inquiry into the enforceability of the license's

forum-selection clause resembled in certain respects a "mer-

__________

3 Indeed, there is some doubt concerning the appropriate procedural vehicle for giving effect to a forum-selection provision. See,

e.g., Haynsworth, 121 F.3d at 961 (noting the "enigmatic question of

whether motions to dismiss on the basis of forum-selection clauses

are properly brought as motions under Fed. R. Civ. P. 12(b)(1),

12(b)(3), or 12(b)(6), or 28 U.S.C. s 1406(a)"); Frietsch v. Refco,

Inc., 56 F.3d 825, 830-31 (7th Cir. 1995); Leandra Lederman, Note,

Viva Zapata! Toward a Rational System of Forum-Selection

Clause Enforcement in Diversity Cases, 66 N.Y.U. L. Rev. 422,

432-35 (1991) (observing that defendants "invoke an assortment of

rules and concepts"--including subject matter jurisdiction, personal

jurisdiction, and venue--to transfer or dismiss cases on forumselection clause grounds).

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its" determination of the sort proscribed by Steel Company,

there are sound reasons for taking the contrary view.

We need not resolve this question, however, because of the

Greek government's clarification of its position at oral argument. Counsel explained that the Greek government's reliance on the forum-selection clause in the district court should

properly be understood as a waiver of its FSIA defense with

respect to the clause. We agree, and reject Marra's description of this as an impermissible "selective waiver" of the

Greek government's sovereign immunity prerogatives. If the

Greek government were sued by Marra for breach of two

different contracts, it certainly would have the prerogative to

waive a sovereign immunity defense with respect to one of

the contracts and invoke that defense for the other. As we

discussed above, a similar situation is presented here, since a

forum-selection clause, properly understood, is a separate

contract in which the parties agree to venue; we therefore

see no reason why the Greek government should not be able

to waive its FSIA defense with respect to the forum-selection

clause, but retain that immunity with respect to the remainder of the license. Therefore the district court had jurisdiction to address the Greek government's forum-selection

clause defense.

B.

It is clear to us that the forum-selection clause, if enforceable, requires Marra to file her suit in Greece. The clause is

broadly written, encompassing (even according to Marra's

translation) "any dispute or disagreement" between the parties "arising from the application of this license, the interpretation or performance of its terms ... and in general any

matter that may occur concerning a license." Marra points to

language later in the clause stating that the licensee agrees to

"submit himself to the jurisdiction of the Greek courts," and

argues that this sentence "indicates that the parties anticipated the forum-selection clause to apply to actions brought by

the Greek State against the licensee for breach of the terms of

the license," and not to suits by Marra against the Greek

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government. We simply cannot accept that interpretation;

nothing in this sentence in any way modifies the broad

language that precedes it.4

This brings us to the more difficult issue of the clause's

enforceability. In The Bremen, the Supreme Court announced that forum-selection provisions are presumptively

enforceable, jettisoning the longstanding American judicial

hostility to forum-selection clauses as founded in the "parochial concept that all disputes must be resolved under our laws

and in our courts." 407 U.S. at 9; see also Vimar Seguros y

Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 537-38

(1995). Marra does not point to factors typically relied on by

litigants seeking to avoid enforcement of forum-selection

clauses-for instance, that the clause is the product of fraud or

that its enforcement would contravene a strong public policy

of the forum in which suit is brought, see The Bremen 407

U.S. at 10, 15-19-to overcome The Bremen's presumption of

validity. Rather, she argues that the Greek government

should be estopped from availing itself of a forum-selection

clause that is part of a contract that it professes to have

"revoked."

Each party's position produces an anomaly. Marra notes

that the Greek government's resolution revoking the Flisvos

license was retroactive in effect, legally "extinguishing" the

license as of the date it issued; if that is so, she asks, how can

the Greek government now seek refuge in a provision of a

nonexistent license? The Greek government responds that it

__________

4 As noted above, Marra's suit also includes an expropriation

count. This count, however, simply realleges and incorporates the

paragraphs of her complaint pertaining to her breach of contract

claim, and adds the following sentence: "By means of their arbitrary, capricious, unjustified and unlawful revocation of plaintiff's

license, defendants have expropriated plaintiffs' valuable property

rights without providing prompt, adequate or effective compensation and therefore in violation of international law." Since Marra's

expropriation claim is wholly derivative of the Greek government's

alleged breach of the Flisvos license, it certainly presents a dispute

"concerning a license" that is covered by the forum-selection provision.

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is no less illogical to allow someone to sue under a contract

while at the same time claiming not to be bound by a

provision within that contract. Moreover, in the Greek government's view, Marra is trapped in a lose-lose situation in

her attempt to pursue litigation in the United States: either

the license was indeed lawfully revoked and she has no cause

of action, or the license is valid and she is bound by the

license's terms to pursue her case in the Greek courts.

While there is no entirely satisfactory answer to this conundrum, we think that the Greek government has the stronger

position. Marra relies heavily on the implications that flow,

under well-settled principles of contract law, from a party's

"repudiation" of a contract. Such a repudiation relieves the

other party from performing its obligations under that contract, see 13 Williston, Contracts s 39:37 (4th ed. 2000); to

put it another way (and in the way preferred by Marra), once

a party repudiates a contract, it has no right to demand

performance from the non-repudiating party. This rule, in

Marra's view, precludes the Greek government from "revoking" the Flisvos license--and repudiating its obligations to

Marra--at the same time that it avails itself of the forumselection clause.

The "repudiation" shoe does not quite fit here, for two

reasons. Adherence to the forum-selection clause is not an

obligation owed by Marra to the Greek government, but a

condition precedent to suit under the contract, binding equally on both parties. This is a distinction with a difference,

since the "rationale behind the rule that a repudiation of a

contract by one party will excuse the other party from the

duty to perform contractual obligations and conditions, is the

prevention of economic waste, in the sense that, following a

clear repudiation, the other party should not be required to

perform the formal, economically wasteful, and useless act of

further performing." Id. This purpose of preventing "wasteful" and "useless" acts of performance is not served in any

way by excusing Marra from compliance with the forumselection provision. Moreover, the rule urged by Marra is

contrary to the conceptual understanding, noted above, of a

forum-selection clause as severable from the contract in which

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it is contained. Therefore while the Greek government's

denial of its contractual obligations to Marra relieves her of

her duty to perform her side of the contract's terms (for

instance, she is no longer obligated to pay her annual license

fee), that action does not work a repudiation of the forumselection clause unless it is specifically directed at the clause

itself. Were this not the case, as the Greek government

correctly points out, the value of a forum-selection clause

would be significantly diminished, since it will often be the

case that a plaintiff can plausibly allege that the defendant's

nonperformance constitutes a "repudiation" of its contractual

obligations precluding it from recourse to the clause.

It is therefore understandable that Marra can point to no

authority extending this general principle of contract law to

preclude a party from relying on a forum-selection clause in a

contract. On the contrary, the Second Circuit has rejected

this argument in the closely analogous context of a challenge

to the enforcement of an arbitration clause in its oft-cited

decision in Kulukundis Shipping Co. v. Amtorg Trading

Corp., 126 F.2d 978 (2d Cir. 1942) (Frank, C.J.). See also Sky

Reefer, 515 U.S. at 534 (noting that "foreign arbitration

clauses are but a subset of foreign forum selection clauses in

general"). In Kulukundis, a defendant in a contract action

sought to stay the suit pending arbitration pursuant to an

arbitration clause in the contract. The plaintiff--like Marra

here--responded that the defendant's denial of the contract's

existence barred it from recourse to the arbitration clause

therein. The Second Circuit rejected the plaintiff's estoppel

theory, drawing on a principle of contract law that is echoed

before us by the Greek government:

As Williston remarks: "A person who repudiates a contract

wrongfully cannot sue upon it himself, but if he is sued

upon it, he can be held liable only according to the terms of

the contract. If, therefore, an arbitration clause amounts

to a condition precedent ... the defendant can be held

liable only if that condition is performed, prevented or

waived."

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Arbitration under the [contract] here was a condition precedent.

Kulukundis, 126 F.2d. at 988 (citing 6 Williston, Contracts

s 1921 (rev. ed. 1938)) (ellipsis added). So too here; under

the terms of the Flisvos license, Marra was obliged to sue in

the Greek courts in order to recover for breach of the license.

The Greek government wins, in our view, the battle of dueling

absurdities.

We might have reached a different conclusion had there

been a dispute as to whether the Flisvos license had been

voluntarily agreed to by the parties. Then it could be

argued--even if one accepts, as we do, the position that a

forum-selection clause is severable from the contract containing it--that if the parties never entered into a contract in the

first place, they by definition did not agree to the forumselection clause, either. Cf. Kulukundis, 126 F.2d at 986,

988-89 (rejecting estoppel theory, but holding that district

court must adjudicate the issue of whether parties entered

into an agreement at all before submitting case to arbitrator).

But the district court determined, and Marra does not challenge on appeal, that she freely entered into a broadly

worded forum-selection agreement; to borrow a formulation

from the arbitration clause context, Marra offers no challenge

to the "making of the agreement" between the parties to

adjudicate their disputes in Greece. Prima Paint, 388 U.S.

at 404. To the contrary, the event that supposedly renders

the Flisvos license void ab initio took place after the making

of this agreement. If we were to hold that the validity of a

contract and that of a forum-selection clause contained within

it are unavoidably linked in this situation, then two parties

can never agree to a binding provision in a contract, designating a forum for the resolution of disputes that might arise

from supervening events calling into question that contract's

validity. That outcome could not be squared with the strong

presumption in favor of the enforcement of forum-selection

clauses established by The Bremen and subsequent Supreme

Court cases.

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III.

We now turn, briefly, to the Greek government's crossappeal. The district court attached two conditions to its

dismissal of Marra's suit, both of which were designed to

protect her ability to pursue a remedy in Greece; the dismissal required the Greek government both to waive any

applicable statute of limitations defense should Marra refile

her suit in Greece within six months of the dismissal, and to

appoint an agent to receive process in the United States.

The Greek government argues that these conditions run afoul

of our decision in Papandreou I, where we noted that a

subsequent district court dismissal of the suit on non-FSIA

grounds could not be accompanied by conditions on the Greek

government. See 139 F.3d at 256 n.6.

Unlike Marra's appeal, this cross-appeal presents no ontological dilemmas. Indeed, as it turns out, it does not present

a question at all. Marra did not file a suit in Greece within

the six-month period following dismissal set forth by the

district court, and at oral argument she (understandably,

since she has not filed suit) disavowed any interest in serving

process on the Greek government in the United States. The

questions raised by the cross-appeal are therefore moot.

* * * *

For the foregoing reasons, the judgment of the district

court is affirmed, and the cross-appeal is dismissed.

So ordered.

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