United States Court of Appeals,

Eleventh Circuit.

No. 97-5144.

Irmgard LIPCON; Mitchell Lipcon; Charles R. Lipcon; Barbara Lipcon, Plaintiffs-Appellants,

v.

UNDERWRITERS AT LLOYD'S, LONDON, a.k.a. Corporation of Lloyd's, a.k.a. Society of

Lloyd's, a.k.a. Lloyd's of London, Defendants-Appellees.

Aug. 5, 1998.

Appeal from the United States District Court for the Southern District of Florida. (NO. 96-1137-CVFAM), Federico A. Moreno, Judge.

Before HATCHETT, Chief Judge, BLACK, Circuit Judge, and KRAVITCH, Senior Circuit Judge.

KRAVITCH, Senior Circuit Judge:

In this appeal, we are confronted with the important question of whether the anti-waiver

provisions of the United States securities laws preclude enforcement of certain choice-of-law and

forum-selection clauses ("choice clauses") in international agreements. Although we recognize that

it is a close question, we follow the weight of circuit authority and conclude that the choice clauses

are enforceable despite the anti-waiver provisions. In addition, we conclude that the agreements in

this case satisfy scrutiny for fundamental fairness and do not contravene public policy. Finally, we

conclude that Irmgard, Mitchell, Charles, and Barbara Lipcon (collectively, "appellants" or "the

Lipcons") all are bound by their agreement with Underwriters at Lloyd's London ("Lloyd's").

Accordingly, we affirm the district court's decision to dismiss the Lipcons' complaint against

Lloyd's.

I.
 1

British Government Br. Amicus Curiae at 3. 

2

Lloyd's is a large insurance market in which more than three hundred Underwriting Agencies

compete for underwriting business. Pursuant to the British Lloyd's Acts of 1871 and 1982, Lloyd's

oversees and regulates the competition for underwriting business in the insurance market; according

to the amicus curiae brief of the British Government, Lloyd's "has statutory powers granted by

Parliament to regulate the affairs of the international insurance market in London...."1 Lloyd's itself,

however, does not accept premiums or insure risks. Instead, Underwriting Agencies, which act as

syndicates, compete for the insurance business. Each Underwriting Agency is controlled by a

Managing Agent, who is responsible for the financial status of its agency. The Managing Agent

must attract not only underwriting business from brokers but also the capital with which to insure

the risks that are underwritten.

Managing Agents recruit "Names" to provide the underwriting capital. A Name becomes

a Member of the Society of Lloyd's through a series of agreements, proof of financial means, and

the deposit of an irrevocable letter of credit in favor of Lloyd's. By becoming a Member, a Name

obtains the right to participate in the Lloyd's Underwriting Agencies. The Names, however, do not

deal directly with Lloyd's or with the Managing Agents. Instead, the Names are represented by

Members' Agents, who, pursuant to agreement, act as fiduciaries for the Names. Upon becoming

a Name, an individual selects the underwriting agencies in which he wishes to participate. The

Names generally join more than one underwriting agency in order to spread their risks across

different types of insurance. In large part because of the experience of the Members' Agents, Names

generally rely on the advice of their Members' Agents in deciding in which syndicates to invest.
 2

R:1-8, Ex. B. 

3

Selecting well is of the utmost financial importance because a Name is responsible for his share of

an agency's losses.

In addition to providing the indicia of financial security mentioned above, to become a Name

one must travel to England to acknowledge the attendant risks of participating in a syndicate by

signing a standard-form "General Undertaking." The General Undertaking is a two-page document

containing choice-of-forum and choice-of-law clauses (collectively the "choice clauses"), which

form the basis for this dispute. The choice clauses provide:

The rights and obligations of the parties arising out of or relating to the Member's

membership of, and/or underwriting of insurance business at, Lloyd's and any other matter

referred to in this Undertaking shall be governed by and construed in accordance with the

laws of England.

Each party hereto irrevocably agrees that the courts of England shall have exclusive

jurisdiction to settle any dispute and/or controversy of whatsoever nature arising out of or

relating to the Member's membership of, and/or underwriting of insurance business at,

Lloyd's and that accordingly any suit, action or proceeding ... arising out of or relating to

such matters shall be brought in such courts....2

Irmgard and Mitchell Lipcon are Names who entered into underwriting agreements, and

Charles and Barbara Lipcon, who signed letters of credit to provide collateral for the Names, are

their spouses. Irmgard and Mitchell first became Names in 1983 and 1984, respectively, and in 1986

signed a revised General Undertaking that contains the choice clauses set out above.

After it became clear that the Names would be responsible for massive losses for asbestos

and pollution claims, appellants brought suit in United States District Court for the Southern District

of Florida alleging that: (1) Lloyd's actively sought investors from the United States to fill an urgent

need to build up capital; (2) concealed information regarding the possible consequences of the risks
4

undertaken; and (3) deliberately and disproportionately exposed the Names to massive liabilities

for which sufficient underwriting capital or reinsurance was not available. The Lipcons stated

claims under the Securities Act of 1933, §§ 5, 12(1), & 15, 15 U.S.C. §§ 77e, 77l, & 77o, the

Securities Exchange Act of 1934, §§ 10(b) & 20, 15 U.S.C. §§ 78j & 78t, the Racketeer Influenced

and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, and various provisions of

Florida law. The district court granted the motion to dismiss brought by Lloyd's, finding that the

choice clauses are enforceable and preclude litigation arising out of the Lipcons' agreement with

Lloyd's in United States courts. In addition, the district court concluded that Charles and Barbara

Lipcon, who signed letters of credit in favor of Lloyd's but never entered into any agreement with

Lloyd's, are bound by the choice clauses.

As in numerous similar cases in the courts of appeals involving these choice clauses, "[t]his

appeal does not address the merits of the underlying claims. It addresses only the Names' contention

that their disputes with Lloyd's should be litigated in the United States despite contract clauses

binding the parties to proceed in England under English law." Richards v. Lloyd's of London, 135

F.3d 1289, 1292 (9th Cir.1998).

II.

As a preliminary matter, we note that some uncertainty exists as to both the appropriate

vehicle for motions to dismiss on the basis of forum-selection clauses and the proper standard of

review for district court decisions granting such motions to dismiss. See Haynsworth v. Lloyd's of

London, 121 F.3d 956, 961 & n. 8 (5th Cir.1997) (citing cases); 5A Charles Alan Wright & Arthur

R. Miller, Federal Practice and Procedure § 1352 (2d ed. Supp. 1998). In the case before us,

Lloyd's styled its motion as a Rule 12(b)(3) motion to dismiss for improper venue.
5

The Ninth Circuit has treated such motions as motions brought pursuant to Fed.R.Civ.P.

12(b)(3) to dismiss for lack of venue, see Richards v. Lloyd's of London, 135 F.3d 1289, 1292 (9th

Cir.1998); cf. Hugel v. Corporation of Lloyd's, 999 F.2d 206, 207 (7th Cir.1993) (affirming district

court's grant of defendant's Rule 12(b)(3) motion to dismiss for improper venue in case involving

forum-selection clause); Commerce Consultants Int'l v. Vetrerie Riunite, 867 F.2d 697, 698

(D.C.Cir.1989) (same), and has reviewed district court decisions to enforce forum-selection and

choice-of-law clauses for abuse of discretion, see id.; accord Sun World Lines, Ltd. v. March

Shipping Corp., 801 F.2d 1066, 1068 & n. 3 (8th Cir.1986). The Second Circuit, on the other hand,

has treated such motions as motions to dismiss for lack of subject matter jurisdiction under Rule

12(b)(1). See AVC Nederland B.V. v. Atrium Inv. Partnership, 740 F.2d 148, 153 & n. 8 (2d

Cir.1984). Finally, several circuits have avoided resolving the issue of the appropriate form of

pleading for a motion to dismiss based upon choice clauses and instead have held simply that "the

enforceability of a forum selection clause is a question of law reviewable de novo." Haynsworth,

121 F.3d at 961; see id. (electing not to reach "the considerably more 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. § 1406(a)"); Shell v. R.W. Sturge, Ltd.,

55 F.3d 1227, 1229 (6th Cir.1995); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953,

956 (10th Cir.1992) (noting that "[a] motion to dismiss based on a forum selection clause frequently

is analyzed as a motion to dismiss for improper venue under Fed.R.Civ.P. 12(b)(3)," but failing to

resolve issue).

 In our view, motions to dismiss based upon forum-selection clauses ordinarily are not

properly brought pursuant to Rule 12(b)(1), which permits motions to dismiss for lack of subject
6

matter jurisdiction, because the basis upon which the defendants seek dismissal—namely, that the

agreement of the parties prohibits the plaintiff from bringing suit in the particular forum—is

unrelated to the actual basis of federal subject matter jurisdiction—namely, federal question

jurisdiction or diversity of citizenship, as the case may be. In the case before us, appellants stated

claims under, inter alia, the federal securities laws, a sufficient basis for federal subject matter

jurisdiction that is not affected by the parties' agreement to litigate elsewhere. See, e.g., Bell v.

Hood, 327 U.S. 678, 66 S.Ct. 773, 90 L.Ed. 939 (1946); Blue Cross & Blue Shield of Ala. v.

Sanders, 138 F.3d 1347, 1352 (11th Cir.1998) (noting that under Bell, "a federal court may dismiss

a federal question claim for lack of subject matter jurisdiction only if: (1) "the alleged claim under

the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose

of obtaining jurisdiction'; or (2) "such a claim is wholly insubstantial and frivolous' ") (quoting Bell,

327 U.S. at 682-83, 66 S.Ct. at 776) (emphasis omitted); Central Contracting Co. v. Maryland Cas.

Co., 367 F.2d 341, 345 (3d Cir.1966) (stating that a forum-selection clause "does not oust the

jurisdiction of the courts; in effect it merely constitutes a stipulation in which the parties join in

asking the court to give effect to their agreement by declining to exercise its jurisdiction"). Instead,

we hold that motions to dismiss upon the basis of choice-of-forum and choice-of-law clauses are

properly brought pursuant to Federal Rule of Civil Procedure 12(b)(3) as motions to dismiss for

improper venue.

We are aware that the First Circuit has treated motions to dismiss upon the basis of forum

selection clauses as Rule 12(b)(6) motions urging dismissal for failure to state a claim upon which

relief can be granted. See Lambert v. Kysar, 983 F.2d 1110, 1112 n. 1 (1st Cir.1993); LFC Lessors,

Inc. v. Pacific Sewer Maintenance, 739 F.2d 4, 6-7 (1st Cir.1984). Although we perceive no
 3

Unlike in Stewart, however, the federal statutory provisions governing transfer of venue

from one United States District Court to another, see 28 U.S.C. § 1404(a) (providing that district

court "may transfer any civil action to any other district or division where it might have been

brought") (emphasis added); 28 U.S.C. § 1406(a) ("The district court of a district in which is

filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest

of justice, transfer such case to any district or division in which it could have been brought.")

(emphasis added), do not apply in cases that involve a forum-selection clause that requires

litigation in another country. 

7

significant doctrinal error in that approach, we consider Rule 12(b)(3) a more appropriate vehicle

through which to assert the motion to dismiss. We find support for this conclusion in the Supreme

Court's decision in Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 2245, 101

L.Ed.2d 22 (1988), in which the Court held that 28 U.S.C. § 1404(a), which vests in the district court

discretion to transfer a civil action to "any other district or division where it might have been

brought," controls the request of a party in a diversity suit to give effect to a contractual

forum-selection clause by transferring the action. Although the Supreme Court did not decide the

precise question presented in the case before us, the Court's conclusion that the federal

transfer-of-venue statute governs district court decisions in enforcing forum-selection clauses

provides support for our view that motions to dismiss based upon forum-selection clauses are

cognizable as motions to dismiss for improper venue. See id. at 29-30, 108 S.Ct. at 2244 ("The

flexible and individualized analysis Congress prescribed in § 1404(a) thus encompasses

consideration of the parties' private expression of their venue preferences.") (emphasis added); see

also 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and

Procedure § 3803.1 (2d ed. 1986 & Supp. 1998) (discussing forum-selection clauses as "Contractual

Modification" of venue).3
 4

See Roby v. Corporation of Lloyd's, 996 F.2d 1353 (2d Cir.), cert. denied, 510 U.S. 945, 114

S.Ct. 385, 126 L.Ed.2d 333 (1993). 

 5

See Allen v. Lloyd's of London, 94 F.3d 923 (4th Cir.1996). 

8

 Although ordinarily we review "the dismissal of a lawsuit for improper venue under the

standard of abuse of discretion," Home Ins. Co. v. Thomas Indus., Inc., 896 F.2d 1352, 1355 (11th

Cir.1990), we conclude that there is good reason to treat district court decisions regarding the

enforceability of forum-selection and choice-of-law provisions in international agreements as

decisions of law reviewable de novo. Not only do such decisions at times require interpretation of

the provisions of a contract—determinations that we review de novo, see, e.g., Zaklama v. Mt. Sinai

Med. Center, 906 F.2d 650, 652 (11th Cir.1990)—but such decisions also, at least in the context of

international agreements, require a complex analysis of fundamental fairness and public policy, see

infra, section III—determinations that are quintessentially legal. We therefore hold that the

enforceability of forum-selection and choice-of-law provisions in international agreements are

questions of law that we review de novo.

A.

We note at the outset that although this circuit has not yet ruled on the validity of the Lloyd's

choice clauses at issue in this case, we do not write on a clean slate. Thus far, the Second,4

 Fourth,5
 6

See Haynsworth v. The Corporation, a/k/a Lloyd's of London, 121 F.3d 956 (5th Cir.1997). 

 7See Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir.1995) (upholding choice clauses as

basis for dismissing claims under Ohio securities laws). 

 8

See Bonny v. Society of Lloyd's, 3 F.3d 156 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114

S.Ct. 1057, 127 L.Ed.2d 378 (1994). 

 9

See Richards v. Lloyd's of London, 135 F.3d 1289, 1292 (9th Cir.1998). 

 10See Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied,

506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992). 

9

Fifth,6

 Sixth,7 Seventh,8 Ninth,9 and Tenth10 Circuits have addressed the enforceability of the precise

choice clauses that we confront today, and although the reasoning of those courts has not been

uniform, all seven courts of appeals have concluded that the clauses are valid and enforceable. See

generally D. Hall, Note, No Way Out: An Argument Against Permitting Parties to Opt Out of U.S.

Securities Laws in International Transactions, 97 Colum. L.Rev. 57, 68 (1997).

B.

 Appellants' first argument is that the choice clauses, which make United States law

inapplicable to disputes arising between them and Lloyd's, are unenforceable under the anti-waiver

provisions of the United States securities laws. The Securities Act of 1933 provides: "Any

condition, stipulation, or provision binding any person acquiring any security to waive compliance

with any provision of this subchapter or of the rules and regulations of the Commission shall be

void." 15 U.S.C. § 77n. The Securities Exchange Act of 1934 contains a similar provision. See 15

U.S.C. § 78cc(a) ("Any condition, stipulation, or provision binding any person to waive compliance

with any provision of this chapter or of any rule or regulation thereunder, or of any rule of an

exchange required thereby shall be void."). According to the Securities and Exchange Commission

("SEC"), which filed an amicus curiae brief, "These provisions are essential to the enforcement of
 11SEC Br. Amicus Curiae (hereinafter "SEC Br.") at 2. 

10

the securities laws in that they prevent persons from avoiding their obligations under those laws

through the simple expedient of requiring investors to waive their rights under those laws as a

condition to engaging in securities transactions."11

The district court rejected appellants' and the SEC's argument that the anti-waiver provisions

categorically render unenforceable the choice clauses in the Lipcons' contract. Instead, the district

court reviewed the clauses under the framework for evaluating choice provisions in international

agreements first announced in M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32

L.Ed.2d 513 (1972). In Bremen, an admiralty case that did not involve the securities laws, the Court

enforced a choice-of-forum clause that required litigation in the courts of London. Because "[w]e

cannot have trade and commerce in world markets and international waters exclusively on our terms,

governed by our laws, and resolved in our courts," id. at 9, 92 S.Ct. at 1913, the Court concluded

that forum-selection clauses in international agreements "are prima facie valid and should be

enforced unless enforcement is shown by the resisting party to be "unreasonable' under the

circumstances," id. at 10, 92 S.Ct. at 1913; see id. at 15, 92 S.Ct. at 1916 ("[I]n the light of

present-day commercial realities and expanding international trade we conclude that the forum

clause should control absent a strong showing that it should be set aside."). Although the contract

at issue in Bremen provided for a forum in which to litigate, as opposed to the substantive law that

would apply to, any dispute, the Court noted that the choice-of-forum clause likely would have the

effect of a choice-of-law clause:

[I]t is the general rule in English courts that the parties are assumed, absent contrary

indications, to have designated the forum with the view that it should apply its own law....
11

It is therefore reasonable to conclude that the forum choice clause was also an effort to

obtain certainty as to the applicable substantive law.

Id. at 14 n. 15, 92 S.Ct. at 1915 n. 15.

In giving content to Bremen 's "strong showing" standard for invalidating international

choice-of-forum clauses, courts have announced that those provisions will be found "unreasonable

under the circumstances," Bremen, 407 U.S. at 10, 92 S.Ct. at 1913 (internal quotations omitted),

and thus unenforceable only when: (1) their formation was induced by fraud or overreaching; (2)

the plaintiff effectively would be deprived of its day in court because of the inconvenience or

unfairness of the chosen forum; (3) the fundamental unfairness of the chosen law would deprive the

plaintiff of a remedy; or (4) enforcement of the provisions would contravene a strong public policy.

See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594-95, 111 S.Ct. 1522, 1528, 113 L.Ed.2d

622 (1991); Bremen, 407 U.S. at 15-18, 92 S.Ct. at 1916-17; Roby v. Corporation of Lloyd's, 996

F.2d 1353, 1363 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993).

Applying this test (hereinafter "the Bremen test"), the district court concluded that the choice clauses

in this case are enforceable.

Appellants and the SEC contend that the Bremen test is inapplicable when Congress has

spoken directly as to whether it is permissible to waive United States statutory remedies. They

argue that to apply the Bremen test—which requires courts to assess public policy, see Bremen, 407

U.S. at 15, 92 S.Ct. at 1916 ("A contractual choice-of-forum clause should be held unenforceable

if enforcement would contravene a strong public policy of the forum in which suit is brought,

whether declared by statute or judicial decision.")—is tantamount to treating "the anti-waiver

provisions [of the securities laws] as merely reflecting a Congressional direction to the courts to
 12SEC Br. at 14. 

 13SEC Br. at 14. 

12

decide whether "the public policies incorporated into' the securities laws would be undermined."12

This approach is incorrect, the SEC argues, because "[t]he anti-waiver provisions ... are not simply

an expression of public policy that favors the United States securities laws unless other comparable

laws are available. Rather, they are an express and unequivocal directive that the rights and

obligations under the securities laws cannot be waived."13 See also Richards v. Lloyd's of London,

135 F.3d 1289, 1297-98 (9th Cir.1998) (Thomas, J., dissenting).

 Although appellants' argument finds strong support in the plain language of the anti-waiver

provisions, which facially admit of no exceptions, precedent and policy considerations compel us

to conclude that Bremen 's framework for evaluating choice clauses in international agreements

governs this case. We turn first to an examination of Supreme Court precedent.

1.

In Scherk v. Alberto-Culver Company, 417 U.S. 506, 94 S.Ct. 2449, 41 L.Ed.2d 270 (1974),

"the Supreme Court explicitly relied on Bremen in a case involving a securities transaction."

Richards v. Lloyd's of London, 135 F.3d 1289, 1293 (9th Cir.1998). Scherk involved an

international transaction to sell a company, where that transaction was based upon a contract that

included arbitration and choice-of-law clauses that provided for the application of Illinois law by

an arbitrator in France. When the deal soured, one of the parties challenged the enforceability of

the arbitration provision. In enforcing the provisions, the Court relied in large part upon the nature

of international agreements:
13

[I]n the absence of the arbitration provision considerable uncertainty existed at the time of

the agreement, and still exists, concerning the law applicable to the resolution of disputes

arising out of the contract. Such uncertainty will almost inevitably exist with respect to any

contract touching two or more countries, each with its own substantive laws and

conflict-of-laws rules. A contractual provision specifying in advance the forum in which

disputes shall be litigated and the law to be applied is, therefore, an almost indispensable

precondition to achievement of the orderliness and predictability essential to any

international business transaction.

Scherk, 417 U.S. at 516, 94 S.Ct. at 2455; see id. at 516-17, 94 S.Ct. at 2456 ("A parochial refusal

by the courts of one country to enforce an international arbitration agreement would ... invite

unseemly and mutually destructive jockeying by the parties to secure tactical litigation

advantages.").

We recognize that Scherk differed from the case before us in that the choice clause before

the Court in Scherk provided, by designating Illinois law as the governing law, for the application

of United States securities law, see id. at 519 n. 13, 94 S.Ct. at 2457 n. 13 ("Under some

circumstances, the designation of arbitration in a certain place might also be viewed as implicitly

selecting the law of that place to apply to that transaction. In this case, however, "the laws of the

State of Illinois' were explicitly made applicable to the arbitration agreement."), and thus that the

Court in Scherk had no opportunity to decide if an international choice-of-law provision is

enforceable if it conflicts with the anti-waiver provisions of the United States securities laws.

Nevertheless, the Court's statement in Scherk that a choice-of-forum clause is "an almost

indispensable precondition to achievement of the orderliness and predictability essential to any

international business transaction," 417 U.S. at 516, 94 S.Ct. at 2455, combined with the Court's

observation that a forum-selection clause "might also be viewed as implicitly selecting the law of

that place to apply to that transaction," id. at 519 n. 13, 94 S.Ct. at 2457 n. 13; see also Bremen, 407

U.S. at 13 n. 15, 92 S.Ct. at 1915 n. 15 (noting that in light of English law, it is "reasonable to
 14We think it clear that the agreement in this case is "truly international," Scherk, 417 U.S. at

515, 94 S.Ct. at 2455, as that term was used in Scherk. In this case, the parties to the agreement

are from different countries, the negotiations leading up to the agreement took place in the

United States whereas the closing took place in England, and the subject matter of the

transaction concerned investment in an international insurance market. 

14

conclude that the forum clause was also an effort to obtain certainty as to the applicable substantive

law"), indicates that international agreements—even those that render United States securities law

inapplicable—are sui generis.14

Appellants nevertheless point our attention to a line of Supreme Court cases that they

contend indicate the Court's disapproval of choice provisions that waive the substantive protections

of United States law. Supreme Court precedent, however, does not resolve the precise issue

presented in this case: namely, whether an international agreement may, through the interaction of

choice-of-forum and choice-of-law clauses, prospectively waive the protections of the United States

securities laws.

Appellants claim that the Court in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473

U.S. 614, 105 S.Ct. 3346, 87 L.Ed.2d 444 (1985), indicated its unwillingness to permit choice

provisions to eliminate United States statutory remedies. In Mitsubishi, the Court held that the

Sherman Act did not render unenforceable a forum-selection provision in an international

agreement, because "[b]y agreeing to arbitrate a statutory claim, a party does not forgo the

substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather

than a judicial, forum." Id. at 628, 105 S.Ct. at 3354 (emphasis added); see id. at 637, 105 S.Ct. at

3359 ("[S]o long as the prospective litigant effectively may vindicate its statutory cause of action

in the arbitral forum, the statute will continue to serve both its remedial and deterrent function.").

Appellants rely in particular on the Court's statement that "in the event the choice-of-forum and
15

choice-of-law clauses operated in tandem as a prospective waiver of a party's right to pursue the

statutory remedy for antitrust violations, we would have little hesitation in condemning the

agreement as against public policy." Id. at 637 n. 19, 105 S.Ct. at 3359 n. 19. In Mitsubishi,

however, the Court was not confronted with the scope of the anti-waiver provisions of the United

States securities laws. See id. at 616, 105 S.Ct. at 3348 ("The principal question presented by these

cases is the arbitrability, pursuant to the Federal Arbitration Act and the Convention on the

Recognition and Enforcement of Foreign Arbitral Awards of claims arising under the Sherman Act

and encompassed within a valid arbitration clause in an agreement embodying an international

commercial transaction.") (internal citations omitted). More important, the Court in Mitsubishi

recognized and affirmed Scherk 's policy of treating international commercial agreements as sui

generis. See Mitsubishi, 473 U.S. at 629, 105 S.Ct. at 3355 ("As in Scherk ..., we conclude that

concerns of international comity, respect for the capacities of foreign and transnational tribunals,

and sensitivity to the need of the international commercial system for predictability in the resolution

of disputes require that we enforce the parties' agreement, even assuming that a contrary result

would be forthcoming in the domestic context.").

Appellants rely as well upon Shearson/American Express, Inc., v. McMahon, 482 U.S. 220,

107 S.Ct. 2332, 96 L.Ed.2d 185 (1987), in which the Court held that the anti-waiver provision of

the Securities Exchange Act of 1934 did not render an arbitration agreement unenforceable, because

"[b]y its terms, [section 78cc(a) ] only prohibits waiver of the substantive obligations imposed by

the Exchange Act." Id. at 288, 107 S.Ct. at 2338 (emphasis added); see also Rodriguez de Quijas

v. Shearson/American Express, Inc., 490 U.S. 477, 485-86, 109 S.Ct. 1917, 1922, 104 L.Ed.2d 526

(1989) (holding that arbitration clause was not invalid under anti-waiver provisions of Securities
16

Act; stating that "[o]ur conclusion is reinforced by our assessment that resort to the arbitration

process does not inherently undermine any of the substantive rights afforded to petitioners under the

Securities Act") (emphasis added). McMahon, however, involved the enforceability of an arbitration

clause in a domestic securities agreement. Although appellants contend that McMahon makes clear

the Court's categorical unwillingness to permit waiver of the substantive remedies of the securities

laws, we do not think that McMahon controls the case before us. As stated above, the Court

consistently has treated "truly international agreements," Scherk, 417 U.S. at 515, 94 S.Ct. at 2455,

differently than domestic transactions, which indisputably are subject to the anti-waiver provisions

of the securities laws, see McMahon, 482 U.S. at 230, 107 S.Ct. at 2339.

Supreme Court precedent thus suggests that the enforceability of choice clauses in

international agreements should be determined by a framework designed specifically for the

international commercial context. Because the Supreme Court has not ruled on whether the

anti-waiver provisions of the United States securities laws categorically render unenforceable

choice-of-law clauses in international agreements, however, we turn to policy considerations.

2.

Underlying the Supreme Court's conclusions in Bremen and Scherk were two main concerns:

(1) ensuring "the orderliness and predictability [that are] essential to any international business

transaction," Scherk, 417 U.S. at 516, 94 S.Ct. at 2455; see Bremen, 407 U.S. at 15, 92 S.Ct. at 1916

(stating importance of "present-day commercial realities and expanding international trade"), and

(2) furthering international comity, see Scherk, 417 U.S. at 516, 94 S.Ct. at 2456 (condemning

"parochial refusal[s] by the courts of one country to enforce ... international agreement[s]");

Bremen, 407 U.S. at 9, 92 S.Ct. at 1913 ("We cannot have trade and commerce in world markets and
17

international waters exclusively on our terms, governed by our laws, and resolved in our courts.").

See also Mitsubishi, 473 U.S. at 629, 105 S.Ct. at 3355 (relying on "concerns of international

comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need

of the international commercial system for predictability in the resolution of disputes....").

To conclude that the anti-waiver provisions of the United States securities laws categorically

preclude sophisticated parties from entering into international agreements—agreements that by

definition involve parties and subject matter that would be subject to the laws of more than one

nation if the parties did not contract ex ante for provisions governing choice of forum and choice

of law—would undermine both policies upon which Bremen and Scherk were based. As the Ninth

Circuit has observed, appellants' assertion that the statutory anti-waiver provisions categorically

invalidate the choice clauses in the agreement with Lloyd's would, if correct, expand the reach of

United States securities law to "any and all such transactions, no matter how remote from the United

States." Richards v. Lloyd's of London, 135 F.3d 1289, 1293 (9th Cir.1998); see also Allen v.

Lloyd's of London, 94 F.3d 923, 929 (4th Cir.1996) ("[W]e do not believe that Congress intended

that the disclosure requirements of the United States securities law be exported and imposed as

governing principles on markets conducted entirely in other countries simply because membership

in such markets is solicited in the United States.").

 We also find in the content of the Bremen test itself support for our conclusion that the

anti-waiver provisions of the United States securities laws do not preclude application of the Bremen

test to determine the validity of the choice clauses. A court will invalidate a choice clause in an

international agreement when "enforcement would contravene a strong public policy of the forum

in which the suit is brought...." Bremen, 407 U.S. at 15, 92 S.Ct. at 1916; see infra, section III.C;
18

Richards, 135 F.3d at 1293; Roby v. Corporation of Lloyd's, 996 F.2d 1353, 1363 (2d Cir.1993).

Thus, "[i]n Bremen itself, the Supreme Court contemplated that a forum selection clause may

conflict with relevant statutes." Richards, 135 F.3d at 1293.

Although we do not deny that there is some force to appellants' argument that the anti-waiver

provisions preclude application of the Bremen test, we believe that to invalidate the choice

provisions for that reason in effect would be to conclude that "the reach of the United States

securities laws [is] unbounded," Richards, 135 F.3d at 1293, and to ignore the Supreme Court's

caveat that "[w]e cannot have trade and commerce in world markets and international waters

exclusively on our terms, governed by our laws, and resolved in our courts," Bremen, 407 U.S. at

9, 92 S.Ct. at 1913. Because we are unwilling so to conclude, we hold that the anti-waiver

provisions of the United States securities laws do not categorically render unenforceable the Lloyd's

choice clauses, and we join the seven other courts of appeals that have addressed the issue in holding

that the Bremen test controls our resolution of the enforceability of the Lloyd's choice clauses. See

Richards, 135 F.3d at 1292-94; Haynsworth v. The Corporation, a/k/a Lloyd's of London, 121 F.3d

956, 962 (5th Cir.1997); Allen v. Lloyd's of London, 94 F.3d 923, 928 (4th Cir.1996); Shell v. R.W.

Sturge, Ltd., 55 F.3d 1227, 1229-30 (6th Cir.1995); Bonny v. Society of Lloyd's, 3 F.3d 156, 159

(7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d 378 (1994); Roby v.

Corporation of Lloyd's, 996 F.2d 1353, 1362-63 (2d Cir.), cert. denied, 510 U.S. 945, 114 S.Ct. 385,

126 L.Ed.2d 333 (1993); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 957 (10th

Cir.), cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992).

III.
19

Appellants contend on appeal that even if the anti-waiver provisions of the United States

securities laws do not per se invalidate the choice clauses, the district court erred in concluding that

the Bremen test was satisfied and that the choice clauses in this case are enforceable. We disagree

and conclude that the district court correctly applied the Bremen test.

 As noted supra, section II.B, forum-selection and choice-of-law clauses "are presumptively

valid where the underlying transaction is fundamentally international in character." Roby v.

Corporation of Lloyd's, 996 F.2d 1353, 1362 (2d Cir.) (citing Bremen, 407 U.S. at 15, 92 S Ct. at

1916), cert. denied, 510 U.S. 945, 114 S.Ct. 385, 126 L.Ed.2d 333 (1993). "This presumption of

validity may be overcome, however, by a clear showing that the clauses are "unreasonable under the

circumstances.' " Roby, 996 F.2d at 1363 (quoting Bremen, 407 U.S. at 10, 92 S.Ct. at 1913 (internal

quotation omitted)). Choice clauses will be found "unreasonable under the circumstances," Bremen,

407 U.S. at 10, 92 S.Ct. at 1913 (internal quotations omitted), and thus unenforceable only when:

(1) their formation was induced by fraud or overreaching; (2) the plaintiff effectively would be

deprived of its day in court because of the inconvenience or unfairness of the chosen forum; (3) the

fundamental unfairness of the chosen law would deprive the plaintiff of a remedy; or (4)

enforcement of such provisions would contravene a strong public policy. See Carnival Cruise Lines,

Inc. v. Shute, 499 U.S. 585, 594-95, 111 S.Ct. 1522, 1528, 113 L.Ed.2d 622 (1991); Bremen, 407

U.S. at 15-18, 92 S.Ct. at 1916-17; Roby, 996 F.2d at 1363. Appellants contend that the choice

clauses in this case are unreasonable under the first, third, and fourth Bremen factors.

A.

Appellants first contend that the choice clauses were the product of fraud and overreaching.

The only specific allegation in the complaint of fraud is that Lloyd's "tricked and fraudulently
 15Second Am. Compl. at 3-4, ¶ 4. 

20

induced [the Lipcons] to sign on or about Nov. 5, 1986 a forum selection clause" by making

"fraudulent statements" that included the following:

The purpose, in both instances, is to bring the agreements into line with ... the new Lloyd's

legislation.

 * * * * * *

The new Premiums Trust Deed will incorporate some new provisions which are mainly of

a technical nature, and will not affect you greatly on a day to day basis.15

Appellants contend that allegation of these statements is sufficient to invalidate the choice clauses.

In Scherk, the Court stated:

In The Bremen we noted that forum-selection clauses "should be given full effect" when "a

freely negotiated private international agreement [is] unaffected by fraud...." This

qualification does not mean that any time a dispute arising out of a transaction is based upon

an allegation of fraud, as in this case, the clause is unenforceable. Rather, it means that an

arbitration or forum-selection clause in a contract is not enforceable if the inclusion of that

clause in the contract was the product of fraud or coercion.

417 U.S. at 519 n. 14, 94 S.Ct. at 2457 n. 14 (emphasis in original) (internal citations omitted). By

requiring the plaintiff specifically to allege that the choice clause itself was included in the contract

due to fraud in order to succeed in a claim that the choice clause is unenforceable, courts may ensure

that more general claims of fraud will be litigated in the chosen forum, in accordance with the

contractual expectations of the parties.

 We conclude that the allegations in the Lipcons' complaint are insufficient to satisfy Scherk

's rigorous standard for pleading fraud. The first alleged statement by Lloyd's (or, presumably, by

an agent of Lloyd's)—that "[t]he purpose, in both instances, is to bring the agreements into line with
 16It is not clear what the phrase "in both instances" refers to, but we assume arguendo that the

phrase refers at least in part to the General Undertaking, as well as to the choice clauses

specifically. 

 17R:1-8, Ex. B. 

 18R:1-8, Ex. C. 

21

... the new Lloyd's legislation"16—is in no way fraudulent or misleading. Indeed, the General

Undertaking, which the Lipcons signed on the day that Lloyd's allegedly made this statement,

specifically provides that "[t]hroughout the period of his membership of Lloyd's the Member shall

comply with the provisions of Lloyd's acts 1871-1982[and] any subordinate legislation made or to

be made thereunder...."17 An allegation that the defendant made a statement that accurately brings

to the attention of the plaintiff the substantive provisions of the contract is insufficient to support

a claim that the choice clauses were included in the contract as a result of fraud.

 The second allegedly fraudulent statement—that "[t]he new Premiums Trust Deed will

incorporate some new provisions which are mainly of a technical nature, and will not affect you

greatly on a day to day basis"—likewise fails to satisfy Scherk 's standard. Appellants contend that

the insertion of the choice clauses in the General Undertaking was a change of more than simply "a

technical nature" and that the statement thus was misleading and fraudulent. According to the

original agreement, which was signed in October 1984 by Mitchell Lipcon and Lloyd's, the

Premiums Trust Deed governs the disposition of "[a]ll premiums and other moneys collected on

behalf of the Name" and provides that all such funds "shall be held upon the trusts declared in the

Trust Deed."18 An allegation that the Lipcons were induced—even fraudulently induced—to make

changes in the Premiums Trust Deed is insufficient to support a claim that the choice clauses, which

are contained in a separate agreement (the General Undertaking), were induced by fraud. As stated
22

above, this court will invalidate a choice clause only if "the inclusion of that clause in the contract

was the product of fraud or coercion." Scherk, 417 U.S. at 519 n. 14, 94 S.Ct. at 2457 n. 14

(emphasis in original). Appellants have not satisfied this standard.

B.

 Appellants also contend that the remedies provided by English law are inadequate. They

argue that no cause of action exists under the laws of England analogous to an action under Section

12(1) of the Securities Act of 1933 for securities registration violations. See Bonny v. Society of

Lloyd's, 3 F.3d 156, 162 (7th Cir.1993), cert. denied, 510 U.S. 1113, 114 S.Ct. 1057, 127 L.Ed.2d

378 (1994). Appellants also contend that their remedies under English law for misrepresentations

made in connection with the sale of a security are inferior to those available under Section 12(2) of

the Securities Act of 1933 because Section 14 of the Lloyd's Act of 1982 immunizes Lloyd's from

any claims under the English Misrepresentations Act, absent a showing of bad faith. Finally,

appellants assert that Lloyd's is immune from liability under England's Financial Services Act of

1986, which provides private remedies for fraud in connection with securities transactions, and that

unlike United States securities law, see 15 U.S.C. § 77o, English law does not recognize controlling

person liability.

 We have little doubt that "the United States securities laws would provide [appellants] with

a greater variety of defendants and a greater chance of success due to lighter scienter and causation

requirements...." Roby, 996 F.2d at 1366. We will not invalidate choice clauses, however, simply

because the remedies available in the contractually chosen forum are less favorable than those

available in the courts of the United States. Instead, we will declare unenforceable choice clauses

only when the remedies available in the chosen forum are so inadequate that enforcement would be
23

fundamentally unfair. See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522,

1528, 113 L.Ed.2d 622 (1991); Roby, 996 F.2d at 1360-61 ("In the absence of other considerations,

the agreement to submit to arbitration or the jurisdiction of the English courts must be enforced even

if that agreement tacitly includes the forfeiture of some claims that could have been brought in a

different forum."); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953, 958 (10th Cir.),

cert. denied, 506 U.S. 1021, 113 S.Ct. 658, 121 L.Ed.2d 584 (1992) ("The fact that an international

transaction may be subject to laws and remedies different and less favorable than those of the United

States is not a valid basis to deny enforcement, provided that the law of the chosen forum is not

inherently unfair.").

Like the seven other courts of appeals that have addressed this issue, we hold that English

law provides remedies adequate to address the complaints of the aggrieved Names. Although

Section 14 of the Lloyd's Act of 1982 exempts Lloyd's, its officers, and its employees from liability

under the English Misrepresentations Act, no other entity within Lloyd's—such as the Members'

Agents and Managing Agents, both of whom owe a fiduciary duty to the Names—is exempt. See

Roby, 996 F.2d at 1365; Richards, 135 F.3d at 1296 ("The Names have recourse against both the

Member and Managing Agents for fraud, breach of fiduciary duty, or negligent misrepresentation.")

(citing Arubuthnott v. Fagan and Feltrim Underwriting Agencies, Ltd., 3 Re LR 145 (H.L.1994));

Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir.1995) (noting that "England's highest appellate

court recently upheld a lower court's ruling that Members' Agents can be contractually liable for

negligent underwriting by the Managing Agents who run the insurance syndicates at Lloyd's")

(citing Deeny v. Gooda Walker Ltd., slip op. (Q.B. Div'l Ct. Apr. 12, 1994), appeal dismissed, slip

op. (H.L. July 25, 1994)). In addition, even Lloyd's itself is not immune from liability if appellants
24

can make a credible showing of bad faith. We therefore conclude that the contractually chosen law

is not fundamentally unfair and thus does not provide a basis upon which to deny enforcement of

the choice clauses.

C.

 Appellants argue that enforcement of the choice clauses would contravene a strong public

policy, namely the policy expressed in the anti-waiver provisions of the United States securities laws

that substantive remedies be available for securities violations. We already have rejected appellants'

argument that the anti-waiver provisions categorically render invalid the choice clauses. See supra,

section II.B. We now must decide whether enforcement of the choice clauses, which would require

appellants to litigate in England under English remedies, would undermine the public policies more

generally expressed in the United States securities laws. In so doing, we are mindful that at least

one commentator has criticized the decisions of some other courts of appeals on the ground that the

public policy inquiry "necessitates an exploration of foreign legal regimes about which U.S. courts

are likely to know little or nothing" and requires courts to "determine which of two

incommensurables is greater." See D. Hall, Note, No Way Out: An Argument Against Permitting

Parties to Opt Out of U.S. Securities Laws in International Transactions, 97 Colum. L.Rev. 57, 83

(1997). Nevertheless, we cannot avoid our duty to ensure, by determining whether enforcement of

the choice clauses would contravene public policy, that enforcement of the choice clauses is not

"unreasonable under the circumstances." Bremen, 407 U.S. at 10, 92 S.Ct. at 1913 (internal

quotation omitted).

Although we share the concern of the Second and Seventh Circuits that "the contract clauses

may operate "in tandem' as a prospective waiver of the statutory remedies for securities violations,"
 19SEC Br. at 24. 

25

Roby, 996 F.2d at 1364 (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614,

637 n. 19, 105 S.Ct. 3346, 3359 n. 19, 87 L.Ed.2d 444 (1985)); accord Bonny, 3 F.3d at 160-61, we

agree with those courts and the other five circuits that have addressed the issue that enforcement of

the Lloyd's choice clauses does not contravene public policy. We reach this conclusion in part for

the reasons stated by the other courts of appeals and in part for the reasons stated in section

III.B—that English remedies are adequate to provide redress for the alleged actions that gave rise

to appellants' United States securities claims.

In Roby and Bonny, the Second and Seventh Circuits, respectively, concluded that "[t]he

framers of the securities laws were concerned principally with reversing the common law rule

favoring "caveat emptor,' " Roby, 996 F.2d at 1364 (citing SEC v. Arthur Young & Co., 584 F.2d

1018, 1025 n. 51 (D.C.Cir.1978)), and accordingly that the United States Securities laws embody

the policies of "insuring full and fair disclosure by issuers and deterring the exploitation of United

States investors," Bonny, 3 F.3d at 161. Appellants and the SEC do not disagree that the securities

laws were intended to ensure disclosure and deter exploitation, but they argue that the Second and

Seventh Circuits, as well as the district court in this case, ignored the compensatory function of

private actions under the securities laws.

We agree with the SEC that private actions under the securities laws "serve as an important

means of providing recompense to investors who have been harmed by wrongdoers."19 We are more

confident than the SEC, however, that the compensatory policy underlying United States securities

law will be vindicated by litigation in English courts under English law; this is especially so given

our conclusion that English law provides adequate remedies to appellants in this case. See supra,
 20Our conclusion is not affected by appellants' pleading of a cause of action under RICO. See

Richards, 135 F.3d at 1296 ("The addition of RICO claims does not alter our conclusion."); 

Roby, 996 F.2d at 1366 ("Although the remedies [in England] and disincentives [to deter English

issuers from exploiting American investors] might be magnified by application of RICO, we

cannot say that application of English law would subvert the policies underlying that statute."). 

26

section III.B. Because we conclude that "the available remedies and potential damage recoveries

suffice to deter deception of American investors[,] to induce the disclosure of material information

to investors," Bonny, 3 F.3d at 162, and to provide redress to aggrieved Names, we hold that the

choice clauses satisfy the public-policy prong of the Bremen test. We thus conclude that the district

court did not err in finding that the choice clauses are enforceable.20

IV.

 Finally, appellants argue that the district court erred in concluding that Charles and Barbara

Lipcon, who signed letters of credit to provide collateral for their spouses but did not sign the

General Undertaking, are so closely related to the dispute that they are bound by the choice clauses.

We hold that the district court did not err and that the spouses must litigate their claims in English

courts under English law, in accordance with the choice clauses.

 "In order to bind a non-party to a forum selection clause, the party must be "closely related'

to the dispute such that it becomes "foreseeable' that it will be bound." Hugel v. Corporation of

Lloyd's, 999 F.2d 206, 209 (7th Cir.1993) (quoting Manetti-Farrow, Inc. v. Gucci Am., Inc., 858

F.2d 509, 514 n. 5 (9th Cir.1988)); see also Manetti-Farrow, 858 F.2d at 514 n. 5 ("[A] range of

transaction participants, parties and non-parties, should benefit from and be subject to forum

selection clauses."). In Hugel, which involved a suit brought by a Name against Lloyd's, the Seventh

Circuit affirmed the district court's finding that two non-signatory corporations were bound by the

Name's assent to the Lloyd's choice clauses. See 999 F.2d at 209-10. The district court based its
27

finding upon the fact that the Name owned 99% of one corporation, which owned 100% of the other.

See id. The court of appeals noted that "[w]hile it may be true that third-party beneficiaries to a

contract would, by definition, satisfy the "closely related' and "foreseeability' requirements, a

third-party beneficiary status is not required." Id. at 209-10 n. 7.; cf. Dayhoff Inc. v. H.J. Heinz Co.,

86 F.3d 1287, 1297 (3d Cir.1996) (holding that a sister corporation that did not sign an arbitration

agreement could not be bound by the agreement, but noting that if the "corporation's interests were

directly related to, if not predicated upon, the [signatory's] conduct," the corporation would have

been subject to agreement).

Because, as the district court found, the interests of the spouses in this dispute are completely

derivative of those of the Name plaintiffs—and thus "directly related to, if not predicated upon" the

interests of the Name plaintiffs, see Dayhoff, 86 F.3d at 1297—we affirm the district court's

conclusion that the spouses are bound by the choice clauses.

V.

Our conclusion that the Lipcons are bound by the choice clauses does not in any way reflect

our view of the merits of their substantive claims. We hold simply that the Lipcons must "honor

[their] bargains," Mitsubishi, 473 U.S. at 640, 105 S.Ct. at 3361 (quoting Alberto-Culver Co. v.

Scherk, 484 F.2d 611, 620 (7th Cir.1973) (Stevens, J., dissenting), rev'd, 417 U.S. 506, 94 S.Ct.

2449, 41 L.Ed.2d 270 (1974)), and attempt to vindicate their claims in the English courts under

English law.

The judgment of the district court is AFFIRMED.