Opinion ID: 662435
Heading Depth: 2
Heading Rank: 3

Heading: The Texas Eastern Case

Text: 36 Texas Eastern Transmission Corp. v. Fidelity & Casualty, No. 88-5707, 13 the third action before the district court, was filed on March 21, 1988, in Harris County, Texas, against all insurers and removed to the United States District Court for the Southern District of Texas by ICI, pursuant to 28 U.S.C. Sec. 1441(d). 14 It was then transferred to the Eastern District of Pennsylvania by order of the Southern District Court dated July 7, 1988. Texas Eastern contends that a service of suit clause appearing in policies subscribed by ICI in favor of Texas Eastern constitutes a waiver of ICI's right of removal under 28 U.S.C. Sec. 1441(d). 15 Texas Eastern relies on our prior holding in Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207 (3d Cir.1991), in which we reviewed a similar contractual provision in the context of diversity jurisdiction. 16 37 Noting that Congress had made clear its intent that foreign states and instrumentalities of foreign states shall have the right to have civil litigation decided in federal court under the FSIA, the district court concluded that a forum selection clause, by which a defendant foreign state purports to accede to jurisdiction in either federal or state court, does not preclude removal to federal court. (Citing Proyecfin de Venezuela, S.A. v. Banco Industrial de Venezuela, S.A., 760 F.2d 390 (2d Cir.1985) (forum selection clause which places jurisdiction in either federal or state court is not waiver of foreign sovereign's Sec. 1441(d) right to remove)). Assuming for purposes of argument that the right to remove could be contractually waived, the district court held that, at the very least, such a waiver must be express and unambiguous in the context of the FSIA. Not finding this, the district court denied the motion of Texas Eastern to remand the action to the state court of Texas. 38 In examining the nature of the service of suit clause in question and its efficacy in depriving ICI of its Sec. 1441(d) right to remove in Texas Eastern, we are again obliged to take cognizance of the policy imperatives of the FSIA. We find those imperatives absent in Foster, the case upon which Texas Eastern relies. It is true that in Foster we construed a forum selection clause in a reinsurance agreement as a waiver of the reinsurer's right to remove. But in Foster, a diversity of citizenship breach of contract case, we also explicitly noted that the FSIA poses unique considerations that might warrant a different conclusion. 933 F.2d at 1217-18 n. 15. In an extensive footnote, we contrasted the diversity context of Foster with the FSIA removal context of In re Delta American Re Ins. Co., 900 F.2d 890 (6th Cir.), cert. denied, 498 U.S. 890, 111 S.Ct. 233, 112 L.Ed.2d 193 (1990), which held that contractual waiver of the Sec. 1441(d) right to remove, if it is to be recognized, must be clear and unequivocal. Id. at 894. Although waiver of a Sec. 1441(d) right of removal was not an issue in Foster, we acknowledged In re Delta's reliance on the peculiar purposes of the FSIA, which are best served by a uniform body of law developed in federal court, and the purpose of Sec. 1441(d) in particular, which is to give the defendant foreign state the unqualified right to remove any civil action brought against it in state court. See also Teledyne, Inc. v. Kone Corp., 892 F.2d 1404, 1409 (9th Cir.1989) (generally applicable rules of removal do not apply to the uniquely expansive Sec. 1441(d)). 39 We concur with our sister circuits which give an expansive interpretation of the nature of the right to remove under Sec. 1441(d). Given Congress' unusually strong preference for adjudication of claims against foreign states in the federal court system, we hold that it would contravene strong public policy to permit a less than absolutely unequivocal contractual provision to divest a federal district court of FSIA subject matter jurisdiction. While the FSIA does not confer exclusive jurisdiction in the federal courts and does not explicitly limit a foreign state's ability to waive its right to remove, the district court's power to remand based on breach of a contractual forum selection clause is doubtful where, as here, the clause may be construed as nothing more than a waiver of the right to contest in personam jurisdiction. See Proyecfin, 760 F.2d at 397. Thus, our holding in Foster is inapplicable in the FSIA context. A remand in this case would be unreasonable, and hence the purported contractual waiver is not enforceable. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 1916, 32 L.Ed.2d 513 (1972) (forum selection clause is binding unless enforcement is unreasonable, unfair or unjust). 40 Moreover, we note that ICI was not a foreign state within the meaning of FSIA at the time ICI subscribed the policies at issue. Thus, ICI at the time it entered into the contracts did not have an absolute right of removal under Sec. 1441(d) to waive, and did not conduct its contract negotiations with the effect of the forum selection clause on a Sec. 1441(d) right of removal in mind. The purported waiver was negotiated strictly between private parties. The foreign sovereign was not a party to the original contract and did not negotiate the original terms. Inasmuch as ordinary principles of contract interpretation apply here, the fact that the forum selection clause was not the subject of negotiations between Texas Eastern and the foreign state militates against a finding of waiver. Under these circumstances, the service of suit clause does not abrogate ICI's absolute right to remove under Sec. 1441(d). The structure and purpose of the FSIA, as well as ordinary principles of contract interpretation, support the district court's exercise of subject matter jurisdiction and its denial of Texas Eastern's motion for remand.