Opinion ID: 3023556
Heading Depth: 1
Heading Rank: 1

Heading: f actual b ackground & p rocedural h istory

Text: In 2003, Sinochem, a Chinese company, contracted with Triorient Trading Inc. (“Triorient”), an American company that is not a party to this action, for the purchase of a large quantity of steel coils. The coils were required to be loaded for shipment to China by April 30, 2003. Pursuant to the contract, Sinochem opened a letter of credit with its bank in China to provide security to Triorient for the purchase price of the coils. To trigger payment under the letter of credit, Triorient was required to submit a valid bill of lading stating that the coils had been loaded on or before April 30, 2003. Sinochem’s contract with Triorient specified that any dispute arising under it would be arbitrated under Chinese law. Triorient sub-chartered a vessel (the M/V HANDY ROSELAND; hereafter the “Vessel”) owned by MISC, a Malaysian company, to transport the steel coils to China.1 1 The Vessel was chartered from MISC to Progress Bulk Carriers, which then sub-chartered it to Pan Ocean Shipping 3 Triorient then hired Novolog Bucks County, Inc. (“Novolog”), an American company also not a party to this action, to load the coils onto the Vessel at the Port of Philadelphia. A bill of lading dated April 30, 2003, was issued, acknowledging that the steel coils had been loaded, and the Vessel sailed for China.2 The bill of lading listed Triorient as the shipper, Sinochem as the receiver, and Pan Ocean as the carrier. On the back of the bill of lading were “Conditions of Carriage” specifying that the Hague Rules applied to it. This document also incorporated by reference a charter party—a contract between MISC and Pan Ocean regarding the Vessel.3 The Co., Ltd. (“Pan Ocean”), which in turn sub-chartered it to Triorient. 2 According to MISC’s amended complaint, the Vessel docked at the Port of Philadelphia on April 25, 2003, and the loading of the coils began that same day. MISC asserts that the loading of the coils was complete on April 30, 2003, that loading of coils for a different shipper continued on May 1, 2003, and that the Vessel set sail on May 2, 2003. 3 Black’s provides a fuller definition. A charter party is “[a] contract by which a ship, or a principal part of it, is leased by the owner, esp. to a merchant for the conveyance of goods on a predetermined voyage to one or more places or for a specified period of time; a special contract between the shipowner and the charterer, esp. for the carriage of goods at sea.” Black’s Law 4 charter party here is not part of the record because Pan Ocean would not disclose its terms. A letter from Pan Ocean’s counsel indicated that the charter party chose “New York law with US arbitration” to apply to disputes under it. An opinion of the Chinese court in the related proceeding,4 however, stated that English law governed disputes under the charter party. On May 15, 2003, Sinochem filed an action in the Eastern District of Pennsylvania, in which it sought discovery, pursuant to 28 U.S.C. § 1782,5 regarding various aspects of the Vessel’s loading, the charter party, and the bill of lading for use in an “imminent foreign proceeding.” The District Court granted this limited discovery. On June 8, 2003, Sinochem petitioned the Guangzhou Admiralty Court in China (the “Chinese Admiralty Court”) for preservation of a maritime claim against MISC and for the arrest of the Vessel when it arrived in China, claiming that MISC had Dictionary 251 (Bryan A. Garner ed., 8th ed. 2004). 4 The related Chinese proceeding, brought by Sinochem in the Guangzhou Admiralty Court, is discussed below. 5 The statute provides, in pertinent part, that “[t]he district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal . . . .” 28 U.S.C. § 1782(a). 5 fraudulently backdated the bill of lading to April 30, 2003. The Chinese Admiralty Court ordered the ship arrested that same day. The arrest of the Vessel was then carried out at the Huangpu Port in China. MISC posted security ($9,000,000), and the Vessel was released. MISC filed the suit before us in the Eastern District of Pennsylvania on June 23, 2003, alleging that, when Sinochem petitioned the Chinese Admiralty Court for the Vessel’s arrest, it negligently misrepresented “the [V]essel’s fitness and suitability to load its cargo.” MISC further alleged that: (1) “[w]ith a minimal amount of investigation, Sinochem knew or otherwise should have known whether its cargo of steel had been loaded aboard the [V]essel on or by April 30, 2003”; (2) “Sinochem knew or should have known that other cargo interests and charterers would reasonably and justifiably rely on Sinochem’s representation(s) that the vessel had not loaded the cargo as required”; and (3) MISC had sustained damages “[d]ue to the fraudulent representations made by Sinochem and the resulting delay to the [Vessel] in the People’s Republic of China caused by said representations . . . .” On July 2, 2003, Sinochem filed a complaint with the Chinese Admiralty Court alleging that it had suffered damage due to MISC’s alleged backdating of the bill of lading (which had triggered payment by Sinochem to Triorient under the letter of credit’s terms). Specifically, Sinochem alleged that May 1, 2003, should have been the loading date on the bill of lading. It 6 asserted that the April 30, 2003 loading date allowed Triorient to negotiate successfully its payment and made it “de facto impossible for [it] to stop payment and refuse acceptance of the goods.” MISC moved to dismiss the Chinese Admiralty Court action on jurisdictional grounds. That Court denied MISC’s motion, and the Guangdong Higher People’s Court (the “Chinese High Court”) affirmed,6 concluding that the Chinese Admiralty Court had jurisdiction. The Chinese High Court rejected MISC’s argument that the choice-of-law provisions of the bill of lading and the charter party controlled the case and that jurisdiction therefore properly rested with the London Maritime Arbitration Commission.7 In rejecting MISC’s contention that the Chinese Admiralty Court should not have exercised jurisdiction because MISC filed its U.S. action before Sinochem filed its Chinese action, the Chinese High Court determined as follows: “Given that the People’s Republic of China and the U.S. are different sovereignties with different jurisdictions, whether [MISC] has 6 The record suggests that the decision of the Chinese High Court cannot be appealed. 7 As noted above, there is some confusion in the record whether the charter party called for the application of American or English law to disputes that arose under it. 7 taken actions at any U.S. court in respect of this case will have no effect on the exercise by a Chinese court of its competent jurisdiction over said case.” While these events were occurring in the Chinese courts, proceedings continued in MISC’s action in the Eastern District of Pennsylvania. Sinochem filed a motion to dismiss MISC’s complaint for lack of subject matter and personal jurisdiction, for forum non conveniens, and “for failure to observe the rules of [international] comity.” The District Court granted Sinochem’s motion to dismiss and later denied MISC’s motion for reconsideration. The District Court determined that it had subject matter jurisdiction over MISC’s action pursuant to 28 U.S.C. § 1333 (admiralty and maritime jurisdiction) because the alleged tort—which the District Court identified as the seizure of the Vessel at a port in China—occurred on navigable waters and because the incident had a sufficient connection to maritime activity. As to personal jurisdiction, the Court concluded that it did not have specific personal jurisdiction over Sinochem under the Pennsylvania long-arm statute. But it did state that, “provided limited discovery, [MISC] might be able to identify sufficient national contacts to establish personal jurisdiction over [Sinochem] through the federal long-arm statute.” The Court declined to order such discovery or rule on this issue 8 because it concluded that dismissal was appropriate on the basis of forum non conveniens.8 In dismissing on forum non conveniens grounds, the District Court noted, in the absence of any argument to the contrary by MISC, that an adequate alternative forum for deciding MISC’s negligent misrepresentation claim existed in the Chinese Admiralty Court. The District Court then reasoned that the “private interest” factors relevant to its forum non conveniens determination (which include, inter alia, ease of 8 The District Court stated that [MISC]’s allegations with respect to other [Sinochem] enterprises in the country, as well as the undisputed facts averred with respect to . . . how the contract was carried out, render [MISC]’s claim [that the Court had personal jurisdiction over Sinochem] far from frivolous. Thus, we would refrain from ruling on whether the federal long-arm statute, Rule 4(k)(2), permits personal jurisdiction over [Sinochem] until after the parties had taken limited jurisdictional discovery. However, as the ensuing analysis shows, this discovery will not be necessary because we will dismiss this matter for forum non conveniens. Malaysia Int’l Shipping Corp. Berhad v. Sinochem Int’l Co. Ltd., Civ. A. No. 03-3771, mem. op. at 17 (E.D. Pa. Feb. 27, 2004). 9 access to sources of proof and availability of compulsory process to obtain the attendance of unwilling witnesses) weighed in favor of dismissal because the main witnesses were located in China, and the American witnesses would have to travel to China for Sinochem’s action regardless whether MISC’s action continued in the United States. It reasoned further that the relevant “public interest” factor—the avoidance of unnecessary conflict-of-laws problems—also weighed in favor of dismissal because Chinese law would apply to MISC’s negligent misrepresentation claim.9 In this context and because 9 The District Court rejected MISC’s argument that the choice-of-law provisions of the charter party and the bill of lading required the application of American law. The Court noted that the letter from Pan Ocean stating that American law applied to disputes under the charter party did not indicate “whether the charter party call[ed] for U.S. law to apply specifically to this type of negligence matter” and also seemed to be directed specifically at the question of which law would apply to the arrest of the Vessel. The Court determined as well that the bill of lading’s choice-of-law provision was not implicated because MISC’s negligent misrepresentation claim had nothing to do with the conditions of carriage of the cargo. As the dispute in this case (and the parallel Chinese proceeding) centered on the alleged backdating of the bill of lading that triggered Sinochem’s payment to Triorient for the steel coils, the Court concluded that “the choice of law clause more applicable to this matter is that of the purchase contract of the steel coils, which calls for the use of Chinese law.” 10 no American interests were implicated, the Court held that dismissal for forum non conveniens was appropriate despite the deference that must be paid to the plaintiff’s (in this case MISC’s) choice of forum. The District Court also issued an opinion denying MISC’s motion for reconsideration of the dismissal for forum non conveniens. In doing so, the Court declined to consider MISC’s assertion that there were additional important witnesses—the people who were retained as surveyors to observe the loading of the Vessel—located in the United States because MISC had failed to establish the connection of those witnesses to this country in responding to the motion to dismiss even though the information was available to MISC at that time. Even if these witnesses were in the United States, the Court pointed out that China had “adequate means” of compelling their testimony. The Court also noted that the Chinese High Court’s decision (which was issued after the decision dismissing MISC’s action had been filed) affirming Chinese jurisdiction over Sinochem’s claim reinforced the District Court’s prior conclusion that it could not justify forcing the parties to litigate this case twice. Finally, the District Court reiterated its choiceof-law analysis. MISC timely appealed the District Court’s dismissal of its action, and the propriety of that dismissal is now before us.