Opinion ID: 390050
Heading Depth: 2
Heading Rank: 1

Heading: The Foreign Jurisdiction Clause.

Text: 10 Insurers claim that the district court has jurisdiction over cases governed by COGSA and, consequently, over the Milwaukee-bound cargo. Relying upon Indussa Corp. v. S.S. RANBORG, 377 F.2d 200 (2d Cir. 1967), Insurers assert that foreign jurisdiction clauses are invalid when COGSA governs. Indussa held a foreign jurisdiction clause inapplicable in a situation when COGSA applied of its own force. Id. at 204. District courts in this circuit have followed Indussa in cases in which COGSA applied ex proprio vigore. Mitsui & Co. Ltd. v. M/V GLORY RIVER, 464 F.Supp. 1004, 1004 (W.D.Wash.1978); Northern Assurance Co., Ltd. v. M/V CASPIAN CAREER, (1977) A.M.C. 421 (N.D.Cal.1977). But cf. Roach v. Hapag-Lloyd, A. G., 358 F.Supp. 481, 484 (N.D.Cal.1973). 11 Fed Com counters that Indussa does not address a situation in which COGSA is incorporated only by contract into a bill of lading. When COGSA does not apply of its own force, Fed Com asserts, a foreign forum clause is a contract term entitled to as much respect as the provision incorporating COGSA. It argues that, in these circumstances, the rule of BREMEN v. Zapata Offshore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), should apply. The parties in BREMEN, a non-COGSA case, had provided that all claims would be heard in a foreign forum. One party sought to avoid that arrangement. The court determined that the parties' mutual agreement to litigate in that forum was a valid and enforceable contract term. 4 Id. at 15, 92 S.Ct. at 1916. 12 Circuits take differing approaches regarding the operation of COGSA when incorporated by contract. Pan American World Airways, supra, at 1175 n.3, held that when the parties contracted for the application of COGSA to domestic carriage, all terms inconsistent with the Act were invalid. We reached that result in Pan American World Airways by relying on § 1312 of COGSA, which states that COGSA shall have the same effect when incorporated into a contract for domestic carriage as it does when it operates of its own force. See Burdines, Inc. v. Pan-Atlantic Steamship Corp., 199 F.2d 571, 573 (5th Cir. 1952). 13 Section 1312 applies only when COGSA is incorporated into domestic carriage contracts otherwise governed by the Harter Act, unlike the instant case. 5 Nonetheless, the Second, Third, and Fourth Circuits have held that even under the language of § 1312 parties may contract for terms inconsistent with COGSA while at the same time agreeing to incorporate the Act into the contract of carriage. See Commonwealth Petrochemicals, Inc. v. S/S PUERTO RICO, 607 F.2d 322 (4th Cir. 1979); PPG Industries, Inc. v. Ashland Oil Co.-Thomas Petroleum Transit Division, 527 F.2d 502, 507 (3d Cir. 1975); Ralston Purina Co. v. Barge Juneau & Gulf Caribbean Marine Lines, Inc., 619 F.2d 374, 375 (5th Cir. 1980). 14 The Fourth Circuit provides a clear distinction between contracts in which COGSA applies of its own force and those in which the statute would have no application absent a contractual term. In Commonwealth Petrochemicals, Inc., supra, at 325, the court held that even when COGSA is incorporated under the language of § 1312, it does not have statute rank but rather is a contractual term like any other. Hence, a contractual term otherwise inconsistent with COGSA remains enforceable. In Union Insurance Society of Canton, Ltd. v. S. S. ELIKON, 642 F.2d 721 (4th Cir. 1981), the court held a forum selection clause invalid where COGSA was referred to as governing law in the bill of lading, but also applied ex proprio vigore under 46 U.S.C. § 1300. 15 In circumstances indistinguishable from the case before this court, the Second Circuit has ruled that parties may contractually incorporate terms inconsistent with COGSA. Pannell v. United States Lines Co., 263 F.2d 497 (2d Cir.), cert. denied, 359 U.S. 1013, 79 S.Ct. 1151, 3 L.Ed.2d 1037 (1959), involved carriage of goods between an American and a foreign port. As in the instant case, the contract provided for on-deck carriage so that the bill of lading was removed from the ex proprio vigore coverage of COGSA under 46 U.S.C. § 1301(c). Section 1312 did not apply to render the transactions fully subject to the statute. Because the case did not involve domestic carriage, the Second Circuit concluded that COGSA in those circumstances is merely a term of contract which does not prevail over other specific provisions in the bill of lading. Id. at 498. 16 Parties may contractually provide for a forum in which to litigate, BREMEN, supra, just as they may contractually agree on COGSA as the governing law with respect to certain parties. Grace Line, Inc., supra, at 371. Because the language of COGSA is not inconsistent with foreign jurisdiction clauses, we reject the view that COGSA preempts all contract terms when its sole force is by incorporation into a contract for foreign transportation. When international parties contractually provide for COGSA to govern disputes, they need not be barred from determining where they want the disputes to be heard. We hold, therefore, that BREMEN controls this case, in which COGSA is incorporated into a contract for foreign carriage, outside of the ex proprio vigore coverage of either the Harter Act or COGSA. 17