Opinion ID: 3051351
Heading Depth: 2
Heading Rank: 1

Heading: determining the law governing contract

Text: FORMATION [1] Before we can determine the validity of the United States choice of law provision in the contract between TransTec and Kien Hung, we need to figure out which country’s law controls the issue of contract formation. Because the availability of a maritime lien under United States law is the ultimate question, the temptation is to skip directly to United States law, as urged by Trans-Tec. That approach, however, “put[s] the barge before the tug.” See DeNicola v. Cunard Line, Ltd., 642 F.2d 5, 7 n.2 (1st Cir. 1981). Instead, we consider which country’s law governs the incorporation issue as if there were no choice of law clause. In other words, we cannot rely on the choice of law provision until we have decided, as a matter of law, that such a provision was a valid contractual term and was legitimately incorporated into the parties’ contract. [2] Both Supreme Court and Ninth Circuit law direct our analysis. We are guided by the principle that “[i]n the absence of a contractual choice-of-law clause, federal courts sitting in admiralty apply federal maritime choice-of-law principles derived from the Supreme Court’s decision in Lauritzen v. Larsen, 345 U.S. 571 (1953), and its progeny.” Chan v. Soc’y Expeditions, Inc., 123 F.3d 1287, 1296 (9th Cir. 1997) (citations omitted). In Lauritzen, the Supreme Court identified seven factors “which, alone or in combination, are generally conceded to TRANS-TEC ASIA v. M/V HARMONY CONTAINER 2263 influence choice of law to govern a tort claim”:6 (1) the place of the wrongful act; (2) the law of the flag; (3) the allegiance of the injured party; (4) the allegiance of the defendant shipowner; (5) the place of contract; (6) the inaccessibility of a foreign forum; and (7) the law of the forum. 345 U.S. at 58392. We have added that courts should weigh and evaluate all relevant points of contact between the transaction and the sovereign legal systems that are affected by it, and not simply run through a mechanical analysis of the Lauritzen factors. Tento, 694 F.2d at 1194-95. Accordingly, we also consider factors that § 188 of the Restatement identifies as relevant where a contract lacks a choice of law provision, such as the place of negotiation of the contract, the place of performance and the place of business of the parties. See RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188 (1971); Gulf Trading & Transp. Co. v. The Vessel Hoegh Shield, 658 F.2d 363, 366-67 (5th Cir. Unit A Oct. 1981) (discussing § 188 factors where there was no choice of law clause). [3] In weighing all the points of contact implicated by the transaction, including the factors set out in Lauritzen and the Restatement, we agree with the district court’s conclusion that under maritime conflicts of law principles, Malaysian law governed the contract formation. Splendid’s nationality and the Harmony’s flag are “substantial contacts” with Malaysia that point towards Malaysian law “as the most appropriate for resolving this litigation.” Tento, 694 F.2d at 1196. No sovereign other than Malaysia boasts such substantial contacts. That the bunkers were supplied in Busan, South Korea, “was dictated in large part by the fortuity of the ship’s location and intended route.” Id. at 1195. Deciding which country consti- 6 Although Lauritzen dealt with tort claims under the Jones Act, the “Supreme Court has extended the Lauritzen approach to ‘guide courts in the application of maritime law generally.’ ” Gulf Trading & Transp. Co. v. The M/V Tento, 694 F.2d 1191, 1193 (9th Cir. 1982) (quoting Romero v. Int’l Terminal Operating Co., 358 U.S. 354, 382 (1959) (citations omitted)). 2264 TRANS-TEC ASIA v. M/V HARMONY CONTAINER tuted the “place of contract” or the place where negotiation of the contract occurred is a thorny inquiry, and does not weigh in favor of applying any one sovereign’s law, as the bunker contract was formed through a series of emails and facsimiles sent by Trans-Tec and Kien Hung through Yee Foo, TransTec’s Taiwanese intermediary, at a time when the Harmony was docked in Hong Kong. To be sure, the Singaporean nationality of Trans-Tec, the “injured party,” is a relevant point of contact. However, standing alone, it fails to outweigh the nature and quality of the Malaysian contacts: the Harmony’s Malaysian flag and Splendid’s Malaysian nationality.