Malaysia Shipping v. Sinochem Intl Co ( 2006 )

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
2-7-2006
Malaysia Shipping v. Sinochem Intl Co
Precedential or Non-Precedential: Precedential
Docket No. 04-1816
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-1816
MALAYSIA INTERNATIONAL SHIPPING
CORPORATION
Appellant
v.
SINOCHEM INTERNATIONAL CO. LTD.
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 03-cv-03771)
District Judge: Honorable Franklin S. Van Antwerpen
Argued June 7, 2005
Before: AMBRO, STAPLETON
and ALARCÓN*, Circuit Judges
* Honorable Arthur L. Alarcón, Senior United States
Circuit Judge for the Ninth Circuit Court of Appeals, sitting
by designation.
(Opinion filed: February 7, 2006)
Ann-Michele G. Higgins, Esquire (Argued)
Diane B. Carvell, Esquire
Rawle & Henderson LLP
One South Penn Square
The Widener Building
Philadelphia, PA 19107
Counsel for Appellant
Stephen M. Hudspeth, Esquire (Argued)
Susan L. Stevens, Esquire
Coudert Brothers LLP
1114 Avenue of the Americas
New York, NY 10036
Counsel for Appellee
OPINION OF THE COURT
AMBRO, Circuit Judge
Appellant Malaysia International Shipping Corporation
(“MISC”) appeals the District Court’s dismissal, on forum non
conveniens grounds, of its fraudulent misrepresentation action
2
against Appellee Sinochem International Company Limited
(“Sinochem”). We agree with the District Court that admiralty
jurisdiction exists over this case. But because we believe the
District Court should have determined whether it had personal
jurisdiction before ruling on Sinochem’s forum non conveniens
motion, we vacate and remand.
I. F ACTUAL B ACKGROUND & P ROCEDURAL H ISTORY
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 choice-
of-law analysis.
MISC timely appealed the District Court’s dismissal of
its action, and the propriety of that dismissal is now before us.
II. J URISDICTION
11
A. Subject Matter Jurisdiction
Sinochem argues that subject matter jurisdiction does not
exist here. Our review of whether the District Court properly
exercised subject matter jurisdiction is plenary. See, e.g., Levine
v. United Healthcare Corp., 402 F.3d 156, 161 (3d Cir. 2005);
Bracken v. Matgouranis, 296 F.3d 160, 162 (3d Cir. 2002).
As stated earlier, the District Court determined that it had
admiralty jurisdiction over this action under 28 U.S.C.
§ 1333(1). That statute provides, in pertinent part, that “[t]he
district courts shall have original jurisdiction . . . of[] [a]ny civil
case of admiralty or maritime jurisdiction . . . .” Id. “[A] party
seeking to invoke federal admiralty jurisdiction pursuant to . . .
§ 1333(1) over a tort10 claim must satisfy conditions both of
location and of connection with maritime activity.” Jerome B.
Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527,
10
As an initial matter, MISC contends that we should apply
the test for admiralty jurisdiction over contract claims—rather
than tort claims—because “[t]he substantive dispute in this case
centers around a bill of lading.” MISC Ltr. Br. at 3. Although
the bill of lading is involved here, MISC did not allege that any
of its terms were breached. Rather, MISC alleged that
Sinochem negligently misrepresented actions MISC took with
respect to the bill of lading. That claim is one of tort and has
little to do with the provisions of the bill of lading itself. Thus,
we analyze whether admiralty jurisdiction exists with reference
only to the test for tort claims.
12
534 (1995); see also Neely v. Club Med Mgmt. Servs., Inc., 63
F.3d 166, 179 (3d Cir. 1995) (en banc) (same). We address the
location and connection tests in turn.
1. The Location Test
“A court applying the location test must determine
whether the tort occurred on navigable water or whether injury
suffered on land was caused by a vessel on navigable water.”
Grubart, 513 U.S. at 534. The tortious act at issue is
Sinochem’s alleged misrepresentations to the Chinese Admiralty
Court that MISC backdated the bill of lading. Sinochem
contends that because (1) these alleged misrepresentations
occurred on land and (2) no injury was suffered on land caused
by a vessel on navigable water, the location test is not met. We
agree with Sinochem as to its second argument, but the
resolution of whether the tort here occurred on land or on
navigable water is not so clear cut.11 In determining
whether the tort occurred on navigable water, we consider the
11
We note that a tort need not have occurred in waters under
the jurisdiction of the United States for us to exercise admiralty
jurisdiction. See, e.g., Neely, 63 F.3d at 170, 179 (finding
admiralty jurisdiction over a claim arising out of an accident that
occurred in coastal waters off St. Lucia, an independent
country).
13
meaning of “tort” as used in the locality test.12 In other words,
is the tort only the alleged tortious act itself (here, the making of
the alleged misrepresentations), or is it the alleged tortious act
as well as the resulting injury? The Supreme Court has
indicated the latter. In Executive Jet Aviation, Inc. v. City of
Cleveland, 409 U.S. 249 (1972), the Court noted that “[u]nder
the locality test, the tort ‘occurs’ where the alleged negligence
took effect . . . .” Id. at 266 (describing problems with the
traditional location test—which did not require that a connection
with maritime activity must exist before admiralty jurisdiction
is found). That statement was based on the Court’s prior
holding that “the whole, or at least the substantial cause of
action, arising out of the wrong, must be complete within the
locality on which the [admiralty] jurisdiction depends—on the
high seas or navigable waters.” The Plymouth, 70 U.S. (3 Wall.)
20, 36 (1866) (emphasis added).13
12
“Locality,” as well as “situs,” are used interchangeably with
“location” in referring to the test or requirement.
13
The application of that rule in The Plymouth led to the
Court’s holding that—when a vessel anchored beside a wharf on
the Chicago River caught fire (due to the negligence of those in
charge of it) and the flames then spread to the wharf, destroying
all the goods stored in the packing-houses there—there was no
admiralty jurisdiction because, although the negligence occurred
on navigable water, the injury occurred on land. 70 U.S. (3
Wall.) at 36.
The effect of this result was later negated by the
14
Our Court has never addressed this issue, but our sister
Courts of Appeals that have considered it have adopted what the
Fifth Circuit has termed an “impact analysis,” Kuehne & Nagel
(AG & Co.) v. Geosource, Inc., 874 F.2d 283, 288 (5th Cir.
1989), for determining where a tort occurred under the location
test. Under that analysis, the place where a tort occurs is the
place where the injury occurs. See id. (collecting cases)
(holding that admiralty jurisdiction did not exist in a case
alleging fraudulent inducement to enter a shipping contract
because both the fraudulent inducement and the resulting injury
occurred on land);14 see also Taghadomi v. United States, 401
Extension of Admiralty Jurisdiction Act, which created the
second part of the location test by providing that “the admiralty
and maritime jurisdiction of the United States shall extend to
and include all cases of damage or injury, to person or property,
caused by a vessel on navigable water, notwithstanding that such
damage or injury be done or consummated on land.” Extension
of Admiralty Jurisdiction Act, ch. 526, 62 Stat. 496, 496 (1948).
Thus, for a particular class of cases—those with facts similar to
The Plymouth—Congress has shifted the focus of the location
test from where the injury occurred to where the injury was
caused.
14
In Kuehne & Nagle, the Fifth Circuit provided several
examples of when the location test is met under the “impact
analysis,” stating:
This court has applied the
“impact” analysis in several
15
F.3d 1080, 1084 (9th Cir. 2005) (rejecting argument that the
location test was not satisfied where the Coast Guard’s alleged
failure to act occurred entirely on land, but the resulting injury
occurred on navigable waters, because it “ignore[d] the clear
law of [that] circuit that the situs of a tort for the purpose of
determining admiralty jurisdiction is the place where the injury
occurs”); Florio v. Olson, 129 F.3d 678, 680 (1st Cir. 1997) (“In
order to satisfy the ‘location’ or ‘situs’ requirement, a party must
show either that the injury occurred on navigable water or that
the injury was caused by a vessel on navigable water.” (first
emphasis added)).
This comports with Executive Jet Aviation and The
Plymouth and also with our view of the meaning of “tort” in the
situations. We found situs present
where a gun was fired from land,
but the bullet struck and injured a
poacher on a vessel. Situs was also
satisfied where the components of
a ship’s navigational system,
negligently manufactured on land,
caused a collision on the high seas.
And we found the situs element
established where workers who
contracted asbestosis were exposed
to asbestos both on land and on
vessels lying in navigable waters.
874 F.2d at 288 (citations omitted).
16
context of our case. A tort claim is not complete until both a
tortious act and an injury have occurred. Put another way,
“negligence, of itself, furnishes no cause of action, it is damnum
absque injuria [damage without injury].” The Plymouth, 70
U.S. (3 Wall.) at 36. Accordingly, we too adopt the rule that, for
purposes of the location test, a tort occurs where the alleged
tortious act takes effect.
Applying that rule here, we conclude easily that the test
is met. The injury resulting from Sinochem’s alleged
misrepresentations to the Chinese Admiralty Court was the
seizure of the Vessel at a port in China. That the seizure
occurred on navigable waters is undisputed. Thus, the District
Court’s determination that, “[a]s the seizure occurred on
navigable water, at a port in China, [MISC]’s complaint satisfies
the locality prong” is correct. We therefore turn to whether the
alleged tort bears a sufficient connection to maritime activity to
warrant the exercise of admiralty jurisdiction.
2. Connection with Maritime Activity Test
The second prong of the admiralty jurisdiction test for
tort claims has two components: (1) “whether the incident
involved was of a sort with the potential to disrupt maritime
commerce”; and (2) whether there is a substantial relationship
to traditional maritime activity, i.e., “whether a tortfeasor’s
activity, commercial or noncommercial, on navigable waters is
so closely related to activity traditionally subject to admiralty
17
law that the reasons for applying admiralty rules would apply in
the suit at hand.” Grubart, 513 U.S. at 538–40.
a. Potential Disruptive Effect on
Maritime Commerce
The District Court concluded that, regardless whether the
incident here was characterized as “the improper loading of
cargo on a vessel docked at a port on navigable waters or the
arrest of a vessel docked in navigable waters,” it had a
“potentially disruptive impact on maritime commerce.” We
believe that the incident before us is better characterized as
Sinochem’s alleged misrepresentations to the Chinese Admiralty
Court that led to the arrest of the Vessel at port. Yet, we agree
that, no matter how we define the incident, it had the potential
to disrupt maritime commerce—and in fact did so, as the alleged
misrepresentations resulted in the Vessel’s seizure. (And we
note that making misrepresentations about another party’s
conduct with respect to the shipment of goods and a bill of
lading is generally likely to disrupt maritime commerce as
between those two parties.) Thus, the first component of the
connection with maritime activity inquiry is met.
b. S u b s ta n t ia l Relationship to
Traditional Maritime Activity
“[W]hether the general character of the activity giving
rise to the incident shows a substantial relationship to traditional
18
maritime activity” is not a concept cabined narrowly or rigidly.
Neely, 63 F.3d at 179 (internal quotation marks omitted); see
also Sisson v. Ruby, 497 U.S. 358, 364 (1990) (“Our cases have
made clear that the relevant ‘activity’ is defined not by the
particular circumstances of the incident, but by the general
conduct from which the incident arose.”). The Supreme Court
has held that a “broad perspective” should be used in
determining whether the activity underlying a claim has the
requisite relationship to maritime activity, and has declined to
hold that navigation is the only activity that could satisfy the
substantial relationship test. Sisson, 497 U.S. at 367.15
15
In Sisson, the Court emphasized that
[t]he fundamental interest giving
rise to maritime jurisdiction is the
protection of maritime commerce,
and we have said that that interest
cannot be fully vindicated unless
all operators of vessels on
navigable waters are subject to
uniform rules of conduct. The need
for uniform rules of maritime
conduct and liability is not limited
to navigation, but extends at least
to any other activities traditionally
undertaken by vessels, commercial
or noncommercial.
497 U.S. at 367 (first emphasis in original) (citations and
internal quotation marks omitted).
19
The District Court held that, under Sisson, the activity in
this case met the substantial relationship test because,
if activities undertaken by vessels
have a substantial relationship to
maritime activity, it logically
follows that activities carried out to
or against vessels would also have
a substantial relationship to
maritime activity. As such, the
very serious act of arresting a
vessel at a port sufficiently relates
to maritime activity to establish
subject matter jurisdiction.
Malaysia, mem. op. at 8 (emphasis in original).
Per Sisson and Neely, our focus in this inquiry must also include
the activity giving rise to the seizure of the Vessel. See Sisson,
497 U.S. at 364; Neely, 63 F.3d at 179.
As stated earlier, Sinochem’s alleged misrepresentations
gave rise to the seizure of the Vessel. Looked at narrowly, it
may seem that the act of making representations (or
misrepresentations, as the case may be) to a court has no
connection with maritime activity. But looking at Sinochem’s
alleged conduct broadly, as we must, it was clearly undertaken
20
with the purpose of having the Vessel seized.16 Asking a court
to have a vessel arrested, as Sinochem did here, is a well-
established method of granting an admiralty court power to
exercise authority over a ship, see Reed v. S.S. Yaka, 307 F.2d
203, 204 (3d Cir. 1962), rev’d on other grounds, 373 U.S. 410(1963), and thus has a substantial relationship to traditional
maritime activity.17
* * * * *
Because both prongs of the test for determining whether
admiralty jurisdiction over a tort claim exists are met here, we
now turn to another jurisdiction-related inquiry in this case—the
16
With this statement we do not mean to imply that
Sinochem’s purpose was not legitimate. That issue, of course,
goes to the underlying merits of MISC’s fraudulent
misrepresentation claim, and the resolution of that claim is not
before us.
17
Finally, we note that the activity here is much closer to the
types of activity the Supreme Court has found satisfy the
substantial relationship test than to those it has found to be too
attenuated, as those were not even aimed at vessels. Cf.
Grubart, 513 U.S. at 540 (“Navigation of boats in navigable
waters clearly falls within the substantial relationship, [and]
storing them at a marina on navigable waters is close enough,
whereas in flying an airplane over the water, as in swimming,
the relationship is too attenuated.” (citations omitted)).
21
propriety of the District Court’s decision to dismiss on forum
non conveniens grounds without first ascertaining that it had
personal jurisdiction over the parties.18
B. Personal Jurisdiction
As discussed above, the District Court held that it did not
have personal jurisdiction over Sinochem under Pennsylvania’s
long-arm statute but that, with limited jurisdictional discovery,
MISC might be able to establish personal jurisdiction over
Sinochem based on the federal long-arm statute. MISC
contends that the District Court erred by not allowing it this
additional discovery, and thus not determining whether personal
jurisdiction existed, before dismissing its complaint on the basis
of forum non conveniens. This issue—whether courts must
decide jurisdictional issues, here personal jurisdiction, before
ruling on forum non conveniens—is one of first impression in
our Circuit.19
18
As we have determined that admiralty jurisdiction exists,
we need not address MISC’s contention that federal question
and diversity jurisdiction are present here as well. We note that
MISC’s counsel decided not to press diversity jurisdiction at
oral argument—a wise decision, as these alternative arguments
rested (at best) on shaky ground.
19
We note that forum non conveniens is a limited doctrine,
typically applying when the alternative forum is in a foreign
country or a state court. 15 Charles Alan Wright, Arthur R.
22
Courts of Appeals have split on the issue. Compare In re
Arbitration Between Monegasque de Reassurances S.A.M. v.
Nak Naftogaz of Ukraine, 311 F.3d 488, 497–98 (2d Cir. 2002)
(holding that courts may pass over jurisdictional questions and
decide a forum non conveniens issue), and In re Papandreou,
139 F.3d 247, 255–56 (D.C. Cir. 1998) (same), superseded by
statute on other grounds, with Dominguez-Cota v. Cooper Tire
& Rubber Co., 396 F.3d 650, 654 (5th Cir. 2005) (per curiam)
(holding that they may not). These are the three cases most
often referred to, but the Seventh and the Ninth Circuits have
also reached the same result as the Fifth Circuit’s Dominguez-
Cota opinion. See Patrickson v. Dole Food Co., Inc., 251 F.3d
795 (9th Cir. 2001), aff’d in part, cert. dismissed in part, 538
U.S. 468 (2003); Kamel v. Hill-Rom Co., Inc., 108 F.3d 799 (7th
Cir. 1997).
We tackle our analysis in two parts. First, we decide
whether forum non conveniens is a non-merits grounds for
dismissal. Second, we decide whether a district court must
establish both subject matter jurisdiction and personal
jurisdiction before ruling on a forum non conveniens issue.
1. Is Forum Non Conveniens Merits Related?
Miller & Edward H. Cooper, Federal Practice and Procedure
§ 3828, at 278–80 (2d ed. 1986). This is because 28 U.S.C.
§ 1404(a) covers inconvenient forum issues within the federal
court system. Id.23
The Supreme Court has held that courts may not assume
“hypothetical jurisdiction” to resolve a case on the merits. See
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 101–02
(1998). In other words, an actual determination must be made
whether subject matter jurisdiction exists before a court may
turn to the merits of a case. The Court later concluded that this
principle applied equally to personal jurisdiction because
“[p]ersonal jurisdiction, too, is an essential element of the
jurisdiction of a district . . . court, without which the court is
powerless to proceed to an adjudication.” Ruhrgas AG v.
Marathon Oil Co., 526 U.S. 574, 584 (1999) (ellipsis in
original) (internal quotation marks omitted). The Court held,
however, that the existence of subject matter jurisdiction need
not be decided before personal jurisdiction, stating that “[i]t is
hardly novel for a federal court to choose among threshold
grounds for denying audience to a case on the merits.” Id. at
585. While Steel Co. required rulings on subject matter
jurisdiction before rulings on the merits, the Ruhrgas Court held
that it did not “dictate a sequencing of jurisdictional issues.” Id.
at 584. In other words, a dismissal on “‘non-merits grounds
such as . . . personal jurisdiction, before finding subject-matter
jurisdiction, makes no assumption of law-declaring power that
violates the separation of powers principles underlying [Steel
Co.]’” Id. at 584–85 (quoting In re Papandreou, 139 F.3d at
255) (omission in original).
In the wake of Steel Co. and Ruhrgas, one commentator
posits that there are three categories of issues, only two of which
24
have set decisional priorities. See Scott C. Idleman, The Demise
of Hypothetical Jurisdiction in the Federal Courts, 52 Vand. L.
Rev. 235, 321 (1999). The first category includes jurisdictional
issues that “cannot be bypassed” because Article III of our
Constitution requires that they be addressed; the second deals
with merits-related issues, which “cannot be reached without
first verifying jurisdiction.” Id. The third category fits
somewhere between these first two. It comprises two subgroups
of issues: (1) jurisdictional issues that do not have to be reached
before the merits and (2) “issues that are neither jurisdictional
nor merits-related.” Id. at 322, 321–22. This first subgroup
includes non-Article III jurisdictional issues like statutory
standing. Id. at 322 n.361; see also id. at 297–99. The second
subgroup includes “procedural, remedial, or evidentiary” issues.
Id. at 322 n.364.
Within this framework, forum non conveniens is not a
constitutional Article III jurisdictional issue, so we address
whether it fits within the second or the third category. The D.C.
Circuit—in a pre-Ruhrgas case—reasoned that what Steel Co.
put “beyond the power of courts lacking jurisdiction [was]
adjudication on the merits, the act of deciding the case,” so that
courts could still dismiss cases on “other non-merits grounds
such as forum non conveniens and personal jurisdiction.” In re
Papandreou, 139 F.3d at 255. Accordingly, it held that forum
non conveniens was “as merits-free as a finding of no
jurisdiction.” Id.25
But the Fifth Circuit reached the opposite conclusion. It
held that it could not “characterize forum non conveniens as a
‘non-merits’ issue akin to personal jurisdiction.” Dominguez-
Cota, 396 F.3d at 654. We disagree, as we believe that forum
non conveniens is a non-merits ground for dismissal.
The Fifth Circuit based its holding on two cases, a
Supreme Court case—Van Cauwenberghe v. Biard, 486 U.S.
517 (1988)—and a 1986 Fifth Circuit case—Partrederiet
Treasure Saga v. Joy Manufacturing Co., 804 F.2d 308 (5th Cir.
1986). See Dominguez-Cota, 396 F.3d at 653 (citing Biard and
Partrederiet). These two cases concern on their face whether
forum non conveniens falls within the collateral-order doctrine
(which allows otherwise non-final orders to be “immediately
appealable under § 1291,” Biard, 486 U.S. at 527). One of the
elements of the collateral-order doctrine is a requirement that the
order be “completely separate from the merits.” Id. The
Supreme Court (and the Fifth Circuit) both determined that, “in
assessing a forum non conveniens motion, the district court
generally becomes entangled in the merits of the underlying
dispute.” Id. at 528; see also Partrederiet, 804 F.2d at 310(same).
These cases are telling, to be sure, but not dispositive, for
four reasons. First, in a context other than the collateral-order
doctrine, both the Supreme Court and the Fifth Circuit have held
forum non conveniens dismissals not to be rulings on the merits.
In a case decided less than a month before Biard, the Supreme
26
Court discussed the Anti-Injunction Act in Chick Kam Choo v.
Exxon Corp., 486 U.S. 140 (1988). It held that the “District
Court did not resolve the merits of [petitioner’s] claim . . . .
Rather, the only issue decided by the District Court was that
petitioner’s claims should be dismissed under the federal forum
non conveniens doctrine.” Id. at 148. In a 2003 opinion citing
Chick Kam Choo and discussing the Anti-Injunction Act and
claim preclusion, the Fifth Circuit held that an “f.n.c. [forum non
conveniens] dismissal . . . does not resolve the substantive
merits.” Vasquez v. Bridgestone/Firestone, Inc., 325 F.3d 665,
677 (5th Cir. 2003). Instead, “[t]he principle of
f.n.c. . . . contemplates resolving the merits in another forum.”
Id. at 679. The Vasquez Court also held that a dismissal under
forum non conveniens could be construed as a Federal Rule of
Civil Procedure 41(b) dismissal for lack of jurisdiction or
improper venue—i.e., not a dismissal on the merits. Id. at 678.
Second, we have before discussed Biard and, in that
context, minimized the entanglement it mentions between the
merits and forum non conveniens. Although a “district court
must immerse itself to a certain degree in the facts of the
case. . . . , [it] must do no more than delineate the likely contours
of the case by ascertaining, among other things, the nature of the
plaintiff’s action, the existence of any potential defenses, and
the essential sources of proof.” Lacey v. Cessna Aircraft Co.,
932 F.2d 170, 181 (3d Cir. 1991). We further noted that
“[n]othing in [Biard] . . . directs a court to assess the relative
strength of the parties’ arguments and to select one paramount
27
issue.” Id. at 182. Thus, an entanglement in the facts does not
suffice to make forum non conveniens grounds a merits-related
issue.
Third, also following from the first reason, language in
the Supreme Court’s 1994 American Dredging opinion suggests
that forum non conveniens is not a merits-based issue, but
simply a procedural one. Am. Dredging Co. v. Miller, 510 U.S.
443, 453 (1994) (noting that “the doctrine is one of procedure
rather than substance”); see also id. at 454 n.4 (stating that
“forum non conveniens is not a substantive right of the parties,
but a procedural rule of the forum”). In doing so, it equated
forum non conveniens with venue: “At bottom, the doctrine of
forum non conveniens is nothing more or less than a
supervening venue provision . . . . But venue is a matter that
goes to process rather than substantive rights—determining
which among various competent courts will decide the case.”
Id. at 453. The Court further distinguished forum non
conveniens from other issues. “Unlike burden of proof . . . and
affirmative defenses such as contributory negligence . . . , forum
non conveniens does not bear upon the substantive right to
recover . . . .” Id. at 454.
Fourth, that forum non conveniens is not merits based has
the most support at the federal appellate level. The First Circuit
also agrees with this notion. Mentioning Papandreou, it
discussed the defendants’ “non-merits-based
defenses . . . (including insufficiency of process, forum non
28
conveniens, and lack of in personam jurisdiction).” Ungar v.
Palestine Liberation Org., 402 F.3d 274, 294 (1st Cir. 2005).
We therefore join three (First Circuit, Second Circuit, see
Monegasque, 311 F.3d at 498, and D.C. Circuit, see
Papandreou, 139 F.3d at 255) of the four Circuits to have
weighed in on the issue, and part with the Fifth Circuit.
This background demonstrates that forum non conveniens
is squarely in the third category of issues discussed above.
Neither a constitutional Article III jurisdictional issue nor a
substantive, merits-related issue, forum non conveniens is a non-
jurisdictional, non-merits procedural issue. We next decide
whether jurisdiction must be determined before forum non
conveniens.
2. Can a Court Decide Forum Non Conveniens
Before Establishing Jurisdiction?
Should the District Court have determined whether
jurisdiction existed before dismissing on forum non conveniens
grounds? We hold yes for two reasons.
First, the very nature and definition of forum non
conveniens presumes that the court deciding this issue has valid
jurisdiction (both subject matter and personal jurisdiction) and
venue. Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (1947)
(“[T]he doctrine of forum non conveniens can never apply if
29
there is absence of jurisdiction 20 or mistake of venue.”),
superseded by statute on other grounds. Through forum non
conveniens, a district court “may decline to exercise its
jurisdiction, even though the court has jurisdiction and venue,
when it appears that the convenience of the parties and the court
and the interests of justice indicate that the action should be
tried in another forum.” Baumgart v. Fairchild Aircraft Corp.,
981 F.2d 824, 828 (5th Cir. 1993) (emphasis added); see also
Am. Dredging, 510 U.S. at 447–48 (same); Altmann v. Republic
of Austria, 317 F.3d 954, 972 (9th Cir. 2002) (same); Rustal
Trading US, Inc. v. Makki, 17 Fed. Appx. 331, 335 (6th Cir.
2001) (unpublished) (same); Howe v. Goldcorp Invs., Ltd., 946
F.2d 944, 947 (1st Cir. 1991) (Breyer, C.J.) (same).
20
We admit that it is not facially apparent that the Gulf Oil
Court was referring to both subject matter and personal
jurisdiction when it said “jurisdiction.” The Court has before
noted that “[j]urisdiction . . . is a word of many, too many,
meanings.” Steel Co., 523 U.S. at 90 (internal quotation marks
omitted). But three paragraphs before the line quoted above
from Gulf Oil, the Court discussed the alternative forum desired
by the defendant and noted that the state and federal courts there
were “able to obtain jurisdiction of the defendant.” Gulf Oil,
330 U.S. at 503. This almost certainly alludes to personal
jurisdiction. The Supreme Court also noted that forum non
conveniens “presupposes” that the court deciding the issue is
one in which the “defendant is amenable to process.” Id. at 507.
This also refers to personal jurisdiction.
30
Forum non conveniens allows a court (with jurisdiction
and proper venue) to decline the exercise of its jurisdiction in
favor of letting another court (also with jurisdiction and venue)
hear the case. In this way, jurisdiction—both subject matter and
personal jurisdiction—is a sine qua non for forum non
conveniens. See, e.g., Gulf Oil, 330 U.S. at 506–07 (“In all
cases in which the doctrine of forum non conveniens comes into
play, it presupposes at least two forums in which the defendant
is amenable to process; the doctrine furnishes criteria for choice
between them.”); In re Bridgestone/Firestone, Inc., 420 F.3d
702, 704 (7th Cir. 2005) (discussing the need for an alternative
forum with jurisdiction and stating “it is tough to argue that the
present forum [i.e., the one deciding the forum non conveniens
motion]—which by definition has both subject matter
jurisdiction and personal jurisdiction over all parties—is ‘out of
all proportion to plaintiff’s convenience,’ when the plaintiff has
no other options”); Black’s Law Dictionary 680 (Bryan A.
Garner ed., 8th ed. 2004) (defining forum non conveniens as the
“doctrine that an appropriate forum—even though competent
under the law—may divest itself of jurisdiction if . . . it appears
that the action should proceed in another forum in which the
action might also have been properly brought in the first place”);
Jack H. Friedenthal et al., Civil Procedure § 2.17, at 91–92 (4th
ed. 2005) (noting that forum non conveniens “permits a court
having jurisdiction over an action to refuse to exercise its
jurisdiction when the litigation could be brought more
appropriately in another forum,” and stating that “[i]t must
appear that jurisdiction over all parties can be secured and that
31
complete relief can be obtained in the supposedly more
convenient court”); 15 Charles Alan Wright, Arthur R. Miller &
Edward H. Cooper, Federal Practice and Procedure § 3828, at
287 (2d ed. 1986) (“The doctrine of forum non conveniens does
not come into play unless the court in which the action was
brought has both subject matter and personal jurisdiction and is
a proper venue. If the case is wanting in any of these respects,
the action should be dismissed on that ground without reaching
questions of forum non conveniens.” (footnote omitted)). The
need for jurisdiction in both forums (the forum deciding the
forum non conveniens issue and the alternative forum) is so
important that the Seventh Circuit recently vacated a forum non
conveniens dismissal because the intended alternative forum did
not have personal jurisdiction over the defendants. In re
Bridgestone/Firestone, 420 F.3d at 705.
Second, at least two other Circuit Courts, and the
Supreme Court (inferentially), have determined that forum non
conveniens dismissals are invalid if the district court does not
have subject matter jurisdiction. The Seventh Circuit in Kamel
affirmed the District Court’s forum non conveniens dismissal.
Kamel, 108 F.3d at 806. But one of the parties, Chedid, was an
American expatriate with a Saudi Arabian domicile; his
expatriate status destroyed complete diversity under 28 U.S.C.
§ 1332(a). Id. at 805. Therefore, the Seventh Circuit held, the
District Court “lacked jurisdiction to rule on [the defendant’s]
forum non conveniens motion because Chedid was a party to this
action.” Id. Because appellate courts have the power to dismiss
32
dispensable parties to salvage diversity jurisdiction, the Court
dismissed Chedid “to attain subject matter jurisdiction to affirm
[the] forum non conveniens dismissal.” Id. at 806. By so doing,
it made clear that forum non conveniens dismissals are of no
effect unless the district courts have jurisdiction. Only by
dismissing Chedid and restoring jurisdiction by fiat could the
Circuit Court there deal with the forum non conveniens
dismissal.
Likewise, in 2001 the Ninth Circuit reversed a forum non
conveniens dismissal because the District Court lacked subject
matter jurisdiction. See Patrickson, 251 F.3d at 800 n.3 (“As the
district court recognized, such claims may raise serious
questions of forum non conveniens under federal and state law.
Of course, the federal courts may decide that issue only if we
have jurisdiction over the case.”). The District Court had
dismissed some class action cases for forum non conveniens, id.
at 798, but the Ninth Circuit held that the District Court had no
federal subject matter jurisdiction, id. at 808. Accordingly, the
Court reversed the District Court’s judgment and remanded the
case with instructions to remand it to a state court. Id. at
808–09. The Supreme Court agreed that there was no subject
matter jurisdiction and affirmed the Ninth Circuit’s reversal of
the forum non conveniens dismissal. Dole Food Co. v.
Patrickson, 538 U.S. 468, 480 (2003).
At least one District Court within our Circuit has also
followed this approach in the context of personal jurisdiction.
33
Henkel Corp. v. Degremont, S.A., 136 F.R.D. 88 (E.D. Pa.
1991), held, in a case where discovery on issues of personal
jurisdiction was ongoing, that the defendants’ forum non
conveniens motion could not be decided because the Court had
“not determined whether [it had] jurisdiction over the parties.”
Id. at 98.
What of the cases holding otherwise? The Second
Circuit’s Monegasque opinion ignores the nature of forum non
conveniens and the cases cited above by clinging to the principle
of hypothetical jurisdiction. See Monegasque, 311 F.3d at 497.
First, in the face of the Supreme Court’s disapproval of this
principle in Steel Co., it claims to retain hypothetical jurisdiction
unless the “potential lack of jurisdiction is a constitutional
question.” Id. (internal quotation marks omitted). It then avoids
further analysis by quoting liberally from the D.C. Circuit’s
Papandreou opinion. See id. at 498.
Papandreou states that forum non conveniens “does not
raise a jurisdictional bar but instead involves a deliberate
abstention from the exercise of jurisdiction.” In re Papandreou,
139 F.3d at 255. As a court can only abstain from jurisdiction
it already has, if it has no jurisdiction ipso facto it cannot abstain
from the exercise of it. The Papandreou Court appears to
concede as much when it mentions that “abstention may appear
logically to rest on an assumption of jurisdiction . . . .” Id. And
again it exposes the weakness of its position in a footnote, where
it admits that “[a]ny such forum non conveniens dismissal [i.e.,
34
one decided without first establishing jurisdiction] could not,
however, be subject to conditions,21 e.g., a condition that
defendants promise to submit to the jurisdiction of another
21
A conditional dismissal is one in which “the district court
dismisses the case only if the defendant waives jurisdiction and
limitations defenses, and only if it turns out that another court
ultimately exercises jurisdiction over the case.” Ford v. Brown,
319 F.3d 1302, 1310 (11th Cir. 2003). This allows the district
court to “reassert jurisdiction in the event that the foreign court
refuses to entertain the suit.” Id. Conditional dismissals provide
protection to plaintiffs by ensuring that an adequate alternative
forum will exist. See, e.g., Bank of Credit & Commerce Int’l
(Overseas) Ltd. v. State Bank of Pak., 273 F.3d 241, 248 (2d Cir.
2001); Mercier v. Sheraton Int’l, Inc., 981 F.2d 1345, 1352 (1st
Cir. 1992); Pain v. United Techs. Corp., 637 F.2d 775, 794
(D.C. Cir. 1980), overruled on other grounds by Piper Aircraft
Co. v. Reyno, 454 U.S. 235 (1981); cf. Alexander Reus, Judicial
Discretion: A Comparative View of the Doctrine of Forum Non
Conveniens in the United States, the United Kingdom, and
Germany, 16 Loy. L.A. Int’l & Comp. L.J. 455, 473–74 (1994)
(discussing the use of conditional dismissals to prevent injustice
to the non-movant but noting that dismissals are still practically
outcome determinative). If a court is not able to grant a
conditional dismissal, the plaintiff could find itself without any
guaranteed forum. Moreover, if that plaintiff comes back to the
transferring forum to refile, and the transferring forum
subsequently finds that it has no jurisdiction over the suit, the
judicial economy claimed by proponents of the “forum non
conveniens without jurisdiction” dismissal ceases to exist.
35
court, for exaction of such a condition would appear inescapably
to constitute an exercise of jurisdiction.” Id. at 256 n.6.
We go a more certain way. District courts either have
jurisdiction to decide forum non conveniens motions or they do
not. As such, we hold that they must have jurisdiction before
they can rule on which forum, otherwise available, is more
convenient to decide the merits.
We do not reach this holding without some regret, as we
would like to leave district courts with another arrow in their
dismissal quivers. Also, we recognize that this result may not
seem to comport with the general interests of judicial economy
and may, in this case, ultimately result in a waste of resources if
the case is again dismissed before the substance of MISC’s
claim is decided. But precedent, logic, and the very terms of the
forum non conveniens doctrine dictate this result. If the
Supreme Court wishes otherwise, we leave that determination
to it. For now, it tells us, “[h]ypothetical jurisdiction produces
nothing more than a hypothetical judgment—which comes to the
same thing as an advisory opinion, disapproved by this Court
from the beginning.” Steel Co., 523 U.S. at 101. Without
jurisdiction over subject matter and parties, we are pundits,
hardly an optimal calling for appellate courts.
Here we have already decided subject matter jurisdiction,
but we must take our inquiry one step further. We must decide
whether the District Court has adequately addressed personal
36
jurisdiction.
3. Did the District Court Adequately Address
Personal Jurisdiction?
Sinochem urges that, regardless of the discussion above,
we should nonetheless conclude that the District Court
adequately addressed personal jurisdiction before moving to its
forum non conveniens analysis, contending that the District
Court determined that MISC had made a prima facie showing of
personal jurisdiction. When a defendant raises the possible lack
of personal jurisdiction, the plaintiff bears the burden of
demonstrating that it exists and “present[ing] a prima facie case
for the exercise of personal jurisdiction by establishing with
reasonable particularity sufficient contacts between the
defendant and the forum state.” Mellon Bank (East) PSFS, Nat’l
Ass’n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (internal
quotation marks omitted). Here, with regard to the potential
existence of personal jurisdiction over Sinochem under the
federal long-arm statute, the District Court stated only that
MISC’s “allegations with respect to [Sinochem] enterprises in
this country, as well as undisputed facts averred with respect to
how the contract was carried out, render [MISC]’s claim far
from frivolous.”
This general statement does not indicate that MISC met
its burden of establishing sufficient contacts with “reasonable
particularity.” Rather, it points out only the possibility that
37
MISC might be able to do so and that there were some facts that
supported MISC’s claim. Consequently, we hold that the
District Court’s general statement as to the possibility that
personal jurisdiction might exist did not determine whether
MISC has made a prima facie case for personal jurisdiction, let
alone constitute an ultimate conclusion that it did exist.22 See
Mellon Bank, 960 F.2d at 1226 (citing Carteret Sav. Bank, FA
v. Shushan, 954 F.2d 141, 150 (3d Cir. 1992)). We therefore
remand this case for a decision on personal jurisdiction (and, of
course, whatever jurisdictional discovery may be necessary for
such a decision).23
III. R ESPONSE TO THE D ISSENT
Our colleague has filed a thoughtful dissent with several
plausible arguments. To stem any confusion, we respond to
those arguments.
1. The dissent argues that our holding “subverts a
22
There was no waiver of personal jurisdiction in this case,
but such a waiver could substitute for the Court’s determination
on personal jurisdiction. See Ins. Corp. of Ir., Ltd. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982).
23
Given this conclusion, we express no opinion regarding
MISC’s argument that the District Court abused its discretion in
dismissing its complaint on the basis of forum non conveniens.
38
primary purpose of the doctrine of forum non conveniens,”
defining (without citation) that primary purpose as “protect[ing]
a defendant from being compelled to litigate in a forum where
it will have to shoulder the burden of substantial and
unnecessary effort and expense.” This overdramatizes the
doctrine, as most litigation involves unwanted effort and
expense for the defendant. The doctrine’s purpose has
elsewhere been described as a district court—with jurisdiction
and venue—declining to exercise that jurisdiction “when it
appears that the convenience of the parties and the court and the
interests of justice indicate that the action should be tried in
another forum.” 17 James Wm. Moore, Moore’s Federal
Practice § 111.70, at 111-208 (3d ed. 2005) (internal quotation
marks omitted); see also Friedenthal et al., supra, § 2.17, at 91
(noting that “a correct, but inconvenient, tribunal” may refuse to
exercise its jurisdiction when “the forum may have little to no
connection with the significant events forming the basis of the
lawsuit” or when “the litigation could be brought more
appropriately in another forum”). Our holding coincides with
this purpose; it ensures that both forums are proper and allows
for choice between them.
2. The dissent quotes Ruhrgas for the proposition that
the rejection of hypothetical jurisdiction is not pertinent here:
“[A] court that dismisses on . . . non-merits
grounds . . . before finding subject-matter
jurisdiction, [however] makes no assumption of
39
law-declaring power that violates the separation
of powers principles underlying . . . Steel
Company.”
(Diss. Op. at 2 (alterations and omissions in original).)
This quotation suggests that a district court’s dismissal on non-
merits grounds of any type does not violate the prohibition
against hypothetical jurisdiction. But while the first omission in
the quotation was as it appeared in Ruhrgas, the second one
obscures the fact that the Supreme Court restricted its statement
to “non-merits grounds such as . . . personal jurisdiction,”
Ruhrgas, 526 U.S. at 584 (omission in original). We held in
section II.B.1 above that forum non conveniens was a non-merits
issue, but of a different type from personal jurisdiction—a
holding the dissent does not dispute. Thus, we do not agree that
Ruhrgas makes the principle of hypothetical jurisdiction
inapplicable in this context.
3. We are faulted for recognizing that our holding may
not always result in the most streamlined procedure. (Diss. Op.
at 2.) But the dissent does not comment on our concerns in
footnote 21, above, that the opposite holding could also result in
a waste of resources. We are not willing to sacrifice the correct
result for an occasional gain in judicial economy.
4. The dissent ignores our citations to the Supreme
Court, the Seventh Circuit, and two treatises by claiming that
40
our “only rationale” is based on Black’s Law Dictionary. (Diss.
Op. at 3.) We cite Black’s, but our reasoning is also based
on—among other sources—Gulf Oil’s statement that forum non
conveniens in all cases “presupposes at least two forums in
which the defendant is amenable to process,” 330 U.S. at 507,
and the Seventh Circuit’s statement that forum non conveniens
“by definition” contemplates that the forum deciding the motion
“has both subject matter jurisdiction and personal jurisdiction
over all parties,” In re Bridgestone/Firestone, 420 F.3d at 704.
5. Our colleague acknowledges that the Seventh
Circuit’s Kamel case supports our result (Diss. Op. at 2–3), but
cannot distinguish it away. The dissent’s only quibble with the
case is apparently Kamel’s lack of citation or explanation (Diss.
Op. at 3 n.1), but that does not prevent us from joining the
Seventh Circuit on this issue. The dissent also ignores the
Seventh Circuit’s reiteration of Kamel’s principles in its 2005 In
re Bridgestone/Firestone case quoted above.
6. The dissent restricts Gulf Oil to holding “only that
where the ‘principle of forum non conveniens [applies] a court
may resist imposition upon its jurisdiction even when
jurisdiction is authorized by the letter of a general venue
statute.’” (Diss. Op. at 3 n.2 (quoting Gulf Oil, 330 U.S. at 507)
(alteration in original).) This ignores the immediately preceding
sentence in the Gulf Oil opinion, the one quoted above that
forum non conveniens “presupposes at least two forums in
which the defendant is amenable to process,” Gulf Oil, 330 U.S.
41at 507; see also id. at 504 (noting that “the doctrine of forum
non conveniens can never apply if there is absence of
jurisdiction or mistake of venue”).
7. Our citation to the Ninth Circuit’s Patrickson case is
criticized as “inapposite.” (Diss. Op. at 3 n.2.) We agree that
the Supreme Court did not explicitly discuss its affirmance of
the Ninth Circuit’s reversal of the forum non conveniens
dismissal for a lack of subject matter jurisdiction. But as
Nixon’s attorney general John Mitchell said, in his oft-
misquoted phrase, “You’d be better informed if instead of
listening to what we say, you watch what we do.” The Oxford
Dictionary of American Legal Quotations 254 (Fred R. Shapiro
ed., 1993). What the Court did speaks louder than its lack of
discussion about it.
8. The dissent concedes that the Supreme Court stated
that forum non conveniens “‘can never apply’” without
jurisdiction, but then claims that courts may abstain from
exercising their jurisdiction without first checking to see if they
have it. (Diss. Op. at 4 (quoting Gulf Oil, 330 U.S. at 504).) In
other words, our colleague believes that a court can rule on
forum non conveniens—which requires jurisdiction—just so
long as it pretends that it has jurisdiction. But if a court suspects
that it does not have personal jurisdiction over the parties, can
it still dismiss for forum non conveniens? What if that court
knows for certain that it does not have personal jurisdiction?
We cannot tell how far the dissent’s principle of willing
42
blindness goes, but we decline to allow courts to exercise this
legal fiction when ruling on a doctrine that depends by
definition on the courts’ having jurisdiction.
9. Last, the dissent claims that, while “it is important to
determine whether the allegedly more convenient forum has
jurisdiction to entertain the suit, there is no utility in, and no
doctrinal necessity for, insisting that the present forum
determine its own jurisdiction before dismissing.” (Diss. Op. at
4.) But this is certainly incorrect. The D.C. Circuit admitted as
much in Papandreou. Cf. 139 F.3d at 256 n.6. It recognized
that district courts without jurisdiction may not grant conditional
dismissals on forum non conveniens grounds. Therefore, while
district courts can “determine” whether the alternative forum has
jurisdiction, they cannot make their decision stick under the
dissent’s reasoning. The usefulness of and necessity for our
holding are that it grants district courts plenary power to deal
with the consequences of their forum non conveniens dismissals.
Not only can courts dismiss cases once their jurisdiction is
established, but they can also enforce those dismissals and
protect the non-moving parties in those cases.
In sum, we appreciate the dissent’s arguments, but we
remain unpersuaded and unchanged in our conviction that forum
non conveniens, by its very terms, requires courts beforehand to
ascertain and have subject matter jurisdiction and personal
43
jurisdiction.24
* * * * *
There is a difference between the typical “hypothetical
jurisdiction” scenario contemplated in Ruhrgas and the situation
we face. In Ruhrgas, the choice was basically between (a)
dismissing based on personal jurisdiction and (b) reaching (and
possibly finding) subject matter jurisdiction and then dismissing
based on personal jurisdiction. See Ruhrgas, 526 U.S. at 588.
Here, the choice is between (a) dismissing for forum non
conveniens or (b) reaching personal jurisdiction and either (i)
dismissing based on the lack of it or (ii) finding personal
jurisdiction and dismissing for forum non conveniens.
Two characteristics make the two situations different.
First, subject matter jurisdiction and personal jurisdiction are
two of the prerequisites for litigation to proceed, but they are
separate inquiries. Thus, it is no surprise that Ruhrgas leaves it
up to the court to decide first whichever one it wants—there is
no necessary order of decision. But forum non conveniens by
definition requires two otherwise proper forums with both
subject matter jurisdiction and personal jurisdiction. In this
24
Proper venue, while not dealt with directly in this case, is
of course also required, though, like personal jurisdiction, it too
can be waived. 15 Wright, Miller & Cooper, supra, § 3828, at
287, § 3829, at 309.
44
light, subject matter jurisdiction and personal jurisdiction are
simply two of the horses to which the litigation cart is harnessed.
Deciding forum non conveniens before jurisdiction puts the cart
before the horses.
Second, a court following Ruhrgas can dismiss with the
certainty that the case is not properly before it. Whether the case
is deficient on subject matter jurisdiction or personal
jurisdiction, the court cannot decide the merits. A case
dismissed for forum non conveniens, on the other hand, is not
faulty—by definition. It is a case properly before the court to
determine the merits, although it is simply more convenient to
do so elsewhere. But if a court were to dismiss a case for forum
non conveniens without ascertaining jurisdiction (whether
subject matter or personal), it could not enforce sending the case
to the alternative forum. Papandreou, 139 F.3d at 256 n.6.
IV. C ONCLUSION
The District Court correctly determined that subject
matter (here admiralty) jurisdiction exists because the injury
resulting from Sinochem’s alleged misrepresentations occurred
on navigable waters and because the activity giving rise to
MISC’s claim had the requisite connection with maritime
activity. But the Court should have ascertained all aspects of its
jurisdiction—including personal jurisdiction—before engaging
in a forum non conveniens analysis. We therefore vacate and
remand this case to the District Court for a determination of
45
whether personal jurisdiction exists.
46
MALAYSIA INT’L SHIPPING CORP. v. SINOCHEM INT’L
CO. LTD. – NO. 04-1816
STAPLETON, J., Dissenting:
In essence, this matter involves a claim that Sinochem
committed fraud on the Chinese court in the course of securing
an arrest of the vessel, and the District Court did not abuse its
discretion in determining that a balancing of the relevant private
and public factors counseled abstention in favor of that court.
See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 507 (1947).
Accordingly, I would affirm the order of the District Court.
Our Court today mandates that the District Court subject
Sinochem to discovery and other proceedings in a forum which
the District Court rightly regards as inappropriate. That mandate
subverts a primary purpose of the doctrine of forum non
conveniens. That doctrine is intended to protect a defendant
from being compelled to litigate in a forum where it will have to
shoulder the burden of substantial and unnecessary effort and
expense. A doctrine having this objective should not be applied
in a manner that imposes a substantial and unnecessary litigation
47
burden on the defendant, absent some important countervailing
consideration. The only countervailing consideration identified
by Malaysia is the doctrine that courts without subject matter
jurisdiction and personal jurisdiction over the defendant are
powerless to adjudicate a case or controversy. While this is a
valid and fundamental proposition, it does not dictate that the
District Court conduct discovery and rule upon its personal
jurisdiction over Sinochem before abstaining in favor of a far
more appropriate forum.
A court may not assume that it has jurisdiction and then
proceed to adjudicate the claim before it. The Supreme Court
rejected such a “hypothetical jurisdiction” approach in Steel Co.
v. Citizens for a Better Environment, 523 U.S. 83, 94 (1998),
“because it carries the courts beyond the bounds of authorized
judicial action and thus offends fundamental principles of
separation of powers.” The Supreme Court has made clear,
however, that this principle is inapposite here:
“[A] court that dismisses on . . . non-merits
grounds . . . before finding subject-matter
jurisdiction, [however] makes no assumption of
law-declaring power that violates the separation
of powers principles underlying . . . Steel
48
Company.” In re Papandreou, 139 F.3d 247, 255
(CADC 1998). It is hardly novel for a federal
court to choose among threshold grounds for
denying audience to a case on the merits. Thus,
as the Court observed in Steel Co., district courts
do not overstep Article III limits when they
decline jurisdiction of state-law claims on
discretionary grounds without determining
whether those claims fall within their pendent
jurisdiction, see Moor v. County of Alameda, 411
U.S. 693, 715-716 (1973), or abstain under
Younger v. Harris, 401 U.S. 37 (1971), without
deciding whether the parties present a case or
controversy, see Ellis v. Dyson, 421 U.S. 426,
433-434 (1975).
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 584-85 (1999).
My colleagues candidly acknowledge that the forum non
conveniens doctrine presents “non merits issues” for the purpose
of applying Steel Co. and Ruhrgas. They also concede that the
result they reach “may not seem to comport with the general
interests of judicial economy and may, in this case, ultimately
result in a waste of resources.” Op. at 35. Moreover, they are
able to cite only one case – Kamel v. Hill-Rom Co., 108 F.3d
49799 (7th Cir. 1997)25 – that arguably requires the result the Court
here reaches.26
25
In Kamel, the District Court dismissed on grounds of forum
non conveniens and the Court of Appeals agreed with that
determination and affirmed. The Court of Appeals also found,
however, that, while the complaint alleged complete diversity,
there was a non-diverse party, and that the District Court,
accordingly, had “lacked [subject matter] jurisdiction to rule on
[the] forum non conveniens motion.” 108 F.3d at 805. The
Court held that it was authorized by Fed. R. Civ. Proc. 2, as
construed in Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
828 (1989), to dismiss the non-diverse dispensable party. It did
not cite precedent for or explain either (a) its finding that the
District Court was not authorized to rule on the forum non
conveniens motion, or (b) its apparent conclusion that dismissal
of the non-diverse party was a prerequisite to an affirmance.
26
The other Supreme Court and Court of Appeals precedents
relied upon by the Court are inapposite. Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 507 (1947), holds only that where the
“principle of forum non conveniens [applies] a court may resist
imposition upon its jurisdiction even when jurisdiction is
authorized by the letter of a general venue statute.” Patrickson
v. Dole Food Co., 251 F.3d 795 (9th Cir. 2001), aff’d 538 U.S.
468 (2003), was a case removed from state court in which the
District Court determined that it had removal jurisdiction and
thereafter dismissed on grounds of forum non conveniens. The
Court of Appeals concluded that the District Court did not have
removal jurisdiction and remanded with instructions that the
50
The only rationale tendered for the Court’s result is its
assertion, based on Black’s Law Dictionary, that “forum non
conveniens is the voluntary transfer of a case from one legally
competent court to another for reasons of convenience.” Op. at
34. From this generalization, the Court concludes that a “court
cannot give away something it has no right to have in the first
place.” Op. at 34. I am unpersuaded.
A court with jurisdiction normally has an obligation to
exercise it. The forum non conveniens doctrine is an exception
to this rule. That doctrine authorizes a court to decide not to
exercise jurisdiction which it possesses, authority that by
definition is unnecessary in the absence of jurisdiction. In this
limited sense, it is true that “the doctrine of forum non
case be sent back to state court. The Supreme Court agreed that
the District Court was without jurisdiction, making no comment
regarding the relief afforded by the Circuit Court judgment. No
issue here relevant was argued before the Court of Appeals.
While not discussed by the Court of Appeals, the issue presented
by the case was whether in an improperly removed case the
District Court or the state court should resolve a forum non
conveniens issue. Given the comity considerations, it clearly
should be the latter, a result that is, in any event, dictated by 28
U.S.C. § 1447(c) (“If at any time before final judgment it
appears that the district court lacks subject matter jurisdiction,
the case shall be remanded.”). As my colleagues concede,
Dominguez-Cota v. Cooper Tire & Rubber Co., 396 F.3d 650(5th Cir. 2005), is based on the faulty premise that forum non
conveniens presents merits issues.
51
conveniens can never apply if there is absence of jurisdiction.”
Gulf Oil, 330 U.S. at 504. It does not follow, however, that a
court may not decide to abstain from exercising any jurisdiction
it may have without affirmatively determining the boundaries of
its jurisdiction.27 While, for obvious reasons, it is important to
determine whether the allegedly more convenient forum has
jurisdiction to entertain the suit, there is no utility in, and no
doctrinal necessity for, insisting that the present forum
determine its own jurisdiction before dismissing.
27
As the Court of Appeals for the District of Columbia
explained in In re Papandreou, 139 F.3d 247, 255-56 (D.C. Cir.
1998) (citations and footnote omitted):
Forum non conveniens does not raise a
jurisdictional bar but instead involves a deliberate
abstention from the exercise of jurisdiction.
While such abstention may appear logically to rest
on an assumption of jurisdiction, it is as merits-
free as a finding of no jurisdiction. By the same
principle on which the Court has approved a
discretionary declination to exercise a pendent
jurisdiction that may not have existed, it would be
proper to dismiss on such grounds (if meritorious)
without reaching the FSIA [jurisdictional] issue.
Similarly, dismissal for want of personal
jurisdiction is independent of the merits and does
not require subject matter jurisdiction.
52
In short, a court “makes no assumption of law declaring
power” when it decides not to exercise whatever jurisdiction it
may have. Ruhrgas, 526 U.S. at 584 (quoting In re Papandreou,
139 F.3d at 255). This means that a district court may dismiss
on forum non conveniens grounds without first determining its
own jurisdiction. In re Monegasque de Reassurances S.A.M. v.
Nak Naftogaz of Ukr., 311 F.3d 488 (2d Cir. 2002); In re
Papandreou, 139 F.3d 247 (D.C. Cir. 1998). I would affirm.
53