8 BRITA NN IA NE WS BRITANNIA NEWS 9

Are forum selection

clauses enforceable Forum selection clauses
United States maritime law recognises the presumptive
The basic premise for this argument is that US
maritime law provides for the independent legal

against in rem claims? validity of mandatory forum selection clauses in bills of

Recent court decisions in the US have refused to enforce forum
selection clauses in bills of lading in circumstances where the foreign
forum does not recognise the concept of an in rem claim against a
vessel. This has resulted in the court retaining the in rem claim against
the vessel while dismissing the in personam claim against the carrier.
lading governed by COGSA.1 The presumptive validity
of mandatory forum selection clauses is rebuttable,
however, and may be overcome in the following ways:
• by ‘clearly demonstrating that it is unreasonable or
invalid’;2 or
• if the ‘ . . . substantive law to be applied [by the
chosen forum] would reduce the carrier’s obligations
to the cargo below what COGSA guarantees’;3 or,
• if the forum selection clause has been waived by the
party seeking to enforce it.4
liability of a vessel in re m ,s e p a rate and apart from the
legal liability of a carrier in personam. If the foreign
forum identified in the bill of lading does not provide
for in rem liability of a vessel, then cargo interests’
rights under COGSA will be ‘lessened’ in the event
that the forum selection clause is enforced. These
decisions, where the claims against carriers in
personam were dismissed, were in respect of cases
where there were Korean forum selection clauses in
the bills of lading, while the claims against the vessel
in rem were not dismissed.6
As a result, the claims against the vessel in rem
remained to be litigated in the US.

The burden of proving the invalidity of the mandatory
forum selection clause is on the party seeking to block
its enforcement.
In rem claims against vessels
Enforcement of forum selection clauses in bills of
lading has come under scrutiny in the context of in
rem claims against vessels. Cargo interests have
argued, successfully in a growing number of cases, that
forum selection clauses should not be enforced, as
they violate § 1303(8) of COGSA, in circumstances
where a foreign forum does not recognise an in rem
claim against the vessel.5
This issue is, however, by no means settled. The only
Court of Appeals that has addressed the issue has
landed on the side of enforcement of a forum
selection clause in respect of an in rem claim against
the vessel. In Fireman’s Fund Ins. Co. v M/V DSR
Atlantic,7 the Ninth Circuit found that the Korean forum
selection clause in the bill of lading did not violate
§ 1303(8) of COGSA in the context of an in rem claim
against the vessel. As a result, the entire lawsuit was
dismissed, including the in rem claim. The Fireman’s
Fund decision has been followed by a number of
district courts in the US.8

Our thanks go to Kirk M H Lyons of

Lyons, Skoufalos, Proios & Flood, LLP,
of New York for this article.
8 BRITA NN IA NE WS BRITANNIA NEWS 9

Are forum selection

clauses enforceable Forum selection clauses
United States maritime law recognises the presumptive
The basic premise for this argument is that US
maritime law provides for the independent legal

against in rem claims? validity of mandatory forum selection clauses in bills of

Recent court decisions in the US have refused to enforce forum
selection clauses in bills of lading in circumstances where the foreign
forum does not recognise the concept of an in rem claim against a
vessel. This has resulted in the court retaining the in rem claim against
the vessel while dismissing the in personam claim against the carrier.
lading governed by COGSA.1 The presumptive validity
of mandatory forum selection clauses is rebuttable,
however, and may be overcome in the following ways:
• by ‘clearly demonstrating that it is unreasonable or
invalid’;2 or
• if the ‘ . . . substantive law to be applied [by the
chosen forum] would reduce the carrier’s obligations
to the cargo below what COGSA guarantees’;3 or,
• if the forum selection clause has been waived by the
party seeking to enforce it.4
liability of a vessel in re m ,s e p a rate and apart from the
legal liability of a carrier in personam. If the foreign
forum identified in the bill of lading does not provide
for in rem liability of a vessel, then cargo interests’
rights under COGSA will be ‘lessened’ in the event
that the forum selection clause is enforced. These
decisions, where the claims against carriers in
personam were dismissed, were in respect of cases
where there were Korean forum selection clauses in
the bills of lading, while the claims against the vessel
in rem were not dismissed.6
As a result, the claims against the vessel in rem
remained to be litigated in the US.

The burden of proving the invalidity of the mandatory
forum selection clause is on the party seeking to block
its enforcement.
In rem claims against vessels
Enforcement of forum selection clauses in bills of
lading has come under scrutiny in the context of in
rem claims against vessels. Cargo interests have
argued, successfully in a growing number of cases, that
forum selection clauses should not be enforced, as
they violate § 1303(8) of COGSA, in circumstances
where a foreign forum does not recognise an in rem
claim against the vessel.5
This issue is, however, by no means settled. The only
Court of Appeals that has addressed the issue has
landed on the side of enforcement of a forum
selection clause in respect of an in rem claim against
the vessel. In Fireman’s Fund Ins. Co. v M/V DSR
Atlantic,7 the Ninth Circuit found that the Korean forum
selection clause in the bill of lading did not violate
§ 1303(8) of COGSA in the context of an in rem claim
against the vessel. As a result, the entire lawsuit was
dismissed, including the in rem claim. The Fireman’s
Fund decision has been followed by a number of
district courts in the US.8

Our thanks go to Kirk M H Lyons of

Lyons, Skoufalos, Proios & Flood, LLP,
of New York for this article.
10 BRITANNIA NEW S ARE FO RUM SELECTION C LAUSES EN FOR CE ABLE BRITANNIA NEWS 11
AG AIN ST IN REM C LAIMS?

K EY POINTS

Are forum selection clauses

Living with the
enforceable against in rem claims?

1 United States Carriage of Goods at Sea

Act, 46 USC § 1300 et seq. (‘COGSA’); Vimar
Seguros y Reaseguros, S.A. v. M/V Sky
Reefer, 515 U.S. 528 (1995).

2 M/S Bremen v. Zapata Off-Shore Co. ,4 0 7

U . S .1 , 15 (1972).
3 Sky Reefer, supra at 515 U.S. 539.
4 In re Rationis Enterprises, Inc. of Panama,
1999 WL 6364 (S.D.N.Y. 1999).
5 Section 1303(8) of COGSA provides that:-
‘[a]ny clause…in a contract of carriage
relieving the carrier or ship from liability
for loss or damage to …goods, …or
lessening such
liability …shall be null and void and of no
effect.’ (Emphasis added).
6 Tokio Marine & Fire Ins. Co. v. M/V
Turquoise, 2001 AMC 1692 (D. S . C .2 0 0 1 ) ;
Allianz Ins. Co. of Canada v. Cho Yang
Shipping Co., 131 F.Supp.2d 787 (E.D.Va.
2 0 0 0 ) ;I nternational Marine Underwriters v.
M/V Kasif Kalkavan, 1998 AMC 765 (S.D.N.Y.
1998). Dismissal of the in personam claim
would apply equally whether the carrier
were the vessel owner, charterer, or
NVOCC.
7 131 F.3d 1336 (9th Cir. 1997).
8 See, eg, Thyssen Inc. v. M/V Markos N,
2000 U.S. Dist. Lexis 9764 (S.D.N.Y. 2001);
Kelso Enterprises, Inc. v. M/V Wisida Frost, 8
F. Supp 2d 1197 (C.D. Cal 1998); Ab ra r
Surgery Ltd. v. M/V Lolly Oro, 1999 U.S. Dist.
Lexis 6768 (S.D.N.Y. 1999); Tradebed, Inc. v.
M/V Agia Sofia, 1997 U.S. Dist. Lexis 23001
(D.N.J.1997).
9 See Tokio Marine in endnote 6.
Security issues
Does the existence of a foreign forum selection clause
serve as a ground to vacate a Rule C arrest or Rule B
attachment proceeding in the US under a theory that, by
virtue of the forum selection clause in the bill of lading,
the parties have agreed that all claims arising under the
bill of lading should be litigated in a foreign forum?
The brief answer is probably ‘no’ based on the few cases
that have addressed this issue. For example, the District
of South Carolina has refused to vacate a vessel’s Rule C
arrest since it found that enforcement of the Korean
forum selection clause would lessen the vessel’s in rem
liability in violation of § 1303(8) of COGSA. Thus, the
Letter of Undertaking given as a substitute for the
vessel remained in place to secure the in rem claim.9
In the context of a Rule B attachment, the Ninth Circuit
Court of Appeals and Southern District of New York
have refused to vacate an attachment on this ground.
These courts have found that the attachment was
essentially for purposes of security and the existence
of a foreign forum selection clause in the governing
contract should not deprive the claimant of the ability
to obtain security for the claim.1 0
In sum, the law governing enforcement of a forum
selection clause in the context of an in rem claim against
a vessel is in a state of flux. It remains to be seen how this
issue will be addressed by other Courts of Appeal.
• US maritime law provides for the
independent liability of a vessel in rem,
separate and apart from the legal liability
of a carrier in personam;
Hill Harmony
We look at the consequences of this impo rt a nt English decision by the House
• US maritime law recognises the
presumptive validity of mandatory forum of Lords regarding a Master’s obligation to comply with charterer’s orders as
selection clauses in bills of lading
governed by COGSA (eg Sky Reefer);
to the route that the ship is to take.
• The enforcement of forum selection
clauses has been scrutinised by US
courts in the context of in rem claims
against vessels;
• Where the foreign forum (stipulated in the
relevant forum selection clause) does not
recognise an in rem claim against a vessel,
the forum selection clause may not be
enforced (in respect of the in rem claim);
• The existence of a forum selection clause
probably does not serve as a ground to
vacate the arrest or attachment of a vessel;
but the law is not firmly established on
this point.

10 Polar Shipping Ltd. v. Oriental Shipping

Corp., 680 F.2d 627 (9th Cir. 1982); Staronset
Shipping Ltd. v. North Star Nav i g at i o n ,I n c. ,
659 F.Supp 189 (S.D.N.Y. 1987). There is an
important distinction between foreign
litigation clauses and foreign arbitration
clauses. Specific statutory authority allows
a party to seek security in aid of
arbitration, 9 USC § 4; whereas there is no
such specific statutory authority for
security in aid of foreign litigation.