District Courts May Take Quickest Path to Dismissal

Sinochem International Co. v. Malaysia International Shipping Corp., 127 S.Ct. 1184 (2007).

Allyson L. Vaughn, 3L, University of Mississippi School of Law

The United States Supreme Court has ruled that a district court does not have to consider a threshold objection, such as subject matter jurisdiction or personal jurisdiction, before responding to a defendant’s forum non conveniens plea.

Background
Sinochem, a Chinese state-owned importer, entered into a contract with Triorient for the purchase of steel coils. Under the contract, Triorient would be paid under a letter of credit when Sinochem received a bill of lading certifying that the coils had been loaded for shipment to China on or before April 30, 2003. Triorient subcharted a vessel owned by Malaysia International to transport the coils to China. A bill of lading dated April 30, 2003 prompted payment; however, Sinochem believed that Malaysia International fraudulently backdated the bill of lading and petitioned a Chinese admiralty court for preservation of a maritime claim and arrest of the vessel. The Chinese court ordered the vessel detained.

Malaysia International filed the present action in United States district court, claiming that Sincohem’s preservation petition contained misrepresentations and that they were entitled to compensation for losses incurred during the detainment of the vessel. Sinochem sought dismissal based on lack of subject-matter jurisdiction and personal jurisdiction and forum non conveniens.

Under the doctrine of forum non conveniens, a federal district court may dismiss an action if an alternative jurisdiction exists that would be more convenient and appropriate for adjudicating the dispute. Additionally, the court can dismiss based on forum non conveniens if the chosen forum is inappropriate based on the court’s own administrative and legal problems. A dismissal on these grounds reflects the court’s assessment of a “range of considerations, most notably the convenience to the parties and the practical difficulties that can attend the adjudication of a dispute in a certain locality.”1

The district court agreed with Sinochem and found that the case should be adjudicated in Chinese courts and dismissed the case based on forum non conveniens. However, the appellate court did not agree with the lower court. The Third Circuit Court of Appeals held that the district court could not dismiss the case based on the doctrine of forum non conveniens until it determined that it had personal jurisdiction and subject matter jurisdiction over the defendant.

The Doctrine of Forum Non Conveniens
In a unanimous opinion authored by Justice Ginsburg, the Supreme Court recognized that there is no mandatory sequence in which those “nonmerit issues” must be resolved; therefore, if forum non conveniens qualified as one of the nonmerit issues, it could be decided before considering personal or subject matter jurisdiction. The Court noted that a federal court generally must establish its jurisdiction over the cause and the parties prior to ruling on the merits of the case. While an inquiry into a forum non conveniens determination may involve the examination of some factual elements of the controversy, Justice Ginsburg explained that the critical element rendering this doctrine a nonmerits issue is that to resolve such a motion the court does not have to exercise any substantive law-declaring power.

A district court may disregard questions of subject-matter and personal jurisdiction and dismiss based on forum non conveniens when “considerations of convenience, fairness and judicial economy so warrant.”2 Justice Ginsburg found this to be a “textbook case for immediate forum non conveniens dismissal.”3 For instance, establishing personal jurisdiction would burden Sinochem with great expense and delay during discovery and would inevitably end with the district court dismissing for forum non conveniens. The Supreme Court found that the gravamen of Malaysia International’s complaint is an issue best left for resolution by the Chinese court.

Conclusion
The Court held that when a lengthy discovery process is required to determine subject-matter or personal jurisdiction and forum non conveniens considerations favor dismissal, the court may follow the least burdensome path and dismiss based on forum non conveniens.

Endnotes
1. Sinochem International Co. v. Malaysia International Shipping Corp., 127 S.Ct. 1184, 1190 (2007).
2. Id. at 1192.
3. Id. at 1194.

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