[Chris Whytock is a Ph.D. candidate at Duke University and will join the faculty of the University of Utah S.J. Quinney College of Law in the fall. He has kindly agreed to lend his timely analysis of the Sinochem opinion to Opinio Juris readers]
On March 5, 2007, the U.S. Supreme Court announced one of its rare decisions on the doctrine of forum non conveniens. The decision has a somewhat narrow scope, and therefore is unlikely to give observers of transnational litigation quite as much to talk about as the court’s last major statement on the doctrine. Nevertheless, the decision is an interesting one, for it resolved a significant circuit split and, because of both what it addressed and what it failed to address, it may have broader implications for forum non conveniens practice.
The case, Sinochem International Co. Ltd. v. Malaysia International Shipping Corp., arose from a dispute over a bill of lading. Petitioner Sinochem, a Chinese state-owned company, ordered steel coils from Triorient Trading, Inc., an American manufacturer, pursuant to a contract requiring shipment by April 30, 2003. Triorient had the coils shipped on a vessel subchartered from respondent Malaysia International. Upon arrival in China, Malaysia International’s vessel was arrested by order of a Chinese admiralty court, based on a petition filed by Sinochem alleging that Malaysia International had falsely backdated the bill of lading to indicate an April 30 shipment, when in fact the shipment was not loaded until May. Malaysia International then sued Sinochem in the U.S. District Court for the Eastern District of Pennsylvania, alleging that Sinochem made misrepresentations to the Chinese admiralty court, leading to the vessel’s arrest.
Sinochem moved to dismiss the U.S. action. The U.S. district court determined that it had subject matter jurisdiction, but that discovery would be needed before it could determine whether it had personal jurisdiction over Sinochem. However, the court dismissed the case without resolving the personal jurisdiction question, reasoning that even if, hypothetically, it did have personal jurisdiction, dismissal was appropriate under the forum non conveniens doctrine.
Malaysia International appealed to the Court of Appeals for the Third Circuit, presenting the following issue: Whether a district court must determine that it has jurisdiction before dismissing a suit on forum non conveniens grounds? Noting a split among circuits (with the D.C. and Second Circuits, but not the Fifth, Seventh and Ninth Circuits, allowing forum non conveniens dismissals without prior resolution of jurisdictional issues), the circuit court held that forum non conveniens is a non-merits ground for dismissal, but that the district court nevertheless should have concluded its jurisdictional inquiry before dismissing under the doctrine. It therefore reversed. The circuit court’s logic was simple and formalistic. The essence of the forum non conveniens doctrine is the discretion it gives a court to abstain from exercising jurisdiction when there is a more appropriate foreign court. “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.” 436 F.3d 349, 363. Thus, “the very nature and definition of forum non conveniens presumes that the court deciding this issue has valid jurisdiction.” Id. at 361. The circuit court also pointed to language from the Supreme Court’s opinion in one of its seminal forum non conveniens decisions, Gulf Oil Corp. v. Gilbert, stating that “[t]he doctrine . . . can never apply if there is absence of jurisdiction . . . .” Id.
In a unanimous decision, the Supreme Court reversed the Court of Appeals. The Supreme Court began by emphasizing the principle underlying its 1998 decision in Steel Co. v. Citizens for Better Environment and its 1999 decision in Ruhrgas AG v. Marathon Oil Co.: that jurisdiction is essential only when a court makes a decision on the merits of a case (slip op. at 7-8). It then characterized forum non conveniens dismissal as a determination denying the plaintiff a decision on the merits because the merits should be decided elsewhere—a determination that “does not entail any assumption by the court of a substantive law-declaring power” (slip op. at 8-9). Therefore, the Supreme Court concluded, forum non conveniens is a non-merits ground for dismissal for which jurisdiction need not be established. This means that “[a] district court . . . may dispose of an action by a forum non conveniens dismissal, bypassing questions of subject-matter and personal jurisdiction . . .” (slip op. at 8). Because Gilbert did not address the issue before the court in Sinochem—whether a court may dismiss on forum non conveniens grounds before deciding on jurisdiction—the Supreme Court argued that the language from Gilbert quoted by the circuit court was “no hindrance to the decision we reach today,” particularly when understood in context.
The decision strikes me as a small but significant victory for pragmatism in transnational litigation. As the Supreme Court argued, to require the district court to resolve the jurisdictional issue would have led to burden and delay—“[a]nd all to scant purpose: The District Court inevitably would dismiss the case without reaching the merits, given its . . . forum non conveniens appraisal.” Such an outcome also would disserve judicial economy and be in tension with one of the stated purposes of forum non conveniens: to reduce inconvenience. The circuit court acknowledged these concerns in its opinion, but concluded that its hands were tied by doctrine: “precedent, logic, and the very terms of the forum non conveniens doctrine dictate this result.” At the risk of reading too much into the Supreme Court’s interpretive methodology in the case, I would suggest that the decision may indicate a rejection of highly formalistic analysis of the rules of transnational litigation, and an embrace of a more purposive and functionally-oriented approach.
That said, the decision is not entirely satisfactory from a conceptual standpoint, at least if one insists on characterizing forum non conveniens as a doctrine of abstention. After all, as the circuit court noted, how can a court abstain from exercising a power that it does not have? In my own work, which takes a global governance perspective on judicial decisionmaking in transnational litigation, I understand forum non conveniens as a doctrine of allocation, namely allocation of adjudicative authority between domestic and foreign courts. Perhaps such an understanding can help resolve the conceptual difficulty that preoccupied the circuit court. Moreover, this understanding resonates with the Supreme Court’s forum non conveniens precedents, according to which the doctrine presupposes at least two courts and “furnishes the criteria for choice between them.” Gilbert, 330 U.S. 501, 506-507.
The Sinochem decision does not have the doctrinal impact of the Supreme Court’s 1981 decision in Piper v. Reyno, which provided important clarifications regarding the level of deference owed to a plaintiff’s choice of forum and the proper methodology for analyzing the proposed alternative forum. However, it does provide some clues about the nature of forum non conveniens decisionmaking that appear to be consistent with some of the results of my empirical research on forum non conveniens practice in U.S. district courts. For example, while the Supreme Court’s opinion did not discuss the district court’s analysis of the alternative Chinese forum or the private or public interest factors that are at the core of the forum non conveniens doctrine, it did emphasize the fact that the territorial locus of the underlying dispute between Sinochem and Malaysia International was almost entirely foreign. Although dictum, this shorthand approach is consistent with findings suggesting that forum non conveniens decisionmaking may, in practice, be driven more by what I call a “territoriality heuristic” than by thorough and systematic application of the doctrine itself. Moreover, although political scientists—and a growing number of empirical legal scholars—emphasize the role of ideology as a primary determinant of judicial decisionmaking, the unanimity of the Supreme Court’s decision is a reminder that ideological explanations are not necessarily convincing when applied to procedural decisionmaking in transnational litigation. In fact, in my empirical analyses, the partisan orientation of judges does not have a statistically significant effect on the decision to grant or deny forum non conveniens motions.
Perhaps more important than what the Supreme Court did address is what it did not address in Sinochem. It explicitly declined to determine whether a district court can condition forum non conveniens dismissals—which is a common practice—without first determining that it has jurisdiction. Moreover, as noted by other commentators, it is debatable whether the availability and adequacy prongs of the forum non conveniens doctrine’s alterative forum analysis sufficiently protect plaintiffs’ interests—but the facts and issues of the Sinochem case did not give the court an opportunity to make a foray onto this controversial terrain.
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Many thanks to Peggy McGuinness for inviting me to share my thoughts on this decision. I have posted the empirical research referred to above on my SSRN author page
—the paper is called “Politics and the Rule of Law in Transnational Judicial Governance: The Case of Forum Non Conveniens”—and I will be making a more general presentation on governance-oriented analysis of transnational litigation on a New Voices panel at the upcoming ASIL annual meeting.