North Carolina Business Litigation Report

The World Gets Even Flatter: Fourth Circuit Applies English Law And Enforces English Forum Selection Clause

The Fourth Circuit ruled today in Albemarle Corp. v. AstraZeneca UK Ltd. that it was required to interpret the forum selection clause negotiated by the parties under English law, which meant that the clause would be read as requiring litigation to be brought in an English court, even though the clause would have been  deemed permissive under American law and would have allowed the lawsuit at issue to be filed in the South Carolina court where it had in fact been filed.

The contract, which required AstraZeneca to buy an ingredient for an anesthetic from Albemarle, contained a forum selection clause which said that the contract "shall be subject to English Law and the jurisdiction of the English High Court."

In affirming the dismissal of the case, the Fourth Circuit aligned itself with six other circuits and held that "a federal court interpreting a forum selection clause must apply federal law in doing so."  Federal law on this subject is that ‘an agreement conferring jurisdiction in one forum will not be interpreted as excluding jurisdiction elsewhere unless it contains specific language of exclusion.’"

English law?  In this case it is as different from federal law as my breakfast this morning was from bangers and mash.  '"Under English law, when the parties designate the English High Court as an appropriate forum, the designation is mandatory and exclusive."  Thus, litigation in the High Court was required per English law.

The only issue remaining for the Court was whether it would be unreasonable to enforce the English forum selection clause, an inquiry required by a 1972 Supreme Court decision, The Bremen, 407 U.S. 1 (1972).  In The Bremen, the Supreme Court upheld an English forum selection clause "in the light of present-day commercial realities and expanding international trade" unless it could be shown that such enforcement might violate "a strong public policy" of the unselected forum in which the case had been brought.

In the Albemarle case, Judge Niemeyer rejected the argument that South Carolina had a strong public policy against the enforcement of forum selection clauses because of a state statute disfavoring such clauses.  Quoting The Bremen, he said that the federal policy enforcing such clauses made them "an almost indispensable precondition  to achievement of the orderliness and predictability essential to any international business transaction."  Id. at 13-14.

The North Carolina Business Court has previously enforced a forum selection clause specifying a foreign jurisdiction in Speedway Motorsports International Ltd. v. Bronwen Energy Trading, Ltd., 2009 NCBC 3 (N.C. Super. Ct. Feb. 18, 2009) (Diaz).

 

 

Trackbacks (0) Links to blogs that reference this article Trackback URL
http://www.ncbusinesslitigationreport.com/admin/trackback/232259
Comments (0) Read through and enter the discussion with the form at the end
Mack Sperling
Brooks Pierce, LLP
2000 Renaissance Plaza
230 North Elm Street
Greensboro, NC 27401
336.373.8850

1600 Wachovia Capitol Center
150 Fayetteville Street
Raleigh, NC 27601
919.839.0300