Trafigura Beheer B V v. M/T Probo Elk, et al

United States Court of Appeals
Fifth Circuit
F I L E D
July 16, 2007
Charles R. Fulbruge III
Clerk
In the
United States Court of Appeals
for the Fifth Circuit
_______________
m 06-20576
_______________
TRAFIGURA BEHEER B.V.,
Plaintiff-Appellant,
VERSUS
M/T PROBO ELK,
HER ENGINES, TACKLE, APPAREL, ETC., IN REM;
PROBO ELK SHIPPING INC.;
LAURIN TANKERS AMERICA INC.,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Southern District of Texas
m 4:05-CV-378
______________________________
Before SMITH, BENAVIDES, and DENNIS,
Circuit Judges.
PER CURIAM:*
Trafigura Beheer B.V. (“Trafigura”) ap-
peals a dismissal based on improper venue.
Finding no error, we affirm.
* Pursuant to 5TH CIR. R. 47.5, the court has
determined that this opinion should not be pub-
lished and is not precedent except under the limited
(continued...)
*(...continued)
circumstances set forth in 5TH CIR. R. 47.5.4.

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I.
Trafigura contracted with defendants Probo
Elk Shipping Inc. and Laurin Tankers America
Inc. to transport a shipment of naphtha from
Algeria to the Netherlands aboard the M/T
PROBO ELK. The charter party contained a
forum selection clause stating that “[t]he High
Court in London shall have exclusive jurisdic-
tion over any dispute which may arise out of
this charter.” According to Trafigura, the
naphtha was in good condition when it was
loaded onto the PROBO ELK in Algeria, but
when it arrived in the Netherlands the intended
buyer rejected it for contamination. Trafigura
eventually located another buyer in the United
States and arranged for the defendants to de-
liver the naphtha to Houston.
Once the shipment arrived in Texas, Trafi-
gura threatened to arrest the ship and assert
jurisdiction in rem. It sued in the Southern
District of Texas, claiming breach of contract,
breach of bailment, and negligence related to
the contamination of the naphtha. To avoid
arrest of the PROBO ELK, the ship’s under-
writers entered into a letter of undertaking
(“LOU”), agreeing to appear as claimants in
the suit and pay any final judgment up to
$775,000. The LOU did not purport to super-
sede the original agreement and expressly re-
served all defenses.1
Defendants successfully moved to dismiss
for improper venue based on the charter par-
ty’s forum selection clause. Trafigura raises
three issues on appeal. First, it claims the
LOU superseded the forum selection clause.
Second, even if it was not superseded, en-
forcement of the forum selection clause would
be unjust and unreasonable. Third, defendants
waived the forum selection clause issue by
failing to make a timely pre-answer motion.
II.
We review the enforcement of a forum sel-
ection clause de novo. Hellenic Inv. Fund,
Inc. v. Det Norske Veritas, 464 F.3d 514, 517
(5th Cir. 2006). Forum selection clauses are
presumptively enforceable under federal law in
the “interests of international comity and out
of deference to the integrity and proficiency of
foreign courts.” Haynesworth v. The Corpo-
ration, 121 F.3d 956, 962 (5th Cir. 1997)
(quoting Mitsui & Co. (U.S.A.), Inc. v. MIRA
M/V, 111 F.3d 33, 35 (5th Cir. 1997)).2 Trafi-
gura claims that the LOU superseded the char-
1 The LOU stated, inter alia, as follows:
It is further intended by this undertaking that
the rights of Trafigura Beheer BV Amsterdam
and of the M/T PROBO ELK and her claimant
be, and for all purposes shall be taken to be,
consistent with the M/T PROBO ELK having
been arrested under process issued out of the
United States District Court for the Southern
District of Texas at Houston and released by
the filing of a release bond, reservation being
(continued...)
1(...continued)
made on behalf of M/T PROBO ELK and her
claimant of all other defenses and objections
otherwise available, including but not limited to
limitation of or exoneration from liability,
arbitration and/or the right to counter security,
except as may be predicated on the fact that the
vessel was released on the basis of this un-
dertaking rather than on the posting of a release
bond.
2 Trafigura argues that Haynesworth is inappli-
cable because it is not an admiralty case and did
not involve a LOU. Haynesworth, however, relied
extensively on admiralty cases such as The Bremen
v. Zapata Off-Shore Co., 407 U.S. 1 (1972), and
Mitsui and held that the rules of these cases, which
are plainly applicable to other admiralty cases, are
also applicable outside the admiralty context. See
Haynesworth, 121 F.3d at 962.

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ter party’s forum selection clause because the
defendants agreed to appear as claimants and
pay a judgment of up to $775,000 if ordered.
Trafigura thus asserts that defendants were
waiving the forum selection clause issue by
agreeing to the Southern District of Texas as
an appropriate venue and that the LOU re-
served only “all other defenses” available to
them. That argument, however, conflates jur-
isdiction and venue.
Defendants submitted to the court’s juris-
diction by virtue of the LOU, which specifi-
callyestablished that jurisdiction would exist in
the same manner as if the ship had been ar-
rested and defendants had appeared as claim-
ants. But a party’s mere appearance as a
claimant does not waive venue. See The
Bremen, 407 U.S. at 20. As the Court ex-
plained in The Bremen, the “jurisdictional”
language of the forum selection clause does
not oust the personal or in rem jurisdiction of
the American courtSSthe parties may not a
priori restrict the court’s statutorily estab-
lished basic power to assert jurisdiction by
their mutual consentSSit only renders it legally
improper for the American court to do more
with its jurisdiction than to evaluate the forum
selection clause’s enforceability. If the clause
is enforceable, the court must dismiss the case
because the United States is an improper for-
um. Id. at 12.
Accordingly, the language of the LOU was
entirely consistent with the charter party’s
forum selection clause and did not supersede
it. Rather, the claimants properly appeared
before the district court as if their ship had
been arrested, and the court properly dis-
missed for improper venue after finding that
the forum selection clause was enforceable.3
III.
Trafigura argues that even if the charter
party was not superseded, enforcement of the
forum selection clause is unjust and unreason-
able. American courts refuse to enforce forum
selection clauses that are unjust and unreason-
able. See id. at 15. A forum selection clause
should not be enforced if the clause was the
product of fraud or overreaching; if the party
seeking to escape enforcement “will for all
practical purposes be deprived of his day in
court” because of the grave inconvenience or
unfairness of the selected forum; or if enforce-
ment of the clause would contravene a strong
public policy of the forum state. Carnival
Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595
(1991); The Bremen, 407 U.S. at 15, 18.
None of these circumstances exists here.
Trafigura contends that dismissal was unfair
because, under British law, its claim would be
time barred in London. But Trafigura’s failure
to plead and prove foreign law below is fatal
to its claim. See Banque Libanaise, 915 F.2d
at 1006. Even if this were not the case,
Trafigura’s claim would fail. It alleges that
Britain imposes a one year statute of limita-
tionsSSthe same limitations that apply in the
United States. Trafigura filed this suit in
Houston two days before the American statute
of limitationsSSalleged to be identical to the
British oneSSwould have run. It is thus disin-
3 Trafigura filed a supplemental brief arguing
for the first time that, under British law, the forum
selection clause was never incorporated into the bill
of lading and thus was not part of the contract.
Because did not prove the content of British law in
the district court, these arguments are waived, and
we do not consider them. See FED. R. CIV. P. 44.1;
Banque Libanaise pour le Commerce v. Khreich,
915 F.2d 1000, 1006 (5th Cir. 1990).

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genuous for Trafigura to accuse defendants of
delaying so as to deny it a forum; defendants
cannot have been expected to file their answer
within two days. Trafigura occasioned its own
predicament by failing timely to file its claim in
the contractually specified forum; no policy
against unfairness counsels in favor of reward-
ing such behavior by adjudicating this case in
a forum that would otherwise be contractually
barred.4
London was otherwise a reasonable forum.
Trafigura has an office there, so it was not in-
convenient. Further, British courts have a
long history of fair and impartial admiralty
jurisprudence. The Bremen, 407 U.S. at 17.
In sum, it was fair and reasonable for the court
to enforce the forum selection clause.
IV.
Trafigura claims defendants waived the for-
um selection clause issue by failing to make a
timely pre-answer motion. We review a dis-
trict court’s interpretation of the federal rules
of civil procedure de novo. Knight v. Kirby
Inland Marine, Inc., 482 F.3d 347, 355 (5th
Cir. 2007). Trafigura cites Federal Rule of
Civil Procedure 12(b) in support of this ar-
gument; that rule states that
[e]very defense, in law or fact, to a claim
for relief in any pleading, whether a claim,
counterclaim, cross-claim, or third-party
claim, shall be asserted in the responsive
pleading thereto if one is required, except
that the following defenses may at the op-
tion of the pleader be made by motion: . . .
(3) improper venue . . . .
(Emphasis added.)
Defendants complied with this rule by rais-
ing their objections to the forum in their an-
swer, which was their first responsive pleading
to the complaint.5 They then objected to all
discovery and refused to participate until they
were compelled to do so by the magistrate
judge while their motion to dismiss was pend-
ing.
Although it was some months before de-
fendants filed their motion to dismiss based on
rule 12(b)(3) and (6), that delay appears to
have resulted from the fact that Trafigura, the
plaintiff, had failed to prosecute the case. Tra-
figura did not make any discovery requests un-
til August 12, approximately six months after
filing its complaint. On September 14 defen-
dants objected to discovery based on improper
venue; they moved to dismiss on October 25.
4 See New Moon Shipping Co. v. Man B&W
Diesel AG, 121 F.3d 24, 32 (2d Cir. 1997)
(“[C]onsideration of a statute of limitations would
create a large loophole for the party seeking to
avoid enforcement of the forum selection clause.
That party could simply postpone its cause of ac-
tion until the statute of limitations has run in the
chosen forum and then file its action in a more
convenient forum.”); Union Steel Am. Co. v. M/V
SANKO SPRUCE, 14 F. Supp. 2d 682, 696
(D.N.J. 1998) (stating that unreasonableness “does
not hinge on whether a clause is unreasonable in
light of present circumstances created by plaintiff’s
failure to file in the correct forum”).
5 See Jockey Int’l, Inc. v. M/V LEVERKUSEN
EXPRESS, 217 F. Supp. 2d 447, 455 (S.D.N.Y.
2002) (finding that after defendants had raised for-
um selection clause in their answer, “[a] delay of
six to seven months in lodging that challenge [to
enforce the clause] is not inordinate, particularly
given that discovery was not even completed at the
time the motion was filed”); Queen Noor, Inc. v.
McGinn, 578 F. Supp. 218, 219 (S.D. Tex. 1984)
(holding that the assertion of a forum selection
clause in an answer is sufficient to preserve the
defense).

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Although we review the court’s interpreta-
tion of the federal rules de novo, we held, in a
similar case, that arbitrability “depends on the
circumstances of each case and usually must
be determined by the trier of facts.” Valero
Refining, Inc. v. M/T LAUBERHORN, 813
F.2d 60, 65 (5th Cir. 1987). There, the defen-
dant’s analogous minimal participation in dis-
covery did not result in waiver of arbitrability,
and we see no reason to upset the district
court’s determination in the present case. See
id. at 66; see also Tenneco Resins, Inc. v.
Davy Int’l, AG, 770 F.2d 416, 421 (5th Cir.
1985). Trafigura can hardly be said to have
been blindsided by the assertion of improper
venue, defendants had requested no discovery,
and Trafigura had not been put to any great
litigation expense in the Southern District of
Texas at the time of the motion.6
AFFIRMED.
6 Compare In Re Deleas Shipping Ltd., 1996
A.M.C. 434 (W.D. Wash. 1995) (reasoning that a
party waives its right to the benefit of a forum
selection clause where it “has taken actions incon-
sistent with it, or delayed its enforcement, and other
parties would be prejudiced”) (citing Lake
Commc’ns, Inc. v. ICC Corp., 738 F.2d 1473,
1477 (9th Cir. 1984)).

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