Article

Note: To pay for the purchase of steel coils, Sinochem International Co. Ltd. (Buyer), a Chinese state owned corporation, caused a commercial LC to be issued. The LC required presentation of a bill of lading requiring loading of the goods in Philadelphia on or before 30 April 2003. Triorient Trading, Inc. (Beneficiary/Seller), a US corporation, subchartered a vessel owned by Malaysia International Shipping Corp. (Carrier) and hired a stevedore company to load the goods. When the documents were presented, Issuer honored the documents and charged Buyer/ Applicant's account. Buyer/Applicant contended that the bill of lading had been backdated and that the vessel was neither fit nor suitable for the cargo.

Claiming fraudulent issuance of the bill of lading by Carrier, Buyer/Applicant sued Carrier in China under Chinese maritime law and Carrier's ship was arrested in China. Subsequently, Carrier filed this suit in United States District Court seeking compensation for misrepresentation about the vessel in the petition to the Chinese court and for losses sustained by the ship's arrest. Buyer/Applicant moved to dismiss on several grounds including forum non conveniens. The United States District Court dismissed on grounds of forum non conveniens, but the United States Court of Appeals for the Third Circuit ruled that the case could not be dismissed on these grounds until it had ascertained both personal and subject-matter jurisdiction.

On appeal, the Supreme Court of the United States, Ginsburg, J., reversed the intermediate appellate decision. The court ruled that jurisdictional rulings are not necessary when dismissing a case on grounds of forum non conveniens. The court stated that requiring jurisdiction to be determined when the forum is clearly inappropriate is unnecessary and expensive. It indicated that, as a non-substantive issue, forum non conveniens may be decided before other jurisdictional issues. It observed that a court "may dispose of an action by a forum non conveniens dismissal, bypassing questions of subject-matter and personal jurisdiction, when considerations of convenience, fairness, and judicial economy so warrant."

Comment:

The backdated B/L might or might not have supported a pre-honor fraud/abuse defense or injunction action under applicable LC law or a posthonor fraud or warranty or breach of underlying contract claim by the applicant-buyer against the beneficiary-seller. If US Revised UCC Article 5 were applicable, the backdating might not be sufficiently material to qualify as LC fraud, and the availability of a post-honor remedy against the carrier might affect the availability of interlocutory injunctive relief. Other country's laws might require proof of fraudulent intent of the seller-beneficiary (rather than intentional or negligent backdating by the stevedore or carrier). Applicable law might also focus chiefly if not entirely on whether backdating the B/L materially breached the underlying contract (i.e., did the goods timely arrive?).

[JEB/gsp]

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