Choice of Forum Clauses and Forum Non Conveniens

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1 Choice of Forum Clauses and Forum Non Conveniens By Chester D. Hooper The drafters of the original Hague Rules considered limiting the use of choice of forum clauses, but decided to leave any limitation of choice of forum clauses to national law. 1 The events since drafting the Hague Rules and, in the United States after the decision of the United States Supreme Court of Vimar Seguros y Reaseguros, S.A. v. Sky Reefer, 2 emphasize the need to limit the use of choice of forum clauses. In 1955, choice of forum clauses were approved by the United States Court of Appeals for the Second Circuit in Wm. H. Muller & Co., Inc. v. Swedish American Line, Ltd., et al., 3 for Member, Holland & Knight LLP; Past President, The Maritime Law Association of the United States; member of the United States Delegation to the United Nations Commission on International Trade Law (UNCITRAL) Transport Law Working Group; B.A. 1963, Hobart College; J.D. 1970, Albany Law School of Union University. The views expressed in this paper are the personal views of the author. They may not be the views of the MLA or of the United States. The author gratefully acknowledges the valuable assistance of Lissa Schaupp, Holland & Knight LLP, B.A. 2002, Columbia University; J.D. 2005, Fordham Law School, and Paula Hammarström Andersson, Trainee, Holland & Knight LLP , University of Gothenburg Law School, Professor Michael F. Sturley, the Stanley D. and Sandra J. Rosenberg Centennial Professor at the University of Texas Law School, has written extensively on this subject. A good overview of the issue is provided in the brief amicus curiae that Professor Sturley wrote for the International Group of P&I Clubs in the Sky Reefer case, see footnote 2. That brief refers to other authority on the issue much of which was also authored by Professor Sturley. The citations for the the articles are: Forum Selection and Arbitration Clauses Under Section 3(8) of the U.S. Carriage of Goods by Sea Act: Statutory Intent and Judicial Interpretation, in Ekmetalleyse toy Ploioy kai Symbatike Eleytheria: 2o Diethnes Synedrio Naytikoy Dikaioy [Ship s Operation and Freedom of Contract: Second International Conference on Maritime Law] 141 (Piraeus: Piraeus Bar Association, 2000) (paper delivered in May 1995); Bill of Lading Forum Selection Clauses in the United States: The Supreme Court Charts a New Course, 1996 Lloyd s Maritime & Commercial Law Quarterly 164 (reprinted in 25th Anniversary Issue, Lloyd s Maritime & Commercial Law Quarterly, May 1999, at 1); Forum Selection Clauses in Cruise Line Tickets: An Update on Congressional Action Overruling the Supreme Court, 24 Journal of Maritime Law & Commerce 399 (1993); Bill of Lading Choice of Forum Clauses: Comparisons between United States and English Law, 1992 Lloyd s Maritime & Commercial Law Quarterly 248; Strengthening the Presumption of Validity for Choice of Forum Clauses: Carnival Cruise Lines v. Shute, 23 Journal of Maritime Law & Commerce 131 (1992) U.S. 528, 1995 AMC 1817 (1995) F.2d 806, 1955 AMC 1687 (2d Cir. 1955).

2 the same basic reason that the arbitration clause was upheld in Sky Reefer that the U.S. Congress had not enacted legislation to limit the use of choice of forum or arbitration clauses. The cargo plaintiff in Wm. H. Muller argued that clause 3(8) 4 of COGSA 5 prohibited a choice of forum clause, because such a clause would lessen a carrier's liability below the minimum liability described by COGSA. The Second Circuit noted that Australia and Canada had declared choice of forum clauses to be null and void, and noted: "We think that if Congress had intended to invalidate such agreements, (choice of forum clauses) it would have done so in a forthright manner, as was done in the Canadian Act of 1910." 6 The Wm. H. Muller court did, however, consider the reasonableness of the clause under consideration in the context of the facts before it, and indicated that that clause was reasonable in its context: We come therefore to a consideration of the reasonableness of this particular agreement in the setting of this case. The Oklahoma was not only Swedish owned: it also was constructed in that country. All of the members of the Oklahoma's crew reside in Sweden. Hence, most of the evidence as to unseaworthiness will be more readily available in a Swedish court. There was an undisputed showing that Swedish courts apply the same measure of damages as American Maritime Courts and that limitation proceedings under Swedish law will be no more restrictive than under American law on the libellant's recovery. Further, there is no contention that the Swedish courts are not capable of adjudicating this case fairly and justly. 7 In 1967, the highly respected Second Circuit Judge, Henry J. Friendly, authored an opinion for the Second Circuit sitting en banc, which determined that Section 3(8) did invalidate 4 "Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties or obligations provided in this section, or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect." 46 U.S.C. App. 1303(8). 5 United States Carriage of Goods by Sea Act, 46 U.S.C. App. 1300, et seq. 6 Wm. H. Muller, 224 F.2d at 807, 1955 AMC at Id. at 808, 1955 AMC at

3 choice of forum clauses. Judge Friendly reasoned that forcing a cargo plaintiff with a $2,600 claim to travel to a foreign forum with a different legal system and language would force a cargo plaintiff to accept an unreasonably low settlement, and would thus lower the carrier's liability below the COGSA minimum: 8 From a practical standpoint, to require an American plaintiff to assert his claim only in a distant court lessens the liability of the carrier quite substantially, particularly when the claim is small. Such a clause puts "a high hurdle" in the way of enforcing liability, GILMORE& BLACK, supra, 125 n. 23, and thus is an effective means for carriers to secure settlements lower than if cargo could sue in a convenient forum. See Note, Enforcement and effect of the Jurisdiction Clause in Admiralty, 34 St. Johns L. Rev. 72, 78 (1959). 9 The Indussa choice of forum clause might have had that effect. It involved a claim of only about $2,600 and required the cargo interests to travel to the nation of the principal place of business of the carrier, Norway. Cargo interests could have, of course, retained admiralty attorneys in Norway rather than in the United States to commence suit, but if the supports for a $2,600 claim were in New York and if the cargo plaintiff had retained New York attorneys, then retaining another law firm, and, if necessary, translating the supports into Norwegian would not make sense. In theory, cargo interests should be able to obtain the same recovery in any nation that has enacted the Hague Rules, 10 as cargo could recover in the United States. Cargo interests would be entitled to a greater recovery, if the clause chose any of the nations that have enacted 8 Indussa Corporation v. SS RANBORG, et al., 377 F.2d 200, 203, 1967 AMC 589, 592 (2d Cir. 1967) (en banc). 9 Indussa, 377 F.2d at 203, 1967 AMC at International Convention for the Unification of Certain rules of Law Relating to Bills of Lading (Brussels, August 25, 1924). COGSA is the U.S. adoption, with minor amendments of the Hague Rules. 3

4 the Hague/Visby Rules, because of the higher package or weight limitation in the Hague/Visby Rules. 11 The judicial system available in some fora may not, in fact, allow cargo interests to recover what cargo interests could recover in other fora. Cargo interests may be forced to accept an unreasonably low settlement if they are faced with a forum whose results are unpredictable, or whose litigation process is too lengthy or whose litigation expenses are excessive. The same rationale could, of course, be applied to concerns by carrier interests. The rationale of the Indussa court influenced the United States courts' attitude towards choice of forum clauses until 1995, when the Supreme Court decided Sky Reefer. 12 Sky Reefer noted the blanks left in COGSA by the Hague Rule drafters' decision to leave choice of forum legislation to each nation. The Supreme Court followed the articles and briefs written by Professor Sturley and reasoned that limitations of the use of choice of forum clauses should be left to the legislature, and that the legislature of the United States had not spoken to the issue. The Court noted that with regard to Section 3(8) of COGSA: The liability that may not be lessened is "liability for loss or damage... arising from negligence, fault, or failure in the duties or obligations provided in this section." The statute thus addresses the lessening of the specific liability imposed by the Act, without addressing the separate question of the means and costs of enforcing that liability Protocol Amending the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading (August 25, 1924, as Amended by the Protocol of February 23, 1968), Brussels, December 21, While COGSA limits a carrier's liability to $500 per package or for goods not shipped in packages, per customary freight unit, the Hague/Visby Rules limit a carrier's liability to SDRs (Special Drawing Rights of the International Monetary Fund. One SDR was valued at $ U.S., $ Canadian, as of June 2, 2006) per package or 2 SDRs per kilo, whichever is greater. In addition, the Hague/Visby Rules specify that an article such as a pallet or an ocean container will not constitute a package if the number of packages on the pallet or container or other article is enumerated in the bill of lading U.S. 528, 1995 AMC 1817 (1995). 13 Sky Reefer, 515 U.S. at 534, 1995 AMC at

5 The Supreme Court also noted that choice of forum clauses would be reasonable in some factual situations, but not in others: If the question whether a provision lessens liability were answered by reference to the costs and inconvenience of the cargo owner, there would be no principled basis for distinguishing national from foreign arbitration clauses. Even if it were reasonable to read 3(8) to make a distinction based on travel time, airfare, and hotel bills, these factors are not susceptible of a simple and enforceable distinction between domestic and foreign forums. Requiring a Seattle cargo owner to arbitrate in New York likely imposes more costs and burdens than a foreign arbitration clause requiring it to arbitrate in Vancouver. It would be unwieldy and unsupported by the terms or policy of the statute to require courts to proceed case by case to tally the costs and burdens to particular plaintiffs in light of their means, the size of their claims, and the relative burden on the carrier. Our reading of "lessening such liability" to exclude increases in the transaction costs of litigation also finds support in the goals of the Brussels Convention for the Unification of Certain Rules Relating to Bills of Lading, 51 Stat. 233 (1924) (Hague Rules), on which COGSA is modeled. Sixty-six countries, including the United States and Japan, are now parties to the Convention, See Department of State, Office of the Legal Adviser, Treaties in Force: A List of Treaties and Other International Agreements of the United States in Force on January 1, 1994, p. 367 (June 1994), and it appears that none has interpreted its enactment of 3(8) of the Hague Rules to prohibit foreign forum selection clauses, see Sturley, International Uniform Laws in National Courts: The Influence of Domestic Law in Conflicts of Interpretation, 27 Va. J. Int'l L. 729, (1987). 14 Cases following Sky Reefer have, however, highlighted the truth of Judge Friendly's observations in Indussa. The lack of relationship between a forum chosen in a bill of lading on one hand, and the contract of carriage or the cargo underwriters, or a lack of familiarity with admiralty disputes on the other hand, has spoken quite loudly to tell us that a uniform control of the forum in which cargo claims may be litigated is necessary. 14 Sky Reefer, 515 U.S. at 536, 1995 AMC at

6 The following fora chosen by the following cases are just the tip of the iceberg of cases that could not be resolved in the United States after Sky Reefer: Korea, 15 China, 16 Croatia, 17 Egypt, 18 England, 19 Malta, 20 Germany, 21 London (arbitration), 22 Greece, 23 and Japan. 24 While most if not all the fora referred to above may be perfectly able to resolve a cargo dispute, none of the fora were chosen by cargo plaintiffs. Cargo plaintiffs have probably accepted unreasonably low settlements rather than commencing suit or arbitration in the "chosen" forum. Jurisdiction and Arbitration Provisions in the New UNCITRAL Instrument. The head of the United States delegation to UNCITRAL Working Group III, Mary Helen Carlson, Attorney-Adviser, Office of Private International Law, U.S. State Department, presented an excellent paper at the Tulane Maritime Law Center, William Tetley Maritime Law Lecture in New Orleans, Louisiana on March 22, In the article, Ms. Carlson explained that the United States considers the interests of its industries when negotiating a treaty. Industries have a great deal of influence, because the President of the United States may not ratify a treaty without the advice and consent of two thirds of the United States Senate. After the treaty is 15 Union Steel lamaerica Co. v. M/V SANKO SPRUCE, 14 F.Supp.2d 682 (D.N.J. 1998); Stemcor USA v. Hyundai Merchant Marine Co., Ltd., 386 F.Supp.2d 229 (S.D.N.Y. 2005); Fireman's Fund Ins. Co. v. M.V. DSR ATLANTIC, 131 F.3d 1336 (9 th Cir. 1997); Intern. Marine Underwriters v. M/V KASIF KALKAVAN, 989 F.Supp. 498 (S.D.N.Y. 1998); Allianz Ins. Co. of Canada v. Cho Yang Shipping, 131 F.Supp.2d 787 (E.D.Va. 2000). 16 Jewel Seafoods Ltd. v. M/V PEACE RIVER, 39 F.Supp.2d 628 (D.S.C. 1999). 17 Pasztory v. Croatia Line, 918 F.Supp. 961 (E.D.Va. 1996). 18 Nippon Fire & Marine Ins. V. M.V. EGASCO STAR, 899 F.Supp. 164 (S.D.N.Y. 1995). 19 Kelso Enterprises, Ltd. v. M/V WISIDA FROST, 8 F.Supp.2d 1197 (C.D.Cal. 1998). 20 Acciai Speciali Terni USA, Inc. v. M/V BERANE, 181 F.Supp.2d 458 (D.Md. 2002). 21 Jockey Intern., Inc. v. M/V "LEVERKUSEN EXPRESS", 217 F.Supp.2d 447 (S.D.N.Y. 2002); Chisso America, Inc. v. M/V HANJIN OSAKA, 307 F.Supp.2d 621 (D.N.J. 2003). 22 Ventura Maritime Co., Ltd. v. Adm Export Co., 44 F.Supp.2d 804 (E.D.La. 1999). 23 Marra v. Papandreou, 216 F.3d 1119 (D.C. Cir. 2000). 24 Talatala v. Nippon Yusen Kaisha Corp., 974 F.Supp (D.Hawaii 1997). 6

7 ratified, it will probably need legislation to place it in force. Both the United States Senate and the United States House of Representatives must pass that legislation with a simple majority vote and the President must sign the bill. Industries within the United States, particularly the industries involved with manufacturing and selling goods that are transported internationally by sea, insist that the Instrument include sensible limitations on choice of forum and arbitration clauses. They insist that the Instrument tell cargo interests where cargo interests may commence suit to provide predictability and sensibility to cargo loss or damage litigation or arbitration. Carrier interests, on the other hand, argue that they wish to litigate in reasonable places. Each side fears that the other will force it to litigation in a place where it will be unable to obtain a fair result. At this stage of drafting the Instrument, cargo interests, with certain exceptions, will have the right to commence suit at the place of the origin of the carriage, the first port of loading, the final port of discharge, the place of destination, or the principal place of the carrier's business. 25 Cargo interests will also be able to commence suit in a forum specified in the contract of carriage. Cargo interests may commence suit in one of those places even if a choice of forum clause calls for litigation in some other place. The Instrument may, in effect, change exclusive choice of forum clauses to non-exclusive choice of forum clauses. The new Instrument will not govern charter parties nor did the Hague Rules or COGSA. The terms and conditions of a charter party are generally freely negotiated and the parties to the charter party deserve the freedom to contract as they see fit. They may choose wherever they wish to litigate or arbitrate their disputes. 25 UNCITRAL Working Group III, A/CN.9/WG.III/WP.56, Chapter at Article 75 and 84, but see proposed changes to Chapter 16 an 17 set forth in A/CN.9/591 at paragraphs on jurisdiction and paragraphs

8 Parties to volume contracts, or as they are known in the United States, service contracts, will also enjoy the freedom to contract. They will be governed by the terms of the Instrument, but in a non mandatory fashion. The parties to a volume contract may thus choose to litigate or arbitrate wherever they wish. If, however, the parties to a volume contract wish to extend a choice of forum or place of arbitration to a third party to the volume contract, they may do so under certain conditions. The place chosen for litigation or arbitration must be one of the five places in which cargo would ordinarily have a right to commence suit. In addition, the volume or service contract must specify that a choice of forum will be extended to third parties and, notice must be given of such an extension probably on the face of the bill of lading. 26 The freedom to choose a forum will also be extended, as it was in the United States in the Second and Fifth Circuits before Sky Reefer to third party holders of charter party bills of lading. If a charter party contains an arbitration or jurisdiction clause, that clause will bind a third party holder of the bill of lading, or other shipping document or electronic record, if the clause is worded broadly enough to include the third party and if the charter party is specifically incorporated by reference into the document or electronic record. 27 The Instrument will, however, limit the binding effect of a charter party choice of forum or arbitration clause on third parties to the non liner trade. It will not honor the extension, for instance, of an arbitration clause in a slot charter for containers in the liner trade to third party holders of the bill of lading. 26 A/CN.9/591 at paragraph See Midland Tar Distillers, Inc. v. M/T LOTOS, et al., 362 F.Supp. 1311, 1973 AMC 1924 (S.D.N.Y. 1973); Coastal States Trading, Inc. v. Zenith Nav. S.A., 446 F.Supp. 330 (1977); Henkel, K.G. v. M/T STOLT HIPPO, et al., 1980 AMC 2618 (S.D.N.Y. 1980), Lucky Metals Corp, et al. v. M/V AVE, etc., et al., 1996 AMC 265 (S.D.N.Y. 1995); Steel Warehouse Company, Incorporated v. Abalone Shipping Limited of Nicosai, 141 F.3d 234, 1998 AMC 2054 (5 th Cir. 1998); Thyssen, Inc. v. M/V MARKOS N, et al., 1999 AMC 2515 (S.D.N.Y. 1999); but see Cia. Platamon de Navegacion, S.A. v. Empresa Colombiana de Petroleos, et al., 478 F.Supp. 66, 1980 AMC 538 (S.D.N.Y. 1979); Macsteel International USA Corp. v. M/V JAG RANI, et al., 2004 AMC 220 (S.D.N.Y. 2003); Continental Florida Materials, Inc. v. M/V LAMAZON, et al., 2004 AMC 612 (S.D.Fla. 2004). 8

9 That limitation to the non-liner trade arises from the system used to describe the scope of application of the new Instrument. The Hague Rules, the Hague/Visby Rules, and COGSA use a "documentary approach" to describe their scope. COGSA's scope provision reads as follows: Every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, shall have effect subject to the provisions of this chapter. 28 In debating the method used to define the scope of application of the new Instrument, three points of view were voiced. One point of view wished to limit the scope to the type of trade. That point of view wished to apply the new Instrument to the liner trade, but not to the non-liner trade. Another approach wished to use the contract approach that is used in the Hamburg Rules. 29 That approach would state that the Instrument would govern all contracts for the carriage of goods by sea except certain named contracts, such as charter parties. The third approach was the documentary approach that has been well tested by the Hague Rules, Hague/Visby Rules, and COGSA. A small drafting group of the working group suggested a compromise that would utilize all three approaches. First, the trade approach and the contract approach were used to state that the new Instrument would govern all contracts for the carriage of goods by sea in the liner trade except certain contracts such as charter parties. The documentary approach was used to include within the scope of application, contracts for the carriage of goods in the non liner trade that were evidenced by a document or electronic record that performed two functions: (1) It evidenced the contract of carriage; and (2) it acted as a receipt for the goods. Such a document U.S.C. App United Nations Convention on the Carriage of Goods by Sea,

10 would, of course, be quite similar to the well known bill of lading. 30 It would, however, also cover sea waybills and electronic versions of sea waybills. It would also cover future forms of contracts that performed those two functions. At the working group session in Vienna in December, 2005, a compromise was proposed for jurisdiction and arbitration provisions. The proposed compromises are set forth in A/CN.9/ The proposed jurisdiction compromise includes another exception to a restriction of choice of forum clauses at Article 76(4). Any nation could, when it ratifies the new Instrument or at a later time, deposit a notification that it will honor more choice of forum clauses than the Instrument permits. That procedure would allow any nation basically to opt out of the choice of forum limitation and to honor any choice of forum clause. That opt out provision would not, however, prevent another nation in which cargo was entitled to commence suit, from refusing to enforce a choice of forum clause and instead to enforce the plaintiff's choice of one of the five places. The provision would, of course, present conflicts between those two nations. Forum Non Conveniens The Instrument is silent on the effect, if any, of the jurisdiction and arbitration provisions on the doctrine of forum non conveniens. Any of the five places at which the Instrument will probably permit cargo plaintiff to bring suit would probably be considered a convenient forum whose jurisdiction would probably not be declined on the grounds of forum non conveniens. The latest, most significant case on forum non conveniens in the Second Circuit, is the en banc decision of Iragorri v. United Technologies Corp. 32 That case was not a maritime case, but 30 A/CN.9/WG.III/WP.56, Chapter 3 at Articles Paragraphs for jurisdiction, for arbitration F.3d 65 (2 nd Cir. 2001) (en banc). 10

11 summarized the law of forum non conveniens and provided instructional guidelines for deciding forum non conveniens issues. It was a wrongful death action brought for the death of a domiciliary of the state of Florida in Colombia, South America. Suit was filed in the United States District Court for the District of Connecticut. The Second Circuit decided to sit en banc to review the relevance of the plaintiff's residence in the United States, but outside the district in which suit was filed for forum non conveniens purposes. The court also summarized the guidelines that should be used to decide forum non conveniens issues. At the outset, the Iragorri court explained that: Iragorri, 274 F.3d at 71. a court reviewing a motion to dismiss for forum non conveniens should begin with the assumption that the plaintiff's choice of forum will stand unless the defendant meets the burden of demonstrating the points outlines below. At the same time, we are led to understand that this deference is not dispositive and that it may be overcome. Notwithstanding the deference, "dismissal should not be automatically barred when a plaintiff has filed suit in his home forum. As always, if the balance of conveniences suggests that trial in the chosen forum would be unnecessarily burdensome for the defendant or the court, dismissal is proper." Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256 n. 23, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). The Second Circuit explained that it would give weight to valid reasons for plaintiff to choose a forum, but not for invalid reasons. It considered the following factors valid:... the convenience of the plaintiff's residence in relation to the chosen forum, the availability of witnesses or evidence to the forum district, the defendant's amenability to suit in the forum district, the availability of appropriate legal assistance, and other reasons relating to convenience or expense. Iragorri, 274 F.3d at 72. It considered the following factors to be invalid: On the other hand, the more it appears that the plaintiff's choice of a U.S. forum was motivated by forum-shopping reasons such as 11

12 attempts to win a tactical advantage resulting from local laws that favor the plaintiff's case, the habitual generosity of juries in the United States or in the forum district, the plaintiff's popularity or the defendant's unpopularity in the region, or the inconvenience and expense to the defendant resulting from litigation in that forum. Id. The Iragorri court did not end its analysis there. Initially, the court must consider whether an adequate alternative forum exists. If so, it must balance the two sets of factors to ascertain whether the case should be adjudicated in the plaintiffs' hosen forum or in the alternative forum proposed by the defendant. Iragorri, 274 F.3d at 73 (emphasis added). The court repeated the classic private interest factors and public interest factors to be considered. The court described them as follows: The first set of factors considered are the private interest factors the convenience of the litigants. These include "the relative ease of access to sources of proof; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing, witnesses; possibility of view of premises, if view would be appropriate to the action; and all other practical problems that make trial of a case easy, expeditious and inexpensive." Gilbert, 330 U.S. at 508, 67 S.Ct Iragorri, 274 F.3d at The court also described public interest factors: Factors of public interest also have place in applying the doctrine. Administrative difficulties follow for courts when litigation is piled up on congested centers instead of being handled at its origin. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation. In cases which touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only. There is a local interest in having localized controversies decided at home. There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern the case, rather than having a court in some other forum untangle problems in conflict of laws, and in law foreign to itself. 12

13 Iragorri, 274 F.3d at 74. The difficulty in obtaining a forum non conveniens dismissal in the United States often lies with the inability to find a forum that is clearly more convenient than the forum in which the litigation was commenced. In many admiralty cases, several places present themselves as possible fora for litigation. It is quite often true that no one forum is clearly more convenient than the forum in which plaintiff commenced suit presents itself. In addition, an admiralty case may very well be large enough to render the expense of witness travel insignificant. We all probably recognize that the parties are generally more interested in the law that will be applied by a certain forum than whether the witnesses will be available at a particular forum. Many complaints are heard of various fora by various parties. Parties often complain of the expense of the discovery process in the United States. One suspects that the louder complainer may be the complainer who has been forced to disclose information harmful to his or her case. More legitimate complaints concern discovery expense that are out of proportion to the size of the case. That problem might be solved or alleviated by an agreement between cargo underwriters and carrier underwriters. If an organization of cargo underwriters, such as the American Institute of Marine Underwriters (AIMA), could negotiate on behalf of its members with an organization representing carrier underwriters, such as the International Group of P&I Clubs, the expense of discovery might be brought under control. The P&I Clubs, for many years, have relied on the Interclub Agreement to help to resolve conflicts arising from the New York Produce Exchange form of charter party. The same type of agreement should keep litigation expenses at a reasonable level. An agreement to keep discovery expenses reasonable would be more 13

14 complicated than the Interclub Agreement and would not resolve disputes. It could, however, reduce discovery expenses and shorten the time necessary to decide disputes. Such an agreement might specify a limit for the number and length of depositions as well as for the production of documents according to the amount in dispute. Both sides could agree to limit their discovery severely for small cases and to increase the amount of discovery allowed for larger cases. Such an agreement would have to provide access to the courts if one party were not abiding by the terms of the agreement. If, for example, the agreement provided for two depositions, each of which should be limited to seven hours, and a witness without knowledge were produced, court intervention might be necessary. Documents to be produced could be limited to the categories of documents and the time period. We have only found one case in which such an agreement was discussed. 33 In that case, an appellate state court in California refused to uphold an agreement to limit discovery that was unfairly balanced in favor of an employer against its employees where the employees had not had an opportunity to negotiate the agreement. An agreement limiting discovery and fully negotiated between cargo interests and carrier interests should, however, be upheld. Time and effort would be required to draft an effective agreement, but the savings in the discovery process should be well worth it. # _v1 33 Fitz v. NCR Corporation, 118 Cal. App.4 th 702, 13 Cal.Rptr.3d 88 (Court of Appeal, Fourth District, Division 1, 2004). 14