Enforcement of Forum Selection Clauses in Aircraft Acquisition Contracts

Forum Selection Clause For Example: “The parties (i) agree that any state or federal court located in Fort Worth, Texas shall have exclusive jurisdiction to hear any suit, action or proceeding arising out of or in connection with this Agreement, and consent and submit to the exclusive jurisdiction of any such court in any such suit, action or proceeding and (ii) hereby waive, and agree not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, to the extent permitted by applicable law, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that this Agreement or any of the transactions contemplated hereby may not be enforced in or by such courts.”

Trilogy of U.S. Supreme Court Decisions The Bremen (1972) Stewart Organization v. Ricoh (1988) Carnival Cruise Lines v. Shute (1991) These decisions not entirely consistent in their approaches Tension between parties’ right to decide for themselves the venue for dispute resolution, and the public interest in the integrity and fairness of the justice system

The Bremen (1972) With minor exceptions forum selection clauses should be treated like any other contracts The Bremen ousted the “Ouster Doctrine” The Ouster Doctrine: Forum selection clause were void per se because they strip all but the designated court of its inherent jurisdiction to adjudicate a dispute

The Bremen (1972) Resisting party must clearly show enforcement would be unreasonable and unjust. Per Chief Justice Burger :“There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power .. should be given full effect.”

Stewart Organization v. Ricoh (1988) Forum non conveniens approach Parties cannot fully control the place of suit with a forum selection clause Courts retain discretion to set aside contractually valid clauses if “factors other than those that bear solely on the parties private ordering of their affairs weigh against enforcement”

Carnival Cruise v. Shute (1991) Extends the Bremen to consumer contracts Emphasized that a clause enforcement motion should turn on the contractual validity of the clause “It bears emphasis that forum-selection clauses contained in form passage contracts contain are subject to judicial scrutiny for fundamental fairness.”

Recent Aviation Cases The Bremen approach is overwhelmingly followed. Clair Aero Inc. v. Tradewinds Mutual Insurance, LLC, 491 F. Supp. 2d 211; 2007 U.S. Dist. LEXIS 44174 Rolico Aviation Limited v. Mansfield Heliflight, Inc., 2008 U.S. Dist. LEXIS 17171 Hasler Aviation, L.L.C. v. Aircenter, Inc., 2007 U.S. Dist. LEXIS 63143 Maria Dalva Viera De Olivera Dos Santos v. Bell Helicopter Textron, Inc., 2009 U.S. Dist. LEXIS 71356 Atlasjet Uluslararasi Havacilik A.S. v. EADS Aeroframe Services, LLC, 2009 U.S. Dist. LEXIS 17077 Aviation Finance Group, LLC v. Duc Housing Partners, Inc., 2009 U.S. Dist. LEXIS 38802

Careful What You Wish For Passenger claimants may use a forum selection clause in an aircraft acquisition contract to assert jurisdiction in the United States where there is otherwise no basis for such jurisdiction Attempted in the Flash Air accident (the passengers lost on fnc): 2005 U.S. Dist. LEXIS 18738

Canada Z.I. Pompey Industrie v. ECU‑Line N.V., [2003] 1 S.C.R. 450, 2003 SCC 27 “In the context of international commerce, order and fairness have been achieved at least in part by application of the “strong cause” test.  This test rightly imposes the burden on the plaintiff to satisfy the court that there is good reason it should not be bound by the forum selection clause.  It is essential that courts give full weight to the desirability of holding contracting parties to their agreements.  There is no reason to consider forum selection clauses to be non-responsibility clauses in disguise.” “In any event, the “strong cause” test provides sufficient leeway for judges to take improper motives into consideration in relevant cases and prevent defendants from relying on forum selection clauses to gain an unfair procedural advantage.”

Thank you