Forum non conveniens is the discretionary power of a court to decline its jurisdiction in cases where another court may more conveniently hear a case. As the U.S. Virgin Islands is roughly 1000 miles from the U.S. mainland, an individual or company faced with litigation may see this doctrine arise.  The U.S. Third Circuit Court of Appeals handled the question in a case involving parties from foreign countries.

In Kisano Trade & Invest Ltd. and Trasteco Ltd., two companies owned by Vadim Shulman, filed suit in the U.S. District Court for the Western District of Pennsylvania in June 2011 against Dev Lemster and his company, Steel Equipment Corp. The complaint alleged numerous contract violations, including intentional interference with contract and unjust enrichment. After discovering potential fraud by his business partner, Akiva Sapir, Shulman  amended his complaint to add himself as a plaintiff, along with Sapir and certain of his entities as defendants.

Sapir moved to dismiss the complaint on forum non conveniens grounds, offering Israel as an alternative forum. The Magistrate Judge granted the motion to dismiss “on the understanding that the case may be refiled in Israel and that the defendants waived certain statute of limitations defenses.”     Senior Circuit Judge Maryanne Trump Barry of the United States Court of Appeals for the Third Circuit wrote in her opinion that, although a plaintiff’s choice of forum should rarely be disturbed, when an alternative forum has jurisdiction to hear the case, and when the trial in the plaintiff’s chosen forum would "establish … oppressiveness and vexation to a defendant … out of all proportion to plaintiff’s convenience," or when the "chosen forum [is] inappropriate because of considerations affecting the court’s own administrative and legal problems," the court is allowed—in the exercise of its sound discretion—to dismiss the case. The Third Circuit set out four factors to guide a District Court’s exercise of discretion:    (1) the amount of deference to be afforded to plaintiffs’ choice of forum;    (2) the availability of an adequate alternative forum where defendants are amenable to process and plaintiffs’ claims are cognizable;    (3) relevant “private interest” factors affecting the convenience of the litigants; and    (4) relevant “public interest” factors affecting the convenience of the forum.    In addition, Judge Barry said that public and private interests should be considered. Private interests include:  

  • the ease of access to sources of proof; 
  • ability to compel witness attendance if necessary; 
  • means to view relevant premises and objects; and 
  • other potential obstacles impeding an otherwise easy, cost-effective, and expeditious trial. 

The judge listed public interests as:  

  • the administrative difficulties arising from increasingly overburdened courts; 
  • local interests in having the case tried at home; 
  • desire to have the forum match the law that is to govern the case to avoid conflict of laws problems or difficulty in the application of foreign law;  and 
  • avoiding unfairly burdening citizens in an unrelated forum with jury duty.

In this case, Judge Barry wrote that the Third Circuit first considered whether the District Court abused its discretion in affording plaintiffs’ choice of forum a lesser degree of deference than would be accorded a domestic plaintiff. Her opinion, quoting a 2008 Third Circuit decision, stating that “[o]rdinarily, a strong presumption of convenience exists in favor of a domestic plaintiff’s chosen forum, and this presumption may be overcome only when the balance of the public and private interests clearly favors an alternate forum.” However, the judge explained, when the plaintiff is foreign, the choice of a U.S. forum “deserves less deference.” Among other reasons, courts are wary of the potential for foreign plaintiffs to seek jurisdiction in the United States because the laws may be more favorable to their claims.    Shulman was an Israeli citizen, Kisano wa a Cypriot corporation, and Trasteco was a Maltese company. Despite their foreign citizenship, they argued that the District Court erred by granting lesser deference to their choice of forum because of the “equal access” provision of a treaty between the United States and Israel which, in part, states:   Nationals and companies of either Party shall be accorded national treatment and most-favored-nation treatment with respect to access to the courts of justice and to administrative tribunals and agencies within the territories of the other Party, in all degrees of jurisdiction, both in pursuit and in defense of their rights.   For several reasons, Judge Barry did not conclude that the equal access provision in the U.S.–Israel treaty required the Third Circuit to find that plaintiffs’ forum choice was entitled to the identical deference courts must afford a domestic plaintiff. Judge Barry opined that a court considering a motion to dismiss on forum non conveniens grounds should not assign “talismanic significance to the citizenship or residence of the parties,” but should give less deference to a foreign plaintiff’s choice of forum because “it would be less reasonable to assume the choice of forum is based on convenience.”    Judge Barry concluded that the equal access provision in the United States–Israel treaty didn’t change the analysis with respect to the degree of deference a District Court must afford a foreign plaintiff’s choice of forum. That being said, the judge then wrote that foreign plaintiffs “may bolster the amount of deference due their choice by making a strong showing of convenience.” In performing its forum non conveniens inquiry, a District Court “must assess[and articulate] whether the considerable evidence of convenience has … overcome any reason to refrain from extending full deference to the foreign plaintiff’s choice.” Judge Barry admitted that this wasn’t a precise inquiry, but, generally, “the greater the plaintiff’s or the lawsuit’s bona fide connection to the United States and to the forum of choice and the more it appears that considerations of convenience favor the conduct of the lawsuit in the United States, the more difficult it will be for the defendant to gain dismissal for forum non conveniens.”    “The District Court considered the evidence of convenience and concluded that the plaintiffs’ choice of forum merited only lesser deference”, Judge Barry wrote. It concluded that Shulman and his companies’ connections with the United States were not extensive. Shulman himself had little connection with the United States. And, although the wiring of money and the purchase of the plant and equipment took place in Pennsylvania, the District Court correctly noted that the agency relationship was formed in Israel, all negotiations for the deal took place in Israel, and most of the conduct for the claims at issue took place in Israel. The District Court did not abuse its discretion in finding that plaintiffs did not make a strong showing of convenience and therefore affording lesser deference to their choice of forum.   Judge Barry also examined the private and public interest factors, and found that when seeking dismissal on grounds of forum non conveniens, a defendant must show that the balance of public and private factors “tips decidedly in favor of trial in the foreign forum.” Although the District Court didn’t engage in a lengthy discussion of “oppressiveness and vexation,” its thorough analysis of the private and public interest factors and its findings reflected the correct understanding of the standard. The location of the parties, their witnesses, and the availability of evidence favor resolution in Israel. The District Court didn’t abuse its discretion in concluding that the private interest factors weighed in favor of dismissal.    To prevail on a forum non conveniens motion, “the movant must show that the balance of these [private and public interest] factors tips decidedly in favor of trial in the foreign forum.”  The order of the District Court dismissing the action on forum non conveniens grounds was affirmed. Kisano Trade & Invest Ltd. v. Lemster, — F.3d —-, 2013 WL 6501170 (C.A.3 (Pa.) December 12, 2013).   Do you have questions about your business and dealing with other businesses?  BoltNagi PC is one of the largest firms in the United States Virgin Islands and has experienced legal professionals to assist companies based in or seeking to relocate in the U.S. Virgin Islands.