The U.S. Fifth Circuit, applying Texas law, affirmed a decision to dismiss a case under the doctrine of forum non conveniens, based on a forum-selection clause contained in a document incorporated into the parties’ contract, even though the plaintiff was not aware of the existence of the forum-selection clause. As a result, the Texas company was required to litigate its contractual dispute in Northern Ireland. The decision reaffirms that contracting parties should be vigilant regarding the documents referenced by or incorporated into their contracts which may affect their legal rights.
In Sierra Frac Sand, L.L.C. v. CDE Global Limited, No. 19-40489, 2020 WL 2731079 (5th Cir. 2020), a Texas-based company that produces frac sand contracted with a Northern Irish company, CDE Global Limited (CDE), to design, assemble, and deliver sand-processing equipment to Sierra’s Louisiana-based processing facility. The parties signed a contract stating that it was subject to the Standard Terms and Conditions of Sale. The Standard Terms and Conditions included a forum-selection clause providing for exclusive jurisdiction of the courts of Northern Ireland over contractual disputes. Sierra claimed it was not aware of the Standard Terms and Conditions, as it never requested or received a copy of the document.
When construction of the plant took longer than expected, Sierra filed suit in federal court for the Eastern District of Texas against CDE, asserting claims of fraud, misrepresentation, and breach of contract. CDE moved to dismiss on several grounds, including forum non conveniens, which is a common law doctrine that promotes convenient trials in the locality most affected by or related to the dispute. Under the forum non conveniens doctrine, a court may relinquish its jurisdiction through dismissal of a case to allow it to be adjudicated elsewhere.
To determine whether to dismiss a case under the doctrine of forum non conveniens, the courts first assesses whether there is an adequate and available alternative forum. In the second step of forum non conveniens analysis, the courts conduct a balancing test based on private-interest and public-interest factors. Ordinarily, unless the balance is strongly in favor of the defendant, a plaintiff’s choice of forum should rarely be disturbed. However, a valid forum-selection clause changes the dynamic of the court’s forum non conveniens analysis, particularly when private-interest factors are deemed to weigh entirely in favor of the preselected forum. In this circumstance, a plaintiff’s choice of forum merits little weight.
Relying on Texas contract law, the federal district court determined that the parties had in fact incorporated the forum-selection clause into the agreement. The court concluded that the Standard Terms and Conditions were binding on the parties. In its forum non conveniens analysis, the court held that the balancing factors weighed in favor of dismissal. Accordingly, Sierra’s failure to request a copy of the Standard Terms and Conditions resulted in dismissal of its suit, requiring it to pursue legal action against CDE in a Northern Irish courtroom.
