District Court May Exercise Jurisdiction Over Norwegian Shipping Companies

Fortis Corporate Ins. v. Viken Ship Management, 2006 U.S. App. LEXIS 14057 (6th Cir. June 8, 2006).

Stephanie Showalter

The global nature of the shipping industry often gives rise to unbelievably complex litigation. Sometimes one of the most challenging issues is jurisdiction. Who can and should hear the case? Consider the following situation.

In 1998, Viken Ship Management, a Norwegian company, chartered a fleet of vessels for the transportation of cargo from FedNav International, a Canadian company. FedNav later subchartered one of the Viken ships, the M/V Inviken, to Metallia, a U.S. company, for the shipment of steel coils from Poland to Toledo, Ohio. While en route, seawater entered the hold and caused severe rust damage to the coils. Fortis Corporate Insurance, a Belgian company, paid $375,000 to resolve Metallia’s insurance claims. Fortis turned around and sued Viken in the U.S. District Court for the Northern District of Ohio in February 2004 seeking damages for negligence and breach of bailment obligations. Got it? Simply stated, a Belgian insurance company sued a Norwegian shipping company in U.S. court.

Viken, not surprisingly, objected to being brought into U.S. court and moved for summary judgment arguing that the district court lacked jurisdiction. The court agreed and dismissed Fortis’ complaint. Fortis appealed.

Minimum Contacts
Jurisdiction refers to the power of a court to hear a case and render a valid judgment. A court’s judgment will only be valid if it has jurisdiction over both the persons involved and the subject matter. To exercise personal jurisdiction over foreign corporations, due process requires only that the corporation have “certain minimum contacts” with the territory of the forum, such that the maintenance of the action does not offend “traditional notions of fair play and substantial justice.”1 In other words, exercise of jurisdiction is reasonable if the corporation has “purposefully availed” itself of the benefits of the forum state.

In the Sixth Circuit, the “purposeful availment” inquiry focuses on “whether the defendant has engaged in some overt actions connecting the defendant to the forum state.”2 Viken outfitted and rigged its ships to sail into the Great Lakes and even stated in the Charter Agreement with FedNav that “the vessel is suitable for Toledo.” Furthermore, Viken entered into a long-term agreement with a charterer which shipped into the Great Lakes. The court found that Viken had purposefully availed itself of the forum state and “had more than sufficient notice that they might be subject to jurisdiction in [Ohio].”3

The court also found that the cause of action arose out of Viken’s activities in Ohio, the second factor in the minimum contacts test. Although the leak and the damage to the steel coils occurred at sea before the Inviken reached Toledo, the harm ultimately suffered by Fortis occurred in Ohio when the ship delivered rusted steel coils. The court held that, in this case, the delivery of damaged goods was sufficient to meet the “arising under” test.

Finally, the court found that the exercise of jurisdiction was reasonable. The parties had conducted discovery without any apparent difficulties, most of the witness speak English, and Ohio has a strong interest in ensuring that shipments to its ports are reliable. The court reversed the ruling of district court and remanded the case for further proceedings.

Endnotes
1. See, International Shoe Co. v. State of Wash., 326 U.S. 310 (1945).
2. Bridgeport Music, Inc. v. Still N the Water Publ’g, 327 F.3d 472, 479 (6th Cir. 2003).
3. Fortis Corporate Ins. v. Viken Ship Management, 2006 U.S. App. LEXIS 14057 at *20-21 (6th Cir. June 8, 2006).

University of Mississippi