As more Latin American and Caribbean litigation pops up in South Florida, a federal appeals court reminded judges to not rush to reject U.S. jurisdiction in lawsuits with foreign parties.
The U.S. Court of Appeals for the Eleventh Circuit ruled Tuesday that U.S. District Judge William Zloch in Fort Lauderdale needs to take a closer look at a telecommunications lease provision in a lawsuit against the government of Belize.
GDG Acquisitions LLC alleged Belize breached the equipment lease contract. Without reaching the merits of the dispute, U.S. District Judge William Zloch in Fort Lauderdale dismissed the lawsuit on grounds of forum and international comity 14 months after the complaint was filed.
“As we see it, the district court abused its considerable discretion in dismissing for forum non conveniens without first evaluating the significance of a forum,” Judge Stanley Marcus wrote for the three-judge appellate panel.
He was joined in the unanimous decision by U.S. District Judges L. Scott Coogler of Tuscaloosa, Ala., and Dudley H. Bowen Jr. in Augusta, Ga.
Ricardo Martinez-Cid, a partner at Podhurst Orseck in Miami who is not involved in the Belize case, said he has seen foreign defendants increasingly challenge forum in U.S. courts knowing judges would like nothing better than to lessen their docket.
“I’m hoping this is just one example of the pendulum swinging the other way because quite frankly the use of the foreign non conveniens doctrine has gotten a bit out of hand,” he said.
The panel said Zloch should have evaluated the forum selection clause of the contract and ordered him to hold a hearing to determine the enforceability and significance of the clause.
The appellate court also vacated Zloch’s dismissal on the alternative ground of international comity, finding retrospective international comity does not apply without a judgment from a foreign tribunal or parallel foreign proceeding.
The lawsuit was filed after Belize tried to reduce its costs on telephone service at government offices. The country had two leases with GDG’s predecessor, Inteleco, valued at $13.5 million. GDG’s lawsuit claimed Belize failed to make lease payments and owes GDG $14 million.
The case had South Florida roots before it got to Zloch.
According to the 22-page opinion, Belize Cabinet Minister Ralph Fonseca negotiated the contract in Florida and Washington and closed the deal with financing from the International Bank of Miami.
The lease contained provisions stating Belize waived sovereign immunity and consented to lawsuits in Florida if a dispute arose. Furthermore, GDG was created in 2012 as a Florida limited liability company with its principal office in Houston. The company was founded by Glenn D. Godfrey, Belize’s former attorney general and tourism minister.
Despite the waiver, Belize moved to dismiss the suit under the Foreign Sovereign Immunities Act, forum issue and international comity.
Zloch found a forum in Belize was available and adequate. He said witnesses and documents were accessible in the Central American country and ruled on the motion for comity that it was in the best public interest that the case be handled in Belize.
Marcus said the appellate court’s decision follows the U.S. Supreme Court’s longstanding recognition “that privately bargained-for forum-selection clauses are a necessary component of the expanded international commercial relationships of our time.”
Martinez-Cid, who is frequently involved in cross-border litigation, said challenges to U.S. forum were supposed to be granted only in exceptional circumstances.
“What is happening is more and more judges will weigh what will be more convenient for the defendant or where they prefer the suit to be, which not surprisingly isn’t in the their own courtroom,” he said.
Defendants know that if they can get their forum challenge granted, the lawsuit is unlikely to get due justice in their native country, he said.
“If a case even has any foreign flavor at all, folks are running to forum non conveniens knowing they may never have to answer in court,” Martinez-Cid said. “What are the real chances that the plaintiff is going to get justice against the government in Belize?”