A customer bought a fitness ball manufactured by a Chinese company from Dick's Sporting Goods, was injured from it, and sued the company in the Pennsylvania state court. The Chinese company had an insurance policy from PICC Property and Casualty Company Ltd., a Chinese insurance company. The insurance policy also covered DSG as a third party beneficiary. The insurance company, however, refused to cover the underlying state court litigation. DSG then sued the defendant insurance company. The defendant claimed the forum selection clause in the contract required the dispute come before a Chinese court.
The court found that the forum selection clause is binding even on the third party beneficiary, and the plaintiff did not make an adequate showing for forum non conveniens.
The first line of the magistrate judge's opinion reads: "International commerce creates international consequences. One such consequence is litigating a garden-variety-insurance dispute on the other side of the world." Isn't that the truth! It's not quite Robert Jackson's quote in Board of Education v. Barnette ("If there is any fixed star in our constitutional constellation, it is that no official . . . can prescribe what shall be orthodox in politics . . ."), but for international litigators, it is such an important point. Something as mundane as an insurance dispute can suddenly go up several factors in difficulty when it crosses borders.
Another interesting point is how the corporations' preference for a forum selection clause is starting to backfire. Until around 15 to 20 years ago, U.S. corporations loved the U.S. court's strict enforcement of the forum selection clause, because it was usually the corporations that were choosing the forum. But as U.S. companies come to rely ever more on trades with China, increasingly it is the Chinese companies dictating the forum selection clause upon a U.S. company, as is the case here.