Does a forum selection clause in a pre-existing agreement between opposing parties in a Section 337 investigation provide grounds for terminating the investigation? A recent decision of Administrative Law Judge Cheney in Certain Color Intraoral Scanners and Related Hardware and Software, Inv. No. 337-TA-1091, Order No. 23 (May 18, 2018) concludes that the answer is no.
The forum selection clause at issue was included in a three-year development agreement designed “to enable” the respondent’s technology “to become acceptable to [complainant].” The clause provided that the parties “irrevocably submit to the exclusive jurisdiction of the courts in Denmark to settle any dispute arising out of or in connection with this Agreement (including any non-contractual disputes or claims.)” Respondent moved for termination of the Section 337 investigation based on the Commission’s discretionary authority to terminate investigations “on the basis of an agreement between the private parties.” 19 U.S.C. § 1337(c).
Although the complainant argued that the Commission had “repeatedly denied” requests to terminate based on forum-selection clauses, the ALJ found that the Commission’s cases did not stand for any such “bright line rule.” Looking to federal court practice, the ALJ determined that the threshold question that must be answered is whether the forum selection clause is enforceable in the forum in which it is asserted. The ALJ determined that enforcing the clause would contravene the public policy behind Section 337 of “protect[ing] U.S. domestic interests in connection with unfair commercial activity involving foreign imports” and that the respondent had not shown that “any other court, and specifically a court in Denmark, can satisfy this congressionally-mandated policy[.]” According to the ALJ, the federal courts “have refused to enforce forum selection clauses based on similar public policy reasons.”
Takeaway: Although noteworthy as a case of first impression, the precedential impact of the ALJ’s decision beyond forum selection clauses is uncertain. For example, the ALJ distinguished arbitration clauses, which Congress in the Federal Arbitration Act deemed “enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” Indeed, arbitration clauses were added by a 1994 amendment to Section 337(c) as an example of the types of private party agreements justifying termination, reversing a contrary conclusion by the Federal Circuit. The ALJ also noted that his decision did not leave the respondent without recourse because the respondent could still request a district court to enjoin the complainant from breaching the forum selection clause and to order the complainant to withdraw its Section 337 complaint.