CONFLICT OF LAWS_CASE DIGESTS 1ST AND 2ND BATCH

GUERRERO’S TRANSPORT SERVICES, INC. v. BLAYLOCK TRANSPORTATION SERVICES EMPLOYEES ASSOCIATION-KILUSAN (BTEA-KILUSAN), LABOR ARBITER FRANCISCO M. DE LOS REYES and JOSE CRUZ

FACTS
In 1972, the US Naval Base authorities in Subic conducted a public bidding for a 5-year contract for the right to operate and/or manage the transportation services inside the naval base. This bidding was won by Santiago Guerrero, owner-operator of Guerrero’s Transport Services, Inc. (Guerrero), over Concepcion Blayblock, the then incumbent concessionaire doing business under the name of Blayblock Transport Services Blayblock. Blayblock’s 395 employees are members of the union BTEA-KILUSAN (the Union).

When Guererro commenced its operations, it refused to employ the members of the Union. Thus, the Union filed a complaint w/ the NLRC against Guerrero to compel it to employ its members, pursuant to Art. 1, Sec. 2 of the RP-US Base Agreement. The case was dismissed by the NLRC upon Guerrero’s MTD on jurisdictional grounds, there being no employer-employee relationship between the parties. Upon appeal, the Sec. of Labor remanded the case to the NLRC. The NLRC issued a Resolution ordering Guererro to “absorb all complainants who filed their applications on or before the deadline” set by Guerrero, except those who may have derogatory records w/ the US Naval Authorities in Subic. The Sec. of Labor affirmed.

Guerrero claims that it substantially complied w/ the decision of the Sec. of Labor affirming the NLRC Resolution, & that any non-compliance was attributable to the individual complainants who failed to submit themselves for processing & examination. The Labor Arbiter ordered the reinstatement of 129 individuals. The Union filed a Motion for Issuance of Writ of Execution. The order wasn’t appealed so it was declared final & executory

Subsequently, the parties arrived at a Compromise Agreement wherein they agreed to submit to the Sec. of Labor the determination of members of the Union who shall be reinstated by Guerrero, w/c determination shall be final. The agreement is deemed to have superseded the Resolution of the NLRC. The Sec. of Labor ordered the absorption of 175 members of the Union subject to 2 conditions.

ISSUE
W/N the said members of the Union were entitled to be reinstated by Guerrero.

RULING
YES. Pursuant to Sec. 6 of Art. I of the RP-US Labor Agreement, the US Armed Forces undertook, consistent w/ military requirements, “to provide security for employment, and, in the event certain services are contracted out, the US Armed Forces shall require the contractor or concessioner to give priority consideration to affected employees for employment.

A treaty has 2 aspects — as an international agreement between states, and as municipal law for the people of each state to observe. As part of the municipal law, the aforesaid provision of the treaty enters into and forms part of the contract between Guerrero and the US Naval Base authorities. In view of said stipulation, the new contractor (Guerrero) is, therefore, bound to give “priority” to the employment of the qualified employees of the previous contractor (Blaylock). It is obviously in recognition of such obligation that Guerrero entered into the aforementioned Compromise Agreement.

Under the Compromise Agreement, the parties agreed to submit to the Sec. of Labor the determination as to who of the members of the Union shall be absorbed or employed by Guerrero, and that such determination shall be considered as final. The Sec. of Labor issued an Order directing the NLRC, through Labor Arbiter Francisco de los Reyes, to implement the absorption of the 175 members into Guerrero’s Transport Services, subject to the following conditions:
a) that they were bona fide employees of the Blaylock Transport Service at the time its concession expired; and
b) that they should pass final screening and approval by the appropriate authorities of the U.S. Naval Base concerned.

For this purpose, Guerrero is ordered to submit to and secure from the appropriate authorities of the U.S. naval Base at Subic, Zambales the requisite screening and approval, the names of the members of the Union.

Considering that the Compromise Agreement of the parties is more than a mere contract and has the force and effect of any other judgment, it is, therefore, conclusive upon the parties and their privies. For it is settled that a compromise has, upon the parties, the effect and authority of res judicata and is enforceable by execution upon approval by the court.

SAUDI ARABIAN AIRLINES v. CA

FACTS
Saudia hired Milagros Morada as a flight Attendant for its airlines based in Jeddah, Saudi Arabia. While on a lay-over in Jakarta, Morada went to a disco dance w/ fellow crew members Thamer & Allah, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in the room, Allah left, and that’s when Thamer attempted to rape Morada. Fortunately, a roomboy & several security personnel heard her cries for help & rescued her. The Indonesian police came & arrested Thamer & Allah.

Saudia officials interrogated Morada about the Jakarta incident. They tried to pressure her in making a statement to drop the case against Thamer & Allah, but Morada refused to cooperate. Indonesian authorities agreed to deport Thamer & Allah after 2 weeks of detention, & they were again employed by Saudia.

1 ½ years later, in Riyadh, a few minutes before the departure of her flight to Manila, Morada was not allowed to board the plane & instead ordered to take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of Saudia. When she did, she was brought to a Saudi court where she was asked to sign a document written in Arabic. They told her this was necessary to close the case against Thamer & Allah. As it turned out, Morada signed a notice to her to appear before the court. Morada returned to Manila.

Later on, Morada was brought to the same Saudi court, & she was informed that the investigation was merely routinary & posed no danger to her. A Saudi judge interrogated her through an interpreter about the Jakarta incident. When her plane was about to take off, a Saudia officer told her that the airline had forbidden her to take flight. She was escorted to the same court where the judge rendered a decision sentencing her to 5 months imprisonment & to 286 lashes. It was then that she realized that the Saudi court tried her, together w/ Thamer & Allah, for the Jakarta incident. The court found Morada guilty of
(1) adultery,
(2) going to a disco, dancing & listening to the music in violation of Islamic laws
(3) socializing w/ the male crew, in contravention of Islamic tradition

Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her & allowed her to leave Saudi Arabia. She was terminated from the service by Saudia, w/o her being informed of the cause. Morada filed a Complaint for Damages against Saudia. Saudia filed a MTD.

Saudia’s contention: The trial court has no jurisdiction to try the case. Morada’s claim for alleged abuse of rights occurred in Saudi. The existence of a foreign element qualifies the instant case for the application of the law of Saudi, by virtue of the lex loci delicti commissi rule.

Morada’s contention: Since her complaint is based on Arts. 19 and 21 of the NCC, then the instant case is properly a matter of domestic law.

ISSUE
(a) W/N the instant case is a matter of domestic law.
(b) W/N Philippine courts have jurisdiction to hear & try the case.
(c) W/N Philippine law should govern.

RULING
(a) NO. A factual situation that cuts across territorial lines & is affected by the diverse laws of 2 or more states is said to contain a “foreign element.” In the instant case, the foreign element consisted in the fact that Morada is a resident Philippine national, & that Saudia is a resident foreign corporation. Also, by virtue of the employment of Morada w/ Saudia as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila to Jeddah & vice versa, that caused a “conflicts” situation to arise.

(b) YES. The RTC of QC possesses jurisdiction over the subject matter of the suit. Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor the RTC of QC assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages & obstacles to a fair trial are equally important. Saudia may not, by choice of an inconvenient form, vex, harass or oppress Morada, i.e. inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.

Weighing the relative claims of the parties, QC RTC found it best to hear the case in the Philippines. Had it refused to take cognizance of the case, it would be forcing Morada to seek remedial action elsewhere, i.e. in Saudi where she no longer maintains substantial connections. That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of forum of Morada should be upheld.

Similarly, the QC RTC also possesses jurisdiction over the persons of the parties. By filing her Complaint w/ QC RTC, Morada has voluntary submitted herself to the jurisdiction of the court. The records show that Saudia filed several motions praying for the dismissal of Morada’s Complaint. Saudia also filed an Answer In Ex Abundante Cautelam. What is very patent and explicit from the motions filed, is that Saudia prayed for other reliefs under the premises. Undeniably, Saudia has effectively submitted to QC RTC’s jurisdiction by praying for the dismissal of the Complaint on grounds other than lack of jurisdiction.

(c) YES. Considering that the complaint in the court a quo is one involving torts, the “connecting factor” or “point of contact” could be the place where the tortuous conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as situs of the tort (the place where the alleged tortuous conduct took place). This is because it is in the Philippines where Saudia allegedly deceived Morada, a Filipina residing & working here. That certain acts or parts of the injury allegedly occurred in another country is of no moment. What is important is the place where the overall harm or the fatality of the alleged injury to the person, reputation, social standing & human rights of complainant, had lodged, according to the Morada.

Also, we find here an occasion to apply the “State of the most significant relationship” rule, which in our view should be appropriate to apply now, given the factual context of this case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.

There is basis for the claim that over-all injury occurred and lodged in the Philippines. There is likewise no question that Morada is a resident Filipina national, working w/ Saudia, a resident foreign corporation engaged here in the business of international air carriage. Thus, the “relationship” between the parties was centered here, although it should be stressed that this suit is not based on mere labor law violations.

NORTHERN PACIFIC RAILROAD COMPANY v. BABCOCK
154 US 190 (1894)

FACTS
This was an action by Albert L. Babcock , as administrator of Hugh M. Munro, deceased, against the Northern Pacific Railroad Company (“the Company”), for damages for the death of said Munro.

Munro was a locomotive engineer employed by the Company within the territory of Montana. In January 10, 1888, Munro was assigned to operate Train No. 161. During that day, there was a severe snowstorm in progress yet it was alleged that the Company negligently refused to send a snow plow ahead of Train No. 161 to clear the snow and ice that had accumulated from the track where the train was to pass. This made the passage of the train unsafe and improper. As a result, the train got derailed when it ran into an accumulation of snow and ice near Gray Cliff (also in Montana), and Munro was instantly killed.

The estate of Munro filed a case for $25,000 in damages in the district court of Minnesota.

ISSUE
Was the amount of damage to be controlled by the law of the place of employment and where the accident occurred (lex loci), or by the law of the forum in which the suit was pending (lex fori)?

* Under the law of Minnesota, when the death occurred, the limit of recovery in case of death was $5,000, but at the time of the trial of the case in the court below, this limit had been increased to $10,000 by amendment of the Minnesota statutes.

**Under the law of Montana, where the death of a person is caused by the negligence of another, the only limitation for the amount of damages which may be given is “as under all the circumstances of the case may be just.”

RULING
The law of Montana applies. The statute of another state has, of course, no extraterritorial force, but rights acquired under it will always, in comity, be enforced if not against the public policy of the laws of the former. In such cases, the law of the place where the right was acquired or the liability was incurred will govern as to the right of action, while all that pertains merely to the remedy will be controlled by the law of the state where the action is brought. The principle is the same whether the right of action be ex contractu or ex delicto.

Therefore, as a general rule, where the lex loci contractus and the lex fori are altogether different, and they are construed these contracts and enforce rights under them according to their force and effect under the laws of the state where made. As an exception, which is to justify a court in refusing to enforce a right of action which accrued under the law of another state because against the policy of our laws, it must appear that it is against good morals or natural justice or that for some other such reason the enforcement of it would be prejudicial to the general interests of our own citizens.

LAUREL v. GARCIA
187 SCRA 797 (1990)

FACTS
The subject Roppongi property is one of the four properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on 9 May 1956, the other lots being the Nampeidai Property (site of Philippine Embassy Chancery), the Kobe Commercial Property (Commercial lot used as warehouse and parking lot of consulate staff), and the Kobe Residential Property (a vacant residential lot). The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

The Roppongi property was acquired from the Japanese government through Reparations Contract. The Roponggi property consists of the land and building “for the Chancery of the Philippine Embassy.” As intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on 22 July 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

During the incumbency of President Aquino, a proposal was made by former Philippine Ambassador to Japan, Carlos J. Valdez, to lease the subject property to Kajima Corporation, a Japanese firm, in exchange of the construction of 2 buildings in Roppongi, 1 building in Nampeidai, and the renovation of the Philippine Chancery in Nampeidai. The President issued EO 296 entitling non-Filipino citizens or entities to avail of reparations’ capital goods and services in the event of sale, lease or disposition. Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot.

ISSUE
1. Whether or not the Roppongi property and others of its kind can be alienated by the Philippine government.
2. Whether there was a conflict of law between the Japanese law on property (as the real property is situated there) and Philippine law.

RULING
1. No. The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the Japanese government. There can be no doubt that it is of public dominion and is outside the commerce of man. And the property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such.

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyances must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.

2. No. A conflict of law rule cannot apply when no conflict of law situation exists. A conflict of law situation arises only when: (1) there is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined; and (2) a foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply. In the present case, none of the above elements exists.

A.1 Carnival Cruise Lines, Inc. v. Shute

Brief Fact Summary. Plaintiff Carnival Cruise Lines, Inc. opposes a suit by a passenger injured on one of their cruise ships, because the cruise tickets contained an agreement that all matters relating to the cruise would be litigated before a Florida court.

Synopsis of Rule of Law. Forum-selection clauses forcing individuals to agree to submit to jurisdiction in a particular place are enforceable so long as they pass the test for judicial fairness.

Facts. Defendant Shute purchased passage for a seven day cruise on the Tropicale, a ship owned by Plaintiff, through a Washington travel agent. The face of each ticket contained terms and conditions of passage, which included an agreement that all matters disputed or litigated subject to the travel agreement, would be before a Florida court. Defendant boarded the ship in California, which then sailed to Puerto Vallarta, Mexico before returning to Los Angeles. While the ship was in international waters, Defendant Eulala Shute was injured from slipping on a deck mat. Defendants filed suit in Federal District Court in Washington. Defendant filed a motion for summary judgment, alleging that the clause in the tickets required Defendants to bring their suit in Florida.

Issue. Whether the court should enforce a forum-selection clause forcing individuals to submit to jurisdiction in a particular state.

Held. Yes. The Supreme Court of the United States held that the Court of Appeals erred in refusing to enforce the forum-selection clause.
Forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness, but where they are not lacking in fairness, they will be enforced.

Dissent. Justice Stevens dissented, in which he was joined by Justice Marshall. Essentially Justice Stevens feels that adhesion contracts, particularly forum-selection clauses, are void as contrary to public policy if they were not freely bargained for, create additional expense for one party, or deny one party a remedy.

Discussion. In reaching its decision, the court noted that there is no evidence that Plaintiff set Florida as the forum as a means of discouraging cruise passengers from pursuing their claims. Such a suggestion is negated by the fact that Plaintiff has its headquarters in Florida, and many of its cruises depart from Florida.
A.3 Burger King Corp. v. Rudzewicz

Brief Fact Summary.

Rudzewicz (Defendant) argued that the district court’s exercise of personal jurisdiction over him violated due process.

Synopsis of Rule of Law
A choice of law provision in a contract may be considered in determining whether a defendant has purposely made use of the benefits and protections of the forum state and therefore the forum state may exercise personal jurisdiction over him.

Facts
Rudzewicz (Defendant) and MacShara (Defendant) applied for a Burger King (Plaintiff) franchise in Michigan.

Their application was accepted and a written agreement executed with the Burger King (Plaintiff) corporate headquarters in Miami, Florida.

The contract called for payments to be made to the Miami office, and that its terms would be interpreted and enforced under the law of Florida.

Defendants defaulted on their payments, and Plaintiff sued for breach in district court in Florida. The district court held it had both personal and subject matter jurisdiction over the defendants and entered judgment for Plaintiff.

The court of appeals reversed, holding the choice of law provision was irrelevant to the determination of personal jurisdiction and excluded it in evaluating the contacts with Florida. Burger King (Plaintiff) appealed.

Issue
Is a choice of law provision in a contract relevant to the determination of personal jurisdiction over a defendant?

Held
(Brennan, J.) Yes. A choice of law provision in a contract may be considered in determining whether a defendant has purposely made use of the protection of the forum state and therefore the forum state may exercise personal jurisdiction over him.

While not dispositive, this element may be used to show the defendant’s consent to abide by and avail himself of the laws of the state. Therefore, the provision requiring application of Florida law, when considered with the other evidence of contacts, could serve to allow personal jurisdiction over Rudzewicz (Defendant). Reversed.

Dissent
(Stevens, J.) Rudzewicz (Defendant) had no reason to believe he would be subject to suit anywhere but in Michigan. All of the negotiations with Burger King (Plaintiff) were in Michigan. Since Burger King’s (Plaintiff) Michigan office was solely charged with dealing with Rudzewicz (Defendant), he could not reasonably expect to be sued elsewhere.

Discussion
The basis of a finding of personal jurisdiction rests on the question whether compelling the defendant to defend himself in the forum state is in accord with with due process. The Court in this case appears to infer a type of consent to jurisdiction based on the choice of law provision. As personal jurisdiction may be consented to, the Court has opened the door to a wider scope of liability.
1. G.R. No. L-37750 May 19, 1978
SWEET LINES, INC., petitioner,
vs.
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO

SANTOS, J.:)
FACTS: Respondents Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of Cebu.
Since many passengers were bound for Surigao, M/S “Sweet Hope would not be proceeding to Bohol.
They went to the proper branch office and was relocated to M/S “Sweet Town” where they were forced to agree “to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard.” and they were exposed to the scorching heat of the sun and the dust coming from the ship’s cargo of corn grits and their tickets were not honored so they had to purchase a new one.

They sued Sweet Lines for damages and for breach of contract of carriage before the Court of First Instance of Misamis Oriental who dismissed the complaint for improper venue.

A motion was premised on the condition printed at the back of the tickets – dismissed instant petition for prohibition for preliminary injunction.

This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:
14.

It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

ISSUE: W/N a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed only in a particular province or city

HELD: NO.
There is no question that there was a valid contract of carriage entered into by petitioner and private respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are present.
It should be borne in mind, however, that with respect to the fourteen (14) conditions — one of which is “Condition No. 14” which is in issue in this case — printed at the back of the passage tickets, these are commonly known as “contracts of adhesion,” the validity and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each case and the nature of the conditions or terms sought to be enforced.
For, “(W)hile generally, stipulations in a contract come about after deliberate drafting by the parties thereto, … there are certain contracts almost all the provisions of which have been drafted only by one party, usually a corporation. Contract of adhesion not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its terms, but rather, one which respondents took no part at all in preparing just imposed upon them when they paid for the fare for the freight they wanted to ship.

Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the inter-island shipping industry in the country today, We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and unenforceable:

first, under circumstances obligation in the inter-island ship. ping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets, on which Condition No. 14 is Printed in fine letters, and second, this subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers in different s of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu.

Public policy is “. . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good …

Under this principle” … freedom of contract or private dealing is restricted by law for the good of the public. Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it.

G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT, respondents.
FACTS:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) reversing the order of the Regional Trial Court denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money was filed by petitioner against private respondents Sherman and Reloj, before the Regional Trial Court of Quezon City, Branch 84.
• Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.

• The Joint and Several Guarantee provides, inter alia, that: This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee.
• The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-mentioned complaint.
• Private respondents filed a motion to dismiss (pp 54-56, Rollo) which was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order dismissing MTD, which read as follows:
There is nothing in the Guarantee which says that the courts of Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred by the will, submission or consent of the parties.
It is also asserted that defendant Sherman is not a citizen nor a resident of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them. There has been a valid service of summons on both defendants and in fact the same is admitted when said defendants filed a ‘Motion for Extension of Time to File Responsive Pleading on December 5, 1984.
• Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order, which were granted. The respondent Court is enjoined from taking further cognizance of the case and to dismiss the same for filing with the proper court of Singapore which is the proper forum.
ISSUE: Whether or not Philippine courts have jurisdiction over the suit.
HELD: The decision of the Regional Trial Court is REINSTATED
• While it is true that “the transaction took place in Singaporean setting” and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that “[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore.
• We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee” be liberally construed.
One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p. 46).
Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant.
However, in this case, private respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case.
Private respondents’ stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation.
• The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction.
Neither did the clause in question operate to divest Philippine courts of jurisdiction.
In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions.
Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter’s authorities.
This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State.
A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them.
Whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court,
Private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below.

A.6 White v. Tennant

Brief Fact Summary
Michael White moved his home from West Virginia to Pennsylvania, but the same day crossed back to take care of his wife who was sick with typhoid. He then caught the disease and died in West Virginia. The question arose concerning which state would be considered his domicile for purposes of intestate succession.

Synopsis of Rule of Law
The succession and distribution of a decedent’s personal estate is controlled by the law of the state where the decedent was domiciled at the time of death.

Facts
Michael White was legally domiciled in West Virginia where he had lived his entire life and owned a farm. Michael had made an agreement with his mother, brothers and sisters to sell his farm and occupy a house on 40 acres of land in Pennsylvania, just across the West Virginia state line. The land was part of a larger family farm located on both sides of the state line with a mansion-house found on the West Virginia side. Michael and his wife brought their possessions and livestock to their new home. However, the house was cold and damp and Michael’s wife was not feeling well, so he accepted an invitation to spend the night in the West Virginia mansion-house. They unloaded their possessions first and then left. It turned out that Michael’s wife had typhoid fever. He took care of her at the mansion-house, and also went into Pennsylvania daily to care for his stock. Two weeks later, Michael caught typhoid and died in West Virginia. His wife recovered and her father, Tennant (Defendant), was appointed administrator of Michael’s estate. Under the law of West Virginia, Michael’s wife would receive all her husband’s personal property by intestate succession. Under Pennsylvania law, she would receive only half, and his immediate family would get the other half. White (Plaintiff), the brothers and sisters of Michael, sought to set aside the West Virginia distribution of his estate, claiming he was domiciled in Pennsylvania.

Issue
Will the succession and distribution of a decedent’s personal estate be controlled by the law of the state where the decedent was domiciled at the time of death?

Held
(Snyder, J.) Yes. The succession and distribution of a decedent’s personal estate is controlled by the law of the state where the decedent was domiciled at the time of death. A domicile is a residence, actual or developing, with the lack of any intent to make a domicile elsewhere. These two elements must exist together. One domicile cannot be lost until another is acquired. The facts reveal that Michael left his West Virginia residence with no plans to return and with the intent and purpose of making his permanent home in Pennsylvania. Therefore, at the moment he and his wife arrived at their new home, their domicile became Pennsylvania. His leaving there, under the circumstances, with the intention of returning there did not change that fact. He did not revive his domicile in West Virginia as he had already sold his residence and left it with no intent to return. Accordingly, the decree must be reversed and remanded.

Discussion
The function of domicile is to enable the legal interests of a person to be determined by a single law “particularly in matters where continuity of application of the same law is important . . .” Under the Second Restatement of Conflicts, it is suggested that domicile will not attach until a person has been there for “a time,” which is some time more than “a moment’s presence.” Note that if a wife goes ahead of her husband to their new, intended domicile, her arrival there before his may be satisfactory to establish the husband’s new domicile

2. In Re Union Carbide Corp. Gas Plant Disaster, 634 F. Supp. 842 (S.D.N.Y. 1986)
U.S. District Court for the Southern District of New York – 634 F. Supp. 842 (S.D.N.Y. 1986)
June 10, 1986

FACTS:
On the night of 23 December 1984, a gas leak occurred at the pesticide plant of Union Carbide India Limited (UCIL) in Bhopal, India resulting in the deaths of more than 2,000 people and injuries to more than 200,000 others. . Thereafter, the India passed a law giving the Indian government the exclusive right to represent the victims of the disaster.
As thus, the Indian government filed a complaint before a New York district court.
The Union Carbide Corporation (UCC) filed a motion to dismiss on the ground of forum non conveniens and lack of personality.
The district court granted the motion on three conditions, namely, that UCC: (1) consent to the jurisdiction of Indian courts and waive defenses based on the Statute of Limitations; (2) agree to the satisfy the judgement of the Indian court, provided it complied with the requirements of due process; and (3) be subject to discovery under the Federal Rules of Civil Procedure of the US.
Consequently, the Indian government filed sued the UCIL and the UCC before the a district court in India.
The UCC appealed the conditions.
Arguments for the Defendant
While Indian courts may provide an adequate alternative forum, they adhere to standards of due process much lower than that followed in the US. Hence, US courts must supervise the proceedings before Indian courts.
ISSUE:
WON the dismissal on the ground of forum non conveniens is proper.
HELD
Yes.
The Indian courts are adequate alternative fora.
Ratio Decidendi
Almost all of the estimated 200,000 plaintiffs are citizens and residents of India who have revoked their representation by an American counsel in favor of the Indian government, which now prefers Indian courts. Further, the UCC has already consented to the assumption of jurisdiction by the Indian courts. All the witnesses and evidence are likewise in India.
As to the conditions, the first is valid in order to secure the viability of the Indian courts as alternate fora. The second is problematic as it gives the impression that foreign judgments the UCC’s consent is necessary in order for the judgement of the Indian courts to be enforceable in New York.
The laws of New York, in fact, recognizes that a judgment rendered by a foreign court may be enforced in that State except if such judgment was rendered in violation of due process or without jurisdiction over the person of the defendant.
The request of UCC of supervision by US courts of Indian courts is untenable. The power of US courts cannot extend beyond their territorial jurisdiction. Moreover, once US courts dismiss a case on the ground of forum non conveniens, they lose any further jurisdiction over the case, except in case of an action for enforcement later on. Denial of due process may, however, constitute a defense against the enforcement of the Indian judgment. The third condition is likewise invalid. Basic justice dictates that both parties must be given equal access to evidence in each other’s possession. Hence, both parties maybe subjected to the modes of discovery under the Federal Rules of Civil Procedure on equal terms subject to approval by Indian courts.
1 National Equipment Rental, Ltd. V. Szukhent

Brief Fact Summary. Petitioner, a New York corporation, sued Respondents, residents of Michigan in New York federal court for failure to make payments on equipment Respondents leased from Petitioner. The lease designated one Florence Weinberg to be Respondents agent to accept service of process on their behalf. Petitioner delivered the complaint and summons to Weinberg, who promptly mailed the documents to Respondents.

Synopsis of Rule of Law. In order to have an “agent authorized by appointment” for purposes of service of process, an individual can contractually designate an agent to accept service of process within a certain state. If said agent promptly delivers the papers served to said individual, then service is effective. It does not matter if the clause requires the agent to deliver the papers or that the agent may have a potential conflict of interest, or that the individual was not acquainted with the particular agent.

Facts. Respondents, the Szukhents, were residents of Michigan. They rented equipment from National Equipment Rental, Ltd., Petitioner, pursuant to a lease. The lease specified that Florence Weinberg, located in Long Island, New York, would be the designated agent of Respondents for purposes of accepting service of process. The lease was signed by Petitioner and Respondents. Petitioner filed suit against Respondents for failure to make payments under the lease. The complaint and summons were served on Weinberg and Petitioner notified Respondents via certified mail of said service. Weinberg promptly forwarded the complaint and summons to Respondents. Respondents moved to quash service of the summons and complaint on the grounds that service was ineffective. The trial court granted the motion to quash. The Circuit Court upheld, reasoning that the lease term did not create an agency relationship between Respondents and Weinberg. Petitioner appealed and the Supreme Court granted certiorari.

Issue. Did the term in the lease between Petitioner and Respondent create an agency relationship between Respondents and the alleged agent such that the agent could validly accept service of process on behalf of Respondents?

Held. Yes. Reversed and remanded.
Both parties acknowledge that the term of the lease was agreed to by Petitioner and Respondents.

Respondents received notice in a complete and timely fashion, so they cannot argue that there has been a due process violation.

Parties can agree to designate an agent to accept service of process or to even waive service.

The prompt acceptance and delivery of the complaint and summons to Respondents was enough to create an agency relationship.

Dissent. Justice Black: The boilerplate language designating an agent in the lease raises due process questions.
Justice Brennan: The “agent authorized by appointment” should not be someone that may have a conflict of interest with the principal. In addition, the agent should be explicitly required to deliver the complaint and summons in order for the agency to be effective. Finally, an individual’s signature should not be sufficient proof that he/she consented to be served in a state outside of his/her residence when that signature appears on a printed form contract prepared by a corporation.

Discussion. Evidence of a signature consenting to the selection of the designated agent and prompt delivery of the complaint and summons is enough to make service effective.

International Shoe Co. v. Washington

Brief Fact Summary. Suit brought within the State of Washington against International Shoe Company (Appellant), a Delaware corporation. Appellant had a principal place of business in St. Louis, Missouri and engaged in the manufacture and sale of shoes and other footwear. The suit sought to recover unpaid contributions to the state unemployment compensation fund.

Synopsis of Rule of Law. In order to subject a defendant to a judgment in personam, if he is not present within the territory of the forum, he must have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

Facts. Appellant did not maintain an office within the State of Washington. The corporation employed between eleven and thirteen salespersons in the state, under the direct supervision and control of managers located in St. Louis. The salespeople resided in Washington and their principal activities were confined to that state. The salespeople received commissions from their sales with Washington. Appellant filed a Motion to Set Aside the Order and Notice of Assessment of Unemployment because service on Appellant’s salesman was not proper. It also contended that it was not a corporation in Washington, it was not doing business in that state, and it had no agent in that state to accept service, nor did it furnish employment within the meaning of the statute. The motion was denied, and both the Superior Court and the Supreme Court of Washington affirmed the decision.

Issue. Whether a foreign actor or corporation has, by its merely conducting business within a forum state, availed itself to suit within that forum state?

Held. Yes. Solicitation within a state by the agents of a foreign corporation plus some additional activities render a foreign corporation amenable to suit within the forum state to enforce an obligation arising out of its activities within the forum state. In this case, Appellant’s activities within Washington were systematic and continuous within the years in question. These activities resulted in a large volume of business. Further, Appellant received the benefits and protections of the laws of Washington. As a result, the suit against Appellant within the state does not involve an unreasonable or undue procedure.

Discussion. In determining whether such minimum contacts exist, a court will look at two factors: sufficient minimum contacts and notice.

International Shoe requires that a defendant have such minimum contacts with the forum state that exercise of jurisdiction over the defendant would be fair and reasonable. Under this analysis, a court will look to whether both purposeful availment and foreseeability exist. Under the foreseeability prong of the minimum contacts analysis, it must be foreseeable that the defendant’s business within the forum makes it amenable to suit within that forum. In addition, under the purposeful availment prong, the defendant’s minimum contacts with the forum state must arise from non-accidental contact.

In addition to the minimum contacts analysis, due process also requires that a reasonable effort be used to notify the defendant of a pending lawsuit so that it has an opportunity to appear and be heard.

B.3 Perkins v. Benguiet Consolidated Mining Co.

Synopsis of Rule of Law. Federal due process is not violated in either taking or declining jurisdiction of a foreign corporation when the foreign corporation’s supervision of a business is carried on continuously and systematically within a state.

Facts. The company’s mining properties were in the Philippine Islands. During the occupation of the Islands by the Japanese operations were halted and the president returned to his home in Ohio. He maintained an office where he conducted his affairs and conducted business of the company and its employees (drew salary checks, maintaining bank accounts, hosting Directors’ meetings, supervising policies to rehabilitate the properties in the Philippines etc.).

Issue. At the constitutional level, the fairness to the corporation, and whether as a matter of federal due process, the business done in Ohio by the respondent mining company was sufficiently substantial and of such a nature as to permit Ohio to entertain a cause of action against a foreign corporation, where the cause of action arose from activities entirely distinct from its activities in Ohio.

Held. Under these particular circumstances it would not violate federal due process for Ohio to either take or decline jurisdiction of the corporation. Vacated and remanded.

Dissent. Justice Minton and The Chief Justice dissented on the grounds that the U.S. Supreme Court was essentially issuing an advisory opinion to the Ohio Supreme Court.

Discussion. Although no mining properties were located in Ohio, the operations and supervision of the company and wartime activities being directed by the president in the State of Ohio are enough not to violate federal due process.

B.4 McGee v. International Life Insurance Co

Synopsis of Rule of Law. A state court’s jurisdiction satisfies due process when it is based on a contract with substantial connection with that state.

Facts. In 1944, Lowell Franklin, a resident of California, purchased a life insurance policy form an insurer subsequently bought by Defendant International Life Insurance Co., who then mailed a reinsurance certificate to Franklin in California offering to insure him. Franklin accepted the offer and paid premiums by mail from his California home to Defendant’s office in Texas until his death in 1950. When the beneficiary, Plaintiff McGee, notified Defendant of Franklin’s death, they refused to pay. Neither the original insurer nor respondent ever had any office or agent in California.

Issue. Whether a non-resident corporation is subject to jurisdiction in a state in which it never had any agent or office, merely because it was a party to a contract with a resident of the state.

Held. No. The Supreme Court of the United States ruled that the Due Process clause did not preclude the California court from entering a judgment binding on Defendant. The Supreme Court found that it is sufficient for purposes of due process that the suit was based on a contract that had substantial connection with California. A state has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims.

Discussion. The Supreme Court, in considering fact the contract was delivered in California, the premiums were mailed from there and the insured was a resident of California when he died, combined with the recognition that modern transportation and communication have made it much less burdensome for a party sued to defend themselves in a state where they conduct business, found that it did not violate just and fair play for the California court to enter a binding agreement on International Life. Moreover, the Court reasoned that California residents would be at a severe disadvantage if they had to leave their own state to obtain payment from their insurance company.

G.R. No. 103493 June 19, 1997
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents.

• This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court.
• Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
• Private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducat’s obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat.
• As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note became due and demandable.
• Private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint.
• While Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint “For Sum of Money with Damages and Writ of Preliminary Attachment” against private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents’ fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal properties of private respondents. 2
• Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement.
• The trial court granted Ducat’s motion to dismiss, stating that “the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens,” even as it noted that Ducat was not a party in the U.S. case.
• A separate hearing was held with regard to 1488, Inc. and Daic’s motion to dismiss. On March 9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that the “main factual element” of the cause of action in this case which is the validity of the sale of real property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial court)
• The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
• The Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL’s former name) and the Athona Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability of Ducat’s securities given in exchange for the Texas property. The recovery of a sum of money and damages, for fraud purportedly committed by appellees, in overpricing the Texas land, constitute the action before the Philippine court, which likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
• It is important to note in connection with the first point that while the present case was pending in the Court of Appeals, the United States District Court for the Southern District of Texas rendered judgment 5 in the case before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals.
ISSUE: Whether Civil Case No. 16536 is barred by the judgment of the U.S. court.
HELD: Decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in accordance with this decision
• While this Court has given the effect of res judicata to foreign judgments in several cases, 7 it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law. 8 It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary. 9 Rule 39, §50 provides:
Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
• In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata.
On the plaintiff’s claim in its Opposition that the causes of action of this case and the pending case in the United States are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners’ action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the appellate court’s ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a separate proceeding.
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may they proceed with their action against private respondents.
• The trial court’s refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, §1, which does not include forum non conveniens. 16 The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after “vital facts are established, to determine whether special circumstances” require the court’s desistance.
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter’s debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.
• It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, §17 on extraterritorial service provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among others, “the property of the defendant has been attached within the Philippines.” 18 It is not disputed that the properties, real and personal, of the private respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.
• As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main judgment under consideration in Civil Case No. 16563. The separability of Guevara’s claim is not only admitted by petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed..

Brief Fact Summary
World-Wide Volkswagen (WWV) (Plaintiff) challenged an Oklahoma district court’s (Defendant) in personam jurisdiction in a products liability action brought by Robinson on the grounds that World-Wide Volkswagen’s (Plaintiff) only contacts with Oklahoma was that Robinson bought a World-Wide Volkswagen (Plaintiff) car in New York and drove it through Oklahoma.

Synopsis of Rule of Law
A state court may exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state.

Facts
Robinson bought a World-Wide Volkswagen (WWV) (Plaintiff) car in New York. While driving to Arizona, Robinson was involved in an auto accident in Oklahoma and brought a products liability action against Plaintiff in Oklahoma. Plaintiff was incorporated and had its business in New York. Plaintiff distributed vehicles, parts, and accessories, under contract with Volkswagen, to retail dealers in New York, New Jersey, and Connecticut. Plaintiff did no business in Oklahoma, had no agents in Oklahoma, did not advertise in Oklahoma, and did not use any media in Oklahoma. Plaintiff challenged the Oklahoma court’s (Defendant) in personam jurisdiction over Plaintiff on the grounds that Plaintiff had no minimum contacts with Oklahoma. The district court (Defendant) and the Oklahoma Supreme Court rejected Plaintiff’s challenge. Plaintiff appealed to the United States Supreme Court.

Issue
May a state court exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state?

Held
(White, J.) Yes. A state court may exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state. There are two purposes this minimum contact requirement serves: (1) It protects the defendant against the burdens of litigating in an inconvenient forum; and (2) It ensures that the states, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. Plus, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes divest a state of its power to render a valid judgment. In this case, Plaintiff did not have minimum contacts with Oklahoma. Plaintiff’s only contact with the state was that one of its cars had been driven through the state. It would not be reasonable to expect Plaintiff to foresee that an accident would occur in Oklahoma and have to defend actions wherever their cars are taken. This situation is distinguished from those where a nonresident corporation intentionally avails itself of the state’s commerce by introducing a product to the state’s market and can therefore fall within the state’s in personam jurisdiction. In such a situation, the corporation can foresee that litigation might occur in the availed state. However, in the present case, Plaintiff’s only contact with Oklahoma was that s consumer drove a car through the state. Since such a contact is not sufficient to satisfy the minimal contacts requirement, the Oklahoma court (Defendant) does not have in personam jurisdiction over WWV (Plaintiff). Reversed.

Dissent
(Brennan, J.) WWV’s (Plaintiff) contacts to Oklahoma were strong in that the accident occurred in the state, witnesses lived in the state, and the state has a legitimate interest in preserving its interstate highways. The sale of automobiles presupposes that such cars will be driven to distant states. This is equal to introducing a product into the market of a state and the likelihood of litigation in other states is foreseeable. Therefore, WWV (Plaintiff) had sufficient contacts with Oklahoma for jurisdiction to apply.

Discussion
The minimum contacts test was first established in International Shoe Co. v. Washington, 326 U.S. 310 (1945). The test is vague and always requires a detailed examination of the facts. The court looks at factors such as manifest state interests, purposeful availment, foreseeability, fairness, and states’ long-arm statutes.

Calder v. Jones

Brief Fact Summary. Respondent, Shirley Jones, brought a libel suit in a California state court against Petitioners, Calder et al. Petitioners South and Calder are Florida residents who argue that California courts lack personal jurisdiction over them.

Synopsis of Rule of Law. A state has personal jurisdiction over any party whose actions intentionally reach another party in the state and are the basis for the cause of action.

Facts. Petitioners South is a reporter, and Petitioner Calder is president and an editor, of Petitioner National Enquirer. South wrote an article that accused Respondent of a drinking problem that was so severe that it affected her acting career. Calder reviewed the article and edited it to its final form for publication. Respondent brought a suit for libel, and South and Calder challenged California’s personal jurisdiction since neither had any physical contacts with California, particularly as it pertained to this article. South did rely on sources from California, and Respondent’s life and career were centered in California. The district court cited Petitioner’s rights under the First Amendment to the United States Constitution as trumpeting Due Process Clause concerns. The appellate court reversed because First Amendment arguments are irrelevant to jurisdictional analysis.

Issue. The issue is whether California has personal jurisdiction over South and Calder through their targeting of Respondent with this article.

Held. The United States Supreme Court held that California had personal jurisdiction over Petitioners. The first step in the analysis is to determine the focal point of the harm suffered, and that was in California. The Court then determined that Petitioners’ actions intentionally aimed at a California resident, and the injuries suffered would be in that state.

Discussion. Petitioners argued that, because they were merely employees of the libelous newspaper, their case was analogous to a welder who works on a boiler in Florida that subsequently explodes in California. The Court distinguishes this by noting that unlike the welder they intentionally targeted the California contact.

Keeton vs Hustler Magazine
Facts of the case
• Kathy Keeton (Keeton) sued Hustler Magazine, Inc. (Hustler) and several other defendants for libel in the United States District Court for the District of New Hampshire. Keeton alleged that the district court had jurisdiction based on diversity of citizenship since she was a resident of New York and Hustler was an Ohio corporation with its principal place of business in California. Hustler sold 10 to 15 thousand copies of its magazine in New Hampshire each month but Keeton’s only connection to New Hampshire was the circulation there of copies of a magazine that she assisted in producing. She chose to sue in New Hampshire because it was the only state in which the statute of limitation for libel six years, the longest in the United States had not run. The district court dismissed the suit on the ground that the due process clause of the Fourteenth Amendment forbade the application of New Hampshire’s long-arm statute in order to acquire personal jurisdiction over Hustler. The First Circuit affirmed, finding that Keeton’s contacts with New Hampshire were too attenuated for an assertion of personal jurisdiction over Hustler. The Court of Appeals also found the application of the “single publication rule,” which would require the court to award Keeton damages caused in all states should she prevail, unfair since most of Keeton’s alleged injuries occurred outside of New Hampshire.
• Question
• Was Hustler’s circulation of magazines within the forum state of New Hampshire alone sufficient, without regard to the depth of plaintiff’s contacts or the amount of plaintiff’s damages caused in New Hampshire, to support an assertion of personal jurisdiction in a libel action based upon the contents of the magazine?
• Yes. Hustler’s regular circulation of magazines in New Hampshire is sufficient to support an assertion of personal jurisdiction in a libel action based on the contents of the magazine. In analyzing whether there are sufficient minimum contacts to permit personal jurisdiction under the Fourteenth Amendment, a court should focus on the relationship among the defendant, the forum, and the litigation. Hustler has continuously and deliberately exploited the New Hampshire market and therefore it must reasonably anticipate being hauled into court there. Keeton did not need to have minimum contacts with the forum state in order for that state to have asserted personal jurisdiction over Hustler. New Hampshire had a sufficient interest in adjudicating the dispute. Moreover, even though most of the harm done to Keeton occurred outside New Hampshire, the same would be true in most libel cases brought anywhere other than plaintiff’s state of domicile

Asahi Metal Industry Co. v. Superior Court

Brief Fact Summary. Gary Zurcher lost control of his Honda motorcycle and collided with a tractor trailer. He was severely injured and his passenger/wife was killed. Zurcher filed a product liability action naming the manufacturer of the motorcycle tire’s tube and Asahi Metal, the manufacturer of the tire’s tube’s valve assembly.

Synopsis of Rule of Law. The “substantial connection,” between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.

Facts. On a California highway Gary Zurcher lost control of his Honda motorcycle and collided with a tractor trailer. He was severely injured and his passenger/wife was killed. Zurcher filed a product liability action alleging the 1978 accident was caused by a sudden loss of air and an explosion in the rear tire of the motorcycle and that the tire, tube and sealant were defective, naming the manufacturer of the tube and Asahi Metal, the manufacturer of the tube’s valve assembly. Zurcher’s claims against the tire manufacturer settles and is dismissed, leaving only the tire manufacturer’s indemnity action against Asahi.

Issue. Whether the mere awareness on the part of a foreign defendant that components it manufactured, sold, and delivered outside the United States would reach the forum State in the stream of commerce constitutes “minimum contacts” between the defendant and the forum State such that the exercise of jurisdiction “does not offend ‘traditional notions of fair paly and substantial justice.’” International Shoe Co. v. Washington, quoting Milliken v. Meyer.

Held. The exertion of personal jurisdiction over Asahi exceeds the limits of due process.

Concurrence Chief Justices Brennan, White, Marshall, Blackmun, Powell and Stevens regarding Part II-B, but did not agree with Parts II-A of the stream-of-commerce theory, nor with its conclusion that Asahi did not “purposely avail itself of the California market”, however did agree that the exercise of personal jurisdiction over Asahi would not comport with “fair play and substantial justice.”; and Powell and Scalia join regarding Parts II-A and III.

Discussion. Asahi seeks to quash Cheng Shin’s service of summons arguing California’s long-arm statute, arguing the state could not exert jurisdiction over it with the Due Process Clause of the Fourteenth Amendment. Asahi is a Japanese corporation that manufactures the tire valve assemblies in Japan and sells the assemblies to Cheng Shin for use in the tire tubes. The Supreme Court of California interpreted this case in light of World-Wide Volkswagen and held that because the stream of commerce eventually brought some valves Asahi sold Cheng Shin into California, Asahi’s awareness that its valves would be sold in California was sufficient to permit California to exercise jurisdiction over Asahi. Here however, the court found that there was no actions by Asahi that demonstrated purposeful availment to the California market.

BENSUAN RESTAURANT CORPORATION VS. RICHARD B. KING, DOCKET NO. 96-9344, (SEPTEMBER 10, 1997)
FACTS: Bensusan Restaurant Corporation, the plaintiff, owned the Blue Note jazz club in New York’s Greenwich Village, and owned a federal trademark registration for the mark “THE BLUE NOTE.”
The defendant, Richard King, operated “The Blue Note,” a small club in the college town of Columbia, Missouri, and had used that mark on a local basis since 1980 — several years prior to use of “Blue Note” by the now-famous New York club.
Although the New York jazz club had obtained a federal registration for the Blue Note mark in 1985, the Missouri club could continue to use the name within its local area based on the Missouri club’s prior use of the name.
In April 1996, the Missouri club began operation of a website (http//www.throughport.com/cyberspot) that offered general information about King’s club, including a calendar of events and ticketing information.
Tickets could not be ordered via the Internet; instead, one could order tickets for an advertised event by telephone and then pick-up the tickets in person at a box office in Columbia, Missouri. The Missouri club’s website also included a hyperlink to the website for Greenwich Village’s Blue Note club, while also offering a disclaimer that “The Blue Note’s Cyberspot should not be confused with one of the world’s finest jazz clubs, the Blue Note, located in the heart of New York’s Greenwich Village. If you should find yourself in the Big Apple give them a visit.”
The New York jazz club viewed the Missouri club’s website on the Internet as an expansion of use of the Blue Note name outside of the local area, and raised this objection with King. In response, King removed the second sentence of the disclaimer and the hyperlink from his website.
The operator of the New York jazz club sued the operator of the Missouri jazz club for trademark infringement in New York.
The district court dismissed the complaint on the ground of lack of personal jurisdiction. Because King does not transact business in New York State.
ISSUE: WON the district court erred in dismissing the complaint.
HELD:NO.
The New York law dealing with personal jurisdiction based upon tortious acts of a non-domiciliary who does not transact business in New York is contained in sub-paragraphs (a)(2) and (a)(3) of CPLR § 302.
As construed by the Feathers decision, jurisdiction cannot be asserted over a nonresident under this provision unless the nonresident commits an act in this state.   This is tantamount to a requirement that the defendant or his agent be physically present in New York․   In short, the failure to perform a duty in New York is not a tortious act in this state, under the cases, unless the defendant or his agent enters the state.
To satisfy the latter requirement, Bensusan relies on the arguments that King participated in interstate commerce by hiring bands of national stature and received revenue from customers-students of the University of Missouri-who, while residing in Missouri, were domiciliaries of other states.  
These alleged facts were not sufficient to establish that substantial revenues were derived from interstate commerce, a requirement that “is intended to exclude non-domiciliaries whose business operations are of a local character.”  
The court stated that “[t]he mere fact that a person can gain information on the allegedly infringing product is not the equivalent of a person advertising, promoting, selling or otherwise making an effort to target its product in New York.”
Consequently, the district court concluded that any tortious action of trademark infringement would arise in Missouri rather than in New York. In examining whether the exercise of jurisdiction over King would satisfy due process, the court asserted that “creating a site, like placing a product into the stream of commerce, may be felt nationwide — or even worldwide — but, without more, it is not an act purposefully directed toward the forum state.”
For all the reasons above stated, we affirm the judgment of the district court.

CompuServe, Inc. v. Patterson, 89 F.3d 1257, 39 U.S.P.Q.2d (BNA) 1502 (6th Cir. 1996).
PERSONAL JURISDICTION – DECLARATORY JUDGMENT – INTERNET – TRADEMARK – UNFAIR COMPETITION – COMPUTER INFORMATION AND NETWORK SERVICE – LONG-ARM STATUTE
Continued supply and sales of shareware via a computer information and network Internet access provider based in the forum state satisfies the due process requirements of the federal Constitution concerning the exercise of personal jurisdiction over an out-of-state defendant.
https://www.law.cornell.edu/background/internet/CompuServe.htm
SUMMARY
Plaintiff-Appellant CompuServe, Inc. (“CompuServe”), a nationwide provider of both electronic network and information services, has its headquarters in Ohio. Among the services provided by CompuServe is the opportunity for subscribers to post and sell software in the form of “shareware.” Shareware, provided to the end user initially free of charge, allows the user to test the software for a specified length of time, after which he or she must decide whether to pay the software’s author for continued use, or terminate the use of the software. CompuServe accepted payment for the shareware from purchasers and remitted that payment, less a commission, to the authors of the software.
Richard S. Patterson (“Patterson”), a resident of Texas, subscribed to CompuServe. Patterson took advantage of CompuServe’s shareware service by posting Internet navigation software that he developed but marketed via his own corporation, Flashpoint Development. Before use of the shareware service, Patterson entered into a “Shareware Registration Agreement” (“SRA”) that provided that Ohio law governed the parties’ relationship.
Subsequent to the posting of Patterson’s navigation software, CompuServe itself began to market its own navigation software. Patterson believed that CompuServe’s software was confusingly similar to his own trademarked software and notified CompuServe.
CompuServe filed a declaratory judgment action in the District Court for the Southern District of Ohio, seeking a declaration that it had not infringed Patterson’s trademarks. Patterson filed a motion to dismiss for lack of personal jurisdiction. The district court granted Patterson’s motion.
CompuServe filed an appeal arguing that Patterson’s repeated availment of the shareware sales procedures constituted minimum contacts with the forum state. CompuServe further argued that the existence of the Shareware Registration Agreement clearly stipulating that Ohio law governed disputes regarding the agreement meant that the exercise of personal jurisdiction comported with traditional notions of fair play and substantial justice.
Issue(s)
Whether an Internet service provider’s home state can exercise jurisdiction over an out-of-state author of software who subscribes to the Internet service provider and receives commissions for software sold via the Internet service provider.
(Did CompuServe make a prima facie showing that Patterson’s contacts with Ohio, which have been almost entirely electronic in nature, are sufficient, under the Due Process Clause, to support the district court’s exercise of personal jurisdiction over him?)
Disposition
Yes. A forum state can exercise jurisdiction over an author of software who sells his software via a Internet service provider based in the forum state because 1) the author purposefully avails himself of the forum’s laws by acting in the forum, 2) the cause of action arises from that availment, and 3) the burden on the defendant author is less than that on the forum state’s interests in determining its laws concerning trademarks and trade names.
Because we believe that Patterson had sufficient contacts with Ohio to support the exercise of personal jurisdiction over him, we REVERSE the district court’s dismissal and REMAND this case for further proceedings consistent with this opinion.
MORE: To determine whether personal jurisdiction exists over a defendant, federal courts apply the law of the forum state, subject to the limits of the Due Process Clause of the Fourteenth Amendment. The Ohio long-arm statute allows an Ohio court to exercise personal jurisdiction over nonresidents of Ohio on claims arising from, inter alia, the nonresident’s transacting any business in Ohio. It is settled Ohio law, moreover, that the “transacting business” clause of that statute was meant to extend to the federal constitutional limits of due process, and that as a result Ohio personal jurisdiction cases require an examination of those limits.   Further, personal jurisdiction may be either general or specific in nature, depending on the nature of the contacts in a given case. In the instant case, because CompuServe bases its action on Patterson’s act of sending his computer software to Ohio for sale on its service, CompuServe seeks to establish such specific personal jurisdiction over Patterson.  
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state.   Second, the cause of action must arise from the defendant’s activities there.   Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.
We conclude that Patterson has knowingly made an effort-and, in fact, purposefully contracted-to market a product in other states, with Ohio-based CompuServe operating, in effect, as his distribution center.   Thus, it is reasonable to subject Patterson to suit in Ohio, the state which is home to the computer network service he chose to employ.
To support this conclusion, we will address each of the above three criteria seriatim, bearing in mind that (1) CompuServe need only make a prima facie case of personal jurisdiction, and (2) we cannot weigh Patterson’s affidavit in the analysis, given that the district court addressed his motion to dismiss without holding an evidentiary hearing.7  
1. The “purposeful availment” requirement.
 This court has stated that the question of whether a defendant has purposefully availed itself of the privilege of doing business in the forum state is “the sine qua non for in personam jurisdiction.”  Mohasco Indus., 401 F.2d at 381-82.   The “purposeful availment” requirement is satisfied when the defendant’s contacts with the forum state “proximately result from actions by the defendant himself that create a ‘substantial connection’ with the forum State,” and when the defendant’s conduct and connection with the forum are such that he “should reasonably anticipate being haled into court there.” Courts require purposeful availment to insure that “random,” “fortuitous,” or “attenuated” contacts do not cause a defendant to be haled into a jurisdiction.  
 This requirement does not, however, mean that a defendant must be physically present in the forum state.   As the Burger King Corp. Court stated, “So long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.”
There is no question that Patterson himself took actions that created a connection with Ohio in the instant case.   He subscribed to CompuServe, and then he entered into the Shareware Registration Agreement when he loaded his software onto the CompuServe system for others to use and, perhaps, purchase.   Once Patterson had done those two things, he was on notice that he had made contracts, to be governed by Ohio law, with an Ohio-based company.   Then, he repeatedly sent his computer software, via electronic links, to the CompuServe system in Ohio, and he advertised that software on the CompuServe system.   Moreover, he initiated the events that led to the filing of this suit by making demands of CompuServe via electronic and regular mail messages.
The real question is whether these connections with Ohio are “substantial” enough that Patterson should reasonably have anticipated being haled into an Ohio court.   The district court did not think so.   It looked to “cases involving interstate business negotiations and relationships” and held that the relationship between CompuServe and Patterson, because it was marked by a “minimal course of dealing,” was insufficient to satisfy the purposeful availment test. We disagree.   The contract cases upon which the district court relied are both distinguishable in important ways.   Patterson, unlike the nonresident defendant in Reynolds, entered into a written contract with CompuServe which provided for the application of Ohio law, and he then purposefully perpetuated the relationship with CompuServe via repeated communications with its system in Ohio.   And, unlike the nonresident defendant in Health Communications, Patterson was far more than a purchaser of services;  he was a third-party provider of software who used CompuServe, which is located in Columbus, to market his wares in Ohio and elsewhere.
In fact, it is Patterson’s relationship with CompuServe as a software provider and marketer that is crucial to this case.   The district court’s analysis misses the mark because it disregards the most salient facts of that relationship:  that Patterson chose to transmit his software from Texas to CompuServe’s system in Ohio, that myriad others gained access to Patterson’s software via that system, and that Patterson advertised and sold his product through that system.   Though all this happened with a distinct paucity of tangible, physical evidence, there can be no doubt that Patterson purposefully transacted business in Ohio.  
Moreover, this was a relationship intended to be ongoing in nature;  it was not a “one-shot affair Patterson sent software to CompuServe repeatedly for some three years, and the record indicates that he intended to continue marketing his software on CompuServe.   As this court has often stated, [B]usiness is transacted in a state when obligations created by the defendant or business operations set in motion by the defendant have a realistic impact on the commerce of that state;  and the defendant has purposefully availed himself of the opportunity of acting there if he should have reasonably foreseen that the transaction would have consequences in that state.
Patterson deliberately set in motion an ongoing marketing relationship with CompuServe, and he should have reasonably foreseen that doing so would have consequences in Ohio.
 Admittedly, merely entering into a contract with CompuServe would not, without more, establish that Patterson had minimum contacts with Ohio. Because Patterson deliberately did both of those things, however, and because of the other factors that we discuss herein, we believe that ample contacts exist to support the assertion of jurisdiction in this case, and certainly an assertion of jurisdiction by the state where the computer network service in question is headquartered.
Similarly, in the instant case, Patterson consciously reached out from Texas to Ohio to subscribe to CompuServe, and to use its service to market his computer software on the Internet.   He entered into a contract which expressly stated that it would be governed by and construed in light of Ohio law.   Ohio has written and interpreted its long-arm statute, and particularly its “transacting business” subsection, with the intent of reaching as far as the Due Process Clause will allow, and it certainly has an interest “in providing effective means of redress for its residents.”  Id.  As the Burger King Corp.   Court noted, the purposeful direction of one’s activities toward a state has always been significant in personal jurisdiction cases, particularly where individuals purposefully derive benefits from interstate activities.   Moreover, the Court continued, it could be unfair to allow individuals who purposefully engage in interstate activities for profit to escape having to account in other states for the proximate consequences of those activities.
Finally, we note this court’s own finding of purposeful availment based (in part) on analogous litigation threats in American Greetings Corp. v. Cohn, 839 F.2d 1164, 1170 (6th Cir.1988).   The American Greetings Corp. case involved an Ohio corporation’s suit, in Ohio, against a California shareholder who had threatened to file a lawsuit to invalidate an amendment to the company’s articles of incorporation.  Id. at 1165.   The district court dismissed the case, without conducting an evidentiary hearing, for lack of personal jurisdiction, finding that the defendant merely owned stock in an Ohio company and expressed strong reservations about a matter of shareholder interest.  Id. at 1166.   This court reversed, finding purposeful availment because of the defendant’s letters and telephone calls to Ohio, in which he had threatened suit and had sought money to release his claim.   Thus, this court stated, the defendant himself had “originated and maintained the required contacts with Ohio.”  Id. at 1170.
In the instant case, the record demonstrates that Patterson not only purposefully availed himself of CompuServe’s Ohio-based services to market his software, but that he also “originated and maintained” contacts with Ohio when he believed that CompuServe’s competing product unlawfully infringed on his own software.   Patterson repeatedly sent both electronic and regular mail messages to CompuServe about his claim, and he posted a message on one of CompuServe’s electronic forums, which outlined his case against CompuServe for anyone who wished to read it.   Moreover, the record shows that Patterson demanded at least $100,000 to settle the matter.
Thus, we believe that the facts which CompuServe has alleged, viewed in the light most favorable to CompuServe, support a finding that Patterson purposefully availed himself of the privilege of doing business in Ohio.   He knowingly reached out to CompuServe’s Ohio home, and he benefitted from CompuServe’s handling of his software and the fees that it generated.
2. The requirement that the cause of action arises from Patterson’s activities in Ohio.
 Even though we have found that Patterson purposefully availed himself of Ohio privileges, we must also find that CompuServe’s claims against him arise out of his activities in Ohio if we are to find the exercise of jurisdiction proper.  Reynolds, 23 F.3d at 1116-17.   If a defendant’s contacts with the forum state are related to the operative facts of the controversy, then an action will be deemed to have arisen from those contacts.  Id. at 1119 (quoting Creech, 908 F.2d at 80).
 The district court viewed the presence of Patterson’s software on the CompuServe system in Ohio as “entirely incidental to the alleged dispute between the parties.”   In the district court’s opinion, Patterson could have claimed trademark or trade name protection for his software against CompuServe even if he had placed his software on another computer network altogether, or in a retail store.   Patterson’s discovery of the similarity in program names may have come to his attention through the CompuServe system, the court below noted, but it concluded that “the way in which the parties discovered they might have a clash of legal interests is not relevant to the issue of jurisdiction.”
Again, we must disagree with the district court’s holding.   The cause of action in the instant case concerns allegations of trademark or trade name infringement and unfair competition.   Patterson’s contacts with Ohio are certainly related to the operative facts of that controversy.   He placed his software on CompuServe’s Ohio-based system.   He used that system to advertise his software and sell it.   The proceeds of those sales flowed to him through Ohio.   According to CompuServe’s allegations, Patterson has marketed his product exclusively on their system.
As the district court points out, Patterson could have placed his software anywhere and had the same result.   Nevertheless, it is uncontroverted that Patterson placed, marketed, and sold his software only on Ohio-based CompuServe.   Thus, any common law trademark or trade name which Patterson might have in his product would arguably have been created in Ohio, and any violation of those alleged trademarks or trade names by CompuServe would have occurred, at least in part, in Ohio.   See United States v. Steffens, 100 U.S. 82, 94, 25 L.Ed. 550 (1879) (stating that trademark rights, under the common law, are appropriated only through actual prior use in commerce);  Dakota Indus. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1388 (8th Cir.1991) (stating that the tort of trademark infringement is considered to have occurred where the passing off of the allegedly infringing goods occurred);  Tally-Ho, Inc. v. Coast Community College Dist., 889 F.2d 1018, 1022 (11th Cir.1989) (stating that where, as here, neither party has registered a disputed trademark with the federal government, the parties must look to common law and state statutes to determine what protection they have);  Younker v. Nationwide Mut. Ins. Co., 175 Ohio St. 1, 191 N.E.2d 145, 148-49 (1963) (defining trade name and trademark and stating that only the actual use of those devices in connection with a business gives rise to legal rights);  Yocono’s Restaurant, Inc. v. Yocono, 100 Ohio App.3d 11, 651 N.E.2d 1347, 1350-51 (1994) (discussing the intersection of Ohio’s Deceptive Trade Practices Act, the common law, and the federal Lanham Act).
Moreover, as noted heretofore with regard to the purposeful availment test, CompuServe’s declaratory judgment action arose in part because Patterson threatened, via regular and electronic mail, to seek an injunction against CompuServe’s sales of its software product, or to seek damages at law if CompuServe did not pay to settle his purported claim.   Thus, Patterson’s threats-which were contacts with Ohio-gave rise to the case before us, as did the threats in the American Greetings Corp. case, 839 F.2d at 1170.
3. The reasonableness requirement.
 Lastly, we consider whether exercising personal jurisdiction over Patterson would be reasonable, i.e., whether it would “comport with ‘traditional notions of fair play and substantial justice.’ ”  Reynolds, 23 F.3d at 1117 (quoting Asahi Metal Indus., 480 U.S. at 113, 107 S.Ct. at 1032-33).   We note that, if we find, as we do, the first two elements of a prima facie case-purposeful availment and a cause of action arising from the defendant’s contacts with the forum state-then an inference arises that this third factor is also present.  American Greetings Corp., 839 F.2d at 1170 (citing First Nat’l Bank v. J.W. Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir.1982));  Mohasco Indus., 401 F.2d at 384 & n. 30.
 A court must consider several factors in this context, including “the burden on the defendant, the interest of the forum state, the plaintiff’s interest in obtaining relief, and the interest of other states in securing the most efficient resolution of controversies.”  American Greetings Corp., 839 F.2d at 1169-70 (citing Asahi Metal Indus., 480 U.S. at 113, 107 S.Ct. at 1032-33).
 The district court analogized the instant case to a standard consumer suit in which CompuServe might have brought suit in Ohio “to collect a small amount of user fees from a Texas resident who, while seated at his computer terminal, became a member of the CompuServe network.”
That is not, however, the case at bar.   Here, we have an entrepreneur who purposefully employed CompuServe to market his computer software product.   It may be burdensome for Patterson to defend a suit in Ohio, but he knew when he entered into the Shareware Registration Agreement with CompuServe that he was making a connection with Ohio, and presumably he hoped that connection would work to his benefit.   Further, Ohio has a strong interest in resolving a dispute involving an Ohio company, which will involve the Ohio law on common law trademarks and trade names.8  CompuServe alleges that more than $10 million could be at stake in this case, and it also contends that this case will have a profound impact on its relationships with other “shareware” providers like Patterson, who also directed their activities toward Ohio-based CompuServe.   We have no reason to believe otherwise.
Again, considering the pleadings and affidavits in a light most favorable to CompuServe (as we must), we find that, on these facts, there is a substantial enough connection between Patterson and Ohio to make it reasonable for an Ohio court to assert personal jurisdiction over him.9  Someone like Patterson who employs a computer network service like CompuServe to market a product can reasonably expect disputes with that service to yield lawsuits in the service’s home state.
Finally, because of the unique nature of this case, we deem it important to note what we do not hold.   We need not and do not hold that Patterson would be subject to suit in any state where his software was purchased or used;  that is not the case before us.   See World-Wide Volkswagen, 444 U.S. at 296, 100 S.Ct. at 566-67 (rejecting the idea that a seller of chattels could “appoint the chattel his agent for service of process”).   We also do not have before us an attempt by another party from a third state to sue Patterson in Ohio for, say, a “computer virus” caused by his software, and thus we need not address whether personal jurisdiction could be found on those facts.   Finally, we need not and do not hold that CompuServe may, as the district court posited, sue any regular subscriber to its service for nonpayment in Ohio, even if the subscriber is a native Alaskan who has never left home.   Each of those cases may well arise someday, but they are not before us now.

GUERRERO’S TRANSPORT SERVICES, INC. v. BLAYLOCK TRANSPORTATION SERVICES EMPLOYEES ASSOCIATION-KILUSAN (BTEA-KILUSAN), LABOR ARBITER FRANCISCO M. DE LOS REYES and JOSE CRUZ

FACTS
In 1972, the US Naval Base authorities in Subic conducted a public bidding for a 5-year contract for the right to operate and/or manage the transportation services inside the naval base. This bidding was won by Santiago Guerrero, owner-operator of Guerrero’s Transport Services, Inc. (Guerrero), over Concepcion Blayblock, the then incumbent concessionaire doing business under the name of Blayblock Transport Services Blayblock. Blayblock’s 395 employees are members of the union BTEA-KILUSAN (the Union).

When Guererro commenced its operations, it refused to employ the members of the Union. Thus, the Union filed a complaint w/ the NLRC against Guerrero to compel it to employ its members, pursuant to Art. 1, Sec. 2 of the RP-US Base Agreement. The case was dismissed by the NLRC upon Guerrero’s MTD on jurisdictional grounds, there being no employer-employee relationship between the parties. Upon appeal, the Sec. of Labor remanded the case to the NLRC. The NLRC issued a Resolution ordering Guererro to “absorb all complainants who filed their applications on or before the deadline” set by Guerrero, except those who may have derogatory records w/ the US Naval Authorities in Subic. The Sec. of Labor affirmed.

Guerrero claims that it substantially complied w/ the decision of the Sec. of Labor affirming the NLRC Resolution, & that any non-compliance was attributable to the individual complainants who failed to submit themselves for processing & examination. The Labor Arbiter ordered the reinstatement of 129 individuals. The Union filed a Motion for Issuance of Writ of Execution. The order wasn’t appealed so it was declared final & executory

Subsequently, the parties arrived at a Compromise Agreement wherein they agreed to submit to the Sec. of Labor the determination of members of the Union who shall be reinstated by Guerrero, w/c determination shall be final. The agreement is deemed to have superseded the Resolution of the NLRC. The Sec. of Labor ordered the absorption of 175 members of the Union subject to 2 conditions.

ISSUE
W/N the said members of the Union were entitled to be reinstated by Guerrero.

RULING
YES. Pursuant to Sec. 6 of Art. I of the RP-US Labor Agreement, the US Armed Forces undertook, consistent w/ military requirements, “to provide security for employment, and, in the event certain services are contracted out, the US Armed Forces shall require the contractor or concessioner to give priority consideration to affected employees for employment.

A treaty has 2 aspects — as an international agreement between states, and as municipal law for the people of each state to observe. As part of the municipal law, the aforesaid provision of the treaty enters into and forms part of the contract between Guerrero and the US Naval Base authorities. In view of said stipulation, the new contractor (Guerrero) is, therefore, bound to give “priority” to the employment of the qualified employees of the previous contractor (Blaylock). It is obviously in recognition of such obligation that Guerrero entered into the aforementioned Compromise Agreement.

Under the Compromise Agreement, the parties agreed to submit to the Sec. of Labor the determination as to who of the members of the Union shall be absorbed or employed by Guerrero, and that such determination shall be considered as final. The Sec. of Labor issued an Order directing the NLRC, through Labor Arbiter Francisco de los Reyes, to implement the absorption of the 175 members into Guerrero’s Transport Services, subject to the following conditions:
a) that they were bona fide employees of the Blaylock Transport Service at the time its concession expired; and
b) that they should pass final screening and approval by the appropriate authorities of the U.S. Naval Base concerned.

For this purpose, Guerrero is ordered to submit to and secure from the appropriate authorities of the U.S. naval Base at Subic, Zambales the requisite screening and approval, the names of the members of the Union.

Considering that the Compromise Agreement of the parties is more than a mere contract and has the force and effect of any other judgment, it is, therefore, conclusive upon the parties and their privies. For it is settled that a compromise has, upon the parties, the effect and authority of res judicata and is enforceable by execution upon approval by the court.

SAUDI ARABIAN AIRLINES v. CA

FACTS
Saudia hired Milagros Morada as a flight Attendant for its airlines based in Jeddah, Saudi Arabia. While on a lay-over in Jakarta, Morada went to a disco dance w/ fellow crew members Thamer & Allah, both Saudi nationals. Because it was almost morning when they returned to their hotels, they agreed to have breakfast together at the room of Thamer. When they were in the room, Allah left, and that’s when Thamer attempted to rape Morada. Fortunately, a roomboy & several security personnel heard her cries for help & rescued her. The Indonesian police came & arrested Thamer & Allah.

Saudia officials interrogated Morada about the Jakarta incident. They tried to pressure her in making a statement to drop the case against Thamer & Allah, but Morada refused to cooperate. Indonesian authorities agreed to deport Thamer & Allah after 2 weeks of detention, & they were again employed by Saudia.

1 ½ years later, in Riyadh, a few minutes before the departure of her flight to Manila, Morada was not allowed to board the plane & instead ordered to take a later flight to Jeddah to see Mr. Miniewy, the Chief Legal Officer of Saudia. When she did, she was brought to a Saudi court where she was asked to sign a document written in Arabic. They told her this was necessary to close the case against Thamer & Allah. As it turned out, Morada signed a notice to her to appear before the court. Morada returned to Manila.

Later on, Morada was brought to the same Saudi court, & she was informed that the investigation was merely routinary & posed no danger to her. A Saudi judge interrogated her through an interpreter about the Jakarta incident. When her plane was about to take off, a Saudia officer told her that the airline had forbidden her to take flight. She was escorted to the same court where the judge rendered a decision sentencing her to 5 months imprisonment & to 286 lashes. It was then that she realized that the Saudi court tried her, together w/ Thamer & Allah, for the Jakarta incident. The court found Morada guilty of
(1) adultery,
(2) going to a disco, dancing & listening to the music in violation of Islamic laws
(3) socializing w/ the male crew, in contravention of Islamic tradition

Because she was wrongfully convicted, the Prince of Makkah dismissed the case against her & allowed her to leave Saudi Arabia. She was terminated from the service by Saudia, w/o her being informed of the cause. Morada filed a Complaint for Damages against Saudia. Saudia filed a MTD.

Saudia’s contention: The trial court has no jurisdiction to try the case. Morada’s claim for alleged abuse of rights occurred in Saudi. The existence of a foreign element qualifies the instant case for the application of the law of Saudi, by virtue of the lex loci delicti commissi rule.

Morada’s contention: Since her complaint is based on Arts. 19 and 21 of the NCC, then the instant case is properly a matter of domestic law.

ISSUE
(a) W/N the instant case is a matter of domestic law.
(b) W/N Philippine courts have jurisdiction to hear & try the case.
(c) W/N Philippine law should govern.

RULING
(a) NO. A factual situation that cuts across territorial lines & is affected by the diverse laws of 2 or more states is said to contain a “foreign element.” In the instant case, the foreign element consisted in the fact that Morada is a resident Philippine national, & that Saudia is a resident foreign corporation. Also, by virtue of the employment of Morada w/ Saudia as a flight stewardess, events did transpire during her many occasions of travel across national borders, particularly from Manila to Jeddah & vice versa, that caused a “conflicts” situation to arise.

(b) YES. The RTC of QC possesses jurisdiction over the subject matter of the suit. Pragmatic considerations, including the convenience of the parties, also weigh heavily in favor the RTC of QC assuming jurisdiction. Paramount is the private interest of the litigant. Enforceability of a judgment if one is obtained is quite obvious. Relative advantages & obstacles to a fair trial are equally important. Saudia may not, by choice of an inconvenient form, vex, harass or oppress Morada, i.e. inflicting upon him needless expense or disturbance. But unless the balance is strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.

Weighing the relative claims of the parties, QC RTC found it best to hear the case in the Philippines. Had it refused to take cognizance of the case, it would be forcing Morada to seek remedial action elsewhere, i.e. in Saudi where she no longer maintains substantial connections. That would have caused a fundamental unfairness to her. Moreover, by hearing the case in the Philippines no unnecessary difficulties and inconvenience have been shown by either of the parties. The choice of forum of Morada should be upheld.

Similarly, the QC RTC also possesses jurisdiction over the persons of the parties. By filing her Complaint w/ QC RTC, Morada has voluntary submitted herself to the jurisdiction of the court. The records show that Saudia filed several motions praying for the dismissal of Morada’s Complaint. Saudia also filed an Answer In Ex Abundante Cautelam. What is very patent and explicit from the motions filed, is that Saudia prayed for other reliefs under the premises. Undeniably, Saudia has effectively submitted to QC RTC’s jurisdiction by praying for the dismissal of the Complaint on grounds other than lack of jurisdiction.

(c) YES. Considering that the complaint in the court a quo is one involving torts, the “connecting factor” or “point of contact” could be the place where the tortuous conduct or lex loci actus occurred. And applying the torts principle in a conflicts case, we find that the Philippines could be said as situs of the tort (the place where the alleged tortuous conduct took place). This is because it is in the Philippines where Saudia allegedly deceived Morada, a Filipina residing & working here. That certain acts or parts of the injury allegedly occurred in another country is of no moment. What is important is the place where the overall harm or the fatality of the alleged injury to the person, reputation, social standing & human rights of complainant, had lodged, according to the Morada.

Also, we find here an occasion to apply the “State of the most significant relationship” rule, which in our view should be appropriate to apply now, given the factual context of this case. In applying said principle to determine the State which has the most significant relationship, the following contacts are to be taken into account and evaluated according to their relative importance with respect to the particular issue: (a) the place where the injury occurred; (b) the place where the conduct causing the injury occurred; (c) the domicile, residence, nationality, place of incorporation and place of business of the parties, and (d) the place where the relationship, if any, between the parties is centered.

There is basis for the claim that over-all injury occurred and lodged in the Philippines. There is likewise no question that Morada is a resident Filipina national, working w/ Saudia, a resident foreign corporation engaged here in the business of international air carriage. Thus, the “relationship” between the parties was centered here, although it should be stressed that this suit is not based on mere labor law violations.

NORTHERN PACIFIC RAILROAD COMPANY v. BABCOCK
154 US 190 (1894)

FACTS
This was an action by Albert L. Babcock , as administrator of Hugh M. Munro, deceased, against the Northern Pacific Railroad Company (“the Company”), for damages for the death of said Munro.

Munro was a locomotive engineer employed by the Company within the territory of Montana. In January 10, 1888, Munro was assigned to operate Train No. 161. During that day, there was a severe snowstorm in progress yet it was alleged that the Company negligently refused to send a snow plow ahead of Train No. 161 to clear the snow and ice that had accumulated from the track where the train was to pass. This made the passage of the train unsafe and improper. As a result, the train got derailed when it ran into an accumulation of snow and ice near Gray Cliff (also in Montana), and Munro was instantly killed.

The estate of Munro filed a case for $25,000 in damages in the district court of Minnesota.

ISSUE
Was the amount of damage to be controlled by the law of the place of employment and where the accident occurred (lex loci), or by the law of the forum in which the suit was pending (lex fori)?

* Under the law of Minnesota, when the death occurred, the limit of recovery in case of death was $5,000, but at the time of the trial of the case in the court below, this limit had been increased to $10,000 by amendment of the Minnesota statutes.

**Under the law of Montana, where the death of a person is caused by the negligence of another, the only limitation for the amount of damages which may be given is “as under all the circumstances of the case may be just.”

RULING
The law of Montana applies. The statute of another state has, of course, no extraterritorial force, but rights acquired under it will always, in comity, be enforced if not against the public policy of the laws of the former. In such cases, the law of the place where the right was acquired or the liability was incurred will govern as to the right of action, while all that pertains merely to the remedy will be controlled by the law of the state where the action is brought. The principle is the same whether the right of action be ex contractu or ex delicto.

Therefore, as a general rule, where the lex loci contractus and the lex fori are altogether different, and they are construed these contracts and enforce rights under them according to their force and effect under the laws of the state where made. As an exception, which is to justify a court in refusing to enforce a right of action which accrued under the law of another state because against the policy of our laws, it must appear that it is against good morals or natural justice or that for some other such reason the enforcement of it would be prejudicial to the general interests of our own citizens.

LAUREL v. GARCIA
187 SCRA 797 (1990)

FACTS
The subject Roppongi property is one of the four properties in Japan acquired by the Philippine government under the Reparations Agreement entered into with Japan on 9 May 1956, the other lots being the Nampeidai Property (site of Philippine Embassy Chancery), the Kobe Commercial Property (Commercial lot used as warehouse and parking lot of consulate staff), and the Kobe Residential Property (a vacant residential lot). The properties and the capital goods and services procured from the Japanese government for national development projects are part of the indemnification to the Filipino people for their losses in life and property and their suffering during World War II.

The Roppongi property was acquired from the Japanese government through Reparations Contract. The Roponggi property consists of the land and building “for the Chancery of the Philippine Embassy.” As intended, it became the site of the Philippine Embassy until the latter was transferred to Nampeidai on 22 July 1976 when the Roppongi building needed major repairs. Due to the failure of our government to provide necessary funds, the Roppongi property has remained undeveloped since that time.

During the incumbency of President Aquino, a proposal was made by former Philippine Ambassador to Japan, Carlos J. Valdez, to lease the subject property to Kajima Corporation, a Japanese firm, in exchange of the construction of 2 buildings in Roppongi, 1 building in Nampeidai, and the renovation of the Philippine Chancery in Nampeidai. The President issued EO 296 entitling non-Filipino citizens or entities to avail of reparations’ capital goods and services in the event of sale, lease or disposition. Amidst opposition by various sectors, the Executive branch of the government has been pushing, with great vigor, its decision to sell the reparations properties starting with the Roppongi lot.

ISSUE
1. Whether or not the Roppongi property and others of its kind can be alienated by the Philippine government.
2. Whether there was a conflict of law between the Japanese law on property (as the real property is situated there) and Philippine law.

RULING
1. No. The nature of the Roppongi lot as property for public service is expressly spelled out. It is dictated by the terms of the Reparations Agreement and the corresponding contract of procurement which bind both the Philippine government and the Japanese government. There can be no doubt that it is of public dominion and is outside the commerce of man. And the property continues to be part of the public domain, not available for private appropriation or ownership until there is a formal declaration on the part of the government to withdraw it from being such.

It is not for the President to convey valuable real property of the government on his or her own sole will. Any such conveyances must be authorized and approved by a law enacted by the Congress. It requires executive and legislative concurrence.

2. No. A conflict of law rule cannot apply when no conflict of law situation exists. A conflict of law situation arises only when: (1) there is a dispute over the title or ownership of an immovable, such that the capacity to take and transfer immovables, the formalities of conveyance, the essential validity and effect of the transfer, or the interpretation and effect of a conveyance, are to be determined; and (2) a foreign law on land ownership and its conveyance is asserted to conflict with a domestic law on the same matters. Hence, the need to determine which law should apply. In the present case, none of the above elements exists.

A.1 Carnival Cruise Lines, Inc. v. Shute

Brief Fact Summary. Plaintiff Carnival Cruise Lines, Inc. opposes a suit by a passenger injured on one of their cruise ships, because the cruise tickets contained an agreement that all matters relating to the cruise would be litigated before a Florida court.

Synopsis of Rule of Law. Forum-selection clauses forcing individuals to agree to submit to jurisdiction in a particular place are enforceable so long as they pass the test for judicial fairness.

Facts. Defendant Shute purchased passage for a seven day cruise on the Tropicale, a ship owned by Plaintiff, through a Washington travel agent. The face of each ticket contained terms and conditions of passage, which included an agreement that all matters disputed or litigated subject to the travel agreement, would be before a Florida court. Defendant boarded the ship in California, which then sailed to Puerto Vallarta, Mexico before returning to Los Angeles. While the ship was in international waters, Defendant Eulala Shute was injured from slipping on a deck mat. Defendants filed suit in Federal District Court in Washington. Defendant filed a motion for summary judgment, alleging that the clause in the tickets required Defendants to bring their suit in Florida.

Issue. Whether the court should enforce a forum-selection clause forcing individuals to submit to jurisdiction in a particular state.

Held. Yes. The Supreme Court of the United States held that the Court of Appeals erred in refusing to enforce the forum-selection clause.
Forum-selection clauses contained in form passage contracts are subject to judicial scrutiny for fundamental fairness, but where they are not lacking in fairness, they will be enforced.

Dissent. Justice Stevens dissented, in which he was joined by Justice Marshall. Essentially Justice Stevens feels that adhesion contracts, particularly forum-selection clauses, are void as contrary to public policy if they were not freely bargained for, create additional expense for one party, or deny one party a remedy.

Discussion. In reaching its decision, the court noted that there is no evidence that Plaintiff set Florida as the forum as a means of discouraging cruise passengers from pursuing their claims. Such a suggestion is negated by the fact that Plaintiff has its headquarters in Florida, and many of its cruises depart from Florida.
A.3 Burger King Corp. v. Rudzewicz

Brief Fact Summary.

Rudzewicz (Defendant) argued that the district court’s exercise of personal jurisdiction over him violated due process.

Synopsis of Rule of Law
A choice of law provision in a contract may be considered in determining whether a defendant has purposely made use of the benefits and protections of the forum state and therefore the forum state may exercise personal jurisdiction over him.

Facts
Rudzewicz (Defendant) and MacShara (Defendant) applied for a Burger King (Plaintiff) franchise in Michigan.

Their application was accepted and a written agreement executed with the Burger King (Plaintiff) corporate headquarters in Miami, Florida.

The contract called for payments to be made to the Miami office, and that its terms would be interpreted and enforced under the law of Florida.

Defendants defaulted on their payments, and Plaintiff sued for breach in district court in Florida. The district court held it had both personal and subject matter jurisdiction over the defendants and entered judgment for Plaintiff.

The court of appeals reversed, holding the choice of law provision was irrelevant to the determination of personal jurisdiction and excluded it in evaluating the contacts with Florida. Burger King (Plaintiff) appealed.

Issue
Is a choice of law provision in a contract relevant to the determination of personal jurisdiction over a defendant?

Held
(Brennan, J.) Yes. A choice of law provision in a contract may be considered in determining whether a defendant has purposely made use of the protection of the forum state and therefore the forum state may exercise personal jurisdiction over him.

While not dispositive, this element may be used to show the defendant’s consent to abide by and avail himself of the laws of the state. Therefore, the provision requiring application of Florida law, when considered with the other evidence of contacts, could serve to allow personal jurisdiction over Rudzewicz (Defendant). Reversed.

Dissent
(Stevens, J.) Rudzewicz (Defendant) had no reason to believe he would be subject to suit anywhere but in Michigan. All of the negotiations with Burger King (Plaintiff) were in Michigan. Since Burger King’s (Plaintiff) Michigan office was solely charged with dealing with Rudzewicz (Defendant), he could not reasonably expect to be sued elsewhere.

Discussion
The basis of a finding of personal jurisdiction rests on the question whether compelling the defendant to defend himself in the forum state is in accord with with due process. The Court in this case appears to infer a type of consent to jurisdiction based on the choice of law provision. As personal jurisdiction may be consented to, the Court has opened the door to a wider scope of liability.
1. G.R. No. L-37750 May 19, 1978
SWEET LINES, INC., petitioner,
vs.
HON. BERNARDO TEVES, Presiding Judge, CFI of Misamis Oriental Branch VII, LEOVIGILDO

SANTOS, J.:)
FACTS: Respondents Atty. Leovigildo Tandog and Rogelio Tiro bought tickets for Tagbilaran City via the port of Cebu.
Since many passengers were bound for Surigao, M/S “Sweet Hope would not be proceeding to Bohol.
They went to the proper branch office and was relocated to M/S “Sweet Town” where they were forced to agree “to hide at the cargo section to avoid inspection of the officers of the Philippine Coastguard.” and they were exposed to the scorching heat of the sun and the dust coming from the ship’s cargo of corn grits and their tickets were not honored so they had to purchase a new one.

They sued Sweet Lines for damages and for breach of contract of carriage before the Court of First Instance of Misamis Oriental who dismissed the complaint for improper venue.

A motion was premised on the condition printed at the back of the tickets – dismissed instant petition for prohibition for preliminary injunction.

This motion was premised on the condition printed at the back of the tickets, i.e., Condition No. 14, which reads:
14.

It is hereby agreed and understood that any and all actions arising out of the conditions and provisions of this ticket, irrespective of where it is issued, shall be filed in the competent courts in the City of Cebu.

ISSUE: W/N a common carrier engaged in inter-island shipping stipulate thru condition printed at the back of passage tickets to its vessels that any and all actions arising out of the contract of carriage should be filed only in a particular province or city

HELD: NO.
There is no question that there was a valid contract of carriage entered into by petitioner and private respondents and that the passage tickets, upon which the latter based their complaint, are the best evidence thereof. All the essential elements of a valid contract, i.e., consent, cause or consideration and object, are present.
It should be borne in mind, however, that with respect to the fourteen (14) conditions — one of which is “Condition No. 14” which is in issue in this case — printed at the back of the passage tickets, these are commonly known as “contracts of adhesion,” the validity and/or enforceability of which will have to be determined by the peculiar circumstances obtaining in each case and the nature of the conditions or terms sought to be enforced.
For, “(W)hile generally, stipulations in a contract come about after deliberate drafting by the parties thereto, … there are certain contracts almost all the provisions of which have been drafted only by one party, usually a corporation. Contract of adhesion not that kind of a contract where the parties sit down to deliberate, discuss and agree specifically on all its terms, but rather, one which respondents took no part at all in preparing just imposed upon them when they paid for the fare for the freight they wanted to ship.

Considered in the light Of the foregoing norms and in the context Of circumstances Prevailing in the inter-island shipping industry in the country today, We find and hold that Condition No. 14 printed at the back of the passage tickets should be held as void and unenforceable:

first, under circumstances obligation in the inter-island ship. ping industry, it is not just and fair to bind passengers to the terms of the conditions printed at the back of the passage tickets, on which Condition No. 14 is Printed in fine letters, and second, this subverts the public policy on transfer of venue of proceedings of this nature, since the same will prejudice rights and interests of innumerable passengers in different s of the country who, under Condition No. 14, will have to file suits against petitioner only in the City of Cebu.

Public policy is “. . . that principle of the law which holds that no subject or citizen can lawfully do that which has a tendency to be injurious to the public or against the public good …

Under this principle” … freedom of contract or private dealing is restricted by law for the good of the public. Clearly, Condition No. 14, if enforced, will be subversive of the public good or interest, since it will frustrate in meritorious cases, actions of passenger cants outside of Cebu City, thus placing petitioner company at a decided advantage over said persons, who may have perfectly legitimate claims against it.

G.R. No. 72494 August 11, 1989
HONGKONG AND SHANGHAI BANKING CORPORATION, petitioner,
vs.
JACK ROBERT SHERMAN, DEODATO RELOJ and THE INTERMEDIATE APPELLATE COURT, respondents.
FACTS:
This is a petition for review on certiorari of the decision of the Intermediate Appellate Court (now Court of Appeals) reversing the order of the Regional Trial Court denying the Motion to Dismiss filed by private respondents Jack Robert Sherman and Deodato Reloj.
A complaint for collection of a sum of money was filed by petitioner against private respondents Sherman and Reloj, before the Regional Trial Court of Quezon City, Branch 84.
• Eastern Book Supply Service PTE, Ltd. (hereinafter referred to as COMPANY), a company incorporated in Singapore applied with, and was granted by, the Singapore branch of petitioner BANK an overdraft facility in the maximum amount of Singapore dollars 200,000.00 (which amount was subsequently increased to Singapore dollars 375,000.00) with interest at 3% over petitioner BANK prime rate, payable monthly, on amounts due under said overdraft facility; as a security for the repayment by the COMPANY of sums advanced by petitioner BANK to it through the aforesaid overdraft facility, on October 7, 1982, both private respondents and a certain Robin de Clive Lowe, all of whom were directors of the COMPANY at such time, executed a Joint and Several Guarantee (p. 53, Rollo) in favor of petitioner BANK whereby private respondents and Lowe agreed to pay, jointly and severally, on demand all sums owed by the COMPANY to petitioner BANK under the aforestated overdraft facility.

• The Joint and Several Guarantee provides, inter alia, that: This guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore. We hereby agree that the Courts of Singapore shall have jurisdiction over all disputes arising under this guarantee.
• The COMPANY failed to pay its obligation. Thus, petitioner BANK demanded payment of the obligation from private respondents, conformably with the provisions of the Joint and Several Guarantee. Inasmuch as the private respondents still failed to pay, petitioner BANK filed the above-mentioned complaint.
• Private respondents filed a motion to dismiss (pp 54-56, Rollo) which was opposed by petitioner BANK (pp. 58-62, Rollo). Acting on the motion, the trial court issued an order dismissing MTD, which read as follows:
There is nothing in the Guarantee which says that the courts of Singapore shall have jurisdiction to the exclusion of the courts of other countries or nations. Also, it has long been established in law and jurisprudence that jurisdiction of courts is fixed by law; it cannot be conferred by the will, submission or consent of the parties.
It is also asserted that defendant Sherman is not a citizen nor a resident of the Philippines. This argument holds no water. Jurisdiction over the persons of defendants is acquired by service of summons and copy of the complaint on them. There has been a valid service of summons on both defendants and in fact the same is admitted when said defendants filed a ‘Motion for Extension of Time to File Responsive Pleading on December 5, 1984.
• Private respondents then filed before the respondent Intermediate Appellate Court (now Court of Appeals) a petition for prohibition with preliminary injunction and/or prayer for a restraining order, which were granted. The respondent Court is enjoined from taking further cognizance of the case and to dismiss the same for filing with the proper court of Singapore which is the proper forum.
ISSUE: Whether or not Philippine courts have jurisdiction over the suit.
HELD: The decision of the Regional Trial Court is REINSTATED
• While it is true that “the transaction took place in Singaporean setting” and that the Joint and Several Guarantee contains a choice-of-forum clause, the very essence of due process dictates that the stipulation that “[t]his guarantee and all rights, obligations and liabilities arising hereunder shall be construed and determined under and may be enforced in accordance with the laws of the Republic of Singapore.
• We hereby agree that the Courts in Singapore shall have jurisdiction over all disputes arising under this guarantee” be liberally construed.
One basic principle underlies all rules of jurisdiction in International Law: a State does not have jurisdiction in the absence of some reasonable basis for exercising it, whether the proceedings are in rem quasi in rem or in personam.
To be reasonable, the jurisdiction must be based on some minimum contacts that will not offend traditional notions of fair play and substantial justice (J. Salonga, Private International Law, 1981, p. 46).
Indeed, as pointed-out by petitioner BANK at the outset, the instant case presents a very odd situation. In the ordinary habits of life, anyone would be disinclined to litigate before a foreign tribunal, with more reason as a defendant.
However, in this case, private respondents are Philippine residents (a fact which was not disputed by them) who would rather face a complaint against them before a foreign court and in the process incur considerable expenses, not to mention inconvenience, than to have a Philippine court try and resolve the case.
Private respondents’ stance is hardly comprehensible, unless their ultimate intent is to evade, or at least delay, the payment of a just obligation.
• The parties did not thereby stipulate that only the courts of Singapore, to the exclusion of all the rest, has jurisdiction.
Neither did the clause in question operate to divest Philippine courts of jurisdiction.
In International Law, jurisdiction is often defined as the light of a State to exercise authority over persons and things within its boundaries subject to certain exceptions.
Thus, a State does not assume jurisdiction over travelling sovereigns, ambassadors and diplomatic representatives of other States, and foreign military units stationed in or marching through State territory with the permission of the latter’s authorities.
This authority, which finds its source in the concept of sovereignty, is exclusive within and throughout the domain of the State.
A State is competent to take hold of any judicial matter it sees fit by making its courts and agencies assume jurisdiction over all kinds of cases brought before them.
Whether a suit should be entertained or dismissed on the basis of the principle of forum non conveniens depends largely upon the facts of the particular case and is addressed to the sound discretion of the trial court,
Private respondents allege that neither the petitioner based at Hongkong nor its Philippine branch is involved in the transaction sued upon. This is a vain attempt on their part to further thwart the proceedings below inasmuch as well-known is the rule that a defendant cannot plead any defense that has not been interposed in the court below.

A.6 White v. Tennant

Brief Fact Summary
Michael White moved his home from West Virginia to Pennsylvania, but the same day crossed back to take care of his wife who was sick with typhoid. He then caught the disease and died in West Virginia. The question arose concerning which state would be considered his domicile for purposes of intestate succession.

Synopsis of Rule of Law
The succession and distribution of a decedent’s personal estate is controlled by the law of the state where the decedent was domiciled at the time of death.

Facts
Michael White was legally domiciled in West Virginia where he had lived his entire life and owned a farm. Michael had made an agreement with his mother, brothers and sisters to sell his farm and occupy a house on 40 acres of land in Pennsylvania, just across the West Virginia state line. The land was part of a larger family farm located on both sides of the state line with a mansion-house found on the West Virginia side. Michael and his wife brought their possessions and livestock to their new home. However, the house was cold and damp and Michael’s wife was not feeling well, so he accepted an invitation to spend the night in the West Virginia mansion-house. They unloaded their possessions first and then left. It turned out that Michael’s wife had typhoid fever. He took care of her at the mansion-house, and also went into Pennsylvania daily to care for his stock. Two weeks later, Michael caught typhoid and died in West Virginia. His wife recovered and her father, Tennant (Defendant), was appointed administrator of Michael’s estate. Under the law of West Virginia, Michael’s wife would receive all her husband’s personal property by intestate succession. Under Pennsylvania law, she would receive only half, and his immediate family would get the other half. White (Plaintiff), the brothers and sisters of Michael, sought to set aside the West Virginia distribution of his estate, claiming he was domiciled in Pennsylvania.

Issue
Will the succession and distribution of a decedent’s personal estate be controlled by the law of the state where the decedent was domiciled at the time of death?

Held
(Snyder, J.) Yes. The succession and distribution of a decedent’s personal estate is controlled by the law of the state where the decedent was domiciled at the time of death. A domicile is a residence, actual or developing, with the lack of any intent to make a domicile elsewhere. These two elements must exist together. One domicile cannot be lost until another is acquired. The facts reveal that Michael left his West Virginia residence with no plans to return and with the intent and purpose of making his permanent home in Pennsylvania. Therefore, at the moment he and his wife arrived at their new home, their domicile became Pennsylvania. His leaving there, under the circumstances, with the intention of returning there did not change that fact. He did not revive his domicile in West Virginia as he had already sold his residence and left it with no intent to return. Accordingly, the decree must be reversed and remanded.

Discussion
The function of domicile is to enable the legal interests of a person to be determined by a single law “particularly in matters where continuity of application of the same law is important . . .” Under the Second Restatement of Conflicts, it is suggested that domicile will not attach until a person has been there for “a time,” which is some time more than “a moment’s presence.” Note that if a wife goes ahead of her husband to their new, intended domicile, her arrival there before his may be satisfactory to establish the husband’s new domicile

2. In Re Union Carbide Corp. Gas Plant Disaster, 634 F. Supp. 842 (S.D.N.Y. 1986)
U.S. District Court for the Southern District of New York – 634 F. Supp. 842 (S.D.N.Y. 1986)
June 10, 1986

FACTS:
On the night of 23 December 1984, a gas leak occurred at the pesticide plant of Union Carbide India Limited (UCIL) in Bhopal, India resulting in the deaths of more than 2,000 people and injuries to more than 200,000 others. . Thereafter, the India passed a law giving the Indian government the exclusive right to represent the victims of the disaster.
As thus, the Indian government filed a complaint before a New York district court.
The Union Carbide Corporation (UCC) filed a motion to dismiss on the ground of forum non conveniens and lack of personality.
The district court granted the motion on three conditions, namely, that UCC: (1) consent to the jurisdiction of Indian courts and waive defenses based on the Statute of Limitations; (2) agree to the satisfy the judgement of the Indian court, provided it complied with the requirements of due process; and (3) be subject to discovery under the Federal Rules of Civil Procedure of the US.
Consequently, the Indian government filed sued the UCIL and the UCC before the a district court in India.
The UCC appealed the conditions.
Arguments for the Defendant
While Indian courts may provide an adequate alternative forum, they adhere to standards of due process much lower than that followed in the US. Hence, US courts must supervise the proceedings before Indian courts.
ISSUE:
WON the dismissal on the ground of forum non conveniens is proper.
HELD
Yes.
The Indian courts are adequate alternative fora.
Ratio Decidendi
Almost all of the estimated 200,000 plaintiffs are citizens and residents of India who have revoked their representation by an American counsel in favor of the Indian government, which now prefers Indian courts. Further, the UCC has already consented to the assumption of jurisdiction by the Indian courts. All the witnesses and evidence are likewise in India.
As to the conditions, the first is valid in order to secure the viability of the Indian courts as alternate fora. The second is problematic as it gives the impression that foreign judgments the UCC’s consent is necessary in order for the judgement of the Indian courts to be enforceable in New York.
The laws of New York, in fact, recognizes that a judgment rendered by a foreign court may be enforced in that State except if such judgment was rendered in violation of due process or without jurisdiction over the person of the defendant.
The request of UCC of supervision by US courts of Indian courts is untenable. The power of US courts cannot extend beyond their territorial jurisdiction. Moreover, once US courts dismiss a case on the ground of forum non conveniens, they lose any further jurisdiction over the case, except in case of an action for enforcement later on. Denial of due process may, however, constitute a defense against the enforcement of the Indian judgment. The third condition is likewise invalid. Basic justice dictates that both parties must be given equal access to evidence in each other’s possession. Hence, both parties maybe subjected to the modes of discovery under the Federal Rules of Civil Procedure on equal terms subject to approval by Indian courts.
1 National Equipment Rental, Ltd. V. Szukhent

Brief Fact Summary. Petitioner, a New York corporation, sued Respondents, residents of Michigan in New York federal court for failure to make payments on equipment Respondents leased from Petitioner. The lease designated one Florence Weinberg to be Respondents agent to accept service of process on their behalf. Petitioner delivered the complaint and summons to Weinberg, who promptly mailed the documents to Respondents.

Synopsis of Rule of Law. In order to have an “agent authorized by appointment” for purposes of service of process, an individual can contractually designate an agent to accept service of process within a certain state. If said agent promptly delivers the papers served to said individual, then service is effective. It does not matter if the clause requires the agent to deliver the papers or that the agent may have a potential conflict of interest, or that the individual was not acquainted with the particular agent.

Facts. Respondents, the Szukhents, were residents of Michigan. They rented equipment from National Equipment Rental, Ltd., Petitioner, pursuant to a lease. The lease specified that Florence Weinberg, located in Long Island, New York, would be the designated agent of Respondents for purposes of accepting service of process. The lease was signed by Petitioner and Respondents. Petitioner filed suit against Respondents for failure to make payments under the lease. The complaint and summons were served on Weinberg and Petitioner notified Respondents via certified mail of said service. Weinberg promptly forwarded the complaint and summons to Respondents. Respondents moved to quash service of the summons and complaint on the grounds that service was ineffective. The trial court granted the motion to quash. The Circuit Court upheld, reasoning that the lease term did not create an agency relationship between Respondents and Weinberg. Petitioner appealed and the Supreme Court granted certiorari.

Issue. Did the term in the lease between Petitioner and Respondent create an agency relationship between Respondents and the alleged agent such that the agent could validly accept service of process on behalf of Respondents?

Held. Yes. Reversed and remanded.
Both parties acknowledge that the term of the lease was agreed to by Petitioner and Respondents.

Respondents received notice in a complete and timely fashion, so they cannot argue that there has been a due process violation.

Parties can agree to designate an agent to accept service of process or to even waive service.

The prompt acceptance and delivery of the complaint and summons to Respondents was enough to create an agency relationship.

Dissent. Justice Black: The boilerplate language designating an agent in the lease raises due process questions.
Justice Brennan: The “agent authorized by appointment” should not be someone that may have a conflict of interest with the principal. In addition, the agent should be explicitly required to deliver the complaint and summons in order for the agency to be effective. Finally, an individual’s signature should not be sufficient proof that he/she consented to be served in a state outside of his/her residence when that signature appears on a printed form contract prepared by a corporation.

Discussion. Evidence of a signature consenting to the selection of the designated agent and prompt delivery of the complaint and summons is enough to make service effective.

International Shoe Co. v. Washington

Brief Fact Summary. Suit brought within the State of Washington against International Shoe Company (Appellant), a Delaware corporation. Appellant had a principal place of business in St. Louis, Missouri and engaged in the manufacture and sale of shoes and other footwear. The suit sought to recover unpaid contributions to the state unemployment compensation fund.

Synopsis of Rule of Law. In order to subject a defendant to a judgment in personam, if he is not present within the territory of the forum, he must have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.

Facts. Appellant did not maintain an office within the State of Washington. The corporation employed between eleven and thirteen salespersons in the state, under the direct supervision and control of managers located in St. Louis. The salespeople resided in Washington and their principal activities were confined to that state. The salespeople received commissions from their sales with Washington. Appellant filed a Motion to Set Aside the Order and Notice of Assessment of Unemployment because service on Appellant’s salesman was not proper. It also contended that it was not a corporation in Washington, it was not doing business in that state, and it had no agent in that state to accept service, nor did it furnish employment within the meaning of the statute. The motion was denied, and both the Superior Court and the Supreme Court of Washington affirmed the decision.

Issue. Whether a foreign actor or corporation has, by its merely conducting business within a forum state, availed itself to suit within that forum state?

Held. Yes. Solicitation within a state by the agents of a foreign corporation plus some additional activities render a foreign corporation amenable to suit within the forum state to enforce an obligation arising out of its activities within the forum state. In this case, Appellant’s activities within Washington were systematic and continuous within the years in question. These activities resulted in a large volume of business. Further, Appellant received the benefits and protections of the laws of Washington. As a result, the suit against Appellant within the state does not involve an unreasonable or undue procedure.

Discussion. In determining whether such minimum contacts exist, a court will look at two factors: sufficient minimum contacts and notice.

International Shoe requires that a defendant have such minimum contacts with the forum state that exercise of jurisdiction over the defendant would be fair and reasonable. Under this analysis, a court will look to whether both purposeful availment and foreseeability exist. Under the foreseeability prong of the minimum contacts analysis, it must be foreseeable that the defendant’s business within the forum makes it amenable to suit within that forum. In addition, under the purposeful availment prong, the defendant’s minimum contacts with the forum state must arise from non-accidental contact.

In addition to the minimum contacts analysis, due process also requires that a reasonable effort be used to notify the defendant of a pending lawsuit so that it has an opportunity to appear and be heard.

B.3 Perkins v. Benguiet Consolidated Mining Co.

Synopsis of Rule of Law. Federal due process is not violated in either taking or declining jurisdiction of a foreign corporation when the foreign corporation’s supervision of a business is carried on continuously and systematically within a state.

Facts. The company’s mining properties were in the Philippine Islands. During the occupation of the Islands by the Japanese operations were halted and the president returned to his home in Ohio. He maintained an office where he conducted his affairs and conducted business of the company and its employees (drew salary checks, maintaining bank accounts, hosting Directors’ meetings, supervising policies to rehabilitate the properties in the Philippines etc.).

Issue. At the constitutional level, the fairness to the corporation, and whether as a matter of federal due process, the business done in Ohio by the respondent mining company was sufficiently substantial and of such a nature as to permit Ohio to entertain a cause of action against a foreign corporation, where the cause of action arose from activities entirely distinct from its activities in Ohio.

Held. Under these particular circumstances it would not violate federal due process for Ohio to either take or decline jurisdiction of the corporation. Vacated and remanded.

Dissent. Justice Minton and The Chief Justice dissented on the grounds that the U.S. Supreme Court was essentially issuing an advisory opinion to the Ohio Supreme Court.

Discussion. Although no mining properties were located in Ohio, the operations and supervision of the company and wartime activities being directed by the president in the State of Ohio are enough not to violate federal due process.

B.4 McGee v. International Life Insurance Co

Synopsis of Rule of Law. A state court’s jurisdiction satisfies due process when it is based on a contract with substantial connection with that state.

Facts. In 1944, Lowell Franklin, a resident of California, purchased a life insurance policy form an insurer subsequently bought by Defendant International Life Insurance Co., who then mailed a reinsurance certificate to Franklin in California offering to insure him. Franklin accepted the offer and paid premiums by mail from his California home to Defendant’s office in Texas until his death in 1950. When the beneficiary, Plaintiff McGee, notified Defendant of Franklin’s death, they refused to pay. Neither the original insurer nor respondent ever had any office or agent in California.

Issue. Whether a non-resident corporation is subject to jurisdiction in a state in which it never had any agent or office, merely because it was a party to a contract with a resident of the state.

Held. No. The Supreme Court of the United States ruled that the Due Process clause did not preclude the California court from entering a judgment binding on Defendant. The Supreme Court found that it is sufficient for purposes of due process that the suit was based on a contract that had substantial connection with California. A state has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims.

Discussion. The Supreme Court, in considering fact the contract was delivered in California, the premiums were mailed from there and the insured was a resident of California when he died, combined with the recognition that modern transportation and communication have made it much less burdensome for a party sued to defend themselves in a state where they conduct business, found that it did not violate just and fair play for the California court to enter a binding agreement on International Life. Moreover, the Court reasoned that California residents would be at a severe disadvantage if they had to leave their own state to obtain payment from their insurance company.

G.R. No. 103493 June 19, 1997
PHILSEC INVESTMENT CORPORATION, BPI-INTERNATIONAL FINANCE LIMITED, and ATHONA HOLDINGS, N.V., petitioners,
vs.
THE HONORABLE COURT OF APPEALS, 1488, INC., DRAGO DAIC, VENTURA O. DUCAT, PRECIOSO R. PERLAS, and WILLIAM H. CRAIG, respondents.

• This case presents for determination the conclusiveness of a foreign judgment upon the rights of the parties under the same cause of action asserted in a case in our local court.
• Petitioners brought this case in the Regional Trial Court of Makati, Branch 56, which, in view of the pendency at the time of the foreign action, dismissed Civil Case No. 16563 on the ground of litis pendentia, in addition to forum non conveniens. On appeal, the Court of Appeals affirmed. Hence this petition for review on certiorari.
• Private respondent Ventura O. Ducat obtained separate loans from petitioners Ayala International Finance Limited (hereafter called AYALA) 1 and Philsec Investment Corporation (hereafter called PHILSEC) in the sum of US$2,500,000.00, secured by shares of stock owned by Ducat with a market value of P14,088,995.00. In order to facilitate the payment of the loans, private respondent 1488, Inc., through its president, private respondent Drago Daic, assumed Ducat’s obligation under an Agreement, dated January 27, 1983, whereby 1488, Inc. executed a Warranty Deed with Vendor’s Lien by which it sold to petitioner Athona Holdings, N.V. (hereafter called ATHONA) a parcel of land in Harris County, Texas, U.S.A., for US$2,807,209.02, while PHILSEC and AYALA extended a loan to ATHONA in the amount of US$2,500,000.00 as initial payment of the purchase price. The balance of US$307,209.02 was to be paid by means of a promissory note executed by ATHONA in favor of 1488, Inc. Subsequently, upon their receipt of the US$2,500,000.00 from 1488, Inc., PHILSEC and AYALA released Ducat from his indebtedness and delivered to 1488, Inc. all the shares of stock in their possession belonging to Ducat.
• As ATHONA failed to pay the interest on the balance of US$307,209.02, the entire amount covered by the note became due and demandable.
• Private respondent 1488, Inc. sued petitioners PHILSEC, AYALA, and ATHONA in the United States for payment of the balance of US$307,209.02 and for damages for breach of contract and for fraud allegedly perpetrated by petitioners in misrepresenting the marketability of the shares of stock delivered to 1488, Inc. under the Agreement. Originally instituted in the United States District Court of Texas, 165th Judicial District, where it was docketed as Case No. 85-57746, the venue of the action was later transferred to the United States District Court for the Southern District of Texas, where 1488, Inc. filed an amended complaint, reiterating its allegations in the original complaint.
• While Civil Case No. H-86-440 was pending in the United States, petitioners filed a complaint “For Sum of Money with Damages and Writ of Preliminary Attachment” against private respondents in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 16563. The complaint reiterated the allegation of petitioners in their respective counterclaims in Civil Action No. H-86-440 of the United States District Court of Southern Texas that private respondents committed fraud by selling the property at a price 400 percent more than its true value of US$800,000.00. Petitioners claimed that, as a result of private respondents’ fraudulent misrepresentations, ATHONA, PHILSEC, and AYALA were induced to enter into the Agreement and to purchase the Houston property. Petitioners prayed that private respondents be ordered to return to ATHONA the excess payment of US$1,700,000.00 and to pay damages. On April 20, 1987, the trial court issued a writ of preliminary attachment against the real and personal properties of private respondents. 2
• Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement.
• The trial court granted Ducat’s motion to dismiss, stating that “the evidentiary requirements of the controversy may be more suitably tried before the forum of the litis pendentia in the U.S., under the principle in private international law of forum non conveniens,” even as it noted that Ducat was not a party in the U.S. case.
• A separate hearing was held with regard to 1488, Inc. and Daic’s motion to dismiss. On March 9, 1988, the trial court 3 granted the motion to dismiss filed by 1488, Inc. and Daic on the ground of litis pendentia considering that the “main factual element” of the cause of action in this case which is the validity of the sale of real property in the United States between defendant 1488 and plaintiff ATHONA is the subject matter of the pending case in the United States District Court which, under the doctrine of forum non conveniens, is the better (if not exclusive) forum to litigate matters needed to determine the assessment and/or fluctuations of the fair market value of real estate situated in Houston, Texas, U.S.A. from the date of the transaction in 1983 up to the present and verily, . . . (emphasis by trial court)
• The trial court also held itself without jurisdiction over 1488, Inc. and Daic because they were non-residents and the action was not an action in rem or quasi in rem, so that extraterritorial service of summons was ineffective. The trial court subsequently lifted the writ of attachment it had earlier issued against the shares of stocks of 1488, Inc. and Daic.
• The Court of Appeals 4 affirmed the dismissal of Civil Case No. 16563 against Ducat, 1488, Inc., and Daic on the ground of litis pendentia, thus:
The plaintiffs in the U.S. court are 1488 Inc. and/or Drago Daic, while the defendants are Philsec, the Ayala International Finance Ltd. (BPI-IFL’s former name) and the Athona Holdings, NV. The case at bar involves the same parties. The transaction sued upon by the parties, in both cases is the Warranty Deed executed by and between Athona Holdings and 1488 Inc. In the U.S. case, breach of contract and the promissory note are sued upon by 1488 Inc., which likewise alleges fraud employed by herein appellants, on the marketability of Ducat’s securities given in exchange for the Texas property. The recovery of a sum of money and damages, for fraud purportedly committed by appellees, in overpricing the Texas land, constitute the action before the Philippine court, which likewise stems from the same Warranty Deed.
The Court of Appeals also held that Civil Case No. 16563 was an action in personam for the recovery of a sum of money for alleged tortious acts, so that service of summons by publication did not vest the trial court with jurisdiction over 1488, Inc. and Drago Daic. The dismissal of Civil Case No. 16563 on the ground of forum non conveniens was likewise affirmed by the Court of Appeals on the ground that the case can be better tried and decided by the U.S. court:
The U.S. case and the case at bar arose from only one main transaction, and involve foreign elements, to wit: 1) the property subject matter of the sale is situated in Texas, U.S.A.; 2) the seller, 1488 Inc. is a non-resident foreign corporation; 3) although the buyer, Athona Holdings, a foreign corporation which does not claim to be doing business in the Philippines, is wholly owned by Philsec, a domestic corporation, Athona Holdings is also owned by BPI-IFL, also a foreign corporation; 4) the Warranty Deed was executed in Texas, U.S.A.
• It is important to note in connection with the first point that while the present case was pending in the Court of Appeals, the United States District Court for the Southern District of Texas rendered judgment 5 in the case before it. The judgment, which was in favor of private respondents, was affirmed on appeal by the Circuit Court of Appeals.
ISSUE: Whether Civil Case No. 16536 is barred by the judgment of the U.S. court.
HELD: Decision of the Court of Appeals is REVERSED and Civil Case No. 16563 is REMANDED to the Regional Trial Court of Makati for consolidation with Civil Case No. 92-1070 and for further proceedings in accordance with this decision
• While this Court has given the effect of res judicata to foreign judgments in several cases, 7 it was after the parties opposed to the judgment had been given ample opportunity to repel them on grounds allowed under the law. 8 It is not necessary for this purpose to initiate a separate action or proceeding for enforcement of the foreign judgment. What is essential is that there is opportunity to challenge the foreign judgment, in order for the court to properly determine its efficacy. This is because in this jurisdiction, with respect to actions in personam, as distinguished from actions in rem, a foreign judgment merely constitutes prima facie evidence of
the justness of the claim of a party and, as such, is subject to proof to the contrary. 9 Rule 39, §50 provides:
Sec. 50. Effect of foreign judgments. — The effect of a judgment of a tribunal of a foreign country, having jurisdiction to pronounce the judgment is as follows:
(a) In case of a judgment upon a specific thing, the judgment is conclusive upon the title to the thing;
(b) In case of a judgment against a person, the judgment is presumptive evidence of a right as between the parties and their successors in interest by a subsequent title; but the judgment may be repelled by evidence of a want of jurisdiction, want of notice to the party, collusion, fraud, or clear mistake of law or fact.
• In the case at bar, it cannot be said that petitioners were given the opportunity to challenge the judgment of the U.S. court as basis for declaring it res judicata or conclusive of the rights of private respondents. The proceedings in the trial court were summary. Neither the trial court nor the appellate court was even furnished copies of the pleadings in the U.S. court or apprised of the evidence presented thereat, to assure a proper determination of whether the issues then being litigated in the U.S. court were exactly the issues raised in this case such that the judgment that might be rendered would constitute res judicata.
On the plaintiff’s claim in its Opposition that the causes of action of this case and the pending case in the United States are not identical, precisely the Order of January 26, 1988 never found that the causes of action of this case and the case pending before the USA Court, were identical. (emphasis added)
It was error therefore for the Court of Appeals to summarily rule that petitioners’ action is barred by the principle of res judicata. Petitioners in fact questioned the jurisdiction of the U.S. court over their persons, but their claim was brushed aside by both the trial court and the Court of Appeals. 13
Moreover, the Court notes that on April 22, 1992, 1488, Inc. and Daic filed a petition for the enforcement of judgment in the Regional Trial Court of Makati, where it was docketed as Civil Case No. 92-1070 and assigned to Branch 134, although the proceedings were suspended because of the pendency of this case. To sustain the appellate court’s ruling that the foreign judgment constitutes res judicata and is a bar to the claim of petitioners would effectively preclude petitioners from repelling the judgment in the case for enforcement. An absurdity could then arise: a foreign judgment is not subject to challenge by the plaintiff against whom it is invoked, if it is pleaded to resist a claim as in this case, but it may be opposed by the defendant if the foreign judgment is sought to be enforced against him in a separate proceeding.
Accordingly, to insure the orderly administration of justice, this case and Civil Case No. 92-1070 should be consolidated. 15 After all, the two have been filed in the Regional Trial Court of Makati, albeit in different salas, this case being assigned to Branch 56 (Judge Fernando V. Gorospe), while Civil Case No. 92-1070 is pending in Branch 134 of Judge Ignacio Capulong. In such proceedings, petitioners should have the burden of impeaching the foreign judgment and only in the event they succeed in doing so may they proceed with their action against private respondents.
• The trial court’s refusal to take cognizance of the case justifiable under the principle of forum non conveniens. First, a motion to dismiss is limited to the grounds under Rule 16, §1, which does not include forum non conveniens. 16 The propriety of dismissing a case based on this principle requires a factual determination, hence, it is more properly considered a matter of defense. Second, while it is within the discretion of the trial court to abstain from assuming jurisdiction on this ground, it should do so only after “vital facts are established, to determine whether special circumstances” require the court’s desistance.
In this case, the trial court abstained from taking jurisdiction solely on the basis of the pleadings filed by private respondents in connection with the motion to dismiss. It failed to consider that one of the plaintiffs (PHILSEC) is a domestic corporation and one of the defendants (Ventura Ducat) is a Filipino, and that it was the extinguishment of the latter’s debt which was the object of the transaction under litigation. The trial court arbitrarily dismissed the case even after finding that Ducat was not a party in the U.S. case.
• It was error we think for the Court of Appeals and the trial court to hold that jurisdiction over 1488, Inc. and Daic could not be obtained because this is an action in personam and summons were served by extraterritorial service. Rule 14, §17 on extraterritorial service provides that service of summons on a non-resident defendant may be effected out of the Philippines by leave of Court where, among others, “the property of the defendant has been attached within the Philippines.” 18 It is not disputed that the properties, real and personal, of the private respondents had been attached prior to service of summons under the Order of the trial court dated April 20, 1987.
• As for the temporary restraining order issued by the Court on June 29, 1994, to suspend the proceedings in Civil Case No. 92-1445 filed by Edgardo V. Guevarra to enforce so-called Rule 11 sanctions imposed on the petitioners by the U.S. court, the Court finds that the judgment sought to be enforced is severable from the main judgment under consideration in Civil Case No. 16563. The separability of Guevara’s claim is not only admitted by petitioners, 20 it appears from the pleadings that petitioners only belatedly impleaded Guevarra as defendant in Civil Case No. 16563. 21 Hence, the TRO should be lifted and Civil Case No. 92-1445 allowed to proceed..

Brief Fact Summary
World-Wide Volkswagen (WWV) (Plaintiff) challenged an Oklahoma district court’s (Defendant) in personam jurisdiction in a products liability action brought by Robinson on the grounds that World-Wide Volkswagen’s (Plaintiff) only contacts with Oklahoma was that Robinson bought a World-Wide Volkswagen (Plaintiff) car in New York and drove it through Oklahoma.

Synopsis of Rule of Law
A state court may exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state.

Facts
Robinson bought a World-Wide Volkswagen (WWV) (Plaintiff) car in New York. While driving to Arizona, Robinson was involved in an auto accident in Oklahoma and brought a products liability action against Plaintiff in Oklahoma. Plaintiff was incorporated and had its business in New York. Plaintiff distributed vehicles, parts, and accessories, under contract with Volkswagen, to retail dealers in New York, New Jersey, and Connecticut. Plaintiff did no business in Oklahoma, had no agents in Oklahoma, did not advertise in Oklahoma, and did not use any media in Oklahoma. Plaintiff challenged the Oklahoma court’s (Defendant) in personam jurisdiction over Plaintiff on the grounds that Plaintiff had no minimum contacts with Oklahoma. The district court (Defendant) and the Oklahoma Supreme Court rejected Plaintiff’s challenge. Plaintiff appealed to the United States Supreme Court.

Issue
May a state court exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state?

Held
(White, J.) Yes. A state court may exercise personal jurisdiction over a nonresident defendant only when there exists minimum contacts between the defendant and the forum state. There are two purposes this minimum contact requirement serves: (1) It protects the defendant against the burdens of litigating in an inconvenient forum; and (2) It ensures that the states, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system. Plus, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes divest a state of its power to render a valid judgment. In this case, Plaintiff did not have minimum contacts with Oklahoma. Plaintiff’s only contact with the state was that one of its cars had been driven through the state. It would not be reasonable to expect Plaintiff to foresee that an accident would occur in Oklahoma and have to defend actions wherever their cars are taken. This situation is distinguished from those where a nonresident corporation intentionally avails itself of the state’s commerce by introducing a product to the state’s market and can therefore fall within the state’s in personam jurisdiction. In such a situation, the corporation can foresee that litigation might occur in the availed state. However, in the present case, Plaintiff’s only contact with Oklahoma was that s consumer drove a car through the state. Since such a contact is not sufficient to satisfy the minimal contacts requirement, the Oklahoma court (Defendant) does not have in personam jurisdiction over WWV (Plaintiff). Reversed.

Dissent
(Brennan, J.) WWV’s (Plaintiff) contacts to Oklahoma were strong in that the accident occurred in the state, witnesses lived in the state, and the state has a legitimate interest in preserving its interstate highways. The sale of automobiles presupposes that such cars will be driven to distant states. This is equal to introducing a product into the market of a state and the likelihood of litigation in other states is foreseeable. Therefore, WWV (Plaintiff) had sufficient contacts with Oklahoma for jurisdiction to apply.

Discussion
The minimum contacts test was first established in International Shoe Co. v. Washington, 326 U.S. 310 (1945). The test is vague and always requires a detailed examination of the facts. The court looks at factors such as manifest state interests, purposeful availment, foreseeability, fairness, and states’ long-arm statutes.

Calder v. Jones

Brief Fact Summary. Respondent, Shirley Jones, brought a libel suit in a California state court against Petitioners, Calder et al. Petitioners South and Calder are Florida residents who argue that California courts lack personal jurisdiction over them.

Synopsis of Rule of Law. A state has personal jurisdiction over any party whose actions intentionally reach another party in the state and are the basis for the cause of action.

Facts. Petitioners South is a reporter, and Petitioner Calder is president and an editor, of Petitioner National Enquirer. South wrote an article that accused Respondent of a drinking problem that was so severe that it affected her acting career. Calder reviewed the article and edited it to its final form for publication. Respondent brought a suit for libel, and South and Calder challenged California’s personal jurisdiction since neither had any physical contacts with California, particularly as it pertained to this article. South did rely on sources from California, and Respondent’s life and career were centered in California. The district court cited Petitioner’s rights under the First Amendment to the United States Constitution as trumpeting Due Process Clause concerns. The appellate court reversed because First Amendment arguments are irrelevant to jurisdictional analysis.

Issue. The issue is whether California has personal jurisdiction over South and Calder through their targeting of Respondent with this article.

Held. The United States Supreme Court held that California had personal jurisdiction over Petitioners. The first step in the analysis is to determine the focal point of the harm suffered, and that was in California. The Court then determined that Petitioners’ actions intentionally aimed at a California resident, and the injuries suffered would be in that state.

Discussion. Petitioners argued that, because they were merely employees of the libelous newspaper, their case was analogous to a welder who works on a boiler in Florida that subsequently explodes in California. The Court distinguishes this by noting that unlike the welder they intentionally targeted the California contact.

Keeton vs Hustler Magazine
Facts of the case
• Kathy Keeton (Keeton) sued Hustler Magazine, Inc. (Hustler) and several other defendants for libel in the United States District Court for the District of New Hampshire. Keeton alleged that the district court had jurisdiction based on diversity of citizenship since she was a resident of New York and Hustler was an Ohio corporation with its principal place of business in California. Hustler sold 10 to 15 thousand copies of its magazine in New Hampshire each month but Keeton’s only connection to New Hampshire was the circulation there of copies of a magazine that she assisted in producing. She chose to sue in New Hampshire because it was the only state in which the statute of limitation for libel six years, the longest in the United States had not run. The district court dismissed the suit on the ground that the due process clause of the Fourteenth Amendment forbade the application of New Hampshire’s long-arm statute in order to acquire personal jurisdiction over Hustler. The First Circuit affirmed, finding that Keeton’s contacts with New Hampshire were too attenuated for an assertion of personal jurisdiction over Hustler. The Court of Appeals also found the application of the “single publication rule,” which would require the court to award Keeton damages caused in all states should she prevail, unfair since most of Keeton’s alleged injuries occurred outside of New Hampshire.
• Question
• Was Hustler’s circulation of magazines within the forum state of New Hampshire alone sufficient, without regard to the depth of plaintiff’s contacts or the amount of plaintiff’s damages caused in New Hampshire, to support an assertion of personal jurisdiction in a libel action based upon the contents of the magazine?
• Yes. Hustler’s regular circulation of magazines in New Hampshire is sufficient to support an assertion of personal jurisdiction in a libel action based on the contents of the magazine. In analyzing whether there are sufficient minimum contacts to permit personal jurisdiction under the Fourteenth Amendment, a court should focus on the relationship among the defendant, the forum, and the litigation. Hustler has continuously and deliberately exploited the New Hampshire market and therefore it must reasonably anticipate being hauled into court there. Keeton did not need to have minimum contacts with the forum state in order for that state to have asserted personal jurisdiction over Hustler. New Hampshire had a sufficient interest in adjudicating the dispute. Moreover, even though most of the harm done to Keeton occurred outside New Hampshire, the same would be true in most libel cases brought anywhere other than plaintiff’s state of domicile

Asahi Metal Industry Co. v. Superior Court

Brief Fact Summary. Gary Zurcher lost control of his Honda motorcycle and collided with a tractor trailer. He was severely injured and his passenger/wife was killed. Zurcher filed a product liability action naming the manufacturer of the motorcycle tire’s tube and Asahi Metal, the manufacturer of the tire’s tube’s valve assembly.

Synopsis of Rule of Law. The “substantial connection,” between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State.

Facts. On a California highway Gary Zurcher lost control of his Honda motorcycle and collided with a tractor trailer. He was severely injured and his passenger/wife was killed. Zurcher filed a product liability action alleging the 1978 accident was caused by a sudden loss of air and an explosion in the rear tire of the motorcycle and that the tire, tube and sealant were defective, naming the manufacturer of the tube and Asahi Metal, the manufacturer of the tube’s valve assembly. Zurcher’s claims against the tire manufacturer settles and is dismissed, leaving only the tire manufacturer’s indemnity action against Asahi.

Issue. Whether the mere awareness on the part of a foreign defendant that components it manufactured, sold, and delivered outside the United States would reach the forum State in the stream of commerce constitutes “minimum contacts” between the defendant and the forum State such that the exercise of jurisdiction “does not offend ‘traditional notions of fair paly and substantial justice.’” International Shoe Co. v. Washington, quoting Milliken v. Meyer.

Held. The exertion of personal jurisdiction over Asahi exceeds the limits of due process.

Concurrence Chief Justices Brennan, White, Marshall, Blackmun, Powell and Stevens regarding Part II-B, but did not agree with Parts II-A of the stream-of-commerce theory, nor with its conclusion that Asahi did not “purposely avail itself of the California market”, however did agree that the exercise of personal jurisdiction over Asahi would not comport with “fair play and substantial justice.”; and Powell and Scalia join regarding Parts II-A and III.

Discussion. Asahi seeks to quash Cheng Shin’s service of summons arguing California’s long-arm statute, arguing the state could not exert jurisdiction over it with the Due Process Clause of the Fourteenth Amendment. Asahi is a Japanese corporation that manufactures the tire valve assemblies in Japan and sells the assemblies to Cheng Shin for use in the tire tubes. The Supreme Court of California interpreted this case in light of World-Wide Volkswagen and held that because the stream of commerce eventually brought some valves Asahi sold Cheng Shin into California, Asahi’s awareness that its valves would be sold in California was sufficient to permit California to exercise jurisdiction over Asahi. Here however, the court found that there was no actions by Asahi that demonstrated purposeful availment to the California market.

BENSUAN RESTAURANT CORPORATION VS. RICHARD B. KING, DOCKET NO. 96-9344, (SEPTEMBER 10, 1997)
FACTS: Bensusan Restaurant Corporation, the plaintiff, owned the Blue Note jazz club in New York’s Greenwich Village, and owned a federal trademark registration for the mark “THE BLUE NOTE.”
The defendant, Richard King, operated “The Blue Note,” a small club in the college town of Columbia, Missouri, and had used that mark on a local basis since 1980 — several years prior to use of “Blue Note” by the now-famous New York club.
Although the New York jazz club had obtained a federal registration for the Blue Note mark in 1985, the Missouri club could continue to use the name within its local area based on the Missouri club’s prior use of the name.
In April 1996, the Missouri club began operation of a website (http//www.throughport.com/cyberspot) that offered general information about King’s club, including a calendar of events and ticketing information.
Tickets could not be ordered via the Internet; instead, one could order tickets for an advertised event by telephone and then pick-up the tickets in person at a box office in Columbia, Missouri. The Missouri club’s website also included a hyperlink to the website for Greenwich Village’s Blue Note club, while also offering a disclaimer that “The Blue Note’s Cyberspot should not be confused with one of the world’s finest jazz clubs, the Blue Note, located in the heart of New York’s Greenwich Village. If you should find yourself in the Big Apple give them a visit.”
The New York jazz club viewed the Missouri club’s website on the Internet as an expansion of use of the Blue Note name outside of the local area, and raised this objection with King. In response, King removed the second sentence of the disclaimer and the hyperlink from his website.
The operator of the New York jazz club sued the operator of the Missouri jazz club for trademark infringement in New York.
The district court dismissed the complaint on the ground of lack of personal jurisdiction. Because King does not transact business in New York State.
ISSUE: WON the district court erred in dismissing the complaint.
HELD:NO.
The New York law dealing with personal jurisdiction based upon tortious acts of a non-domiciliary who does not transact business in New York is contained in sub-paragraphs (a)(2) and (a)(3) of CPLR § 302.
As construed by the Feathers decision, jurisdiction cannot be asserted over a nonresident under this provision unless the nonresident commits an act in this state.   This is tantamount to a requirement that the defendant or his agent be physically present in New York․   In short, the failure to perform a duty in New York is not a tortious act in this state, under the cases, unless the defendant or his agent enters the state.
To satisfy the latter requirement, Bensusan relies on the arguments that King participated in interstate commerce by hiring bands of national stature and received revenue from customers-students of the University of Missouri-who, while residing in Missouri, were domiciliaries of other states.  
These alleged facts were not sufficient to establish that substantial revenues were derived from interstate commerce, a requirement that “is intended to exclude non-domiciliaries whose business operations are of a local character.”  
The court stated that “[t]he mere fact that a person can gain information on the allegedly infringing product is not the equivalent of a person advertising, promoting, selling or otherwise making an effort to target its product in New York.”
Consequently, the district court concluded that any tortious action of trademark infringement would arise in Missouri rather than in New York. In examining whether the exercise of jurisdiction over King would satisfy due process, the court asserted that “creating a site, like placing a product into the stream of commerce, may be felt nationwide — or even worldwide — but, without more, it is not an act purposefully directed toward the forum state.”
For all the reasons above stated, we affirm the judgment of the district court.

CompuServe, Inc. v. Patterson, 89 F.3d 1257, 39 U.S.P.Q.2d (BNA) 1502 (6th Cir. 1996).
PERSONAL JURISDICTION – DECLARATORY JUDGMENT – INTERNET – TRADEMARK – UNFAIR COMPETITION – COMPUTER INFORMATION AND NETWORK SERVICE – LONG-ARM STATUTE
Continued supply and sales of shareware via a computer information and network Internet access provider based in the forum state satisfies the due process requirements of the federal Constitution concerning the exercise of personal jurisdiction over an out-of-state defendant.
https://www.law.cornell.edu/background/internet/CompuServe.htm
SUMMARY
Plaintiff-Appellant CompuServe, Inc. (“CompuServe”), a nationwide provider of both electronic network and information services, has its headquarters in Ohio. Among the services provided by CompuServe is the opportunity for subscribers to post and sell software in the form of “shareware.” Shareware, provided to the end user initially free of charge, allows the user to test the software for a specified length of time, after which he or she must decide whether to pay the software’s author for continued use, or terminate the use of the software. CompuServe accepted payment for the shareware from purchasers and remitted that payment, less a commission, to the authors of the software.
Richard S. Patterson (“Patterson”), a resident of Texas, subscribed to CompuServe. Patterson took advantage of CompuServe’s shareware service by posting Internet navigation software that he developed but marketed via his own corporation, Flashpoint Development. Before use of the shareware service, Patterson entered into a “Shareware Registration Agreement” (“SRA”) that provided that Ohio law governed the parties’ relationship.
Subsequent to the posting of Patterson’s navigation software, CompuServe itself began to market its own navigation software. Patterson believed that CompuServe’s software was confusingly similar to his own trademarked software and notified CompuServe.
CompuServe filed a declaratory judgment action in the District Court for the Southern District of Ohio, seeking a declaration that it had not infringed Patterson’s trademarks. Patterson filed a motion to dismiss for lack of personal jurisdiction. The district court granted Patterson’s motion.
CompuServe filed an appeal arguing that Patterson’s repeated availment of the shareware sales procedures constituted minimum contacts with the forum state. CompuServe further argued that the existence of the Shareware Registration Agreement clearly stipulating that Ohio law governed disputes regarding the agreement meant that the exercise of personal jurisdiction comported with traditional notions of fair play and substantial justice.
Issue(s)
Whether an Internet service provider’s home state can exercise jurisdiction over an out-of-state author of software who subscribes to the Internet service provider and receives commissions for software sold via the Internet service provider.
(Did CompuServe make a prima facie showing that Patterson’s contacts with Ohio, which have been almost entirely electronic in nature, are sufficient, under the Due Process Clause, to support the district court’s exercise of personal jurisdiction over him?)
Disposition
Yes. A forum state can exercise jurisdiction over an author of software who sells his software via a Internet service provider based in the forum state because 1) the author purposefully avails himself of the forum’s laws by acting in the forum, 2) the cause of action arises from that availment, and 3) the burden on the defendant author is less than that on the forum state’s interests in determining its laws concerning trademarks and trade names.
Because we believe that Patterson had sufficient contacts with Ohio to support the exercise of personal jurisdiction over him, we REVERSE the district court’s dismissal and REMAND this case for further proceedings consistent with this opinion.
MORE: To determine whether personal jurisdiction exists over a defendant, federal courts apply the law of the forum state, subject to the limits of the Due Process Clause of the Fourteenth Amendment. The Ohio long-arm statute allows an Ohio court to exercise personal jurisdiction over nonresidents of Ohio on claims arising from, inter alia, the nonresident’s transacting any business in Ohio. It is settled Ohio law, moreover, that the “transacting business” clause of that statute was meant to extend to the federal constitutional limits of due process, and that as a result Ohio personal jurisdiction cases require an examination of those limits.   Further, personal jurisdiction may be either general or specific in nature, depending on the nature of the contacts in a given case. In the instant case, because CompuServe bases its action on Patterson’s act of sending his computer software to Ohio for sale on its service, CompuServe seeks to establish such specific personal jurisdiction over Patterson.  
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state.   Second, the cause of action must arise from the defendant’s activities there.   Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum to make the exercise of jurisdiction over the defendant reasonable.
We conclude that Patterson has knowingly made an effort-and, in fact, purposefully contracted-to market a product in other states, with Ohio-based CompuServe operating, in effect, as his distribution center.   Thus, it is reasonable to subject Patterson to suit in Ohio, the state which is home to the computer network service he chose to employ.
To support this conclusion, we will address each of the above three criteria seriatim, bearing in mind that (1) CompuServe need only make a prima facie case of personal jurisdiction, and (2) we cannot weigh Patterson’s affidavit in the analysis, given that the district court addressed his motion to dismiss without holding an evidentiary hearing.7  
1. The “purposeful availment” requirement.
 This court has stated that the question of whether a defendant has purposefully availed itself of the privilege of doing business in the forum state is “the sine qua non for in personam jurisdiction.”  Mohasco Indus., 401 F.2d at 381-82.   The “purposeful availment” requirement is satisfied when the defendant’s contacts with the forum state “proximately result from actions by the defendant himself that create a ‘substantial connection’ with the forum State,” and when the defendant’s conduct and connection with the forum are such that he “should reasonably anticipate being haled into court there.” Courts require purposeful availment to insure that “random,” “fortuitous,” or “attenuated” contacts do not cause a defendant to be haled into a jurisdiction.  
 This requirement does not, however, mean that a defendant must be physically present in the forum state.   As the Burger King Corp. Court stated, “So long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there.”
There is no question that Patterson himself took actions that created a connection with Ohio in the instant case.   He subscribed to CompuServe, and then he entered into the Shareware Registration Agreement when he loaded his software onto the CompuServe system for others to use and, perhaps, purchase.   Once Patterson had done those two things, he was on notice that he had made contracts, to be governed by Ohio law, with an Ohio-based company.   Then, he repeatedly sent his computer software, via electronic links, to the CompuServe system in Ohio, and he advertised that software on the CompuServe system.   Moreover, he initiated the events that led to the filing of this suit by making demands of CompuServe via electronic and regular mail messages.
The real question is whether these connections with Ohio are “substantial” enough that Patterson should reasonably have anticipated being haled into an Ohio court.   The district court did not think so.   It looked to “cases involving interstate business negotiations and relationships” and held that the relationship between CompuServe and Patterson, because it was marked by a “minimal course of dealing,” was insufficient to satisfy the purposeful availment test. We disagree.   The contract cases upon which the district court relied are both distinguishable in important ways.   Patterson, unlike the nonresident defendant in Reynolds, entered into a written contract with CompuServe which provided for the application of Ohio law, and he then purposefully perpetuated the relationship with CompuServe via repeated communications with its system in Ohio.   And, unlike the nonresident defendant in Health Communications, Patterson was far more than a purchaser of services;  he was a third-party provider of software who used CompuServe, which is located in Columbus, to market his wares in Ohio and elsewhere.
In fact, it is Patterson’s relationship with CompuServe as a software provider and marketer that is crucial to this case.   The district court’s analysis misses the mark because it disregards the most salient facts of that relationship:  that Patterson chose to transmit his software from Texas to CompuServe’s system in Ohio, that myriad others gained access to Patterson’s software via that system, and that Patterson advertised and sold his product through that system.   Though all this happened with a distinct paucity of tangible, physical evidence, there can be no doubt that Patterson purposefully transacted business in Ohio.  
Moreover, this was a relationship intended to be ongoing in nature;  it was not a “one-shot affair Patterson sent software to CompuServe repeatedly for some three years, and the record indicates that he intended to continue marketing his software on CompuServe.   As this court has often stated, [B]usiness is transacted in a state when obligations created by the defendant or business operations set in motion by the defendant have a realistic impact on the commerce of that state;  and the defendant has purposefully availed himself of the opportunity of acting there if he should have reasonably foreseen that the transaction would have consequences in that state.
Patterson deliberately set in motion an ongoing marketing relationship with CompuServe, and he should have reasonably foreseen that doing so would have consequences in Ohio.
 Admittedly, merely entering into a contract with CompuServe would not, without more, establish that Patterson had minimum contacts with Ohio. Because Patterson deliberately did both of those things, however, and because of the other factors that we discuss herein, we believe that ample contacts exist to support the assertion of jurisdiction in this case, and certainly an assertion of jurisdiction by the state where the computer network service in question is headquartered.
Similarly, in the instant case, Patterson consciously reached out from Texas to Ohio to subscribe to CompuServe, and to use its service to market his computer software on the Internet.   He entered into a contract which expressly stated that it would be governed by and construed in light of Ohio law.   Ohio has written and interpreted its long-arm statute, and particularly its “transacting business” subsection, with the intent of reaching as far as the Due Process Clause will allow, and it certainly has an interest “in providing effective means of redress for its residents.”  Id.  As the Burger King Corp.   Court noted, the purposeful direction of one’s activities toward a state has always been significant in personal jurisdiction cases, particularly where individuals purposefully derive benefits from interstate activities.   Moreover, the Court continued, it could be unfair to allow individuals who purposefully engage in interstate activities for profit to escape having to account in other states for the proximate consequences of those activities.
Finally, we note this court’s own finding of purposeful availment based (in part) on analogous litigation threats in American Greetings Corp. v. Cohn, 839 F.2d 1164, 1170 (6th Cir.1988).   The American Greetings Corp. case involved an Ohio corporation’s suit, in Ohio, against a California shareholder who had threatened to file a lawsuit to invalidate an amendment to the company’s articles of incorporation.  Id. at 1165.   The district court dismissed the case, without conducting an evidentiary hearing, for lack of personal jurisdiction, finding that the defendant merely owned stock in an Ohio company and expressed strong reservations about a matter of shareholder interest.  Id. at 1166.   This court reversed, finding purposeful availment because of the defendant’s letters and telephone calls to Ohio, in which he had threatened suit and had sought money to release his claim.   Thus, this court stated, the defendant himself had “originated and maintained the required contacts with Ohio.”  Id. at 1170.
In the instant case, the record demonstrates that Patterson not only purposefully availed himself of CompuServe’s Ohio-based services to market his software, but that he also “originated and maintained” contacts with Ohio when he believed that CompuServe’s competing product unlawfully infringed on his own software.   Patterson repeatedly sent both electronic and regular mail messages to CompuServe about his claim, and he posted a message on one of CompuServe’s electronic forums, which outlined his case against CompuServe for anyone who wished to read it.   Moreover, the record shows that Patterson demanded at least $100,000 to settle the matter.
Thus, we believe that the facts which CompuServe has alleged, viewed in the light most favorable to CompuServe, support a finding that Patterson purposefully availed himself of the privilege of doing business in Ohio.   He knowingly reached out to CompuServe’s Ohio home, and he benefitted from CompuServe’s handling of his software and the fees that it generated.
2. The requirement that the cause of action arises from Patterson’s activities in Ohio.
 Even though we have found that Patterson purposefully availed himself of Ohio privileges, we must also find that CompuServe’s claims against him arise out of his activities in Ohio if we are to find the exercise of jurisdiction proper.  Reynolds, 23 F.3d at 1116-17.   If a defendant’s contacts with the forum state are related to the operative facts of the controversy, then an action will be deemed to have arisen from those contacts.  Id. at 1119 (quoting Creech, 908 F.2d at 80).
 The district court viewed the presence of Patterson’s software on the CompuServe system in Ohio as “entirely incidental to the alleged dispute between the parties.”   In the district court’s opinion, Patterson could have claimed trademark or trade name protection for his software against CompuServe even if he had placed his software on another computer network altogether, or in a retail store.   Patterson’s discovery of the similarity in program names may have come to his attention through the CompuServe system, the court below noted, but it concluded that “the way in which the parties discovered they might have a clash of legal interests is not relevant to the issue of jurisdiction.”
Again, we must disagree with the district court’s holding.   The cause of action in the instant case concerns allegations of trademark or trade name infringement and unfair competition.   Patterson’s contacts with Ohio are certainly related to the operative facts of that controversy.   He placed his software on CompuServe’s Ohio-based system.   He used that system to advertise his software and sell it.   The proceeds of those sales flowed to him through Ohio.   According to CompuServe’s allegations, Patterson has marketed his product exclusively on their system.
As the district court points out, Patterson could have placed his software anywhere and had the same result.   Nevertheless, it is uncontroverted that Patterson placed, marketed, and sold his software only on Ohio-based CompuServe.   Thus, any common law trademark or trade name which Patterson might have in his product would arguably have been created in Ohio, and any violation of those alleged trademarks or trade names by CompuServe would have occurred, at least in part, in Ohio.   See United States v. Steffens, 100 U.S. 82, 94, 25 L.Ed. 550 (1879) (stating that trademark rights, under the common law, are appropriated only through actual prior use in commerce);  Dakota Indus. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1388 (8th Cir.1991) (stating that the tort of trademark infringement is considered to have occurred where the passing off of the allegedly infringing goods occurred);  Tally-Ho, Inc. v. Coast Community College Dist., 889 F.2d 1018, 1022 (11th Cir.1989) (stating that where, as here, neither party has registered a disputed trademark with the federal government, the parties must look to common law and state statutes to determine what protection they have);  Younker v. Nationwide Mut. Ins. Co., 175 Ohio St. 1, 191 N.E.2d 145, 148-49 (1963) (defining trade name and trademark and stating that only the actual use of those devices in connection with a business gives rise to legal rights);  Yocono’s Restaurant, Inc. v. Yocono, 100 Ohio App.3d 11, 651 N.E.2d 1347, 1350-51 (1994) (discussing the intersection of Ohio’s Deceptive Trade Practices Act, the common law, and the federal Lanham Act).
Moreover, as noted heretofore with regard to the purposeful availment test, CompuServe’s declaratory judgment action arose in part because Patterson threatened, via regular and electronic mail, to seek an injunction against CompuServe’s sales of its software product, or to seek damages at law if CompuServe did not pay to settle his purported claim.   Thus, Patterson’s threats-which were contacts with Ohio-gave rise to the case before us, as did the threats in the American Greetings Corp. case, 839 F.2d at 1170.
3. The reasonableness requirement.
 Lastly, we consider whether exercising personal jurisdiction over Patterson would be reasonable, i.e., whether it would “comport with ‘traditional notions of fair play and substantial justice.’ ”  Reynolds, 23 F.3d at 1117 (quoting Asahi Metal Indus., 480 U.S. at 113, 107 S.Ct. at 1032-33).   We note that, if we find, as we do, the first two elements of a prima facie case-purposeful availment and a cause of action arising from the defendant’s contacts with the forum state-then an inference arises that this third factor is also present.  American Greetings Corp., 839 F.2d at 1170 (citing First Nat’l Bank v. J.W. Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir.1982));  Mohasco Indus., 401 F.2d at 384 & n. 30.
 A court must consider several factors in this context, including “the burden on the defendant, the interest of the forum state, the plaintiff’s interest in obtaining relief, and the interest of other states in securing the most efficient resolution of controversies.”  American Greetings Corp., 839 F.2d at 1169-70 (citing Asahi Metal Indus., 480 U.S. at 113, 107 S.Ct. at 1032-33).
 The district court analogized the instant case to a standard consumer suit in which CompuServe might have brought suit in Ohio “to collect a small amount of user fees from a Texas resident who, while seated at his computer terminal, became a member of the CompuServe network.”
That is not, however, the case at bar.   Here, we have an entrepreneur who purposefully employed CompuServe to market his computer software product.   It may be burdensome for Patterson to defend a suit in Ohio, but he knew when he entered into the Shareware Registration Agreement with CompuServe that he was making a connection with Ohio, and presumably he hoped that connection would work to his benefit.   Further, Ohio has a strong interest in resolving a dispute involving an Ohio company, which will involve the Ohio law on common law trademarks and trade names.8  CompuServe alleges that more than $10 million could be at stake in this case, and it also contends that this case will have a profound impact on its relationships with other “shareware” providers like Patterson, who also directed their activities toward Ohio-based CompuServe.   We have no reason to believe otherwise.
Again, considering the pleadings and affidavits in a light most favorable to CompuServe (as we must), we find that, on these facts, there is a substantial enough connection between Patterson and Ohio to make it reasonable for an Ohio court to assert personal jurisdiction over him.9  Someone like Patterson who employs a computer network service like CompuServe to market a product can reasonably expect disputes with that service to yield lawsuits in the service’s home state.
Finally, because of the unique nature of this case, we deem it important to note what we do not hold.   We need not and do not hold that Patterson would be subject to suit in any state where his software was purchased or used;  that is not the case before us.   See World-Wide Volkswagen, 444 U.S. at 296, 100 S.Ct. at 566-67 (rejecting the idea that a seller of chattels could “appoint the chattel his agent for service of process”).   We also do not have before us an attempt by another party from a third state to sue Patterson in Ohio for, say, a “computer virus” caused by his software, and thus we need not address whether personal jurisdiction could be found on those facts.   Finally, we need not and do not hold that CompuServe may, as the district court posited, sue any regular subscriber to its service for nonpayment in Ohio, even if the subscriber is a native Alaskan who has never left home.   Each of those cases may well arise someday, but they are not before us now.

BIENVENIDO M. CADALIN, ROLANDO M. AMUL, DONATO B. EVANGELISTA, and the rest of 1,767 NAMED-COMPLAINANTS, thru and by their Attorney-in-fact, Atty. GERARDO A. DEL MUNDOvs. PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION’S ADMINISTRATOR, NLRC, BROWN & ROOT INTERNATIONAL, INC. AND/OR ASIA INTERNATIONAL BUILDERS CORPORATION
GRN 104776, December 5,1994.
FACTS:
This is a consolidation of 3 cases of SPECIAL CIVIL ACTIONS in the Supreme Court for Certiorari.
On June 6, 1984, Cadalin, Amul and Evangelista, in their own behalf and on behalf of 728 other OCWs instituted a class suit by filing an “Amended Complaint” with the POEA for money claims arising from their recruitment by ASIA INTERNATIONAL BUILDERS CORPORATION (AIBC) and employment by BROWN & ROOT INTERNATIONAL, INC (BRI) which is a foreign corporation with headquarters in Houston, Texas, and is engaged in construction; while AIBC is a domestic corporation licensed as a service contractor to recruit, mobilize and deploy Filipino workers for overseas employment on behalf of its foreign principals.
The amended complaint sought the payment of the unexpired portion of the employment contracts, which was terminated prematurely, and secondarily, the payment of the interest of the earnings of the Travel and Reserved Fund; interest on all the unpaid benefits; area wage and salary differential pay; fringe benefits; reimbursement of SSS and premium not remitted to the SSS; refund of withholding tax not remitted to the BIR; penalties for committing prohibited practices; as well as the suspension of the license of AIBC and the accreditation of BRII
On October 2, 1984, the POEA Administrator denied the “Motion to Strike Out of the Records” filed by AIBC but required the claimants to correct the deficiencies in the complaint pointed out.
AIB and BRII kept on filing Motion for Extension of Time to file their answer. The POEA kept on granting such motions.
On November 14, 1984, claimants filed an opposition to the motions for extension of time and asked that AIBC and BRII declared in default for failure to file their answers.
On December 27, 1984, the POEA Administrator issued an order directing AIBC and BRII to file their answers within ten days from receipt of the order.
(at madami pang motions ang na-file, new complainants joined the case, ang daming inavail na remedies ng both parties)
On June 19, 1987, AIBC finally submitted its answer to the complaint. At the same hearing, the parties were given a period of 15 days from said date within which to submit their respective position papers. On February 24, 1988, AIBC and BRII submitted position paper. On October 27, 1988, AIBC and BRII filed a “Consolidated Reply,” POEA Adminitartor rendered his decision which awarded the amount of $824, 652.44 in favor of only 324 complainants. Claimants submitted their “Appeal Memorandum For Partial Appeal” from the decision of the POEA. AIBC also filed its MR and/or appeal in addition to the “Notice of Appeal” filed earlier.
NLRC promulgated its Resolution, modifying the decision of the POEA. The resolution removed some of the benefits awarded in favor of the claimants. NLRC denied all the MRs. Hence, these petitions filed by the claimants and by AlBC and BRII.
The case rooted from the Labor Law enacted by Bahrain where most of the complainants were deployed. His Majesty Ise Bin Selman Al Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on June 16, 1176, otherwise known re the Labour Law for the Private Sector. Some of the provision of Amiri Decree No. 23 that are relevant to the claims of the complainants-appellants are as follows:
“Art. 79: x x x A worker shall receive payment for each extra hour equivalent to his wage entitlement increased by a minimum of twenty-rive per centurn thereof for hours worked during the day; and by a minimum off fifty per centurn thereof for hours worked during the night which shall be deemed to being from seven o’clock in the evening until seven o’clock in the morning .”
Art. 80: Friday shall be deemed to be a weekly day of rest on full pay.
If employee worked, 150% of his normal wage shall be paid to him x x x.”
Art. 81; x x x When conditions of work require the worker to work on any official holiday, he shall be paid an additional sum equivalent to 150% of his normal wage.”
Art. 84: Every worker who has completed one year’s continuous service with his employer shall be entitled to Laos on full pay for a period of not less than 21 days for each year increased to a period not less than 28 days after five continuous years of service.”
A worker shall be entitled to such leave upon a quantum meruit in respect of the proportion of his service in that year.”
Art. 107: A contract of employment made for a period of indefinite duration may be terminated by either party thereto after giving the other party prior notice before such termination, in writing, in respect of monthly paid workers and fifteen days’ notice in respect of other workers. The party terminating a contract without the required notice shall pay to the other party compensation equivalent to the amount of wages payable to the worker for the period of such notice or the unexpired portion thereof.”
Art. Ill: x x x the employer concerned shall pay to such worker, upon termination of employment, a leaving indemnity for the period of his employment calculated on the basis of fifteen days’ wages for each year of the first three years of service and of one month’s wages for each year of service thereafter. Such worker shall be entitled to payment of leaving indemnity upon a quantum meruit in proportion to the period of his service completed within a year.”
ISSUE:
1. WON the foreign law should govern or the contract of the parties.(WON the complainants who have worked in Bahrain are entitled to the above-mentioned benefits provided by Amiri Decree No. 23 of Bahrain).
2. WON the Bahrain Law should apply in the case. (Assuming it is applicable WON complainants’ claim for the benefits provided therein have prescribed.)
3. Whether or not the instant cases qualify as; a class suit (siningit ko nalang)
(the rest of the issues in the full text of the case refer to Labor Law)
RULING:
1. NLRC set aside Section 1, Rule 129 of the 1989 Revised Rules on Evidence governing the pleading and proof of a foreign law and admitted in evidence a simple copy of the Bahrain’s Amiri Decree No. 23 of 1976 (Labour Law for the Private Sector).
NLRC applied the Amiri Deere, No. 23 of 1976, which provides for greater benefits than those stipulated in the overseas-employment contracts of the claimants. It was of the belief that where the laws of the host country are more favorable and beneficial to the workers, then the laws of the host country shall form part of the overseas employment contract. It approved the observation of the POEA Administrator that in labor proceedings, all doubts in the implementation of the provisions of the Labor Code and its implementing regulations shall be resolved in favor of labor.
The overseas-employment contracts, which were prepared by AIBC and BRII themselves, provided that the laws of the host country became applicable to said contracts if they offer terms and conditions more favorable than those stipulated therein. However there was a part of the employment contract which provides that the compensation of the employee may be “adjusted downward so that the total computation plus the non-waivable benefits shall be equivalent to the compensation” therein agree,’ another part of the same provision categorically states “that total remuneration and benefits do not fall below that of the host country regulation and custom.”
Any ambiguity in the overseas-employment contracts should be interpreted against AIBC and BRII, the parties that drafted it. Article 1377 of the Civil Code of the Philippines provides:
‘The interpretation of obscure words or stipulations in a contract shall not favor the party who caused the obscurity.”
Said rule of interpretation is applicable to contracts of adhesion where there is already a prepared form containing the stipulations of the employment contract and the employees merely “take it or leave it.” The presumption is that there was an imposition by one party against the other and that the employees signed the contracts out of necessity that reduced their bargaining power.
We read the overseas employment contracts in question as adopting the provisions of the Amiri Decree No. 23 of 1976 as part and parcel thereof. The parties to a contract may select the law by which it is to be governed. In such a case, the foreign law is adopted as a “system” to regulate the relations of the parties, including questions of their capacity to enter into the contract, the formalities to be observed by them, matters of performance, and so forth. Instead of adopting the entire mass of the foreign law, the parties may just agree that specific provisions of a foreign statute shall be deemed incorporated into their contract “as a set of terms.” By such reference to the provisions of the foreign law, the contract does not become a foreign contract to be governed by the foreign law. The said law does not operate as a statute but as a set of contractual terms deemed written in the contract.
A basic policy of contract is to protect the expectation of the parties. Such party expectation is protected by giving effect to the parties’ own choice of the applicable law. The choice of law must, however, bear some relationship the parties or their transaction. There is no question that the contracts sought to be enforced by claimants have a direct connection with the Bahrain law because the services were rendered in that country.
2. NLRC ruled that the prescriptive period for the filing of the claims of the complainants was 3 years, as provided in Article 291 of the Labor Code of the Philippines, and not ten years as provided in Article 1144 of the Civil Code of the Philippines nor one year as provided in the Amiri Decree No. 23 of 1976.
Article 156 of the Amiri Decree No. 23 of 1976 provides:
“A claim arising out of a contract of employment shall not actionable after the lapse of one year from the date of the expiry of the Contract”.
As a general rule, a foreign procedural law will not be applied in the forum (local court), Procedural matters, such as service of process, joinder of actions, period and requisites for appeal, and so forth, are governed by the laws of the forum. This is true even if the action is based upon a foreign substantive law.
A law on prescription of actions is sui generis in Conflict of Laws in the sense that it may be viewed either as procedural or substantive, depending on the characterization given such a law. In Bournias v. Atlantic Maritime Company (220 F. 2d. 152, 2d Cir. [1955]), where the issue was the applicability of the Panama Labor Code in a case filed in the State of New York for claims arising from said Code, the claims would have prescribed under the Panamanian Law but not under the Statute of Limitations of New York. The U.S. Circuit Court of Appeals held that the Panamanian Law was procedural as it was not “specifically intended to be substantive,” hence, the prescriptive period provided in the law of the forum should apply. The Court observed: “. . . we are dealing with a statute of limitations of a foreign country, and it is not clear on the face of the statute that its purpose was to limit the enforceability, outside as well as within the foreign country concerned, of the substantive rights to which the statute pertains. We think that as a yardstick for determining whether that was the purpose, this test is the most satisfactory one.
The Court further noted: “Applying that test here it appears to us that the libellant is entitled to succeed, for the respondents have failed to satisfy us that the Panamanian period of limitation in question was specifically aimed against the particular rights which the libellant seeks to enforce. The Panama Labor Code is a statute having broad objectives.” The American court applied the statute of limitations of New York, instead of the Panamanian law, after finding that there was no showing that the Panamanian law on prescription was intended to be substantive. Being considered merely a procedural law even in Panama, it has to give way to the law of the forum (local Court) on prescription of actions.
However the characterization of a statute into a procedural or substantive law becomes irrelevant when the country of the forum (local Court) has a “borrowing statute.” Said statute has the practical effect of treating the foreign statute of limitation as one of substance. A “borrowing statute” directs the state of the forum (local Court) to apply the foreign statute of limitations to the pending claims based on a foreign law. While there are several kinds of “borrowing statutes,” one form provides that an action barred by the laws of the place where it accrued will not be enforced in the forum even though the local statute was not run against it.
Section 48 of Code of Civil Procedure is of this kind. It provides: “If by the laws of the state or country where the cause of action arose, the action is barred, it is also barred in the Philippine Islands.”
Section 48 has not been repealed or amended by the Civil Code of the Philippines. In the light of the 1987 Constitution, however, Section 48 cannot be enforced ex proprio vigore insofar as it ordains the application in this jurisdiction of Section 156 of the Amiri Decree No. 23 of 1976.
The courts of the forum (local Court) will not enforce any foreign claim obnoxious to the forum’s public policy. To enforce the one-year prescriptive period of the Amiri Decree No. 23 of 1976 as regards the claims in question would contravene the public policy on the protection to labor.
In the Declaration of Principles and State Policies, the 1987 Constitution emphasized that:“The state shall promote social justice in all phases of national development” (Sec. 10).
‘The state affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare” (Sec. 18).
In Article XIII on Social Justice and Human Rights, the 1987 Constitution provides:
“Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all.”
Thus, the applicable law on prescription is the Philippine law.
The next question is whether the prescriptive period governing the filing of the claims is 3 years, as provided by the Labor Code or 10 years, as provided by the Civil Code of the Philippines.
Article 1144 of the Civil Code of the Philippines provides:
“The following actions must be brought within ten years from the time the right of action accross:
(1) Upon a written contract; (2) Upon an obligation created by law; (3) Upon a judgment”
In this case, the claim for pay differentials is primarily anchored on the written contracts between the litigants, the ten-year prescriptive period provided by Art. 1144(l) of the New Civil Code should govern.
3. NO. A class suit is proper where the subject matter of the controversy is one of common or general interest to many and the parties are so numerous that it is impracticable to bring them all before the court. When all the claims are for benefits granted under the Bahrain law many of the claimants worked outside Bahrain. Some of the claimants were deployed in Indonesia under different terms and condition of employment.
Inasmuch as the First requirement of a class suit is not present (common or general interest based on the Amiri Decree of the State of Bahrain), it is only logical that only those who worked in Bahrain shall be entitled to rile their claims in a class suit.
While there are common defendants (AIBC and BRII) and the nature of the claims is the same (for employee’s benefits), there is no common question of law or fact. While some claims are based on the Amiri Law of Bahrain, many of the claimants never worked in that country, but were deployed elsewhere. Thus, each claimant is interested only in his own demand and not in the claims of the other employees of defendants. A claimant has no concern in protecting the interests of the other claimants as shown by the fact, that hundreds of them have abandoned their co-claimants and have entered into separate compromise settlements of their respective claims. The claimants who worked in Bahrain can not be allowed to sue in a class suit in a judicial proceeding.
WHEREFORE, all the three petitioners are DISMISSED.
M/S BREMEN AND UNTERWESER REEDEREI, GMBH v. ZAPATA OFF-SHORE COMPANY 407 U.S. 1 (1972) FACTS: The Bremen (BREMEN), a German towing corporation, contracted to transport a self-elevating drilling rig from Louisiana to Ravenna, Italy – in the Adriatic Sea, for Zapata Off-Shore Co. (ZAPATA), a Houston-based American Corporation. Their towing agreement included a forum-selection clause (FSC) providing for the “litigation of any dispute in the High Court Justice in London (English tribunal).” When suddenly, a storm forced Bremen to make land in the nearest port of refuge which is in Tampa, Florida and since the rig under tow was damaged, Zapata sued there, ignoring the forum clause. The Bremen responded by invoking the forum clause and moved to dismiss for lack of jurisdiction or on forum non conveniens grounds. In the meantime, Bremen was faced with a dilemma in the pending action in the United States court at Tampa. The six-month period for filing action to limit its liability to Zapata and other potential claimants was about to expire, but the United States District Court in Tampa (DISTRICT COURT) had not yet ruled on Bremen’s motion to dismiss or stay Zapata’s action after the sixmonth period for filing the limitation action had run, that the District Court denied Bremen’s motion to dismiss or stay Zapata’s initial action. The US District Court in Tampa, relying on the Carbon Black Export, disregarded the FSC saying that it is unenforceable and instead conducted a forum non conveniens analysis. The Court of Appeals affirmed the District Court’s use of a forum non conveniens analysis and also held that the said forum-selection clause is unenforceable, reiterating the traditional view of many American courts that ‘agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced.’ It even ruled that unless the selected state or forum named in the FSC would provide a more convenient forum than the state in which suit is brought, the FSC will not be enforced. ISSUE: WON the forum-selection clause in the towing contract of The Bremen and Zapata is enforceable and binding among the parties. RULING: YES. The forum-selection clause, which was a vital part of the towing contract, is enforceable and binding on the parties unless the party seeking to avoid it can meet the heavy burden of showing that its enforcement would be unreasonable, unfair, or unjust. The Supreme Court reversed the decision of the Court of Appeals. It stated that absent an FSC, a forum non conveniens analysis would be appropriate, but that in times of expanding world trade and commerce, judicial hostility towards FSCs is outdated. Continued judicial hostility towards FSCs, the Court explained, would have the opposite effect on the much desired expansion of American business and industry. Thus, the Supreme Court asserted a new attitude towards choice clauses, by reasoning that Americans simply could not continue to force their laws into the forefront of international commerce and trade agreements by giving their courts control over every conflict in international trade and commerce in which a U.S. party is involved. In addition to ending the hostility towards FSCs, the Court developed a new analytical framework in the area of international contracts, abandoning the traditional forum non conveniens analysis used in domestic contract cases. Supreme Court asserted a new attitude towards choice clauses, by reasoning that Americans simply could not continue to force their laws into the forefront of international commerce and trade agreements by giving their courts control over every conflict in international trade and commerce in which a U.S. party is involved. In addition to ending the hostility towards FSCs, the Court developed a new analytical framework in the area of international contracts, abandoning the traditional forum non conveniens analysis used in domestic contract cases. Despite the Supreme Court’s support for FSCs, the Court in The Bremen held that several circumstances would allow a court to disregard an FSC. These exceptions or defenses can be roughly characterized as: (1) unreasonableness, (2) fraud, (3) undue influence or overweening bargaining power,(4) the traditional exceptions for voiding any contract, and (5) public policy An FSC is not binding if a party can prove that enforcement would be unreasonable or unjust. Mere inconvenience or additional expense is not the test of unreasonableness since it may be assumed that the parties received benefits under the contract in exchange for these potential problems. Therefore, unless serious unexpected inconvenience is present, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold a party to his bargain.
RUSH v. SAVCHUK, (1980)
No. 78-952
Argued: October 3, 1979 Decided: January 21, 1980
While a resident of Indiana, appellee was injured in an accident in Indiana while riding as a passenger in a car driven by appellant Rush, also an Indiana resident. After moving to Minnesota, appellee commenced this action against Rush in a Minnesota state court, alleging negligence and seeking damages. As Rush had no contacts with Minnesota that would support in personam jurisdiction, appellee attempted to obtain quasi in rem jurisdiction by garnishing the contractual obligation of State Farm Mutual Automobile Insurance Co. (State Farm) to defend and indemnify Rush in connection with such a suit. State Farm, which does business in Minnesota, had insured the car, owned by Rush’s father, under a liability insurance policy issued in Indiana. Rush was personally served in Indiana, and after State Farm’s response to the garnishment summons asserted that it owed the defendant nothing, appellee moved the trial court for permission to file a supplemental complaint making the garnishee, State Farm, a party to the action. Rush and State Farm moved to dismiss the complaint for lack of jurisdiction over the defendant. The trial court denied the motion to dismiss and granted the motion for leave to file the supplemental complaint. The Minnesota Supreme Court affirmed, ultimately holding that the assertion of quasi in rem jurisdiction under the Minnesota garnishment statute complied with the due process standards enunciated in Shaffer v. Heitner, 433 U.S. 186 .
Held:
A State may not constitutionally exercise quasi in rem jurisdiction over a defendant who has no forum contacts by attaching the contractual obligation of an insurer licensed to do business in the State to defend and indemnify him in connection with the suit. Pp. 327-333.
(a) A State may exercise jurisdiction over an absent defendant only if the defendant has certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310 . In determining whether a particular exercise of state-court jurisdiction is consistent with due process, the inquiry must focus on “the relationship among the defendant, the forum, and the litigation.” Shaffer v. Heitner, supra, at 204 P. 327.
(b) Here, the only affiliating circumstance offered to show a relationship among Rush, Minnesota, and this lawsuit is that Rush’s insurance [444 U.S. 320, 321] company does business in the State. However, the fictional presence in Minnesota of State Farm’s policy obligation to defend and indemnify Rush – derived from combining the legal fiction that assigns a situs to a debt, for garnishment purposes, wherever the debtor is found with the legal fiction that a corporation is “present,” for jurisdictional purposes, wherever it does business – cannot be deemed to give the State the power to determine Rush’s liability for the out-of-state accident. The mere presence of property in a State does not establish a sufficient relationship between the owner of the property and the State to support the exercise of jurisdiction over an unrelated cause of action, and it cannot be said that the defendant engaged in any purposeful activity related to the forum that would make the exercise of jurisdiction fair, just, or reasonable merely because his insurer does business there. Nor does the policy provide significant contacts between the litigation and the forum, for the policy obligations pertain only to the conduct, not the substance, of the litigation. Pp. 327-330.
(c) Moreover, the requisite minimum contacts with the forum cannot be established under an alternative approach attributing the insurer’s forum contacts to the defendant by treating the attachment procedure as the functional equivalent of a direct action against the insurer, and considering the insured a “nominal defendant” in order to obtain jurisdiction over the insurer. The State’s ability to exert its power over the “nominal defendant” is analytically prerequisite to the insurer’s entry into the case as a garnishee, and if the Constitution forbids the assertion of jurisdiction over the insured based on the policy, then there is no conceptual basis for bringing the “garnishee” into the action. Nor may the Minnesota court attribute State Farm’s contacts to Rush by considering the “defending parties” together and aggregating their forum contacts in determining whether it has jurisdiction. The parties’ relationships with each other may be significant in evaluating their ties to the forum, but the requirements of International Shoe must be met as to each defendant over whom a state court exercises jurisdiction. Pp. 330-332.
272 N. W. 2d 888, reversed.
MARSHALL, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, WHITE, BLACKMUN, POWELL, and REHNQUIST, JJ., joined. BRENNAN, J., ante, p. 299, and STEVENS, J., post, p. 333, filed dissenting opinions.
O. C. Adamson II argued the cause for appellants. With him on the briefs was James F. Roegge. [444 U.S. 320, 322]
Edward H. Borkon argued the cause and filed a brief for appellee.
MR. JUSTICE MARSHALL delivered the opinion of the Court.
This appeal presents the question whether a State may constitutionally exercise quasi in rem jurisdiction over a defendant who has no forum contacts by attaching the contractual obligation of an insurer licensed to do business in the State to defend and indemnify him in connection with the suit.
I
On January 13, 1972, two Indiana residents were involved in a single-car accident in Elkhart, Ind. Appellee Savchuk, who was a passenger in the car driven by appellant Rush, was injured. The car, owned by Rush’s father, was insured by appellant State Farm Mutual Automobile Insurance Co. (State Farm) under a liability insurance policy issued in Indiana. Indiana’s guest statute would have barred a claim by Savchuk. Ind. Code 9-3-3-1 (1976).
Savchuk moved with his parents to Minnesota in June 1973. 1 On May 28, 1974, he commenced an action against Rush in the Minnesota state courts. 2 As Rush had no contacts with Minnesota that would support in personam jurisdiction, Savchuk attempted to obtain quasi in rem jurisdiction by garnishing State Farm’s obligation under the insurance policy to defend and indemnify Rush in connection with such a suit. 3 State Farm does business in Minnesota. 4 Rush was [444 U.S. 320, 323] personally served in Indiana. The complaint alleged negligence and sought $125,000 in damages. 5
As provided by the state garnishment statute, Savchuk moved the trial court for permission to file a supplemental complaint making the garnishee, State Farm, a party to the action after State Farm’s response to the garnishment summons asserted that it owed the defendant nothing. 6 Rush and State [444 U.S. 320, 324] Farm moved to dismiss the complaint for lack of jurisdiction over the defendant. 7 The trial court denied the motion to dismiss and granted the motion for leave to file the supplemental complaint.
On appeal, the Minnesota Supreme Court affirmed the trial court’s decision. 311 Minn. 480, 245 N. W. 2d 624 (1976) (Savchuk I). It held, first, that the obligation of an insurance company to defend and indemnify a nonresident insured under an automobile liability insurance policy is a garnishable res in Minnesota for the purpose of obtaining quasi in rem jurisdiction when the incident giving rise to the action occurs outside Minnesota but the plaintiff is a Minnesota resident when the suit is filed. Second, the court held that the assertion of jurisdiction over Rush was constitutional because he had notice of the suit and an opportunity to defend, his liability was limited to the amount of the policy, and the garnishment procedure may be used only by Minnesota residents. The court expressly recognized that Rush had engaged in no voluntary activity that would justify the exercise of in personam jurisdiction. The court found, however, that considerations of fairness supported the exercise of quasi in rem jurisdiction because in accident litigation the insurer controls the defense of the case, State Farm does business in and is regulated by the State, and the State has an interest in protecting its residents and providing them with a forum in which to litigate their claims.
Rush appealed to this Court. We vacated the judgment and remanded the cause for further consideration in light of [444 U.S. 320, 325] Shaffer v. Heitner, 433 U.S. 186 (1977). 433 U.S. 902 (1977).
On remand, the Minnesota Supreme Court held that the assertion of quasi in rem jurisdiction through garnishment of an insurer’s obligation to an insured complied with the due process standards enunciated in Shaffer. 272 N. W. 2d 888 (1978) (Savchuk II). The court found that the garnishment statute differed from the Delaware stock sequestration procedure held unconstitutional in Shaffer because the garnished property was intimately related to the litigation and the garnishment procedure paralleled the asserted state interest in “facilitating recoveries for resident plaintiffs.” 272 N. W. 2d, at 891. 8 This appeal followed.
II
The Minnesota Supreme Court held that the Minnesota garnishment statute embodies the rule stated in Seider v. Roth, 17 N. Y. 2d 111, 216 N. E. 2d 312 (1966), that the contractual obligation of an insurance company to its insured under a liability insurance policy is a debt subject to attachment under state law if the insurer does business in the State. 9 Seider jurisdiction was upheld against a due process challenge in Simpson v. Loehmann, 21 N. Y. 2d 305, 234 N. E. 2d 669 (1967), reargument denied, 21 N. Y. 2d 990, 238 N. E. 2d 319 (1968). The New York court relied on Harris v. Balk, 198 U.S. 215 (1905), in holding that the presence of the debt [444 U.S. 320, 326] in the State was sufficient to permit quasi in rem jurisdiction over the absent defendant. The court also concluded that the exercise of jurisdiction was permissible under the Due Process Clause because, “[v]iewed realistically, the insurer in a case such as the present is in full control of the litigation” and “where the plaintiff is a resident of the forum state and the insurer is present in and regulated by it, the State has a substantial and continuing relation with the controversy.” Simpson v. Loehmann, supra, at 311, 234 N. E. 2d, at 672.
The United States Court of Appeals for the Second Circuit gave its approval to Seider in Minichiello v. Rosenberg, 410 F.2d 106, adhered to en banc, 410 F.2d 117 (1968), cert. denied, 396 U.S. 844 (1969), although on a slightly different rationale. Judge Friendly construed Seider as “in effect a judicially created direct action statute. The insurer doing business in New York is considered the real party in interest and the nonresident insured is viewed simply as a conduit, who has to be named as a defendant in order to provide a conceptual basis for getting at the insurer.” 410 F.2d, at 109; see Donawitz v. Danek, 42 N. Y. 2d 138, 142, 366 N. E. 2d 253, 255 (1977). The court held that New York could constitutionally enact a direct action statute, and that the restriction of liability to the amount of the policy coverage made the policyholder’s personal stake in the litigation so slight that the exercise of jurisdiction did not offend due process.
New York has continued to adhere to Seider. 10 New Hampshire has followed Seider if the defendant resides in a Seider jurisdiction, 11 but not in other cases. 12 Minnesota is the only [444 U.S. 320, 327] other State that has adopted Seider-type jurisdiction. 13 The Second Circuit recently reaffirmed its conclusion that Seider does not violate due process after reconsidering the doctrine in light of Shaffer v. Heitner. O’Conner v. Lee-Hy Paving Corp., 579 F.2d 194, cert. denied, 439 U.S. 1034 (1978).
III
In Shaffer v. Heitner we held that “all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.” 433 U.S., at 212 . That is, a State may exercise jurisdiction over an absent defendant only if the defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In determining whether a particular exercise of state-court jurisdiction is consistent with due process, the inquiry must focus on “the relationship among the defendant, the forum, and the litigation.” Shaffer v. Heitner, supra, at 204.
It is conceded that Rush has never had any contacts with Minnesota, and that the auto accident that is the subject of [444 U.S. 320, 328] this action occurred in Indiana and also had no connection to Minnesota. The only affiliating circumstance offered to show a relationship among Rush, Minnesota, and this lawsuit is that Rush’s insurance company does business in the State. Seider constructed an ingenious jurisdictional theory to permit a State to command a defendant to appear in its courts on the basis of this factor alone. State Farm’s contractual obligation to defend and indemnify Rush in connection with liability claims is treated as a debt owed by State Farm to Rush. The legal fiction that assigns a situs to a debt, for garnishment purposes, wherever the debtor is found is combined with the legal fiction that a corporation is “present,” for jurisdictional purposes, wherever it does business to yield the conclusion that the obligation to defend and indemnify is located in the forum for purposes of the garnishment statute. The fictional presence of the policy obligation is deemed to give the State the power to determine the policy-holder’s liability for the out-of-state accident. 14
We held in Shaffer that the mere presence of property in a State does not establish a sufficient relationship between the owner of the property and the State to support the exercise of jurisdiction over an unrelated cause of action. The ownership of property in the State is a contact between the defendant and the forum, and it may suggest the presence of other ties. 433 U.S., at 209 . Jurisdiction is lacking, however, unless there are sufficient contacts to satisfy the fairness standard of International Shoe.
Here, the fact that the defendant’s insurer does business in the forum State suggests no further contacts between the defendant and the forum, and the record supplies no evidence of any. State Farm’s decision to do business in Minnesota [444 U.S. 320, 329] was completely adventitious as far as Rush was concerned. He had no control over that decision, and it is unlikely that he would have expected that by buying insurance in Indiana he had subjected himself to suit in any State to which a potential future plaintiff might decide to move. In short, it cannot be said that the defendant engaged in any purposeful activity related to the forum that would make the exercise of jurisdiction fair, just, or reasonable, see Kulko v. California Superior Court, 436 U.S. 84, 93 -94 (1978); Hanson v. Denckla, 357 U.S. 235, 253 (1958), merely because his insurer does business there.
Nor are there significant contacts between the litigation and the forum. The Minnesota Supreme Court was of the view that the insurance policy was so important to the litigation that it provided contacts sufficient to satisfy due process. 15 The insurance policy is not the subject matter of the case, however, nor is it related to the operative facts of the negligence action. The contractual arrangements between the defendant and the insurer pertain only to the conduct, not the substance, of the litigation, and accordingly do not affect the court’s jurisdiction unless they demonstrate ties between the defendant and the forum.
In fact, the fictitious presence of the insurer’s obligation in Minnesota does not, without more, provide a basis for concluding that there is any contact in the International Shoe sense [444 U.S. 320, 330] between Minnesota and the insured. To say that “a debt follows the debtor” is simply to say that intangible property has no actual situs, and a debt may be sued on wherever there is jurisdiction over the debtor. State Farm is “found,” in the sense of doing business, in all 50 States and the District of Columbia. Under appellee’s theory, the “debt” owed to Rush would be “present” in each of those jurisdictions simultaneously. It is apparent that such a “contact” can have no jurisdictional significance.
An alternative approach for finding minimum contacts in Seider-type cases, referred to with approval by the Minnesota Supreme Court, 16 is to attribute the insurer’s forum contacts to the defendant by treating the attachment procedure as the functional equivalent of a direct action against the insurer. This approach views Seider jurisdiction as fair both to the insurer, whose forum contacts would support in personam jurisdiction even for an unrelated cause of action, and to the “nominal defendant.” Because liability is limited to the policy amount, the defendant incurs no personal liability, 17 and the judgment is satisfied from the policy proceeds which are not available to the insured for any purpose other than paying accident claims, the insured is said to have such a slight stake in the litigation as a practical matter that it is not unfair to make him a “nominal defendant” in order to obtain jurisdiction over the insurance company.
Seider actions are not equivalent to direct actions, however. 18 The State’s ability to exert its power over the “nominal [444 U.S. 320, 331] defendant” is analytically prerequisite to the insurer’s entry into the case as a garnishee. If the Constitution forbids the assertion of jurisdiction over the insured based on the policy, then there is no conceptual basis for bringing the “garnishee” into the action. Because the party with forum contacts can only be reached through the out-of-state party, the question of jurisdiction over the nonresident cannot be ignored. 19 Moreover, the assumption that the defendant has no real stake in the litigation is far from self-evident. 20
The Minnesota court also attempted to attribute State Farm’s contacts to Rush by considering the “defending parties” together and aggregating their forum contacts in determining whether it had jurisdiction. 21 The result was the [444 U.S. 320, 332] assertion of jurisdiction over Rush based solely on the activities of State Farm. Such a result is plainly unconstitutional. Naturally, the parties’ relationships with each other may be significant in evaluating their ties to the forum. The requirements of International Shoe, however, must be met as to each defendant over whom a state court exercises jurisdiction.
The justifications offered in support of Seider jurisdiction share a common characteristic: they shift the focus of the inquiry from the relationship among the defendant, the forum, and the litigation to that among the plaintiff, the forum, the insurer, and the litigation. The insurer’s contacts with the forum are attributed to the defendant because the policy was taken out in anticipation of such litigation. The State’s interests in providing a forum for its residents and in regulating the activities of insurance companies are substituted for its contacts with the defendant and the cause of action. This subtle shift in focus from the defendant to the plaintiff is most evident in the decisions limiting Seider jurisdiction to actions by forum residents on the ground that permitting nonresidents to avail themselves of the procedure would be unconstitutional. 22 In other words, the plaintiff’s contacts with the forum are decisive in determining whether the defendant’s due process rights are violated.
Such an approach is forbidden by International Shoe and its progeny. If a defendant has certain judicially cognizable ties with a State, a variety of factors relating to the particular cause of action may be relevant to the determination whether the exercise of jurisdiction would comport with “traditional notions of fair play and substantial justice.” See McGee v. International Life Ins. Co., 355 U.S. 220 (1957); cf. Kulko v. California Superior Court, 436 U.S., at 98 -101. Here, however, the defendant has no contacts with the forum, and the[444 U.S. 320, 333] Due Process Clause “does not contemplate that a state may make binding a judgment . . . against an individual or corporate defendant with which the state has no contacts, ties, or relations.” International Shoe Co. v. Washington, 326 U.S., at 319 . The judgment of the Minnesota Supreme Court is, therefore,
Reversed.
[For dissenting opinion of MR. JUSTICE BRENNAN, see ante, p. 299.]
Footnotes
[ Footnote 1 ] Savchuk moved to Pennsylvania after this appeal was filed.
[ Footnote 2 ] The suit was filed after the 2-year Indiana statute of limitations had run. 272 N. W. 2d 888, 891, n. 5 (1978).
[ Footnote 3 ] Minnesota Stat. 571.41, subd. 2 (1978), provides in relevant part:
“Notwithstanding anything to the contrary herein contained, a plaintiff in [444 U.S. 320, 323] any action in a court of record for the recovery of money may issue a garnishee summons before judgment therein in the following instances only:
. . . . .
“(b) If the court shall order the issuance of such summons, if a summons and complaint is filed with the appropriate court and either served on the defendant or delivered to a sheriff for service on the defendant not more than 30 days after the order is signed, and if, upon application to the court it shall appear that:
. . . . .
“(2) The purpose of the garnishment is to establish quasi in rem jurisdiction and that
. . . . .
“(b) defendant is a nonresident individual, or a foreign corporation, partnership or association.
“(3) The garnishee and the debtor are parties to a contract of suretyship, guarantee, or insurance, because of which the garnishee may be held to respond to any person for the claim asserted against the debtor in the main action.”
The Minnesota Supreme Court cited this version of the statute, enacted in 1976, in its opinion in 272 N. W. 2d 888 (1978) (Savchuk II). The version of the statute that was in effect at the time of the original opinion, 311 Minn. 480, 245 N. W. 2d 624 (1976) (Savchuk I), does not differ in any important respect.
[ Footnote 4 ] State Farm is an Illinois corporation that does business in all 50 States, the District of Columbia, and several Canadian Provinces. The Insurance Almanac 431-432 (1977).
[ Footnote 5 ] The prayer was later reduced voluntarily to $50,000, the face amount of the policy.
[ Footnote 6 ] Minnesota Stat. 571.495 (1978) requires the garnishee to disclose the amount of his debt to the defendant. Section 571.51 provides in relevant part:
“[I]n all . . . cases where the garnishee denies liability, the judgment creditor may move the court at any time before the garnishee is discharged, [444 U.S. 320, 324] on notice to both the judgment debtor and the garnishee, for leave to file a supplemental complaint making the latter a party to the action, and setting forth the facts upon which he claims to charge him; and, if probable cause is shown, such motion shall be granted. . . .” Minn. Stat. 571.51 (1978).
The party-garnishee is not a defendant.
[ Footnote 7 ] The motion to dismiss also alleged lack of subject-matter jurisdiction, insufficiency of process, and insufficiency of service of process.
[ Footnote 8 ] Minnesota would apply its own comparative negligence law, rather than Indiana’s contributory negligence rule. See Schwartz v. Consolidated Freightways Corp., 300 Minn. 487, 221 N. W. 2d 665 (1974). Appellants assert that Minnesota would also decline to apply the Indiana guest statute if this case were tried in Minnesota. Juris. Statement 10, n. 2; cf. Savchuk II, supra, at 891-892. The constitutionality of a choice-of-law rule that would apply forum law in these circumstances is not before us. Cf. Home Ins. Co. v. Dick, 281 U.S. 397 (1930).
[ Footnote 9 ] 272 N. W. 2d., at 891.
[ Footnote 10 ] Baden v. Staples, 45 N. Y. 2d 889, 383 N. E. 2d 110 (1978). The State has declined, however, to make the attachment procedure available to nonresident plaintiffs. Donawitz v. Danek, 42 N. Y. 2d 138, 366 N. E. 2d 253 (1977).
[ Footnote 11 ] Forbes v. Boynton, 113 N. H. 617, 313 A. 2d 129 (1973). But cf. Rocca v. Kenney, 117 N. H. 1057, 381 A. 2d 330 (1977).
[ Footnote 12 ] Camire v. Scieszka, 116 N. H. 281, 358 A. 2d 397 (1976).
[ Footnote 13 ] The practice has been rejected, based on state law or constitutional grounds, in Belcher v. Government Employees Ins. Co., 282 Md. 718, 387 A. 2d 770 (1978); Javorek v. Superior Court, 17 Cal. 3d 629, 552 P.2d 728 (1976); Hart v. Cote, 145 N. J. Super. 420, 367 A. 2d 1219 (Law Div. 1976); Grinnell v. Garrett, 295 So.2d 496 (La. App. 1974); Johnson v. Farmers Alliance Mutual Ins. Co., 499 P.2d 1387 (Okla. 1972); State ex rel. Government Employees Ins. Co. v. Lasky, 454 S. W. 2d 942 (Mo. App. 1970); Howard v. Allen, 254 S. C. 455, 176 S. E. 2d 127 (1970); De Rentiis v. Lewis, 106 R. I. 240, 258 A. 2d 464 (1969); Housley v. Anaconda Co., 19 Utah 2d 124, 427 P.2d 390 (1967); Jardine v. Donnelly, 413 Pa. 474, 198 A. 2d 513 (1964). See also Tessier v. State Farm Mutual Ins. Co., 458 F.2d 1299 (CA1 1972); Kirchman v. Mikula, 443 F.2d 816 (CA5 1971); Robinson v. O. F. Shearer & Sons, 429 F.2d 83 (CA3 1970); Sykes v. Beal, 392 F. Supp. 1089 (Conn. 1975); Ricker v. Lajoie, 314 F. Supp. 401 (Vt. 1970).
[ Footnote 14 ] The conclusion that State Farm’s obligation under the insurance policy was garnishable property is a matter of state law and therefore is not before us. Assuming that it was garnishable property, the question is what significance that fact has to the relationship among the defendant, the forum, and the litigation.
[ Footnote 15 ] The court explained: “In the instant case, the insurer’s obligation to defend and indemnify, while theoretically separable from the tort action, has no independent value or significance apart from accident litigation. In the accident litigation, however, it is inevitably the focus, determining the rights and obligation [sic] of the insurer, the insured, and practically speaking, the victim.” Savchuk II, 272 N. W. 2d, at 892 (emphasis in original). The court considered the “practical relationship between the insurer and the nominal defendant,” ibid., the limitation of liability to the policy amount, and the restriction of the garnishment procedure to resident plaintiffs, and concluded that “the relationship between the defending parties, the litigation, and the forum state,” id., at 893, was sufficient to sustain the exercise of jurisdiction.
[ Footnote 16 ] Id., at 892-893; but see Savchuk I, 311 Minn., at 488, 245 N. W. 2d, at 629.
[ Footnote 17 ] See Savchuk II, 272 N. W. 2d, at 892; Simpson v. Loehmann, 21 N. Y. 2d 990, 991, 238 N. E. 2d 319, 320 (1968).
[ Footnote 18 ] In Savchuk I, the Minnesota Supreme Court rejected Rush’s argument that the garnishment procedure amounted to a direct action, observing: “The defendant, not the insurer, is the party sued. There is nothing in the statute which suggests that the insurer should be named as a defendant.” 311 Minn., at 488, 245 N. W. 2d, at 629. See n. 6, supra.
[ Footnote 19 ] Compare the direct action statute upheld in Watson v. Employers Liability Assurance Corp.,348 U.S. 66 (1954), which was applicable only if the accident or injury occurred in the State or the insured was domiciled there and which permitted the plaintiff to sue the insurer alone, without naming the insured as a defendant. Id., at 68, n. 4.
[ Footnote 20 ] A party does not extinguish his legal interest in a dispute by insuring himself against having to pay an eventual judgment out of his own pocket. Moreover, the purpose of insurance is simply to make the defendant whole for the economic costs of the lawsuit; but noneconomic factors may also be important to the defendant. Professional malpractice actions, for example, question the defendant’s integrity and competence and may affect his professional standing. Cf. Donawitz v. Danek, 42 N. Y. 2d 138, 366 N. E. 2d 253 (1977) (medical malpractice action premised on Seider jurisdiction dismissed because plaintiff was a nonresident). Further, one can easily conceive of cases in which the defendant might have a substantial economic stake in Seider litigation – if, for example, multiple plaintiffs sued in different States for an aggregate amount in excess of the policy limits, or if a successful claim would affect the policyholder’s insurability. For these reasons, the defendant’s interest in the adjudication of his liability cannot reasonably be characterized as de minimis.
[ Footnote 21 ] The court stated: “We view as relevant the relationship between the defending parties, the litigation, and the forum state. It cannot be said that Minnesota lacks such minimally-requisite `contacts, ties or relations’ to those defending parties as to offend the requirements of due process.” Savchuk II, 272 N. W. 2d, at 893 (emphasis added).
[ Footnote 22 ] See, e. g., Farrell v. Piedmont Aviation, Inc., 411 F.2d 812 (CA2 1969); Rintala v. Shoemaker, 362 F. Supp. 1044 (Minn. 1973); Donawitz v. Danek, supra; Savchuk I.
MR. JUSTICE STEVENS, dissenting.
As the Court notes, appellant Rush had no contact with Minnesota that would support personal jurisdiction over him in that State. Ante, at 322. Moreover, Shaffer v. Heitner, 433 U.S. 186 , precludes the assertion of quasi in rem jurisdiction over his property in that forum if the intangible property attached is unrelated to the action. It does not follow, however, that the plaintiff may not obtain quasi in rem jurisdiction over appellant’s insurance policy, since his carrier does business in Minnesota and since it has also specifically contracted in the policy attached to defend the very litigation that plaintiff has instituted in Minnesota.
In this kind of case, the Minnesota statute authorizing jurisdiction is correctly characterized as the “functional equivalent” of a so-called direct-action statute. The impact of the judgment is against the insurer. * I believe such a direct-action statute is valid as applied to a suit brought by a forum resident, see Watson v. Employers Liability Assurance Corp., 348 U.S. 66, 72 , even if the accident giving rise to the action did not occur in the forum State, see Minichiello v. Rosenberg, [444 U.S. 320, 334] 410 F.2d 106 (CA2 1968), cert. denied, 396 U.S. 844 , so long as it is understood that the forum may exercise no power whatsoever over the individual defendant. As so understood, it makes no difference whether the insurance company is sued in its own name or, as Minnesota law provides, in the guise of a suit against the individual defendant.
In this case, although appellant Rush may have a contractual obligation to his insurer to appear in court to testify and generally to cooperate in the defense of the lawsuit, it is my understanding that Minnesota law does not compel him to do so through the contempt power or otherwise. Moreover, any judgment formally entered against the individual defendant may only be executed against the proceeds of his insurance policy. In my opinion, it would violate the Due Process Clause to make any use of such a judgment against that individual – for example, by giving the judgment collateral-estoppel effect in a later action against him arising from the same accident. Accord, Minichiello v. Rosenberg, supra, at 112; Note, The Constitutionality of Seider v. Roth after Shaffer v. Heitner, 78 Colum. L. Rev. 409, 418-419 (1978). But we are not now faced with any problem concerning use of a quasi in rem judgment against an individual defendant personally. I am therefore led to the conclusion that the Federal Constitution does not require the Minnesota courts to dismiss this action.
[ Footnote * ] It seems to me that the possible impact of a default judgment on the reputation of an individual, see ante, at 331, n. 20, who has no contacts whatever with the forum State is far too remote to affect the analysis of the constitutional issue in this case. [444 U.S. 320, 335]
Yamada Corporation, a Japanese corporation, is a manufacturer of pumps, one of which was purchased by CWC Fluids. The pump installed in CWC failed and resulted to the release of acid and caustic solutions causing damage to the CWC.

CWC filed a complaint against Yamada Corporation for damages. Yamada Corp on the other hand tendered the defense to Yasuda Fire Insurance, which rejected the tender.

Yamada filed a complaint for declaratory judgment against Yasuda Fire Insurance, who sought the dismissal on the ground of forum selection clause. Yasuda filed a declaratory judgment action against Yamada in Tokyo Court.

Yamada enjoined Yasuda from proceeding in Japan. Yasuda sought dismissal based on the forum selection clause which states: “It is agreed that coverage disputes arising out of this insurance shall be subject to Japanese law and forum”

Issue: Whether or not the forum selection clause is valid.

Ruling: ANALYSIS
A forum-selection clause in a contract is prima facie valid and should be enforced unless the opposing party shows that enforcement would contravene the strong public policy of the state in which the case is brought (Maher & Associates, Inc. v. Quality Cabinets, 267 Ill. App. 3d 69, 74 (1994)), or that the chosen forum would be so seriously inconvenient for trial that the opposing party would be deprived of his or her day in court. M.S. Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 15, 18, 32 L. Ed. 513, 520, 523, 525, 92 S. Ct. 1907, 1913, 1916, 1917 (1972); Calanca v. D & S Manufacturing Co., 157 Ill. App. 3d 85, 87-88 (1987).
I. MANDATORY FORUM-SELECTION CLAUSE
The first issue is whether the clause is mandatory or permissive. The clause at issue provides that “coverage disputes arising out of this insurance shall be subject to Japanese law and forum.” The word “shall” indicates that Japan is the exclusive forum. See Calanca, 157 Ill. App. 3d at 85 (stating that word “shall” in forum-selection clause means the stated forum is exclusive).
II. INCONVENIENCE
A party to the contract may not successfully argue inconvenience as a reason for rendering a forum-selection clause unenforceable if both parties freely entered into the agreement contemplating such inconvenience should there be a dispute. Maher, 267 Ill. App. 3d at 74-75; see also M.S. Bremen, 407 U.S. at 16-18, 32 L. Ed. at 524-25, 92 S. Ct. at 1916-17; Calanca, 157 Ill. App. 3d at 88. Furthermore, a forum-selection clause made during an arms-length negotiation between experienced and sophisticated businesspeople should be honored and enforced absent some “compelling and countervailing reason” otherwise. Maher, 267 Ill. App. 3d at 75; see also M.S. Bremen, 407 U.S. at 12, 32 L. Ed. at 521, 92 S. Ct. at 1914; Calanca, 157 Ill. App. 3d at 88.
Neither Judge Dunn nor Judge Dixon ruled that plaintiffs would be so seriously inconvenienced that they would be deprived of their day in court if this action proceeded in Japan. Judge Dunn, however, apparently believed that Japan would be inconvenient when he ruled that “[e]nforcement of the forum selection clause would require the plaintiffs to proceed in Japan and under Japanese law which would thereby create enormous inconvenience and expense for the plaintiffs.”
To determine whether a forum-selection clause is unreasonable, this court should consider the following factors: (1) which law governs the formation and construction of the contract; (2) the residency of the parties involved; (3) the place of execution and/or performance of the contract; (4) the location of the parties and witnesses participating in the litigation; (5) the inconvenience to the parties of any particular location; and (6) whether the clause was equally bargained for. Calanca, 157 Ill. App. 3d at 88. By applying these six factors to the present case, it is apparent that plaintiffs did not meet their burden of proving that the forum-selection clause was so seriously unreasonable that they would be deprived of their day in court.
1. Formation and Construction
The policy contains an express choice-of-law provision designating Japanese law as the controlling law. In addition, absent an express choice-of-law provision, insurance policy provisions are generally ” ‘governed by the location of the subject matter, the place of delivery of the contract, the domicile of the insured or of the insurer, the place of the last act to give rise to a valid contract, the place of performance, or other place bearing a rational relationship to the general contract.’ ” Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 526-27 (1995), quoting Hofeld v. Nationwide Life Insurance Co., 59 Ill. 2d 522, 528 (1975).
In the present case, the policy covered air-powered diaphragm pumps distributed around the world. The policy was negotiated, executed, delivered, and paid for in Japan. The insurer, Yasuda Fire, was a Japanese corporation, and Yamada, the named insured, was a Japanese corporation. The policy, however, also covered more than 200 additional insureds around the world. Illinois’ only connection to the policy is the fact that 3 of the more than 200 additional insureds, including Yamada America, were located in Illinois, and the pump at issue in the CWC complaint allegedly failed in Illinois. As a result, we believe that Japanese law should govern the formation and construction of the contract to “obtain a consistent interpretation” of the policies (see Lapham-Hickey, 166 Ill. 2d at 527). A contrary result would open up these policies to possibly hundreds of different views of the law, depending on the site of the risk.
2. Residency
A corporation is a resident of the state or country under whose laws it was organized. LeBlanc v. G.D. Searle & Co., 178 Ill. App. 3d 236, 238 (1988). Consequently, Yamada is a resident of Japan, Yamada America is a resident of Illinois, Yasuda Fire is a resident of Japan, and Yasuda Claims is a resident of California. Again, Illinois’ only tie is through Yamada America, an additional insured under the policy.
3. Execution and Performance
The policy was executed in Japan. Performance, on the other hand, was to occur all over the world.
4. Location of Parties and Witnesses
Two of the parties participating in the litigation are located in Japan, one is located in California, and one is located in Illinois. In addition, no witnesses are necessary.
The entire complaint rests on count I regarding defendants’ duty to defend. Without a duty to defend, there is no duty to indemnify. Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384, 398 (1993). Similarly, without a duty to defend, there can be no breach of contract or violation of the Consumer Fraud Act or section 155 of the Illinois Insurance Code.
To determine whether an insurer has a duty to defend an insured, the court must compare the allegations of the underlying complaint to the policy language, and if the court determines that these allegations fall within or potentially within the policy’s coverage, the insurer has a duty to defend. Cincinnati Cos. v. West American Insurance Co., 183 Ill. 2d 317, 323 (1998). Thus, the determination of the duty to defend in this case is a legal question that requires no witnesses.
5. Inconvenience of Location
Regarding inconvenience, Illinois is inconvenient for Yasuda Fire. Japan, however, is not inconvenient to Yamada, Yasuda Fire, or Yasuda Claims. Additionally, Yamada America’s directors reside in Japan and hold meetings at Yamada’s headquarters in Japan. Moreover, Yamada America was not responsible for purchasing general liability insurance; rather, Yamada purchased the general liability insurance policy on Yamada America’s behalf. Furthermore, the clause provides Yamada with the assurance that its products distributed around the world will be covered under one uniform law leading to certainty, consistency, and convenience.
6. Bargaining Power
There is no evidence in the record that the policy was not equally bargained for. Based on the number of products covered, the complexity of those products, the number of additional insureds, and the location of distributors worldwide, it is safe to presume that Yamada is a sophisticated insured.
Based on the factors enumerated in Calanca, there is little evidence that enforcement of the forum-selection clause would be unreasonable. Furthermore, there is no evidence in the record that would demonstrate that plaintiffs would be denied their day in court.

On January 13, 1972, Randal Rush and Jeffrey Savchuk were involved in a single-car crash outside of Elkhart, Indiana. The passenger, Savchuk, was injured in the crash. In June 1973, Savchuk moved to Minnesota with his parents. He sued Rush in Minnesota district court and attempted to obtain quasi in rem jurisdiction based on the fact that State Farm, the agency that insured Rush’s car, operates in Minnesota. Rush and State Farm moved to dismiss, but the trial court denied the petition and allowed Savchuk to proceed. The Minnesota Supreme Court affirmed. Rush appealed the case to the Supreme Court, which vacated the judgment and remanded the case for reconsideration. The Minnesota Supreme Court again found in favor of Savchuk.

ISSUE:
Can a state have jurisdiction over a defendant with no connections in the state by attaching the contractual obligation of an insurer licensed in the state?

HELD:

No. Justice Thurgood Marshall delivered the opinion of the 7-2 majority. The Court held that there must be a certain amount of minimum contacts between the defendant and the state in which the suit occurs. The fact that Rush’s insurance company does business in Minnesota is not a sufficient link between him and the state, especially since he owns no property there and has no other connection. Rush had no reason to suspect that having an insurance contract with State Farm would subject him to the possibility of a lawsuit in all states where State Farm does business.
Justice John Paul Stevens wrote a dissenting opinion and argued that the insurance company could be sued in Minnesota under Rush’s policy. As long as it is understood that the Minnesota court has jurisdiction over the policy and State Farm, rather than the defendant, Justice Stevens argued that the suit could be continued.

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