MBC Financial Services Ltd. v. Boston Merchant Financial, Ltd.
704 F. App'x 14
| 2d Cir. | 2017Background
- Plaintiff MBC Financial Services Ltd. (MBCFX), a BVI foreign-currency brokerage, sued Boston Merchant Financial, Ltd. (BMFN), its CEO Pavel Belogour, and related entities in SDNY asserting CEA and multiple common‑law claims arising from alleged unauthorized FX trades.
- The parties’ relationship was governed by a Corporate Client Agreement containing a forum‑selection clause requiring disputes to be resolved only by a tribunal located in Switzerland and a choice‑of‑law clause selecting BVI law.
- Defendants moved to dismiss on forum non conveniens grounds based on enforcement of that forum‑selection clause; the district court granted dismissal and MBCFX appealed.
- On appeal, MBCFX preserved only two issues: (1) whether the agreement covers its claims, and (2) whether enforcing the clause is unreasonable or contrary to public policy (due process and access to evidence concerns).
- The Second Circuit applied the four‑step forum‑selection clause framework (communication, mandatory nature, scope/applicability, and unreasonableness/public‑policy exceptions) and affirmed dismissal, finding the clause applicable and enforceable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Corporate Client Agreement governs MBCFX’s claims | MBCFX contends its claims are not subject to the clause under BVI law (or that no contract exists) | Defendants argue the clause broadly covers all disputes "arising out of or relating to" the Agreement, including the alleged trades | Held: Clause covers MBCFX’s claims; scope is broad under governing law (BVI choice‑of‑law); arguments that contract didn’t exist were forfeited on appeal |
| Whether enforcement is unreasonable because it violates due process / U.S. public policy protecting financial markets | MBCFX argues U.S. public policy (CEA protections) requires access to U.S. courts and remedies | Defendants argue MBCFX failed to show BVI/Swiss remedies are inadequate or that U.S. public policy would be frustrated | Held: Public‑policy exception fails; MBCFX did not demonstrate BVI/Swiss remedies are insufficient to protect against fraud or undermine CEA policy |
| Whether enforcement is unreasonable due to inconvenience (deprives MBCFX of its day in court) | MBCFX claims litigating in Switzerland would deny access to evidence/witnesses and effectively kill the case | Defendants argue plaintiffs offered only conclusory assertions and no supporting evidence of inability to litigate in Switzerland | Held: Inconvenience claim rejected; plaintiff offered no evidence and burden to overcome clause was not met |
| Standard of review for forum‑selection clause enforcement | (Raised generally) MBCFX implied errors in district court application | Defendants urge deference to dismissal under forum non conveniens or standard applicable | Held: Court noted circuit hasn’t settled de novo vs. abuse‑of‑discretion question but found the result correct under either standard, so affirmed |
Key Cases Cited
- Atlantic Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (2013) (forum‑selection clauses are enforced via forum non conveniens framework)
- M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (1972) (forum‑selection clauses are presumptively valid unless enforcement is unreasonable or unjust)
- Phillips v. Audio Active Ltd., 494 F.3d 378 (2d Cir. 2007) (four‑step test for forum‑selection clause enforceability)
- Martinez v. Bloomberg LP, 740 F.3d 211 (2d Cir. 2014) (exceptions to enforcing forum‑selection clauses narrowly construed)
- Roby v. Corp. of Lloyd’s, 996 F.2d 1353 (2d Cir. 1993) (foreign forum enforcement defeated only if remedies there are insufficient to vindicate strong U.S. public policy)