Peter Weber v. Pact XPP Technologies, AG
811 F.3d 758
| 5th Cir. | 2016Background
- Plaintiff Peter Weber, former CEO/chairman of German corporation PACT XPP AG, sued in Texas for unpaid compensation under a 2008 German-language agreement after PACT obtained a large U.S. patent verdict.
- The agreement contains a German forum-selection clause (FSC): “Soweit gesetzlich zulässig, ist Gerichtsstand und Erfüllungsort der Sitz der PACT AG.” Translation and scope were disputed.
- PACT filed a parallel declaratory action in Germany; the German court held the compensation terms unenforceable for lack of shareholder ratification but upheld the FSC as severable and mandatory for disputes.
- District court granted PACT’s forum non conveniens (FNC) motion, concluding the FSC was mandatory and enforceable and dismissing without prejudice to refiling in Germany.
- On appeal, the Fifth Circuit reviewed de novo the interpretation/enforceability of the FSC and for abuse of discretion the Atlantic Marine public-interest balancing; it affirmed dismissal.
Issues
| Issue | Plaintiff's Argument (Weber) | Defendant's Argument (PACT) | Held |
|---|---|---|---|
| Whether the FSC is mandatory or permissive | "Sitz" means "residence"/principal place of business (U.S.); clause not clearly mandatory | "Sitz" means corporate seat (Munich); clause mandates exclusive jurisdiction in Germany | FSC is mandatory (de novo review) |
| Which substantive law governs interpretation of the FSC | Apply federal/general common law as in pre-Atlantic Marine practice | Apply Texas choice-of-law (Klaxon) to determine substantive law; German law applies | Apply Texas choice-of-law rules; German substantive law governs interpretation |
| Whether the mandatory FSC is enforceable despite challenges | Enforceability defeated because German law renders the compensation agreement void; no remedy in Germany; estoppel/unclean hands by PACT | FSC is presumptively enforceable and severable; German courts provide analogous remedies; PACT did not procure FSC by fraud | FSC enforceable; plaintiff did not overcome strong presumption in favor of enforcement |
| Whether public-interest FNC factors justify retaining case in U.S. despite valid FSC | U.S./Texas has strong interest protecting its citizens; equitable remedies unavailable in Germany | Atlantic Marine presumption favors enforcement of valid FSC; public-interest factors rarely defeat it | District court did not abuse discretion; public-interest factors insufficient to overcome FSC; dismissal affirmed |
Key Cases Cited
- Atl. Marine Constr. Co. v. U.S. Dist. Court for W. Dist. of Tex., 134 S. Ct. 568 (2013) (FSC to foreign forum enforced via FNC dismissal; mandatory FSC negates plaintiff's forum preference and limits factors considered)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) (canonical FNC factors—private and public interests—to govern forum non conveniens analysis)
- Haynsworth v. The Corp., 121 F.3d 956 (5th Cir. 1997) (FSCs presumptively valid and severable; presumption of enforceability)
- Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487 (1941) (federal courts sitting in diversity must apply forum state's choice-of-law rules)
- M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (forum-selection clauses generally enforceable absent unreasonableness, fraud, or contravention of public policy)