Carnival Cruise Lines v Shut
499 U S 585 [1991]
Author:- Sam Biers

Relevant Facts: The Shutes through a WA travel agent, purchased passage on a 7 day cruise with petitioner’s ship.  Res paid the fare to the agent, who forwarded payment to Pet’s HQ in Miami. Pet then prepared tickets and sent them to Res in the State of WA.  Each ticket contained an admonition “subject to conditions on contract on last pages.”  On those pages under the terms and conditions of passage acceptance of the ticket was acceptance to FL as the State where all suits would be brought to the exclusion of all other States. The ship sailed to Mexico and back to LA. While off Mexican water Mrs Shute slipped on a deck mat and was injured.  Res concede they had notice of the forum selection provision within their brief.

Legal Issue(s):   Whether the forum-selection clause contained on the tickets issued by the Petitioner Carnival, is a valid and enforceable consent/waiver of jurisdiction?

Court’s Holding:

Procedure: Res filed in U.S. Washington, Pet moved for Summary; Granted; Ct of Appeals Reversed and Remanded then w/drew opinion, left to WA S. Ct. enforceable; Ct. App reversed and remanded;  S. Ct.  Reversed

Law or Rule(s):  A freely negotiated forum-selection clause, such as the one there at issue, should be given full effect, and are subject to judicial scrutiny for fundamental fairness.

Court Rationale:   Form contracts with similar terms are of the type not subject to negotiation, and that an individual purchasing the ticket will not have bargaining parity (equality) w/ the cruise line.  A reasonable forum clause is permissible for several reasons.  A cruise line has a special interest in limiting the fora.  It carries numerous passengers from as many locales.  The clause has the effect of dispelling confusion about where suits arising must be brought, thus sparing litigants time and money arguing the correct forum, and conserving judicial resources. Passengers benefit from reduced fares as a result.  There is no indication that the establishment of FL as the state with juris was done to discourage passengers from pursing legitimate claims.  Pet has its principal place of business in FL; no evidence resp accession was obtained by fraud.  Res conceded they were given notice.

Plaintiff’s Argument: Pet} The forum clause in the respondent’s tickets required the Shutes to bring their action against Pet in the State of FL.

Defendant’s Argument: Res} The forum clause should not be enforced b/c it was not the product of negotiation, and enforcement would effectively deprive respondents of their day in court.

DISSENT : Forum selection clauses are not enforceable if they were not freely bargained for, create additional expense for one party, or deny one party a remedy. Forum selection clauses which seek to limit the place or court in which an action may be brought, are invalid as contrary to public policy.