Forum Selection Clauses

• Author: International Law Group

In 1994, the Greek Ministry of Tourism licensed a consortium of investors, including Rosemarie Marra as 9% partner, to run a gambling casino at Flisvos on the outskirts of Athens. The Greek government would be a partner in the enterprise to receive a percentage of annual profits plus an annual fee. After thirty years, the Greek government would acquire title to the gambling complex.

The license featured a forum-selection clause. It provided that disputes between the government tourist agency and the consortium "arising from the application of this license, the interpretation or performance of its terms, the extent of the rights and obligations of the State and the holder of the license, and in general any matter that may occur concerning a license, shall be settled by the Greek courts."

Matters soon went downhill. There was local political opposition to the casino site and the central government began to negotiate for a new location. Finally, the Prime Minister, Andreas Papandreou, had to step down due to illness in the midst of it all. Vaso Papandreou, the new Minister of Tourism, revoked the consortium's license ab initio.

Most of the partners challenged the revocation in the Greek courts. Alleging breach of contract and unlawful expropriation of property, however, Marra sued in a U.S. federal court seeking damages of $1,600,000,000 from Papandreou and various government agencies ("the Greek Government" or defendants).

The Greek government moved to dismiss based on a claim of state immunity from suit under the Foreign Sovereign Immunities Act. Marra replied that the government's efforts to recruit U.S. investors brought it within the "commercial activity" exception under Section 1605(a)(2). When the court allowed Marra limited jurisdictional discovery, including the deposing of Greek officials, defendants sought a writ of mandamus from the Court of Appeals to vacate the order.

The Court of Appeals granted the writ ("Papandreou I"). Conceding that the discovery might well turn up facts relevant to the immunity issue, it expressed concern that too much discovery could turn the evaluation of the immunity into an encroachment on its inherent benefits, i.e., freedom from undue litigation. It directed the lower court to explore alternative non-merits routes to dismissal.

Back in the lower court, the Greek government moved to dismiss based on the forum-selection clause. Applying M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), the district...