1993 WL 13076393

Supreme Court of the United States.

John S. ROBY, et al., Petitioners, v.

THE CORPORATION OF LLOYD'S, et al., Respondents.

No. 93-333.

October Term, 1993.

September 29, 1993.

On Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Second Circuit

Respondents' Brief in Opposition

Taylor R. Briggs, Counsel of Record, Sheila H. Marshall, Mary L.B. Betts, Stephen H. Orel, LeBoeuf, Lamb, Leiby & MacRae, 125 West 55th Street, New York, New York 10019, (212) 424-8000, Counsel for Respondents, The Society, Corporation, Committee and Council of Lloyd's and their Individual, Internal Members. [FN*]

Thomas W. Wilson, Jonathan C. Thau, Nicholas J. Conca, Fred N. Knopf, Wilson, Elser, Moskowitz, Edelman & Dicker, 150 East 42nd Street, New York, New York 10017, (212) 490-3000, Counsel for the Members', Agent Respondents [FN*].

Daniel M. Bianca, Leo W. Fraser, III, William A. Meehan, Mendes & Mount, 750 Seventh Avenue, New York, New York 10019, (212) 261-8000, Counsel for the Managing, Agent Respondents [FN*].

FN* (Complete Lists of These Respondents Appear in Appendix B to the Petition for Certiorari)

*i COUNTER QUESTION PRESENTED

Whether this Court's unbroken line of precedents favoring enforcement of choice of forum and choice of law clauses in international agreements warranted dismissal by the courts below of Petitioners' purported federal securities law claims against the Society, Corporation, Committee and Council of Lloyd's of London and against their Managing Agents and Members' Agents at Lloyd's, arising out of Petitioners' membership in that very English institution.

*ii STATEMENT PURSUANT TO RULE 29.1

Respondents the Society, Corporation, Committee and Council of Lloyd's, have no parent or subsidiary corporations within the meaning of Rule 29.1 of the Rules of the Supreme Court of the United States. Those Managing Agent Respondents that have parent or subsidiary corporations within the meaning of Rule 29.1 are listed below:

*iii Managing Agent Respondents not appearing in the table above have no parent or subsidiary corporations within the meaning of Rule 29.1.

Those Members' Agent Respondents that have parent or subsidiary corporations within the meaning of Rule 29.1 are listed below:

Managing Agent  --------------	Parent Companies and  Subsidiaries    --------------------
Anton Managing Agency	Merrett Holdings Plc.
AJ Archer & Co., Ltd.	AJ Archer Holdings Plc.
Birrell Smith Underwriting Agency	Cater Allen Holdings Plc.
BPC Underwriting Agencies	BPC Holdings Ltd.
Cater Allen Synd. Mgmt.	Cater Allen Holdings Plc.
Edwards & Payne Underwriting Agency	Sturge Holdings Plc.
Guest Barnes (Uwring. Agencies)	CaterAllen Holdings Plc.
Holmes Hayday Underwriting Agencies Ltd	Sturge Holdings Plc.
BPD Kellett & Company Ltd	AJ Archer Holdings Plc.
London Wall Managing Agency Ltd.	London Wall Holdings Plc.
Mark Loveday Uwring. Agencies	Cater Allen Holdings Plc.
MIS Uwring. Agency Ltd.	Merrett Holdings Plc.
Merrett Syndicates Ltd.	Merrett Holdings Plc.
Murray Lawrence & Partners Ltd. Ltd.	Murray Lawrence Holdings
Oxford Syndicate Mangement Ltd.	Sturge Holdings Plc.
RD Robertson Uwring. Agency	Cater Allen Holdings Plc.
Stewart & Hughman Ltd.	Stewart Underwriting Agency
Sturge Marine Syndicate Mgmt. Ltd.	Sturge Holdings Plc.
Three Quays Uwring. Mgmt. Ltd.	Cater Allen Holdings Plc.

*iii Managing Agent Respondents not appearing in the table above have no parent or subsidiary corporations within the meaning of Rule 29.1.

Those Members' Agent Respondents that have parent or subsidiary corporations within the meaning of Rule 29.1 are listed below:

Members' Agent --------------	Parent Companies and Subsidiaries ------------
Alexander Howden & Beck Ltd.	London Wall Holdings PLC
Cater Allen Members Agency	Cater Allen Holdings PLC
Donner Underwriting Agencies Ltd.	Sturge Holdings PLC
Gardner Mountain & Capel	Hogg Group PLC
London Wall Members' Agency Ltd.	London Wall Holdings PLC
PW Kininmonth Ltd.	A.J. Archer PLC
RW Sturge Ltd.	Sturge Holdings PLC
Sedgwick Lloyd's Underwriting Agents Ltd.	Sedgwick Group PLC
KC Webb (Underwriting) Ltd.	Hogg Group PLC
Willis Faber & Dumas (Agencies) Ltd.	Willis Corron Group PLC

*iv Members' Agent Respondents not appearing in the table above have no parent or subsidiary corporations within the meaning of Rule 29.1.

*v TABLE OF CONTENTS

COUNTER QUESTION PRESENTED ... i

STATEMENT PURSUANT TO RULE 29.1 ... ii

TABLE OF AUTHORITIES ... vi

COUNTERSTATEMENT OF THE CASE ... 1

REASONS FOR DENYING THE PETITION ... 7

I. The Decision Below Follows the Decisions of this Court and of all Courts of Appeals that have Considered Identical Cases ... 7

II. The Decision Below Raises no New Issue ... 14

CONCLUSION ... 24

*vi TABLE OF AUTHORITIES

CASES

Bonny v. The Society of Lloyd's, Nos. 92-1662, 92-2771, 1993 WL 292345 (7th Cir. Aug. 5, 1993) ... 3, 7, 21

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991) ... 10, 14, 21

Development Bank of Philippines v. Chemtex Fibres, Inc., 617 F. Supp. 55 (S.D.N.Y. 1985) ... 14

Hafer v. Melo, 502 U.S. 21, 112 S. Ct. 358 (1991) ... 1

Heller v. Doe, 509 U.S. 312, 113 S. Ct. 2637 (1993) ... 1

Hirsch v. Oakeley Vaughan Underwriting Ltd., No. 89-2563, unpublished slip opinion (5th Cir. May 31, 1989), cert. denied, 498 U.S. 981 (1990) ... 4, 7

Howe v. Goldcorp. Inves., Ltd., 946 F.2d 944 (1st Cir. 1991), cert. denied, ___ U.S. ___, 112 S. Ct. 1172 (1992) ... 8, 19

Hudson v. McMillian, 503 U.S. 1, 112 S. Ct. 995 (1992) ... 1

In re Bank of Boston Corp. Sec. Lit., 762 F. Supp. 1525 (D. Mass. 1991) ... 18

Landoil Resources Corp. v. Alexander & Alexander Servs., Inc., 77 N.Y.2d 28, 565 N.E.2d 488, 563 N.Y.S.2d 739 (1990) ... 2

M/S The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) ... 10, 12, 15, 16, 21, 22

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) ... 10, 13, 14, 21

Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) ... 19

Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 658 (1992) ... 3, 4, 7, 8, 17

*vii Rodriguez de Quijas v Shearson/American Express, Inc., 490 U.S. 477 (1989) ... 6

Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974) ... 10, 11, 15, 21, 22

Wilko v. Swan, 346 U.S. 427 (1953) ... 6

STATUTES AND TREATIES

Securities Act of 1933, 15 U.S.C. § 77a, et seq ... 18, 19

Securities Exchange Act of 1934, 15 U.S.C. § 78a, et seq ... 12

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 3 (adopted and codified by 9 U.S.C. §§ 201-208) ... 6

MISCELLANEOUS

J. William Hicks, 7D Exempted Transactions Under the Securities Act of 1933 (1992) ... 18

L. Loss, Fundamentals of Securities Regulation (1983) ... 18

McLaughlin & Genevro, Enforcement of Arbitral Awards Under the New York Convention - Practice in U.S. Courts, 3 Int'l Tax & Bus. Law. 249 (1986) ... 14

S. Ct. R. 14.1(a) ... 1

*1 COUNTERSTATEMENT OF THE CASE

Respondents incorporate by reference the statements of fact in the opinions below (Petition at 7c-11c, 3d-6d, 2e-6e). As the courts below found, this is not a case involving the sale of publicly traded securities. Rather, it involves petitioners' memberships in Lloyd's, a unique and very English institution. Lloyd's is not an insurance company; it is a market, in which individuals such as petitioners (known as "Members" or "Names" at Lloyd's; see Petition at 3e) underwrite insurance risks on the basis of unlimited liability for their own losses and no liability for those of any other Member. Members are organized for administrative purposes into syndicates or groups of Members whose assets provide the capital against which risks are underwritten. [FN1] A professional Underwriter, himself a Member, makes the actual underwriting decisions, acting on authority delegated to him by the Members who have pledged some or all of their assets to capitalize *2 his efforts for a given year. Most Members participate in more than one syndicate each year. [FN2]

FN1. Petitioners originally sued their syndicates, but those claims were dismissed by the District Court on the ground that syndicates are not juridical entities under English or American law. Petition App. D. The Court of Appeals saw no reason to reach review of the District Court's ruling on this question in light of its finding that the forum clauses in issue were so broad that they would encompass the syndicates if need be. Petitioners do not seek review of the rulings of the courts below on this point. See Supreme Court Rule 14.1(a); Heller v. Doe, 509 U.S. 312, 113 S. Ct. 2637, 2650 n.4 (1993); Hafer v. Melo, 502 U.S. 21, 112 S. Ct. 358, 361 n.* (1991); Hudson v. McMillian, 112 S. Ct. 995, 1002 (1992). Accordingly, the so-called Syndicate Defendants are filing no response to the Petition.

FN2. Contrary to petitioners' assertions (Petition at 5 n.1), syndicates do not do business in the United States by virtue of the Lloyd's American Trust Fund (a fund held in trust in the United States for the sole benefit of United States policyholders). In Landoil Resources Corp. v. Alexander & Alexander Serv., Inc., 77 N.Y.2d 28, 565 N.E.2d 488, 563 N.Y.S.2d 739 (1990), the Court of Appeals for the Second Circuit certified precisely this question under New York law to the Court of Appeals for the State of New York, which answered it with a resounding negative.

The market at Lloyd's is regulated by respondents the Society, Corporation, Committee and Council of Lloyd's pursuant to delegated English statutory powers, analogous to the way that the New York Stock Exchange governs its membership. English statutes, and Lloyd's byelaws made pursuant to those statutes, establish the organizational pattern within which Managing Agents and Members' Agents have well-defined roles. Managing Agents manage the syndicates through which Members underwrite insurance risks. Members' Agents, among other things, provide Members with information regarding possible syndicates in which to participate.

More than 80 percent of the Membership at Lloyd's is English; the remainder come from some 80 different countries. American Members such as petitioners have historically constituted at most about eight percent of the total membership of Lloyd's, some 30,000 at its peak, and there are even fewer American Members today. These 110 petitioners are but a small fraction of the Americans who were Members of Lloyd's during the years pertinent to these claims.

*3 Persons such as petitioners, who wish to join Lloyd's, must apply for membership, must satisfy a test of good character, must be sponsored, must acknowledge their understanding of the risk of unlimited loss, must submit evidence of their financial ability to withstand losses, and must go to England to be interviewed and to sign their membership agreements. Although petitioners seek to characterize their insurance obligations as "securities," membership is personal; it cannot be assigned or traded.

The membership agreements signed by petitioners with Lloyd's (the General Undertaking) and with the Agents (the Agency Agreements) each contain broad forum selection clauses giving exclusive jurisdiction over disputes to the courts of England, and choosing English law to govern the parties' relationships. In addition, the Agency Agreements contain broad arbitration clauses. These clauses are necessary so that Lloyd's may govern its market coherently, under one legal system, for the benefit of all its members, and for the protection of policyholders throughout the world.

It is in this context that no fewer than three U.S. Circuit Courts of Appeals have recently enforced the forum selection and arbitration clauses in Members' agreements with Lloyd's and with the Agents in virtually identical cases alleging violations of United States securities laws, among them the Court of Appeals for the Second Circuit in this case. [FN3] There were no dissenting *4 opinions in any of these cases, and no Circuit Court has ruled to the contrary. This Court has already denied certiorari in the Riley case. [FN4]

FN3. The Seventh and Tenth Circuits have upheld dismissals in virtually identical cases. See Bonny v. The Society of Lloyd's, Nos. 92-1662, 92- 2771, 1993 WL 292345 (7th Cir. Aug. 5, 1993); Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied, ___ U.S. ___, 113 S. Ct. 658 (1992). In addition, the Court of Appeals for the Fifth Circuit dismissed tort claims brought by a Member against Lloyd's on the ground of forum non conveniens in favor of England. Hirsch v. Oakeley Vaughan Underwriting Ltd., No. 89-2563, unpublished slip opinion (5th Cir. May 31, 1989), cert. denied, 498 U.S. 981 (1990).

FN4. 113 S. Ct. 658 (1992).

Contrary to the statement of this case provided by petitioners, the holdings below, and those of other Courts of Appeals, are not a threat to American investors. These holdings explicitly are limited to the unique facts of these cases, as to which they are entirely fair and appropriate. petitioners' complaint alleged fraud and misrepresentation against all of the respondents. The District Court dealt with the case as one sounding in fraud, holding that English law provides adequate remedies for fraud such that it was reasonable to require petitioners to abide by their forum selection and arbitration clauses. In so doing, the District Court had before it a number of affidavits attesting to the extensive public and private remedies available under English law for fraud, for negligent misrepresentation, and for breach of contract. [FN5] It held that this case was, "closer to being entirely English than it is *5 to being either international or a domestic American dispute." [FN6] The District Court discussed the specific English remedies available to petitioners, and found that it was fair to require petitioners to abide by their agreements to submit their disputes to English courts and arbitrators.

FN5. These affidavits came from English barristers on both sides of this case. There was no serious disagreement among them as to the significant remedies English law would provide to these petitioners. See, e.g., Petition at 20e-21e, 24c-27c for discussions of the evidence as to the available provisions of English law contained in the opinions of the courts below. See also infra pp. 16-19.

FN6. Petition at 17e.

Petitioners argued to the Court of Appeals that English remedies were not adequate because English law, they represented, would require them to show proof of scienter and/or proof that the omissions they complained of had rendered misleading some affirmative statement made to them by respondents. This, they claimed, they could not do. Petitioners admitted to the Court of Appeals that they had no expectation of being able to prove many of the allegations contained in their Complaint even under U.S. law. Now, to this Court, petitioners present their case as essentially a failure to register case under § 12(1) of the Securities Act of 1933, the only U.S. statute alleged in the 169 paragraph Complaint for which there is no precise English law analogue. In doing so, petitioners implicitly concede that the rulings below on their § 12(2), Rule 10b-5, and RICO claims *6 provide no basis upon which certiorari is warranted. [FN7] This tempest is now truly presented in a teapot. [FN8]

FN7. Similarly, petitioners argued to the District Court that Wilko v. Swan, 346 U.S. 427 (1953) is still good law, and based their case largely on that precedent. Told by the District Court that Wilko was "flatly overruled" in Rodriguez de Quijas v Shearson/American Express, Inc., 490 U.S. 477 (1989) (Petition at 17e), petitioners proceeded to the Court of Appeals on the basis that, though overruled, Wilko's "essential lesson" lives on. Rejected again (Petition at 18c), petitioners now present Wilko to this Court in a footnote (Petition at 9 n.5) as a basis for attempting to argue that the U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 21 U.S.T. 2517, T.I.A.S. No. 6997, 330 U.N.T.S. 3 (adopted and codified by 9 U.S.C. §§ 201-208), does not apply here. Petitioners further misrepresent to this Court that the Court of Appeals so held, when in fact that Court held that it did not have to reach that issue in light of its determination that the forum selection and arbitration clauses in petitioners' various agreements were enforceable (Petition at 19c n.2). It will thus be for the English courts to determine whether petitioners must submit their disputes with their Agents to an English court or to an English arbitral panel.

FN8. Although petitioners complain here, as they did in the courts below, about the supposed inadequacy of the remedies available to them in England, even prior to the decision of the district court in this case, some petitioners also brought actions against respondents in English courts, advancing claims stemming from the same events that underly this case. As of the date of this brief, at least 49 of the 110 petitioners are in lawsuits pending in England. Cases involving these petitioners are firmly set for trial in April and October, 1994.

*7 REASONS FOR DENYING THE PETITION

I.

The Decision Below Follows the Decisions of this Court and of all Courts of Appeals that have Considered Identical Cases

The decision below follows this Court's consistent holdings and the decisions of the circuit courts, and petitioners seek review of jurisprudence as to which certiorari has been repeatedly denied. There are no new issues requiring review by this Court.

Riley v. Kingsley Underwriting Agencies, Ltd., 969 F.2d 953 (10th Cir.), cert. denied, ___ U.S. ___, 113 S.Ct. 658 (1992), and Bonny v. The Society of Lloyd's, Nos. 92-1662, 92-2771, 1993 WL 292345 (7th Cir. Aug. 5, 1993), dismissed the same causes of action by American Names who signed the same contracts, and joined many of the same syndicates, as petitioners. Hirsch v. Oakeley Vaughan Underwriting Ltd. and the Society, Council, and Corporation of Lloyd's, No. 89-2563, unpublished slip opinion (5th Cir. May 31, 1989), cert. denied, 498 U.S. 981 (1990), dismissed, in a case that arose from activities prior to the time when the Choice Clauses at issue here were included in membership contracts, a similar action by a Name against Lloyd's on grounds of forum non conveniens. [FN9]

FN9. The district court below dismissed on the Choice Clause, but also agreed with Hirsch:

"The overwhelmingly English nature of this dispute likely also would warrant dismissal of the action on forum non conveniens grounds." Petition at 21e.

Ordinary forum non conveniens considerations, which dictate dismissal in favor of the courts of a foreign country, apply equally to actions brought under the United States securities laws. Howe v. Goldcorp. Inves., Ltd., 946 F.2d 944 (1st Cir. 1991), cert. denied, ___ U.S. ___, 112 S.Ct. 1172 (1992). The court below correctly held, a fortiori, that international contractual agreements to achieve the same result should be honored.

*8 Including this case, the three circuit courts of appeal which have examined the same fact pattern pleaded herein and the same legal arguments proffered herein [FN10] uniformly - without so much as a single dissenting or even concurring opinion - have enforced petitioners' contractual undertakings to utilize exclusively court proceedings or arbitration in England for any dispute arising out of or relating to their membership or underwriting at *9 Lloyd's. Each court has applied the clearly articulated jurisprudence of this Court to the unique facts presented by the contractual participation of foreign underwriters in the Lloyd's insurance market. The courts below stressed the singular and complicated nature of Lloyd's, and the complex of unusual agreements which define the status of underwriting members at Lloyd's such as petitioners. District court opinion at Petition pp. 3e-6e, 9e-16e; circuit court opinion at Petition pp. 6c-9c, 11c-17c. As stated by the court below:

FN10. Petitioners' are careless in their assertion (Pet. at 19) that their arguments "about the effect of anti-waiver provisions and the adequacies of English law were not made [in Riley]". In fact, the same arguments have been made in each case and each court has found them ill-founded. See, e.g., the Petition for Certiorari in Riley, No. 92-664 at pages 13-14:

"I. B. The Choice Clauses at Issue Herein Operate to Waive Mr. Riley's

Substantive Statutory Rights Under the U.S. Securities Laws."

"II. B Fundamental Public Policy is Violated When Enforcement of an Arbitration Clause Waives the Substantive Protections of the U.S. Securities Laws."

Petitioner in Riley, like petitioners here, argued that English law was inadequate because it would not recognize claims under the U.S. securities laws, and because of the limited immunity for Lloyd's governing bodies under the Lloyd's Act 1982. Id. at 14, 20. Petitioner in Riley, exactly like petitioners here, extensively briefed to both the Tenth Circuit and this Court the anti-waiver provisions of the 1933 and 1934 Acts and the supposedly farreaching implications of the ruling on all sorts of foreign issuers of conventional securities. See, e.g., id. at 10-12, 22.

We are satisfied not only that the Roby Names have several adequate remedies in England to vindicate their substantive rights, but also that in this case the policies of ensuring full and fair disclosure and deterring the exploitation of United States investors have not been subverted.

[W]e hold ... that the Roby Names have remedies under English law adequate not only to vindicate their substantive rights but also to protect the public policies established by the United States securities laws.

Petition at 24c, 27c (emphasis in original).

When petitioners entered a commercial relationship by becoming insurance underwriters, they and respondents agreed with one another that their respective rights and obligations would be "governed by and construed in accordance with the laws of England," and that any dispute would be settled in "the courts of England." [FN11] These *10 Choice Clauses were an integral part of a bargain which petitioners enjoyed for a number of years, and now seek to repudiate. Attempts to evade such clauses have been thoroughly considered and solidly rebuffed by this Court in M/S The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972), in Scherk v. Alberto-Culver Co., 417 U.S. 506 (1974), in Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985) and in Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991).

FN11. The text of the relevant paragraph from the General Undertaking can be found in the opinion of the Second Circuit at the top of page 12c of the Petition: "Each party hereto irrevocably agrees that the courts of England shall have exclusive jurisdiction to settle any dispute and/or controversy of whatsoever nature arising out of or relating to [petitioner's] membership of, and/or underwriting of insurance business at, Lloyd's." Relevant provisions from the Agents' Agreements can be found in the district court's opinion at pp. 4e-6e of the Petition.

In The Bremen (not cited by petitioners), a contract for towing a drilling rig from Louisiana to Italy provided for judicial resolution of disputes in an English forum. In transit, the rig suffered storm damage and was towed to Tampa, Florida. In Florida the owner, like petitioners herein, "ignoring its contract promise to litigate 'any dispute arising' in the English courts," 407 U.S. at 3, filed suit in the United States district court. The district court denied a motion to dismiss, and the Court of Appeals affirmed, holding the forum-selection clause unenforceable on public policy grounds because the plaintiffs' claims would be subject to exculpatory clauses in England, but not in the United States, where they were against public policy. This Court reversed. Pointing out the "expansion of overseas commercial activities by business enterprises based in the United States," 407 U.S. at 9, it observed:

*11 The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts.

Chief Justice Burger explained the reasons guiding the Court's ruling as follows: first, as here, a number of jurisdictions could otherwise be the situs of suit, and the parties justifiably wished to avoid the uncertainty and inconvenience which could come to pass as a result. 407 U.S. at 13. Secondly, the choice-of-forum clause was a "vital part of the contract" (as the Choice Clauses certainly were here, embracing two of the three substantive paragraphs in the General Undertaking; see Petition at 4a-5a) and the Court quoted with approval the statement of the English High Court of Justice that:

[T]he force of an agreement for litigation in this country, freely entered into between two competent parties, seems to me to be very powerful.

407 U.S. at 14. Finally, this Court concluded with a strong endorsement of the forum-selection clause:

Thus, in the light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside.

407 U.S. at 15.

In Scherk, a contract covering the sale of several German businesses and associated trademarks provided for arbitration in France as the forum, with Illinois law as the applicable law. Like petitioners here, the American company sought to repudiate its contract, and filed suit *12 in Illinois claiming violations of the Securities Exchange Act of 1934, 15 U.S.C. § 78a, et seq. The district court and the court of appeals held the Choice Clauses, in particular the arbitration clause, to be unenforceable. This Court again reversed, as it had in The Bremen. Speaking through Mr. Justice Stewart, this Court discussed its rationale for honoring Choice Clauses in international transactions. It emphasized the advantages to those engaged in international commerce in eliminating uncertainties in the applicable law, stating:

Such uncertainty will almost inevitably exist with respect to any contract touching two or more countries, each with its own substantive laws and conflict-of-laws rules. A contractual provision specifying in advance the forum in which disputes shall be litigated and the law to be applied is, therefore, an almost indispensable precondition to achievement of the orderliness and predictability essential to any international business transaction.

417 U.S. at 516.

This Court rejected the post-contract forum shopping so vividly illustrated by the instant case:

A parochial refusal by the courts of one country to enforce an international arbitration agreement would not only frustrate these purposes, but would invite unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages.

417 U.S. at 516-7. It reaffirmed the rationale and reasoning of The Bremen, 417 U.S. at 518.

*13 This Court next decided Mitsubishi, holding that an agreement requiring arbitration in Japan is valid and enforceable and extends to statutory claims under the U.S. antitrust laws. In its analysis, this Court repeated, once more and in detail, the principles applicable to commercial transactions in international commerce, emphasizing the need for certainty and predictability in international dealings:

[W]e conclude that concerns of international comity, respect for the capacities of foreign and transnational tribunals, and sensitivity to the need of the international commercial system for predictability in the resolution of disputes require that we enforce the parties' agreement, even assuming that a contrary result would be forthcoming in a domestic context....

Notwithstanding the possibility that the English court would enforce provisions in the towage contract exculpating the German party which an American court would refuse to enforce, this Court [in The Bremen] gave effect to the choiceof-forum clause.

473 U.S. at 629. The Court condemned reliance upon purely domestic policies as a ground for striking down a choice clause, and summarized the law in these terms:

The Bremen and Scherk establish a strong presumption in favor of enforcement of freely negotiated contractual choice-of-forum provisions. Here, as in Scherk, that presumption is reinforced by the emphatic federal policy in favor of arbitral dispute resolution. And at least since this Nation's accession in 1970 to the Convention, see [1970] 21 U.S.T. 2517, T.I.A.S. 6997, and the implementation of the Convention in the *14 same year by amendment of the Federal Arbitration Act, that federal policy applies with special force in the field of international commerce.

473 U.S. at 631. Accord, Carnival Cruise Lines, supra; Development Bank of Philippines v. Chemtex Fibres, Inc., 617 F.Supp. 55, 57 n.12 (S.D.N.Y. 1985) (concluding from Mitsubishi that "it is clear that the Convention does not contemplate the expression of local public policy as a barrier to the arbitrability of claims"); Mclaughlin & Genevro, Enforcement of Arbitral Awards Under the New York Convention - Practice in U.S. Courts, 3 Int'l Tax & Bus. Law. 249, 260 n.69 (1986).

Accordingly, the court below reinforced the Mitsubishi holding: "Moreover, international comity dictates that American courts enforce these sorts of clauses out of respect for the integrity and cooperation of foreign tribunals. See Mitsubishi, 473 U.S. at 629." Petition at 19c.

II.

The Decision Below Raises no New Issue

Petitioners' overheated contention that the court below utilized a "novel" approach to the enforcement of Choice Clauses that will supposedly create a gaping "loophole" in the American securities laws, resulting in mass exemption for hundreds of foreign "issuers" and a "severe competitive disadvantage" for American companies (Petition at 11-12), is built on a gross misstatement of what the courts below actually did. What these courts did, far from creating a rule with implications for other cases, was to go out of their way to limit their analyses to the facts and circumstances of the Choice Clauses at issue *15 in this case, and the unique nature of an underwriting Name's commercial relationships with his or her Members' and Managing Agents at Lloyd's, and with Lloyd's itself. It is sheer hyperbole to suggest that the Second Circuit's narrow, fact-bound opinion has any implications, much less far-reaching ones, for hundreds of foreign issuers of conventional securities, and it is nonsense to hint that those issuers are in any way comparable to Lloyd's. There is nothing in the record to support petitioners' assertions.

Nor did the courts below in any way employ a "novel" approach to the enforcement of Choice Clauses, contrary to petitioners' bald assertions (see Petition at 10, 13 n.11). Even apart from the fact that this Court has upheld Choice Clauses in an unbroken line of decisions stretching back over twenty years - a trend petitioners ignore - the Second Circuit's analysis in this case is patterned exactly on the analysis employed by this Court in The Bremen and Scherk. As the Second Circuit noted, those cases require a court considering the enforcement of a Choice Clause in an international contract to start with a presumption of the Clause's validity that can only be overcome by a "clear showing that the clauses are " 'unreasonable' under the circumstances." " Petition at 20c, quoting The Bremen, 407 U.S. at 10. As the court below noted, this Court has made this exception a very narrow one: a Choice Clause will be enforced unless its inclusion in the contract was procured by fraud, "if the complaining party 'will for all practical purposes be deprived of his day in court,' due to the grave inconvenience or unfairness of the selected forum", if plaintiff would be *16 deprived of all remedy, or if enforcement would violate a strong public policy. Petition at 20c.

The Second Circuit's analysis thus comes almost verbatim from The Bremen. Compare 407 U.S. at 15, 18-19. The only way one could call it "novel" would be to ignore The Bremen which, astonishingly, is what petitioners have done. The case is not cited in the Petition.

Petitioners do not even take issue with most of the Second Circuit's ruling. Petitioners argued below, but no longer, that they would be gravely inconvenienced by having to litigate in England. [FN12] Id. The district court was so unmoved by the balances of convenience argument that it indicated that had it not dismissed on the Choice Clauses, it would likely have granted respondents' fully briefed motion to dismiss on grounds of forum non conveniens. Petition at 21e. Petitioners suggested below, but no more, that English courts or arbitral forums would be unfair or biased. Petition at 20c. [FN13]

FN12. But not so gravely inconvenienced that 49 petitioners herein have in fact brought actions there. See footnote 4, supra.

FN13. Petitioners never alleged, for example, that they were fraudulently induced into agreeing to the Choice Clauses. Petition at 20c.

Petitioners fail to demonstrate how they are seriously harmed by enforcement of their Choice Clauses. At most, the Petition can be read to complain that the court below "misunderstood" and made "speculative and unsupportable" assumptions about the claims and remedies English law affords petitioners. Petition at 13. Nothing could be further from the truth. For example, petitioners brazenly *17 claim that they can only impose liability on the Members' and Managing Agent respondents under "fault-based" theories that "require proof of fraudulent intent" (Petition at 15), yet petitioners conceded that they have available in England claims and remedies sounding in the tort of deceit; Sections 2(1) and 2(2) of the Misrepresentation Act 1967; and claims for pre-contractual material misleading omissions. The Second Circuit relied on the affidavit of petitioners' own expert when it concluded that English law "provides remedies for knowing or reckless deceit, negligent misrepresentation, and even innocent misrepresentation." Petition at 24c. [FN14]

FN14. There is no dispute that English law provides remedies for fraud. Petition at 24c, 26c. See also Riley, 969 F.2d at 958.

Furthermore, as the court below correctly found, both the Members' and Managing Agents have express contractual obligations to make fair disclosure to their Names, and petitioners do not dispute the Second Circuit's finding that claims based on alleged failures to make material representations can be asserted in England under theories of breach of contract and violation of fiduciary duty - claims which clearly do not require proof of fraudulent intent. See Petition at 25c-26c. Indeed, English law is more favorable to petitioners in some ways than American law, for it would enable petitioners, if they can establish liability, to recover legal costs even under common law theories, and because English limitations periods are substantially longer than their U.S. counterparts. In sum, the court below was amply justified in concluding that "the available remedies [in England] *18 are adequate and the potential recoveries substantial." Petition at 24c.

Petitioners abandoned the argument made below that English law is inferior to American law because it does not make "mere omissions" actionable unless something that is said is rendered misleading, in supposed comparison to § 12(2) of the 1933 Act, after respondents showed conclusively that the English and American standards are the same. [FN15] Petitioners complain that "controlling person" liability does not exist under English law, but as the court below noted, petitioners would have grave difficulty prevailing on such claims here. Petition at 15, 24c. Petitioners' unequivocal allegation that respondents the Society, Corporation, Committee and Council of Lloyd's "are not subject to liability at all" (Petition at 15) is false, as the court below found. Id. at 25c.

FN15. The plain language of § 12(2) imposes liability only for omissions of material facts "necessary in order to make the statements ... not misleading." It is black letter law that § 12(2) does not impose liability for "mere omissions" unless some affirmative statement is rendered misleading. See Loss, Fundamentals of Securities Regulation 1023 (1983); In re Bank of Boston Corp. Sec. Lit., 762 F. Supp. 1525, 1538 (D. Mass. 1991). See also J. William Hicks, 7D Exempted Transactions Under the Securities Act of 1933 § 16.05(7) at 16-210 and n.2 (1992).

Petitioners appear to claim that it would be "fundamentally unfair" for English law to require them to demonstrate both wrongdoing and causation on the part of the alleged wrongdoer (each of whom has been identified in the complaint as a "racketeer"). See Petition at 14-15. As the court below found, "it certainly is not unfair for *19 English law to require proof of actual misconduct and reliance." Petition at 24c. [FN16]

FN16. Contrary to petitioners' implicit suggestion, it is not necessary

that the foreign law afford precisely the same remedy as American law, merely that the foreign forum provide some form of remedy. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 (1981) (in the analogous area of decisions rendered under the doctrine of forum non conveniens, the possibility that the law of the more convenient forum will be less favorable to plaintiff can preclude dismissal only if "the remedy provided by the alternative forum is so clearly inadequate or unsatisfactory that it is no remedy at all"). Accord, Howe v. Goldcorp Inv. Ltd., 946 F.2d 944, 952 (1st Cir. 1991), cert. denied, ___ U.S. ___, 112 S. Ct. 1172 (1992) (dismissing securities fraud claims by American investor in Canadian company where Canadian law offered "somewhat similar protections").

That basically leaves petitioners with their § 12(1) claims, premised on the supposed failure to comply with the registration requirements of the 1933 Act. [FN17] But as the court below noted, those claims face severe difficulties. See Petition at 25c. The SEC has determined that if any "security" is involved in petitioners' underwriting of insurance at Lloyd's, compliance with Regulation D (governing limited offerings to qualified investors) meant that no registration would be required. See Commission letter, attached hereto as respondents' Appendix A. Petitioners' contention that the SEC has "defaulted" by supposedly not taking a "publicly disclosed, principled position" *20 (Petition at 21) is disingenuous in the extreme: The Commission's letter was mailed to a United States Congressman, among others, to answer questions put by the name plaintiff below, petitioner John Steiner Roby. The SEC's position is both public and principled. [FN18] Petitioners' dissatisfaction with the view taken by the regulatory agency is hardly a proper ground for certiorari, particularly when the agency in question is not a party to this litigation and has refused petitioners' invitation to intervene. [FN19] To the extent it has not already been addressed herein, petitioners' argument that this case is about construction of the statutory phrase "waive compliance" was not presented to the courts below. Petitioners never made the "essential feature" argument (see Petition at 14), nor did *21 they cite any of the cases that appear at page 15 of the Petition.

FN17. Petitioners do not argue that their pleading of boilerplate RICO counts is a reason to grant certiorari. The transformation of this case from a fraud and racketeering extravaganza into an alleged failure to comply with the registration requirements of the securities laws is one of the more remarkable of petitioners' retreats.

FN18. If the SEC's position is accepted, all of the claims pleaded by petitioners here vanish. Petitioners' contention that the court below was "procedurally wrong" in considering the merits of their § 12(1) claims (Petition at 17 n.15) is equally disingenuous: respondents had moved to dismiss the § 12(1) claims on a variety of grounds, including statute of limitations, failure to allege "seller" status of certain defendants, and failure to allege controlling person status. In addition, the Commission's letter was in the record below, was quoted by Judge Lasker (see Petition at 14d-15d) and was referred to, albeit not by name, by the Second Circuit (see Petition at 25c).

FN19. At oral argument before the Second Circuit, petitioners' counsel responded to a direct question from that court by admitting that petitioners had asked the SEC for support in this litigation and had been rebuffed. The agency would have a perfectly good reason for not wanting to give an advisory opinion on the enforceability of Lloyd's Names' Choice Clauses: under the agency's already expressed view, the question in the context of this case is entirely moot.

Since the issuance of the decision below, the Seventh Circuit's decision involving these same forum selection provisions confirms its correctness, and confirms that there are no new issues requiring review by this Court. Bonny v. The Society of Lloyd's, Nos. 92-1662, 92-2771, 1993 WL 292345 (7th Cir. Aug. 5, 1993). Having carefully reviewed this Court's decisions in Bremen, Scherk, Mitsubishi Motors and Carnival Cruise Lines, and the singular factual details of the arrangements by which an individual obtains the right to participate in insurance underwriting at Lloyd's, the Seventh Circuit came to the same correct result as the court below:

In the present case, we are satisfied that several remedies in England vindicate plaintiffs' substantive rights while not subverting the United States policies of insuring full and fair disclosure by issuers and deterring the exploitation of United States investors. 1993 WL 292345 at *4.

Far from creating any "loophole" in the protection afforded to Americans interested in participating at Lloyd's, as argued by petitioners, the decision as to which review is sought expressly addressed that potential concern. The court simply concluded that petitioners failed to make a showing that the specified remedies available to them in England were insufficient, in the light of petitioners' own expert's affidavit. There is nothing in the decision below warranting review.

Finally, although the decision below dismissed petitioners' case on the basis of the contractual Choice *22 Clauses, petitioners' claims here were never more than shaky, for at least the following reasons:

a) The District Court also had dismissed the action against most defendants because of petitioners' binding agreements with them to arbitrate any disputes. Said the court below:

We might have referred to the [United Nations] Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for sig nature June 10, 1958, 21 U.S.T. 2517 ... for further support with respect to the arbitration clauses. Petition at 19c n.2.

It did not, but rather relied on The Bremen jurisprudence of this Court for forum selection clauses, because "an arbitration clause is merely a specialized type of forum selection clause. See Scherk, 417 U.S. at 519." Id. As the District Court ruled: "none of the three rationales plaintiffs assert for the non-application of the Convention is persuasive." Petition at 18e.

b) Claims against over twelve hundred of the named defendants (the "syndicates") had already been dismissed because those defendants were found to lack juridical status in either the United States or the United Kingdom. Petitioners do not question that ruling here.

c) Ordinary forum non conveniens considerations independently dictated sending petitioners' claims to England:

The overwhelmingly English nature of this dispute likely also would warrant dismissal of the action on forum non conveniens grounds. Petition at 21e.

*23 d) Also pending before the District Court were fully-briefed motions to dismiss the complaint for failure to plead fraud with particularity, failure to plead with specificity controlling person liability and other defects in stating a Securities Act cause of action, failure to plead adequately the alleged RICO violations, and failure to plead compliance with the statute of limitations.

e) The SEC had previously determined that petitioners held no "security" that required registration.

*24 CONCLUSION

The petition for certiorari should be denied.

Appendix not available.