Snöfrost AB v. Håkansson, 1:18-cv-10798 (D. Mass. Dec. 19, 2018) [click for opinion]
Snöfrost, a Swedish company, filed a complaint in the U.S. District Court for the District of Massachusetts against Susanne Håkansson, a Massachusetts resident, seeking to enforce an alleged share purchase agreement ("SPA"). The SPA required Håkansson to purchase shares in a Swedish company (Farstorps Gård AB) for 330 million Swedish Krona, or approximately $40 million. Snöfrost alleged that Håkansson reneged on the deal "at the eleventh hour" by raising regulatory issues as an excuse.
Håkansson denied the enforceability of the SPA, and argued that even if the SPA could be enforced, Snöfrost breached the SPA by failing to provide satisfactory proof that the transaction complied with Swedish law. The district court did not address the merits of the dispute because it granted Håkansson's motion to dismiss on the grounds of forum non conveniens.
The court first remarked that, because the Plaintiff is a foreign entity, its choice of forum is afforded diminished deference. The court then proceeded to address whether Håkansson established the existence of an available and adequate alternative forum, and whether she showed "that the compendium of factors relevant to the private and public interests implicated by the case strongly favors dismissal."
In dismissing the lawsuit, the court concluded that Sweden was an adequate forum for the dispute. Håkansson had submitted opinions written by Swedish law experts that Swedish courts would honor Håkansson's consent to personal and subject matter jurisdiction in Sweden. The court also found "nothing in the record suggesting that the Swedish courts cannot provide an adequate remedy either in addressing the enforceability of the alleged contract and any reference to arbitration, or that the parties will be treated unfairly."
The court then concluded that the "private and public factors overwhelmingly point to Sweden as being the most convenient and appropriate forum for Snöfrost's action." In reaching the conclusion, the court found that most "of the material witnesses were in Sweden when the central event at issue" occurred and noted that neither party suggested that any witnesses were unwilling to testify. The court also emphasized the complaint's allegation that the "key meeting" took place in Sweden and that "Sweden is, without a doubt, where the center of gravity lies."
The court determined that Swedish law would apply under the most significant relationship test, even if the SPA's governing law clause were unenforceable, and that a Swedish court would be more competent to decide and apply the applicable Swedish law. Since it was "evident that the center of gravity for this dispute is in Sweden," the court commented, "Snöfrost strains to suggest the United States has a significant interest in hearing the case." The court noted that the SPA included a clause providing for resolution of disputes by arbitration administered by the Arbitration Institute of the Stockholm Chamber of Commerce. The parties did not address whether a court or an arbitrator should decide whether the arbitration agreement was enforceable under Swedish law. The court said it would "assume in the apparent absence of a dispute raised by Snöfrost that, as under the Federal Arbitration Act, whether a contract containing an arbitration clause exists under Swedish law is generally a question for a court, not an arbitrator," and the district court left "pursuit of this dispute to Swedish legal process," for the Swedish court to determine the enforceability of the SPA and its arbitration clause.
The court ruled that Håkansson "made a compelling showing to overcome the background—but diminished—presumption in favor of Snöfrost's anomalous choice of forum" and granted Håkansson's motion to dismiss subject to Håkansson executing and filing a stipulation consenting to personal jurisdiction and venue in the Swedish court and agreeing to be bound by the Swedish court's determination regarding the enforceability of the SPA.