Bonny v. Society of Lloyd's
United States Court of Appeals for the Seventh Circuit
3 F.3d 156 (7th Cir. 1993)
Agents of Lloyd's of London (defendant), an English insurance and investment market, met with American investors Kenneth Bonny, Francesca Bonny, and Robert Flevig (plaintiffs) in Illinois, and the investors later traveled to England to sign membership agreements containing forum-selection and choice-of-law clauses designating England and English law, plus a separate agreement requiring arbitration in England. After suffering large losses, the plaintiffs sued Lloyd's in U.S. court, alleging violations of the Securities Act of 1933 and Securities Exchange Act of 1934. The district court dismissed based on the forum-selection and arbitration clauses, and the plaintiffs appealed.
Whether a forum-selection clause, though presumptively valid, is unenforceable as unreasonable under the circumstances when U.S. investors claim it prospectively waives their federal securities-law remedies.