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Change of Venue
Under a federal law called the Carriage of Goods by Sea Act, a shipping dispute involving a U.S. company is supposed to be settled in the federal court system. But the U.S. Supreme Court has ruled that the legal venue is a contractual matter between exporters and importers, and that U.S. companies can be forced to settle disputes in foreign courts if a venue selection is listed in the bill of lading. "It's not a widely known decision," says Peter Quinter, an attorney with the Fort Lauderdale law firm of Becker & Poliakoff. "The Supreme Court decision was a 180-degree turn from everything the court has done before."
The high court's stance was upheld recently by a federal court in Miami in a case pitting a U.S. company against a freight forwarder that delivered its merchandise to St. Thomas. When some of its goods were discovered missing or damaged, the U.S. company filed suit in Miami. But it lost the case when the judge upheld the defendant's argument that the dispute had to be settled in France, in accordance with terms listed in the bill of lading. The judge also ruled that a one-year statute of limitations applied. So even though the U.S. company filed suit within a year, by the time the judge ruled, the one-year time limit had expired and the company couldn't file another suit in France.
Quinter says U.S. companies should try to negotiate shipping contracts with terms that call for dispute resolution in this nation's federal courts. But he concedes that small firms may not have enough clout with big carriers.
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BARRINGTON INTERNATIONAL
On The Frontier
One year ago, when a plane crash in Croatia killed U.S. Commerce Secretary Ron Brown and other members of a trade mission, one of the lesser-known victims was Barry L. Conrad, top executive of Fort Lauderdale-based Barrington International Hotels and Restaurants.
Despite Conrad's death, the executive's vision of international expansion lives on at Barrington. The hotel management and development firm finds opportunities in emerging foreign markets where competitors won't tread. It manages dozens of hotels in Eastern Europe and plans to develop hundreds in South America.
"The tragic turn that our company took, with the death of Barry Conrad, set us back about six to eight months in our plans," says Paul J. Sistare, 42, who succeeded Conrad as Barrington's top officer. But Sistare says the privately held company is back on track. "The annual gross revenues of our group, including all of our affiliates and subsidiaries, will be in excess of about $75 million this year." Not bad for a company founded just two years ago. And Sistare says the best is yet to come, as Barrington expands from hotel management, where margins are razor-thin, into hotel development, where the potential profit is much greater.
Barrington is developing hotels in South America as a master franchisee for Maryland-based Choice Hotels International, which runs large chains doing business under such brand names as Comfort Inn, Clarion Hotel and Quality Inn. Barrington operates in South America through majority-owned subsidiaries in Buenos Aires, Argentina, and S?o Paulo, Brazil.
Barrington recently announced the start of construction for the first Comfort Inn in Brazil, scheduled to open in Lages in the summer of 1998. Under the Comfort Inn name and other Choice brands, Barrington plans to develop hotels throughout Argentina, Brazil, Paraguay and Uruguay.
"In Uruguay, we have one hotel in Punta del Este. We have signed a contract to develop 17 hotels in Argentina, and we've signed a deal to develop another 20 hotels in the S?o Paulo area," Sistare says. "Our plan is, in the next five years, we'll have 200 hotels open and operating."
In Eastern Europe, Barrington is primarily a property manager. It operates through minority-owned affiliates in Zagreb, Croatia, and Budapest, Hungary, that manage more than 70 hotels and other lodging facilities. And Barrington is hungry for more. "Soon, we hope to be represented in Vienna, where we're doing a deal to take on a group of hotels out of Austria," Sistare says. "We're actively working on a deal in Poland. We're very close to a deal in the Czech Republic."
In the meantime, Barrington will oversee a five-year, $100 million renovation of its properties in Croatia.
Why not do business in the U.S.? Because it's too crowded, says Sistare, a 25-year veteran of the hotel business whom Barrington recruited from Richfield Hospitality Services, a Denver-based hotel management company, where he served as president and CEO.
"If you look at the U.S. hotel environment now, it's very densely saturated," he says. At a busy intersection near his Fort Lauderdale office, "you see a Residence Inn, you see a Wellsley, a Courtyard, a Holiday Inn up the street, a Hilton up the street. And you think, ?How many more hotels can you put on an interchange?'"
Business opportunities appear more promising in South America, he says, especially for operators of mid-priced hotels. "Go to S?o Paulo and try to find a room to stay in for less than $150. You're not going to find one. There is an intense need for the $50-to-$75 category of rooms that we take for granted in the United States. There's nothing like that in these countries."
Not only are Barrington's operations international, so is its corporate structure. It's incorporated in the Cayman Islands to take advantage of that nation's lenient taxes on corporate profits repatriated from the European and South American nations where Barrington does business.
