Gulf Trading & Transp. Co. v. M/V Tento

Citation694 F.2d 1191
Decision Date20 December 1982
Docket Number80-4158 and 80-4176,Nos. 80-4151,s. 80-4151
PartiesGULF TRADING & TRANSPORTATION CO., and Permal Shipping Co., Plaintiffs-Appellees, v. The M/V TENTO, her engines, tackle, boilers, etc., in rem, Defendant, I/S NOREXIM, Claimant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

D. Thomas McCune, Lillick, McHose & Charles, San Francisco, Cal., for claimant-appellant.

Eric Danoff, Graham & James, San Francisco, Cal., for plaintiffs-appellees.

Appeal from the United States District Court for the Northern District of California.

Before KENNEDY and TANG, Circuit Judges, and HOFFMAN, * District Judge.

KENNEDY, Circuit Judge:

This case presents certain choice of law questions respecting maritime liens. Liens were filed against the M/V Tento (Tento) when it docked at the Port of Stockton, in the Eastern District of California. The underlying claims arose from two separate transactions, the first with Gulf Trading & Transportation Company (Gulf), the second with Permal Shipping Company (Permal).

The Tento is a Norwegian flag vessel owned by I/S Norexim (Norexim), a Norwegian corporation. Norexim placed the Tento under time charter to Aspen Steamship Company (Aspen), and Aspen subchartered to Coin, S.A. (Coin). Both Coin and Aspen operated from New York City. Norexim's charter to Aspen provided that United States law would govern certain aspects of the agreement and that the charterer was responsible for obtaining the Tento's fuel oil. The Tento had made a significant number of voyages to United States ports in the past 1 and on the voyage giving rise to the claim it embarked from the United States for the Suez Canal.

While Tento was enroute, Coin decided to refuel it in Italy, and the Gulf transaction resulted. One Rodriguez acted for a New York based company that had served as an agent for Coin. At Coin's instance, Rodriguez asked a fuel broker in New York City to order oil for the Tento to be bunkered in Italy. The broker contacted Gulf Oil Corporation at its New York sales office and made an oral contract for sale and delivery of fuel oil.

Gulf, a Delaware corporation, used an Italian company, AGIP, to deliver the fuel oil in Italy. Gulf paid AGIP and charged the Tento $105,447.46. As one might predict at this point, neither Coin, as subcharterer, nor Norexim, as owner, paid the invoice.

The second transaction was with Permal, a New York corporation. Again on Coin's behalf, Rodriguez requested Permal in New York City to advance approximately $40,000 for the Tento's Suez Canal transit. Permal complied and sent invoices, but $12,376.91 is still owing.

Gulf and Permal initiated in rem actions against the Tento by arresting the vessel in Stockton, California. The charter having terminated, Norexim was operating the vessel. The vessel posted security and Norexim appeared to defend the actions against the vessel. Gulf asserted a maritime lien for the fuel oil, and Permal asserted a maritime lien for the canal expenses.

Here and in the district court, Norexim contended that Italian and Egyptian law govern the Gulf and Permal transactions respectively, and that under those laws the owner's vessel is not subject to liens for expenses incurred by the sub-charterer. 2 It argued Italian and Egyptian law control because the correct choice of law is determined by a single point of contact for the separate transactions, namely, the country where the supplies were obtained. In the alternative, Norexim asserted that even if the choice of law were made by weighing all the points of contact in each transaction, Italian law rules the Gulf transaction and Egyptian law the Permal one. Rejecting Norexim's arguments, the district court determined United States law applies to each transaction, and we affirm.

In Lauritzen v. Larsen, 345 U.S. 571, 73 S.Ct. 921, 97 L.Ed. 1254 (1953), the Supreme Court was required to resolve a choice of law question in a maritime tort suit under the Jones Act. The Court adopted an approach similar to the second Restatement of Conflicts. See Restatement (Second) of Conflict of Laws Sec. 6 (1971). The Court's approach was to set forth the points of contact between the transaction and various jurisdictions and to weigh and evaluate them. Id. at 582, 73 S.Ct. at 928. Its review included the place of the wrongful act, the flag of the ships, allegiance or domicile of the injured seaman, allegiance of the shipowner, place of signing the employment contract, accessibility of a foreign court, and the law of the forum.

In a subsequent decision, the Supreme Court declared that the factors in Lauritzen were not exhaustive. Hellenic Lines, Ltd. v. Rhoditis, 398 U.S. 306, 309, 90 S.Ct. 1731, 1734, 26 L.Ed.2d 252 (1970). 3 The vessel's "base of operations," that is, the shipowner's center of management and the location most benefited economically by the business of the vessel, 4 is also relevant. Id. at 309, 90 S.Ct. at 1734. The Supreme Court has extended the Lauritzen approach to "guide courts in the application of maritime law generally." Romero v. International Terminal Operating Co., 358 U.S. 354, 382, 79 S.Ct. 468, 485, 3 L.Ed.2d 769 (1959).

Norexim argues that in certain situations the Lauritzen analysis demands resort to a single contact to solve choice of law problems. In support of its theory, it points to McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 19, 83 S.Ct. 671, 676, 9 L.Ed.2d 547 (1963), where the Supreme Court intimated that Lauritzen's balance of contacts theory should not be applied to the ultimate, but that in certain circumstances the appropriate rule is to focus on a single point of contact.

Norexim asserts further that the needs of the shipping industry make it appropriate for courts to determine supply cases by resort to the single factor of the law of the place where the supplies were delivered. It posits that predictability of result is particularly important in merchantile transactions, and that reference to the law of the place of supply to resolve rights of the parties would lend certainty to such transactions. The use of a general contacts approach, according to Norexim, creates confusion because vessels attract contacts "as easily as their hulls grow barnacles." Norexim claims, moreover, that the burden of learning foreign law should be on suppliers such as Gulf and Permal because such companies have chosen to sell on a multinational scale. We reject these arguments.

The Second Circuit has already discredited the notion that choice of law in maritime lien cases should be made by looking solely to the law of the place of supply. Rainbow Line, Inc. v. M/V Tequila, 480 F.2d 1024, 1026 & n. 5 (2d Cir.1973). 5 Instead, the court required consideration of all points of contact with the various nations.

Though we have not ruled on the appropriate approach for choice of law in the context of maritime liens, to hold that the choice of law in such cases is controlled by the significance of multiple contacts is consistent with our previous holdings, both in maritime cases involving other types of disputes and in non-maritime contract choice of law cases. A single contact approach would run counter to an important principle, which is the desirability, even the necessity, of accommodating the legitimate interests of separate sovereignties in vindicating their own legal policies. Lauritzen, 345 U.S. at 582, 73 S.Ct. at 928. This principle is of special import in admiralty, where international relations are delicate. In Phillips v. Amoco Trinidad Oil Co., 632 F.2d 82 (9th Cir.1980), cert. denied, 451 U.S. 920, 101 S.Ct. 1999, 68 L.Ed.2d 312 (1981), a wrongful death and injury case, we held that the Jones Act did not apply to an accident occurring at a foreign based operation though the operator was an American based corporation with headquarters in California. We reviewed the factors listed in Lauritzen, noted that the list was not exhaustive, and stressed the importance of sensitivity to the interests of other nations. Id. at 84-85. In Commercial Ins. Co. v. Pacific-Peru Construction Co., 558 F.2d 948, 952 (9th Cir.1977), we referred to general choice of law doctrines to determine that contract choice of law issues were governed by the various contacts set forth in the Restatement. Similarly, we conclude here that all relevant contacts must be considered in maritime lien cases.

Our holding is consistent with congressional policy. When it amended the maritime lien provisions of the Ship Mortgage Act, 46 U.S.C. ch. 25, Secs. 911-84 (1976), Congress demonstrated its intent that maritime liens be enforced even if it was the charterer rather than the owner who had ordered the supplies giving rise to it. Id. at Sec. 973. Before the amendment had been passed, it appeared that a prohibition of lien clause in a charter party barred the supplier from acquiring a lien on a vessel for necessaries furnished to it. The statute then in effect permitted a supplier to acquire such a lien despite a prohibition of lien clause in the charter agreement. Faced with a situation similar to the one before this court, Congress determined that the vessel, and not the American supplier, should bear the burden when a charterer has not paid for its supplies. The legislative history stated:

Your Committee gave careful consideration to this problem of American materialmen where the owner, by chartering or surrendering possession of the vessel, clothes the master thereof with at least apparent authority to bind the vessel for necessaries furnished to the vessel. The question presented was where a loss occurs in this situation, whether it should be suffered by the owner of the vessel, or the American materialman who furnished such necessaries in good faith.

* * *

After careful consideration of the entire record, your Committee has concluded that, as a matter of equity, the owner should bear the loss in such a...

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