Poseidon Schiffahrt, GmBH v. M/S NETUNO, Civ. A. No. 2866.

• Decision Date: 06 January 1972
• Docket Number: Civ. A. No. 2866.
• Citation: 335 F. Supp. 684
• Parties: POSEIDON SCHIFFAHRT, G.m.B.H., Plaintiff, v. The M/S NETUNO, Her Engines, Tackle, Apparel, etc., Defendant.
• Court: U.S. District Court — Southern District of Georgia

335 F. Supp. 684

POSEIDON SCHIFFAHRT, G.m.B.H., Plaintiff, v. The M/S NETUNO, Her Engines, Tackle, Apparel, etc., Defendant.

Civ. A. No. 2866.

United States District Court, S. D. Georgia, Savannah Division.

January 6, 1972.

George H. Chamlee, Lawton, Sipple & Chamlee, Savannah, Ga., A. Stuart Hyndman, McMaster, Meighen, Minnion, Patch & Cordeau, Montreal, Canada, for plaintiff.

Spencer Connerat, Jr., Connerat, Dunn, Hunter, Houlihan, Maclean & Exley, Savannah, Ga., Raymond A. Ballard, Foster, Meadows & Ballard, Detroit, Mich., for defendant.

ORDER ON DEFENDANT'S MOTION TO DISMISS

LAWRENCE, Chief Judge.

This libel involves the collision of two vessels on the early morning of August 27, 1971, in the channel of the St. Clair River at the south end of Lake Huron. The Transmichigan which is of German registry is owned by Poseidon Schiffahrt. She was on a voyage from Hamburg to Milwaukee. The Netuno, a Brazilian motorship, was bound from Bay City to Detroit. At issue is whether or not this Court should exercise its discretion in favor of retaining jurisdiction in a case where similar litigation between the same parties is pending in the admiralty courts of Canada.

Shortly after the collision an in rem and in personam action was brought by the owner of the Netuno against the Transmichigan in the United States District Court for the Eastern District of Michigan. The complaint was not served and the in rem feature of the litigation was never perfected. Apparently the proceeding was merely a vehicle for deposing, pursuant to an ex parte order, the crew of the Transmichigan and the two pilots. The action was dismissed on September 20, 1971.

On September 3, 1971, a libel action was filed by Poseidon as owner of the Transmichigan in the Federal Court of Canada at Montreal where the Netuno was then under repair. Damages to the German vessel and her owner were estimated at approximately $1,000,000. The suit was denominated an "Action in Rem" and there was a prayer for condemnation of the Netuno. A "Statement of Defence" and a counterclaim were filed by the defendant.

On September 27, 1971, a third libel proceeding was filed at Savannah where the Netuno had put following her departure from Montreal.¹ In the proceeding in this Court the Netuno was not seized in view of a waiver by the owner of warrant for arrest in action in rem. It was stipulated that it would have the same effect as though there had been service of such warrant.

Defendant moves to dismiss Poseidon's action on the ground that it had commenced litigation which is pending in The Federal Court of Canada and which involves the same parties and issues.

Poseidon replies that both vessels were carrying American cargo; both were bound to American ports; the pilots were American, and the collision occurred in American waters. Although libellant selected the Canadian jurisdiction, it says that there is no necessary or practical reason of trying the case there and that the only interests involved are Brazilian, German and American. It also contends that the action is not in rem. Counsel for Netuno's owner argue that the collision occurred in Canadian waters; that the witnesses as to damages and repairs reside in Canada, and that the suit brought in the Canadian admiralty court is one in rem.

The defendant's motion to dismiss was orally argued on November 29th. Briefs have been furnished and counsel for the parties have filed affidavits supporting and contesting the motion.

In insisting that this Court take jurisdiction of the libel brought here Poseidon lays store by The Belgenland, 114 U.S. 355, 5 S.Ct. 860, 29 L.Ed. 152 and Motor Distributors, Limited v. Olaf Pedersen's Rederi A/S owner of the Sunny Prince, 239 F.2d 463 (5 Cir.); cert. denied, 353 U.S. 938, 77 S.Ct. 816, 1 L.Ed. 2d 760. In The Belgenland the Supreme Court held that in the case of a collision on the high seas between vessels of foreign nationality jurisdiction of our courts is beyond dispute. Expediency as to its exercise is all that matters. Assumption thereof depends largely on the discretion of the court of first instance. Jurisdiction should be entertained by the latter "unless special circumstances exist to show that justice would be better subserved by declining it."²

In Motor Distributors, supra, a district court in Florida dismissed a libel in rem brought there against a foreign ship by nationals of foreign countries for damages arising out of a collision at sea between a German and a Norwegian vessel. Reading The Belgenland as requiring the denial of jurisdiction unless it should work an injustice, the lower court found that no such showing had been made. The Fifth Circuit reversed. It held that the correct rule is that jurisdiction must be assumed unless to do so would produce an injustice.

In neither of the cases referred to was there the element of a libel pending in a foreign jurisdiction involving the same parties and the same subject matter. Nor was there such a situation in the other cases cited by the Fifth Circuit Court of Appeals in support of the ruling in Motor Distributors.

A case bearing greater resemblance to the one sub judice is The Kanto Maru (9 Cir.) 112 F.2d 564. It involved a collision in the territorial waters of Japan between a vessel of Japanese and a vessel of Norwegian nationality. The Kanto Maru owners brought a libel proceeding against the Ingeren in an admiralty court in Japan. No cross libel was filed by respondent but consent was given to such a procedure. Subsequently, while the action in Japan was pending, the owners of the Ingeren filed a libel in rem in a district court in California. The district judge dismissed the proceeding, stating that the question of liability could be properly and promptly heard in the admiralty courts of Japan. The Ninth Circuit affirmed. "While it is true that there are some reasons advanced by the libelant which would point to the desirability of retaining jurisdiction there are many facts stated by the trial court in the findings upon which it based its decision which tend to fully justify that decision. . . ." The Kanto Maru, supra, 112 F.2d 566.

The rule as to the effect of the pendency of a similar action between the parties in another jurisdiction applies in admiralty. Where the proceeding is in rem it is said that the right of the first court to assume possession and control of the property is exclusive. 2 Am.Jur. 2d Admiralty § 140; 2 C.J.S. Admiralty § 83, p. 164. The rule has been held to be different where the pending action in a foreign country is in personam. The Kongsli, 252 F. 267. In Iperia-Svalen, 1938 A.M.C. 778 (E.D.,N.Y.,1919) the Iperia was arrested in the Azores following a collision at sea with the Svalen. Bond was given for her release. Subsequently, the Iperia was attached in rem in a libel proceeding in the Eastern District of New York. The district judge ruled that if the first arrest was pursuant to an action in rem authorized by Portuguese law, the ship could not be arrested a second time in the United States. There was no proof, however, that such a proceeding was available under the law of Portugal. Defendant's motions were denied after libellant expressed a willingness to discontinue the action which was pending in the Azores.

The parties are at odds as to whether the proceeding in Canada is in rem. It is so denominated but the Netuno was not seized. An application for warrant of arrest was issued but not served. Under Canadian law a vessel which has been attached cannot be moved without court approval until bail is given. The "Statement of Claim" (which is the originating document) was served on the ship. But this does not constitute an arrest. There is a procedure by which issuance and service of a warrant for arrest may be forestalled through a "Notice for Caveat Warrant." On September 20, 1971, counsel for the underwriters of the Netuno, following negotiations, notified Poseidon that within three days after being required to do so bail would be given in the amount sued for or in such lesser sum as the court might fix. Such notice is not the equivalent of bail. It is unilateral and may be withdrawn at any time. It is effective only for six months. No bail has been fixed in the proceeding at Montreal.

In The Kongsli, supra, a British and a Norwegian steamship collided at Oran and an action was filed against the latter in the French courts in Algeria. The Norwegian vessel was seized but was released from attachment upon the owner furnishing a letter of indemnity. Before the litigation in that country had proceeded to trial and judgment the British owners libeled the Kongsli in the Federal District Court in Maine. The district judge ruled that the Algerian action was not in rem in the sense of such proceedings under English and American law and that the letter of indemnity did not constitute a bond discharging the lien and substituting for the ship. The Algerian suit being in personam, jurisdiction was retained.

I do not think the Canadian proceeding is a true in rem action. If there had been an arrest of the vessel, followed by bail, the fact might be conclusive as to non-retention of jurisdiction. However, whatever its nature may be, the pendency of the twin action in Canada is relevant to proper exercise of discretion. In Charter Shipping Company, Limited v. Bowring, Jones & Tidy, Limited, 281 U.S. 515, 50 S.Ct. 400, 74 L.Ed. 1008 the district judge had declined jurisdiction under similar circumstances. The Circuit Court of Appeals for the Second Circuit reversed. Certiorari was granted. In reversing the ruling the Supreme Court said, "Both of the parties being British subjects and the present litigation, as well as the suit pending abroad, apparently involving the application of English law to the fund located there, it was for the District Court to say, as it did, upon a consideration of all the circumstances, whether it should decline `to take cognizance of the case if...