Poseidon Schiffahrt GMBH v. Netuno

• Court: U.S. District Court — Southern District of Georgia
• Writing for the Court: LAWRENCE
• Citation: Poseidon Schiffahrt GMBH v. Netuno, 361 F. Supp. 412, 1974 AMC 147 (S.D. Ga. 1973)
• Decision Date: 01 August 1973
• Docket Number: Civ. A. No. 2866.
• Parties: POSEIDON SCHIFFAHRT G.M.B.H., Plaintiff, v. The M/S NETUNO, her engines, tackle, apparel, etc., Defendant.

361 F. Supp. 412

1974 AMC 147

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.

August 1, 1973.

George H. Chamlee, Lawton, Sipple & Chamlee, Savannah, Ga., for plaintiff.

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

SECOND ORDER

LAWRENCE, Chief Judge.

This admiralty case grows out of a collision on Lake Huron between a Brazilian and a German vessel on or near the International Boundary Line of Canada and the United States. I dismissed the action for lack of jurisdiction. See 335 F.Supp. 684.

On appeal the case was remanded "for the court to reassess its conclusion not to exercise jurisdiction using the proper legal standard," as set forth in Motor Distributors, Ltd. v. Olaf Pedersen's Rederi A/S, 5 Cir., 239 F.2d 463. See The Netuno, 474 F.2d 203, at 205.

In The Belgenland, 114 U.S. 355, 367, 5 S.Ct. 860, 866, 29 L.Ed. 152 the Supreme Court said that the subject of jurisdiction had been before our admiralty courts frequently and "there has been but one opinion expressed, namely, that they have jurisdiction in such cases, and that they will exercise it unless special circumstances exist to show that justice would be better subserved by declining it." In Motor Distributors, supra, the Fifth Circuit interpreted this language to mean that, "Instead of the rule being, as the trial court here stated, that jurisdiction should be denied unless such denial would work an injustice, the rule is, rather, that jurisdiction should be taken unless to do so would work an injustice."¹ The same test was applied by the Court of Appeals in remanding this case for reassessment of the conclusion reached by this Court.

To gloss the gloss of the Fifth Circuit I take this to mean that a libel must be entertained by the admiralty courts of the United States in a case involving collisions of vessels of foreign nationality unless the defendant ship is able to show that to do so would work, as to such owner, "an injustice" because of the "special circumstances."

Counsel for the Netuno owners state:

"If the question of liability is tried in the Federal Court of Canada, the Netuno interests will be able to assert, by way of defense, the navigational faults of the Transmichigan, and, if not successful, would then still be entitled to claim limitation of liability. It is estimated that the limitation fund under Canadian law would be approximately $640,000.00 whereas claims have been asserted in excess of $1,000,000.00. Consequently, limitation of liability under Canadian law is very important to the Netuno interests. On the other hand, limitation of liability under United States law is worthless to the Netuno interests because it is based on the value of the vessel after the accident and that value is far in excess of the amount of the claims."

Defendant says that the cost of trying the case at Savannah (where not a single witness resides) would represent considerable additional expense to it.

As to the pending Canadian litigation by the same plaintiff in the Federal Court of Canada filed prior to the libel in rem in this Court, counsel for the Netuno owners inform me that the case "is for all practical purposes, ready for trial and a trial date in the very near future could be appointed." They complain:

"If this case proceeds to trial in Savannah, it will probably lead to multiple litigation because of the pending litigation in the Federal Court of Canada at Montreal, Quebec, Canada. Defendants have filed their counterclaims in that action and intend to proceed with that litigation. The only reason that litigation has not proceeded at this time, is because the Netuno interests are in a defense position initially and the Transmichigan interests have not initiated the offense."

The Netuno interests also rely on the Brussels Convention of 1952 which is binding on both German and Brazilian vessels. It provides that actions for collisions must be brought (a) in a court where defendant resides or has a place of business; (b) where the defendant vessel has been arrested or where arrest could have been effected and bail or security has been furnished, or (c) before the Court of the place of collision if in inland waters. Article 1 (1)(a), (b), (c). The claimant may decide in which of these tribunals the proceeding shall be instituted but it may not "bring a further action against the same defendant on the same facts in another jurisdiction, without discontinuing an action already instituted."² Brussels Convention of 1952, Article 1 (2), (3); 6 Benedict on Admiralty (7th ed.), pp. 35-37.

In its 1972 Order this Court referred to the Convention. However, in the light of Carbon Black Export, Inc. v. The S. S. Monrosa, 254 F.2d 297 (5th Cir.) it was deemed expedient to steer clear of the foggy area of our admiralty law respecting deference to foreign-forum stipulations. See 335 F.Supp. at 688. Since the remand of this case, the Supreme Court has decided The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 which went up from the Fifth Circuit.³ In that case the highest Court held that the forum-selection clause involved was binding on the contracting parties unless respondent meets the heavy burden of showing that its enforcement would be unreasonable or unjust.⁴

Counsel for Poseidon Schiffahrt point out that the fact that the cargo damage rule or limitation statutes or laws of a foreign forum are more favorable to the defendant shipowner than the maritime law of the American court is not good reason to decline jurisdiction. The Western Farmer, 210 F.2d 754, 757 (2nd Cir.); The Mandu, 102 F.2d 459 (2nd Cir.); Volkswagen of America, Inc. v. S/S Silver Isle, 257 F.Supp. 562, 564 (N.D.Ohio). Such statutes are part of the remedy and the governing law is that of the forum.

The real inquiry, plaintiff insists, should be directed to whether the American court selected by the libellant is in fact "a neutral forum." Such, counsel say, is the rationale of Belgenland and the question of "injustice" must be assayed in that context.

The Brussels Convention of 1952 deals with civil jurisdiction in matters of collision. An action between seagoing vessels can only be "introduced" (other than at defendant's place of business or residence and the place of collision if in a port or in inland waters) "before the Court of the place where arrest has been effected of the defendant ship . . . or where arrest could have been effected and bail or other security has been furnished." Article 1(c).

I expressed the view in my first decision that the Netuno was not "seized" in Canada and that the service on the vessel of the "Statement of Claim" and defendant's written assurance, after negotiation, that bail would be given in the amount sued for or in such lesser sum as the court might fix is not the equivalent of bail. See 335 F.Supp. 687. I further commented that the proceeding was not a true in rem action. With that observation the Appellate Court agreed.⁵

The owners of the Netuno stress Article 1(c). They contend that the arrest could have been effected at Montreal and bail or other security furnished there. This is quite true but the language of the sub-section is in the conjunctive and apparently requires both that an arrest could have been effected and that "bail or other security has been furnished" in connection with an arrest. (Italics added). Both conditions must be fulfilled.

Article 1(3) of the Brussels Convention prohibits a claimant from bringing a second and identical claim against the same defendant in another jurisdiction "without discontinuing an action already instituted." Does this include cases where a voluntary dismissal is prevented by the existence of a defendant's counterclaim? Is this provision limited to discontinuance of in rem actions or does the prohibition include proceedings in personam?

These problems of interpretation arise out of a compact to which the United States is not a party. No decisions by the courts of the signatory nations light the way. It is a virginal area of law. Even if the meaning of the Brussels Convention were clear, there remains the question of whether our admiralty courts recognize treaty restrictions which would affect their traditional jurisdiction over collisions of foreignowned vessels.

To re-intone the Fifth Circuit liturgy, admiralty courts in this country must retain jurisdiction over in rem actions in collisions between vessels of different nationalities unless the defendant vessel or owner establishes existence of special circumstances which would work an injustice if the court took jurisdiction.⁶ The fact that the rule of valuation in limitation of liability is more liberal in this country than the Canadian standard does not make retention of jurisdiction unjust. The foreign shipowner can avail himself of the right, in a proper case, to libel another foreign-owned vessel in the admiralty courts of this country where the maritime law may be more favorable to him. His doing so does not, without more, warrant declension of jurisdiction.

Inconvenience of the Savannah forum to defendant does not in itself work an injustice to the shipowner.⁷ See the decision in The Netuno, 474 F. 2d at 205, note 5. Multiple jurisdiction may result in an injustice to a defendant. It is conceivable though improbable that the Canadian Court and this Court would both proceed to judgment in this case. It is possible, too, that the counterclaim would be tried in the former and plaintiff's case in the latter. I add that the Canadian Court seemingly has not pushed the litigation at Montreal because the owner of the Transmichigan has not desired to do so.

It is settled in our admiralty law that the choice of forum by a foreign plaintiff ...