THE BREMEN v. ZAPATA OFF-SHORE CO.
Argument of David C. G. Kerr
Chief Justice Warren E. Burger: We will hear arguments next in Bremen and Unterweser against Zapata Off-Shore Company.
Mr. Kerr you may proceed.
Mr. David C. G. Kerr: Mr. Chief Justice, if it please the court.
The petitioner here is Unterweser Reederei, a German corporation, domiciled in Bremen, Germany, the owner of the Seagoing tug Bremen.
The respondent is Zapata Off-Shore Company, a multinational drilling company, owner of the drill rig self-elevated drill rig Chaparral.
Very briefly the facts and circumstances which bring this case to this Court, have their genesis in a drilling contract, executed by and between Zapata or through it's wholly owned foreign subsidiary and Italian company by the name of (Inaudible) calling for presence of the drill rig Chaparral, off of Ravenna, Italy at the Adriatic.
This necessitated of course, towing the Chaparral from it's sites off of Louisiana to the Adriatic, off of Ravenna.
The Zapata solicited this for this towage voyage and several companies responded, including the petition here Unterweser.
Unterweser was the low bidder and subsequently was requested to submit a contract and it did so, submitted a contract to Zapata in Houston and several changes were made in that contract.
It was executed by Zapata, Houston and the contract was then forwarded to Bremen where the changes were accepted and the contract was executed.
The tow voyage commenced on about January 5, 1968 from the (Inaudible) Mississippi and some 5 days later in the middle of the Gulf of Mexico, a casualty occurred which precipitated a number of losses, very briefly the nature of casualty was a collapse of the three drilling legs and a parting of the tow line.
The tow was reestablished by the tug Bremen and on orders from Zapata, it proceeded to the port of Tampa, Florida which was a nearest port of refuge.
On arrival, at Tampa, the tug Bremen was met by United States Marshal and arrested in conjunction or in connection with a complaint which had been filed by Zapata the previous day, alleging negligent towage and basically a complaint in admiralty based on towage.
That is the first litigation in this particular matter and very briefly, the complaint was filed.
In that litigation, I indicated the day prior to the arrival of the flotilla in Tampa and subsequently, Unterweser filed a motion in the district court at Tampa, seeking among other things that the action in Tampa be stayed, pursuant to a foreign clause in a towage contract which provided that all disputes should be heard by the London Court of Justice in England.
Justice William J. Brennan: Do I understand that, that clause was subject to negotiation before he finally agreed upon, wasn't it?
Mr. David C. G. Kerr: Yes sir.
Justice William J. Brennan: Between the parties there had been some discussion, what law should apply, had they not?
Mr. David C. G. Kerr: The record is devoid of indication that was discussion between the parties.
The only thing we have in the record, Mr. Justice Brennan, is the fact that the Director of Unterweser said that without that clause, they would not have entered into this contract.
The contract was submitted, as I have indicated, by the Unterweser to Zapata in Houston, was reviewed presumably by Zapata in Houston.
They made several changes and initialed and sent back to Bremen.
That clause was not changed in anyway.
Justice Potter Stewart: That clause is in the original submission?
Mr. David C. G. Kerr: Yes sir, it was in the original submission and obviously in the --
Justice Potter Stewart: I thought I read somewhere that there had been some consideration of other law besides--
Mr. David C. G. Kerr: What you're referring to Mr. Justice Brennan is the fact that the director from Unterweser, that's the affidavit of Eric Oswegon (ph), in which he said that normally Unterweser applies German law and German forums to their contracts but here, recognizing that this tow voyage would traverse many jurisdictions and as a compromise, they selected the London forum and then submitted that to Zapata and Zapata executed the contract.
Justice Potter Stewart: In other words, that decision that was made by Unterweser?
Mr. David C. G. Kerr: Yes sir.
Chief Justice Warren E. Burger: Well is it your view that the parties each having one national court to which it -- for which it would have a preference and agreed upon a neutral court?
Mr. David C. G. Kerr: I believe that's what happened here.
I believe this was a neutral forum and it was decided upon as a selection of a forum in recognition that this tow voyage was after all going to traverse many jurisdictions and be subject to many nationality or the courts of many nationality.
Zapata filed its motion, as I've indicated, seeking among other things to state.
Justice Byron R. White: Well did the clause say that in which law would apply?
Mr. David C. G. Kerr: No Mr. Justice White.
It merely said that all disputes shall be submitted to the London Court of Justice.
Justice Byron R. White: So there is no attempt to specify a law?
Mr. David C. G. Kerr: No, we would contend that the attempt was to specify English law as well and that's how the clause has been interrupted by the English courts which have also had this case before.
Justice Byron R. White: I mean normally in English court, regardlessly of the location of an accident or of any other contacts would apply English law?
Mr. David C. G. Kerr: Apparently, the English law, on that subject, Mr. Justice White, is that where the parties had selected the forum, it is presumed that they selected it with the intent of having that forum apply its own law.
Justice Byron R. White: Would that include the English conflict laws?
Mr. David C. G. Kerr: I can't answer that question on English law.
As far as I know in this case, the English court has indicated and this I believe was in the Judge Karminski's decision in the London Court of Justice that presumably, English law would apply but whether the entire body or the English law including conflicts and whether you get into a (Inaudible) situation, I cannot answer that question.
Chief Justice Warren E. Burger: That would be the alternatives this collision, this accident occurred, this damaged occurred in waters of no particular nation, isn't that true?
Mr. David C. G. Kerr: That's correct Mr. Chief Justice.
The alternatives would be, you would get in the contact theory, as determined by what law should this contract be construed and what law should govern.
I think ultimately, you would get to the conclusion that the contract was executed in Bremen, Germany.
And this I think would have considerable weight as I understand the cases that have dealt with contacts.
It's true you have an American National but that's outweighed by German National and German Flag Vessel.
Chief Justice Warren E. Burger: Outweighed or balanced?
Mr. David C. G. Kerr: Balanced.
So ultimately you come to the proposition that the contract was executed in Germany ultimately.
Following the filing of Zapata's motions speaking, to have this matter referred to London Court of Justice, the matter rested in the district court for some months.
In the meantime, the tug was released by agreement of the parties and Unterweser giving security in the amount of $3,500,000.
An action was instituted in London by Unterweser, based on breach of the towage contract and Zapata appeared in that action and objected to the action being brought in London.
Ultimately the London High Court of Justice ruled that the towage contract and its forum provision, particularly the forum provision was reasonable one and that was sustained on appeal in the Court of Appeal in London.
Chief Justice Warren E. Burger: Was that appearance by Zapata there, a general appearance or does it make any difference?
Mr. David C. G. Kerr: Well, believe it was a special appearance.
They raised the question of the reasonableness of the towage, of the forum provision in the court, saying that it should not be enforced that there was a prior action pending in the US and all those questions were decided --
Chief Justice Warren E. Burger: Prior action pending where?
Mr. David C. G. Kerr: In the US and of course they were referring to their district court action in Tampa, which was filed in January and the action by Unterweser in London was filed in February.
So it is correct that that action was pending in Tampa and pending on Zapata on Unterweser's motion to have the case referred to London and in accordance with the towage --.
Justice Byron R. White: When was Unterweser's limitations actions filed?
Mr. David C. G. Kerr: I was coming to that Mr. Justice White, that comes later.
At this point,
Justice Byron R. White: Not much later though.
Mr. David C. G. Kerr: No sir, not much later, about six months later.
The next procedure here was the filing by Unterweser of its complaint seeking exoneration and limitation of liability.
Justice Byron R. White: They didn't have to do that, did it, to ultimately prevail on the issue that's here.
Mr. David C. G. Kerr: We submit that it had to do that in order to protect its limitation right which was about to expire --
Justice Byron R. White: Only, only if the forum question didn't cancel out the American action?
Mr. David C. G. Kerr: If the forum provision had been enforced by the District Court, and that had been sustained on Appeal because I presume an appeal would have been taken, then they would not have to file a limitation action in US.
Justice Byron R. White: Why didn't they pursue that then from the time the District Court first refused to stay action?
Mr. David C. G. Kerr: Because at the time that we filed a complaint limitation, the District Court had still not on ruled on our original motion filed in the original action.
Justice Byron R. White: Why was a limitations action filed?
Mr. David C. G. Kerr: Because the six-month statute was about to run, and if you do not file a limitation within six months of first written notice, you may lose that right.
So if we hadn't filed --
Justice Byron R. White: You may lose it or?
Mr. David C. G. Kerr: You may lose it there is some doubt, Mr. Justice White.
The respondents have argued here, that we could have filed defensive limitation.
This has two problems connected with.
Problem number one is, when you file defensive limitation you don't protect your security, because there may be multiple claims and you would have to go to different jurisdictions, and you would have to put up the same security in each instances were a lawsuit was filed.
So one of the purposes would be defeated, that is a purpose of having a precocious law litigation.
The second danger, or problem with filing limitation by answer which is what they are suggesting is essentially that there is some question of the law and this court has never decided, whether since 1937 Amendment to the Limitation Act, whether or not defensive limitation can be filed after the expiration of six months, and the text writers say that the prudent thing to do is to file a petition affordably within the six moth.
Justice William J. Brennan: Can you file formally petition that in anyway it was something like a special appearance without prejudice to your forum claim under the contract?
Mr. David C. G. Kerr: Mr. Justice Brennan, this is precisely what we did.
Justice William J. Brennan: I see.
Mr. David C. G. Kerr: In the petition -- in our complaints seeking limitation, we reasserted the supremacy of the forum clause, pointing out that the court had not ruled on, that we were compelled to file limitation, but we still maintain and assert it that, that forum clause was supreme and govern the cause and the matter should be referred to London.
Chief Justice Warren E. Burger: If the parties at the outset had both acknowledged the forum clause of the contract, would you have been in the Florida Courts at all in the United States Court?
Mr. David C. G. Kerr: If Zapata had complied with this contractual obligations, there would be no lawsuit in Tampa.
That is correct, Mr. Chief Justice.
Justice William H. Rehnquist: Mr. Kerr, does English law recognize the type of admiralty limitation proceeding that the United Stated laws do.
Mr. David C. G. Kerr: They do, Mr. Justice Rehnquist, but it is somewhat different.
It is different in amount of the limitation fund as the respondent points out that it's considerably less than the US.
And then also they have no statute limitation within which to file.
They don't have the six months.
In England you can only file your limitation action once a claim has been asserted against in a court.
There is no limitation period.
So which brings up another point, that we did not file limitation in England, because it would have been premature under that law.
Because we had no claim against this, the London action is not an issue.
Zapata never responded on the merits because the London action was stayed by the United States District Court in Tampa.
Justice William H. Rehnquist: If as you suggest, Zapata had performed it's obligation under the contract to resort to the British forum.
What proceeding would Zapata have brought rather than the one it did bring in Florida?
Mr. David C. G. Kerr: They would have a filed a complaint, alleging in the British Courts, alleging negligent towage and alleging, I presume the same breaches of same action responsibility.
Yes, an action in towage.
Justice William J. Brennan: And in that circumstances and under the British law, what about the limitation action, how would that come under--?
Mr. David C. G. Kerr: Under British law as we understand it , the moment you have a court of circuit claim against you.
You may then turn around and petition for limitation.
In United States, you could petition for limitation without any other action being filed just within the six months of written notice of such a claim that might be asserted against you.
In other words, there is no statute limitation in England.
What triggers the limitation under British law is the filing of a complaint in court or over cross claim or what have you.
Justice Byron R. White: Wasn't there a provision in this contract saying that Unterweser would not be liable in any event?
Mr. David C. G. Kerr: Mr. Justice White there are clauses in the contract on the general towage conditions which are incorporated in the contract by reference, which have been categorized by British solicitor, say affidavit this case as exculpatory and I don't think we would serve a purpose to be called about it, I think they are exculpatory.
And under the laws of Great Britain or the English law, prima facie, these are enforced that is a tugboat is permitted to entering such a contract with its tow.
Justice Byron R. White: Clearly here though.
Mr. David C. G. Kerr: And in United States, this is of course a critical issue in this case.
Justice William J. Brennan: That's Bisso, isn't it?
Mr. David C. G. Kerr: That's Bisso and Dixilyn and other decisions.
Justice Byron R. White: So maybe if Zapata would never have filed that action, the English court might have been useless.
Mr. David C. G. Kerr: We say this, it's premature actually to determine that but the possibilities or the likelihood is that this exculpatory provision or these clauses which in that read altogether, provide an exculpatory provision, would be enforced by the British courts, of course, we say Mr. Justice White, that this was part of the contract, this was part of the expectation and this was part of referring a case to London, which was Zapata's contract and this is a natural, this flows naturally from the entry of the towage contract.
Justice Byron R. White: Are those clause --
Mr. David C. G. Kerr: Which is what they are fighting for.
Justice Byron R. White: Do you know whether those clauses are enforced in German courts?
Mr. David C. G. Kerr: I happen to know that.
It's not in the record but they are.
There is no German law in this appendix, although we did plead notice of foreign law including German law because when we filed our complaint limitation, we were in doubt as to ultimately what conflict the law of principle might be applicable so in order to be completely safely we plead, British law, American law, and German law in the alternative.
I would like to come back to that question on Bisso because I believe that the file analysis, or what you have here is a clash of policies that I think is going to be inherent in any decision this court might make.
On the one hand, we have the so called the Bisso, Dixilyn policy wherein this court stated that it was a public policy, as a public policy matter, tugs should not be permitted to exempt themselves or insulate themselves from liability.
We believe that in this particular case, there are overriding policy considerations which basically are making parties adhere or stick to their contracts particularly in an international context, where the parties has selected the forum, they've done so for a variety of reasons in an international contract.
Particularly, for certainty, for the law that will govern their contract and this is particularly true, we submit in a case, where the performance of the contract will traverse as was the case in this instance many, many jurisdictions and touched on many different -- the waters of many different nations.
So, we feel that number one in so far as Bisso sought to enunciate a US public policy.
It is not all pervasive because in Bisso, Bisso can be circumvented by routine day-to-day commercial insurance practice.
This was recognize by Justice Frankfurt in his original, Mr. Justice Frankfurt in original dissent.
And in fact and indeed is circumvented on a daily basis by simply having the tow purchase insurance and Unterweser way of subrogation against the tug.
The tug is completely insulated except to the extend of a small deductible perhaps.
So and in other fields of law, this court and other courts have recognize the right to limit one liability by contract or even to exculpate oneself.
So we don't feel that Bisso was in all pervasive matter of public policy, but more importantly in the context of this case, we don't feel that Bisso is applicable because if you extend Bisso to cover this situation, and we feel it's distinguished well on its facts and circumstance but if this court should extend Bisso to that extent, it would have to do so by first of all adopting what we consider is a modern rule on forum contract provisions, that is that they are prima facie valid unless unreasonable.
Justice William J. Brennan: I gather Mr. Kerr, you are or are you satisfied that in the British forum proceeding, it's improbable that they would apply American law to Bisso on merits of this confidence?
Mr. David C. G. Kerr: I think it's improbable, Mr. Justice Brennan, and I can't give you a positive answer obviously but I think it's improbable because they have already indicated and their case law reflects, that in a situation where parties select the forum, they also intend to select the law, otherwise it will be little purposely selecting the forum, that is the law of England.
So they probably apply English law and insofar if someone would argue that they had to, the (Inaudible) situation that they would have to look towards American law, I think they would come full circle and say, if we have to look to any law here, it would probably be German law because that's what the contract was executed.
Justice William J. Brennan: But it's either British or German law, than those exculpatory clauses would be enforced probably.
Mr. David C. G. Kerr: Yes sir.
That is --
Justice William J. Brennan: It's only if the Bisso rule were applied that you might not ---
Mr. David C. G. Kerr: Mr. Justice Brennan, it is only if you extend Bisso rule and say that it encompasses this situation and in order to do that, you must say that it's the Bisso rule which makes this forum clause unreasonable and we submit that you get into a situation then when you got to consider, is it more unreasonable to reform this contract after the fact in favor of Zapata and thereby frustrate even Zapata's contractual intent what ended in a contract and at the same time, put Unterweser in an economic, position of economic exposure that a contract to insulate itself from, is that one unreasonable or is it more reasonable to form a contract and enforce Bisso, extend Bisso to cover this situation, I have saved the balance of my time for rebuttal Mr. Chief Justice.
Chief Justice Warren E. Burger: What you are saying, I take it, Mr. Kerr's, that it's hardly reasonable to assume that the parties would contract for British court if they intended to enforce American law, for example, in which case it would be in the hands of judges unfamiliar with it to American law.
Mr. David C. G. Kerr: Yes, sir.
Well, we think that's true because why would a party designate a forum, unless they turned that forum replies slow and further more.
We have -- there is evidence in the record that we intended British law to apply.
Zapata for it's part is accustomed to this.
The drilling contract which is in the appendix that is a contract that's it wholly owned European subsidiary ended into the Italians interestingly enough, provides for a British forum and the applicability of British common law.
So, we feel that they have demonstrated a familiarity with that procedure and that indicates that they do this, it's a matter of a routine there.
Chief Justice Warren E. Burger: Very well, Mr. Kerr.
Argument of James K. Nance
Mr. James K. Nance: Justice, may it please the court.
Of course, I have my problem here right now but in view of some the questions that had been asked by served with the justice, I think I would reply to some of these questions, so it will be sensed fresh in your mind.
As to the towage contract, it says the provision that the court was inquiring about, with reference to the negotiation for the forum clause although Mr. Bond Oswegon (ph) makes a conclusory statement that he wouldn't have make the contract, he is the manging director of the Unterweser but for the forum clause, in the affidavit which was before the trial court below, regarding the party that signed the contract on behalf of Zapata, it states facts that after Zapata accepted Unterweser's there above mentioned, the contract of towage was drafted to Unterweser and mailed by from Bremen.
Zapata and Houston, the draft included the clause any dispute arising must be treated before the London Court of Justice and this is important.
Before and after such draft was extended to Zapata for acceptance, there were no discussions between Zapata and Unterweser Reederei whatever concerning paragraph 8.
That further, he also denies that Mr. Oswegon (ph) had been mistaken that the parties “intended that the controlling law to be applied would below the forum English law.”
In no time, they had found Unterweser Reederei, discussed or mentioned what law was intended to throw in the vein of litigation, simply “after the low bid by a telegram was received and this is in the record.
Unterweser drafted this clause as Mr. Oswegon (ph) affidavit says, ordinarily we include German, an exclusive German forum clause which means a disclusion of any of them, which I will discuss later on one of the points in our brief and also we usually apply the application of German law, so that's a term of this record here, there is nothing that you cannot rightfully say that the parties agreed that these laws were applied.
Justice Byron R. White: Are the conditions -- is the call for bid in the contract?
Mr. James K. Nance: Sir?
Justice Byron R. White: Is the call for bids in the record?
Mr. James K. Nance: Yes they are.
Well a call I am not sure, Your Honor, there are some telegraphic bids and Zapata, -- there are in the record.
Justice Byron R. White: Was there any insurance provisions in the --
Mr. James K. Nance: No, Zapata is uninsured.
This is an uninsured law, so paid out $3 millions.
Justice Potter Stewart: Mr. Nance, so Zapata did through experience to review this submitted contract, it did submit some changes they denied?
Mr. James K. Nance: No, Your Honor, there is a (Inaudible), no attorneys reviewed this that was --
Justice Potter Stewart: Or did Zapata itself review the contract and submit to it --
Mr. James K. Nance: Well they have -– and this is not in the record, they must have the exchange of telegrams and on the draft of the -- I believe the contract that's in the record, it shows the initial of HST that's Mr. Taylor that signed the affidavit.
So there must has been the ones that they changed, they do not pertain to the forum clause.
Justice Potter Stewart: But they did make changes in other portions of the contract submitted to the Bremen visit.
Mr. James K. Nance: Yes they did and they are the ones that are initiated in the record.
Unknown Speaker: Mr. Nance, is it customary for there are to be no insurance in this kind of a towing operation?
Mr. James K. Nance: Well I don't answer the facts, that Zapata Off-Shore company was it's hub and liability peeling on and so forth and all of its rigs were uninsured.
They simply were self --
Justice Byron R. White: But in hiring entirely to make a tow, is it characteristics that you don't specify that the tower or the carry insurance?
Mr. James K. Nance: Sometimes the party do it, sometimes it is not mentioned in this contract.
Justice Byron R. White: It is not mentioned in this contract.
Justice William J. Brennan: I am curious but it's no importance but what was the purpose this tow, is there some – I am not getting that term.
Mr. James K. Nance: Just one more question and reply it fair and I hope I can get to the main body of my address, about the act of the law, it's simple plead, this event happened between two nations; an American and a German.
It happened on the high scenes starting it with the Scotland.
It's in the brief, they don't challenge it, affirmed by this court in the Belgenland and affirmed by the Second Circuit in the Gylfe versus the Trujillo and I could name you dozens of cases, they don't challenge it.
When that occurs and there are torts involved, the law of the forum is applied.
This suit, both ours and their limitation is in the United States and it will apply United States law not only to to determine the rights and liabilities but also under the Titanic, in the limitation action, the amount of the fund is determined by the American Fund.
In this case $1.4 millions, in England we are only to have recoursed $80,000.
This is important and I will discuss that later on but I do want to get that crystal clear.
On contacts, Mr. Justice Rehnquist, we have detailed in our brief if the court wants to talk about, (Inaudible), we have detailed that this thing is -- up the point of this collision was that was all done in America, this rig was carefully prepared here, the Germans inspected it, seaworthiness inspections, seaworthy certificates and so forth.
It was repaired in American zone.
Now I like to get back to my remaining speech on this.
Chief Justice Warren E. Burger: Well then at some point, I hope you suggest your hypothesis as to why the forum clause wasn't included and what the parties intended by it?
Would you do that at your own?
Mr. James K. Nance: I will do that.
Now just in order to get to the crux of the things, the end results of this, if this court overruled this discretionary order entered by the limitation court, in which he determined he would assert and retain his jurisdiction, it will necessarily relegate Zathe product to London where under London law, the exculpatory clauses would defeat our claim and the American law being applied is outlined here before under Bisso and Dixilyn and Dixilyn, that was the freely negotiated contract where a reduced rates were given for an exchange for the exculpatory, this court per curiam on Bisso reversed the law court and held exculpatory clauses void and invalid.
Now what we had here was a vessel, it was as tall as (Inaudible) it is 44 storeys tall.
There is a picture of it in the brief in the upright position.
The legs are 44 stories tall, this bank had been carefully moved in 32 coast wise voyages on 32 previous occasions.
Then it was decided to send the ship overseas on a drilling contract, in the Italian sea.
Special devices called the locking devices which are in the brief, on the deck, were to be installed on this huge 44 storey leg rig prior to a transocean crossing, this rig with those tall legs simply cannot take the road without the legs locked.
Zapata instructed Bremen to tow the vessel coast wise in 250 foot water deeps, so that in event of a bad weather, it could jack down its legs, jack-up the rig and ride out to weather as I am sure you've heard about during the Hurricane season.
This was not a Hurricane period but this is was, and no other came through in January, instead of going coast wise and jacked up water dips, the rig was towed directly across, for in 10,000 feet of water, 150 miles from the nearest jacked up water dips, 250 feet, this bad weather hit, the legs rolled and finally all three broke off.
There is a picture of the damaged rig in the brief.
Now, as I have stated under American law, this is not before – of course we can prove it but this, the court below is entirely considered the contention with the party when it gets to around to determining where is the evidence which I am going to discuss in a moment.
Now let's put this – let's focus in on what is at issue here.
Here is a case where after we filed suit, we took, we noticed and took 25 German's depositions including Mr. Oswegon, managing director tended by Mr. Kerr and his firm.
Thereafter they noticed, we noticed and they cross noticed and invoking the jurisdiction of the Tampa court and took depositions of Eight Americans on The Chaparral.
After that, invoking the jurisdiction of court below, they took more depositions of the marine surveyors in New Orleans.
They also filed motion for discovery and we produced documents and the file of the case, I could not put it all on this tape, this case has been deposed and it's substantially was ready for trial in the first suit which we filed when Mr. Kerr's client decided to file the limitation of liability procedure and let me tell you what that is, Your Honor.
He mentioned that he made a special appearance when he filed it.
We will just read the complaint.
Under our rules of practice, you cannot make a special appearance in going and filing a lawsuit.
Let me tell you what a limitation liability proceeding is.
Under 181, of 46 US Code, Congress provides that a ship owner may limit his liability to the value of the vessel as he can show us not a fault.
183 provides, it may file its own proceeding, a limitation liability proceeding, that does so within six months after of notice of written claim, and assert that it is entitled to limit its liability to the value of the vessel.
Rule F of the rules, supplemental rules, Civil Procedure elaborate upon that procedure and spells out in quite detail which we will mention in our brief as to the procedure that he needs to go through.
Not only does Rule F allow the petitioner ship owner to assert that he is (Inaudible) to liability, but he is entitled to claim he is exonerated from any and everybody's claim.
Now what happened here is this.
He could have filed this indefensively as the courts have held, it is cited in the brief, this case doesn't turn on that.
What he did was, was to file this suit, and in the suit, he claimed these things.
It was all the fault of the Chaparral, that there were other potential claimants, and the crew members that were on there, were somewhat hurt getting off.
And he wanted a concourse, where all these claims could come into the suit.
He got an injunction out and he enjoined the suit that was being litigated in the Tampa District Court, enjoined it and cited us Zapata to come in and file our claim, it will be served with the main issue.
He is the plaintiff, and we are the defendant.
Now what is this proceeding, it's most important, Your Honor, that you look at this forum clause in the context of the litigation that's before you.
There is not before you what the trial court did, that is the ruling in the Zapata's first filed suit, denying their motion to dismiss the jurisdiction stay.
What they did in their own suit was to file a motion to stay the prosecution of our claim.
Now, if you look to this court's decision in British Transport, it is cited in the briefs, there you had the question of United States owning one vessel following a limitation proceeding.
British Transport Commission had vessel in collision with.
It came in and filed a claim.
Other parties came in and filed claims, there being a concourse here.
Justice Byron R. White: Well, where there are some claims against Unterweser other than Zapata?
Mr. James K. Nance: No, Your Honor, there have been no claims filed in the suit up to this point.
Justice Byron R. White: Well, what would Unterweser have filed its own limitations actions, if it could have done the same thing in the Zapata suit?
Mr. James K. Nance: Because Your Honor in the event some other claimants were to file a separate suit against them then 6 months had having run, then of course they would --
Justice Byron R. White: So this was what we thought.
Do you think this was a way of eliminating through this limitations action, and whether as you call a concourse, eliminating every other, all other claims?
Mr. James K. Nance: No Your Honor, it was to provide that if anybody else wanted to come in --
Justice Byron R. White: That's what I mean.
Mr. James K. Nance: -- and do it, they could so --
Justice Byron R. White: But they would have a limited time to do so.
Mr. James K. Nance: And the procedure Your Honor, the court sets a time.
Justice Byron R. White: Yes, that's what I mean.
Mr. James K. Nance: But no order of --
Justice Byron R. White: Unterweser this way could say, anybody else that has a claim come in and file it.
Mr. James K. Nance: That's right.
Justice Byron R. White: And if they didn't, that was the end of it.
Mr. James K. Nance: Well, actually, there are no other claims filed, but other people could come in and they can file one out because no order of default has been entered.
Justice Byron R. White: Obviously.
Mr. James K. Nance: But let me address myself to this point.
In the British Transport case this Court categorized the limitation proceeding as one, that constitutes it as a cross liable between it and the claimant.
That was one of the case where the claimant British Transport was cross-claimed against by other claimants, it was crossed claimed against by the (Inaudible) petitioner.
And this court was confronted with a contention that the petitioner couldn't do that, said that everybody that's in it could cross claim and sue each other, but the point out of it is, is that in this case the petitioner here has submitted himself to the jurisdiction of the court, there is no rule providing for any special appearance.
The basis of motion this day is solely on the basis of the forum clause.
He is set on an entitled exoneration from the world, he says that I am entitled to limit my liability.
He had sued us and he had filed this and come in there and we have cross claim.
We have filed our comments now.
He also counter claimed against us, for everything that he had filed in the London suit.
In addition, he put it in not in terms of breach of contract, but in terms of towage.
And furthermore, he filed a brand new thing called salvage.
The Salvage claim in count two.
He claims that everything that happened after, after the legs were lost, was outside the contract, that he, in other words, as if were stranger, he came up to rig, cut a line on it and tow this into nearest port of refuge.
He was asked for the Admiral court below to give him an award for salvage.
Well the vessel was worth about $ three million dollars after rig, and it's not unusual for an Admiral court to give, say 10% or something like that, like that would amount to $300,000.
Point is, may it please the court, is that he submitted himself voluntarily to the jurisdiction of the court below.
Chief Justice Warren E. Burger: Well there is a salvage – would a salvage claim be a claim under the contract?
Mr. James K. Nance: They have alleged specifically Your Honor, that it rose outside the contract.
Chief Justice Warren E. Burger: Anyone who had picked up the vessel and told the court or engaged in salvage operations could bring a suit, could they not?
Mr. James K. Nance: Yes, Your Honor, they could make a claim for salvage if they rescued a rig vessel at sea.
Chief Justice Warren E. Burger: Well, why do you say, that it is, I am a little confused, do you say it's under the contract or outside?
Mr. James K. Nance: They claim it was outside the contract.
Chief Justice Warren E. Burger: What do you say?
Mr. James K. Nance: Well, we deny but that's for the court to decide.
I am saying to you, Your Honor, he has submitted himself to the jurisdiction of the limitation court in filing the counter claims, and particularly the one where he filed a counter claim for salvage, and he has asked this court here to give him a fund of recovery.
Justice Byron R. White: Let's assume that Zapata had followed the language of the contract and had filed suited in London -- let's just assume that.
Do you think it would have been inconsistent with that forum clause, or Unterweser then to file a limitations action in the United States to attempt to have other possible claimants file or surface their claims?
Mr. James K. Nance: Well.
Mr. Justice White whatever they wanted to do, they could do the question for this court is having submitted himself to the jurisdiction of the limitation court, and having invoked it, he is now -- asking a firm to relief on exoneration liability period, asking for limited liability, and counter claiming, he has thereby fully submitted himself to the Court, and he is not in a position to say, just because of the forum clause don't let Zapata try its claim.
Justice Potter Stewart: But he did all this I understand it.
In the limitations court expressly without prejudice to the reliance on the forum clause, and you are saying that reservation is meaningless.
Mr. James K. Nance: It's meaningless.
Your Honor he submitted himself or he hasn't, I want to call attention to two decisions of this court where a counter claim was filed--
Chief Justice Warren E. Burger: Before you kept to that claim, let me see if I can verify one of the things, same question I put to Mr. Kerr.
If your client had been sentenced to the forum clause, and gone in to the British courts would there be any proceedings in federal courts in this country at all?
Mr. James K. Nance: Your Honor, if we had submitted ourself over there, if we had, and we still wouldn't, we have a right to sue over here, we certainly have a right to sue --
Chief Justice Warren E. Burger: This is hypothetical.
Would there have been any occasion for Unterweser to go into the courts of the United States, if you had complied with the forum clause of the contract and let this matter be resolved in the British courts.
Mr. James K. Nance: Well I don't believe that they would have done it, Your Honor no sir, if we ruled our litigating, that case is not even at issue.
That there is nothing been done about the case, no depositions has been taken, it just sitting there.
Justice Potter Stewart: It's conceivable that they might have filed a salvage claim in the court in Florida, because that was wholly unrelated to the contract and did not involve any dispute arising under the contract.
Mr. James K. Nance: But they could have filed wherever they would could find Zapata which is it's used to and that's where their bases --
Justice William H. Rehnquist: Mr. Nance what do you say Unterweser should have done in order to conserve its rights after your client had the ship arrested in Tampa, do you feel apparently they did more than they ought to have in order to preserve their rights to go to London, what do you say they should have done?
Mr. James K. Nance: What who should have done Mr. Justice?
Justice William H. Rehnquist: What should Unterweser have done after your client had the ship arrested in Tampa, in order to fully preserve its rights in this action and still not avoid a waiver of its claim to have it submitted to the High Court of London.
Chief Justice Warren E. Burger: You can answer that question right after the lunch.
You may now address yourself to Justice Rehnquist's question.
Justice William H. Rehnquist: Could it be of any help?
Mr. James K. Nance: If you would repeat it?
Justice William H. Rehnquist: If I tried to restate it.
It's my understanding that the proceedings in the Federal Court who are instituted by your client by the arrest of the tug when it arrived.
Is your position is that result subsequent actions taken by the Unterweser in that act, they have somehow waived their claim to assert the forum clause.
At least they have submitted themselves to the jurisdiction of that court.
My question is assuming that I think that they have a right to take whatever precautionary steps that they feel are necessary to preserve their rights in the Tampa litigation case they lose on this point, or would you have them do differently, and sort of -- so they wouldn't say they had submitted themselves in the jurisdiction.
Mr. James K. Nance: Well I'll try to answer this way Mr. Justice Rehnquist.
Of course this was stated, they had the privilege they wanted to assert it to assert their -- the liability defenses to us to in the first filed suit by Zapata.
Now, well, before we filed a limitation action on July 2, this case has been pending several months.
As I've stated our litigating by taking deposition and so forth.
The counsel for Unterweser had all the opportunity in the world to file a motion with the District Court and acquiesce him -- Your Honor I need to know whether you are going to overrule my motion to jurisdiction, are you going to grant them because I got to make a decision whether or not I need to file my limitation of liability proceeding.
The Docket entries in the the record show that no such motion were made and I am certain that the District Court, like any other judges where he's advised of the situation would such a motion had been presented you would have ruled on these things in order to accord been them the opportunity, one of two things, they could plead defensively if he overruled their motion of jurisdiction, or as they have the privilege to do and they were under no legal compulsion to do they could have filed which they did do the suit which is before this court today.
Justice William H. Rehnquist: Did they assert lack of jurisdiction in the answer?
Mr. James K. Nance: Yes Sir.
Justice William H. Rehnquist: Do you think they should done it by motion rather than the answer?
Mr. James K. Nance: No sir, the record shows that after we filed our lawsuit, that decision had been taken, they filed a motion to address the Court's jurisdiction saying one; that it lacked jurisdiction because the forum clause.
Well that was overruled probably because no private parties cannot fashion their own private rules of jurisdiction.
Parties by contract cannot say what the Federal Court, or what the State Court's jurisdiction will be, either it's taken jurisdiction as to the subject matter, that was presented and ultimately it was overruled.
In that proceeding they filed a motion to stay, and to decline jurisdiction on the ground of forum non convenience.
The court on July 29th, after they had already filed a limitation action on July 2nd overruled those motions.
So those motions were represented to the court and you overruled.
So he has entered two orders in this court Your Honor.
Mr. Justice Rehnquist an order overruling the motions in the Zapata's first filed suit addressed to the jurisdiction.
And he is overruled a motion to stay which is what is before this court today.
Chief Justice Warren E. Burger: Well, then you are quite right that he could have made these motions, and the question in this case is whether he was required to make them in order to protect the position which he is now trying to protect or sometimes judges don't entertain motions very cheerfully if the motion is telling them to get along and decide some matter.
Mr. James K. Nance: Well, it certainly was a --- it's a motion that he couldn't make and he did not know so I had couldn't project what you do.
I just presume that the court would move on with such motion but Your Honor, that bags the issue I think because there is no legal compulsion for him to file this limitation liability proceeding.
He did it for two reasons.
One was to get the injunction out to stop the litigation in the first filed suit of Zapata.
Secondly, if he claims in his petition, he says, I fear the falling of other suits.
However there were seamen on our rig that this was a terrible accident and they were flooded, the compartments, they were sinking, they got off, they came back, pumped it out and so there were people who got hurt.
He shows in his limitation proceeding, I fear the filing of other claims.
Now, one of the purposes of limitation proceeding is as here by the cases are cited in brief is to provide a concourse not only for the claim for he has sued us in the limitation because he did, he got off the monitions.
It come into this court but in order to bring in to concourse, the claimants who got hurt on the rig.
And by doing that he has only one, they get just one piece of pie they can slice.
The value of the tug which is $1,390,000 here.
And that is -- this is most important Your Honor if you read (Inaudible) that says the purpose of limitation proceeding being an equitable one is one to bring all controversies into one so that the court can administer and dispose off any counter controversy.
That case has been cited in the British Transport case saying where they said a limitation proceeding is a cost liable, against the claimant and so Your Honor I submit that he has invoked it, it's here, I'll admit.
He is nothing --
Justice Byron R. White: Well, Mr. Nance, do you suggest his position would have been any different had he done this by way of answer on your seat?
Mr. James K. Nance: He could have pleaded, Your Honor.
Justice Byron R. White: Would his position be any different?
Mr. James K. Nance: The difference Your Honor would be that if these seamen, American seamen, sued him for Jones Act where there is a third party case, of course if he hadn't filed within six months.
Justice Byron R. White: You mean file -- his answer would be what?
Mr. James K. Nance: Well, under the case Your Honor he can file his answer under the case I've cited in the brief, he can file those at any time before they go to trial.
I can hear the defense, he always got the question of notice, I mean --
Justice William J. Brennan: What I don't quite understand, perhaps I didn't catch Mr. Nance but I gather your position is you may not now claim the benefit of the forum clause.
Because of what he did in filing a limitation suit?
Mr. James K. Nance: No, I am not going to get that straight.
He has imperatives addressed this Equity court to say Your Honor in whatever state it is send Zapata away there.
I do not think as a matter of his way he did, the point is he has invoked and submitted himself to this equitable court, asking for exonerations from liabilites not only to us but to the world and also saying --
Justice William J. Brennan: Well, from that you conclude that he may not now insist on sending Zapata, isn't that?
Mr. James K. Nance: So inconsistent possession to say that I here invoke the court's jurisdiction and now we're there but I counterclaim and sue and Your Honor --
Justice Potter Stewart: So you're saying that you have the right to participate in his limitations action in Tampa.
You have right to assert your claim there?
Mr. James K. Nance: Yes, and I'm coming to discuss [Voice Overlap] when I say what I think is the proper interpretation of the – oh is my light off?
Chief Justice Warren E. Burger: Your light is on.
Mr. Nance --
Mr. James K. Nance: May I have 5 minutes, Your Honor?
Justice Potter Stewart: Mr. Nance, I take it that if you lose on the point you have been arguing then you arrive at the question of whether or not the forum clause is valid.
Mr. James K. Nance: I don't want to get to that and I would hope you would give me five minutes Your Honor.
This is a – we have been litigating this case for four years, and I'm sorry, I mean I think I could give my speech in 30 minutes.
I appreciate and the court should ask me anything it wishes and I want to answer your question --
Chief Justice Warren E. Burger: The circumstances, we will give you five more minutes and enlarge Mr. Kerr's time accordingly.
Mr. James K. Nance: Thank you.
I want to base -- these two Supreme Court cases are not in my brief and one decided by Mr. Justice Douglas, Freeman v. Bee Machine Co. in 1943, that's 319 U.S. 448 where this court held that a defendant found a counter claim, he submitted in both the jurisdictions of the court and submitted himself for purposes of which he was there.
Chief Justice Warren E. Burger: Was there --
Mr. James K. Nance: That was not a Forum Clause, no sir.
Chief Justice Warren E. Burger: Forum Clause --
Mr. James K. Nance: Well, yes -- well, it does in this sense Your Honor because we are not taking position that the decision that the forum clause has been -- he is already entitled to assert it, but the limitation core sitting in (Inaudible) had to take in consideration all the factors which are fixed and discussed on the reason list of the forum clause in just a moment.
Chief Justice Warren E. Burger: You better get to that.
Mr. James K. Nance: Alright sir, the other case relied upon in that case was Merchants Heat & Light Co. v. James B. Clow & Sons., 204 U.S. 286 for the court held that the filing of a counter claim thus is that he waived all objections to the jurisdiction if it's good for that, it certainly won't say he has waived his right to assert that we should be sent somewhere, but the rational of the case is en banc.
Now, I want to address myself now quickly.
The forum clause reads, any dispute arising must be treated before the London Court of Justice.
A Forum Clause was strictly construed in this court in the Carbon Black v. Monrosa case cited in the brief.
Here that clause was drafted by the German company having usually but the exclusive jurisdiction provisions in it.
They did not in this case and we submit in the guided fully brief here that, that Forum Clause being non-exclusive in nature should not be a bar to preclude Zapata from prosecuting it's counterclaim in this suit.
I think the court has called upon to pass upon that.
Now turning to this question, the waving authority in this country is that forum clauses are unenforceable.
All cases hold that there are avoided against by the (Inaudible) and so far as they attempt to deprive or defeat any court of its jurisdiction.
There are a line of cases referred to as a modern rule starting in the Second Circuit William H. Muller and other citied in the brief here which say that under appropriate set of circumstances, a court may decline to assert its jurisdiction in a case where there is a Forum Clause involved.
And they look at these factors and Mr. Kerr in urging this on the court, said to the court among other facts that you can consider, is whether or not the plaintiff, we were plaintiff there at that stage, would be deprived of this remedy if you were relegated to the forum court.
In the Second Circuit after this reasonable -- the Forum Clause maybe enforced if reasonable.
The case is on there head in situation cited in the brief that where the plaintiff would be deprived of his remedy in the jurisdictional forum, stipulated forum, that in that instances that is a proper consideration and that they could keep the case.
Now the reasonableness of this thing and we have covered this clearly, where they include nationalities of the the parties, place to form the contract, deprivation of remedy and then the balance of convenience of the trial.
And I am hoping to clear this in one moment.
The trial court found that the balance of convenience is strong in his forum, all the evidence of the Zapata liability, and damages is in the merits about forum depositions of 40 witness.
Toed because of tremendous amount of repairs and liability.
All the evidence is to the German Unterweser as to toe line approach is in Florida where there is survey.
The salvage suit testimony has been taken but a deposition, is to what the service it was done.
That preserved the depositions of Florida.
The only thing that we will have to calculate would be the hire of the tug which it didn't get because it didn't finish the voyage.
I think it's most important that this court in deciding the case that I do believe you would find it, the worse of a standpoint that the forums clause is not enforceable, ipso facto, no case holds that.
They all say you must -- the court must look at all the circumstances and we have detailed very much in our brief all of those sayings and there is a fact time with courts that the balance of convenience is strongly there.
This is an equity court, he exercised his best judgment where he should do on the circumstances and I don't think that the Unterwerser has shown to this court any abuse of that discretion, I thank you.
Chief Justice Warren E. Burger: Mr. Kerr.
Rebuttal of David C. G. Kerr
Mr. David C. G. Kerr: Mr. Chief Justice if it please the court, I have several factual points I think should be cleared up that were raised by questions from the court, but first of all in order to decide what the lower court, the District Court determined or held with respect to our motion, our original motion filed in the initial action to stay this proceeding and have it referred to London Court.
You must go to the Court's original order, which is I think has been pointed out was filed as submitted or entered some six months after our motions was originally filed.
In that order the District Judge committed what we think is the fundamental error in this case with respect to how he approached the case.
And he held and I am reading from page 82 of the Appendix which is Judge Princeton's order of July 29, 1968 and I am reading from the next to last paragraph on that page and the last sentence of that paragraph.
We think this is crucial to show the misunderstanding that the court had at this entire issue.
The balance of conveniences here is not strongly in favor of defendant that being Zapata and plaintiff's choice of forum should not be disturbed.
This means that as of that date with the initial action filed, the District Court found that the balance of convenience was in Unterweser's favor, although not strongly.
Then he went on to say and plaintiff's choice of forum should not be disturbed which is of course applying the forum non-convenience rule.
But, the difference between the forum non-convenience rule is a critical difference, and the difference between the choice of forum situation is that the initial choice of forum is not the District Court intent.
The initial choice of forum here is London.
So he first of all found that the balances of conveniences were in favor of Unterweser and then he said, he applied the presumption that Zapata's choice of forum was Tampa which of course it was not by contract his choice of forum was London from the very beginning.
I make that point because I think it is critical to the decision of this case.
Now, there were several factual points I think that should be cleared up Mr. Justice White you ask whether -- you asked Mr. Nance, whether or not insurance was mentioned or discussed.
Mr. Nance is incorrect, when he said it was not.
Insurance was mentioned, in the original telegraphic bid sent by Unterweser to Zapata in response to solicitation for bids which appears on page 295 of the Appendix.
Unterweser agreed or offered to arrange for insurance for Zapata and then subsequently in the towage contract that's clause 2 B, and the towage contract appears in several points in this Appendix, but the one I am refereeing to is on the page 72.
In the towage contract, it was stipulated that insurance would be for the account of the owner, that is the owner of the towage, Zapata.
So insurance was mentioned and the decision to go and insure was here decision marrest of the tugade by choice, by Zapata.
So I don't feel that, that really has as far as it's saying it is here uninsured, it was given the opportunity to get insurance.
It was told that insurance would be for its account.
So insurance was discussed by the party and mentioned in the documents.
The second factual point is with respect to all of these depositions.
It is true that a lot of depositions were noticed initially when the tug first arrived in Tampa de bene esse, we move for protective orders twice.
In the second protective order when we were aware of all of the facts and had consulted with our German clients we specifically pointed out that this clause might well be tried in London and therefore some of the discovery that taken here might well have to be repeated, but the court orders to go ahead and we then also engage in discovery depositions.
Once the court has said that it was not impressed with our argument and in any event we feel this is immaterial because we have stipulated that all discovery undertaken in United States will be admissible in the London action subject to the ordinary rules of evidence.
Chief Justice Warren E. Burger: We have stipulated, have both parties agreed?
Mr. David C. G. Kerr: We have offered this.
Chief Justice Warren E. Burger: You have offered this.
Mr. David C. G. Kerr: Yes sir.
We have stipulated unilaterally Mr. Chief Justice.
Justice William J. Brennan: Once you say Mr. Kerr what's the status of that London proceeding?
Mr. David C. G. Kerr: The London proceeding of course Mr. Justice Brennan is stayed by injunction.
The parties have been enjoined by the District Court from proceeding which raises the next point I want to mention.
The reason that all the issues that are not pending in London is not because they could not be presented through appropriate pleading in London, but it is because the District Court has enjoined us as parties from moving forward with that action.
Justice Byron R. White: Let's assume you win this case, are you going to abandon your limitations action?
Mr. David C. G. Kerr: Abandon the limitation action in US, I suspect we will Mr. Justice White because then under English law we will be compelled as soon as Zapata makes its claims against us in the English action.
We are then compelled by English law to assert English limitation.
Those are their rules.
Justice Byron R. White: Oh I know but do you think you can force claimants to go to England?
Mr. David C. G. Kerr: So far as I know Your Honor --
Justice Byron R. White: Let's assume well, let's assume some other claimant came in here into this limitations action, you couldn't terminate it then could you?
Mr. David C. G. Kerr: No sir and of course those claimants would not be bound, be bound by the forum provision either.
Justice Byron R. White: No that's what I said.
Mr. David C. G. Kerr: That's right.
Justice Byron R. White: And I suppose you are interested in foreclosing other claimants.
Mr. David C. G. Kerr: Yes sir.
Justice Byron R. White: And if they don't come into this limitation action here in the United States, they are foreclosed, aren't they?
Mr. David C. G. Kerr: That is correct.
That's my understanding of the law --
Justice Byron R. White: My question again to you is are you going to abandon your limitations action if you win this lawsuit?
Mr. David C. G. Kerr: If we win this lawsuit, we would ask as we did, we have already asked in the limitation action that our action be stayed in the United States --
Justice Byron R. White: Stayed but not abandoned?
Mr. David C. G. Kerr: No sir and the reason for that is that we have one of the concerns here and concerns in some of the cases is what about the Zapata's security after all they brought in rem suit.
The purpose for bringing in rem suit is to obtain security and we did post security and we post a bond to limitation action, and one of the reasons that action in Tampa would remain on file is because we have offer to make that security available to Zapata, not remove it.
Justice Byron R. White: Well, your claimant and limitation actions is that every claimant except Zapata should be able to litigate in that action against Unterweser.
Mr. David C. G. Kerr: That is correct, that's the purpose of the limitation action.
Justice Byron R. White: But you say that for one claimant, the Forum Clause precludes his filing a claim.
Mr. David C. G. Kerr: I say that the claimant that is subject to a forum provision must litigate where the contract calls for.
Obviously, we can't bargain people that weren't parties to the contract.
Justice Byron R. White: But you gave Zapata notice though I suppose and you got an injunction against their lawsuit.
Mr. David C. G. Kerr: We got a restraining order of the initial suit.
This is the traditional form that --
Justice Byron R. White: Well I know they may get a notice or an invitation or a direction to file their claim?
Mr. David C. G. Kerr: And they did, yes sir.
And they filed their claim in that and that action of course has all the issues pending in it that pended in the original action.
Justice William H. Rehnquist: Mr. Kerr, I suppose there is at least a practical presumption that no other claimants have appeared on the scene since the time of the Act.
So there probably are no other claimants, isn't it?
Mr. David C. G. Kerr: I think at this point that's a safe assumption Mr. Justice Rehnquist.
It was not necessarily a safe assumption at the time, that this action was originally filed.
Justice Potter Stewart: We don't know whether any have been settled or anything.
Mr. David C. G. Kerr: Not to my knowledge.
Chief Justice Warren E. Burger: Is this situation different with respect to colloquy, you have been engaging in, from what it would be if instead of a forum clause for the British Courts, you had a different type of Forum Clause.
The Forum Clause with arbitration binding arbitration of a fixed kind, the American Arbitration Association or what not.
Mr. David C. G. Kerr: Mr. Chief Justice, evidently there would be a slight distinction as a matter of law because it appears that arbitration clauses now are generally recognized and enforced.
We submit and we have argued in our briefs that there is no logical reason for making a distinction between an arbitration clause calling for arbitration in London or any other forum and a contractual forum provision and that's been fully argued I believe by both parties.
But there would be that slight distinction in law because I think generally arbitration clauses are enforced without any exceptions now-a-days.
Chief Justice Warren E. Burger: I am not so sure if that's true.
One of the recent cases which they have failed to recognized arbitration clauses with finality and elimination of judicial review, but that's not --
Mr. David C. G. Kerr: I wasn't referring to the recognition as far as the results or what the review might be.
I was referring to the fact that arbitration clause is calling for arbitration in a foreign forum are generally recognized in force to that extent.
One important factor that we also want to make very clear is with respect to the limitation action, we were faced of course with the moment, an action is filed inevitably, a claim in this country.
Limitation, a petition for limitation or as the party defendant seeking limitation, this is almost an inevitable consequence of that action.
So that we had to protect our security in this country.
We had $3.5 million security.
So what we did was a reactional protective measure, avail ourselves of a protective device at a time when the court had not yet approved on our original motion, and therefore we reasserted in that petition as I have indicated before and this is in the appendix, we reasserted the paramountacy of our forum provision and the stay, the motion for stay.
Justice William J. Brennan: Could you have done the same thing Mr. Kerr by answering in the fliled suit.
Mr. David C. G. Kerr: We suggest Mr. Justice Brennan no for two reasons; number one, we would not have had a protection of our security.
We might then be called upon to post security if any other actions were filed and secondly and perhaps more importantly, there is balance in the law at the present time that we cited the cases and the comment by Gilmore and Blacks on that point, there is doubt at the present time whether defensive limitation is permissible after six months have expired and that comes about as the moral castle amendment, 1937 when the six months provision was first introduced in the law and it's not entirely clear at this point in decisions since then whether you can file defensive limitation after the expiration of six months and in any event, what Zapata argues is that in the limitation proceeding, we are invoking the benefits of the Limitation Act, the privilege as they put it.
Well, you invoke that by answer or by petition, so you are subject to the same objection.
There has been an urging here with respect to Carbon Black and that our forum provision in this case is governed by Carbon Black.
There are several distinctions, they are made in the brief but the principle ones are in Carbon Black, the Forum Clause related only to actions against the master, owner or agent, that is it was person stipulated who could not be sued and Fifth Circuit ceased upon that to say that this was directed in personam suits and not in rem suits.
So that's one distinction.
The second distinction is that Carbon Black is a carriage of (Inaudible) case and therefore governed by the provisions of that Federal Statute and that does make a difference and that difference I think is officially discussed in briefs.
Justice Byron R. White: Do you think the Forum Clause would have prevented you from bringing the limitations action in Tampa?
Mr. David C. G. Kerr: Yes sir.
I think the forum clause compelled us to go to London for all remedies available in London including limitation and not in the US.
In so far as Zapata is concerned, Mr. Justice White, now if there was a suit by a third person not subject to the provisions of the towage contract, obviously we could file limitation --
Justice Byron R. White: Some of the claimant had arrested the ship in Tampa and sued you and brought a limitations action and you noticed all claimants including Zapata, would you do that under the limitation clause?
Mr. David C. G. Kerr: Yes sir and I think the limitations court would say that since Zapata is compelled by contract to file its claim in London, they may file a claim in London.
Justice Byron R. White: Yeah they may but --
Mr. David C. G. Kerr: They can or should.
Just like Unterweser would have to file its limitation claim in so far as Zapata is concerned in London because the contract is binding only on those two not on the seamen that travel on the Chaparral.
Justice Byron R. White: You don't think you could make Zapata come into the limitations action if it had been filed in the circumstances I posed.
Mr. David C. G. Kerr: No sir, because it would have been a limitation action pending in London presumably.
Justice Byron R. White: Not if Zapata hadn't sued you there?
Mr. David C. G. Kerr: No, obviously Zapata hadn't sued us there, there would be no limitation action in London but if the contract had been complied with, all of the issues in this clause, including limitation would have been before the London High Court of Justice.
Justice Byron R. White: Well I'll put it this way.
On my assumptions, some of the claimants sues you, and files the limitations action, and Zapata had filed its claim there and you had objected to it.
Could you have done it?
Mr. David C. G. Kerr: I think absolutely, successfully.
I think we could have --
Justice Byron R. White: Even though some other claimant arrests the ship filed a limitations action in response to that and then Zapata files this claim along with other claimants, you would say you could make Zapata go to London to litigate his claim.
Mr. David C. G. Kerr: Yes sir, because we would not have filed the limitation --
Justice Byron R. White: I guess you have to say that in your position.
Mr. David C. G. Kerr: Well I feel I do because the action would, there would have been a limitation action pending in London presumably.
This could only have happened if Zapata had gone to London and they would have been engaged in all the issues that would have been in London.
Chief Justice Warren E. Burger: Mr. Kerr, I know your time is up but may I just ask you what's the difference between this $8,000 fund fund and it's mentioned what would be available here in forum.
Mr. David C. G. Kerr: This is just a difference in the limitation funds in the two countries.
The limitation fund in Great Britain is smaller than the limitation fund in the US.
Justice Byron R. White: Well, is it as small as $8,000?
Mr. David C. G. Kerr: Yes sir, $80,000, yes sir.
Justice Byron R. White: And what's the amount here?
Mr. David C. G. Kerr: It's $1, 390,000 which is presently the established value of the Bremen at the present juncture of the proceedings.
Chief Justice Warren E. Burger: Thank you Mr. Kerr, thank you Mr. Nance.
The case is submitted.