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Monday, February 11, 2013

M/S Bremen v. Zapata Off-Shore Co. case brief

M/S Bremen v. Zapata Off-Shore Co.  
407 U.S. 1

SYNOPSIS: Petitioner sought review by certiorari of the judgment entered by the United States Court of Appeals for the Fifth Circuit in which a forum-selection clause in a contract between petitioner German corporation and respondent United States corporation was held invalid.

-The German corporation contracted with the United States corporation to transport an oil rig from Louisiana to the Adriatic Sea. During transportation, the rig was damaged and was towed to Tampa, Florida, where the United States corporation filed suit.
-The German corporation, however, asked the district court to enforce the forum-selection clause contained in the contract placing jurisdiction in England.
-The district court refused to enforce the clause and the lower appellate court affirmed.

-The court held that the forum-selection clause should be enforced unless the party resisting the clause could show that enforcement would be unreasonable.

-The argument that such clauses ousted a court of jurisdiction was not valid, and the German corporation did not waive operation of the clause by appearing in the federal court.
-As a result, the court stated that the forum-selection clause was valid and the case was remanded for a determination of whether enforcement was unreasonable.

RULES:Forum-selection clauses are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be unreasonable under the circumstances. This is the correct doctrine to be followed by federal district courts sitting in admiralty

OUTCOME: The court vacated the lower appellate court's judgment and remanded the case for a determination of whether enforcement of the forum-selection clause was unreasonable.

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