Unterweser Reederei GmbH v. Zapata Off-Shore Company

In November 1967, Unterweser Reederei GmbH (Unterweser) (plaintiff), operator of the tugboat Bremen, entered into a contract with Zapata Off-Shore Company (Zapata) (defendant), a United States company that operated oil rigs, under which Unterweser would tow Zapata’s oil rig, the Chaparral, from Louisiana to Italy. The contract required the parties to submit any disputes to the courts of London, England. The trip started on January 5, 1968. Five days later, the vessels encountered a severe storm in the Gulf of Mexico, causing damage to the Chaparral and forcing the Bremen to take shelter with the damaged rig in the port at Tampa, Florida. Unterweser blamed Zapata for providing an unseaworthy oil rig. Zapata claimed Unterweser had used an unseaworthy tug and operated it negligently. Each claimed damages against the other. On January 12, 1968, Zapata filed an admiralty action in the United States District Court in Tampa. Discovery and other activities proceeded in that matter, including Unterweser posting $3,500,000 as security to allow it to continue to operate the Bremen. On February 21, 1968, Unterweser issued a writ in London and sought leave to serve it in a foreign jurisdiction (the United States), arguing that the contract specified the London courts as the agreed-upon jurisdiction and that the contract terms were impliedly subject to English law. While the matter was pending before the English court, Unterweser continued to defend itself in the United States district court action, including participating in numerous depositions, objecting to the proceedings in Tampa, and moving to set aside or stay those proceedings. The London judge granted Unterweser leave to serve the writ on Zapata so the London matter could proceed. Zapata appealed. During the appeal, Unterweser obtained an injunction in the American court prohibiting Zapata from prosecuting its claims against Unterweser pending a further decision by the American court on the appropriateness of the case there. Unterweser offered to waive the injunctive relief to allow Zapata to file a counterclaim in London and allow the security payment to remain in place for any counterclaim brought in the London proceedings.