The Bremen v. Zapata Off-Shore Co.

407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513, 1972 U.S. LEXIS 114, 1972 A.M.C. 1407

• Court: Supreme Court of the United States
• Decided: June 12, 1972
• Docket: 71-322
• Status: Published

Opinions

Mr. Chief Justice Burger

delivered the opinion of the Court.

We granted certiorari to review a judgment of the United States Court of Appeals for the Fifth Circuit declining to enforce a forum-selection clause governing disputes arising under an international towage contract between petitioners and respondent. The circuits have differed in their approach to such clauses.¹ For the reasons stated hereafter, we vacate the judgment of the Court of Appeals.

In November 1967, respondent Zapata, a Houston-based American corporation, contracted with petitioner Unterweser, a German corporation, to tow Zapata's ocean-going, self-elevating drilling rig Chaparral from Louisiana to a point off Ravenna, Italy, in the Adriatic Sea, where Zapata had agreed to drill certain wells.

Zapata had solicited bids for'the towage, and several companies including Unterweser had responded. Unter-weser was the low bidder and Zapata requested it to submit a contract, which it did. The contract submitted by Unterweser contained the following provision, which is at issue in this case:

“Any dispute arising must be treated before the London Court of Justice.”

In addition the contract contained two clauses purporting to exculpate Unterweser from liability for damages to the towed barge.²

After reviewing the contract and making several changes, but without any alteration in the forum-selection or exculpatory clauses, a. Zapata vice president executed the contract and forwarded it to Unter-weser in Germany, where Unterweser accepted the changes, and the contract became effective.

On January 5, 1968, Unterweser’s deep sea tug Bremen departed Venice, Louisiana, with the Chaparral in tow bound for Italy. On January 9, while the flotilla was in international waters in the middle of the Gulf of Mexico, a severe storm arose. The sharp roll of the Chaparral in Gulf waters caused its elevator legs, which had been raised for the voyage, to break off and fall into the sea, seriously damaging the Chaparral. In this emergency situation Zapata instructed the Bremen to tow its damaged rig to Tampa, Florida, the nearest port of refuge.

On January 12, Zapata, ignoring its contract promise to litigate “any dispute arising” in the English courts, commenced a suit in admiralty in the United States District Court at Tampa, seeking $3,500,000 damages against Unterweser in personam and the Bizmen in rem, alleging negligent towage and breach of contract.³ Un-terweser responded by invoking the forum clause of the towage contract, and moved to dismiss for lack of jurisdiction or on jorum non conveniens grounds, or in the alternative to stay the action pending submission of the dispute to the “London Court of Justice.” Shortly thereafter, in February, before the District Court had ruled on its motion to stay or dismiss the United States action, Unterweser commenced an action against Zapata seeking damages for breach of the towage contract in the High Court of Justice in London, as the contract provided. Zapata appeared in that court to contest jurisdiction, but its challenge was rejected, the English courts holding- that- the contractual forum provision conferred jurisdiction.⁴

In the meantime, Unterweser was faced with a dilemma in the pending action in the United States court at Tampa. The six-month period for filing action to limit its liability to Zapata and other potential claimants was about to expire,⁵ but the United States. District-Court in Tampa had not yet ruled on UnterweserV motion , to dismiss or stay Zapata’s action. On July 2, -1968, confronted with difficult alternatives, Unterweser filed an action to limit its liability in the District Court in Tampa. That court entered the cústomary injunction against proceedings outside the limitation court, and Zapata refiled its. initial claim in the limitation action.⁶

It wás only at this juncture, on July 29, after the six-month: period for filing the limitation action had. run, that the District Court denied Unterweser’s January motion to dismiss or stay Zapata’s initial action. In denying the motion, that court relied on the prior decision of the Court of Appeals in. Carbon Black Export, Inc. v. The Monrosa, 254 F. 2d 297 (CA5 1958), cert. dismissed, 359 U. S. 180 (1959). In that case the Court of Appeals had held a forum-selection clause unenforceable, reiterating the traditional view of many American courts that “agreements in advance of controversy whose object is to oust the jurisdiction of the courts are contrary to public policy and will not be enforced.” 254 F. 2d, at 300-301.⁷ Apparently concluding that it was bound by the Carbon Black case, the District Court gave the forum-selection clause little, if any, weight. Instead, the court treated the motion to dismiss under normal jorum non conveniens doctrine applicable in the absence of such a clause, citing Gulf Oil Corp. v. Gilbert, 330 U. S. 501 (1947). Under that doctrine “unless the balance is.strongly in favor of the defendant, the plaintiff’s choice of forum should rarely be disturbed.” Id., at 508. The District Court concluded: “The balance of conveniences here is not strongly in favor of [Unterweser] and [Zapata’s] choice of forum should not be disturbed.”

Thereafter, on January 21, 1969, the District Court .. denied, another motion by Unterweser to stay the limitation action pending determination of the controversy in the High Court of Justice in London and granted Zapata’s motion to restrain Unterweser from litigating further in the London court. The District Judge ruled that, having taken jurisdiction in the limitation proceeding, he had jurisdiction to determine all matters relating to the controversy. He ruled that Unterweser should ■ be required to “do equity” by refraining from also litigating the controversy in the London court, not only for the reasons he had previously stated for denying Unterweser’s first motion to stay Zapata’s action, but also because Unterweser had invoked the United States court’s jurisdiction to obtain the benefit of the Limitation Act.

On appeal, a divided panel of the Court of Appeals affirmed, and on rehearing en banc the panel opinion was adopted, with six of the 14 en baric judges dissenting. As had the District Court, the majority rested on the Carbon Black decision, concluding that “ ‘at the very least”’ that case stood for the proposition that a forum-selection clause “ ‘will not bé enforced unless the selected state would provide a more convenient forum than the state in which, suit is brought.’ ” From that premise the Court of Appeals proceeded to conclude that, apart from the forum-selection clause, the District Court did not abuse its discretion in refusing to decline jurisdiction on the basis of forum non con-veniens. It noted that (1) the flotilla never “escaped the Fifth Circuit’s mare nostrum, and the casualty occurred in close proximity to the district court”; (2) a considerable number of potential witnesses, including Zapata crewmen, resided in the Gulf Coast area; (3) preparation for the voyage and inspection and repair work had been performed in the Gulf area; (4) the testimony of the Bremen crew was available by way of deposition; (5) England had no interest in or contact with the controversy other than the forum-selection clause. The Court of Appeals majority further noted that Zapata was a United States citizen and “[t]he discretion of the district court to remand the cáse to a foreign forum was consequently limited” — especially since it appeared likely that the English courts would enforce the exculpatory, clauses.⁸ In the Court of Appeals’ view, enforcement of such clauses would be contrary to public policy in American courts under Bisso v. Inland Waterways Corp., 349 U. S. 85 (1955), and Dixilyn Drilling Corp. v. Crescent Towing & Salvage Co., 372 U. S. 697 (1963). Therefore, “[t]he district court was. entitled to consider that remanding Zapata to a foreign forum, with no practical contact with the controversy, could raise a bar to recovery by a United States citizen which its own convenient courts would not countenance.”⁹

We hold, with the six dissenting members of the Court of Appeals, that far top little weight and effect were given to the forum clause in resolving this controversy. For at least two decades we have witnessed an expansion of overseas commercial activities by business enterprises based in the United States. The barrier of distance that once tended to confine a business concern to a modest territory no longer does so. Here we see an American company with special expertise contracting with a foreign company to tow a complex machine thousands of miles across seas and oceans. The expansion of American business and industry will hardly be encouraged if, notwithstanding solemn contracts, we insist on a parochial concept that all disputes must be resolved under our laws and in our courts. Absent a contract forum, the considerations relied on by the Court of Appeals would be persuasive reasons for holding an American forum convenient in the traditional sense, but in. an era of expanding world trade and commerce, the absolute aspects of the doctrine of the Carbon Black case have little place and would be a heavy hand indeed on the future development of international commercial dealings by Americans. We cannot have trade and cofnmerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts.

Forum-selection clauses have historically not been favored by American courts. Many courts, federal and state, have declined to enforce such clauses on the ground that they were “contrary to public policy,” or that their effect was to “oust the jurisdiction” of the court.¹⁰ Although this view apparently still-has considerable acceptance, other courts are tending to adopt a more hospitable attitude toward forum-selection clauses. This view, advanced in the well-reasoned dissenting opinion in the instant case, is that such clauses are prima facie valid and. should be enforced unless enforcement is shown by the resisting party- tó be “unreasonable” under the circumstances.¹¹ We believe this is the correct doctrine to be followed by federal district courts sitting in admiralty. It is merely the' other side of the proposition recognized by this Courts in National Equipment Rental, Ltd. v. Szukhent, 375 U. S. 311 (1964), holding that in federal courts a party may validly consent to be sued in a jurisdiction where he cannot be found for service of process through contractual designation of an “agent” for receipt of process in that, jurisdiction. In so holding, the Court stated: ... • •

“[I]t is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court, to permit notice to be served by the opposing party, or even to waive notice altogether.”

Id., at 316-316.

This approach is substantially that followed in other common-law countries including England.¹². It is the view advanced by noted scholars and that adopted by the Restatement of the Conflict of Laws.¹³ It accords with ancient concepts of freedom of contract and reflects an appreciation of the expanding horizons of American cbntractors who seek business in all parts of the world. Not surprisingly, foreign businessmen prefer, as do we, to have disputes resolved in their own courts, but if that choice is not available, then in a neutral forum with expertise in the subject matter. Plainly,- the courts of England meet the standards of neutrality and long experience in admiralty litigation. The choice of that forum was made in an arm’s-length negotiation by experienced and sophis- ■ ticated businessmen, and absent some compelling and countervailing reason' it should be honored by the parties and enforced by the courts.

The argument that such clauses are improper because they tend to “oust” a court of jurisdiction is hardly more than a vestigial legal fiction. It appears to rest at core on historical judicial resistance to any attempt to reduce the power and business of a particular court and has little place in an era when all courts are overloaded and when businesses once essentially local now operate in world markets. It reflects something of a provincial attitude regarding the fairness of other tribunals. No one seriously contends in this case that the forum-selection clause “ousted” the District Court of jurisdiction over Zapata’s action. The threshold question is whether that court should have exercised its jurisdiction to do more than give effect to the legitimate expectations of the parties, manifested in their freely negotiated agreement, by specifically enforcing the forum clause.

There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power,¹⁴ such as that involved here, should be given full effect. In this case, for example, we are concerned with a far from routine transaction between companies of two different nations contemplating the tow of an extremely costly piece of equipment from Louisiana across the Gulf of Mexico and the Atlantic Ocean, through the Mediterranean Sea to its final destination in the Adriatic Sea. In the course of its voyage, it was to traverse the waters of many jurisdictions. The Chaparral could have been damaged at any point along the route, and there were countless possible ports of refuge. That the accident occurred in the Gulf of Mexico and the barge was towed to Tampa in an emergency were mere fortuities. It cannot be doubted for a moment that the parties sought to provide for a neutral forum for the resolution of any disputes arising during the tow. Manifestly much uncertainty and possibly great inconvenience to both parties could arise if a suit could be maintained in any jurisdiction in which an accident might occur or if jurisdiction were left to any place where the Bremen or Unterweser might happen to be found.¹⁵ The elimination of all such uncertainties by agreeing in advance on a forum acceptable to both parties is an indispensable element in international trade, commerce, and contracting. There is strong evidence that the forum clause was a vital part of the agreement,¹⁶ and it would be unrealistic to- think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations. Under these circumstances, as Justice Karminski reasoned in sustaining jurisdiction over Zapata in the High Court of Justice, “[t]he force of an agreement for litigation in this country, freely entered into between two competent parties, seems to me to be very powerful.”

Thus, in the light of present-day commercial realities and expanding international trade we conclude that the forum clause should control absent a strong showing that it should be set aside. Although their opinions are not altogether explicit, it seems reasonably clear that the District Court and the Court of Appeals placed the burden on Unterweser to show that London would be a more convenient forum than Tampa, although the contract expressly resolved that issue. The correct approach would have been to enforce the forum clause specifically unless Zapata could clearly show that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching. Accordingly, the case must be remanded for reconsideration.

We note, however, that there is nothing in the record presently before us that would support a'refusal to enforce the forum clause. The Court of Appeals suggested that enforcement would be contrary to the public policy of the forum under Bisso v. Inland Waterways Corp., 349 U. S. 85 (1955), because of the prospect that the English courts would enforce the clauses of the towage contract purporting to exculpate Unterweser from liability for damages to the Chaparral. A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision. See, e. g., Boyd v. Grand Trunk W. R. Co., 338 U. S. 263 (1949). It is clear, however, that whatever the proper scope of the policy expressed in Bisso,17 it does not reach this case. Bisso rested on considerations with respect to the towage business strictly in American waters, and those considerations are not controlling in an international commercial agreement. Speaking for the dissenting judges in the Court of Appeals, Judge Wisdom pointed out:

“[W]e should be careful not to over-emphasize the strength of the [Bisso] policy. . . . [T]wo concerns underlie the rejection of exculpatory agreements: that they may be produced by overweening bargaining power; and that they do not sufficiently discourage negligence. . . . Here the conduct in question is that of a foreign party occurring in international waters outside our jurisdiction. The i evidence disputes any notion of overreaching in' the contractual/ agreement. And for all we know, the uncertainties and dangers in the new field of transoceanic towage of oil rigs were so great that the tower was unwilling to take financial responsibility for the risks, and the parties thus allocated responsibility for the voyage to the tow. It is equally possible that the contract price took this factor into account. I conclude that we should not invalidate the forum selection clause here unless we are firmly convinced that we would thereby significantly encourage negligent conduct within the boundaries of the United States.” 428 F. 2d, at 907-908. (Footnotes omitted.)

Courts have also suggested that a forum clause, even though it is freely bargained for and contravenes no important public policy of the forum, may nevertheless be “unreasonable” and unenforceable if the chosen forum is seriously inconvenient for the trial of the action. Of course, where it can be said with reasonable assurance that at the time they entered the contract, the parties to a freely negotiated private international commercial agreement contemplated the claimed inconvenience, it is difficult to see why any such claim of inconvenience should be heard to render the forum clause unenforceable. We are not here dealing with an agreement between two Americans to resolve their essentially local disputes in a remote alien forum. In such a case, the serious inconvenience of the contractual forum to one or both of the parties might carry greater weight in determining the reasonableness of the forum clause. The remoteness of the forum might suggest that the agreement was an adhesive one, or that the parties did not have the particular controversy in mind when they made their agreement; yet even there the party claiming should bear a heavy burden of proof.¹⁸ Similarly, selection of a remote forum to apply differing foreign law to an essentially American controversy might contravene an' important public policy of the forum. For. example, so long'as Bisso governs Aftierican courts with respect to the towage business in American waters, it would quite arguably be improper to permit an American tower to avoid that policy by providing a foreign forum for resolution of his disputes with an American towee.

This case, however, involves a freely negotiated international commercial transaction between a German and an American corporation for towage of a vessel from the Gulf of Mexico to the Adriatic Sea. As noted, selection of a London forum was clearly a reasonable effort to bring vital certainty to this international transaction and to provide a neutral forum experienced and capable in the resolution of admiralty litigation. Whatever “inconvenience” Zapata would suffer by being forced to litigate in the contractual forum as it agreed to do was clearly foreseeable at the time of contracting. In such circumstances it should be incumbent on the party seeking to escape his contract to show that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court. Absent that, there is no basis for concluding that it would be unfair, unjust, or unreasonable to hold that, party to his bargain.

In the course of its ruling orí Unterweser’s second motion to stay the proceedings in Tampa, the District •Court did make a conclusory finding that the balance of convenience was “strongly” in favor of litigation in Tampa. However, as previously noted, in making that finding the court erroneously placed the burden of proof on Unterweser to show that the balance of convenience was strongly in its favor.¹⁹ Moreover, the finding falls far short of a conclusion that Zapata would be effectively deprived of its day in court should it be forced to litigate in London. Indeed, it cannot even be assumed that it would be, placed to the expense of transporting its witnesses to London. It is not unusual for important issues in international admiralty-cases to be dealt with by deposition. Both the District Court .and the Court of Appeals majority appeared satis-* fied that Unterweser could receive a fair hearing in Tampa by using deposition testimony of its witnesses from distant places, and there is no reason to conclude that Zapata could not use deposition testimony to equal advantage if forced to litigate in London as it bound itself to do. Nevertheless, to allow Zapata opportunity to carry its heavy burden of showing not only that the balance of convenience is strongly in favor of trial in Tampa (that is, that it will be far more ■ inconr venient for Zapata to litigate in- London than it will be for Unterweser to litigate in Tampa), but also that a London trial will be so manifestly and gravely inconvenient to Zapata that it will be effectively deprived of a meaningful day in court, we remand for further., proceedings. . •

Zapata’s remaining contentions do not require extended treatment. It is clear that Unterweser’s action in filing its limitation complaint in the District Court in Tampa was, so far as Zapata was concerned, solely a defensive measure made necessary as a response to Zapata's breach of the forum clause of the contract. When the six-month statutory period for filing an action to limit its liability had almost run without the District Court’s having ruled on Unterweser’s initial motion to dismiss or stay Zapata’s action pursuant to the forum clause, Unterweser had no other prudent alternative but to protect itself by filing for limitation of its liability.²⁰ Its action in so doing was a direct consequence of Zapata’s failure to abide by the forum clause of the towage contract. There is no basis on which to conclude that this purely necessary defensive action by Unterweser should preclude it from relying on the forum clause it bargained for.

For the first time in this litigation, Zapata has suggested to this Court that the forum clause should not be construed to provide for an exclusive forum or to include in rent actions. However, the language of the clause is clearly mandatory and all-encompassing; the language of the clause in. the Carbon Black case was far different.²¹

The judgment of the Court of Appeals is vacated and the case is remanded for further proceedings consistent with this opinion.

Vacated and remanded.

1 Compare,, e. g., Central Contracting Co. v. Maryland Casualty Co., 367 F. 2d 341 (CA3 1966), and Wm. H. Muller & Co. v. Swedish American Line Ltd., 224 F. 2d 806 (CA2), cert. denied, 350 U. S. 903 (1955), with Carbon Black Export, Inc. v. The Monrosa, 254 F. 2d 297 (CA5 1958), cert. dismissed, 359 U. S. 180 (1959).

2 The General Towage Conditions of the contract included the following:

“1. . . . [Unterweser and its] masters and crews are not responsible for defaults and/or errors in the navigation of the tow.

“2. . . .

“b) Damages suffered by the towed object are in any case for account of its Owners.”

In addition, the contract provided that any insurance of the Chaparral was to be “for account of” Zapata. Unterweser’s initial telegraphic bid had also offered to “arrange insurance covering towage risk for rig if desired.” As Zapata had chosen to be self-insured on all its rigs, the loss in this case was not compensated' by insurance.

3 The Bremen was arrested by a United States marshal acting pursuant to Zapata's complaint immediately upon her arrival in Tampa. The tug was subsequently released when Unterweser furnished security in the amount of $3,500.000.

4 Zapata appeared specially and moved to set aside service of process outside the country. Justice Karminski of the High Court of Justice denied the motion on the ground the contractual choice-of-forum provision conferred jurisdiction and would be enforced, absent a factual showing it would not be “fair and right” to do so. He did not believe Zapata had made such a showing, and held that it should be required to “stick to [its] bargain.” App. 206, 211, 213. The Court of Appeal dismissed an appeal on the ground that Justice Karminski had properly applied the English rule. Lord Justice Willmer stated that rule as follows:

“The law on the subject, I think, is not open to doubt .... It is always open to parties to stipulate . . . that a particular Court shall have jurisdiction over any dispute arising out of their contract. Here the parties chose to stipulate that disputes were to be referred to the ‘London Court,’ which I take as meaning the High Court in this country. Prima facie it is the policy of. the Court to hold parties to the bargain into which they have entered. . . . But that is not an indexible rule, as was shown, for instance, by the case of The Fehmarn, [1957] 1 Lloyd’s Rep. 511; (C. A.) [1957] 2 Lloyd’s Rep. 551 . . . .

“I approach the matter, therefore, in this way, that the Court has a discretion, but it is a discretion which, in the ordinary way and in ' the absence of strong reason to the contrary, will be exercised in favour of holding parties to their bargain. The question is whether sufficient circumstances have been shown to exist in this case to make it desirable, on the grounds of balance of convenience, that proceedings should not take place in this country . . . .” [1968] 2 Lloyd’s Rep. 158, Í62-163.

5 46 U. S. C. §§ 183, 185. See generally G, Gilmore & C. Black, Admiralty §10-15 (1957).

6 In its limitation complaint, Unterweser stated it “reserve[d] all rights”, under its previous motion to dismiss or stay Zapata’s action, and reasserted that the High Court of Justice was the proper forum for determining the entire controversy, including its own right to limited liability, in accord with the contractual forum clause. Unterweser later counterclaimed, setting forth the same contractual cause' of action as in its English action and a further cause of action for salvage arising out of the Bremen’s services following the casualty. In its counterclaim, Unterweser again asserted that the High Court of Justice in London was the proper forum for determining all aspects • of the controversy, including its counterclaim. ■

7 The Carbon Black court went on to say that it was, in any event, unnecessary for it to reject the more liberal position taken in Wm. H. Muller & Co. v. Swedish American Line Ltd., 224 F. 2d 806 (CA2), cert. denied, 350 U. S. 903 (1955), because the case before it had a greater nexus with the United States than that in Muller.

8 The record contains an undisputed affidavit of a British solicitor stating an opinion that the exculpatory clauses of the contract would be held “prima facie valid and enforceable” against Zapata in any action maintained in England in which Zapata alleged that defaults or errors in Unterweser’s tow caused the casualty and damage to the Chaparral. .

In addition, it is not disputed that while the limitation fund in the-District Court in Tampa amounts to $1,390,000, the limitation fund in England would be only slightly in excess of $80,000 under English law.

9 The Court of Appeals also indicated in passing that even if it took the view that choice-of-forum clauses were' enforceable unless “unreasonable” it was “doubtful” that enforcement would be proper here because the exculpatory clauses would deny Zapata relief to which it was “entitled” and because England was “seriously inconvenient” for-trial of the action.

10 Many decisions reflecting this view are collected in Annot., 56 A. L. R. 2d 300, 306-320 (1957), and Later Case Service (1967).

For leading early cases, see, e. g., Nute v. Hamilton Mutual Ins. Co., 72 Mass. (6 Gray) 174 (1856); Nashua River Paper Co. v. Hammermill Paper Co., 223 Mass. 8, 111 N. E. 678 (1916); Benson v. Eastern Bldg. & Loan Assn., 174 N. Y. 83, 66 N. E. 627 (1903).

The early admiralty cases were in accord. See, e. g., Wood & Selick, Inc. v. Compagnie Generale Transatlantique, 43 F. 2d 941 (CA2 1930); The Ciano, 58 F. Supp. 65 (ED Pa. 1944); Kuhnhold v. Compagnie Generale Transatlantique, 251 F. 387 (SDNY 1918); Prince Steam-Shipping Co. v. Lehman, 39 F. 704 (SDNY 1889).

In Insurance Co. v. Morse, 20 Wall. 445 (1874), this Court broadly stated that “agreements in advance to oust the courts of the jurisdiction conferred by law are illegal and void.” Id., at 451. But the holding of that cáse was only that the State of Wisconsin could not by statute force a foreign corporation to “agree” to surrender its federal statutory' right to remove a state court action to' the federal courts as a condition of doing business in Wisconsin. Thus, the case is properly understood as one in which a state statutory requirement was viewed as imposing an unconstitutional condition on the exercise of the federal right of removal. See, e. g., Wisconsin v. Philadelphia & Reading Coal Co., 241 U. S. 329 (1916).

•As Judge Hand noted in Krenger v. Pennsylvania R. Co., 174 F. 2d 556 (CA2 1949), even at that date there was in fact no “absolute taboo” against such clauses. See, e. g., Mittenthal v. Mascagni, 183 Mass. 19, 66 N. E. 425 (1903); Daley v. People’s Bldg., Loan & Sav. Assn., 178 Mass. 13, 59 N. E. 452 (1901) (Holmes, J.). See also Cerro de Pasco Copper Corp. v. Knut Knutsen, O. A. S., 187 F 2d 990 (CA2 1951). '

11 E. g., Central Contracting Co. v. Maryland Casualty Co., 367 F. 2d 341 (CA3 1966); Anastasiadis v. S. S. Little John, 346 F. 2d 281 (CA5 1965) (by implication); Wm. H. Muller & Co. v. Swedish American Line Ltd., 224 F. 2d 806 (CA2), cert. denied, 350 U. S. 903 (1955); Cerro de Pasco Copper Corp. v. Knut Knutsen, O. A. S., 187 F. 2d 990. (CA2 1951); Central Contracting Co. v. C. E. Youngdahl & Co., 418 Pa. 122, 209 A. 2d 810 (1965).

The Muller case, was overruled in Indussa Corp. v. S. S. Ranborg, 377 F. 2d 200 (CA2 1967), insofar as it held that the forum clause-was .not inconsistent with the “lessening of liability” provision of the Carriage of Goods by Sea Act, 46 U. S. C. § 1303 (8), which was applicable to the transactions in Muller, Indussa, and Carbon Black.' That Act is not applicable in this case.

12 In addition to the decision of the Court of Appeal in the instant case, Unterweser Reederei G. m. b. H. V. Zapata Off-Shore Co. [The Chaparral], [1968] 2 Lloyd’s Rep. 158 (C. A.), see' e. g., Mackender v. Feldia A. G., [1967] 2 Q. B. 590 (C. A.); The Fehmam, [1958] 1 W. L. R. 159 (C. A.); Law v. Garrett, [1878] 8 Ch. D. 26 (C. A.); The Eleftheria, [1970] P. 94. As indicated by the clear statements in The Eleftheria and of Lord Justice Wilkner in this case, supra, n. 4, the decision of the trial court calls for an exercise of discretion. See generally A. Dicey & J. Morris, The Conflict of Laws 979-980, 1087-1088 (8th éd. 1967); Cowen & Mendes da Costa, The Contractual Forum: Situation, in England and the British Commonwealth, 13 Am. J. Comp. Law 179 (1964) ; Reese, The Contractual Forum: Situation in the United States, id., at 187, 190 n. 13; Graupner, Contractual Stipulations Conferring Exclusive Jurisdiction Upon Foreign Courts in the Law of England and Scotland, 59 L. Q. Rev. 227 (1943).

13 Restatement (Second) of the Conflict of Laws §80 (1971); Reese, The Contractual Forum: Situation in the United States, 13 Am. J. Comp. Law 187 (1964); A. Ehrenzweig, Conflict of Laws § 41 (1962). See also Model Choice of Forum Act (National Conference of Commissioners on Uniform State Laws. 1968).

14 The record, here refutes any notion of overweening bargaining power. Judge Wisdom, dissenting, in the Court of Appeals noted:

“Zapata has neither presented evidence of nor alleged fraud or undue bargaining power in the agreement. Unterweser was only one of several companies bidding on the project. No evidence contradicts its Managing Director’s affidavit that it specified English courts 'in an effort to meet Zapata Off-Shore Company half way.’ Zapata’s Vice President has declared by affidavit that no specific negotiations- concerning the forum clause took place. But this was not simply a form contract with boilerplate language that Zapata had no power to alter. The towing of an oil rig across the Atlantic was a new business. Zapata did make alterations to the contract submitted by Unterweser. The forum clause could hardly be ignored. It is the final sentence of the agreement, immediately preceding the date and the parties’ signatures. . . .” 428 F.-2d 888, 907.

15 At the very least, the clause was an effort to eliminate all uncertainty as to the nature, location, and outlook of the forum in which these companies of differing nationalities might find themselves. Moreover, while the contract here did not specifically provide that the substantive law of England should be applied, it is the general rule in English courts that the parties are assumed, absent contrary indication, to have designated the forum with the view that it should apply its own law. See, e. g., Tzortzis v. Monark Line A/B, [1968] 1 W. L. R. 406 (C. A.); see generally 1 T. Carver, Carriage by Sea 496-497 (12th ed. 1971); G. Cheshire, Private International Law 193 (7th ed. 1965); A. Dicey & J. Morris, The Conflict of Laws 705, 1046 (8th ed, 1967); Collins, Arbitration Clauses and Forum Selecting Clauses in the Conflict of Laws: Some Recent Developments in England, 2 J. Mar. L. & Comm. 363, 365-370 and n. 7 (1971). It is therefore reasonable to conclude that the forum clause was also an effort to obtain certainty as to the' applicable substantive law.

The record contains an affidavit of a Managing Director of Unterweser stating that Unterweser considered the choice-of-forum provision to be of "overriding importance” to the transaction. He stated that Unterweser- towage contracts ordinarily' provide for exclusive German jurisdiction and application of German law, but that “[i]n this instance, in an effort to meet [Zapata] half way, [Unterweser] proposed the London Court of Justice. Had this provision not been accepted by [Zapata], [Unterweser] would not have entered into the towage contract . . . .” He also stated that the parties intended, by designating the London forum, that English law would be applied. A responsive affidavit by Hoyt Taylor, a vice president of Zapata, denied that there were any discussions between Zapata and Unterweser concerning the forum clause or the question of the applicable law.

16 See nn. 14-15, supra. Zapata has denied specifically discussing the forum clause with Unterweser, but, as Judge Wisdom pointed out, Zapata made numerous changes in the contract without altering the forum clause, which could hardly have escaped its attention. Zapata is clearly not unsophisticated in such matters. The contract of its wholly owned subsidiary with an Italian corporation covering the contemplated drilling operations in the Adriatic Sea provided that all disputes were to be settled by arbitration in London under English law, and contained.broad exculpatory clauses. App. 306-311.

17 Dixilyn Drilling Corp. v. Crescent Towing & Salvage Co., 372 U. S. 697 (1963) (per curiam), merely followed Bisso and declined to subject its rule governing towage contracts in American waters to “indeterminate exceptions” based on delicate analysis of the facts of each case. See 372 U. S., at 698 (Harlan, J., concurring).

18 See, e. g., Model Choice of Forum Act .§3 (3), supra, n. 13, comment: “On rare occasions, the state of the forum may be a substantially more convenient place for the trial of a particular controversy than the chosen state. If so, the present clause would permit the action to proceed. This result will presumably be in accord with the desires of the parties. It can be assumed that they did not have the particular controversy in mind when they made the choice-of-forum agreement since they would not consciously have agreed to have the action brought in an inconvenient place.”

19 Applying the proper burden of proof, Justice Karminski in the High Court of Justice at London made the following findings, which appear to have substantial support in the record:

“[Zapata] pointed out that in this case the balance of convenience so far as witnesses were concerned pointed in the direction of having the case heard and tried in the United States District Court at Tampa in Florida because the probability is that most, but not necessarily all,, of the witnesses will be American. The answer, as it seems to me, is that a substantial minority at least of witnesses are likely to be German. The tug was a German vessel and was, as far as I know, manned by a German crew .... Where they all are now or are likely to be when this matter is litigated I do not know, because the experience of the Admiralty Court here strongly points out that maritime witnesses in the course of their duties move about freely. The homes of the German crew presumably are in Germany. ' There is probably a balance of numbers in favour of the Americans, but not, as I am inclined to think, a very heavy balance.” App. 212.

It should also be noted that if the exculpatory clause is enforced in the English’ courts, many of Zapata’s witnesses on the questions of negligence and damage may be completely unnecessary.

20 Zapata has suggested that Unterweser was not in any way required to file its “affirmative” limitation complaint because it could- just as easily have pleaded limitation of liability by way of defense in Zapata’s initial action, either' before or after the six-month period.' That course of action was not without risk, however, that Unterweser’s attempt to limit its liability by' answer would be held invalid. .See G. Gilmore & C. Black, Admiralty § 10-15 (1957). We do not believe this hazardous option in any way deprived .Unterweser’s limitation complaint of its essentially defensive character so far as Zapata was concerned.

21 See 359 U. S., at 182.