The M/V Transmichigan (a German-flagged vessel owned by Poseidon Schiffahrt GmbH) collided with the M/S Netuno (a Brazilian-flagged vessel) in the channel of the St Clair River at the southern end of Lake Huron, close to the international boundary between Michigan and Toronto, Canada (with the exact location vis-à-vis the actual border undetermined). An initial suit was filed in federal court in Michigan in personam and in rem by the Netuno’s owner against the Transmichigan/Poseidon, but was dismissed, prior to perfection of in rem jurisdiction, after initial crew discovery. Thereafter, Poseidon filed a nominal in rem action against the Netuno in the Federal Court of Canada at Montreal (while the Netuno was under repair at Toronto), and the Netuno’s owners counterclaimed for damages. However, the Netuno apparently sailed from its repair berth in Toronto without posting any bail in the in rem proceeding, such that the proceeding was deemed not to be a true in rem action. Poseidon commenced a third proceeding in Savannah, Georgia (the Netuno's next port of call) against the Netuno in rem. The Netuno was not arrested in the Georgia action, but the owner filed a stipulated waiver of arrest to have the same effect as if an arrest warrant had been served. Poseidon acknowledged that the purpose of the Georgia action was to have access to a larger limitation of liability fund under US law than would be available under Canadian law.

The lower Court dismissed the case initially on forum non conveniens grounds (see CMI1049), and the Fifth Circuit Court of Appeals reversed and remanded (see CMI1048), on the basis that in rem jurisdiction must be exercised by a US federal court in a case arising out of a collision between vessels of foreign nations on the high seas, absent a showing of injustice to the defendant. The Fifth Circuit remanded the case to the lower Court to apply this standard.

On remand, the Netuno's owner relied on arts 1.1.a-c of the Collision (Civil Jurisdiction) Convention 1952, to which both Germany and Brazil are signatories, to argue that the only proper forum for in rem actions after a collision is: (a) the defendant's residence/place of business; (b) forum where the defendant vessel has been or could have been arrested and bail/security has been furnished; or (c) the place of the collision if in inland waters. In turn, art 1.2 provides that while the claimant has the choice among these fora, it cannot bring a further action on the same collision in another jurisdiction without discontinuing the first.

The lower Court re-confirmed that the Canadian action was not an in rem proceeding because no bail/security had been posted. Thus, art 1.1.b of the Collision (Civil Jurisdiction) Convention 1952 did not apply because although the Netuno had been arrested in Montreal, no bail had been posted for its release. Accordingly, because art 1.1.b requires the conjunctive prerequisites of arrest and posting of bail/security to perfect in rem jurisdiction, in rem jurisdiction in Montreal was not proper. The lower Court next addressed whether dismissal was proper under art 1.3:

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

The lower Court ultimately determined that there were no decisions from any signatory jurisdictions to the Collision (Civil Jurisdiction) Convention 1952 to shed light on these thorny questions. Accordingly, because the US is a non-signatory, and to adhere to the binding Fifth Circuit rule that 'admiralty courts in this [the US] must retain jurisdiction over in rem actions in collisions between vessels of different nationalities unless the defendant vessel or owner establishes existence of special circumstances which would work an injustice if the court took jurisdiction', the Court refused to dismiss the case. The only argument for 'injustice' was that the US limitation of liability regime would allow for greater recovery by Poseidon against the Netuno interests, but this on its own was insufficient for a finding of 'injustice'.

Ultimately, however, the lower Court did transfer the case to the District Court for the Eastern District of Michigan on statutory forum non conveniens grounds under 28 USC §1404(a) because: (a) the initial suit in rem and in personam (to take crew discovery) had been filed there (although it was dismissed prior to perfection of in rem jurisdiction); and (b) Port Huron (where the collision occurred) would be an 'inland water' location sufficient to satisfy jurisdiction under art 1.1.c of the Collision (Civil Jurisdiction) Convention 1952.