In any case where claims exceed the amount of the shipowners limitation of liability of 1,000 francs ($67) per ton for property claim and 2,100 francs ($140) for personal injury and death claims:

(a) The shipowner, foreign or domestic, may institute a proceeding for limitation of liability and constitute his limitation fund in the courts of any maritime nation in the world at his unfettered option, regardless of where the accident or disaster may have occurred. (There is no limitation on the shipowner's choice of forum in the bill or in the convention.1)

(b) After constitution of a proper fund no claimant or potential claimant may exercise any right against the property of the shipowner, either by attachment, or by execution on a judgment, in any other jurisdiction.

This provision leaves the claimant no choice. He can only enforce his claim by going to the forum chosen by the shipowner and submitting to the law, procedure and methods of proof enforced in that forum.

Specifically the burden of proof with respect to privity and knowledge is left to the law of the forum and in many, probably most, foreign countries the burden is placed on the claimant, which is the reverse of the rule in this country.

In collision cases it is both possible and probable that shipowners of different nationalities would each choose his home forum, subjecting claimants to double litigation, and the risk that each court would favor the ship of its own nationality.

(c) Of lesser importance, under certain circumstances of choice of jurisdiction, the shipowner would be entitled to mandatory release of any security obtained by any claimant prior to constitution of the fund, and in all cases to such release in the discretion of the court. Under these circumstances it is clear that

(1) The shipowner (but not the claimants) is free to shop for his most favorable forum.

(2) In most cases a foreign shipowner will choose a foreign forum, and even a domestic shipowner may resort to a foreign forum under some circumstances.

(3) When a foreign forum is chosen American claimants will be deprived of access to our own courts to enforce their claims.

I do not need to dwell on the great hardship to American claimants, who would otherwise be entitled to sue on their claims in our own courts, of being compelled to go abroad at great expense and inconvenience, possibly to two or more jurisdictions, to litigate their claims in foreign courts with different systems of law and procedure including costs, and where lawyers, if available, are expensive and must be paid in advance. (Contingent retainers are unknown outside this country.)

I simply ask each Senator and Congressman who will consider this bill to imagine that he with members of his family might some day find himself aboard a ship involved in a disastrous fire in a strange foreign port, or in a collision with another ship in faraway waters, and to consider the plight of other passengers, or seamen, so involved, not to mention the owners of property destroyed. The 1957 Convention was initiated, promoted and drafted by foreign shipowning interests in complete disregard of American views, in particular those on choice of forum. See position paper paragraphs A (1) and B (1).

Their objectives were primarily two: Their first objective was to acquire the right to establish a jurisdiction of their own choice to which all claimants would have to come to litigate their claims. Thereby veiled was the determination that this should not be the courts of the United States. Every British shipping publication, and the reports of every British P. I. Club (liability insurance) conrain loud frequent laments over the alleged overgenerosity of U.S. courts in finding liability on the part of shipowners and in assessing damages with respect to personal claims. If the convention becomes accepted generally, and particularly in this country, their primary objective will have been accomplished. Thereafter no foreign shipowner will have to answer for claims in an American court in any case where limitation can be invoked, and they will not.

1 There are no safeguards which would inhibit the shipowner's choice of forum. On the contrary, the provisions of convention art. 5, bill sec. 7, providing for preferred jurisdictions might encourage rather than discourage the shipowner to file for limitation in faraway places and highly inconvenient, if not impracticable, jurisdictions for claimants.

While these dire results will not follow in all cases and there may still occa. sionally be limitation cases in American courts, the means of avoiding this would be placed at the disposal of every foreign shipowner, and this tool may occasionally be used by American shipowners as well.

The owners of the Andrea Doria and the Stockholm filed their limitation proceedings in a U.S. district court only because many suits were brought against them here which could otherwise have been prosecuted to enforcible judgments. With the enactment of section 4 (e) of the bill and adoption of article 2(4) of the convention, owners similarly situated would be able to nullify the effect of suits brought here, simply by establishing a valid funds in a foreign court, thereby requiring all claimants to come to the forum selected for effective prosecution of their claims.2

This is a "concursus of claims" on an international basis. Whatever may be said of the desirability of concursus on a national basis as enforced under our existing law, it is obvious that quite different considerations apply when this is attempted on an international basis with the shipowner free to choose the forum most favorable to himself among the many available with widely divergent systems of law and procedure, and conceptions of justice.

For American claimants, and the American public, of which we all a part, all of whom are potential claimants, I submit that the sacrifice of rights is too great. There is no such overpowering call for international uniformity as to justify it, particularly when we are asked to lead the parade, and many foreign countries are looking to us for guidance.

The second objective of the shipowners is to be relieved of any form of security in any other country than that which they choose to constitute their fund. It occasionally happens that before the petitioner files his petition for limitation of liability, a claimant will have sued and obtained security. Under our existing law a shipowner upon filing his petition in this country is entitled to a stay of any pending suits but not to a release of any security furnished therein. The Pelotas, 297 F. 318; cited The Salvore (C.C.A. 2) 36 F. 2d 712. The retention of this security is important if the right of limitation is denied since in that event the security filed in the limitation proceeding would ipso facto be insufficient to pay all cleams. Release of such security would be justified only on the assumption that the shipowners claim of the right to limit will be granted, which is unwarranted, as this issue is still to be litigated.

Nevertheless, article 5 of the convention would require the mandatory release of prior obtained security in certain cases and provide discretionary release in all others. The shipowner would have the convention assume as a matter of course that limitation of liability will be granted before the issue is litigated. Aside from this possibility of being required to maintain such partial additional security which the shipowners would avoid, they express the fear that if their right to a single fund and concursus is not maintained they might be subject to being required to pay claims up to the limitation amount in more than one jurisdiction.

This expressed fear of shipowners is purely theoretical. They can point to no case where this has ever happened.

The shipowner has protection against liability in excess of his limitation by reason of payment of claims in another jurisdiction by way of a credit against his fund, under the law of England, as pointed out in the position paper, paragraph A(1). Probably this would also be the law in this country but in over 110 years of experience in our courts the point has never come up, indicating how unsubstantial is this expression of fear.

The shipowners fail to realize that limitation of liability is not an absolute right to be protected against all hazards but is a special privilege. They have no legitimate complaint if the system of national enforcement of this privilege is not as perfect as they would like to have it. This is particularly true when the hardships of the scheme of enforcement which they propose would work such great hardships on American claimants.

2 The supposed protection of the condition of "availability" is shadowy. It would take a courageous court to declare "unavailable" a fund accepted and approved by a foreign court and a factual showing of unavailability would be difficult. Availability at the time of constitution might mean nothing at the time of distribution. In most cases availability would probably not be open to question.

PROPOSALS FOR MODIFICATION OF S. 556 AND NEOGTIATIONS WITH RESPECT THERETO S. 556 was introduced in the Senate by Senator Bartlett on January 28, 1963, as a reintroduction of S. 2314, 87th Congress, as reported by the committee. In the interim between the adjournment of the 87th Congress and this date, informal discussions with the AMMI group sponsoring the legislation developed the possibility that the sponsors might be willing to consider modifications of the bill to meet some of the objections thereto raised by representatives of claimants. A formal meeting of the two groups was held in New York on January 15, 1963, and continued in Philadelphia on February 7, 1963. At this meeting it was indicated by AMMI representatives that they would be willing to consider modifications which would permit American claimants to sue in the courts of the United States, with a further provision that where the shipowner had constituted a limitation fund in a foreign court he might file an ancillary proceeding for limitation of liability in a U.S. court in which American claimants might litigate their claims and the issue of the shipowner's right to limitation of liability, and be assured of payment of their claims in this country in accordance with such adjudication as the U.S. court might make. In the event the U.S. court held that the shipowner was entitled to limitation of liability, they would be paid the same pro rata of their claims based on the amount of the limitation fund as claimants filing their claims in the foreign proceeding were paid. Upon payment the shipowner would be subrogated to the claims of such claimants and obtain a credit in his own behalf from the foreign limitation fund.

Pursuant to this discussion, tentative drafts of amendments were submitted by the AMMI group and considered in a meeting of that group on March 19, at which time a revised draft of S. 556 was prepared and circulated. After informal discussions and correspondence, a further meeting of the conferees was held on April 23.

Under date of April 30, 1963, Mr. Spector, chairman of the AMMI committee, wrote to Mr. Bourbon, as the professional staff member of this committee, enclosing a revised copy of S. 556, indicating the revisions which that committee was prepared to make but noting that this revision was still in the process of review with Messrs. Freedman, Matteson, and De Barco, whose concurrence had not yet been received. The letter further: (1) Called attention to discussions of the 300-ton minimum provision; (2) stated that the AMMI committee had further agreed to delete the word "actual" before the phrase "fault or privity of the owner" in section 3(a); (3) further agreed to eliminate section 3(b); and (4) include a new subsection, 3(f), to carry forward into the new act the provision of the Sirovich amendment of 1936 to our present law with respect to fault or privity of the master, superintendent, or managing agent of the owner at or prior to the commencement of the voyage.

The letter further stated that they had not yet fully reviewed new section 5, particularly 5(g), but hoped to cover this ground at a meeting called for Friday, May 3. At the meeting held on Friday, May 3, I called attention to the defects which I considered existing in new section 5, and after some discussion prepared a new, quick draft of section 5(g) and called attention to other specific provisions of section 5 which in my judgment required either elimination or modification. After inconclusive discussions this meeting adjourned with the assurance that the AMMI committee would meet on May 9 to discuss my proposed changes. Following this meeting I promptly prepared a new redraft of a complete revision of section 5 and furnished the same to the AMMI committee in ample time for its meeting.

Following the meeting of May 9 we expected to receive from the AMMI group a statement of their position with respect to the proposed revision of section 5. However, upon communicating with Mr. Spector on May 10, I was informed that the AMMI committee did not reach full consideration of my proposed amendments and, consequently, could take no position. Mr. Spector further advised me that at the hearing on May 20, his group proposed to stand on S. 556 as introduced and put the burden on the opponents of the bill to propose any and all amendments thereto. Mr. Freedman, I am informed, received advice to the same effect. Under these circumstances, I conceive it to be my responsibility to present to this committee a statement of the revi

sions to S. 556, which it is my understanding the AMMI committee was prepared to agree to, and probably still are, and a statement of my further proposals with the reasons therefor.

To place the proposals intelligibly before the committee I have prepared and submit herewith a new revised draft of S. 556, containing both the proposed modifications apparently agreed to by AMMI and the further proposals submitted to AMMI for consideration, indicating both deletions and insertions, which are coded to indicate the proposals apparently agreed to by AMMI and the further proposals.

DISCUSSION OF PROPOSALS

The revision of S. 556 sent by the AMMI committee to Mr. Bourbon on April 30 included the following important features:

(1) Deletion of section 4(e)

This is the critical section, which would prevent any American claimant from exercising any right against the assets of the shipowner in this country, either by attachment or execution on a judgment, after a foreign limitation fund had been constituted.

(2) Deletion of section 7 in its entirety

This is the section of the bill requiring or permitting release of security obtained by a claimant in this country prior to the constitution of a foreign limitation fund.

The revision also added to the draft a new section 5(g) providing for an ancillary proceeding for limitation of liability in the United States by a shipowner who had first constituted his limitation fund in a foreign jurisdiction.

These are substantial modifications. The deletions are of paragraphs taken directly from the convention and are those paragraphs which would enable a shipowner to compel a foreign concursus of claims to which American claimants would be compelled to resort.

When I was first informed that it was proposed to delete these paragraphs from the bill, I immediately pointed out that their deletion from the bill would be meaningless if these same paragraphs in the convention were retained in any ratification thereof. At the meeting on May 3 I was assured by Mr. Spector for the AMMI committee that in any subsequent proposal for ratification of the convention these paragraphs would be eliminated by reservation or otherwise.

These modifications are so substantial, striking at one of the primary objectives of shipowners in the framing of the convention that much of the force of any plea for uniformity through enactment and ratification is dissipated.

Needless to say, the deletions are most welcome to the claimants.

The proposal for an ancillary proceeding for limitation of liability in the United States is satisfactory in itself provided the rights of claimants therein are adequately protected, but it is submitted that their rights are not adequately protected by the provision as drafted by AMMI. The AMMI draft specifically provides that no security shall be required and that all other provisions of section 5 shall apply. These would include, in their draft, the provision of subparagraph (d) requiring release of any security obtained by any claimant by prior attachment. The American claimants would therefore be left without any security for the performance of the shipowner's obligation in the ancillary proceeding and stripped of any they might have previously obtained. Moreover, since filing of claims in the ancillary proceeding would not be the equivalent of filing claims in the foreign proceeding, the claimants would be left without direct access to the foreign fund.

In the case of well-known and substantial domestic or foreign steamship owners having assets within the United States, this would not present a serious problem. However, the procedures established by this bill, if it becomes law, would be available to any foreign-vessel owner, however irresponsible, and whether or not he has, or is likely to have, assets within this country.

It is true that it is contemplated that the U.S. court at the conclusion of the ancillary proceeding would direct payment of American claims in the United States by the shipowner; but if the shipowner is unable or unwilling to perform this obligation, the claimants would have no redress, and cannot look even through the shipowner to the foreign fund. For the protection of American claimants we see no alternative to the provision of security by the shipowner in the ancillary proceeding for the performance of his obligations in that proceed

ing, even though this does involve to some extent an added burden for the shipowner.

Our proposed revision of this subsection would provide that in the ancillary proceeding "the court shall fix the amount of the deposit or security which shall be filed by the petitioner, having regard to the amount of the limitation of liability to which the petitioner may be entitled in respect of all claims as to which limitation of liability is invoked, and the proportion of such claims which it can be anticipated will be filed in the ancillary proceeding."

Since this amount must be based on a preliminary estimate, provision is also made for revision of this determination up or down as may be indicated by any change of circumstances. Furthermore, since the ancillary proceeding may be completed before final disposition of the foreign proceeding and the pro rata awarded to claimants in the foreign proceeding may not have been determined, there is a provision that upon conclusion of the ancillary proceeding the Court will nevertheless decree payments to the claimants subject to modification and further decree if it should later appear that foreign claimants have received a larger pro rata. American claimants in the ancillary proceeding should not be required to await final determination of the foreign proceeding, which may be interminably delayed, or possibly never disposed of by adjudication of the pro rata awarded to claimants therein.

I believe that my proposed revision of section 5(g) provides only the minimum requirements for the protection of American claimants in the ancillary proceeding if the ancillary proceeding is to be permitted in our courts.

We have no statement of the position of AMMI on this proposal.

In the revised text submitted, subparagraph (g) has been renumbered subparagraph (f). This, and the renumbering of other preceding paragraphs, derives from our proposed deletion of subparagraph (d) of the AMMI draft. This is the paragraph which would require, upon the constitution of a limitation fund in this country, the absolute release of any prior obtained security. This subparagraph is not a convention provision. It is an additional paragraph inserted in the bill which would change the American law on this subject to the advantage of shipowners and the disadvantage of claimants. We have pointed this out supra, referring to the decisions in the cases of The Pelotas, 297 F. 318 and The Salvore (CCA 2), 36 F. 2d 712.

No good reason supports this paragraph, but the contrary. In fact, the retention of this paragraph would violate the principle of the working agreement on which revisions of S. 556 were discussed, which was that no unnecessary modifications of U.S. law would be brought about by the revised bill.

Similar considerations apply to my proposed revision of subparagraph (d), formerly (e). The final sentence of that provision would have provided that upon a determination for any reason that the shipowner is not entitled to limitation of liability, the injunction theretofore in effect against proceedings against the shipowner otherwise than in the limitation proceeding, should not be modified without the "consent of all the parties," including the shipowner. In other words, the shipowner having prevented the claimants from proceeding against him on their claims in the courts of their choice by the filing of a limitation proceeding, asserting a right of limitation of liability which he has been unable to support, would nevertheless be enabled to prevent the parties from returning to the jurisdiction of their choice. Since the limitation proceeding is in admiralty, this would mean denial of a jury trial to claimants desiring, and otherwise entitled to, such trial.

This is contrary to the present law of the United States on this subject. The present law of the United States is stated in the substitute sentence which precedes the stricken sentence in the text and is indicated by double underscoring. The present law is that upon denial of the petitioner's right to limitation of liability claimants have their option to remain in the limitation proceeding to take advantage of the security filed there, or of exercising their right to return to the jurisdiction of their first choice or to proceed against the shipowner in such other manner as may be available to them.

The objectionable sentence is not based on any provision of the convention and is simply a gratuitous attempt by shipowners to accomplish a change in our law on this point for their own advantage to the disadvantage of claimants.

The additional changes which we have proposed in subparagraphs (a), (b). and (d) are largely drafting changes, which I believe are nevertheless important for clarity. I do not believe it is necesasry to discuss them here.