German Vessel Owner Seeks Rehearing at 5th Cir. on Jurisdiction Over MSC in Arb. Case

German corporation Conti, owner of the "Flaminia" vessel, petitioned the U.S. Court of Appeals for the 5th Circuit for rehearing on whether the court had personal jurisdiction over Mediterranean Shipping Co. in a suit seeking to confirm a $200 million arbitration award against the shipping giant. Conti said the grounds on which the appellate court rejected personal jurisdiction were twice waived since the company failed to raise them before the trial court and in its opening brief, and are wrong as a "factual matter" (Conti 11. Container Schiffarts-Gmbh & Co. KG M.S., MSC Flaminia v. MSC Mediterranean Shipping Co., 5th Cir. # 22-30808).

Conti chartered the Flaminia to MSC, and during one voyage in which the ship received three chemical tanks from the Port of New Orleans, the tanks exploded, causing damage and three deaths. A London arbitration panel awarded the German firm $200 million, prompting Conti's suit to confirm the award.

The Louisiana district court in which the case was filed said it had personal jurisdiction over MSC since the tanks were loaded in New Orleans, though the Fifth Circuit in January reversed. While the appellate court said that it agrees a court "should consider contacts related to the underlying dispute," the court said that underlying dispute involved contacts between MSC's subsidiary, MSC (USA), and the forum.

Conti said that it's "this narrow factual issue" on which it moves for rehearing.

The German company said the contention that the contacts were those of MSC's U.S. subsidiary "is an issue that MSC raised for the first time in MSC’s reply brief to this Court," meaning the company "never had an opportunity to respond to that argument and, respectfully, this Court erred in accepting MSC’s belated parent-subsidiary argument." The parent-subsidiary claim "was not raised, and was absolutely not pressed, below," the brief said. "Nor did MSC raise the alleged factual dispute, even obliquely, in its opening brief to this Court. Under these circumstances, this Court should have held it waived."

Even if this argument is accepted, Conti said it "cannot survive the standard of review," which is one of "clear error." The Louisiana district court found that the loading of the subject cargo in New Orleans "is a contact between MSC and the forum." Conti said that this holding "easily clears" the clear error standard.

MSC and the Fifth Circuit said that the subsidiary's contacts couldn't be imputed to MSC given their parent-subsidiary relationship "in the absence of proof that the two were alter egos of each other." Conti said that this is not the argument it would have made if this claim was properly raised. Instead, it would say that MSC (USA) is an "agent" of its parent company, imbuing personal jurisdiction on the parent.

The next question asks whether such an agent relationship exists between MSC and MSC (USA), "but the record on appeal contains the answer to that question" since the arbitration panel specifically said that the subsidiary acted as MSC's "local agent" for various purposes, Conti said. "Moreover, MSC expressly conceded an agency relationship below."