INTERNATIONAL HARVESTER COMPANY V.

HAMBURG-AMERICAN LINE
J. Johnson | March 15, 1916
Topic 1: Choice of Law Issues in Conflicts Contracts Cases
Nature: Appeal from a judgment of the CFI

PARTIES:
 INTERNATION HARVESTER COMPANY IN RUSSIA, plaintiff-appellee

 HAMBURG-AMERICAN LINE, defendant-appellant

RELEVANT INFORMATION
A. PRIL ISSUE: W/N choice of law clause may be enforced; W/N jurisdiction is with the Hamburg courts
B. NATURE OF THE SUIT:
 Cause of Action: Breach of contract (recover damages)

 Subject Matter – Contract

 Kind of Action: In personam

C. MEANS TO ATTAIN JURISDICTION: not mentioned
D. FOREIGN ELEMENT/S: Plaintiff (American Corporation); Defendant (German corporation); choice of law clause (German law); stipulation granting Hamburg courts
jurisdiction
E. CONFLICTING RULES: None mentioned (no conflicting law pleaded)

SYNOPSIS:
International Harvester sought the delivery to a consignee in Vladivostok a large consignment of agricultural machinery, through defendant Hamburg American Line. While the
steamer of defendant was en route to Vladivostok, a war broke out in Europe. Since the steamer was a German vessel, the master of the ship decided to take refuge in the
nearest neutral port – in Manila. Eventually, International Harvester had to employ the services of another steamer to send the goods to the consignee, after Hamburg-American
line refused to do so. International Harvester now seeks to recover damages from Hamburg-American, including compensation for the expenses incurred in sending the cargo
from Manila to Vladivostok through a different steamer.
The relevant issue in this case are the alleged clauses in the contract pertaining to jurisdiction and choice of law. Defendant argues that jurisdiction.
W/N the provision in the bill of lading stating that all disputes arising under the contract are, at the option of the defendant company, to be decided exclusively by the
Hamburg courts, may be invoked (therefore, the CFI has no jurisdiction) – NO
 It cannot be admitted that a provision of this character has the effect of ousting the jurisdiction of the court of the Philippine Islands in the matter now before it. An

express agreement tending to deprive a court of jurisdiction conferred on it by law is of no effect.

 Whatever the effect of this provision, the benefit of it was waived when the defendant company appeared and answered generally without objecting to the

jurisdiction of the court.

W/N the rights of the party should be determined in accordance with the law of Germany
 When it is proposed to invoke the law of a foreign country as supplying the proper rules for the solution of a case, the existence of such law must be pleaded and

proved.
o Defendant has done neither. Thus, it is to be presumed that the law prevailing in the foreign country is the same as that which prevails in our own.

DOCTRINE:
An express agreement tending to deprive a court of jurisdiction conferred on it by law is of no effect.
When it is proposed to invoke the law of a foreign country as supplying the proper rules for the solution of a case, the existence of such law must be pleaded and proved.

FACTS:
 1914 – Plaintiff, International Harvester, an American corporation organized under the laws of Maine delivered to defendant, Hamburg-American, at Baltimore, Maryland

a large consignment of agricultural machinery. [To Baltimore, to Hamburg then to Vladivostock]

o The goods are then to be laden on Hamburg-American's steamer Bulgaria, which shall then be transferred to Hamburg, Germany.
o All goods shall be delivered ultimately to the Consignor at Vladivostock, Russia.
o The freight charges were prepaid to the ultimate destination.

 At Baltimore, a bill of lading was issued to International Harvester, which provided that the goods should be forwarded by Hamburg-American to Vladivostock.

 The shipment arrived at Hamburg and the cargo was transferred to the Suevia, also a ship of Hamburg-American. Hamburg-American issued to itself as forwarding

agent another bill of lading covering the transportation from Hamburg to Vladivostock.
 While the ship was carrying the cargo en route to Vladivostock, war broke out in Europe. Since Suevia was a German vessel, the master considered it necessary to take

refuge in the nearest neutral port, which happened to be in Manila. Ship remained there at the date of the trial.
  After it became apparent that Suevia would be detained indefinitely in Manila, International Harvester, made demand upon the agent of Hamburg-American in Manila for

the cargo to be forwarded to Vladivostock, if not by Suevia then by some other steamer.
o Hamburg-American refused, unless plaintiff would agree to subject the cargo to liability upon general average to satisfy the costs and expenses of the

Suevia (incident to its stay in Manila).

 International Harvester did not assent to this.
o Hamburg-American then offered to deliver the cargo provided the owner would deposit with Hamburg-American a cum of money (=20% of the value of the

cargo) as security and expenses adjusted as general average. [implied to not have been accepted as well by plaintiff International Harvester]
 However, plaintiff eventually instituted the present action in the CFI Manila in order to recover the possession of the cargo + damages for breach of contract and

unlawful detention of the property.

 A writ of replevin was issued in favor of the plaintiff and the cargo was delivered to it. Plaintiff then sent the cargo to Vladivostok by another steamer.

 Defendant American-Hamburg denies liability for damages and asserts that it has a lien on the property for general average.

 Judgment was given in favor of International Harvester, recognizing its right to the possession of the goods and awarding to it damages.
o Hamburg-American appealed, arguing that the plaintiff is liable to it, by way of general average, for the costs and expenses incurred by reason of Suevia's

internment in Manila. It also denies liability for the expenses of transferring the cargo to another ship and transporting it to the port of destination.

ISSUES/HELD:

[RELEVANT TO PRIL] W/N the provision in the bill of lading stating that all disputes arising under the contract are, at the option of the defendant company, to be decided
exclusively by the Hamburg courts, may be invoked (therefore, the CFI has no jurisdiction) – NO
 It cannot be admitted that a provision of this character has the effect of ousting the jurisdiction of the court of the Philippine Islands in the matter now before it. An

express agreement tending to deprive a court of jurisdiction conferred on it by law is of no effect.

 Whatever the effect of this provision, the benefit of it was waived when the defendant company appeared and answered generally without objecting to the jurisdiction of

the court.

[RELEVANT TO PRIL] W/N the rights of the party should be determined in accordance with the law of Germany
 When it is proposed to invoke the law of a foreign country as supplying the proper rules for the solution of a case, the existence of such law must be pleaded and

proved.
o Defendant has done neither. Thus, it is to be presumed that the law prevailing in the foreign country is the same as that which prevails in our own.

W/N cargo is liable to a general average – NO

 Agricultural machinery was not claimed to be a contraband of war. Being neutral goods, the cargo was not liable to forfeiture in the event of capture by the enemies of

the ship's flag.

 When the master of the Suevia decided to take refuge in the port of Manila, he acted exclusively with a view to the protection of his vessel. There was no common

danger to the ship and cargo, therefore it was not a case of general average.

W/N Hamburg-American is liable for the expenses incident to the transhipment and conveyance of the cargo to Vladivostok – YES
 The original bill of lading issued to the shipper in Baltimore contained a provision that the goods should be forwarded from Hamburg to Vladivostok at the steamer's

expense. If on account of war disturbances, the master is in doubt as to whether he can safely reach the port of destination, there discharge in the usual manner, or
proceed thence on his voyage unmolested he is at liberty to discharge the goods at another place or harbour which he may consider safe, whereby his obligations are
fulfilled.
o However, it was also provided therein that if the goods for any reason whatsoever cannot be discharged at the port of destination, the ship is at liberty to

forward them by some other means to the port of destination, for ship's account but not at ship's risk.
 Defendant insists that inasmuch as war had broken out between Germany and Russia, and the master had brought the cargo into a neutral harbor, all the obligations of

the company have been fulfilled. The Court disagreed.

o By the terms of the contract of affreightment, the defendant company was bound to forward the cargo to Vladivostok at the steamer's expense, not

necessarily by a steamer belonging to the defendant company. It does not follow that it is not liable for expense incurred by the owner in completing the
unfinished portion of the voyage in another ship.
o In the abovementioned Par. X of the bill of lading, the master is given the election to discharge at another port, if war should interfere with the completion

of the voyage. In this case, however, no such election was made by the master, and on the contrary, after arrival in Manila, he refused to discharge the
goods, and must be held to have elected to retain them, leaving the obligations of the contract intact. The master even proposed to hold the cargo until
such time as the Suevia might continue her voyage without fear.
o Further, in par. X, defendant recognized its responsibility with respect to forwarding the goods. When it was mentioned that the master's obligation will be

fulfilled by discharge in another port, it must be understood that the master's obligation will be fulfilled by discharge in another port, it must be understood
that reference is had to the obligations incident to the carriage of the goods on the instant voyage.
 Stipulations in a bill of lading exempting a shipowner are strictly construed against him.
 o Where goods have been loaded and partly carried on the agreed voyage, though the exact performance of the contract may become legally impossible, it

will not be regarded as completely an end, if it can by any reasonable construction be treated as still capable of being performed in substance.
 IN THIS CASE, there is no reason to hold that defendant company has been absolved by the outbreak of war from its contractual obligation to bear the expenses of

forwarding the goods to Vladivostok, even though it is immediately absolved from the duty to convey them on its own ship.
o The outbreak of the war between Germany and Russia did not make the contract of affreightment illegal between the German company and the American

shipper.
o The freight was prepaid by the shipper from Baltimore to destination but has been only in part earned. It is clear that upon principles of equity, the

company should be bound to restore so much of the freight that represents the unaccomplished portion of the voyage.

DISPOSITIVE:

The judgment appealed from is affirmed, with costs against the appellant. So ordered.