The Bremen v. Zapata Off-Shore Co.
Citation: 407 U.S. 1 (1972)
Facts
Zapata, a Houston-based company, contracted with Unterweser, a German company, to tow an oil rig from Louisiana to Italy. The contract contained a forum selection clause designating London courts for all disputes. When the tow encountered a storm in the Gulf of Mexico and the rig was damaged, Zapata sued in Florida federal court. Unterweser sought to enforce the forum selection clause.
Issue
Are forum selection clauses in international commercial contracts enforceable in federal courts?
Holding
Yes. The Supreme Court held that forum selection clauses in international contracts should be enforced unless the party opposing enforcement shows that the clause is “unreasonable and unjust” or the result of fraud or overreaching.
Rule
Forum selection clauses in international commercial contracts are prima facie valid and should be enforced unless the resisting party shows: (1) the clause is unreasonable or unjust; (2) it was obtained by fraud or overreaching; (3) enforcement would contravene a strong public policy of the forum; or (4) trial in the designated forum would be so gravely difficult as to effectively deny the party its day in court.
Significance
The Bremen reversed the prior American presumption against forum selection clauses and is the foundational case for their enforcement in international contracts. It reflects the federal policy favoring international commercial arbitration and predictability in cross-border dealings.