In re Rationis Enterprises of Panama

The M/V MSC Carla was a container ship. Hyundai Mipo Dockyard Co, Ltd. (HMD) (defendant), a Korean shipyard, installed a mid-body insert in the Carla to make it longer. On a voyage across the Atlantic more than a decade after the Carla had been elongated, the ship broke in half after one of the seams between the original hull and the insert portion split. Half of the ship and her cargo of hundreds of containers sank. The owner of the ship, Rationis Enterprises of Panama (Rationis) (plaintiff) filed a petition in federal court under the Limitation of Liability Act in order to determine all liability issues and limit its liability to the salvage value of the vessel and the value of freight then pending, as provided by the act. There were approximately 1,000 cargo claimants involved in the limitation proceeding. HMD was brought into the proceeding by third-party complaints from those claimants seeking to hold HMD jointly and severally responsible for their loses. HMD sought a declaratory judgment of nonliability in a Korean court but only served notice of that action on three of the 1,000 cargo claimants. Those three claimants moved in the limitation action to have the district court enjoin HMD from bringing its Korean action against them. HMD claimed that the district court did not have personal jurisdiction over it. The district court held that personal jurisdiction had been properly established because HMD had sufficient contacts in the locality and that it had forfeited its right to object to jurisdiction by participating in discovery. The court granted the injunction against the Korean action. HMD appealed.