## Facts

- The Brazilian steamship *Mandu* and the German steamship *Denderah* collided on July 31, 1929, in Brazilian territorial waters near the port of Santos.
- The *Denderah* sank and most of its cargo was lost.
- Great American Insurance Co. insured certain cargo interests on the *Denderah*, paid claims for the loss, and became subrogated to the cargo owners’ rights against responsible parties.
- Great American also obtained, for value, assignments of cargo-loss claims from other insurers that had paid losses on additional cargo shipped on the *Denderah*.
- Great American sued in federal court in New York, asserting cargo-damage claims against the *Mandu* and seeking to recover its payments (as subrogee) and the assigned claims (as assignee).
- The *Mandu*’s owner argued that Brazilian substantive law controlled because the collision occurred in Brazil’s territorial waters; Brazil and Germany were parties to the 1910 Brussels Collision Convention, which divides collision liability between at-fault vessels based on relative fault.
- Great American objected, contending that United States admiralty law should apply, under which an innocent cargo interest could recover its entire loss from either negligent vessel without regard to relative fault.
- The district court rejected Great American’s objection, applied Brazilian law implementing the Brussels Convention, and limited Great American’s recovery to the portion allowed under that regime; Great American appealed.

## Issues

1. Whether a United States admiralty court must apply the substantive law of the place of the collision—here, Brazilian law incorporating the 1910 Brussels Collision Convention—to determine the measure and apportionment of cargo-loss liability arising from a collision in Brazilian territorial waters between foreign vessels.
2. Whether, under that governing law, a cargo insurer (standing as subrogee and assignee) may recover full cargo damages from one negligent vessel as permitted by United States admiralty doctrine, or is limited to the vessel’s proportionate share of fault.
3. Whether Great American could pursue the assigned cargo claims in its own name, notwithstanding that the assignment instruments were absolute in form.

## Decision

- The Second Circuit held that Brazilian law governed the substantive rights and liabilities because the tort occurred in Brazilian territorial waters.
- The court held that Brazilian law included the Brussels Collision Convention’s rule requiring division of collision liability in accordance with the vessels’ respective fault (and equal division when comparative fault cannot be determined).
- The court rejected Great American’s attempt to use the United States rule allowing full cargo recovery from either negligent vessel regardless of relative fault.
- The court recognized Great American’s standing to assert the cargo claims it had acquired by subrogation and by assignment, but only with the same substantive limits that bound the original cargo interests.
- The court affirmed the district court’s application of Brazilian law and the resulting restriction of Great American’s recovery to the share permitted under that law.

## Legal Principles

- A maritime collision occurring within a foreign nation’s territorial waters is governed, as to substantive liability and measure of damages, by the law of that place.
- When the place-of-wrong has implemented an international collision convention, the convention’s apportionment rule is part of the governing substantive law applied by a United States court.
- Under the 1910 Brussels Collision Convention, collision liability is allocated between vessels in proportion to their respective fault (or equally if fault cannot be comparatively measured), which can limit a cargo claimant’s recovery against a single vessel.
- A subrogee or assignee of cargo interests takes no greater substantive rights than the cargo owners had; it may sue in its own name, but remains subject to the same foreign-law limits on recovery.

## Conclusion

Because the collision occurred in Brazilian territorial waters between foreign ships whose flag states were parties to the 1910 Brussels Collision Convention, the Second Circuit applied Brazilian law implementing the Convention and affirmed a proportionate (not full) cargo-loss recovery against the *Mandu*, while allowing Great American to pursue the claims it held by subrogation and assignment subject to those same limits.


Great American Insurance Co. v. The Mandu, 102 F.2d 459 (2d Cir. 1939)