Professor Martin Davies
Director, Tulane Maritime Law Center, New Orleans
Bill Honan
Partner, Holland + Knight, New York
Intertanko Tanker Chartering Seminar
Tokyo, 12 May 2009
1
Requirements
 Maritime claim
 Defendant “not found within the district”
 “Tangible or intangible property” of the defendant
found within the district
 Electronic fund transfers (EFTs) through New York
banks
 Other property of the defendant (eg, a ship)
 If all three requirements are satisfied, property can be
attached up to the value of the claim
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Winter Storm Shipping v TPI (2d Cir
2002)
Oppsal
Shipping
SDNY
London
Bank of NY
Winter
Storm
Malta
TPI
Defendant
Thailand
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Plaintiff
Winter Storm Shipping v TPI (2d
Cir 2002)
 Maritime claim: claim for breach of a charterparty
 TPI (Thai) “not found within the district”
 Not doing business in NYC or subject to service
 EFT was “tangible or intangible property” in New York
(very briefly)
 Rule B attachment properly made
 NY state statute prohibiting attachment of funds in
intermediary banks pre-empted (ie, overridden) by
inconsistent federal law
4
Winter Storm Shipping v TPI (2d
Cir 2002)
 Fact that TPI-Oppsal EFT had no connection with
claim was irrelevant
 Great commercial pressure: TPI owes Oppsal money
on a transaction completely unconnected with the
claim by Winter Storm
5
Winter Storm lives
 Many challenges, many attempts to get around
 Rule B attachment of EFTs in New York City still
occurs many times every day, in claims having nothing
to do with New York or the United States
 Can proceed in the US and attach property under Rule
B even if the merits of the claim are going to be
decided by arbitration or litigation in another country
 9 USC § 8 specifically allows this re foreign arbitration
 Re foreign court clauses, depends on what the clause
says – “all disputes arising out of”, etc
6
Three requirements repeated
 Maritime claim
 Defendant “not found within the district”
 “Tangible or intangible property” of the defendant
found within the district
7
Maritime claim
 Claim falling within the court’s admiralty jurisdiction
 No statutory list
 Maritime contracts, maritime torts
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Maritime contracts
 The test is “conceptual not spatial”
 Norfolk Southern Railway Company v. James N. Kirby
Pty, Ltd., 543 U.S. 14, 23-24(2004):
 “To ascertain whether a contract is a maritime one, we
cannot look to whether a ship or other vessel was
involved in the dispute … Nor can we simply look to the
place of the contract’s formation or performance.
Instead, the answer depends upon ... the nature and
character of the contract, and the true criterion is
whether it has reference to maritime service or maritime
transactions.”
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Maritime contracts (contd)
 “Preliminary contract” doctrine
 Contract to do something in preparation for maritime
activity is not a maritime contract
 Charterparty is a maritime contract, so claim on a CP is
a maritime claim, can lead to Rule B attachment
 Winter Storm itself
 Contract between owner or charterer and broker is not
a maritime contract, so no Rule B attachment
 Shipping Financial Services Corp. v. Drakos, 140 F.3d 129
(2d Cir. 1998)
10
Maritime contracts (contd)
 Some claims in relation to agency fall within the
admiralty jurisdiction (and so Rule B attachment
available) and some do not
 Depends on what the agent is actually doing
 Exxon Corp. v. Central Gulf Lines, 500 U.S. 603 (1991)
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Maritime torts
 Horribly complicated test, very unpredictable
outcomes
 Not just maritime location
 Location must be on navigable waters
 Does this kind of incident (the “general features”, not
this particular incident) have the potential to disrupt
maritime commerce?
 Does the activity in question (described at an
“intermediate level of generality”) have a substantial
relationship to a traditional maritime activity?
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“Not found within the district”
 Two-part test (Seawind Cia, S.A. v. Crescent Line, Inc., 320
F.2d 580 (2d Cir. 1963)
 Can the defendant be found within the district in terms of
jurisdiction;
 Can it be found for service of process?
 Foreign corporations can be subject to the jurisdiction of
US courts even if they have no place of business in the USA
 “Doing business” basis of jurisdiction
 “Minimum contacts” test: “purposefully engaged” in activities
in the district
 For federal claims (including maritime claims), “minimum
contacts” with the USA as a whole are sufficient even if there
are not enough with any one jurisdiction (FRCP 4(k)(2))
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“Not found within the district”
 Being “found within the district” has both positive and
negative features
 Positive (very positive!) feature is that your property is
not subject to Rule B attachment
 Negative feature is that you cannot resist the court’s
juridiction

Easier to enforce judgments or arbitral awards against you
 But you can ask it not to exercise that jurisdiction
 Forum selection clauses, forum non conveniens
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Property within the district
 “Tangible or intangible property”
 Winter Storm: “What manner of thing can be neither
tangible nor intangible and yet still be property?”
 The Nicene Creed: “all things, seen or unseen”
 Can garnish debts owing to the defendant
 Direct the debtor to pay you, not the defendant
 Can attach ships owned by the defendant, whether or
not they have anything to do with the claim
 Can attach defendant’s money in the jurisdiction
 Even if it is only there for a split second, provided the
court’s order is operational for that split second
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Property within the district
 EFTs are property within the district, even though in the




hands of an intermediary bank
Whose property? The sending party or the intended
beneficiary?
In Winter Storm itself, defendant was the sending party
How can an EFT be property of both?
Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd, 460 F.3d
434, 436 (2d Cir. 2006):
 “Under the law of this circuit, EFTs to or from a party are attachable
by a court as they pass through banks located in that court's
jurisdiction.”
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Inward-bound EFTs
 Only one district court has held that inward-bound EFTs
are not attachable
 Seamar Shipping Corp. v. Kremikovtzi Trade Ltd, 461 F.Supp.2d 222
(S.D.N.Y. 2006)
 Others say that they are – any property interest is sufficient
to render the asset attachable, and the intended
beneficiary has some interest
 Dominion Bulk Int’l S.A. v. Naviera Panoceanica, S.A., 2007 AMC
186 (S.D.N.Y. 2006)
 HBC Hamburg Bulk Carriers G.m.b.H. & Co. K.G. v. Proteinas y
Oleicas S.A. de C.V., 2005 AMC 1586 (S.D.N.Y. 2005)
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Sample Bank Attachment Notice
--------Original Message----------From: janelyn.a.johnston@us.hsbc.com [mailto:janelyn.a.johnston@us.hsbc.com]
Sent: Tuesday, May 05, 2009 2:06 PM
To: Nolan, Christopher (NYC - X73307
Cc: Legal.Paper.Processing@us.hsbc.com
Subject: Visa Comtrade 09 852
Janelyn A. Johnston
Operations Representative
Legal Department
1 HSBC Center 12th Floor
Buffalo, New York 14203
Phone (716) 841-4501 Fax (212) 382-7593
janelyn.a.johnston@us.hsbc.com
Chris,
Here is the information on the wire for Visa Comtrade..
Remitter: Visa Comtrade Ag Address; Zug, Switzerland
Bene; Inchcape Shipping Services Pte Ltd No Address
Amount : $18,987.64
Date; 2/6/09,
The other lawyers/ law firms are Neal Mitchell @ Blank Rome & Enmanuel Suarez @ Cardillo & Corbett..
If you need any other information, please feel free to Email or call me..
Have A Good Day!!
Janie
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Common Forms of Security
P&I Club LOU
2. Bank Guarantee
3. Letter of Credit
4. Escrow Agreement
1.
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Supplemental Rule E(7)
Security on Counterclaim
(a) When a person who has given security for
damages in the original action asserts a counterclaim
that arises from the transaction or occurrence that is
the subject of the original action, a plaintiff for
whose benefit the security has been given must give
security for damages demanded in the counterclaim
unless the court for cause shown, directs otherwise.
Proceedings on the original claim must be stayed
until this security is given unless the court directs
otherwise.
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Practice Tip
If you are representing the claimant (i.e., the party
seeking the Rule B attachment), you must ask, at the
outset, if the defendant has, or could have, a
counterclaim.
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Supplemental Rule E(4)f
When property is arrested or attached, any person
claiming an interest in it shall be entitled to a prompt
hearing at which the plaintiff shall be required to show
why the arrest or attachment should not be vacated or
other relief granted consistent with these rules.
22
Challenges By Defendant:
What Won’t Work
 The Plaintiff’s claim has no merit.
 The Defendant is creditworthy and has sufficient cash
or other liquid assets to pay the plaintiff’s claim.
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Challenges by Defendant:
What Might Work
 Plaintiff’s claim is not a maritime claim.
 Defendant can be found within the district.
 Funds do not belong to the Defendant.
 Plaintiff has failed to commence an action on the
underlying claim.
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Challenges: What Will Work
Registering the Defendant with the New York
State authorities to conduct business in New York and
appointing an agent for service of process is sufficient
for the Defendant to be considered present within the
district for Rule B purposes.
STX Panocean v. Glory Wealth Shipping,2009 U.S.
App. LEXIS 5751, March 19, 2009
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Disadvantages in Registering
 It costs money to register.
 It is effective only in New York State.
 The Defendant then is subject to jurisdiction in New
York for all purposes.
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What Else Have Defendants Done?
 Re-routed its payments through another entity.
 Used subterfuge to the sender and/or the receiver
where possible.
 On new transactions, used currencies other than
U.S. $ as the payment medium.
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