Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Victrix Steamship Co. v. Salen Dry Cargo A.B.

decided: August 5, 1987.

VICTRIX STEAMSHIP CO., S.A., PLAINTIFF-APPELLANT, INSURANCE CO. OF NORTH AMERICA, PLAINTIFF,
v.
SALEN DRY CARGO A.B., DEFENDANT-APPELLEE, M/V SEATRANSPORT, HER ENGINES, ETC., CONTINENTAL MARITIME, INC., AND BROWN BROTHERS HARRIMAN & CO., AS GARNISHEE, DEFENDANTS



Appeal from an order of the District Court for the Southern District of New York (Robert L. Carter, Judge) vacating an attachment and awarding attorney's fees for wrongful attachment. The District Court deferred enforcement of a London arbitration award and a British judgment to Swedish bankruptcy proceedings.

Newman, Miner, and Mahoney, Circuit Judges.

Author: Newman

JON O. NEWMAN, Circuit Judge:

This appeal presents the issue whether comity considerations oblige the courts of this country to defer to a bankruptcy proceeding of another country as to the enforcement of an arbitration award and a money judgment based on maritime claims entered against the bankrupt in a third country. The issue arises on an appeal by Victrix Steamship Company, S.A. ("Victrix") from an order of the District Court for the Southern District of New York (Robert L. Carter, Judge) vacating an attachment Victrix had obtained against funds owed to Salen Dry Cargo A.B. ("Salen"), a debtor in Swedish bankruptcy proceedings. The order also awarded Salen attorney's fees for wrongful attachment. Judge Carter vacated the attachment after deciding to defer to the Swedish bankruptcy court's resolution of issues concerning enforcement of a London arbitration award and a British judgment. Agreeing with the District Court's decision to defer to the Swedish bankruptcy proceeding, we affirm the order vacating the attachment and awarding fees.

Background

In August 1984, Victrix, a Panamanian corporation, and Salen, a Swedish corporation, entered into an agreement for the charter of Victrix's ship, the M/V PLOTO. On December 19, 1984, Salen filed for bankruptcy in Stockholm. The next day, Salen told Victrix it would make no further payments on the charter party. The Swedish bankruptcy court appointed an interim administrator in bankruptcy and suspended creditor suits against Salen.

Seeking to recover damages incurred by Salen's default, Victrix promptly commenced arbitration in London as provided in the charter party. Salen and its administrator declined to participate, telexing Victrix that, rather than pursuing arbitration, creditors "should file any claim they may have with the bankruptcy estate." While Victrix followed this advice and filed a claim against the bankrupt's estate in February 1985, it also continued to pursue its arbitration remedy. Victrix's arbitrator, proceeding alone in the absence of an arbitrator designated by Salen, held a hearing and on April 16, 1985, returned an award for Victrix of $302,531.96 with interest. On May 8, 1985, the High Court, Queen's Bench Division, entered judgment on the award under Section 26 of the British Arbitration Act, 1950. Despite ample opportunity to challenge the award both before and after judgment was entered, Salen never appeared in the British judicial proceeding.

Meanwhile, Victrix pursued other avenues of recovery against Salen and its property in this country. On March 18, 1985, Victrix, claiming breach of the charter party, commenced an in personam admiralty action in the District Court for the Southern District of New York by attaching Salen's New York account with Brown Brothers Harriman & Co. Victrix then filed a suit in New York Supreme Court alleging the same facts and claiming breach of contract. On March 20, 1985, Victrix successfully obtained a state court order of attachment against the funds already attached in the admiralty action. Salen later removed the state action to federal court on the ground that it related to a subject of foreign arbitration, 9 U.S.C. § 205 (1982);*fn1 the two suits were eventually consolidated with other related actions and assigned to Judge Carter.

In June 1985, Victrix moved in the District Court to confirm the London arbitration award and to enforce the British judgment, and Salen cross-moved to vacate the attachment. The parties agreed to adjourn the motions pending this Court's decision in Cunard Steamship Co., Ltd. v. Salen Reefer Services A.B., now reported at 773 F.2d 452 (2d Cir. 1985), a case concerning the same Swedish bankruptcy proceeding. We issued an opinion in that case on September 19, 1985, vacating a similar attachment in an admiralty action and holding that comity required deference to the ongoing Swedish bankruptcy proceeding. Relying primarily on Cunard, Salen, represented by the administrator in bankruptcy, renewed its motion. It sought an order vacating the attachment and awarding attorney's fees for wrongful attachment under N.Y. Civ. Prac. L. & R. 6212(b) (McKinney 1980). Victrix cross-moved (1) to confirm the arbitration award under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 9 U.S.C. § 201 et seq. (1982) ("the Convention"); (2) to enforce the British judgment under the Convention, the doctrine of comity, and N.Y. Civ. Prac. L. & R. 5301-5303 (McKinney 1978); and (3) to confirm the state court order of attachment.

The District Court ruled in favor of Salen, vacating the attachment and awarding Salen attorney's fees under New York law for wrongful attachment. 65 Bankr. 466 (S.D.N.Y. 1986). Judge Carter did not decide whether to enforce the London arbitration award or the British judgment, deferring decision on these matters to the Swedish bankruptcy court. No order was entered with respect to the attached funds, which by stipulation had been paid into the registry of the District Court and remain invested in an interest bearing account. Salen has proposed that the funds be transferred to the account of its liquidator in the Swedish bankruptcy proceeding. Victrix appeals from the order vacating the attachment and awarding attorney's fees.

Discussion

Preliminarily, we consider our appellate jurisdiction. An order vacating an attachment has been deemed appealable as a collateral order, Swift & Co. Packers v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 688-89, 94 L. Ed. 1206, 70 S. Ct. 861 (1950); Chilean Line Inc. v. United States, 344 F.2d 757, 759 (2d Cir. 1965), at least in a case like this where serious and unsettled issues are involved, see Dayco Corp. v. Foreign Transactions Corp., 705 F.2d 38, 40 (2d Cir. 1983). Complicating the matter somewhat is the absence of an order disposing of the funds that were brought within the jurisdiction of the District Court as a result of the attachment. Normally an appealable order vacating an attachment leaves nothing further to be done with respect to the attached funds. Nevertheless, we think it appropriate to exercise appellate jurisdiction over the order vacating the attachment. The parties appear not to dispute that, if the attachment is to be vacated, the funds should be transferred to the liquidator. Indeed, the destination of the funds is inextricably linked to the issue on the merits whether enforceability of the London arbitration award and the British judgment should be left for decision by the Swedish bankruptcy court.

Choice of Law. Before considering the merits of the appeal, we face a choice of law issue, both with respect to Victrix's claim for enforcement of the London arbitration award and its claim for enforcement of the British judgment. With respect to the claim for enforcement of the arbitration award, it is clear that federal law applies. The Convention is a treaty of the United States governing the enforcement of foreign arbitration awards. It sets forth a procedure for enforcement of foreign arbitration awards to which all signatories are expected to abide. The obligations of the United States under the Convention would be undermined if they were not determined according to a uniform body of federal law. Though the nature of obligations under the Convention are matters of federal law, it is arguable that state law might nevertheless supply the rule of decision for claims that seek enforcement of foreign arbitration awards without resort to the Convention. We think, however, that the Convention preempts state laws and leaves the entire subject of enforcement of foreign arbitration awards governed by its terms. See Island Territory of Curacao v. Solitron Devices, Inc., 489 F.2d 1313, 1319 (2d Cir. 1973) (ruling that Convention does not preempt state law governing enforcement of foreign money judgments but indicating, by implication, that it would preempt state law concerning enforcement of foreign arbitral awards), cert. denied, 416 U.S. 986, 94 S. Ct. 2389, 40 L. Ed. 2d 763 (1974).

With respect to the claim for enforcement of the British judgment, the matter is more complex. Neither the admiralty suit nor the removed state court suit initially included a claim to enforce the British judgment. That claim was made by motion after the suits were consolidated. Little if any attention was given as to whether the motion applied to the admiralty suit, the removed state court suit, or both, and whether the motion was governed by federal or state law. The federal suit was initially a proper invocation of the District Court's admiralty jurisdiction since it presented a claim for breach of a charter party. The state court suit based on the same maritime claim was properly brought in the state court under the "saving to suitors" clause. 28 U.S.C. § 1333(1) (1982). The additional claim for enforcement of the British judgment asserted ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.