The opinion of the court was delivered by: Scheindlin, District Judge.
Defendants, Ocean Rig 1 AS and Ocean Rig 2 AS (hereinafter
"Ocean Rig" or "defendants"), move pursuant to Fed.R.Civ.P. Rules
12(b)(1) and (6) to dismiss the complaint and to vacate the
maritime attachment brought by plaintiff Maritima Petroleo E
Engenharia LTDA (hereinafter "Maritima" or "plaintiff") on the
grounds that: (1) there is no admiralty jurisdiction; (2) the
complaint fails to state a claim upon which relief can be
granted; (3) plaintiff has abused the attachment process; and (4)
plaintiff has no need for security. Because this Court lacks
subject matter jurisdiction over plaintiff's claims, defendants'
motion to dismiss the complaint and to vacate the attachment is
On November 4, 1998, defendants, the owners of two Bingo deep
sea oil drilling rigs, entered into a Memorandum Of Agreement
("MOA") with Maritima and two non-party Maritima affiliates,
Formaritima Ltd. and Petrodrill Offshore, Inc. ("Formaritima" and
"Petrodrill" respectively). See Complaint ("Compl.") ¶ 6; MOA
attached to Complaint, Ex. A. The MOA contains a choice of law
provision specifying that English law will govern any disputes
and an arbitration clause. MOA ¶ 29. The MOA arose out of the
following circumstances: Ocean Rig sought to secure drilling
contracts for two rigs which were under construction. MOA ¶ B.
Petrodrill had contracted with Petroleo Brasileiro S.A.
("Petrobras"), the Brazilian government's oil development agency,
for the provision of six Amethyst oil rigs, but had experienced
significant delays in the delivery of those rigs. MOA ¶¶ C & D.
To remedy the situation, Petrobras and Petrodrill agreed to seek
drilling rigs from third parties that were capable of fulfilling
Petrobras' requirements. MOA ¶ E.
Accordingly, the MOA sets forth an agreement among Maritima,
Ocean Rig, Petrodrill and Formaritima to seek drilling rig
contracts for defendants' rigs with Petrobras for a period of
between 12 and 18 months at a rate equal to the two highest rates
that Petrobras would have paid for the Amethyst rigs. MOA ¶¶ 3 &
4. The MOA provided that once the contracts with Petrobras were
procured, they would be governed by "new contracts". MOA ¶ 4.
These new drilling contracts contemplated by the MOA would
consist of a "Charter Contract" and a "Services Contract". MOA ¶
16. Petrodrill agreed that it would sign each Charter Contract
directly with Petrobras and then assign its rights and
obligations under each Charter Contract to Ocean Rig. MOA ¶ 17.
Similarly, Maritima agreed to sign each Services Contract with
Petrobras and then
assign all rights and proceeds under each Services Contract to
Ocean Rig. MOA ¶ 18.
Plaintiff alleges that after the MOA was signed, Ocean Rig
threatened to negotiate with others for the chartering of its
rigs. Compl. ¶ 8. To dissuade defendants from doing this,
Maritima agreed to provide a standby Letter of Credit ("LOC
Agreement"), for an LOC issued by Safra National Bank in the
amount of $15 million. See LOC Agreement, November 18, 1999,
Compl. Ex. B.
The purpose of the LOC was to secure Maritima's ability to
procure the new contracts with Petrobras by 4:00 p.m. Brazilian
time on February 5, 1999. Compl. ¶ 8; LOC Agreement ¶ 1.3. The
parties agreed that if Maritima failed to procure the contracts
by such time, Ocean Rig could present a demand letter and the LOC
to Safra. Although it appeared to Maritima that its negotiations
with Petrobras were likely to bear fruit, Maritima failed to
secure the contracts for Ocean Rig by February 5, 1999.
Thereafter, Ocean Rig presented demand letters for payment to
Safra. Citing certain discrepancies related to the conformity of
the demand letters with the requirements of the LOC, Safra
refused to honor the LOC. Compl. ¶ 13. Ocean Rig then sued Safra
in this Court for wrongful dishonor and obtained a judgment
directing Safra to pay the sum of the LOC. See Ocean Rig ASA v.
Safra Nat'l Bank of New York, 72 F. Supp.2d 193, 204 (S.D.N Y
1999, amended July 14, 1999).
On the same day that the Court issued its order granting
summary judgment to Ocean Rig, Ocean Rig issued a press release
disclosing that there were substantial delays in the construction
of its two Bingo rigs and that they would not be ready for
delivery to Brazil until the first half of the year 2000. Compl.
¶ 15. Earlier, Ocean Rig had agreed in the MOA that construction
on the two Bingo rigs would be completed by September 1999 and
January 2000, MOA ¶ 8, and that it would be able to deliver the
rigs to Brazil no later than November 30, 1999 and February 28,
2000. MOA ¶ 9.
On August 2, 1999, plaintiff filed its complaint in the instant
action seeking an order to issue Process of Maritime Attachment
and Garnishment pursuant to Fed. R.Civ.P. Supplemental Rule B and
the Arbitration Act. 9 U.S.C. § 8. Plaintiff is also in the
process of commencing an arbitration in London seeking, inter
alia, recission of the MOA (and recissionary damages) arising
out of Ocean Rig's allegedly fraudulent misrepresentations
regarding the completion and delivery date of the rigs. Compl. ¶¶
16 & 21. In addition, Maritima alleges that defendants breached
their obligations under the MOA by calling on the LOC. Because
Maritima was unable to procure either the Amethyst rigs or a
substitute for Petrobras, Maritima is directly liable to
Petrobras for liquidated damages and seeks compensation from
Ocean Rig for these damages. Compl. ¶ 18. In total, Maritima
seeks over $31 million in damages. For the purposes of securing
Maritima's claims before the London arbitration, plaintiff
obtained the order of maritime attachment over defendants' only
identifiable asset in this district — Ocean Rig's $15 million
judgement against Safra. Compl. ¶ 19; Order of Attachment, issued
August 6, 1999, by United States District Judge Sidney H. Stein.
A. Motion to Dismiss for Lack of Subject Matter Jurisdiction
When considering a motion to dismiss for lack of subject matter
jurisdiction, a court must accept as true all material factual
allegations in the complaint. Atlantic Mut. Ins. Co. v. Balfour
Maclaine Int'l Ltd., 968 F.2d 196, 198 (2d Cir. 1992). The Court
is not confined to the complaint, however. It may consider
evidence outside the pleadings, such as affidavits. See Antares
Aircraft, L.P. v. Federal Republic of Nigeria, 948 F.2d 90, 96
(2d Cir. 1991), vacated on other grounds, 505 U.S. 1215,
112 S.Ct. 3020, 120 L.Ed.2d 892 (1992). In addition, "when the
question to be considered is one involving the jurisdiction of a
federal court, jurisdiction must be shown affirmatively, and that
showing is not made by drawing from the pleadings inferences
favorable to the party asserting it." Shipping Financial Serv.,
Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998).
B. Procedure for Release From Attachment
Pursuant to Fed.R.Civ.P. Rule E(4)(f), defendants are 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. . . ." Fed.R.Civ.P. E(4)(f). Thus, Maritima bears
the burden of demonstrating why the attachment should not be
vacated. The Order of Attachment was issued pursuant to the
Federal Arbitration Act, 9 U.S.C. § 8, and Rule B(1) of the
Supplemental Rules for Certain Admiralty and Maritime Claims.
Rule B is invoked when a plaintiff files "a verified complaint
in personam sufficient to make a prima facie showing that the
plaintiff has a maritime claim against the defendant in the
amount sued for and that the defendant is not present in the
district." 2 Thomas J. Schoenbaum, Admiralty and Maritime Law,
§ 21-2 at 471 (2d ed. 1999) (hereinafter ...