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YAYASAN SABAH DUA SHIPPING v. SCANDINAVIAN LIQUID CARRIERS

YAYASAN SABAH DUA SHIPPING SDN BHD, Plaintiff,
v.
SCANDINAVIAN LIQUID CARRIERS LIMITED, Defendant.



The opinion of the court was delivered by: LEWIS KAPLAN, District Judge

MEMORANDUM OPINION

This is an action for breach of a maritime charter party. The matter now is before the Court on defendant's motion to vacate an order of maritime attachment on the grounds that it could be "found in the district" or, alternatively, that the attached funds were held in an off-shore account beyond the territorial reach of the Court. I.

  Plaintiff Yayasan is a foreign corporation involved in the shipping business. Defendant Scandinavian Liquid Carriers Limited ("SLCL") is a Liberian corporation that charters vessels from others to transport chemical and product cargos for third parties.*fn1 From time to time, it also "charters out product and chemical tankers to sub-charterers on a time or voyage charter basis. SLCL earns most of its income and profit from the differential between the . . . rate[s] at which it charters vessels [in] and the . . . rate[s] at which it either charters those same vessels [out] . . . or books movement of cargoes."*fn2 Its managing agent, Copenhagen Tankers A/S, is a Danish entity whose representative, Henrik Madsen, handles SLCL business matters worldwide from Denmark.*fn3

  Under the charter party at issue, SLCL contracted with Doquest, Inc., the previous owner of the M/V DANUM, to charter the vessel for twelve months beginning in March 2001.*fn4 Yayasan then purchased the DANUM from Doquest in October 2001, and it claims that it thereby came into privity with SLCL with respect to the charter.*fn5

  SLCL allegedly served a notice of termination of the charter party shortly after Yayasan purchased the ship.*fn6 Approximately one year later, Yayasan demanded arbitration of the matter*fn7 pursuant to a clause in the charter party which designated venue in New York. The parties' respective local counsel thereafter had some discussions and exchanged preliminary correspondence regarding the arbitration, which remains pending.*fn8 New York counsel for both sides in the arbitration now represent their clients in this action.

  Yayasan filed this action in aid of the arbitration*fn9 on June 9, 2004. In addition to damages, the complaint sought an immediate ex parte order of maritime attachment under Rule B(1). Yayasan alleged that SLCL could not be found within the district but had accounts and credits "within the District at various banks."*fn10 It alleged that it made unsuccessful efforts to locate SLCL in the district before filing suit: it contacted the Secretary of State — which advised that SLCL is not licensed to do business in New York — and consulted various local telephone directories which failed to reveal a listing for SLCL.*fn11 It did not contact SLCL's New York arbitration counsel — Nourse & Bowles — to ascertain whether that firm was authorized to accept service of process on behalf of SLCL.

  The Court granted the order of maritime attachment on June 9, 2004. Yayasan subsequently served a series of restraining notices on the New York branch of the Danske Bank in response to which the bank segregated and froze $500,000 held in an SLCL account.*fn12

  Yayasan sent notice of the attachment to SLCL's counsel, Nourse & Bowles, on June 14, 2004.*fn13 Approximately two weeks later, on June 28, 2004, Yayasan's counsel asked Nourse & Bowles if it was authorized to accept service of process on SLCL's behalf.*fn14 Attorney Vayda of Nourse & Bowles promptly wrote to his client, purportedly to "confirm" that Nourse & Bowles was so authorized. He received a faxed response the following day, June 29, from the Danish Defence Fund — an entity acting on SLCL's behalf — which stated, in relevant part:
"Re: MV Danum. Dear Jack, Thank you for your fax of yesterday. Having discussed the matter with Niels Stig Christensen of Copenhagen Tankers, you are hereby authorised to accept service of proceedings in this particular matter only."*fn15
  Nourse & Bowles subsequently appeared for SLCL in this action and moved to vacate the order of maritime attachment. The parties engaged in limited discovery. The two issues for decision are whether (1) SLCL was "found in the district," within the meaning of Admiralty Rule B, when Yayasan filed suit, and (2) the situs of SLCL's Danske Bank account is New York or the Cayman Islands. II.

  A. "Not Found in the District"

  1. General principles of maritime attachment

  Maritime attachment is a centuries-old remedy that "antedates both the congressional grant of admiralty jurisdiction to the federal district courts and the promulgation of the first Supreme Court Admiralty Rules in 1844."*fn16 Admiralty Rule B, which codifies the law, is "simply an extension of this ancient practice."*fn17 The device exists for the benefit of merchants engaged in the far flung maritime trade, who face special risks in seeking legal redress "against perpetrators of maritime injury [who] are likely to be peripatetic."*fn18 Without it, "defendants, their ships, and their funds easily could evade the enforcement of substantive rights of admiralty law."*fn19

  Rule B allows an admiralty plaintiff to include in the complaint a request for an ex parte order of attachment against the defendant's "tangible or intangible personal property — up to the amount sued for — in the hands of garnishees named in the process."*fn20 A maritime attachment serves the dual purpose of obtaining the appearance of a foreign defendant and ensuring satisfaction of a favorable judgment.*fn21 Accordingly, a Rule B attachment is available only "[i]f a defendant is not found within the district" where the suit is brought.*fn22

  2. Standard

  The phrase "not found within the district" is not defined in the Rule. Nevertheless, it denotes two types of absence. First, in order to be subject to maritime attachment the defendant must lack sufficient contacts with the forum to render it subject to personal jurisdiction. Second, the defendant must not amenable to service of process.*fn23 A plaintiff must show that the defendant is absent in both senses in order to sustain the attachment. Moreover, a plaintiff must make a bona fide effort to ...


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