United States District Court, S.D. New York
January 10, 2006.
HEBEI PHOENIX SHIPPING CO., LTD., Plaintiff,
ENERGY SHIPPING S.p.A., Defendant.
The opinion of the court was delivered by: ROBERT PATTERSON JR., Senior District Judge
OPINION AND ORDER
Energy Shipping S.p.A. ("Energy") moves, pursuant to
Supplemental Admiralty Rule E(4)(f), to vacate an ex parte
order of Maritime Attachment and Garnishment ("Order of
Attachment") issued by this Court on December 3, 2005.
Energy asserts that Plaintiff Hebei Phoenix Shipping Co., Ltd.
("Hebei"), pursuant to the Order of Attachment, on or about
December 10, 2005, wrongfully attached Energy's property in the
form of an Electronic Funds Transfer in the hands of Standard
Chartered Bank in Manhattan in the sum of $187,865.76.
Supplemental Admiralty Rule E(4)(f) provides in relevant part
Procedure for Release from Arrest or Attachment.
Whenever 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.
Supp. R. for Certain Admiralty & Maritime Claims E(4)(f) (2005).
Energy claims that Plaintiff Hebei's attachment was in breach
of a "standstill agreement" entered into on November 29, 2005
between London counsel for Energy and London counsel for Hebei in
a pending arbitration proceeding in London. (Energy Mem. in Supp.
at 2, 4.) Energy asserts that the attachment should be vacated because London
counsel for Hebei "expressly agreed to take no action between
November 29, 2005 and December 16, 2005; second, because to
permit the attachment to stand would be patently unfair; and,
third, because maintaining the attachment under the circumstances
presented in this case would amount to a judicial sanctioning of
the tactical use of Rule B for the purpose of obtaining unfair
negotiating leverage." (Id. at 4-5.)
As Plaintiff points out, the supporting Declaration of December
19, 2005 by Jonathan Peter Wake Green ("Green Decl."). English
solicitor for Energy, does not support a finding that the oral
"standstill agreement" was anything more than an agreement by
counsel to take no further action in the London arbitration. The
documents attached to the Green declaration support Plaintiff's
contention. Green's fax transmission of November 29, 2005 to the
arbitrator refers to standstill of the reference. (Green Decl.,
Ex. 1.) The fax transmission dated December 1, 2005 from the
arbitrator to the London solicitors refers to the "standstill" as
a pause in the reference. (Green Decl., Ex. 1.) Furthermore, Mr.
Green's fax transmission of December 16, 2005 to Mr. Houghton
does not state that the attachment order freezing Energy's funds
was a violation of the standstill agreement. (Green Decl., Ex. 1)
Green's Declaration contains no statement that the oral agreement
between counsel for both parties was intended to bind the clients
from initiating ancillary actions in other jurisdictions.
The opposing Declaration of Plaintiff's London solicitor,
Timothy James Houghton, states that he believed he had agreed in
the oral agreement "not to take formal steps to progress the
substantive claim in the London arbitration before [the] 13th
[of] January 2006," and that the Rule B attachment of funds in
New York does not progress the substantive claim but is an
ancillary action. (Decl. of Timothy James Houghton, dated
December 20, 2005, at ¶ 6.) The Declaration of Mr. Green and his fax transmissions do not
support Energy's claim of a violation of the standstill
agreement, as Defendant claims. By his Reply Declaration dated
December 21, 2005, Mr. Green states that his notes reflect his
understanding of the parties' agreement, but, unfortunately, that
understanding was not reflected in his communication to the
arbitrator, the arbitrator's reply, or any other document.
In its reply papers, Energy takes the position that the
attachment should be vacated as abusive and unfair, claiming that
the attachment was obtained solely to obtain leverage over
Energy. However, the facts of the dispute suggest otherwise.
The claim arises out of a charter by Energy of a vessel owned
by Hebei. Energy apparently refused to pay the charter hire,
claiming that the vessel did not perform as warranted. There is
little question as to the amount due Hebei by Energy since it is
a matter of arithmetic, whereas the validity claim of Energy is
more indefinite. Thus, Energy, by failing to pay the charter, was
in a leverage position. The attachment obtained by Plaintiff
against a foreign defendant merely evened out the bargaining
Energy also asks that Plaintiff be ordered to post
counter-security pursuant to Supplemental Admiralty Rule E(7)(a).
This motion is unopposed. Accordingly, Energy's motion to vacate
is denied and its motion for counter-security is granted.
IT IS SO ORDERED.
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