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J.K. International, Pty., Ltd. v. Agriko S.A.S.

February 13, 2007

J.K. INTERNATIONAL, PTY., LTD., PLAINTIFF,
v.
AGRIKO S.A.S., DEFENDANT.



The opinion of the court was delivered by: Kenneth M. Karas, District Judge

OPINION AND ORDER

Defendant Agriko S.A.S. seeks to vacate an Order of Maritime Attachment obtained by Plaintiff J.K. International, Pty., Ltd.,*fn1 pursuant to the Federal Rules of Civil Procedure Supplemental Admiralty Rule E(4)(f) ("Rule E(4)(f)"), and to stay the action in favor of arbitration in London, England. Defendant argues, inter alia, that Plaintiff's claims are premature and not ripe for adjudication by this Court. For the following reasons, Defendant's Motion to Vacate the Attachment is GRANTED.

I. Background

On November 15, 2006, Plaintiff obtained an Order of Maritime Attachment from this Court in the amount of $709,371. (Aff. of Peter Skoufalos Ex. G.) After the Court issued the Attachment, Defendant moved pursuant to an Order to Show Cause to vacate the Attachment. The Court held a hearing on Defendant's Motion to Vacate the Attachment pursuant to Rule E(4)(f) on December 19, 2006.*fn2

Plaintiff's Verified Complaint, which accompanied the Attachment, asserts three causes of action against Defendant. First, Plaintiff alleges that Plaintiff and Defendant entered into a contract by which Plaintiff agreed to buy a quantity of grain from the port of Kavkaz, Ukraine for delivery to the port of Chittagong, Bangladesh. (Verified Compl. ¶ 6; Aff. of Peter Skoufalos Exs. B, C.) Under the agreement, Defendant was obliged to sell the grain to Plaintiff. (Verified Compl. ¶ 6.) Plaintiff arranged for the M/V VOC PROGRESS to act as the carrying vessel pursuant to a Bulk Grain Charter Party with the owners of the M/V VOC PROGRESS. (Id.) Defendant was not a party to the vessel charter agreement for the M/V VOC PROGRESS. Due to delays in loading the M/V VOC PROGRESS, demurrage charges in the amount of $444,490 were incurred by Plaintiff and due to the owners of the M/V VOC PROGRESS under the terms of the charter party. (Id. ¶ 7.) Plaintiff alleges that under its contract with Defendant, Plaintiff is entitled to full indemnity from Defendant for the demurrage charges owed to the vessel's owners. (Id.)

As a second cause of action, Plaintiff alleges that Plaintiff and Defendant entered into a similar contract for the sale and transport of grain from the Ukraine to Bangladesh. (Id. ¶ 11; Aff. of Peter Skoufalos Ex. A.) The Charter Party agreement between Plaintiff and the vessel owners, to which Defendant again was not a party, provided for transportation of the grain aboard the M/V FULL RICH. (Verified Compl. ¶ 11.) As with the M/V VOC PROGRESS, Plaintiff claims that Defendant must indemnify Plaintiff for $47,773 in demurrage charges that were incurred as a result of delays in loading the M/V FULL RICH. (Id. ¶ 12.) Plaintiff also claims that Defendant failed to load the minimum required cargo of grain aboard the M/V FULL RICH and has brought a deadfreight claim against Defendant for $42,764. (Id. ¶ 13.)

Plaintiff's third cause of action against Defendant is for breach of contract. Plaintiff alleges that Defendant's failure to fully indemnify Plaintiff for loses incurred under the M/V VOC PROGRESS and M/V FULL RICH charter agreements has caused Plaintiff to sustain additional loses totaling $174,334 in the form of legal fees, interest on the funds paid by Plaintiff, and expenses from attempts at collecting the debts owed by Defendant. (Id. ¶ 17.)

The three grain contracts at issue also incorporate, by reference, provisions which govern arbitration of claims arising under the contracts. All three contracts provide that additional terms and conditions not found in the contracts are governed by "GAFTA 49." (Aff. of Peter Skoufalos Exs. A, B, C.) GAFTA is an acronym for the Grain and Feed Trade Association, which provides arbitration services to parties that adopt GAFTA's standard contract forms.*fn3 Under Paragraph 24 of the GAFTA 49 agreement, all disputes between the Parties are to be resolved in London pursuant to the GAFTA arbitration rules. (Id. ¶ 13, Ex. D.) Arbitration of Plaintiff's claims against Defendant is underway in London. (Id. ¶ 25.) The arbitration, however, has not proceeded under the GAFTA arbitration rules. Instead, Defendant's English solicitor proposed, and Plaintiff agreed to, commencing the arbitration before the London Maritime Arbitration Association ("LMAA"). (Decl. of John A. Orzel in Opp'n to Def.'s Mot. to Vacate Maritime Attachment ¶ 9, Exs. 7, 9, 10 ("Decl. of John A. Orzel").)

II. Discussion

A. Standard of Review

To obtain a maritime attachment, a plaintiff must comply with Supplemental Admiralty Rule B ("Rule B"), which states in relevant part:

If a defendant is not found within the district, . . . a verified complaint may contain a prayer for process to attach the defendant's tangible or intangible personal property - up to the amount sued for - in the hands of garnishees named in the process . . . . The court must review the complaint and affidavit and, if the conditions of this Rule B appear to exist, enter an order so stating and authorizing process of attachment and garnishment. The clerk may issue supplemental process enforcing the court's order upon application without further court order.

Fed. R. Civ. P. Supp. R. B(1)(a)-(b).

Rule E(4)(f) allows any person whose property has been attached pursuant to Rule B an opportunity to appear before a district court to contest the ...


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