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Crossbow Cement SA v. Mohamed Ali Saleh Al-Hashedi & Brothers

December 4, 2008

CROSSBOW CEMENT SA, PLAINTIFF,
v.
MOHAMED ALI SALEH AL-HASHEDI & BROTHERS, DEFENDANT.



The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge

OPINION & ORDER

Plaintiff Crossbow Cement SA obtained an Ex Parte Order for Process of Maritime Attachment ("Attachment Order") with respect to its claim for demurrage pursuant to a sales contract between it and Defendant Mohamed Ali Saleh Al-Hashedi & Brothers. As of August 4, 2008, Plaintiff had attached $134,110 of Defendant's funds, the full amount set forth in the Attachment Order. Defendant moves to vacate the Attachment Order and release its funds on the ground that Plaintiff's claim is not "maritime" in nature. For the reasons set forth below, the Attachment Order will remain in place and Defendant's motion is denied.

I. BACKGROUND

Plaintiff, a foreign corporation organized under Swiss law, sold a cargo of approximately 25,000 metric tons of cement to Defendant, a foreign corporation organized under Yemeni law, pursuant to a sales contract dated July 27, 2005 ("Sales Contract"). (Compl. ¶¶ 2-4.) The Sales Contract, which bears the title "Pro Forma Invoice No. 07091/05," provides that the shipment was to be made by sea to the port of Aden, Yemen, and specifies how the cement was to be packed, the quantity sold, the unit price, the time of shipment and how payment was to be made. (See Jacobson Decl. Ex. 1.)

The Sales Contract refers to a provision contained in a standard form charter party, the Uniform General Charter published by the Baltic and International Maritime Conference, as revised in 1922 and 1976 ("Gencon Charter Party"). (See Decl. of Rahul Wanchoo Ex. D.) Specifically, the Sales Contract provides that the discharge rate was "as per 'Gencon' C/P [i.e., Charter Party] terms." (Jacobson Decl. Ex. 1.) The Sales Contract identifies English law as the governing law and further states, simply, "London arbitration clause."

Finally, the Sales Contract contains a demurrage clause as follows: "Demurrages: US$20,000 per day or prorata, payable every 3 days in advance." (Id.) Demurrage is defined under maritime law as a liquidated penalty owed by a charterer to a shipowner for the charterer's failure to load or unload cargo by a certain time. See Black's Law Dictionary (7th ed.).

Slightly more than two weeks after the parties executed the Sales Contract, Plaintiff entered into a charter party on the standard Gencon Charter Party form with the owner of the M/V SEABOSS 1, Seafreighters Line Inc. of Panama, which is not a party to this action or to the Sales Contract. (Decl. of Rahul Wanchoo Ex. D.) The charter party, dated August 13, 2005, provides that the M/V SEABOSS 1 would carry Plaintiff's cement from Longkou, China to Aden, Yemen, and sets demurrage at the same rate as the Sales Contract, $20,000 per day. (Id. at 1.) Finally, the charter party identifies English law as the governing law and provides that any dispute arising out of or in connection with the charter party must be arbitrated in London in accordance with the London Maritime Arbitrators Association. (Id. at 7.)

On September 26, 2005, Plaintiff and Defendant amended their Sales Contract on a form titled "Invoice No. 09016/05" ("Amendment"), which provides that the cement would be discharged in part at Berbera, Somalia and in part at Hodeiah, Yemen, instead of Aden, in exchange for an additional lump sum payment by Plaintiff. (Jacobson Decl. Ex. 2.) Like the original Sales Contract, the Amendment refers to terms in the Gencon Charter Party, and it recognizes that the M/V SEABOSS 1 would carry the cement. The Amendment contains the same demurrage provision as the Sales Contract and charter party. (Id.)

Plaintiff alleges that it incurred demurrage on the vessel at Berbera, Somalia for 4.5 days at $20,000 per day, or a total of $90,000, pursuant to the Sales Contract and Amendment. (Compl. ¶ 6.) Plaintiff commenced arbitration against Defendant in London pursuant to the arbitration clause in the Sales Contract and designated an arbitrator, Mark William Hamsher ("Arbitrator") of the London Maritime Arbitrators Association. (Wanchoo Decl. Ex. E.) Plaintiff and the Arbitrator each sent notices of the arbitration and requests for defense submissions to Defendant, but Defendant never submitted a written defense in the arbitration, requested a hearing, objected to the designation of the Arbitrator or attempted to appoint its own arbitrator. (Id. at 1-4.) In several telephone calls to the Arbitrator, a representative of Defendant asserted generally that Plaintiff's allegations were false but refused to make any written submissions. (Id. at 5-6.) Ultimately, on December 6, 2006, the Arbitrator rendered a Final Arbitration Award on the basis of the evidence submitted by Plaintiff.

The Arbitrator found that Defendant owed Plaintiff demurrage in the amount of $90,000 under the Sales Contract and Amendment, as payment for the detention of the M/V SEABOSS 1 at Berbera, Somalia for 4.5 days. The Arbitrator also awarded Plaintiff demurrage in the amount of $1,140 with respect to the detention of a separate vessel called the "SAPANCA." (Id. at 13.) As to the detention of the SAPANCA, the Arbitrator relied on a facsimile sent from Defendant to Plaintiff on October 26, 2005, in which Defendant confirmed that it owed Plaintiff demurrage in the amount of $1,140. (Id.) The Arbitrator explained that "[i]f, as seemed likely, the acknowledged debt arose under another transaction, no objection was raised to it being claimed in these arbitration proceedings and I therefore had jurisdiction in respect of it."*fn1 (Id.) The Arbitrator therefore awarded Plaintiff total demurrage in the amount of $91,140, plus interest and costs. (Id. at 17.) The total award, including interest, as of May 29, 2008 was $134,110, which is also the amount of the maritime attachment obtained by Plaintiff here. (Compl. ¶ 8.)

Plaintiff alleges that Defendant has failed to pay any amount of the arbitration award. (Id. ¶ 9.) Defendant has not appealed from or otherwise moved to set aside the Final Arbitration Award, and its time for doing so has passed. (Id. ¶ 10.)

II. LEGAL STANDARD

With respect to an in personam action based on an admiralty claim, Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims("Supplemental Rules") of the Federal Rules of Civil Procedure permits a plaintiff to obtain from a district court, ex parte, an order that directs financial institutions within the district to attach the defendant's property, up to the amount sued for. Fed. R. Civ. P. Supp. Rule B(1). To obtain such an order, the plaintiff must submit a verified complaint, and the plaintiff or the plaintiff's attorney must sign and file an affidavit stating that, to the affiant's knowledge, or on information and belief, the defendant cannot be found within the district. Id. "If the plaintiff's filings comply with these conditions, the court must enter an order authorizing the attachment, which the plaintiff may then serve on any persons in possession of the defendant's property located within the district." Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434, 438 (2d Cir. 2006).

Once its property has been restrained, the defendant may appear before the district court to contest the attachment pursuant to Supplemental Rule ...


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