Opinion
05 Civ. 10295 (PAC).
January 23, 2006
MEMORANDUM ORDER
Defendant Sovarex, S.A. ("Sovarex") moves by Order to Show Cause to reduce the amounts attached by Plaintiff Proton Shipping Inc. ("Proton") to twice the principal amount of the charter party claim, and to release the attached sums in excess of that amount.
On December 8, 2005, Proton commenced its action. It alleged that Sovarex, as charterer, entered into a charter party with Proton, the owner, for the chartering of the M/V Karla (Compl. ¶ 4). The charter party required all disputes to be referred to arbitration in London and specified that English law would apply (Comp. ¶ 5). After arbitration, the sole arbitrator awarded Proton damages for demurrage and deadfreight in the amount of $55,754.22 together with quarterly compounded interest at the rate of 3.5% from May 1, 2003 until payment (Comp. ¶ 6(a); and costs in the amount of 64,526.89 British pounds (or $112,278), with quarterly compounded interest at the rate of 5.75% from June 23, 2005 (Compl. ¶ 6(b). Proton also sought attachment for an English High Court judgment in the amount of $28,126.23, for a Freezing Order which awarded costs in the amount of 13,000 British pounds (or $22,620.30) Compl. ¶ 8; attorneys' fees for a futile enforcement proceeding in France in the amount of $29,593.12; and, finally, projected attorneys' fees in this proceeding in the amount of $20,000 (Compl. ¶ 14(xiii). Based on these allegations, Proton sought an order of attachment, pursuant to Admiralty Rule B, of an amount up to and including $275,475.46. Subsequently, Proton attached that amount.
Sovarex now moves, pursuant to Supplemental Rules E4(f), E5(a)(i) and E(6) to reduce the amount attached to two times the principal amount of the charter party claim for demurrage and deadfreight, which is $55,754.72, for a total attachment of $111,509.44, and the release of the balance of approximately $164,000.
Sovarex's motion, pursuant to E4(f), came on for hearing before the Court on January 20, 2006. Sovarex argued that the amount that can be attached was limited to twice the amount of Proton's claim for demurrage and deadfreight. According to Sovarex, Rule E5(a)(i) mandates that the dollar amounts attributable to the arbitration award for legal and arbitral costs; the cost of court proceedings in England and France; and the projected attorneys' fees in this proceeding cannot exceed two times the amount of the "plaintiff's claim."
In its initial moving papers, Sovarex cites no cases for the proposition that "claim" should be so narrowly circumscribed. At oral argument, counsel explained that the proposition was "obvious" and required no further elaboration. The cases cited in Sovarex's reply papers are hardly controlling and seem to address other issues, rather than the meaning of "claim."
When Proton sought its attachment in December, 2005, it had in hand an arbitrator's award which allowed for demurrage and deadfreight, together with costs of that proceeding, specifying the exact amount attributable to each award. Both awards, arising as they do from a single arbitration, pursuant to the charter party, are maritime in nature. As such, they are part of Proton's "claim" and appropriate for both attachment and enforcement. Victrix Steamship Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709, 713 (2d Cir. 1987) ("admiralty court has jurisdiction of a claim to enforce a foreign judgment that is itself based on a maritime law.") International Sea Food Ltd. v. M/V Campeche, 566 F.2d 482 (5th Cir. 1978) (District Court had subject matter jurisdiction in admiralty to enforce the foreign maritime decree awarding money damages.")
There is no good reason in law or logic to separate what the arbitrator did. The awards arose from a single arbitration of one charter party and the awards, while stated separately, constitute a single claim totalling, at a minimum, before interests and costs, $167,000. Twice this amount is far greater than the amount attached.
In these circumstances, it is not necessary to pass on Proton's other arguments on (i) the need to read the Admiralty Rules together so that they make sense; (ii) that the purpose of the attachment in admiralty is to give security for all maritime claims and judgments, and that releasing funds as Sovarex suggests, would result in less security; and (iii) that English and French enforcement costs are recoverable as integral parts of the underlying maritime action.
Sovarex's motion to reduce the amount of the maritime attachment is denied; and the existing attachment in the amount of $275,475.46 is continued.
SO ORDERED.