In admiralty law, there are two bases for attaching property to secure maritime claims. The first is the exercise of a maritime lien upon specific property. Here the claimant usually arrests the offending object (a ship). The lien arises from the seized property. A claimant may litigate the dispute and then have the property sold by the U.S. Marshal to satisfy its maritime claim.
The second basis for seizing property is the process of maritime attachment. This unique admiralty law predates the U.S. Constitution and permits federal courts to adjudicate maritime claims against non-resident defendants over whom they have no personal jurisdiction. This is accomplished by utilizing Supplemental Admiralty Rule B to attach the defendant’s property found within the district of the court. The property may consist of cargo, a vessel, charter hire, freights, sub-freights or marine insurance proceeds. However, the property need not be maritime in nature (i.e., bank accounts, goods, chattels, credits, account receivables, buildings, etc.).
The Rule B security devise is made necessary because of the international nature of maritime commerce where companies constantly transfer assets as they go about their business of moving ships and cargo throughout the world. The defendant’s property is attached by a process similar to a maritime arrest. The seized property is then sold to satisfy a judgment subsequently rendered by the court against the defendant.
Courts Can Order Arbitration
In the United States there is also a strong federal policy that encourages maritime arbitration – the Federal Arbitration Act (Title 9, U.S.C.). This Act empowers federal courts to order parties to arbitrate if they have agreed to do so in their maritime contracts. Section 8 of the Act, however, permits an aggrieved party to use the federal courts to commence a litigation in order to seize property by maritime arrest or attachment for security purposes. After the property is seized, the court action is stayed while the parties debate the merits of the dispute before arbitrators.
What happens if a party to an ongoing maritime commences an action in federal court for the purpose of obtaining security under Supplemental Admiralty Rule B? Should the attachment be vacated? This issue was recently addressed by a Louisiana Federal Court in the Unitramp case (1994 A.M.C. 476).
In the Unitramp case the foreign defendant who already had appeared in a London maritime arbitration moved to vacate a Rule B attachment that was subsequently commenced by a claimant against its property in Louisiana. The defendant argued that the primary function of Rule B is to obtain jurisdiction over a defendant through its property. Furthermore, if attachment is not necessary for jurisdiction, it cannot be maintained solely for the purpose of obtaining security. Here the claimant did not seek jurisdiction for the purpose of going forward with the arbitration because the defendant already had gone forward in arbitration.
The claimant argued there were several cases in which courts allowed maritime attachment to issue although arbitration had begun. Furthermore, the Supreme Court a half century ago observed, “Congress plainly and emphatically declared that although parties had agreed to arbitrate, the traditional admiralty procedure with is concomitant security should be available to the aggrieved party without in any way lessening his obligation to arbitrate his grievance rather than to litigate the merits in court.”
The federal court then denied the defendant’s motion to vacate the attachment. The court made it patently clear that Supplemental Admiralty Rule B attachment is not precluded by a prior commencement of arbitration.