Gordon Rees Scully Mansukhani Maritime and Commercial Litigation Partners David Bland and Julie Araujo recently obtained an opinion from the Second U.S. Circuit Court of Appeals affirming rulings in favor of a vessel owner/client. The case involved a Maltese owner/client of a Maltese-flagged vessel that was time chartered to a Greek entity, and which was fueled at the charterer’s request by a Cyprian bunker supply company at a Chilean port pursuant to a U.S. law-governed fuel supply contract. The charterer failed to pay for the fuel and as a result the vessel was seized by the supplier in Panama to enforce its maritime lien. In a declaratory judgment action in the U.S. District Court for the Southern District of New York filed against the supplier one day after the Panamanian arrest action, Bland and Araujo successfully argued motions based upon issues of international comity and laches under U.S. maritime lien law. At the appellate level, the Second Circuit requested that the parties additionally present positions as to whether the federal court had subject matter jurisdiction, given the fact that the vessel was never present and could not have been arrested in the U.S.
On July 13, 2018, the Second Circuit issued a decision finding that the federal court had admiralty jurisdiction in a declaratory judgment action to adjudicate maritime lien rights within an in personam action, notwithstanding the lack of in rem jurisdiction. The Second Circuit went on to affirm the district court’s rulings in which it had declined the defendant/appellant’s request to abstain on international comity grounds and found that the defendant/appellant’s maritime lien was unenforceable due to laches. A dissenting opinion was also issued which found that jurisdiction to adjudicate a maritime lien could only be conferred by in rem action and that the vessel owner’s consent to have its rights in the vessel adjudicated in the U.S. was insufficient to confer subject matter jurisdiction.