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Pollution & IncidentResponse Team
CONTENTSPAGE
Recent Developments in ......................................................................1Rule B Attachment Practice in New York
Freezing Orders and Injunctions ........................................................3Under the Hong Kong Civil Justice Reform
New Ship Recycling Convention on the Horizon ............................6
Meet Blank Rome ...................................................................................8
Ship Mortgages in Favor of “Owners” ..............................................9
Nicholas J. Healy, Pre-Eminent Maritime Attorney, ...................12Dies at 99
Shanghai Court Upholds Hong Kong Arbitration Clause ..........13
Appendix A.............................................................................................14
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© 2009, BLANK ROME LLP. Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. The Advisory should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel. Additional information on Blank Rome may be found on ourwebsite www.blankrome.com.
Watergate • 600 New Hampshire Ave., NW • Washington, DC 20037 • 202.772.5800
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July 2009 No. 3
To learn more about how Blank Rome can help your business please go to www.BlankRomeMaritime.com
Recent Developments inRule B Attachment Practice in New York
By Thomas H. Belknap
IntroductionTo say that the law of Rule B mar-
itime attachments has been a movingtarget would be a bit of an under -statement. Since my last article on thesubject in January 2009, there havebeen several important developments,and there are several more on thenear horizon.
It would be impossible to cover them all in one article, but in this note I highlight some of the more“controversial” jurisdictional issues relating to when aRule B attachment may be had and then discuss the new“model” order recently propounded by the Court and,in particular, some of the impacts on the practice thatthis order has already had.
The Prima Facie CaseMost people in the shipping world now know very
well the two main requirements to obtain a maritime“Rule B” attachment in the United States. One, the plain-tiff must have a “maritime claim,” and two, the defendantmust not be “found” in the district at the time the actionis filed. Each of these prongs has been the subject ofrecent developments that are worthy of note.
What is a “Maritime Claim”Traditionally, ship building contracts were viewed as
being outside admiralty jurisdiction, thus barring a RuleB action on such a claim. Recent decisions by theSupreme Court and the Second Circuit (encompassingNew York) have suggested to some, however, that thisissue may be open to revisitation by the higher courts.Thus far, we are aware of no decisions upholding a
Rule B attachment on such a claim. There is at least onedecision denying an attachment on such a claim that iscurrently on appeal, however, and this appeal is expectedto be heard towards the end of this year.
As with ship construction contracts, the traditionalview was that claims under ship sale MOA’s were notmaritime claims. One decision in the Fall of 2008(Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd., 08cv 5299 (SAS)) held that, under the reasoning of therecent Supreme Court authority referenced above, aship sale contract was a maritime contract, and upheld aRule B attachment. Numerous other decisions decidedbefore and after Kalafrana, however, have held to thecontrary. This issue is also on appeal to the SecondCircuit and should be decided sometime this year.
A few decisions have found that claims under com-modity sales contracts, where the claims involve the“maritime” elements of the contract, such as, for instance,a claim for payment of vessel demurrage due under a com-modity sales contract, will support a Rule B attachment.
THOMAS H. BELKNAP, JR.
the wire transfer documentation). The requirement for providing information shall be satisfied if the garnishee furnishes to the
plaintiff the payment order for the funds; and it is further,
[11] ORDERED, that in the event plaintiff restrains any assets pursuant to the Attachment Order, within five (5) days of
this having occurred plaintiff shall inform the Court in writing that it has restrained assets and within thirty (30) days of this having
occurred shall inform the Court in writing whether it has arranged with defendant(s) and/or any third parties to establish a separate
escrow account into which to transfer funds in the amount of the attached assets, or obtain mutually acceptable substitute security
in the amount of such assets, or pay such funds into the Registry of the Court. If the parties are able to agree to an arrangement,
then this case will be dismissed without prejudice, and, upon request by plaintiff, the case will be reopened for the purposes of any
necessary proceedings to enforce any judgment or arbitration award rendered in connection with a resolution of the merits of the
dispute that is the subject of this action; and it is further,
[12] ORDERED, that this Order shall automatically expire [60] or [90] days from the date of its issuance if no assets or
other property has been restrained pursuant to this Order, unless the plaintiff shows good cause for an extension of this Order for an
additional [60] days. Further [60]-day extensions may be granted in the discretion of the Court, but only upon a showing by plaintiff
of extraordinary circumstances. All applications for extensions shall be made by letter to the Court; and it is further,
[13] ORDERED, that this attachment shall automatically expire 45 days after the date of this Order unless plaintiff
confirms by letter that it has commenced arbitration or other adversarial proceedings on the merits of the claims underlying the
attachment. Plaintiff may request by letter an extension of the Order for an additional 45 days if it shows good cause why it has not
commenced arbitration or other adversarial proceedings. In no event will the Order extend beyond 90 days where no arbitration or
other adversarial proceeding has been commenced; and it is further,
[14] ORDERED, that upon expiration or vacatur of this Order by reason of the two preceding paragraphs, this Action may
be dismissed without prejudice, without costs, and without further notice to any party. The plaintiff is directed to submit a letter to
the Court informing it of the automatic expiration of the Order.
Dated:
SO ORDERED:
U.S.D.J.
(continued on page 2)
In the event of an incident please contact any member of our team:
Tom Belknap [email protected]
Jeanne Grasso [email protected]
Jeremy Harwood [email protected]
John Kimball [email protected]
LeRoy Lambert [email protected]
Greg Linsin [email protected]
Peter Mills [email protected]
Jeff Moller [email protected]
Richard Singleton [email protected]
Jon Waldron [email protected]
Alan Weigel [email protected]
+1.202.772.5800 Washington, DC
+1.212.885.5000 New York
+1.215.569.5500 Philadelphia
+852.3528.8300 AsiaWe are on call 24 / 7 / 365
electronic fund transfers originated by, payable to, or otherwise for the benefit of Defendant at the time of service, in an amount of
up to US$ __________, pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal
Rules of Civil Procedure; and it is further,
[2] ORDERED, that any person claiming an interest in any property attached or garnished pursuant to this Order shall,
upon application to the Court, be entitled to a prompt hearing at which the Plaintiff shall be required to show why the attachment
and garnishment should not be vacated; and it is further,
[3A] OPTION A. ORDERED, that the United States Marshal or his designee shall serve this Order and Process of Maritime
Attachment and Garnishment on any garnishee identified in Schedule A to this Order and on such additional garnishees as so
permitted herein; and it is further,
OR
[3B] OPTION B. ORDERED, that any person at least 18 years of age and not a party to this action, employed with or
appointed by ______________, be and hereby is appointed to serve this Order and Process of Maritime Attachment and
Garnishment on any garnishee identified in Schedule A to this Order and on such additional garnishees as permitted herein; and it is
further,
[4] ORDERED, that supplemental process specifying other or additional garnishees and enforcing the Court’s Order may
not be issued by the Clerk without further Order of the Court; and it is further,
[5] ORDERED, that initial service by the United States Marshal (option A) or other designated process server (option B)
shall be made personally upon each garnishee; and it is further,
[6] ORDERED, that at the request of the garnishee, plaintiff is required to pay a reasonable fee for processing this
attachment, as determined by each garnishee; and it is further,
[7] ORDERED, that a copy of this Order be attached to and served with initial service of the Process of Maritime
Attachment and Garnishment upon each garnishee; and it is further,
[8] ORDERED, that pursuant to Federal Rule of Civil Procedure 5(b)(2)(E) and/or (F), any garnishee may consent to deem
service to be effective and continuous for any period of time not to exceed 60 days from the date of this order. Such consent may be
manifested in the garnishee’s rules, policies or other instructions regarding service; and it is further,
[9] ORDERED, that following initial service as described above, if any supplemental service of the Process of Maritime
Attachment and Garnishment is required, it shall be made personally, unless the garnishee consents to service by way of facsimile
transmission to a fax number designated by the garnishee for that purpose. Supplemental service can also be made by e-mail or other
means if consented to by the garnishee pursuant to Fed. R. Civ. P. 5(b)(2)(E) and/or (F). Such consent may be manifested in the
garnishee’s rules, policies or other instructions regarding service; and it is further,
[10] ORDERED, that any garnishee served with this Order, upon determining that it is in possession of any property which
may be subject to this Order, shall, as soon thereafter as is practicable, advise the plaintiff of such details about the attachment as
are reasonably available to it. With respect to the attachment of an electronic funds transfer, the garnishee shall, to the extent known,
advise counsel for the plaintiff of the following details: (1) amount of funds attached, (2) the exact name of the originator and
beneficiary as reflected in the wire transfer information, (3) any available details about the purpose of the transfer (e.g., contained in
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Other decisions have held otherwise, however, and haveconcluded that even these claims will not support a RuleB attachment. This is still an issue in flux, and we are stillseeing inconsistent decisions from the Courts.
Under the present state of the law, a Rule B attachmentordinarily will not be allowed on an unripe indemnityclaim (i.e., where the party seeking indemnity has not beenfound liable to the original claimant). This arises most commonly in claims under a chain of charters. There issome case law that supports the view that where the partyseeking the attachment has already had a claim lodgedagainst it and has had to give security in respect of theclaim for which it is seeking indemnity, a Rule B actionmay lie. Recent decisions, however, suggest even this is notsufficient to make the claim “ripe” for Rule B purposes—particularly where the security given is “only” a club LOUon a claim that is covered by P&I insurance and thus isessentially “costless”—except where the equities lie heavilyin favor of the plaintiff.
Found Within The DistrictThe basic rule is that an attachment will only lie
where the defendant is not subject to personal jurisdic-tion in the district (i.e., both amenable to service ofprocess and subject to the personal jurisdiction of thecourt). Over the past couple of years, parties have foundthat a simple way to avoid Rule B is to render themselves“found” in New York by registering with the New YorkSecretary of State and appointing an agent for service ofprocess in New York. The Second Circuit recently heldin STX Panocean (UK) Co., Ltd. v. Glory Wealth Shipping,08-6131 (March 19, 2009), that this did in fact render aparty “found” in New York for Rule B purposes.
The Southern District’sModel Rule B Attachment Order
In recent months, the Courts have been strugglingwith how to deal with the huge influx of new Rule Bcases arising out of the financial crisis and, particularly,the collapse of the dry bulk market. Last Fall, Tradewindsreported that Rule B cases rose from about 10% of thenew filings in the Southern District of New York in thebeginning of the year to over 30% by mid-November.Anecdotally, it appears the number of new filings hasdropped significantly in the past couple of months asthe markets have started to stabilize. It seems clear, how-ever, that Rule B remains a popular remedy.
To fight the tide, some judges started appending theirown “custom” modifications to their attachment orders,imposing limits such as provisions holding that theorder is only good for 90 or 120 days and would auto-
matically expire thereafter unless funds are attached.Another typical restriction provided that the order auto-matically expired within 45 days if the plaintiff had notcommenced litigation or arbitration on the merits withinthat time. Other judges began requiring detailed docu-mentation of the merits of the claim, even where theywere subject to foreign law and arbitration, and eventhough no such requirement is found anywhere in therules or case law. One judge began to refuse to issueattachment orders on the ground that the standardpleading in the complaint that a party “may” have assetsin the jurisdiction during the pendency of the action wasinsufficient without specific allegations that the defen-dant’s property could be found in the district.
In April 2009, after receiving comments from theCity Bar Association’s Admiralty Committee and fromthe banking interests, the Southern District Court’sJudicial Improvements Committee issued a “model”Rule B attachment order. Although use of the modelorder is not strictly mandatory, in her covering letter tothe City Bar Association, Judge Shira Scheindlin, chairof the Judicial Improvements Committee, wrote “It isour hope, if not expectation, that maritime lawyers willimmediately start submitting this proposed order.”
The “model” Rule B order contains some criticalchanges to the standard practice and has given the bankssome additional leverage on certain important issues. Acopy of the order is set out on the final pages of thispublication (see Appendix A). Some of the more impor-tant changes are discussed below.
The model order formalizes the practice of a numberof judges who required that the plaintiff allege withmore specificity facts upon which the Court could con-clude that the defendant can reasonably be expectedto have property in the district. A plaintiff should nowbe prepared to provide such information in their complaint, including details about other business thedefendant conducts that is likely to involve payments inU.S. dollars.
It appears the judges could not agree whether attach-ment orders should be limited to transfers “originated”by the defendant or should also extend to those “origi-nated by, payable to, or otherwise for the benefit of” thedefendant. The judge to whom the case is assigned isthus permitted to choose either option at the time theorder is issued. The proper application of Rule B ordersto EFT’s is expected to be decided presently by theSecond Circuit Court of Appeals, so this “choice”should fall away shortly in favor of one or the otheroption depending on that Court’s ruling.
Recent Developments (continued from page 1)
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APPENDIX A
MODEL RULE B ORDER
Issued By the Judicial Improvements Committee of the United States District Courtfor the Southern District of New York on April 3, 2009
On , Plaintiff, ABC, INC., filed a Verified Complaint in the captioned action seeking damages of
US$ inclusive of interest, costs, and reasonable attorneys’ fees, and seeking the issuance of Process of Maritime
Attachment and Garnishment pursuant to Rule B of the Supplemental Admiralty Rules for Certain Admiralty and Maritime Claims of
the Federal Rules of Civil Procedure.
The Court has reviewed the Verified Complaint and the Supporting Affidavit of dated and
finds that the conditions of Supplemental Admiralty Rule B appear to exist.
The Affidavit of has demonstrated [to the Court’s satisfaction] that the Defendant regularly sends
funds to others, which funds are routed electronically (electronic funds transfers) through New York banks.
ACCORDINGLY, IT IS HEREBY
[1A] OPTION A. ORDERED, that Process of Maritime Attachment and Garnishment shall issue against all tangible or
intangible property belonging to or being held for Defendant by any garnishee identified in Schedule A to this Order, upon whom a
copy of the Process of Maritime Attachment and Garnishment may be served, including but not limited to funds representing elec-
tronic fund transfers originated by Defendant at the time of service, in an amount of up to US$ pursuant to Rule B
of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure; and it is further,
OR
[1B] OPTION B. ORDERED, that Process of Maritime Attachment and Garnishment shall issue against all tangible or
intangible property belonging to or being held for Defendant by any garnishee identified in Schedule A to this order, upon whom a
copy of the Process of Maritime Attachment and Garnishment may be served, including but not limited to funds representing
Freezing Orders and InjunctionsUnder the Hong Kong Civil Justice Reform
By Nigel J. Binnersley and Daniel Lee
We regularly receive inquiries fromlawyers and clients worldwide askingwhether it is possible to freeze bankaccounts or seize assets in Hong Kongin aid of foreign proceedings. In mostcases, the defendant is not a residentin Hong Kong but may have bankaccounts or other assets in the territory.Until recently, the usual advice wasthat if the substantive proceedings orthe defendant itself had no connec-tion to Hong Kong, it was unlikelythat the Hong Kong Courts wouldexercise jurisdiction to grant a pre-judgment injunction/freezing order inaid of foreign proceedings. That posi-tion has now changed, however, andchanged quite radically.
Hong Kong is undergoing a process of Civil JusticeReform. This came into effect on April 2, 2009. TheHong Kong Courts now have clear statutory power togrant interim injunctions against a foreign defendantwho has assets located within Hong Kong, regardless ofwhether or not the substantive dispute has a nexus withHong Kong or the defendant is domiciled or present. Aclaimant can therefore now apply to the Hong KongCourts for a “Mareva”/freezing order style injunction torestrain a defendant from dealing with or disposingwholly of its assets, whether they are monies on account,goods, or real properties, etc. Any third party that holds,possesses, or has control of such assets are also subject tothe injunction proceedings.
Civil Justice Reform (“CJR”)The issue as to whether the Hong Kong Courts
should have power to grant interim relief—including aninterim injunction in aid of foreign proceedings—wasreviewed prior to the enactment of CJR. The general viewin the legal community was in support of such reform.
In order to accomplish this, amendments were madeto the High Court Ordinance and Arbitration Ordinanceso that the Hong Kong Courts now have the power togrant interim relief in the absence of substantive pro-ceedings—including an interim injunction—against thedefendant, restraining it from dealing with its assetswithin the Hong Kong High Court jurisdiction. This
The judges apparently also could not agree onwhether to require service by the Marshall or to allowservice by a substitute process server, as is contemplatedby the rules. Here again, the Judicial ImprovementsCommittee has left it up to the individual judges todecide at the time the order is issued. Anecdotally, initialindications seem to be that most judges will not requireservice by a U.S. Marshall. This trend will need to beclosely monitored, however, in the coming months.
The model order gives the garnishee bank the right torequire payment of a “reasonable fee for processing thisattachment, as determined by each garnishee.” Citibankhas already started charging a $300 administrative fee, andJP Morgan has recently followed suit with its own admin-istrative fee. Others are certain to follow suit shortly. Itremains to be seen how this will be administered/collectedand when, and what, “reasonable” is.
The new model order does not “order” the banks toaccept supplemental electronic service, nor does it orderthat service shall be deemed continuous throughout theday on which it is served. These are important changes tothe practice up to now. The garnishee bank may still con-sent to daily service by fax or by email and may also consent to have service be effective for up to 60 days. If thebanks do not consent to accept electronic service, how -ever, service must be made “personally” upon the bank,presumably by the same means as for initial service(i.e., U.S. Marshall or process servers). And if banks do notagree to deem service continuous, then it will be necessaryto effect multiple services within the same day. Obviously,this could dramatically increase the costs.
The model order contains a provision requiringthe garnishee to advise the name of the originator, thebeneficiary, and any details about the purpose of thetransaction. At present, some banks provide such infor-mation willingly and others are not so cooperative.
The model order provides that it will automaticallyexpire in 60 or 90 days (the judge chooses), with the pos-sibility of an extension for an additional 60 days upon ashowing of “good cause” and further extensions upon ashowing of “extraordinary circumstances.” It furtherrequires that arbitration be commenced at the latest with-in 45 days of the date of the order. Thus, a party shouldnot commence a Rule B action unless/until it is substan-tially ready to proceed on the merits in the chosen forum.
ConclusionIn some ways, the model order helps to clarify and
unify the practice, but in many import respects it raisesat least as many problems as it solves. It is clear that thepractice will continue to evolve at lightning pace, how-ever, and it is equally clear that the industry will have tobe prepared to continue to adapt to shifting sands. �
NIGEL J. BINNERSLEY
DANIEL LEE
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
ABC,Plaintiff,
-against-XYZ,
Defendant.
09 Civ.
ORDER DIRECTING CLERK TOISSUE PROCESS OF MARITIMEATTACHMENT AND GARNISHMENTAND APPOINTING PROCESS SERVER
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effectively reverses the House of Lords’ decision inSiskina in which Lord Diplock stated that an interiminjunction was not a cause of action by itself and couldnot stand on its own, but was ancillary and incidental toa pre-existing cause of action. Although this decision didnot go without attracting criticism, it had been generallyfollowed by the Hong Kong Courts. No more.
Current PositionNowadays, monies can be transferred electronically
and goods can move across borders very quickly. TheHong Kong “view” now appears to be that it is a com-mercial necessity for Courts of different jurisdictions toco operate and assist each other to prevent foreigndefendants from defeating a judgment by transferring or moving assets out of the jurisdiction.
The following examples are circumstances where itnow may technically be possible to apply in Hong Kongfor an injunction:
• A Panamanian shipowner enters into a charterpartywith a Bangladesh charterer for the chartering of avessel. The charterer defaults by failing to pay hire.The charterparty is governed by English law, withany disputes to be referred to arbitration in London.The charterer has no assets, save for monies in abank account in Hong Kong. The shipowner cannow apply to the Hong Kong Court for an injunc-tion/freezing order to restrain the charterer fromdealing with the monies in the bank account.
• A Chinese shipping company charters vessels fromvarious German shipowners. The shipping companydefaults by failing to pay hire relating to variousvessels. The shipowner discovers that the shippingcompany has set up BVI companies to hold realproperty in Hong Kong. The shipowner can applyfor an injunction/freezing order prohibiting theshipping company and the BVI companies fromselling the real property and also removing anyrental monies from Hong Kong bank accounts.
• The plaintiff is incorporated in California. The defen-dant is a BVI registered investment company. Theplaintiff alleges that it was persuaded to enter into afraudulent scheme to invest in a deal to purchase ahospital in Los Angeles. The plaintiff commencescivil action in California. Through discovery pro-ceedings, the plaintiff manages to obtain informationthat his investment monies were remitted to thedefendant’s bank account in Hong Kong. The plain-tiff can apply to the Hong Kong Court for an injunc-tion/freezing order against the defendant to restrainthe defendant from dealing with, or disposing of, thefunds in the Hong Kong bank account.
• The Plaintiff is a Singaporean investment companyand the defendant was an employee of the same. Theplaintiff received client complaints that the defen-dant carried out unauthorized shares transactionsthat resulted in substantial losses to the clients. Thedefendant disappeared and the plaintiff was unableto contact him. The plaintiff commenced legal pro-ceedings in Singapore seeking damages from thedefendant. After a series of asset tracing exercises, it isfound that a substantial sum of monies was trans-ferred from the defendant’s bank account inAustralia to his wife’s father’s bank account in HongKong. The plaintiff can commence legal proceedingsin Hong Kong to apply for an injunction/freezingorder against the defendant and his father-in-lawfrom removing the monies out of the bank account.
Prior to the enactment of CJR, it would have beendifficult to have successfully pursued and frozen assetsin the examples set out above.
While the enactment of CJR may not result in HongKong becoming a “hot spot” like New York (with regardto the use of Rule B actions), it is thought that the num-ber of applications for injunctions/freezing orders to theHong Kong Courts may well increase.
A comparison between the two jurisdictions is setout in the table on the next page.
Arbitration Clause; (2) it is well established underEnglish law that there can be more than one nationalsystem of law bearing upon an international arbitration—the substantive law and the procedural law; (3) in thiscase the substantive rights and duties of the parties weregoverned by English Law and the procedure of the arbi-tration was governed by Hong Kong law, where the arbi-tration will take place; and (4) according to the HongKong Arbitration Ordinance, the parties should send anapplication to the Hong Kong International ArbitrationCentre to determine the number of arbitrators.
The Supreme Court concluded that the arbitrationclause was valid and binding on the parties underEnglish Law and Hong Kong Law, and that SMC did nothave jurisdiction over the merits of the disputes. Thejudgment of SMC was thus reversed and the Compliantdismissed.
Although this is not a binding precedent decision, itwill provide a guideline to the lower Courts upon anumber of issues including:
• choice of law;
• the admission of foreign legal expert opinion; and
• the enforceability of a contractual arbitration clause.
While Courts in China have a reputation for prefer-ring to keep jurisdiction, this case may reflect an increasedwillingness to uphold a contractual arbitration clausebetween the direct contracting parties and to deny theirown jurisdiction on the merits.
The admission of foreign expert legal opinion in theChinese Courts is not straight forward and this processrequired strict adherence with the admission rules. �
Shanghai Court UpholdsHong Kong Arbitration Clause
By Grace Hou
Shanghai People’s Supreme Court(the “Court”) recently upheld thevalidity of a Hong Kong arbitrationclause in a fixture note between char-terer Lu Qin (Hong Kong) Co. Ltd.(the “Charterer”) and owner SinotransGuangdong (the “Owner”).
The case arose when the Chartererinitiated an action in the Shanghai
Maritime Court (“SMC”) against the Owner for charterparty disputes, ignoring Clause 17 of the subject fixturenote which provided “ARBITRATION IN HONG KONGAND ENGLISH LAW TO APPLY.” The Owner moved tocompel the Charterer into arbitration. SMC ruled thatthe PRC law shall be the governing law in determiningthe effectiveness of the Arbitration Clause. It furtherdenied the Owner’s motion on the ground that theArbitration Clause failed to stipulate the arbitrationtribunal, and to specify the number of arbitrators, and wastherefore invalid under the Arbitration Law of the PRC.
The Owner appealed. Before the Shanghai People’sSupreme Court, the Owner submitted a legal “expert”opinion prepared by Blank Rome partner NigelBinnersley on the pertinent issues of English and HongKong law. Noting that the arbitration clause was mutu-ally agreed upon by the parties, the Shanghai People’sSupreme Court recognized and accepted that: (1) Englishlaw should be applicable on the interpretation of the
GRACE HOU
Freezing Orders and Injunctions (continued from page 3)
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Nicholas J. Healy, Pre-EminentMaritime Attorney, Dies at 99
Nicholas J. Healy, who was widely regarded as thefinest maritime attorney in the United States, died inBantry, County Cork, Ireland on Wednesday, May 20,of natural causes. He was 99 years old.
Mr. Healy was a founding partner of the distin-guished admiralty law firm Healy & Baillie LLP, estab-lished on St. Patrick’s Day, 1948. The firm combinedwith Blank Rome in 2006. He was president of theMaritime Law Association from 1964 to 1966, honoraryvice president and former vice president of the ComiteMaritime International (CMI), and served on the boardof directors of Victory Carriers.
He was best known in the admiralty law field for hiswork with British P&I Clubs. He was involved with manyof the major shipping collision cases of the last half ofthe 20th Century—including the Amoco Cadiz and theTorrey Canyon cases. He was even involved with the RMSTitanic. Although the legendary ship sank in 1912 andsuits involving it had long been settled, Mr. Healy wasenlisted as an expert to give testimony in 2000 in a sal-vage case involving the ship’s wreckage.
A prolific writer, he co-authored numerous booksincluding Cases of the Law of Admiralty (1950), which ispart of the American Casebook series published byWest. He co-authored four editions of Admiralty: Casesand Materials, first published in 1965; the most recentedition, called Cases on Admiralty, was published threeyears ago by Thomson West. In 1998, The Law of MarineCollision, co-authored with Joseph C. Sweeney, was pub-lished by Cornell Maritime Press. He wrote numerousarticles for the MLA Journal as well as the entry on“maritime law” for the Encyclopedia Britannica. He servedon the board of the Journal of Maritime Law andCommerce and as its editor in chief from 1980 to 1988.
As adjunct professor at New York University, hetaught the course in admiralty law for so manyyears–39–that a preponderance of American maritimelawyers were taught by him or taught by someone whowas taught by him. In 1991, a biennial Nicholas J. HealyLecture on Admiralty Law was established at New YorkUniversity Law School; the ninth Healy Lecture washeld this past May. He also gave courses and lectures inadmiralty law at Tulane University, Temple University,and Shanghai Maritime University.
Nicholas Joseph Healy was born on January 4, 1910.His namesake father, an amateur thespian, was presidentof the Catholic Repertory Theater and owned one of thegreat collections of dramatic literature. The collection—
some 10,000 volumes—was sold to Clare Booth Luce andis now housed in the library at Catholic Universityin Washington, D.C. that bears her name. His great-grandfather emigrated to the United States from Irelandaround 1830 and established a livery service company.
Mr. Healy graduated from Regis High School in NewYork City in 1927, from Holy Cross College in Worcester,Massachusetts in 1931, and from Harvard Law School in1934. He sang with the Friendly Sons of St. Patrick GleeClub for more than 50 years, was a lifelong member ofthe Society of the Sons of St. Patrick, and a member ofIndia House and the Harvard Club.
In 1942, Mr. Healy obtained a commission in theUnited States Naval reserve, then went on active duty until1945, earning the rank of Lieutenant (Senior Grade). Hespent the war years at the U.S. Department of Justice, work-ing on collision cases for its admiralty section.
His wife, Margaret Ferry, predeceased him in 2003after 66 years of marriage. He is survived by his six chil-dren: Nicholas Jr. of Naples, Florida; Margaret Parker ofGlen Rock, New Jersey; Rosemary Bell of Naples,Florida; Mary Louise White of Garden City, New York;Donall Healy of New York City; Kathleen Hamon ofHarrisville, New Hampshire; and by 21 grandchildren,21 great-grandchildren, and his sister Marjorie Borden ofKing of Prussia, Pennsylvania.
Contributions can be made to the Nicholas J. HealyLecture on Admiralty Law, Development Office, New YorkUniversity, 161 Avenue of the Americas, NY, NY 10013. �
Types of Claims All types of monetary claims, including maritimeclaims.
“Maritime” claims.
(For non-maritime claims, the applicant mustuse state court attachment procedures, whichare broadly similar to those of the Marevainjunction).
Undertaking An undertaking is required to be given to thedefendant for the loss and/or damage that maybe suffered by the defendant in the event thatthe order is subsequently discharged.
An undertaking to a third party for the costsand expenses incurred and the loss and/or damage suffered, if any, as a result of complyingwith the order.
Not required.
Application Documents By affidavit, attaching a writ or a draft writ, setting out:
(a) the details of the claims, the amount and thepoints for and against the application (fulland frank disclosure);
(b) reasonable belief that the defendant hasassets within the jurisdiction; and
(c) there is a real risk of dissipation of the assets.
By affidavit, showing that the defendant cannotbe “found” in the district, accompanied by averified complaint alleging a “maritime” claim.
Requirements (a) a good arguable case(b) a real risk of dissipation of assets(c) urgency
(a) A prima facie “maritime” claim.
The defendant cannot be “found” in the judicialdistrict, but has property in that district.
(To be “found” in a district, the defendant mustbe doing business there and have an agent forservice of process in that district).
Purpose To freeze the defendant’s assets, preventing thedefendant from removing its assets out of thejurisdiction, so as to defeat the judgment.
Attachment of assets, including electronic fundstransfers, of a defendant within the jurisdiction.
Proceedings afterGrant of Order
Costs
The Court may set the return date of when theparties will appear before the Court and theplaintiff will show cause. The Court may vary ordischarge the order, if necessary.
If property is attached, prompt notice must begiven to the defendant, and the defendant isentitled to a prompt post-attachment hearing atwhich the plaintiff has the burden to show thatthe attachment is proper.
Costs may be relatively high/expensive. A gooddeal of information and disclosure is required tobe given to the Court to support the application.
Costs for obtaining Rule B are generally low.
Basis of Application In order for it to be effective, it must be swift and secret, so it is always applied and grantedex-parte.
The application is made and granted ex-parte.
FREEZING ORDER RULE B ATTACHMENT
NICHOLAS J. HEALY
Business Restructuring& Bankruptcywww.BlankRome.com
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RescueToThe
New Ship Recycling Convention on the HorizonBy Joan M. Bondareff and Charles T. Blocksidge
On May 15, 2009, sixty-threenations, including the United States,acting through the auspices of theInternational Maritime Organization(IMO), adopted a new convention inHong Kong to regulate the manage-ment and disposal of ships containinghazardous materials. Entitled the HongKong International Convention forthe Safe and Environmentally SoundRecycling of Ships, 2009 (Convention),the Convention represents the firstinternational agreement specificallyfocused on the combined subjects ofthe recycling of merchant ships andthe protection of human health andthe environment, throughout a ship’soperating life. The scrapping of ships,
which is primarily for resource reclamation purposes, con-tinues to be a viable business in certain countries through-out the world—in 2008 alone, approximately 1,000 shipswere recycled or disposed of for scrap. Additionally, giventhe impending phase out of single hull tankers, the per-centage of the world’s fleet slated for scrapping is due tosignificantly increase in the coming years.
Entry into ForceBefore the Convention can enter into force, it must
be ratified by 15 nations with a combined fleet of notless than 40% of the gross tonnage of the world’s mer-chant shipping. Additionally, the combined maximumannual ship recycling volume (evaluated over the pre-ceding 10 years) of the States satisfying the ‘number ofstates’ requirement accounts for 3% of the gross tonnageof those States’ combined merchant shipping. This qualifier is an unusual addition to ratification, but certainly ensures that the countries most impacted bythe Convention have the most say in its success. TheConvention is open for signature from September 1,2009 to August 31, 2010. It remains to be seen as towhether or not the United States will become a Party tothe Convention.
Government Ships ExemptIf the Convention enters into force and is ratified by
the United States, it will apply to U.S.-flag ships over 500GT and to ship recycling facilities within the jurisdictionof the United States. The agreement exempts govern-ment ships and those ships operating, throughout their
respective lifetimes, solely in waters subject to the sover-eignty or jurisdiction of a Single Party. However, partiesare encouraged to act consistent with the purposes of theConvention for exempt ships. The Convention regulatesthe management of hazardous materials on ships fromcradle to grave through a series of government-requiredsurveys, inspections, and certificates of compliance; andregulates the ship recycling activities of facilities throughan authorization process and a ship-specific recycling planapproval process. To be suitable for authorization andoperations, facilities must meet substantive requirementsestablished under the Convention and engage in planningprocesses. For the Convention to come into force for theUnited States, it will require not only Senate approval, butmore likely implementing legislation as discussed below.
Key RequirementsEach party to the Convention will be required to
conduct a survey of its ships subject to the Convention,and prepare Certificates on Inventory of HazardousMaterials to accompany the ship during its lifetime andbefore it goes for recycling. An International Certificateon Inventory of Hazardous Materials may be issued fora period of 5 years or less; Part I of the Inventory ofHazardous Materials must be updated and maintainedthroughout the operational life of the ship. This inven-tory will include the ship’s particulars, and will certifythat the ship complies with the Convention’s controlson hazardous materials, as well as keep track of the specific hazardous materials listed in the Convention,including lead, mercury, radioactive substances, and certain chlorinated paraffins. There are also particularcontrols contained in the Convention concerning thefollowing hazardous materials:
• Asbestos – the new installation of materials con-taining asbestos is prohibited for all ships.
• PCBs – the new installation of materials containingPCBs is prohibited for all ships.
• Ozone-depleting substances – new installations thatcontain ozone-depleting substances shall be pro-hibited on all ships, except new installations ofhydrochlorofluorocarbons, which are permitteduntil January 1, 2020.
• Anti-fouling compounds – neither new or existingships may apply anti-fouling compounds, whoseapplication is prohibited by the InternationalConvention on the Control of Harmful Anti-Fouling Systems on Ships, 2001 (AFS). Compoundsmay not be used in a manner inconsistent with theAFS Convention on new ships or new installationson existing ships.
CHARLES T. BLOCKSIDGE
JOAN M. BONDAREFF
quoted above, in which “is” was substituted for “shallconstitute.” The references to the mortgage lien in theother sections of the Liberian and Marshall Islands lawsare similar to those in the U.S. statute, and in mostplaces it is referred to as a “preferred mortgage lien.”
Except for the characterization of the ship mortgagelien as a “maritime lien”, ship mortgages under the lawsof both Liberia and the Marshall Islands have the samecharacteristics as the U.S. ship mortgage when comparedto maritime liens. Thus, it is probable that the character-ization is an error by the draftsmen of the Liberian andMarshall Islands statutes. Until the error is corrected,however, there remains uncertainty as to the treatmentof ship mortgages in favor of a shareholder of theshipowner in Liberia and the Marshall Islands. In lightof these provisions, it is not clear whether the rule of
Pacific Pride or Custom Fuel is to be incorporated byreference into Liberian and Marshall Islands law. Thesestatutory provisions leave open the possibility that suchmortgages would be held to be invalid under themaritime lien rule that an “owner” may not have a lienon his own ship. Whereas, under the U.S. statute and theCustom Fuel decision, the consequence is that the trans-action will be subject to special scrutiny for inequitableconduct, and in the worst case there would be a lossof priority. �
This article was first published in Benedict’s MaritimeBulletin, Vol. 7, No. 1, First Quarter 2009, p. 16.
Blank Rome’s Maritime Bankruptcy Group has an
unmatched ability to provide a one stop solution to
help clients through the four stages of what can be a
hurricane-like experience:
1. Financial Storm Gathering—Advise on your options
2. Gale Force Financial Winds—Prepare for debtor’s
bankruptcy, including DIP financing
3. Bankruptcy Hurricane—Guide you through the
bankruptcy process, including Chapter 15 and
injunctions in aid of foreign bankruptcy cases, to a
reorganization plan
4. Smooth Financial Sailing—Assist you with imple-
menting a bankruptcy reorganization plan,
including exit financing
California Delaware Florida Hong Kong New York New Jersey Ohio Pennsylvania Washington, DC
any business founderingscan be avoided or mitigated byearly risk assessment, evaluationof alternatives, and restructuring.
M
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regulates all usage of PCBs in amounts higher than 50parts per million. Under TSCA, the United States cannotexport PCBs in regulated quantities, and through a courtdecision and U.S. policy, the export of a vessel contain-ing PCBs in banned amounts has been construed to bean export prohibited under TSCA (unless EPA grants awaiver). If ratified, the Convention would give Congressthe opportunity to establish a policy for the disposal ofU.S. merchant ships which heretofore has not directlybeen addressed.
ConclusionIf the major recycling nations such as India,
Bangladesh, and Pakistan ratify the Convention, itwould certainly go a long way to improving current shipdisposal conditions in those countries. If any of themajor scrapping countries were to eventually developtruly green recycling yards, the impediment to sendingships to those countries for disposal would seem to beremoved. However, funding and implementation willcontinue to be issues. �
At the end of the ship’s useful life, a Ready forRecycling Certificate will need to be completed that certifies, among other things, that the ship has been surveyed for hazardous materials, that it has a currentinventory of hazardous materials onboard, and that theship recycling facility where the ship will be recycledholds a valid authorization in accordance with theConvention. Each ship recycling facility must be author-ized by the Competent Authority of the State in whichit is situated. Authorization and operation is contingentupon satisfaction of environmental and safety require-ments, including the safe management of hazardousmaterials and worker protection measures (e.g., the estab-lishment of “safe-for-entry” and “safe-for-hot-work”conditions throughout recycling and the use of personalprotective equipment). These requirements and othersmust also be accounted for in the Ship RecyclingFacility Plan. In addition, facilities must seek explicit ortacit approval (according to election under nationallaw) of ship specific “Ship Recycling Plans” prior to the commencement of recycling.
A key aim of the Convention is to promote workerprotection, but, according to its critics, the Conventiondid not go far enough. In the late 1990s, a series ofBaltimore Sun newspaper articles introduced the worldto the shipbreaking industry and focused its attentionon the deplorable health and environmental conditionsthat went hand-in-hand with this necessary resourcereclamation function. While conditions in these facilitieshave slowly improved, the Convention does not bancertain practices used in ship recycling nations, such asIndia and Bangladesh that traditionally dispose of shipsby beaching them and manually dismantling them inpoor conditions rather than in dry docks. For thisreason, NGOs, such as Greenpeace and Friends of theEarth, are not satisfied with the final text.
Analysis From a logistical standpoint, it remains to be seen
how the United States would enforce the Conventiononce it enters into force. Presumably, the Coast Guardwould be responsible for conducting the surveys andissuing the Certificates of Inventory of HazardousMaterials and Ready for Recycling Certificates, and theEnvironmental Protection Agency (EPA) would beresponsible for approving the ship recycling facilityplans. The Maritime Administration would likely be atechnical advisor.
Congress also would have to address the relationshipbetween the Convention and the Toxic SubstancesControl Act of 1976 (TSCA), (15 U.S.C. §§ 2601, et. seq.),which specifically bans the introduction of PCBs and
inequitable conduct, the court appeared to accept thatin the absence of bad faith or fraud, compliance with thestatutory requirements and the existence of a valid debtwould establish the validity of a ship mortgage. If thereis inequitable conduct related to an “owner’s” mortgage,it will become an issue of the priority accorded to themortgage lien, not its validity.
In Custom Fuel, the shipowner was a wholly ownedsubsidiary of a bank. The bank loaned the shipowner100% of the subsidiary’s purchase price of the vessel andtook back a ship mortgage. The vessel was then bareboatchartered to a vessel operator. After incurring repair lienson the vessel, the charterer became insolvent, and thebank commenced a foreclosure action against the vessel.The court found that it would be inequitable to permitthe mortgagee bank to obtain in foreclosure the fullvalue of the vessel to the exclusion of the repair yard.The court analyzed the 100% mortgage amount and thenominal $1,000 capital of the shipowner and concludedthat the shipowner was inadequately capitalized. As aresult, the court applied the doctrine of equitable subor-dination to give the repair yard’s maritime lien priorityover the mortgage. The issue of the reasonableness ofcapital is normally analyzed at the time a transaction isinitiated, and presumably, had the mortgage beenrecorded for only 75% of the purchase price, the courtwould not have found the shipowner to be inadequatelycapitalized even if the outstanding loan amount at thetime of foreclosure exceeded the value of the vessel.
Loss of priority for a foreign flag vessel would nor-mally be of little consequence in the United Statesbecause ship mortgages on foreign flag vessels are subor-dinate to maritime liens in favor of those providing necessaries in the U.S. There are, however, provisions inthe Maritime Laws of each of the Marshall Islands andLiberia that uncertainty not only as to priority, but alsoas to the validity of a mortgage to an “owner.”
The Liberian Maritime Law was adopted in 1949,and was modeled on the U.S. maritime statutes. It incor-porates by reference the general maritime law of theUnited States to the extent not inconsistent with theLiberian statutes. In 1990, the Marshall Islands adopteda Maritime Law that followed very closely the Liberianstatute. Both statutes state that “A preferred mortgageshall constitute a maritime lien on the mortgagedvessel…” Liberian Maritime Law § 107; Marshall IslandsMaritime Act § 311. The origin of the insertion of “maritime” in the adoption of the U.S. statutory provi-sions is unclear. The original Ship Mortgage Act statedthat “A preferred mortgage shall constitute a lien on themortgaged vessel...” Ship Mortgage Act, 1920, SubsectionK. This section was recodified in 46 U.S.C. § 31325,
are secret liens, whereas ship mortgages must be recordedin a public registry. Maritime liens rank in inverse orderto the time they are incurred while the priority of shipmortgages is based on the first to be filed. Unlike mar-itime liens, ship mortgages are not subject to laches.
The Ship Mortgage Act, recodified in 46 U.S.C. §§31301-30, consistently refers to the mortgage lien as a“preferred mortgage lien,” or a “mortgage lien.” Section31325 states that “A preferred mortgage is a lien on themortgaged vessel…”. Nowhere in the Act is the mort-gage lien characterized as a “maritime lien.” Indeed,Section 31326 recognizes that a mortgage lien is not amaritime lien: “When a vessel is sold…to enforce a pre-ferred mortgage lien or a maritime lien…the vessel issold free of all those claims.”
Rules governing maritime liens, including the rulequoted above from the Pacific Pride case, are not applica-ble to ship mortgages. The criteria for reviewing thevalidity and the priority of ship mortgages to “owners”were established in Custom Fuel. While stating thatmortgages to “owners” must be closely scrutinized for
Ship Mortgages (continued from page 9)
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Congratulations to Our Chambers 2009 AwardeesWe are pleased to announce that Blank Rome’s shipping and maritime practice was
once again well recognized in the 2009 edition of Chambers USA: America’s LeadingLawyers for Business. We were listed as a “Band 1” firm in three categories: ShippingLitigation (New York); Shipping Litiga tion (Nationwide); and Shipping Regulatory(Nationwide); and also as a top firm in Shipping Finance (Nationwide). Individualsrecognized by Chambers were John Kimball (recognized as a “Star Individual”), LeRoyLambert, Jack Greenbaum, Thomas Belknap, Glen Oxton, and Jonathan Waldron.
Six members of the firm were also recently recognized in The International Who’s Whoof Shipping & Maritime Lawyers, including John Kimball and LeRoy Lambert who were ontheir 2009 list of “Most Highly Regarded Individuals,” as well as Richard Singleton, JeremyHarwood, Jonathan Waldron, and Jeanne Grasso.
Blank Rome also received national practice rankings in Investment Funds: Venture Capital and was recognized in both Pennsylvania and Delaware in Bankruptcy/Restructuring. In Pennsylvania, Blank Rome achieved six practice rankings (includingthree #1 rankings), including Banking & Finance, Corporate/M&A & Private Equity,Labor & Employment, Litigation, and Real Estate. �
The International Maritime Litigation and ADR Practice GroupBlank Rome LLP is constantly changing to meet the needs of its clients. To this end, the
firm has created a new practice group to better serve our clients’ dispute resolution needsin international and mari time matters. The new group is focused entirely on counseling andrepresenting our clients in maritime litigation, international commercial litigation, and arbi-tration and other forms of alternative dispute resolution. The group is headed by formerHealy & Baillie chairman John Kimball and combines the strengths of many of the formerHealy & Baillie partners and associates with a number of Blank Rome veterans. The practicegroup is divided into three core sections: Richard Singleton (New York), Thomas Belknap(New York), and Peter Mills (Hong Kong) lead the maritime litigation section; JeremyHarwood (New York), Stephen Orlofsky (New Jersey), and Martin Downey (Hong Kong) arethe team leaders for the ADR group; and Cameron Beard (New York) and Andrew Hart(Hong Kong) spearhead the international litigation section.
The creation of this new group means that Blank Rome LLP now has two practice groupsdedicated to maritime matters. The other group is the Maritime, International Trade andPublic Contracts group, headed by Brett Esber (DC), which concentrates on governmental regulation of the maritime industry and trade; environmental crimes; and maritime corpo-rate, finance, and transactional matters. The two groups together total some 40+ lawyers, making it the largest maritime practice in the United States.
Blank Rome LLP also has a dedicated industry group to serve the maritime industry. Thisgroup includes members from the two maritime-oriented practice groups as well as lawyersfrom numerous other disciplines, including tax, bankruptcy, environmental, and white collarcriminal law. The goal of this group is to have an established industry-focused team capa-ble of providing specialized advice to our maritime clients in all aspects of their businesses.For more information, please visit www.blankromemaritime.com. �
Ship Mortgages in Favor of “Owners”By Glen T. Oxton
Some transactions, including Frenchtax lease deals, call for a ship mortgagein favor of a shareholder of a corpo-rate shipowner. The typical structureinvolves a shipowner that is a whollyowned subsidiary of a bank, and a shipmortgage is granted to the bank. Thisstructure raises the issue of whether aship mortgage may be granted in favorof an “owner.” Under normal princi-
ples of corporate law, the bank would not be consideredthe owner of the vessel without applying the extraordi-nary remedy of piercing the corporate veil, but this detailhas been ignored by some courts. Some courts and prac-titioners also incorrectly assume that a ship mortgagegives rise to a “maritime lien.” The mistaken applicationof traditional maritime lien rules to ship mortgages createsuncertainty as to the validity and priority of a ship mort-gage granted to a shareholder of the shipowner.
Under the Maritime Lien Act (recodified in 46 U.S.C.§§ 31341-42), providers of necessaries to a vessel aregranted a maritime lien to secure payment. Theshipowner, of course, is obliged to pay for the neces-saries provided to his vessel. Thus, the rule that ashipowner cannot have a maritime lien on his own vessel is a sensible one. The shipowner should notobtain a priority over creditors simply because he haspaid his bills. When there is a corporate shipowner anda shareholder pays for the vessel’s necessaries, the issueis less clear. The separate identity of the corporationshould be respected, but it does not seem equitable topermit a shareholder as an indirect owner to have a pri-ority over other creditors when he benefited indirectlyfrom the provision of necessaries to the ship, and pay-ment for them should have been made from the assetsof his corporation. In The NATCHEZ, 236 F. 588, 591(D. La. 1916), for example, the corporation was dor-mant, there were no other assets, the vessel was laid up,and a shareholder sought a lien for advances made forrepairs to the vessel. The court held that the shareholderwas a virtual owner of the vessel and said “...in these circumstances it would be inequitable in the last degreeto grant a secret lien to the virtual owners of the vesselto the prejudice of the materialmen because of the legalfiction of her ownership by a corporation.”
While it may be reasonable to deny a maritime liento a shareholder who paid for necessaries, the situationis very different if a shareholder makes a bona fide loan
to the shipowning corporation that is secured by a shipmortgage. There are economic and legal differencesbetween a shareholder who pays the provider of neces-saries and hopes to obtain a maritime lien on the vessel,and a shareholder who makes a bona fide secured loanto the corporation. First, there could be no bona fideloan by a shareholder if the shipowner is undercapital-ized. A “loan” made to an undercapitalized corporationshould be deemed to be capital. Second, by recording aship mortgage, the shareholder would be relying on therecodified Ship Mortgage Act, and not on the MaritimeLien Act, for its security. The two statutes have differentbut compatible purposes. The Ship Mortgage Act wasadopted in order to encourage financing of ships, whiletraditional maritime liens are intended to protect localmerchants. By recording the mortgage, subsequentproviders of necessaries are put on notice that there is asenior mortgage lien.
Because ship mortgages give rise to a lien that isenforceable in rem in admiralty, the statutory preferredmortgage lien is often confused with a maritime lien. InSecurity Pacific National Bank v. Pacific Pride, 549 F. Supp53, 54-55 (W.D. Wa. 1982), the court, in dicta, purportedto apply the maritime lien rule to a ship mortgagewithout acknowledging or discussing that it might notbe applicable:
The sole issue here is whether a ship mortgagegranted by a partnership in favor of individualpartners, securing a loan of funds to the partner-ship by those partners, may constitute a validpreferred ship mortgage.*** The opponents ofthis motion correctly point out that the law isclear that owners, part owners, joint venturersand stockholders cannot have a valid maritimelien on any vessel in which they own an interest.
(Emphasis added)
The court refused to permit the partner mortgagees toforeclose the mortgage without a full trial as to the valid-ity and priority of the mortgage. A practical problem wasa major factor in the court’s decision. The partner mort-gagees sought to credit bid at the foreclosure sale, and thecourt could not defer resolution of the issue of validity orpriority until after the sale was conducted.
In fact, the ship mortgage lien is a statutory lien thatbears little resemblance to a traditional maritime lien.This distinction has been recognized by the courts. U.S.v. GOLDEN DAWN, 222 F. Supp. 186 (E.D.N.Y. 1963);Custom Fuel Services, Inc. v. Lombas Industries, Inc., 805F.2d 561 (5th Cir. 1986), (“Custom Fuel”). Maritime liens
GLEN T. OXTON
(continued on page 10)
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Congratulations to Our Chambers 2009 AwardeesWe are pleased to announce that Blank Rome’s shipping and maritime practice was
once again well recognized in the 2009 edition of Chambers USA: America’s LeadingLawyers for Business. We were listed as a “Band 1” firm in three categories: ShippingLitigation (New York); Shipping Litiga tion (Nationwide); and Shipping Regulatory(Nationwide); and also as a top firm in Shipping Finance (Nationwide). Individualsrecognized by Chambers were John Kimball (recognized as a “Star Individual”), LeRoyLambert, Jack Greenbaum, Thomas Belknap, Glen Oxton, and Jonathan Waldron.
Six members of the firm were also recently recognized in The International Who’s Whoof Shipping & Maritime Lawyers, including John Kimball and LeRoy Lambert who were ontheir 2009 list of “Most Highly Regarded Individuals,” as well as Richard Singleton, JeremyHarwood, Jonathan Waldron, and Jeanne Grasso.
Blank Rome also received national practice rankings in Investment Funds: Venture Capital and was recognized in both Pennsylvania and Delaware in Bankruptcy/Restructuring. In Pennsylvania, Blank Rome achieved six practice rankings (includingthree #1 rankings), including Banking & Finance, Corporate/M&A & Private Equity,Labor & Employment, Litigation, and Real Estate. �
The International Maritime Litigation and ADR Practice GroupBlank Rome LLP is constantly changing to meet the needs of its clients. To this end, the
firm has created a new practice group to better serve our clients’ dispute resolution needsin international and mari time matters. The new group is focused entirely on counseling andrepresenting our clients in maritime litigation, international commercial litigation, and arbi-tration and other forms of alternative dispute resolution. The group is headed by formerHealy & Baillie chairman John Kimball and combines the strengths of many of the formerHealy & Baillie partners and associates with a number of Blank Rome veterans. The practicegroup is divided into three core sections: Richard Singleton (New York), Thomas Belknap(New York), and Peter Mills (Hong Kong) lead the maritime litigation section; JeremyHarwood (New York), Stephen Orlofsky (New Jersey), and Martin Downey (Hong Kong) arethe team leaders for the ADR group; and Cameron Beard (New York) and Andrew Hart(Hong Kong) spearhead the international litigation section.
The creation of this new group means that Blank Rome LLP now has two practice groupsdedicated to maritime matters. The other group is the Maritime, International Trade andPublic Contracts group, headed by Brett Esber (DC), which concentrates on governmental regulation of the maritime industry and trade; environmental crimes; and maritime corpo-rate, finance, and transactional matters. The two groups together total some 40+ lawyers, making it the largest maritime practice in the United States.
Blank Rome LLP also has a dedicated industry group to serve the maritime industry. Thisgroup includes members from the two maritime-oriented practice groups as well as lawyersfrom numerous other disciplines, including tax, bankruptcy, environmental, and white collarcriminal law. The goal of this group is to have an established industry-focused team capa-ble of providing specialized advice to our maritime clients in all aspects of their businesses.For more information, please visit www.blankromemaritime.com. �
Ship Mortgages in Favor of “Owners”By Glen T. Oxton
Some transactions, including Frenchtax lease deals, call for a ship mortgagein favor of a shareholder of a corpo-rate shipowner. The typical structureinvolves a shipowner that is a whollyowned subsidiary of a bank, and a shipmortgage is granted to the bank. Thisstructure raises the issue of whether aship mortgage may be granted in favorof an “owner.” Under normal princi-
ples of corporate law, the bank would not be consideredthe owner of the vessel without applying the extraordi-nary remedy of piercing the corporate veil, but this detailhas been ignored by some courts. Some courts and prac-titioners also incorrectly assume that a ship mortgagegives rise to a “maritime lien.” The mistaken applicationof traditional maritime lien rules to ship mortgages createsuncertainty as to the validity and priority of a ship mort-gage granted to a shareholder of the shipowner.
Under the Maritime Lien Act (recodified in 46 U.S.C.§§ 31341-42), providers of necessaries to a vessel aregranted a maritime lien to secure payment. Theshipowner, of course, is obliged to pay for the neces-saries provided to his vessel. Thus, the rule that ashipowner cannot have a maritime lien on his own vessel is a sensible one. The shipowner should notobtain a priority over creditors simply because he haspaid his bills. When there is a corporate shipowner anda shareholder pays for the vessel’s necessaries, the issueis less clear. The separate identity of the corporationshould be respected, but it does not seem equitable topermit a shareholder as an indirect owner to have a pri-ority over other creditors when he benefited indirectlyfrom the provision of necessaries to the ship, and pay-ment for them should have been made from the assetsof his corporation. In The NATCHEZ, 236 F. 588, 591(D. La. 1916), for example, the corporation was dor-mant, there were no other assets, the vessel was laid up,and a shareholder sought a lien for advances made forrepairs to the vessel. The court held that the shareholderwas a virtual owner of the vessel and said “...in these circumstances it would be inequitable in the last degreeto grant a secret lien to the virtual owners of the vesselto the prejudice of the materialmen because of the legalfiction of her ownership by a corporation.”
While it may be reasonable to deny a maritime liento a shareholder who paid for necessaries, the situationis very different if a shareholder makes a bona fide loan
to the shipowning corporation that is secured by a shipmortgage. There are economic and legal differencesbetween a shareholder who pays the provider of neces-saries and hopes to obtain a maritime lien on the vessel,and a shareholder who makes a bona fide secured loanto the corporation. First, there could be no bona fideloan by a shareholder if the shipowner is undercapital-ized. A “loan” made to an undercapitalized corporationshould be deemed to be capital. Second, by recording aship mortgage, the shareholder would be relying on therecodified Ship Mortgage Act, and not on the MaritimeLien Act, for its security. The two statutes have differentbut compatible purposes. The Ship Mortgage Act wasadopted in order to encourage financing of ships, whiletraditional maritime liens are intended to protect localmerchants. By recording the mortgage, subsequentproviders of necessaries are put on notice that there is asenior mortgage lien.
Because ship mortgages give rise to a lien that isenforceable in rem in admiralty, the statutory preferredmortgage lien is often confused with a maritime lien. InSecurity Pacific National Bank v. Pacific Pride, 549 F. Supp53, 54-55 (W.D. Wa. 1982), the court, in dicta, purportedto apply the maritime lien rule to a ship mortgagewithout acknowledging or discussing that it might notbe applicable:
The sole issue here is whether a ship mortgagegranted by a partnership in favor of individualpartners, securing a loan of funds to the partner-ship by those partners, may constitute a validpreferred ship mortgage.*** The opponents ofthis motion correctly point out that the law isclear that owners, part owners, joint venturersand stockholders cannot have a valid maritimelien on any vessel in which they own an interest.
(Emphasis added)
The court refused to permit the partner mortgagees toforeclose the mortgage without a full trial as to the valid-ity and priority of the mortgage. A practical problem wasa major factor in the court’s decision. The partner mort-gagees sought to credit bid at the foreclosure sale, and thecourt could not defer resolution of the issue of validity orpriority until after the sale was conducted.
In fact, the ship mortgage lien is a statutory lien thatbears little resemblance to a traditional maritime lien.This distinction has been recognized by the courts. U.S.v. GOLDEN DAWN, 222 F. Supp. 186 (E.D.N.Y. 1963);Custom Fuel Services, Inc. v. Lombas Industries, Inc., 805F.2d 561 (5th Cir. 1986), (“Custom Fuel”). Maritime liens
GLEN T. OXTON
(continued on page 10)
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regulates all usage of PCBs in amounts higher than 50parts per million. Under TSCA, the United States cannotexport PCBs in regulated quantities, and through a courtdecision and U.S. policy, the export of a vessel contain-ing PCBs in banned amounts has been construed to bean export prohibited under TSCA (unless EPA grants awaiver). If ratified, the Convention would give Congressthe opportunity to establish a policy for the disposal ofU.S. merchant ships which heretofore has not directlybeen addressed.
ConclusionIf the major recycling nations such as India,
Bangladesh, and Pakistan ratify the Convention, itwould certainly go a long way to improving current shipdisposal conditions in those countries. If any of themajor scrapping countries were to eventually developtruly green recycling yards, the impediment to sendingships to those countries for disposal would seem to beremoved. However, funding and implementation willcontinue to be issues. �
At the end of the ship’s useful life, a Ready forRecycling Certificate will need to be completed that certifies, among other things, that the ship has been surveyed for hazardous materials, that it has a currentinventory of hazardous materials onboard, and that theship recycling facility where the ship will be recycledholds a valid authorization in accordance with theConvention. Each ship recycling facility must be author-ized by the Competent Authority of the State in whichit is situated. Authorization and operation is contingentupon satisfaction of environmental and safety require-ments, including the safe management of hazardousmaterials and worker protection measures (e.g., the estab-lishment of “safe-for-entry” and “safe-for-hot-work”conditions throughout recycling and the use of personalprotective equipment). These requirements and othersmust also be accounted for in the Ship RecyclingFacility Plan. In addition, facilities must seek explicit ortacit approval (according to election under nationallaw) of ship specific “Ship Recycling Plans” prior to the commencement of recycling.
A key aim of the Convention is to promote workerprotection, but, according to its critics, the Conventiondid not go far enough. In the late 1990s, a series ofBaltimore Sun newspaper articles introduced the worldto the shipbreaking industry and focused its attentionon the deplorable health and environmental conditionsthat went hand-in-hand with this necessary resourcereclamation function. While conditions in these facilitieshave slowly improved, the Convention does not bancertain practices used in ship recycling nations, such asIndia and Bangladesh that traditionally dispose of shipsby beaching them and manually dismantling them inpoor conditions rather than in dry docks. For thisreason, NGOs, such as Greenpeace and Friends of theEarth, are not satisfied with the final text.
Analysis From a logistical standpoint, it remains to be seen
how the United States would enforce the Conventiononce it enters into force. Presumably, the Coast Guardwould be responsible for conducting the surveys andissuing the Certificates of Inventory of HazardousMaterials and Ready for Recycling Certificates, and theEnvironmental Protection Agency (EPA) would beresponsible for approving the ship recycling facilityplans. The Maritime Administration would likely be atechnical advisor.
Congress also would have to address the relationshipbetween the Convention and the Toxic SubstancesControl Act of 1976 (TSCA), (15 U.S.C. §§ 2601, et. seq.),which specifically bans the introduction of PCBs and
inequitable conduct, the court appeared to accept thatin the absence of bad faith or fraud, compliance with thestatutory requirements and the existence of a valid debtwould establish the validity of a ship mortgage. If thereis inequitable conduct related to an “owner’s” mortgage,it will become an issue of the priority accorded to themortgage lien, not its validity.
In Custom Fuel, the shipowner was a wholly ownedsubsidiary of a bank. The bank loaned the shipowner100% of the subsidiary’s purchase price of the vessel andtook back a ship mortgage. The vessel was then bareboatchartered to a vessel operator. After incurring repair lienson the vessel, the charterer became insolvent, and thebank commenced a foreclosure action against the vessel.The court found that it would be inequitable to permitthe mortgagee bank to obtain in foreclosure the fullvalue of the vessel to the exclusion of the repair yard.The court analyzed the 100% mortgage amount and thenominal $1,000 capital of the shipowner and concludedthat the shipowner was inadequately capitalized. As aresult, the court applied the doctrine of equitable subor-dination to give the repair yard’s maritime lien priorityover the mortgage. The issue of the reasonableness ofcapital is normally analyzed at the time a transaction isinitiated, and presumably, had the mortgage beenrecorded for only 75% of the purchase price, the courtwould not have found the shipowner to be inadequatelycapitalized even if the outstanding loan amount at thetime of foreclosure exceeded the value of the vessel.
Loss of priority for a foreign flag vessel would nor-mally be of little consequence in the United Statesbecause ship mortgages on foreign flag vessels are subor-dinate to maritime liens in favor of those providing necessaries in the U.S. There are, however, provisions inthe Maritime Laws of each of the Marshall Islands andLiberia that uncertainty not only as to priority, but alsoas to the validity of a mortgage to an “owner.”
The Liberian Maritime Law was adopted in 1949,and was modeled on the U.S. maritime statutes. It incor-porates by reference the general maritime law of theUnited States to the extent not inconsistent with theLiberian statutes. In 1990, the Marshall Islands adopteda Maritime Law that followed very closely the Liberianstatute. Both statutes state that “A preferred mortgageshall constitute a maritime lien on the mortgagedvessel…” Liberian Maritime Law § 107; Marshall IslandsMaritime Act § 311. The origin of the insertion of “maritime” in the adoption of the U.S. statutory provi-sions is unclear. The original Ship Mortgage Act statedthat “A preferred mortgage shall constitute a lien on themortgaged vessel...” Ship Mortgage Act, 1920, SubsectionK. This section was recodified in 46 U.S.C. § 31325,
are secret liens, whereas ship mortgages must be recordedin a public registry. Maritime liens rank in inverse orderto the time they are incurred while the priority of shipmortgages is based on the first to be filed. Unlike mar-itime liens, ship mortgages are not subject to laches.
The Ship Mortgage Act, recodified in 46 U.S.C. §§31301-30, consistently refers to the mortgage lien as a“preferred mortgage lien,” or a “mortgage lien.” Section31325 states that “A preferred mortgage is a lien on themortgaged vessel…”. Nowhere in the Act is the mort-gage lien characterized as a “maritime lien.” Indeed,Section 31326 recognizes that a mortgage lien is not amaritime lien: “When a vessel is sold…to enforce a pre-ferred mortgage lien or a maritime lien…the vessel issold free of all those claims.”
Rules governing maritime liens, including the rulequoted above from the Pacific Pride case, are not applica-ble to ship mortgages. The criteria for reviewing thevalidity and the priority of ship mortgages to “owners”were established in Custom Fuel. While stating thatmortgages to “owners” must be closely scrutinized for
Ship Mortgages (continued from page 9)
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RescueToThe
New Ship Recycling Convention on the HorizonBy Joan M. Bondareff and Charles T. Blocksidge
On May 15, 2009, sixty-threenations, including the United States,acting through the auspices of theInternational Maritime Organization(IMO), adopted a new convention inHong Kong to regulate the manage-ment and disposal of ships containinghazardous materials. Entitled the HongKong International Convention forthe Safe and Environmentally SoundRecycling of Ships, 2009 (Convention),the Convention represents the firstinternational agreement specificallyfocused on the combined subjects ofthe recycling of merchant ships andthe protection of human health andthe environment, throughout a ship’soperating life. The scrapping of ships,
which is primarily for resource reclamation purposes, con-tinues to be a viable business in certain countries through-out the world—in 2008 alone, approximately 1,000 shipswere recycled or disposed of for scrap. Additionally, giventhe impending phase out of single hull tankers, the per-centage of the world’s fleet slated for scrapping is due tosignificantly increase in the coming years.
Entry into ForceBefore the Convention can enter into force, it must
be ratified by 15 nations with a combined fleet of notless than 40% of the gross tonnage of the world’s mer-chant shipping. Additionally, the combined maximumannual ship recycling volume (evaluated over the pre-ceding 10 years) of the States satisfying the ‘number ofstates’ requirement accounts for 3% of the gross tonnageof those States’ combined merchant shipping. This qualifier is an unusual addition to ratification, but certainly ensures that the countries most impacted bythe Convention have the most say in its success. TheConvention is open for signature from September 1,2009 to August 31, 2010. It remains to be seen as towhether or not the United States will become a Party tothe Convention.
Government Ships ExemptIf the Convention enters into force and is ratified by
the United States, it will apply to U.S.-flag ships over 500GT and to ship recycling facilities within the jurisdictionof the United States. The agreement exempts govern-ment ships and those ships operating, throughout their
respective lifetimes, solely in waters subject to the sover-eignty or jurisdiction of a Single Party. However, partiesare encouraged to act consistent with the purposes of theConvention for exempt ships. The Convention regulatesthe management of hazardous materials on ships fromcradle to grave through a series of government-requiredsurveys, inspections, and certificates of compliance; andregulates the ship recycling activities of facilities throughan authorization process and a ship-specific recycling planapproval process. To be suitable for authorization andoperations, facilities must meet substantive requirementsestablished under the Convention and engage in planningprocesses. For the Convention to come into force for theUnited States, it will require not only Senate approval, butmore likely implementing legislation as discussed below.
Key RequirementsEach party to the Convention will be required to
conduct a survey of its ships subject to the Convention,and prepare Certificates on Inventory of HazardousMaterials to accompany the ship during its lifetime andbefore it goes for recycling. An International Certificateon Inventory of Hazardous Materials may be issued fora period of 5 years or less; Part I of the Inventory ofHazardous Materials must be updated and maintainedthroughout the operational life of the ship. This inven-tory will include the ship’s particulars, and will certifythat the ship complies with the Convention’s controlson hazardous materials, as well as keep track of the specific hazardous materials listed in the Convention,including lead, mercury, radioactive substances, and certain chlorinated paraffins. There are also particularcontrols contained in the Convention concerning thefollowing hazardous materials:
• Asbestos – the new installation of materials con-taining asbestos is prohibited for all ships.
• PCBs – the new installation of materials containingPCBs is prohibited for all ships.
• Ozone-depleting substances – new installations thatcontain ozone-depleting substances shall be pro-hibited on all ships, except new installations ofhydrochlorofluorocarbons, which are permitteduntil January 1, 2020.
• Anti-fouling compounds – neither new or existingships may apply anti-fouling compounds, whoseapplication is prohibited by the InternationalConvention on the Control of Harmful Anti-Fouling Systems on Ships, 2001 (AFS). Compoundsmay not be used in a manner inconsistent with theAFS Convention on new ships or new installationson existing ships.
CHARLES T. BLOCKSIDGE
JOAN M. BONDAREFF
quoted above, in which “is” was substituted for “shallconstitute.” The references to the mortgage lien in theother sections of the Liberian and Marshall Islands lawsare similar to those in the U.S. statute, and in mostplaces it is referred to as a “preferred mortgage lien.”
Except for the characterization of the ship mortgagelien as a “maritime lien”, ship mortgages under the lawsof both Liberia and the Marshall Islands have the samecharacteristics as the U.S. ship mortgage when comparedto maritime liens. Thus, it is probable that the character-ization is an error by the draftsmen of the Liberian andMarshall Islands statutes. Until the error is corrected,however, there remains uncertainty as to the treatmentof ship mortgages in favor of a shareholder of theshipowner in Liberia and the Marshall Islands. In lightof these provisions, it is not clear whether the rule of
Pacific Pride or Custom Fuel is to be incorporated byreference into Liberian and Marshall Islands law. Thesestatutory provisions leave open the possibility that suchmortgages would be held to be invalid under themaritime lien rule that an “owner” may not have a lienon his own ship. Whereas, under the U.S. statute and theCustom Fuel decision, the consequence is that the trans-action will be subject to special scrutiny for inequitableconduct, and in the worst case there would be a lossof priority. �
This article was first published in Benedict’s MaritimeBulletin, Vol. 7, No. 1, First Quarter 2009, p. 16.
Blank Rome’s Maritime Bankruptcy Group has an
unmatched ability to provide a one stop solution to
help clients through the four stages of what can be a
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any business founderingscan be avoided or mitigated byearly risk assessment, evaluationof alternatives, and restructuring.
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Nicholas J. Healy, Pre-EminentMaritime Attorney, Dies at 99
Nicholas J. Healy, who was widely regarded as thefinest maritime attorney in the United States, died inBantry, County Cork, Ireland on Wednesday, May 20,of natural causes. He was 99 years old.
Mr. Healy was a founding partner of the distin-guished admiralty law firm Healy & Baillie LLP, estab-lished on St. Patrick’s Day, 1948. The firm combinedwith Blank Rome in 2006. He was president of theMaritime Law Association from 1964 to 1966, honoraryvice president and former vice president of the ComiteMaritime International (CMI), and served on the boardof directors of Victory Carriers.
He was best known in the admiralty law field for hiswork with British P&I Clubs. He was involved with manyof the major shipping collision cases of the last half ofthe 20th Century—including the Amoco Cadiz and theTorrey Canyon cases. He was even involved with the RMSTitanic. Although the legendary ship sank in 1912 andsuits involving it had long been settled, Mr. Healy wasenlisted as an expert to give testimony in 2000 in a sal-vage case involving the ship’s wreckage.
A prolific writer, he co-authored numerous booksincluding Cases of the Law of Admiralty (1950), which ispart of the American Casebook series published byWest. He co-authored four editions of Admiralty: Casesand Materials, first published in 1965; the most recentedition, called Cases on Admiralty, was published threeyears ago by Thomson West. In 1998, The Law of MarineCollision, co-authored with Joseph C. Sweeney, was pub-lished by Cornell Maritime Press. He wrote numerousarticles for the MLA Journal as well as the entry on“maritime law” for the Encyclopedia Britannica. He servedon the board of the Journal of Maritime Law andCommerce and as its editor in chief from 1980 to 1988.
As adjunct professor at New York University, hetaught the course in admiralty law for so manyyears–39–that a preponderance of American maritimelawyers were taught by him or taught by someone whowas taught by him. In 1991, a biennial Nicholas J. HealyLecture on Admiralty Law was established at New YorkUniversity Law School; the ninth Healy Lecture washeld this past May. He also gave courses and lectures inadmiralty law at Tulane University, Temple University,and Shanghai Maritime University.
Nicholas Joseph Healy was born on January 4, 1910.His namesake father, an amateur thespian, was presidentof the Catholic Repertory Theater and owned one of thegreat collections of dramatic literature. The collection—
some 10,000 volumes—was sold to Clare Booth Luce andis now housed in the library at Catholic Universityin Washington, D.C. that bears her name. His great-grandfather emigrated to the United States from Irelandaround 1830 and established a livery service company.
Mr. Healy graduated from Regis High School in NewYork City in 1927, from Holy Cross College in Worcester,Massachusetts in 1931, and from Harvard Law School in1934. He sang with the Friendly Sons of St. Patrick GleeClub for more than 50 years, was a lifelong member ofthe Society of the Sons of St. Patrick, and a member ofIndia House and the Harvard Club.
In 1942, Mr. Healy obtained a commission in theUnited States Naval reserve, then went on active duty until1945, earning the rank of Lieutenant (Senior Grade). Hespent the war years at the U.S. Department of Justice, work-ing on collision cases for its admiralty section.
His wife, Margaret Ferry, predeceased him in 2003after 66 years of marriage. He is survived by his six chil-dren: Nicholas Jr. of Naples, Florida; Margaret Parker ofGlen Rock, New Jersey; Rosemary Bell of Naples,Florida; Mary Louise White of Garden City, New York;Donall Healy of New York City; Kathleen Hamon ofHarrisville, New Hampshire; and by 21 grandchildren,21 great-grandchildren, and his sister Marjorie Borden ofKing of Prussia, Pennsylvania.
Contributions can be made to the Nicholas J. HealyLecture on Admiralty Law, Development Office, New YorkUniversity, 161 Avenue of the Americas, NY, NY 10013. �
Types of Claims All types of monetary claims, including maritimeclaims.
“Maritime” claims.
(For non-maritime claims, the applicant mustuse state court attachment procedures, whichare broadly similar to those of the Marevainjunction).
Undertaking An undertaking is required to be given to thedefendant for the loss and/or damage that maybe suffered by the defendant in the event thatthe order is subsequently discharged.
An undertaking to a third party for the costsand expenses incurred and the loss and/or damage suffered, if any, as a result of complyingwith the order.
Not required.
Application Documents By affidavit, attaching a writ or a draft writ, setting out:
(a) the details of the claims, the amount and thepoints for and against the application (fulland frank disclosure);
(b) reasonable belief that the defendant hasassets within the jurisdiction; and
(c) there is a real risk of dissipation of the assets.
By affidavit, showing that the defendant cannotbe “found” in the district, accompanied by averified complaint alleging a “maritime” claim.
Requirements (a) a good arguable case(b) a real risk of dissipation of assets(c) urgency
(a) A prima facie “maritime” claim.
The defendant cannot be “found” in the judicialdistrict, but has property in that district.
(To be “found” in a district, the defendant mustbe doing business there and have an agent forservice of process in that district).
Purpose To freeze the defendant’s assets, preventing thedefendant from removing its assets out of thejurisdiction, so as to defeat the judgment.
Attachment of assets, including electronic fundstransfers, of a defendant within the jurisdiction.
Proceedings afterGrant of Order
Costs
The Court may set the return date of when theparties will appear before the Court and theplaintiff will show cause. The Court may vary ordischarge the order, if necessary.
If property is attached, prompt notice must begiven to the defendant, and the defendant isentitled to a prompt post-attachment hearing atwhich the plaintiff has the burden to show thatthe attachment is proper.
Costs may be relatively high/expensive. A gooddeal of information and disclosure is required tobe given to the Court to support the application.
Costs for obtaining Rule B are generally low.
Basis of Application In order for it to be effective, it must be swift and secret, so it is always applied and grantedex-parte.
The application is made and granted ex-parte.
FREEZING ORDER RULE B ATTACHMENT
NICHOLAS J. HEALY
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effectively reverses the House of Lords’ decision inSiskina in which Lord Diplock stated that an interiminjunction was not a cause of action by itself and couldnot stand on its own, but was ancillary and incidental toa pre-existing cause of action. Although this decision didnot go without attracting criticism, it had been generallyfollowed by the Hong Kong Courts. No more.
Current PositionNowadays, monies can be transferred electronically
and goods can move across borders very quickly. TheHong Kong “view” now appears to be that it is a com-mercial necessity for Courts of different jurisdictions toco operate and assist each other to prevent foreigndefendants from defeating a judgment by transferring or moving assets out of the jurisdiction.
The following examples are circumstances where itnow may technically be possible to apply in Hong Kongfor an injunction:
• A Panamanian shipowner enters into a charterpartywith a Bangladesh charterer for the chartering of avessel. The charterer defaults by failing to pay hire.The charterparty is governed by English law, withany disputes to be referred to arbitration in London.The charterer has no assets, save for monies in abank account in Hong Kong. The shipowner cannow apply to the Hong Kong Court for an injunc-tion/freezing order to restrain the charterer fromdealing with the monies in the bank account.
• A Chinese shipping company charters vessels fromvarious German shipowners. The shipping companydefaults by failing to pay hire relating to variousvessels. The shipowner discovers that the shippingcompany has set up BVI companies to hold realproperty in Hong Kong. The shipowner can applyfor an injunction/freezing order prohibiting theshipping company and the BVI companies fromselling the real property and also removing anyrental monies from Hong Kong bank accounts.
• The plaintiff is incorporated in California. The defen-dant is a BVI registered investment company. Theplaintiff alleges that it was persuaded to enter into afraudulent scheme to invest in a deal to purchase ahospital in Los Angeles. The plaintiff commencescivil action in California. Through discovery pro-ceedings, the plaintiff manages to obtain informationthat his investment monies were remitted to thedefendant’s bank account in Hong Kong. The plain-tiff can apply to the Hong Kong Court for an injunc-tion/freezing order against the defendant to restrainthe defendant from dealing with, or disposing of, thefunds in the Hong Kong bank account.
• The Plaintiff is a Singaporean investment companyand the defendant was an employee of the same. Theplaintiff received client complaints that the defen-dant carried out unauthorized shares transactionsthat resulted in substantial losses to the clients. Thedefendant disappeared and the plaintiff was unableto contact him. The plaintiff commenced legal pro-ceedings in Singapore seeking damages from thedefendant. After a series of asset tracing exercises, it isfound that a substantial sum of monies was trans-ferred from the defendant’s bank account inAustralia to his wife’s father’s bank account in HongKong. The plaintiff can commence legal proceedingsin Hong Kong to apply for an injunction/freezingorder against the defendant and his father-in-lawfrom removing the monies out of the bank account.
Prior to the enactment of CJR, it would have beendifficult to have successfully pursued and frozen assetsin the examples set out above.
While the enactment of CJR may not result in HongKong becoming a “hot spot” like New York (with regardto the use of Rule B actions), it is thought that the num-ber of applications for injunctions/freezing orders to theHong Kong Courts may well increase.
A comparison between the two jurisdictions is setout in the table on the next page.
Arbitration Clause; (2) it is well established underEnglish law that there can be more than one nationalsystem of law bearing upon an international arbitration—the substantive law and the procedural law; (3) in thiscase the substantive rights and duties of the parties weregoverned by English Law and the procedure of the arbi-tration was governed by Hong Kong law, where the arbi-tration will take place; and (4) according to the HongKong Arbitration Ordinance, the parties should send anapplication to the Hong Kong International ArbitrationCentre to determine the number of arbitrators.
The Supreme Court concluded that the arbitrationclause was valid and binding on the parties underEnglish Law and Hong Kong Law, and that SMC did nothave jurisdiction over the merits of the disputes. Thejudgment of SMC was thus reversed and the Compliantdismissed.
Although this is not a binding precedent decision, itwill provide a guideline to the lower Courts upon anumber of issues including:
• choice of law;
• the admission of foreign legal expert opinion; and
• the enforceability of a contractual arbitration clause.
While Courts in China have a reputation for prefer-ring to keep jurisdiction, this case may reflect an increasedwillingness to uphold a contractual arbitration clausebetween the direct contracting parties and to deny theirown jurisdiction on the merits.
The admission of foreign expert legal opinion in theChinese Courts is not straight forward and this processrequired strict adherence with the admission rules. �
Shanghai Court UpholdsHong Kong Arbitration Clause
By Grace Hou
Shanghai People’s Supreme Court(the “Court”) recently upheld thevalidity of a Hong Kong arbitrationclause in a fixture note between char-terer Lu Qin (Hong Kong) Co. Ltd.(the “Charterer”) and owner SinotransGuangdong (the “Owner”).
The case arose when the Chartererinitiated an action in the Shanghai
Maritime Court (“SMC”) against the Owner for charterparty disputes, ignoring Clause 17 of the subject fixturenote which provided “ARBITRATION IN HONG KONGAND ENGLISH LAW TO APPLY.” The Owner moved tocompel the Charterer into arbitration. SMC ruled thatthe PRC law shall be the governing law in determiningthe effectiveness of the Arbitration Clause. It furtherdenied the Owner’s motion on the ground that theArbitration Clause failed to stipulate the arbitrationtribunal, and to specify the number of arbitrators, and wastherefore invalid under the Arbitration Law of the PRC.
The Owner appealed. Before the Shanghai People’sSupreme Court, the Owner submitted a legal “expert”opinion prepared by Blank Rome partner NigelBinnersley on the pertinent issues of English and HongKong law. Noting that the arbitration clause was mutu-ally agreed upon by the parties, the Shanghai People’sSupreme Court recognized and accepted that: (1) Englishlaw should be applicable on the interpretation of the
GRACE HOU
Freezing Orders and Injunctions (continued from page 3)
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APPENDIX A
MODEL RULE B ORDER
Issued By the Judicial Improvements Committee of the United States District Courtfor the Southern District of New York on April 3, 2009
On , Plaintiff, ABC, INC., filed a Verified Complaint in the captioned action seeking damages of
US$ inclusive of interest, costs, and reasonable attorneys’ fees, and seeking the issuance of Process of Maritime
Attachment and Garnishment pursuant to Rule B of the Supplemental Admiralty Rules for Certain Admiralty and Maritime Claims of
the Federal Rules of Civil Procedure.
The Court has reviewed the Verified Complaint and the Supporting Affidavit of dated and
finds that the conditions of Supplemental Admiralty Rule B appear to exist.
The Affidavit of has demonstrated [to the Court’s satisfaction] that the Defendant regularly sends
funds to others, which funds are routed electronically (electronic funds transfers) through New York banks.
ACCORDINGLY, IT IS HEREBY
[1A] OPTION A. ORDERED, that Process of Maritime Attachment and Garnishment shall issue against all tangible or
intangible property belonging to or being held for Defendant by any garnishee identified in Schedule A to this Order, upon whom a
copy of the Process of Maritime Attachment and Garnishment may be served, including but not limited to funds representing elec-
tronic fund transfers originated by Defendant at the time of service, in an amount of up to US$ pursuant to Rule B
of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure; and it is further,
OR
[1B] OPTION B. ORDERED, that Process of Maritime Attachment and Garnishment shall issue against all tangible or
intangible property belonging to or being held for Defendant by any garnishee identified in Schedule A to this order, upon whom a
copy of the Process of Maritime Attachment and Garnishment may be served, including but not limited to funds representing
Freezing Orders and InjunctionsUnder the Hong Kong Civil Justice Reform
By Nigel J. Binnersley and Daniel Lee
We regularly receive inquiries fromlawyers and clients worldwide askingwhether it is possible to freeze bankaccounts or seize assets in Hong Kongin aid of foreign proceedings. In mostcases, the defendant is not a residentin Hong Kong but may have bankaccounts or other assets in the territory.Until recently, the usual advice wasthat if the substantive proceedings orthe defendant itself had no connec-tion to Hong Kong, it was unlikelythat the Hong Kong Courts wouldexercise jurisdiction to grant a pre-judgment injunction/freezing order inaid of foreign proceedings. That posi-tion has now changed, however, andchanged quite radically.
Hong Kong is undergoing a process of Civil JusticeReform. This came into effect on April 2, 2009. TheHong Kong Courts now have clear statutory power togrant interim injunctions against a foreign defendantwho has assets located within Hong Kong, regardless ofwhether or not the substantive dispute has a nexus withHong Kong or the defendant is domiciled or present. Aclaimant can therefore now apply to the Hong KongCourts for a “Mareva”/freezing order style injunction torestrain a defendant from dealing with or disposingwholly of its assets, whether they are monies on account,goods, or real properties, etc. Any third party that holds,possesses, or has control of such assets are also subject tothe injunction proceedings.
Civil Justice Reform (“CJR”)The issue as to whether the Hong Kong Courts
should have power to grant interim relief—including aninterim injunction in aid of foreign proceedings—wasreviewed prior to the enactment of CJR. The general viewin the legal community was in support of such reform.
In order to accomplish this, amendments were madeto the High Court Ordinance and Arbitration Ordinanceso that the Hong Kong Courts now have the power togrant interim relief in the absence of substantive pro-ceedings—including an interim injunction—against thedefendant, restraining it from dealing with its assetswithin the Hong Kong High Court jurisdiction. This
The judges apparently also could not agree onwhether to require service by the Marshall or to allowservice by a substitute process server, as is contemplatedby the rules. Here again, the Judicial ImprovementsCommittee has left it up to the individual judges todecide at the time the order is issued. Anecdotally, initialindications seem to be that most judges will not requireservice by a U.S. Marshall. This trend will need to beclosely monitored, however, in the coming months.
The model order gives the garnishee bank the right torequire payment of a “reasonable fee for processing thisattachment, as determined by each garnishee.” Citibankhas already started charging a $300 administrative fee, andJP Morgan has recently followed suit with its own admin-istrative fee. Others are certain to follow suit shortly. Itremains to be seen how this will be administered/collectedand when, and what, “reasonable” is.
The new model order does not “order” the banks toaccept supplemental electronic service, nor does it orderthat service shall be deemed continuous throughout theday on which it is served. These are important changes tothe practice up to now. The garnishee bank may still con-sent to daily service by fax or by email and may also consent to have service be effective for up to 60 days. If thebanks do not consent to accept electronic service, how -ever, service must be made “personally” upon the bank,presumably by the same means as for initial service(i.e., U.S. Marshall or process servers). And if banks do notagree to deem service continuous, then it will be necessaryto effect multiple services within the same day. Obviously,this could dramatically increase the costs.
The model order contains a provision requiringthe garnishee to advise the name of the originator, thebeneficiary, and any details about the purpose of thetransaction. At present, some banks provide such infor-mation willingly and others are not so cooperative.
The model order provides that it will automaticallyexpire in 60 or 90 days (the judge chooses), with the pos-sibility of an extension for an additional 60 days upon ashowing of “good cause” and further extensions upon ashowing of “extraordinary circumstances.” It furtherrequires that arbitration be commenced at the latest with-in 45 days of the date of the order. Thus, a party shouldnot commence a Rule B action unless/until it is substan-tially ready to proceed on the merits in the chosen forum.
ConclusionIn some ways, the model order helps to clarify and
unify the practice, but in many import respects it raisesat least as many problems as it solves. It is clear that thepractice will continue to evolve at lightning pace, how-ever, and it is equally clear that the industry will have tobe prepared to continue to adapt to shifting sands. �
NIGEL J. BINNERSLEY
DANIEL LEE
UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK
ABC,Plaintiff,
-against-XYZ,
Defendant.
09 Civ.
ORDER DIRECTING CLERK TOISSUE PROCESS OF MARITIMEATTACHMENT AND GARNISHMENTAND APPOINTING PROCESS SERVER
(continued on page 4)
electronic fund transfers originated by, payable to, or otherwise for the benefit of Defendant at the time of service, in an amount of
up to US$ __________, pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal
Rules of Civil Procedure; and it is further,
[2] ORDERED, that any person claiming an interest in any property attached or garnished pursuant to this Order shall,
upon application to the Court, be entitled to a prompt hearing at which the Plaintiff shall be required to show why the attachment
and garnishment should not be vacated; and it is further,
[3A] OPTION A. ORDERED, that the United States Marshal or his designee shall serve this Order and Process of Maritime
Attachment and Garnishment on any garnishee identified in Schedule A to this Order and on such additional garnishees as so
permitted herein; and it is further,
OR
[3B] OPTION B. ORDERED, that any person at least 18 years of age and not a party to this action, employed with or
appointed by ______________, be and hereby is appointed to serve this Order and Process of Maritime Attachment and
Garnishment on any garnishee identified in Schedule A to this Order and on such additional garnishees as permitted herein; and it is
further,
[4] ORDERED, that supplemental process specifying other or additional garnishees and enforcing the Court’s Order may
not be issued by the Clerk without further Order of the Court; and it is further,
[5] ORDERED, that initial service by the United States Marshal (option A) or other designated process server (option B)
shall be made personally upon each garnishee; and it is further,
[6] ORDERED, that at the request of the garnishee, plaintiff is required to pay a reasonable fee for processing this
attachment, as determined by each garnishee; and it is further,
[7] ORDERED, that a copy of this Order be attached to and served with initial service of the Process of Maritime
Attachment and Garnishment upon each garnishee; and it is further,
[8] ORDERED, that pursuant to Federal Rule of Civil Procedure 5(b)(2)(E) and/or (F), any garnishee may consent to deem
service to be effective and continuous for any period of time not to exceed 60 days from the date of this order. Such consent may be
manifested in the garnishee’s rules, policies or other instructions regarding service; and it is further,
[9] ORDERED, that following initial service as described above, if any supplemental service of the Process of Maritime
Attachment and Garnishment is required, it shall be made personally, unless the garnishee consents to service by way of facsimile
transmission to a fax number designated by the garnishee for that purpose. Supplemental service can also be made by e-mail or other
means if consented to by the garnishee pursuant to Fed. R. Civ. P. 5(b)(2)(E) and/or (F). Such consent may be manifested in the
garnishee’s rules, policies or other instructions regarding service; and it is further,
[10] ORDERED, that any garnishee served with this Order, upon determining that it is in possession of any property which
may be subject to this Order, shall, as soon thereafter as is practicable, advise the plaintiff of such details about the attachment as
are reasonably available to it. With respect to the attachment of an electronic funds transfer, the garnishee shall, to the extent known,
advise counsel for the plaintiff of the following details: (1) amount of funds attached, (2) the exact name of the originator and
beneficiary as reflected in the wire transfer information, (3) any available details about the purpose of the transfer (e.g., contained in
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Other decisions have held otherwise, however, and haveconcluded that even these claims will not support a RuleB attachment. This is still an issue in flux, and we are stillseeing inconsistent decisions from the Courts.
Under the present state of the law, a Rule B attachmentordinarily will not be allowed on an unripe indemnityclaim (i.e., where the party seeking indemnity has not beenfound liable to the original claimant). This arises most commonly in claims under a chain of charters. There issome case law that supports the view that where the partyseeking the attachment has already had a claim lodgedagainst it and has had to give security in respect of theclaim for which it is seeking indemnity, a Rule B actionmay lie. Recent decisions, however, suggest even this is notsufficient to make the claim “ripe” for Rule B purposes—particularly where the security given is “only” a club LOUon a claim that is covered by P&I insurance and thus isessentially “costless”—except where the equities lie heavilyin favor of the plaintiff.
Found Within The DistrictThe basic rule is that an attachment will only lie
where the defendant is not subject to personal jurisdic-tion in the district (i.e., both amenable to service ofprocess and subject to the personal jurisdiction of thecourt). Over the past couple of years, parties have foundthat a simple way to avoid Rule B is to render themselves“found” in New York by registering with the New YorkSecretary of State and appointing an agent for service ofprocess in New York. The Second Circuit recently heldin STX Panocean (UK) Co., Ltd. v. Glory Wealth Shipping,08-6131 (March 19, 2009), that this did in fact render aparty “found” in New York for Rule B purposes.
The Southern District’sModel Rule B Attachment Order
In recent months, the Courts have been strugglingwith how to deal with the huge influx of new Rule Bcases arising out of the financial crisis and, particularly,the collapse of the dry bulk market. Last Fall, Tradewindsreported that Rule B cases rose from about 10% of thenew filings in the Southern District of New York in thebeginning of the year to over 30% by mid-November.Anecdotally, it appears the number of new filings hasdropped significantly in the past couple of months asthe markets have started to stabilize. It seems clear, how-ever, that Rule B remains a popular remedy.
To fight the tide, some judges started appending theirown “custom” modifications to their attachment orders,imposing limits such as provisions holding that theorder is only good for 90 or 120 days and would auto-
matically expire thereafter unless funds are attached.Another typical restriction provided that the order auto-matically expired within 45 days if the plaintiff had notcommenced litigation or arbitration on the merits withinthat time. Other judges began requiring detailed docu-mentation of the merits of the claim, even where theywere subject to foreign law and arbitration, and eventhough no such requirement is found anywhere in therules or case law. One judge began to refuse to issueattachment orders on the ground that the standardpleading in the complaint that a party “may” have assetsin the jurisdiction during the pendency of the action wasinsufficient without specific allegations that the defen-dant’s property could be found in the district.
In April 2009, after receiving comments from theCity Bar Association’s Admiralty Committee and fromthe banking interests, the Southern District Court’sJudicial Improvements Committee issued a “model”Rule B attachment order. Although use of the modelorder is not strictly mandatory, in her covering letter tothe City Bar Association, Judge Shira Scheindlin, chairof the Judicial Improvements Committee, wrote “It isour hope, if not expectation, that maritime lawyers willimmediately start submitting this proposed order.”
The “model” Rule B order contains some criticalchanges to the standard practice and has given the bankssome additional leverage on certain important issues. Acopy of the order is set out on the final pages of thispublication (see Appendix A). Some of the more impor-tant changes are discussed below.
The model order formalizes the practice of a numberof judges who required that the plaintiff allege withmore specificity facts upon which the Court could con-clude that the defendant can reasonably be expectedto have property in the district. A plaintiff should nowbe prepared to provide such information in their complaint, including details about other business thedefendant conducts that is likely to involve payments inU.S. dollars.
It appears the judges could not agree whether attach-ment orders should be limited to transfers “originated”by the defendant or should also extend to those “origi-nated by, payable to, or otherwise for the benefit of” thedefendant. The judge to whom the case is assigned isthus permitted to choose either option at the time theorder is issued. The proper application of Rule B ordersto EFT’s is expected to be decided presently by theSecond Circuit Court of Appeals, so this “choice”should fall away shortly in favor of one or the otheroption depending on that Court’s ruling.
Recent Developments (continued from page 1)
Pollution & IncidentResponse Team
CONTENTSPAGE
Recent Developments in ......................................................................1Rule B Attachment Practice in New York
Freezing Orders and Injunctions ........................................................3Under the Hong Kong Civil Justice Reform
New Ship Recycling Convention on the Horizon ............................6
Meet Blank Rome ...................................................................................8
Ship Mortgages in Favor of “Owners” ..............................................9
Nicholas J. Healy, Pre-Eminent Maritime Attorney, ...................12Dies at 99
Shanghai Court Upholds Hong Kong Arbitration Clause ..........13
Appendix A.............................................................................................14
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© 2009, BLANK ROME LLP. Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. The Advisory should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel. Additional information on Blank Rome may be found on ourwebsite www.blankrome.com.
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July 2009 No. 3
To learn more about how Blank Rome can help your business please go to www.BlankRomeMaritime.com
Recent Developments inRule B Attachment Practice in New York
By Thomas H. Belknap
IntroductionTo say that the law of Rule B mar-
itime attachments has been a movingtarget would be a bit of an under -statement. Since my last article on thesubject in January 2009, there havebeen several important developments,and there are several more on thenear horizon.
It would be impossible to cover them all in one article, but in this note I highlight some of the more“controversial” jurisdictional issues relating to when aRule B attachment may be had and then discuss the new“model” order recently propounded by the Court and,in particular, some of the impacts on the practice thatthis order has already had.
The Prima Facie CaseMost people in the shipping world now know very
well the two main requirements to obtain a maritime“Rule B” attachment in the United States. One, the plain-tiff must have a “maritime claim,” and two, the defendantmust not be “found” in the district at the time the actionis filed. Each of these prongs has been the subject ofrecent developments that are worthy of note.
What is a “Maritime Claim”Traditionally, ship building contracts were viewed as
being outside admiralty jurisdiction, thus barring a RuleB action on such a claim. Recent decisions by theSupreme Court and the Second Circuit (encompassingNew York) have suggested to some, however, that thisissue may be open to revisitation by the higher courts.Thus far, we are aware of no decisions upholding a
Rule B attachment on such a claim. There is at least onedecision denying an attachment on such a claim that iscurrently on appeal, however, and this appeal is expectedto be heard towards the end of this year.
As with ship construction contracts, the traditionalview was that claims under ship sale MOA’s were notmaritime claims. One decision in the Fall of 2008(Kalafrana Shipping Ltd. v. Sea Gull Shipping Co. Ltd., 08cv 5299 (SAS)) held that, under the reasoning of therecent Supreme Court authority referenced above, aship sale contract was a maritime contract, and upheld aRule B attachment. Numerous other decisions decidedbefore and after Kalafrana, however, have held to thecontrary. This issue is also on appeal to the SecondCircuit and should be decided sometime this year.
A few decisions have found that claims under com-modity sales contracts, where the claims involve the“maritime” elements of the contract, such as, for instance,a claim for payment of vessel demurrage due under a com-modity sales contract, will support a Rule B attachment.
THOMAS H. BELKNAP, JR.
the wire transfer documentation). The requirement for providing information shall be satisfied if the garnishee furnishes to the
plaintiff the payment order for the funds; and it is further,
[11] ORDERED, that in the event plaintiff restrains any assets pursuant to the Attachment Order, within five (5) days of
this having occurred plaintiff shall inform the Court in writing that it has restrained assets and within thirty (30) days of this having
occurred shall inform the Court in writing whether it has arranged with defendant(s) and/or any third parties to establish a separate
escrow account into which to transfer funds in the amount of the attached assets, or obtain mutually acceptable substitute security
in the amount of such assets, or pay such funds into the Registry of the Court. If the parties are able to agree to an arrangement,
then this case will be dismissed without prejudice, and, upon request by plaintiff, the case will be reopened for the purposes of any
necessary proceedings to enforce any judgment or arbitration award rendered in connection with a resolution of the merits of the
dispute that is the subject of this action; and it is further,
[12] ORDERED, that this Order shall automatically expire [60] or [90] days from the date of its issuance if no assets or
other property has been restrained pursuant to this Order, unless the plaintiff shows good cause for an extension of this Order for an
additional [60] days. Further [60]-day extensions may be granted in the discretion of the Court, but only upon a showing by plaintiff
of extraordinary circumstances. All applications for extensions shall be made by letter to the Court; and it is further,
[13] ORDERED, that this attachment shall automatically expire 45 days after the date of this Order unless plaintiff
confirms by letter that it has commenced arbitration or other adversarial proceedings on the merits of the claims underlying the
attachment. Plaintiff may request by letter an extension of the Order for an additional 45 days if it shows good cause why it has not
commenced arbitration or other adversarial proceedings. In no event will the Order extend beyond 90 days where no arbitration or
other adversarial proceeding has been commenced; and it is further,
[14] ORDERED, that upon expiration or vacatur of this Order by reason of the two preceding paragraphs, this Action may
be dismissed without prejudice, without costs, and without further notice to any party. The plaintiff is directed to submit a letter to
the Court informing it of the automatic expiration of the Order.
Dated:
SO ORDERED:
U.S.D.J.
(continued on page 2)
In the event of an incident please contact any member of our team:
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