The Second Circuit Decides That "Beneficiary" Wire Transfers Are Not Attachable Property Under Rule B And That It Is "Probable" That "Originator" Wire Transfers Are Likewise Not Attachable1The Second Circuit's decision today, October 16, 2009, in The Shipping Corporation of India Ltd. v. Jaldhi Overseas Pte. Ltd. overruled the Court's 2002 Winter Storm Shipping v. TPL decision on the attachability of electronic fund transfers ("EFTs") "with the consent of all the judges of the Court in active service." The Court ruled that Winter Storm was "erroneously decided and therefore should no longer be binding precedent in our Circuit." The issue on appeal was specifically the attachability of EFTs being sent to a Rule B defendant (i.e. "beneficiary" EFTs)—which the District Court had ruled were not attachable property. That question had been left open by the Second Circuit's decision in Consub Delaware LLC v. Schahin Engenheria Limitada (2008), which had upheld the attachability of "originator" EFTs. The Court stated, in a footnote, that in "overturning Winter Storm, we also abrogate any decision insofar as it has relied on Winter Storm, specifically [Consub Delaware]"—a reversal of views by the entire court from a decision from just the prior year. Background The Court preceded its analysis with a review of "critical commentary" of the Winter Storm decision including that "some even suggested that Winter Storm has threatened the usefulness of the dollar in international transactions." Moreover, note was made of the Clearing House Banks' amicus arguments (also made and ignored in Winter Storm and Consub Delaware) of the burden placed on its member banks by the volume of attachments. Indeed, the Court went back to an amicus brief submitted by the Federal Reserve Bank of New York seven years earlier in Winter Storm, which had not been re-filed in this case, in respect of "[u]ndetermining the efficiency and certainty of fund transfers in New York" and to its "standing as an international financial center." The Court next discussed how the effectiveness of Rule B had been "cabined" or limited by its decision this year in STX Panocean upholding "registration" as a basis for defeating Rule B and other lower court restrictions. Reference was made to a lower court decision rejecting "continuous service," which, if upheld, "would arguably limit the reach of Winter Storm." These limitations, including one judge's requirement of proof of an EFT being made "beyond a hunch,"...
The End Of Winter Storm: The Second Circuit Decides That 'Beneficiary' Wire Transfers Are Not Attachable Property Under Rule B And That It Is 'Probable' That 'Originator' Wire Transfers Are Likewise Not Attachable
|Author:||Mr Jeremy Harwood|
|Profession:||Blank Rome LLP|
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