Eleventh Circuit Clarifies The Permissible Reach Of Rule B

Author:Mr David Russo
Profession:Lewis Brisbois Bisgaard & Smith LLP
 
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In SCL BASILISK AG v. Agribusiness United Savannah Logistics LLC, Docket no. 16-15535 (Nov. 14, 2017), the Eleventh Circuit Court of Appeals clarified the permissible reach of Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (“Supplemental Claims”) and explained the limits of state court remedies that intersect with Rule B's application. In doing so, the Court upheld the limits of Rule B and reinforced maritime law's supremacy over conflicting state remedies. 

This commercial dispute arose out of a voyage charter party. Defendants had issued a letter of indemnity as part of the transaction, which required it to post security if the vessel were arrested or detained. A third party subsequently detained the vessel on an unrelated claim, and the vessel thus incurred damages. Plaintiffs initiated arbitration in London to recover these amounts from defendants. Plaintiffs also filed a Petition in the district court in Georgia to obtain security from defendants under Georgia state law, in aid of the London arbitration. The district court denied relief, and the Eleventh Circuit upheld that decision as discussed below.

First, it was held that the plaintiffs were not entitled to the requested relief under maritime law. Rule B of the Supplemental Rules, while providing a remedy for attachment as security for a claim, requires that the plaintiff file an affidavit that the defendant(s) “cannot be found” within the district. Here, the plaintiff's Petition alleged the contrary - that the defendants could be found within the district at least to the extent that they were registered to do business there (which the Court of Appeals treated as sufficient). The Eleventh Circuit explained that Rule B's purpose is twofold: ensure the defendant's appearance and assure satisfaction of a potential judgment. Moreover, it held that those two purposes “may not be separated” and thus security...

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