The United States Court of Appeals for the Second Circuit confirmed in a decision last week that U.S. federal courts have subject matter jurisdiction to enforce foreign maritime judgments. This, by itself, is hardly news; however, in a ruling of first impression at the appeals court level, the Second Circuit determined that the question of whether a foreign judgment is a "maritime judgment" is assessed with reference to U.S. law, and not the law of the foreign court. This ruling could have important ramifications for parties seeking to use the U.S. Rule B maritime attachment remedy to enforce a foreign judgment in the United States.
The case is D'Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd, 11-cv-3473 (2d Cir. June 12, 2014). The plaintiff had sought a Rule B maritime attachment in an action seeking to enforce an English judgment rendered in respect of claims under a "forward freight agreement" or FFA, which is a derivative contract whose value is derived from freight rates for specific types of vessels on specified voyage routes, as reported on the Baltic Exchange. The district court vacated the attachment on the basis that the judgment had been issued by the English Commercial court rather than the Admiralty court and that the claim was not deemed to be a "maritime claim" under English law.
The Second Circuit reversed the lower court's ruling, finding that it erred in analyzing its subject matter jurisdiction with reference to English law. The court concluded that there were several reasons why U.S. law should control this inquiry and, of particular note, stated as follows:
In determining the federal court's subject matter jurisdiction, in other words, it is irrelevant whether the English judgment was issued by an "Admiralty" or "Commercial" court—or whether English law deemed the underlying claim to be "maritime"—so long as it would be a maritime claim under U.S. law. If so, then a foreign judgment of such claim is cognizable in admiralty.
As this case illustrates, the federal court's maritime subject matter jurisdiction could be broader than what one might expect based on the law of the jurisdiction where the judgment was issued. The facts of D'Amico, for instance, present a situation where a U.S. court may have maritime jurisdiction over a claim involving a FFA even though the claim was not considered maritime in the jurisdiction where the judgment was obtained.
Notably, in D'Amico, the district court never addressed the question of whether the FFA there at issue was a maritime contract, and so the Second Circuit remanded the case for further consideration of this issue. A clear majority of the district courts in New York and elsewhere that have previously considered this question have determined that they are maritime; however, no appeals court has yet ruled on this issue.
Importantly, the Second Circuit expressly noted that it had "no reason in this case to decide whether the maritime nature of the claim under the law of the nation that rendered the judgment would also suffice to bring a suit on the judgment within the [Federal court's maritime jurisdiction.]" (P.29, n.7). In other words, it has left open the question of whether a federal court has subject matter jurisdiction to enforce a judgment of a foreign admiralty court in a case where there would not normally be federal maritime subject matter jurisdiction. This issue could arise where, for instance, a party sought to enforce a judgment of a foreign admiralty court on a ship sale or ship construction contract. Under long-standing Supreme Court precedent, these kinds of contracts are not considered maritime under U.S. law. But it remains to be seen whether a foreign "maritime" judgment on such a claim might nevertheless be cognizable here in admiralty.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
