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Psara Energy LTD. v. Space Shipping LTD.

United States District Court, D. Connecticut

November 20, 2017




         PSARA Energy, LTD (“Plaintiff”) filed a Verified Complaint on October 30, 2017, seeking attachment of SPACE Shipping and Geden Holdings's (“Defendants” or “SPACE”) property located within the District of Connecticut. See Compl., ECF No. 1. Specifically, Plaintiff sought attachment of a debt owed by a third-party, ST Shipping and Trading Pte. Ltd. (“ST Shipping”), to SPACE arising from an arbitration proceeding in London.

         Currently pending before the Court is ST Shipping's motion to release the maritime attachment under Rule E(f)(4) of the Supplement Rules. Because the Court holds that it lacks personal jurisdiction over ST Shipping and, therefore, the debt is not within the District of Connecticut, ST Shipping's motion is GRANTED. The attachment will be VACATED.

         I. Factual and Procedural History

         PSARA is a corporation organized under the laws of the Republic of the Marshall Islands. Compl. ¶ 3. SPACE Shipping, one of the defendants in this matter, is a foreign company organized under the laws of Malta. Id. at ¶ 4.1

         On February 23, 2010, the parties entered into an agreement for the Defendants to charter Plaintiff's crude oil tanker, the CV STEALTH. Id. Plaintiff alleges that Defendants sub-chartered the vessel to a third party, who sailed it to Venezuela with the intention of loading the tanker with crude oil. Id. at ¶¶ 9, 10. Upon arrival in the Venezuelan port of Puerto La Cruz, Plaintiff alleges that the “Vessel was detained . . . purportedly for being unauthorized to lift a cargo of crude oil from Venezuela and being employed to lift a cargo stolen” from the Venezuelan state oil company. Id. at ¶ 14-16.

         Venezuelan authorities released the vessel on October 3, 2017. Plaintiff alleges, however, “due to her forced idleness” for several years without maintenance, “the vessel has suffered extensive damages and deterioration . . . .” Id. at ¶ 24. Plaintiff alleges that the vessel is “out of class, uninsurable” and will require numerous repairs that “will exceed the sum of $15, 000, 000.” Id. at ¶ 25.

         Plaintiff alleges that delivery of the vessel “in such a deteriorated state of extensive disrepair” is a material breach of the bareboat charter that the parties signed. Id. at ¶ 27. In addition to the cost of repairs, Plaintiff alleges that Defendants failed to make payments owed for the hire of the vessel, owe attorney's fees for an arbitration brought in London as well as interest, and owe damages for the time it will take to repair the vessel. Id. at ¶¶ 26-31. The total claim equals $19, 604, 297.00. Id. at ¶ 39.

         The parties entered into arbitration in London for the unpaid hire amount of $5, 272, 100.90. Id. at ¶ 17. Following the arbitration award, the parties pursued a settlement agreement addressing enforcement of that award. Id. at ¶¶ 18-22. Plaintiff alleges that the Defendants failed to make payments under the settlement agreement and therefore the Plaintiff is “about to submit a claim in the London arbitration, which has continual jurisdiction over the claims for the January through June 2017 unpaid hires, interest, legal costs, and costs of the London arbitration, and any other claims arising under the bareboat charter.” Id. at ¶ 22.

         Plaintiff then filed a Verified Complaint in this Court on October 30, 2017 and sought the attachment of an arbitration award between the Defendants and a third party: ST Shipping. Plaintiff alleged that the debt owed by ST Shipping to SPACE in relation to the award was intangible property within the meaning of Rule B and - based on a lawsuit filed by SPACE in this District to enforce the award against ST Shipping - that property existed within the District of Connecticut's jurisdiction.

         On November 1, 2017, this Court held that “Plaintiff has met its initial burden in seeking attachment under Rule B, and the Court will authorize process of attachment and garnishment.” Ruling On Attachment, ECF No. 15. The Court subsequently issued a writ of garnishment.

         ST Shipping filed a motion seeking to vacate the garnishment under Rule(E)(4)(f) of the Supplement Rules and sought a hearing. See Motion to Release Maritime Attachment, ECF No. 18. The Court then scheduled and held a hearing on November 17, 2017, at which SPACE Shipping appeared for the first time. SPACE maintained that Plaintiff failed to inform the Court about developments in the London arbitration and therefore argued the Verified Complaint should be dismissed or, alternatively, reduced to account for those developments. ST Shipping argued that this Court lacked jurisdiction over the debt because this Court lacked personal jurisdiction over ST Shipping. Alternatively, it sought Court approval to transfer the funds it owed to an escrow account in London.

         Following the November 17th hearing, the Court issued an order permitting the parties to submit any supplemental briefing on any issue. See Order, ECF No. 33. ST Shipping filed a supplement brief in which it argued that a debt is only found within this District only if a creditor - here, SPACE - could enforce that debt here. Garnishee's Supplemental Br., ECF No. 37 at 1-4. Additionally, ST Shipping argued that, in order for SPACE to enforce a debt in the District, there must be personal jurisdiction over ST Shipping and, as a foreign corporation, ST Shipping argues SPACE would be unable to do so. Id. at 4-5.

         SPACE adopted ST Shipping's jurisdictional arguments in their filing. See Defs. Objection 3, ECF No. 36. Additionally, they argued that the award should be vacated or reduced based on developments in the London arbitration between PSARA and SPACE. Id. at 1-2. Specifically, SPACE argued that the arbitrators found many of the losses related to the condition of the vessel not yet ripe, and that PSARA should have notified the Court of this decision when filing the Verified Complaint. Id. at 2-3. They argue that, by not informing the Court, “Plaintiff has thus breached the heightened duty of disclosure imposed in rule B attachment actions.” Id. at ...

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