FLAME S.A. v. Freight Bulk Pte. Ltd.
762 F.3d 352
4th Cir.2014Background
- Flame (Swiss shipping/trading co.) obtained an English Commercial Court judgment against Industrial Carriers, Inc. (ICI) for breach of four Forward Freight Agreements (FFAs) after ICI’s 2008 insolvency.
- Flame registered the New York district court’s recognition of that English judgment in the Eastern District of Virginia and sought a Rule B maritime attachment against the M/V CAPE VIEWER (owned by Freight Bulk) as alter ego of ICI.
- Freight Bulk moved to vacate the attachment, arguing the court lacked admiralty jurisdiction because (1) English law controls whether the underlying FFAs are maritime, and (2) under English law FFAs are not maritime contracts.
- The district court held federal law governs the jurisdictional (procedural) question and found the FFAs at issue were maritime under federal law; it certified the question for interlocutory appeal.
- The Fourth Circuit affirmed: federal law controls the admiralty-character inquiry for enforcement of foreign judgments, and on the facts the FFAs here are maritime contracts because they were entered into primarily for hedging in shipping businesses.
Issues
| Issue | Plaintiff's Argument (Flame) | Defendant's Argument (Freight Bulk) | Held |
|---|---|---|---|
| Which law controls whether a foreign judgment/enforcement claim is "maritime" for U.S. admiralty jurisdiction? | Federal law governs the procedural/jurisdictional inquiry so U.S. maritime law should apply. | The maritime character should be determined by the law of the country that rendered the judgment (English law). | Federal law controls the procedural/jurisdictional question; U.S. maritime law applies. |
| Are the specific FFAs maritime contracts under controlling law? | FFAs here were entered primarily for hedging maritime risk by shipping companies and thus are maritime. | FFAs are purely financial (cash-settled), not tied to particular vessels or shipments, so not maritime. | On these facts, the district court’s finding that the FFAs are maritime under federal law is affirmed. |
| Does the absence of vessel- or cargo-specific terms preclude admiralty status? | No — maritime contracts need not name vessels or voyages; focus is on relation to maritime commerce. | Yes — lack of direct linkage to a vessel/transportation defeats maritime character. | Court: maritime character depends on nature and purpose; lack of a specific vessel is not dispositive. |
| Does cash settlement preclude maritime characterization? | No — cash-settled marine insurance and hedging instruments can be maritime. | Yes — cash settlement shows financial speculation, not maritime contract. | Cash settlement alone does not preclude admiralty status; context and purpose control. |
Key Cases Cited
- Vitol, S.A. v. Primerose Shipping Co., 708 F.3d 527 (4th Cir. 2013) (discussed characterization of foreign judgments and admiralty attachment under Rule B)
- D’Amico Dry Ltd. v. Primera Maritime (Hellas) Ltd., 756 F.3d 151 (2d Cir. 2014) (holds U.S. law governs whether underlying claim is maritime for enforcing foreign judgment)
- Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004) (federal maritime law governs interpretation of maritime contracts to ensure uniformity)
- Kossick v. United Fruit Co., 365 U.S. 731 (1961) (notes conceptual difficulty in defining admiralty contract scope)
- Aqua Stoli Shipping Ltd. v. Gardner Smith Pty Ltd., 460 F.3d 434 (2d Cir. 2006) (articulates prima facie admiralty claim standard used in Rule B attachment inquiries)