In Re Containership Co.(tcc) A/S
466 B.R. 219
Bankr. S.D.N.Y.2012Background
- Debtor Containership Company (TCC) A/S sought recognition of a Danish reconstruction as a foreign main proceeding under Chapters 1504/1515 and related relief; Danish court approved the restructuring.
- The court recognized the Danish reconstruction on July 1, 2011, appointing a Danish-appointed Reconstructor as Debtor's foreign representative.
- On August 1–2, 2011, Debtor filed ~77 adversary proceedings against shippers for breach of pre-petition service contracts containing MQCs, seeking liquidated damages, interest, and fees.
- Service contracts provided that disputes would be litigated in SDNY, though Debtor and Movants dispute FMC jurisdiction over alleged Shipping Act violations.
- Movants sought relief from the stay to file FMC claims alleging Shipping Act violations and to stay the adversary proceedings; Debtor opposed as contract defenses, not FMC issues.
- Court applied the Sonnax twelve-factor test to decide stay relief and concluded FMC lacks exclusive/primary jurisdiction; Stern v. Marshall issues were deemed not determinative here.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the FMC has exclusive jurisdiction over the Shipping Act claims | Movants rely on FMC exclusive jurisdiction over Shipping Act violations. | Debtor contends contracts are ordinary breach defenses; FMC lacks exclusive/primary jurisdiction over these defenses. | FMC does not have exclusive or primary jurisdiction over Movants' Shipping Act allegations. |
| Whether Sonnax factors support lifting the stay | Lift stay to avoid duplicative litigation and promote FMC expertise. | Stay relief unnecessary; issues are contract defenses better resolved in court. | Sonnax factors favor denial of stay relief. |
| Whether Stern v. Marshall affects the court's authority | Stern raises potential Article III concerns about final judgments. | Proceedings can be handled with proposed findings if necessary; Stern does not compel lifting the stay. | Stern does not alter denial of stay; no immediate impact on jurisdictional posture. |
Key Cases Cited
- In re Sonnax Indus., Inc., 907 F.2d 1280 (2d Cir.1990) (twelve-factor test for stay relief and primary jurisdiction)
- River Plate and Brazil Conf. v. Pressed Steel Car Co., 227 F.2d 60 (2d Cir.1955) (breach of contract not stayed for FMC proceedings when no agency expertise required)
- General Electric Co. v. Nedlloyd, 817 F.2d 1022 (2d Cir.1987) (primary jurisdiction limits; contract-based issues do not require agency expertise)
- LSB Indus., Inc. v. Prudential Lines, Inc., 736 F.2d 10 (2d Cir.1984) (contract interpretation generally within courts' expertise)
- Far East Conference v. United States, 342 U.S. 570 (Supreme Court 1952) (shipping issues not requiring ordinary judicial expertise)
- Cunard S.S. Co. v. United States, 284 U.S. 474 (Supreme Court 1932) (shipping disputes raised to broader concerns beyond conventional contract issues)
- New York Thruway Auth. v. Level 3 Communications, LLC, 734 F. Supp. 2d 257 (N.D.N.Y.2010) (contract disputes are legal questions within conventional judicial expertise)