Maritime attachment is a powerful procedure that allows an aggrieved party to garnish any of the defendant’s property located within a particular federal judicial district. Attachment is especially powerful because the garnished property can be used to ensure satisfaction of a claim, even if the property within the judicial district is not related to the claim that has been filed there. This right can prove invaluable for securing payment of claims from a foreign defendant who cannot be easily traced down and sued. This particular species of attachment is unique to admiralty law and is only available to satisfy “admiralty” or “maritime” claims, including contractual obligations that are separable from an non-maritime aspects of a contract.
The Fifth Circuit’s recent decision in Alphamate Commodity GMBH v. CHS Europe SA, 627 F.3d 183 (5th Cir. 2010) narrowly defines maritime claims, thereby limiting the availability of maritime attachment proceedings in cases involving contractual disputes. In Alphamate, AFL (a Libyan company) entered into a contract to purchase grain from a European grain merchant (Alphamate). AFL allegedly breached the contract when it failed to timely obtain letters of credit, and Alphamate claimed it was owed damages of $8,000,000 for this breach. Importantly, Alphamate claimed that at least half of these damages were for demurrage and detention, both of which are traditionally admiralty claims. Detention is a legal remedy, in the form of damages, which is available to a shipowner who loses use of the vessel and profits due to a charterer’s failure to timely return the vessel. Demurrage is a sum fixed in a contract, which serves to remunerate a shipowner for detention of the vessel beyond the number of days allowed by the contract for loading and unloading.
While AFL and Alphamate were arbitrating this contractual dispute in Europe, Alphamate also initiated maritime attachment proceedings in the United States District Court for the Eastern District of Louisiana. Through maritime attachment, Alphamate seized a shipment of corn in New Orleans while it was aboard a third party’s vessel en route to AFL. The Fifth Circuit found that Alphamate could not use maritime attachment to seize the corn because the underlying dispute between AFL and Alphamate did not involve a maritime claim. In particular, the court determined that the AFL-Alphamate contract primarily called for the sale of grain and that the obligation to ship the grain by sea did not convert the contract into a maritime claim. The Fifth Circuit further rejected Alphamate’s argument that the demurrage and detention claims were independent maritime obligations capable of sustaining maritime attachment proceedings. The court reasoned that these claims were too intertwined with the non-maritime breach of contract claims to provide a basis for maritime jurisdiction.
Notwithstanding the Fifth Circuit’s rejection of maritime attachment proceedings in Alphamate, the Court left open the possibility that a party can still use maritime attachment to secure payment of loss-of-use damages if the breached contract includes an independent obligation for demurrage. This ruling emphasizes the importance of including a contractual clause that expressly sets forth an obligation to pay demurrage fees in the event that a vessel is unjustly detained by the charterer. According to the Fifth Circuit, this clause is necessary to establish maritime jurisdiction over claims for demurrage and detention, thereby allowing an aggrieved party to utilize maritime attachment to secure payment of such fees from foreign defendants. Absent such an express demurrage provision, Alphamate illustrates that damages for loss of use can only be recovered through a breach of contract action – a more arduous process that, unlike maritime attachment, fails to provide security for the satisfaction of successful claims.