Rule B Attachment

Attachment under Rule B is similar to the procedure of saisie conservatoire available under French law.[4] It has its origins in the former British procedure of admiralty attachment,[5] which was still in existence at the time of the American Revolution but fell into disuse in the United Kingdom at the end of the 18th Century.[6] Maritime attachments were formally recognized by the Supreme Court of the United States in 1825 in Manro v. Almeida,[7] in which Justice Johnson stated:

Upon the whole, we are of opinion, that for a maritime trespass, even though it savours of piracy, the person injured may have his action in personam, and compel appearance by the process of attachment on the goods of the trespasser, according to the forms of the civil law, as ingrafted upon the admiralty practice. And we think it indispensable to the purposes of justice, and the due exercise of the admiralty jurisdiction, that the remedy should be applied, even in cases where the same goods may have been attachable under the process of foreign attachment issuing from the common law Courts. For it will necessarily follow, in all such cases, that a question peculiarly of admiralty cognisance, will be brought to be examined before a tribunal not competent to exercise original admiralty jurisdiction; and that, as a primary, not an incidental question; since the whole proceeding will have for its object to determine whether a maritime trespass has been committed, and then to apply the remedy.

The Supreme Court issued the Rules of Practice in Causes of Admiralty and Maritime Jurisdiction in 1844[8] to govern such proceedings,[9] which substantially remained in force until 1966 when the current Supplemental Rules were adopted.[9]

Attachment is not dependent, as is arrest in rem, on the existence of a maritime lien or preferred mortgage lien, but necessitates merely an in personam claim against the defendant which falls within U.S. admiralty jurisdiction.[4] It does not require the applicant to show that the attachment is necessary to satisfy a potential judgment.[10] Unlike in rem proceedings, the property that can be attached is not restricted to maritime property,[4] and it may be either tangible or intangible.[11]

The US courts have taken an expansive view as to what constitutes a claim that may fall under maritime jurisdiction, which can include:[12]

• non-compete and non-disclosure agreements that relate to maritime commerce,
• forward freight agreements,
• joint venture agreements involving aspects of maritime commerce, and
• settlement agreements arising from maritime disputes.

To secure a writ of maritime attachment pursuant to Rule B, the plaintiff must show that:[13][14]

1. he has an in personam claim against the defendant which is cognizable in admiralty;
2. the defendant "cannot be found within the district" in which the action is commenced;
3. property belonging to the defendant is present or will soon be present in the district; and
4. there is no statutory or general maritime law proscription to the attachment.

The procedure's advantages can be described through the following scenario:[15]

1. A shipyard provides repair services in the Caribbean under a contract which calls for the application of English law. The shipyard allows the vessel to sail prior to full payment, and the debt goes unpaid.
2. The ship sails into a US port where the shipowner has no presence.
3. Under English law, no maritime lien, as defined by the US courts, exists on the vessel, so the ship is not subject to a Rule C arrest.
4. Under Rule B, however, the shipyard may attach the debtor vessel, a sister vessel, or any other assets of the debtor found in the jurisdiction even if they are in the hands of a third party.

Attachment may extend to a co-defendant or a third party, and can include guarantors and alter egos of the original vessel owner.[16][17] Where the underlying claim is subject to foreign law and will be litigated or arbitrated in a foreign proceeding, federal maritime law governs whether Rule B attachment will be applicable.[18]

In the event of a counterclaim, counter-security may be posted under FRCP Rule E.[19] The courts have been prepared to enforce this through staying foreign arbitration in London pending such posting,[20] as well as issuing gag orders in special circumstances in order to assist in attaining such security.[19]

The procedure may not prove to be effective in several circumstances:[21]

• the attachment could be "futile" where a superior claim exists in the property[22][23]
• there is a risk that the shipowner may become bankrupt[23]
• the vessel may prove to be a white elephant (ie, it has no market, even if it is in good condition)

Parties that have entered into foreign insolvency proceedings may be able to obtain protection from Rule B attachments by applying for a stay of proceedings under Chapter 15 of the United States Bankruptcy Code.[24][25]

In the 2002 case Winter Storm Shipping v. TPI, the United States Court of Appeals for the Second Circuit held that an electronic fund transfer (EFT) which passes through intermediary banks in the Southern District of New York was subject to Rule B.[26] Specifically the Court found that due process was served even though the defendant was unaware of which bank would be targeted, these transfers constituted intangible property under the meaning of Rule B, and that federal law preempted New York state law prohibiting attachment of EFTs.

The effect of this ruling was far reaching. Considering that the Southern District contains New York City, and more importantly the numerous large financial institutions therein, this allowed the federal courts to attach billions of dollars in EFTs because pieces of electronic information representing those dollars had passed fleetingly through the Southern District.

• William Tetley (1999). "Arrest, Attachment and Related Maritime Law Procedures" (PDF). Tulane Law Review. Tulane University Law School. 73: 1895–1985. Retrieved August 16, 2014.
• J. Ralph White (November 2007). "A Synopsis of Supplemental Rules B, C and D for Admiralty or Maritime Claims" (PDF). Water Log. Mississippi-Alabama Sea Grant Consortium. 27 (3): 5–10. Retrieved August 16, 2014.
• Force, Robert; Yiannopoulos, A.N.; Davies, Martin (2008). Admiralty and Maritime Law. Vol. 2. Washington, DC: Beard Books. ISBN 978-1-58798-285-9.
• Jon W. Zinke; Elizabeth Berry (Winter 2009). "Rule B Attachments in the United States" (PDF). Seaview. Hong Kong: Institute of Sea Transport (88). Retrieved November 29, 2013.
• Mandaraka-Sheppard, Aleka (2013). "3(II): Rule B(1) Attachment – Security for maritime claims in US". Modern Maritime Law: Volume 1: Jurisdiction and Risks. contribution by Alan Van Praag (3rd ed.). Informa Law from Routledge. pp. 80–96. ISBN 978-0-415-83516-9.