would “cut down” a federal statute.
39 Because the Court did not regard in rem and in
personam actions as two distinct civil actions, an in rem suit was transferred to the
more convenient forum where an in personam suit was pending.
40
Following the Supreme Court, the Second Circuit Court of Appeals in Burns
Bros. v. Central R.R. dictated that although the American theory purports to view the
wrong of the ship as distinct from that of the shipowner, the present claim in rem was
merely an alternative remedy to the claim in personam, therefore, res judicata effect
could be given to an in personam action in an in rem suit.
41 Similarly, it stated in
Royal School Laboratories, Inc. v. Town of Watertown that interpleader jurisdiction
was proper when a statutory materialmen lien claim and breach of contract claim
arose out of a single contract because the claims were “inextricably interrelated.”
Allowing the suits to proceed separately created the risk of two recoveries against the
plaintiff for the same enrichment.
42 In addition, the court in Insurance Co. of
N. America v. S/S American Argosy further explained that “the in rem liability of a
ship is a fiction; the reality is that the owner, not the ship, pays the judgment.”
43
3 The Court’s Decision
In the noted case, the Second Circuit construed the interpleader statute liberally and
explained that the in personam claims against the shipowners and the in rem claims
against the ships themselves arose out of the same debt. They were inextricably
interrelated, and therefore, subject to interpleader.
44 Furthermore, the court held that
the owner consented to the District Court’s jurisdiction over its interests, which was
sufficient to confer in rem jurisdiction.
45 But the Second Circuit ordered limited
remand to permit the district court to apply the correct standard for anti-foreign-suit
injunctions.
46
First, USOT alleged that because its claims to payment arise from statutory in rem
liens against ships while the O.W. Bunker entities’ claims arise from the supply
contract (and thus are correctly characterized by USOT as being in personam in
nature), its codefendants are not claiming entitlement to the same money.
47 The
Second Circuit, however, rejected this argument. It is well established that the
39 Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 25, 1961 AMC 1, 5 (1960).
40 Id.
41 Burns Bros. v. Central R.R., 202 F.2d 910, 912–13, 1953 AMC 718, 720–21 (2d Cir. 1953).
42 Royal School Laboratories, Inc. v. Town of Watertown, 358 F.2d 813, 815 (2d Cir. 1966).
43 Insurance Co. of N. America v. S/S American Argosy, 732 F.2d 299, 302, 1984 AMC 1547, 1552
(2d Cir. 1984).
44 Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, 814 F.3d 146, 153 (2d Cir. 2016).
45 Id. at 154.
46 Id. at 155.
47 Id. at 151.
Shipowner Protection in the Wake of the Collapse of O.W. Bunker: The. . .
683
39 Because the Court did not regard in rem and in
personam actions as two distinct civil actions, an in rem suit was transferred to the
more convenient forum where an in personam suit was pending.
40
Following the Supreme Court, the Second Circuit Court of Appeals in Burns
Bros. v. Central R.R. dictated that although the American theory purports to view the
wrong of the ship as distinct from that of the shipowner, the present claim in rem was
merely an alternative remedy to the claim in personam, therefore, res judicata effect
could be given to an in personam action in an in rem suit.
41 Similarly, it stated in
Royal School Laboratories, Inc. v. Town of Watertown that interpleader jurisdiction
was proper when a statutory materialmen lien claim and breach of contract claim
arose out of a single contract because the claims were “inextricably interrelated.”
Allowing the suits to proceed separately created the risk of two recoveries against the
plaintiff for the same enrichment.
42 In addition, the court in Insurance Co. of
N. America v. S/S American Argosy further explained that “the in rem liability of a
ship is a fiction; the reality is that the owner, not the ship, pays the judgment.”
43
3 The Court’s Decision
In the noted case, the Second Circuit construed the interpleader statute liberally and
explained that the in personam claims against the shipowners and the in rem claims
against the ships themselves arose out of the same debt. They were inextricably
interrelated, and therefore, subject to interpleader.
44 Furthermore, the court held that
the owner consented to the District Court’s jurisdiction over its interests, which was
sufficient to confer in rem jurisdiction.
45 But the Second Circuit ordered limited
remand to permit the district court to apply the correct standard for anti-foreign-suit
injunctions.
46
First, USOT alleged that because its claims to payment arise from statutory in rem
liens against ships while the O.W. Bunker entities’ claims arise from the supply
contract (and thus are correctly characterized by USOT as being in personam in
nature), its codefendants are not claiming entitlement to the same money.
47 The
Second Circuit, however, rejected this argument. It is well established that the
39 Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 25, 1961 AMC 1, 5 (1960).
40 Id.
41 Burns Bros. v. Central R.R., 202 F.2d 910, 912–13, 1953 AMC 718, 720–21 (2d Cir. 1953).
42 Royal School Laboratories, Inc. v. Town of Watertown, 358 F.2d 813, 815 (2d Cir. 1966).
43 Insurance Co. of N. America v. S/S American Argosy, 732 F.2d 299, 302, 1984 AMC 1547, 1552
(2d Cir. 1984).
44 Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, 814 F.3d 146, 153 (2d Cir. 2016).
45 Id. at 154.
46 Id. at 155.
47 Id. at 151.
Shipowner Protection in the Wake of the Collapse of O.W. Bunker: The. . .
683