remanded the case to the district court to eliminate or retain the foreign scope of its
injunction according to specific conclusions under the China Trade test.
58
4 Analysis of the Decision
This was the first time that the Second Circuit encountered the issue of whether it has
subject matter jurisdictions over interpleader involving in rem actions. The Court
addressed the apparent conflicts among bankruptcy law, maritime law, and interpleader relief.
59 For shipowners, the decisions in all such cases are notable because it
means that they can use interpleader actions to protect themselves from multiple
payments and from the risk of ship arrest arising from the collapse of O.W. Bunker.
Also, this development is important because the court equitably applied the personification doctrine.
The Second Circuit’s decision in Hapag-Lloyd expanded the application of equity
personification into the interpleader context. Although not explicitly stated in the
decision, the court applied the personification doctrine with a mind for fairness. In
other words, the court approached the doctrine of ship personification as an equitable
principle that may be ignored when it causes an outcome contrary to the panel’s own
subjective sense of justice.
60 Whereas, generally, courts deem in personam and in
rem actions as two distinct proceedings, the decisions here were departures from the
general rule. But many U.S. courts have already so departed in previous cases.
Before Hapag-Lloyd, the Supreme Court and Second Circuit had already applied the
personification doctrine equitably in res judicata cases. In Burns Bros. v. Central R.
R., for example, the Second Circuit criticized overly technical distinctions between
civil actions in rem and in personam. The Court explained 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, and, therefore, res judicata applies to an in personam action in an in rem
suit.
61 Because similar instances of equitable personification have already occurred
in other maritime contexts, the panel in Hapag-Lloyd expanded the application of
equity personification into the interpleader arena, a choice that remains consistent
with precedent and honours the purpose of interpleader actions.
62
58 Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, 814 F.3d 146, 154–55; see also China
Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987).
59 Hapag-Lloyd, 814 F.3d at 148.
60 See Schwab (2012), p. 281.
61 Burns Bros. v. Central R.R., 202 F.2d 910, 912–13, 1953 AMC 718, 720–21 (2d Cir. 1953).
62 See, e.g., Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 25, 1961 AMC 1, 5 (1960)
(because the court did not regard in rem and in personam actions as two distinct civil proceeds, an in
rem suit had been transferred to the more convenient forum where an in personam suit was
pending).
Shipowner Protection in the Wake of the Collapse of O.W. Bunker: The. . .
685
injunction according to specific conclusions under the China Trade test.
58
4 Analysis of the Decision
This was the first time that the Second Circuit encountered the issue of whether it has
subject matter jurisdictions over interpleader involving in rem actions. The Court
addressed the apparent conflicts among bankruptcy law, maritime law, and interpleader relief.
59 For shipowners, the decisions in all such cases are notable because it
means that they can use interpleader actions to protect themselves from multiple
payments and from the risk of ship arrest arising from the collapse of O.W. Bunker.
Also, this development is important because the court equitably applied the personification doctrine.
The Second Circuit’s decision in Hapag-Lloyd expanded the application of equity
personification into the interpleader context. Although not explicitly stated in the
decision, the court applied the personification doctrine with a mind for fairness. In
other words, the court approached the doctrine of ship personification as an equitable
principle that may be ignored when it causes an outcome contrary to the panel’s own
subjective sense of justice.
60 Whereas, generally, courts deem in personam and in
rem actions as two distinct proceedings, the decisions here were departures from the
general rule. But many U.S. courts have already so departed in previous cases.
Before Hapag-Lloyd, the Supreme Court and Second Circuit had already applied the
personification doctrine equitably in res judicata cases. In Burns Bros. v. Central R.
R., for example, the Second Circuit criticized overly technical distinctions between
civil actions in rem and in personam. The Court explained 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, and, therefore, res judicata applies to an in personam action in an in rem
suit.
61 Because similar instances of equitable personification have already occurred
in other maritime contexts, the panel in Hapag-Lloyd expanded the application of
equity personification into the interpleader arena, a choice that remains consistent
with precedent and honours the purpose of interpleader actions.
62
58 Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, 814 F.3d 146, 154–55; see also China
Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987).
59 Hapag-Lloyd, 814 F.3d at 148.
60 See Schwab (2012), p. 281.
61 Burns Bros. v. Central R.R., 202 F.2d 910, 912–13, 1953 AMC 718, 720–21 (2d Cir. 1953).
62 See, e.g., Continental Grain Co. v. Barge FBL-585, 364 U.S. 19, 25, 1961 AMC 1, 5 (1960)
(because the court did not regard in rem and in personam actions as two distinct civil proceeds, an in
rem suit had been transferred to the more convenient forum where an in personam suit was
pending).
Shipowner Protection in the Wake of the Collapse of O.W. Bunker: The. . .
685