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A/S Dan-Bunkering Ltd. v. M/V Centrans Demeter

United States District Court, S.D. Alabama, Southern Division

March 31, 2015

A/S DAN-BUNKERING LTD., Plaintiff,
v.
M/V CENTRANS DEMETER, IMO No. 9445174, her engines, freights. apparel, appurtenances, tackle, etc., in rem, Defendant.

ORDER

CALLIE V. S. GRANADE, District Judge.

A/S Dan-Bunkering Ltd. ("Plaintiff") initiated this maritime action on June 26, 2014, claiming it holds a maritime lien on the M/V Centrans Demeter, IMO No. 9445174 ("Vessel"). (Doc. 1). Based on this lien, Plaintiff asked the Court to authorize an arrest of the Vessel when it arrived in Mobile, Alabama. (Doc. 1, p. 6; Doc. 4). The Court granted Plaintiff's request, and on July 3, 2014, the U.S. Marshall arrested the Vessel. (Doc. 8). The Vessel's owner, Aries Shipping Co., Ltd. ("Aries"), subsequently moved the Court to vacate the arrest and release or reduce the security (Doc. 21), and dismiss the complaint. (Doc. 22). Plaintiff opposed the motions, and filed a motion for summary judgment. (Doc. 26). Aries responded and opposed the motion for summary judgment. (Doc. 33). Plaintiff then filed its reply to Aries' response. (Doc. 34).

After reviewing the initial motions, the Court denied the motions to vacate the arrest and dismiss the complaint, stayed the motion for summary judgment, and ordered supplemental briefing on the choice-of-law issues underlying the case. (Doc. 37, p. 16). Plaintiff and Aries filed their supplemental briefs and corresponding replies. (Docs. 38, 39, 42, 43).

I. BACKGROUND

The Court previously summarized this breach of contract dispute and the unique nature of maritime liens for necessaries under U.S. law. (Doc. 37). In essence, Plaintiff helped fuel the Vessel in the port of Hong Kong and never received payment for doing so. (Doc. 27, pp. 5 - 7). Plaintiff is a company organized under the laws of Denmark. (Doc. 27, p. 5). Aries is a Hong Kong company. (Doc. 39, p. 1). The Vessel is flagged under the laws of Hong Kong. (Doc. 33, p. 11). The Vessel's charterer, Zhenhua International Shipping Co., Ltd. ("Zhenhua"), is a Chinese company. (Doc. 33, p. 11).

Plaintiff and Zhenhua entered into a bunker fuel agreement dated November 15, 2011 ("Bunker Contract"). (Doc. 27, Exh. 1, pp. 6 - 7). Aries is not a party to the Bunker Contract, nor did it participate in contract negotiations. (Doc. 27, Exh. 1, pp. 6 - 7; Doc. 39, p. 2). The Bunker Contract stated: "Our General Terms and Conditions of March 2010, which are known to you, are to apply. Copy available on request and on our homepage www.dan-bunkering.com." (Doc. 27, pp. 5 - 6; Doc. 27, Exh. 1, p. 7). The General Terms and Conditions contain a choice-of-law clause. That clause reads:

16.1 The Bunker Contract shall be governed by the laws of Denmark. However, the choice of law is for the sole benefit of the Seller and the Seller may apply and benefit from any law granting a maritime lien and/or right to arrest the Vessel in any country as stipulated in Section 9 hereof. (Doc. 27, Exh. 1, p. 15).

The relevant portion of Section 9 reads:

9.1... The Seller is entitled to rely on any provisions of law of the flag state of the Vessel, the place of delivery or where the Vessel is found and shall, among other things, enjoy full benefit of local rules granting the Seller maritime lien in the Vessel and/or providing for the right to arrest the Vessel. Nothing in this Bunker Contract shall be construed to limit the rights or legal remedies that the Seller may enjoy against the Vessel or the Buyer in any jurisdiction. (Doc. 27, Exh. 1, p. 13)

Pursuant to the Bunker Contract, Plaintiff helped provide fuel for the Vessel on November 18, 2011. (Doc. 27, p. 4; Doc. 39, p. 2). Plaintiff then invoiced Zhenhua and the Vessel $593, 484.00 for the fuel. (Doc. 27, p. 4; Doc. 27, Exh. 1, p. 19). The Vessel went on its way. Zhenhua made some payments for the fuel but never paid Plaintiff in full. (Doc. 27, p. 4; Doc. 27, Exh. 2, p. 30). When the Vessel sailed into Mobile, Alabama on July 1, 2014, Plaintiff had it arrested to enforce a maritime lien. (Docs. 4, 8, 9). Plaintiff claims it holds a maritime lien for necessaries pursuant to U.S. law based on the choice-of-law clause set forth above. (Doc. 27, pp. 7, 10 - 11).

After reviewing the motions and the Bunker Contract, the Court decided it could not "begin its inquiry by assuming the contract is governed by U.S. law and the choice-of-law clause is part of the contract. Instead, the Court must first determine which country's laws govern contract formation...." (Doc. 37, p. 11). As a result, the Court ordered supplemental briefing on the choice-of-law questions, and the doctrine of forum non conveniens. (Doc. 37, p. 16). In the supplemental briefing, Plaintiff argues recent federal court decisions confronting similar maritime claims are compellingly persuasive, and U.S. law should similarly apply to its maritime claim. (Doc. 38, pp. 2 - 5). Aries argues Hong Kong law governs questions related to contract formation, as Hong Kong is the place with the most significant relationship to the transaction at issue. (Doc. 39, pp. 2 - 3). Aries further argues that the need to apply foreign law favors dismissing the case under a forum non conveniens analysis. (Doc. 39, pp. 14 - 17).

II. ANALYSIS

First, the Court must determine the choice-of-law issue and decide which country's laws control contract formation. If United States law is applicable, the Court may not dismiss the case on forum non conveniens grounds. If, however, foreign law is applicable, then the Court can exercise discretion in determining whether a forum non conveniens dismissal is appropriate. See Perez & Compania (Cataluna), S.A. v. M/V Mexico I, 826 F.2d 1449, 1452 (5th Cir. 1987) (using forum non conveniens to dismiss action for nonpayment of fuel supplied in Spain and used on a maritime voyage from Spain to the United States); Forsyth Int'l (U.K.) Ltd. v. SS Penavel, 630 F.Supp. 61, 64 ...


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