Sembawang Shipyard, Ltd. v. Charger, Inc.

• Citation: 955 F.2d 983
• Decision Date: 16 March 1992
• Docket Number: No. 91-3195,91-3195
• Parties: SEMBAWANG SHIPYARD, LTD., Plaintiff-Appellee, Cross-Appellant, v. CHARGER, INC., and M/V CHARGER, Defendants-Appellants, Cross-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 983

955 F.2d 983

1993 A.M.C. 1341

SEMBAWANG SHIPYARD, LTD., Plaintiff-Appellee, Cross-Appellant, v. CHARGER, INC., and M/V CHARGER, Defendants-Appellants,

Cross-Appellees.

No. 91-3195.

United States Court of Appeals, Fifth Circuit.

March 16, 1992.

James L. Schupp, Jr., Terriberry, Carroll & Yancey, New Orleans, La., for defendants-appellants, cross-appellees.

Cecil Gordon Starling, Jr., Gelpi, Sullivan, Carroll & Laborde, New Orleans, La., Peter Skoufalos, Chalos, English & Brown, New York City, for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before REYNALDO G. GARZA, GARWOOD, and DUHE, Circuit Judges.

DUHE, Circuit Judge:

Sitting in admiralty, we face a number of questions involving maritime jurisdiction, both in personam and in rem, as well as issues of international law and arbitration. We hold that the parties contracted for Singapore law to govern all disputes arising from this transaction. We further hold that the Plaintiff improperly arrested the Vessel under Supplemental Rule C. The Plaintiff could have attached the Vessel under Supplemental Rule B, however, and we will allow it to reach the ship's bond in spite of Plaintiff's technical mistake; the Defendant can show no prejudice in this case. We also hold that the conversion date for the money judgment should have been the date of judgment rather than the day of breach.

Thus, we disagree with some of the reasoning of the district court. We affirm the judgment for the shipyard, however, and remand with instructions to modify the judgment so that the conversion rate on the date of judgment is applied.

I.

The parties do not dispute any facts before this Court. The Plaintiff, Sembawang Shipyard, Ltd., a Singapore corporation, performed various repairs at its Singapore yard on the M/V Charger, ¹ which was owned by Charger, Inc., a Liberian corporation. The details of the work and the terms of payment are governed by a contract between Sembawang and Charger. After paying several installments, Charger defaulted.

On November 11, 1988, Sembawang filed this collection suit in the Eastern District of Louisiana, where the M/V Charger was calling at the time, against the M/V Charger in rem and against Charger, Inc. in personam. In its verified Complaint, Sembawang invoked the maritime jurisdiction of the district court, and it moved that the Vessel be arrested pursuant to Supplemental Rule C. ² The district court issued an arrest warrant under Rule C, and the marshal seized the Vessel. Charger, Inc. filed a claim of owner on November 14 and secured the release of the Vessel by posting a bond.

On December 20, Charger moved for a post-seizure hearing, which was held on January 11, 1989, and further motion practice by both parties followed. On August 16, the district court granted Sembawang's motion to stay proceedings pending arbitration, which the contract required, and the court retained jurisdiction to enter the arbitral award as its judgment. On July 16, 1990, the arbitrator rendered an award for Sembawang, whereupon Charger and Sembawang moved the district court to lift the stay. Charger moved that in personam service of process be quashed, and Sembawang moved that the arbitral award be confirmed. On November 9 the district court granted Charger's motions, but reversed itself on reconsideration. On January 31, 1991, the district court confirmed the arbitral award, and it entered judgment for Sembawang against the M/V Charger and against Charger, Inc. on April 12. The district court used the date of breach to convert the award from Singapore dollars to United States dollars.

Both parties appeal. Sembawang asks only that we use the exchange rate on the date of judgment to convert the arbitral award. Charger asks that this suit be dismissed for lack of jurisdiction and that the bond be vacated. We address the claims of both parties in turn. Because all of the issues before us present questions of law, our review is plenary. Dow Chem. Co. v. M/V ROBERTA TABOR, 815 F.2d 1037, 1042 (5th Cir.1987).

II.

First we must decide whether to apply the law of the United States or the law of Singapore. The resolution of this issue is crucial to our analysis. If United States law applies, Sembawang would hold a maritime lien against the M/V Charger, and the right to proceed in rem against the Vessel under Supplemental Rule C(1)(a) would be undisputed. If Singapore law applies, we would be required to explore complex, not to say arcane, questions of Singapore admiralty law, and we would have to decide how that law affects the procedural rights available in a United States admiralty court.

We conclude that the parties bound themselves to be governed by Singapore law. Their contract regulating the underlying transaction provides that "[a]ny dispute shall be determined according to the Arbitration Ordinance 1963. The contract shall be governed by the Law of Singapore." Sembawang Shipyard Limited, Standard Conditions of Contract p 10, 1 R. 297. Clauses such as this one are presumptively valid. See Carnival Cruise Lines v. Shute, --- U.S. ----, ----, 111 S.Ct. 1522, 1526, 113 L.Ed.2d 622 (1991). "There are compelling reasons why a freely negotiated private international agreement, unaffected by fraud, undue influence, or overweening bargaining power, such as that involved here, should be given full effect." M/S BREMEN v. Zapata Off-Shore Co., 407 U.S. 1, 12-13, 92 S.Ct. 1907, 1914-15, 32 L.Ed.2d 513 (1972) (footnote omitted).

Sembawang concedes that Singapore law governs the in personam claim, which Sembawang agrees arises from the contract. It argues, however, that although the contract is governed by Singapore law, the forum court should apply United States law to determine whether Plaintiff holds a maritime lien for purposes of in rem jurisdiction. We disagree. Two Supreme Court cases on this subject are instructive. In The Bremen, the parties agreed that "[a]ny dispute arising must be treated before the London Court of Justice." Id. at 2, 92 S.Ct. at 1909. The Court held that this clause covered both actions in rem and in personam. Id. at 20, 92 S.Ct. at 1918. It distinguished the language in an earlier case, in which the parties agreed only that "no legal proceedings may be brought against the Captain or Shipowners or their Agents " except in Genoa; the parties did not agree that actions against the vessel had to be brought in Genoa. THE MONROSA v. Carbon Black Export, Inc., 359 U.S. 180, 182, 79 S.Ct. 710, 712, 3 L.Ed.2d 723 (1959) (5-4 decision dismissing certiorari) (emphasis added).

The language in the contract before us is more akin to the language used in the contract in The Bremen. The Sembawang contract contemplates that "[a]ny dispute" arising from this transaction will be governed by Singapore law. The contract makes no distinction between actions against persons and actions against things, unlike the contract in The Monrosa. We therefore hold that Singapore law determines Sembawang's rights against the Vessel in rem as well as Sembawang's rights against Charger in personam. To hold otherwise would "impute[ ] to the parties the drawing of a distinction the purpose of which is impossible to grasp." THE MONROSA, 359 U.S. at 184, 79 S.Ct. at 713 (Harlan, J., dissenting).

Sembawang's attempts to distinguish The Bremen are unpersuasive. That Carnival Cruise Lines, The Bremen, and The Monrosa concern forum-selection clauses instead of choice-of-law clauses makes no difference. Nor do the other purported distinctions affect our analysis. Nor will our decision deprive a plaintiff of security when it is appropriate; attachment under Supplemental Rule B may be had even if arrest under Supplemental Rule C may not. We emphasize that our holding on choice of law applies to the creation of a maritime lien or other right. We are not ranking liens, as the courts were doing in the cases cited by Sembawang. See Brandon v. S.S. DENTON, 302 F.2d 404, 410 (5th Cir.1962).

III.

In the preceding Part, we determined that Sembawang's rights against Charger and against the Vessel are governed by Singapore law. We must decide what those rights are by examining the law of Singapore. We also must decide how those rights are to be protected under the procedural law of the United States courts. A brief examination of the Supplemental Admiralty Rules is a helpful starting point because it will guide our inquiry into unfamiliar Singapore law.

A.

The Supplemental Rules appended to the Federal Rules of Civil Procedure allow a maritime plaintiff to secure his claim. Supplemental Rule B provides for attachment. Supplemental Rule C provides for arrest. Attachment and arrest are not the same, and they should not be confused. See Belcher Co. v. M/V MARATHA MARINER, 724 F.2d 1161, 1163-64 (5th Cir.1984). Supplemental Rule E provides procedural rules for both attachment and arrest, though, and attachment and arrest are similar in several ways.

Rule B is an adjunct to a claim in personam. When the defendant cannot "be found within the district," the plaintiff may "attach the defendant's goods and chattels." Supplemental Rule B. Thus, the plaintiff's claim is against the person, not the thing, but if the person cannot be found in the district, the plaintiff is protected by the ability to proceed against the thing. Such a proceeding is an action quasi in rem. In contrast, Supplemental Rule C is a true proceeding in rem. The claim is against the thing itself.

Access to a proceeding in rem, under Rule C, is rigorously restricted. Traditionally, the plaintiff must hold a maritime lien. See THE RESOLUTE, 168 U.S. 437, 440, 18 S.Ct. 112, 113, 42 L.Ed. 533 (1897); Supplemental Rule C(1)(a). Additionally, a plaintiff may proceed under Supplemental Rule C "[w]henever a statute of the United States provides for a maritime action in rem or a proceeding analogous thereto." Supplemental Rule C(1)(b).

Sembawang...