This gets stranger and stranger.
It's all because most of the business in international shipping is in U.S. Dollars, so monies move through the U.S., if only for a Milli-second. The way to keep from having these funds attached when they are in the U.S., is to register your foreign company in New York. This is because your company would then be able to be considered "found" in New York.
This is just a bunch of lawyers figuring out a way to use old laws, which have never been updated. Seriously, with communications today, can you not "find" a company wherever it is registered? I guess if this court ruling holds there will be a rush to register companies in New York, so the lawyers make out any way it goes.
Or maybe not.
Personally, I think it's a bad idea for the U.S. If I were doing deals in London, or anyplace else in the world, I would now insist everything be quoted in Euros.
This from
Lloyds ListTHE use of Rule B attachment lawsuits may soon come to an end after the US Court of Appeals for the Second Circuit ruled on Friday that registration in New York would protect defendant companies from such litigation.
As the triangle of charterers, cargo interests, and shipowners has tangled up in recrimination over idle ships, unpaid charterhire and cargoes committed but not delivered, lawsuits — notably arbitration in London — have mushroomed.
According to standard industry practice, the amounts due and defaulted are usually denominated in US dollars.
Since all dollar-denominated payments in the world, no matter where the originate, must necessarily pass, even if momentarily, through the electronic funds transfer network in the US, Rule B attachment lawsuits have gained notoriety.
By using Rule B attachments, plaintiffs are able to capture monies belonging to defendants, more precisely dollars, as they pass through New York.
Rule B attachment lawsuits are technically meant to be security cover for arbitrations ongoing in London as per standard shipping clauses. But the fact that shipping finance deals are denominated in US dollars means Rule B has been applied to with greater scope.
Rule B attachments, when granted, allow plaintiffs to intercept third-party funds that have a connection with the defendant.
The catch is that Rule B attachments can only be brought against companies that cannot be ‘found’ in New York.
Foreign shipping companies have been seeking to get around this loophole by registering themselves in the district.
With scores of lawsuits brought since last autumn, the dozens of New York district court judges obliged to deal with such cases have been swamped with work. Simultaneously, theories have begun to emerge on how individual judges might have different takes on Rule B.
The appellate court on Friday heard the case of STX Pan Ocean (UK) vs Glory Wealth.
Glory Wealth attorney James Power of Holland & Knight told Lloyd’s List that against the grain of events and rather spontaneously, the appellate court decided to consider comprehensively the issue of ‘registration’ in New York vis-à-vis the technicality of ‘found’ versus ‘not found’.
Although the written verdict would not be available for at least a couple of weeks, Mr Power said all indications point to the appellate court having issued a clear precedent that companies that have registered as a foreign business with the New York state government would get protection against Rule B attachment lawsuits.
Mr Power said this ruling was a potential “game changer”, as it has levelled the playing field between those claiming to be owed money that just happens to pass electronically through New York and people owing it.
