Challenges to Rule B Attachment on EFT and Application of FSIA

China National Chartering Corporation (also known as Sinochart), a subsidiary of Sinotrans, whose capital is fully invested by the People's Republic of China (PRC), held the charter of the Ocean Victory, a vessel belonging to Ocean Line Holdings Limited (Ocean Line). The Ocean Victory ran aground, broke in two, and sank while the vessel was trying to depart from the port of Kashima, Japan. An order of attachment was issued in this admiralty case by the judge of the U.S. District Court for the Southern District of New York on September 20, 2007, authorizing the seizure of up to $177,520,838 of Sinochart's assets (part of it from electronic funds transfer (EFT)). The claim was disputed by Sinochart and the merits will be contested in arbitration proceedings in London pursuant to the charter party. Three applications were made to the court by Sinochart. It moved to vacate the attachment on the grounds that it is immune from attachment as an instrumentality of the PRC under the Foreign Sovereign Immunities Act (FSIA). It alternatively seeks countersecurity for its claims for losses resulting from the casualty. It moves for an order in which Ocean Line is required to post security for costs incurred in posting surety bonds. In this case, the core and background facts are twofold. Sinochart is a subsidiary of PRC-owned company Sinotrans. PRC is a socialist country with many enterprises owned by the population. The Rule B attachment, moreover, is on an EFT affiliated with an intermediate bank in New York, the validity of which was under debate during the trial

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Filing Info

  • Accession Number: 01153247
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Jan 6 2010 6:12PM