Trans-Tec Asia v. M/V Harmony Container
In this opinion, the United States Court of Appeals for the Ninth Circuit held that U.S. courts would recognize and enforce maritime liens for bunkers (or other necessaries) against a vessel in rem if the supplier of necessariesí standard terms and conditions contained a choice of U.S. law clause, even if the supplier provided supplies to foreign vessels in foreign ports under contracts between foreign interests
DMC Category Rating: Developed
Case note submitted by LeRoy Lambert, an attorney with the firm Blank Rome LLP, in New York. Blank Rome are International Contributors to the website for the United States.
Facts and Procedural History
Kien Hung went bankrupt and did not pay Trans-Tec Asia. Trans-Tec Asia threatened to arrest the vessel in Long Beach, California, and received security in lieu of arrest. Trans-Tec Asia and the vessel owner then contested the issue whether Trans-Tec Asia had a U.S. law lien against the vessel in these circumstances. The district court found, inter alia, that no lien existed, and an appeal followed.
The Court of Appeals Decision
The Court moved to a third inquiry, whether and how to give effect to the U.S. choice of law clause. The Court stated that choice of law provisions are now favored in the United States, M/S "Bremen" v. Zapata Off-Shore Co., 407 U.S. 1 (1972), and saw no reason not to apply the clause here. The Court then had little difficulty applying U.S. law to find that the bunkers supplied in this case gave rise to a lien against the vessel in rem. The Court rejected various arguments by the vessel owner that the Court should not apply U.S. law "extraterritorially."
The Ninth Circuit decision, of course, does not mean that courts
in other countries would enforce the U.S. choice of law clause to allow
an arrest which otherwise would not be possible under that countryís law. So, a
bunker supplier may have difficulty enforcing the clause in other countries if
the vessel does not call at the U.S.
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