OW Bunker, a  major supplier of fuel to vessels, unexpectedly entered bankruptcy in November 2014, with the result that various parties claimed to be entitled to payment for fuel delivered to vessels: the OW Bunker Trustee in bankruptcy, OW Bunker’s bank, and the physical suppliers of the fuel to vessels. Physical suppliers asserted maritime liens against vessels to whom they had supplied bunkers and began to arrest those vessels, seeking security for their claims. On behalf of a number of shipowner clients, we filed interpleader actions in the U.S. district court for the Southern District of New York, posting bonds for the value of the unpaid bunkers, obtaining an injunction preventing arrests of our clients’ vessels, and securing an order requiring all in rem and in personam claims to be filed in that court.

In Hapag-Lloyd Aktiengesellschaft v. U.S. Oil Trading LLC, we filed an interpleader and obtained an injunction preventing the imminent arrests of three of Hapag-Lloyds’ vessels by U.S. Oil Trading LLC, a physical supplier of bunkers.  U.S. Oil Trading then appealed to the Second Circuit Court of Appeals, arguing that the district court had erroneously exercised interpleader jurisdiction over the competing claims for payment. In a decision dated February 24, 2016 the court of appeals rejected all of U.S. Oil Trading’s arguments.  The Second Circuit, in particular, agreed that the fact that some of the claims were asserted as in rem claims against vessels and some claims were asserted as in personam contract claims was of no moment, because all claims regardless of theory are inextricably intertwined.  The Second Circuit thus affirmed the district court’s exercise of jurisdiction and use of the anti-suit injunctive power afforded under the interpleader act.

The physical supplier appellant also challenged the foreign scope of the interpleader injunction, but the court of appeals declined to reduce the scope of the injunction and instead, granted Hapag’s request to remand this issue to the district court to decide the foreign scope of the injunction against the standards set down in the case of China Trade & Dev. Corp. v. M.V. Choong Young.

Freehill’s representation of Hapag-Lloyd was spearheaded by Mike Fernandez with assistance from partner Gina Venezia and associate Michael Dehart.  Gina handled the oral argument before the Second Circuit.