Laser Focus on Asset Recovery – Pre and Post-Judgment Tools for the Maritime Industry
Maritime Partner Christopher Nolan authored a Steamship Mutual Sea Venture Newsletter article titled "Laser Focus on Asset Recovery – Pre and Post-Judgment Tools for the Maritime Industry."
Without a vessel arrest or attachment of other assets, owners and charterers often question whether it is worthwhile to go ahead with an LMAA or SMA arbitration. And for good reason; as a New York appellate court recognized a few years ago in Aqua Stoli Shipping v. Gardner Smith Pty Ltd, vessel arrests or attachment of assets are necessary because "it is frequently, but not always, more difficult to find property of parties to a maritime dispute than of parties to a traditional civil action. Maritime parties are peripatetic, and their assets are often transitory."
This calls for what can be a delicate balancing act. Clubs and their members must be more proactive than ever in both searching for and retaining security in support of claims. Yet, at the same time, regard must be had to the costs and likely success of the pursuit of assets. In the two years since an appellate court ruled maritime practitioners could no longer attach a maritime defendant's electronic fund transfers passing through New York as security, lawyers have searched around the world for the next big thing. This mindset is wrong. There is no Rule B magic bullet useful for all occasions. However, so long as the maritime industry continues to contract in U.S. dollars, there are tricks of the trade to hunt for the assets of a non-cooperative wrongdoer.
In this article, Mr. Nolan explores recent developments in U.S. asset recovery including: the risks and rewards of seeking pre-judgment security in unfamiliar jurisdictions like U.S. state courts; the extent of attaching assets of an alleged alter-ego company, successor-in-interest, or sister ships, and how SMA arbitrators are reacting to what used to be rare pre-judgment security applications.