A recent decision of the United States District Court for the Southern District of New York may have far-reaching consequences on the right to obtain security by way of arrest or attachment in maritime arbitration proceedings.

In Sanko Steamship Co. v. Newfoundland Refining Co. (not yet reported) the plaintiff commenced a suit in Admiralty in the U.S. District Court in New York and obtained an order of attachment pursuant to New York State’s provisional remedy statute1. The underlying charter-party provided for submission of disputes to the jurisdiction of the English Courts or, at the election of either party, to arbitration in London. However, s. 8 of the Federal Arbitration Act, 9 U.S.C., expressly permits a claimant to commence an Admiralty action and seize a vessel or other property of the defendant for purposes of security, even where the merits of the claim are to be determined by arbitration2.

It has long been settled that s. 8 permits both provisional remedies such as maritime attachment (formally known as “foreign attachment”) which are ancillary to proceedings in personam, and in rem actions, such as the arrest of a vessel or the seizure of freight monies to enforce a maritime lien3. Moreover, at least one leading case held that non-maritime attachment remedies were also reserved to plaintiffs under the Federal Arbitration Act, notwithstanding the fact that s. 8 is couched in terms of “Admiralty” remedies4. The purpose of s. 8 is to encourage arbitration agreements by preserving provisional remedies of parties who have agreed to arbitrate.

Until Sanko no distinction had been made between cases referrable to arbitration in the U.S. (typically New York) and cases referrable to foreign arbitration tribunals (typically London). However, the defendant in Sanko raised as a defence to the attachment the decision in The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1971), in which the U.S. Supreme Court upheld the validity of a foreign forum clause in a towage contract to the exclusion to U.S. jurisdiction5. In The Bremen the Court did not address itself to the issue of whether U.S. jurisdiction could still be invoked for the limited purpose of obtaining security pending determination of the merits by the foreign tribunal. Perhaps naively, it seems to have been assumed by the American Admiralty Bar that s. 8 of the Federal Arbitration Act would continue to permit provisional remedies, at least insofar as foreign arbitrations were concerned. However, the decision in Sanko expressly interpreted The Bremen as denying a litigant the right to invoke provisional remedies in the U.S. where the underlying dispute is referrable to arbitration or suit outside the U.S.