Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne de Navigation

Compagnie Nationale Algerienne de Navigation (CNAN) (defendant) entered into a contract with Amoco Transport Company (Amoco Transport) (plaintiff) to ship oil from Egypt to Amoco Overseas Oil Company (Amoco Overseas) (plaintiff). Amoco Transport’s broker, Poten & Partners, Inc. (Poten), negotiated the contract. The contract contained an arbitration clause that designated New York as the place where arbitration was to be held if a dispute arose. After the oil was shipped, pursuant to the contract, the freight payments were deposited in Poten’s New York bank account. Before the money was remitted to CNAN, Amoco Transport and Amoco Overseas discovered that not all of the oil had been delivered. Amoco Transport and Amoco Overseas filed a quasi in rem action to try to recover the freight payments. The district court issued an order of attachment levied upon the freight payments held in Poten’s New York bank account. To collect the money, New York law required Amoco Transport and Amoco Overseas to commence a special garnishment proceeding against Poten’s bank. The special garnishment proceeding was not commenced, so the bank refused to honor the district court’s judgment. The district court issued a new order of attachment and an amended judgment in favor of Amoco Transport and Amoco Overseas. CNAN motioned to vacate the amended judgment, arguing that the district court lacked jurisdiction. The district court denied CNAN’s motion. CNAN appealed.