Flame S.A. v. Freight Bulk Pte. Ltd.

Flame S.A. (Flame) (plaintiff), a shipping company, entered into four forward-freight swap agreements (FFA) with Industrial Carriers, Inc. (ICI). An FFA is a type of contract used to hedge against the risk of price fluctuations in the shipping market. The FFAs were contracts for shipping services that detailed the applicable shipping routes, market rates, quantities for shipment, and payment due dates for services. The FFAs did not relate to any specific vessel or shipment. As with most FFAs, the parties did not intend for the services detailed in the contract to be performed. Instead, the parties intended to settle the FFAs at a future date according to an agreed-upon formula. ICI defaulted on the terms of the FFAs. Flame sued ICI in the United Kingdom (UK) for breach of the FFAs. The court in the UK awarded Flame nearly $20 million in damages from ICI (the UK judgment). Flame secured recognition of the UK judgment in US federal court and petitioned the district court for an order of attachment against a shipping vessel owned by Freight Bulk (defendant) to satisfy the UK judgment on the grounds that Freight Bulk was the alter ego of ICI. The court issued the order. Freight Bulk moved to vacate the attachment, arguing that because the case was brought under the court’s maritime jurisdiction, the district court lacked jurisdiction because FFAs are not maritime contracts under UK law. The district court held that the court’s jurisdiction must be determined based on US law rather than UK law and that FFAs are maritime contracts under US law. Accordingly, the district court ruled it had jurisdiction and denied the motion to vacate. Freight Bulk appealed.