Oil Shipping B.V. v. Sonmez Denizcilik Ve Ticaret A.S.; the Ziya S

The Ziya S (defendant) was a bulk-carrier ship chartered by Sonmez Denizcilik Ve Ticaret A.S. (Sonmez) (defendant), a Turkish shipping company. The Ziya S’s owner, Northwest, had obtained a mortgage over the vessel held by the Royal Bank of Scotland (Royal Bank), and Sonmez was a guarantor on the mortgage. Sonmez entered into a number of contracts for the provisioning of the Ziya S with a number of suppliers, including Oil Shipping B.V. (plaintiff) and Baytur Trading S.A. (Baytur). Baytur had provided multiple fuel deliveries to the Ziya S in Turkey. Sonmez failed to pay the suppliers, and Northwest and Sonmez eventually defaulted on the mortgage. When the Ziya S entered a United States port, Oil Shipping filed a complaint in district court against Sonmez and against the Ziya S in rem. The vessel was arrested, and Royal Bank and Baytur both intervened in the suit. The Ziya S was sold, but the proceeds were insufficient to fully pay all of the claims. After the proceeds were initially distributed, the district court ruled that the Ship Mortgage Act was the applicable law to determine priority among the remaining claims. The court further ruled that Royal Bank had priority over Baytur under the Ship Mortgage Act and entered summary judgment for Royal Bank. Baytur appealed, alleging that Turkish law should have been applied in determining the priority of the claims.