Case of the Day: Flame S.A. v. Industrial Carriers, Inc.

The case of the day is Flame S.A. v. Industrial Carriers, Inc. (E.D. Va. 2014). This is the same case I wrote about on August 8, 2014. In the prior post, the issue was recognition of an English judgment Flame, a Swiss shipping and trading company, had obtained against Industrial Carriers for breach of a forward freight contract. In today’s post, the issue was whether another of the plaintiffs, Glory Wealth Shipping PTE Ltd., was entitled to maintain a maritime attachment of the M/V Cape Viewer on account of a default judgment from the Southern District of New York recognizing an English arbitral award Glory Wealth had obtained against Industrial Carriers. But the challenge to the attachment was not brought by Industrial Carriers, but by Freight Bulk PTE Ltd., which was not a party to the New York case and, it appears, not even a party to the underlying arbitration.

The court’s main conclusion was that because Freight Bulk was not a party to the New York action, it lacked standing to argue, as it did, that Industrial Carriers was not validly served with process in New York and that Glory Wealth’s claim for confirmation of the award was barred by the statute of limitations. The court construed the motion as one under FRCP 60(b)(4), which allows a court to relieve a party from a void judgment. The precedents hold that a non-party lacks standing under the rule unless the non-party was in privity with the party—something Freight Bulk had elsewhere denied—or where the non-party was directly affected by the judgment or raised a claim of fraud on the court. But even in these cases, the Virginia court concluded, the non-party had to seek relief in the court that issued the judgment, not in a court where the judgment creditor had registered the judgment for purposes of enforcement proceedings.

The court recognized that a party could attack a judgment of one court in another court where the judgment creditor sought enforcement on the grounds that the judgment is void. Indeed, we saw an example of this on Monday. But, according to the court, only a party can do this.

The court doesn’t explain why it should be that a non-party can have standing to bring a FRCP 60(b)(4) challenge to a judgment in certain cases in the issuing court but not in another court. Standing is standing. I don’t really see the logic of saying that the non-party has standing in one court but not in another. Standing is about whether the party seeking relief has a real interest in the controversy, not about the forum where the litigation is pending. So I am inclined to say that the reasoning of the case is incorrect. Now, it may be that on the facts of this case Freight Bulk should not have been able to attack the judgment in New York let alone in Virginia. But I see no good reason why the result should depend on the district where it brings it attack.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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