The case of the day is SCL Basilisk AG v. Agribusiness United Savannah Logistics LLC (11th Cir. 2017). SCL Basilisk AG chartered a ship, the SCL Basilisk, to Agribusiness United, which was to be used to carry grain from New Orleans to Portugal and Morocco. At Agribusiness’s request, Sonada Agro Limited (UK) LLC took Agribusiness’s place as charterer. Sonada issued a letter of indemnity (Agribusiness United was the guarantor) requiring Sonada to post security in case the ship was arrested or detained and to indemnify SCL Basilisk AG against damage. In fact, the ship was arrested in New Orleans for reasons that aren’t important to the case. Sonada was late in posting security, which caused SCL Basilisk AG nearly half a million dollars in damage. SCL therefore demanded arbitration in London.

SCL Basilisk sought security in aid of the arbitration in the federal court in Savannah, Georgia. It claimed it was entitled to relief under § 9-9-30 of the Georgia code, which provides:

Before or during arbitral proceedings, a party may request from a court an interim measure of protection, and a court may grant such measure, and such request shall not be deemed to be incompatible with an arbitration agreement.

The District Court denied relief, and SCL Basilisk appealed. The court began by holding that the federal attachment remedy in Supplemental Rule B, the rule that governs attachment and garnishment in in personam admiralty cases, did not apply, since under Rule B(1)(a), the rule only applies if the defendant is not found in the district, yet it was clear that Sonada and the other defendants were present in Georgia. Rule B(1)(e), however, also allows the use of “state-law remedies under Rule 64 for seizure of person or property for the purpose of securing satisfaction of the judgment.” SCL Basilisk point to a provision of Georgia’s enactment of the UNCITRAL Model Law (the version prior to the most recent amendments), which provided:

Before or during arbitral proceedings, a party may request from a court an interim measure of protection, and a court may grant such measure, and such request shall not be deemed to be incompatible with an arbitration agreement.

But the court did not construe this provision as creating new remedies, but rather simply allowing the courts to impose whatever prejudgment remedies would otherwise be available notwithstanding the pendency of the arbitration. In other words, the statute aimed to put arbitrations on the same footing as litigation, not to create new remedies particular to arbitration. This reading is consistent with international commentaries on the UNCITRAL Model Law.

SCL Basilisk argued, as a last resort, that the court had equitable power under maritime law to grant relief. It’s true that the courts have inherent powers in admiralty, but only to the extent they had such powers at the time of the adoption of the Constitution. In the late eighteenth century an admiralty court could arrest a vessel at the start of an action for the purpose of obtaining jurisdiction, but not for the purpose of obtaining security against an eventual judgment. The basis of a maritime attachment, in other words, is different from the basis of attachment at common law. (I think it would be possible to question this conclusion, since at common law attachment was also used as a way of obtaining jurisdiction or forcing the defendant to appear; but that’s a matter for another post).

In short, the court affirmed the denial of relief on the grounds that neither Supplemental Rule B nor its inherent admiralty powers authorized the relief sought.