Brazilian to English Translations for Litigation
We’ve blogged before about choice-of-law provisions in the context of international contracts. In Praxis Energy v. M/V Pebble Beach, a dispute arose over the payment for fuel for a maritime vessel. At issue in the case was whether the plaintiff could invoke a maritime lien against the vessel under U.S. or Brazilian law in order to satisfy the amount that the plaintiff was owned in exchange for supplying fuel to the vessel. A summary of the facts and court’s ruling follows below.
Dispute Involving Portuguese Language Documents
In 2014, the owner of the defendant marine vessel “Pebble Beach” entered into a charter party agreement with Geatwin Carrier (Holdings) Co., Ltd. In which Greatwin agreed it would not procure supplies or services “including, inter alia, bunkers (marine fuel) on the credit of the owners of the vessel or in the owner’s name…” One month later, Greatwin placed an order with the plaintiff for marine fuel for the vessel when the vessel was in Russia.
The plaintiff emailed Greatwin a purchase order that stated that the vessel would be subject to the seller’s maritime lien rights according to its standard terms and conditions. The terms and conditions also provided that General Maritime Law of the United States would govern the agreement.
After discovering that Greatwin arranged for the fuel company to deliver fuel to the vessel, the vessel’s ship manager emailed the fuel company informing it that any fuel delivered to the vessel is for the charter’s account and that the charterers are responsible for the payment of the fuel, not the vessel or the vessel’s owner. The email clearly stated that under no circumstances would the owners, master, or crew be called upon to pay any amount. The vessel’s manager also informed the fuel company that “any maritime lien rights that the physical suppliers…may have under the terms of this sale or otherwise are hereby and unreservingly waived.” Thereafter, the fuel was delivered to the vessel. A delivery note was provided to the vessel confirming the delivery, which contained a “no lien” stamp.
Vessel Arrives in Brazil
Greatwin then failed to pay the fuel company for the fuel delivered to the vessel. Approximately one year later, the vessel arrived at the port of Rio Grande, Brazil. The plaintiff filed a pleading in Brazil asking the court to detain the vessel in Brazil and order a writ of attachment upon the vessel until the defendants made a $270,000 security payment. The defendants made the security payment, which remains in the Brazilian court’s custody, and thereafter obtained the release of the vessel.
Vessel arrives in the U.S.
Two years later, the vessel arrived in Wilmington, Delaware. At that time, the plaintiff filed a complaint in the U.S. District Court for the District of Delaware asking the court to issue a warrant for the vessel. The vessel was again released after a surety bond was paid by the defendant owner.
Parties File Motions for Summary Judgment
The plaintiff filed a motion for summary judgment and the defendant owner filed a cross motion for summary judgment as well as a motion seeking additional discovery before summary judgment was decided.
The plaintiff argued that the court should grant its motion for summary judgment because the agreement was governed by U.S. Maritime Law, and, under U.S. law, a maritime lien may be obtained on a vessel and a civil action may be brought in order to enforce a lien.
The plaintiff claimed that it holds a maritime lien of $177,870 against the vessel and is entitled to that amount plus prejudgment interest. The defendant owner claimed that it was not a party to the contract between the plaintiff and Greatwin and was therefore not bound by the U.S. choice-of-law provision in the contract; thus, the plaintiff had no right to assert a second lien against the vessel. The defendant owner also argued that the plaintiff was on notice the Greatwin was barred from obtaining a maritime lien against the vessel and therefore cannot obtain a maritime lien.
In considering these arguments, the court found that it did not matter that the defendant owner was not a party to the agreement because the plaintiff brought an in rem claim against the vessel, not an in personam action against the vessel’s owner.
The court also held that U.S. law applied to the dispute. However, the court agreed with the defendant owner that the plaintiff did not have a valid maritime lien to arrest the vessel a second time in Delaware. The court began its analysis by explaining that Brazil recognizes maritime liens, unlike the Netherlands and India. The court held that the plaintiff’s maritime lien was “tied up” in the security held by the Brazilian court and that the defendant’s security paid to the U.S. court should be returned. Accordingly, the court denied the plaintiff’s motion for summary judgment and granted the defendant’s cross motion for summary judgment. The parties will therefore be required to resolve their ongoing dispute in Brazil.
The case is Praxis Energy Agents PTE LTD v. M/V Pebble Beach, Case No. 17-559-LPS decided on September 25, 2018 in the United States District Court for the District of Delaware.
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***This legal translation blog article should not be construed as legal advice. You should always consult an attorney regarding your specific legal needs.***
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