Fifth Circuit Affirms In Rem Under the Federal Maritime Lien Act

World Fuel Servs. Singapore PTE, Ltd. v. Bulk Juliana M/V

By: Sarah Didlake

Edited by: Alex Lauricella

World Fuel Servs. Singapore PTE, Ltd. v. Bulk Juliana M/V, No. 15-30239, 2016 WL 1295041 (5th Cir. Apr. 1, 2016).This case stems from a claim filed by a Singapore-based fuel supplier in the Eastern District of Louisiana in an effort to recover for unpaid bunkers delivered to a vessel in a foreign port. The supplier, World Fuel Services Singapore (“WFS Singapore”) arrested M/V BULK JULIANA, in rem, seeking to recuperate the debt pursuant to a 2012 contract between WFS Singapore and the time charterer, Denmar which was dismissed due to its insolvency. The owner of the vessel filed a Motion for Summary Judgment to dismiss the arrest asserting that WFS Singapore did not have a maritime lien. The trial court denied the motion holding that WFS Singapore did have a maritime lien under U.S. maritime law.On appeal, United States Court of Appeals for the Fifth Circuit specifically thoroughly reviewed the district court’s grant of partial summary judgment in favor of WFS Singapore regarding the controlling law as to the validity and enforceability of a maritime lien against the M/V BULK JULIANA. The contract contained a choice of law clause stating that the transaction and any subsequent disputes were to be governed by the “General Maritime law of the United States.” The district court upheld the parties’ express choice of law and held that the lien issued against the vessel was enforceable under the Federal Maritime Lien Act (“FMLA”).The Fifth Circuit initially noted that the applicability of Singapore law to the formation of the contract was no longer in dispute and then addressed the remaining issues in its four-part opinion. First, the court relied heavily on expert witness testimony to affirm the district court’s finding that the contractual terms—including the choice of law clause—were not only legitimately incorporated into the contract, but also enforceable under Singapore law. Second, even though Bulk Juliana lacked privity of contract with the fuel supplier, the court held that Denmar had the authority to bind the vessel in rem for the fuel purchase and that the maritime lien for the now-insolvent charter’s nonpayment was enforceable against the third-party vessel “as a matter of black-letter law under the FMLA.” Third, the court found that the maritime lien was created by operation of law rather than solely under the terms of the contract. Finally, the court held that the choice of law clause, which only expressly invoked the U.S. General Maritime Law, also included the statutorily-created FMLA. To support this conclusion, the court cited principles of contractual interpretation as well precedent from the Fourth Circuit in a case addressing an identical choice of law provision.Finally, the Fifth Circuit affirmed the district court’s grant of partial summary judgment upholding the parties’ choice of U.S. law as well as the district court’s order enforcing the maritime lien against the vessel.