Third-Party Supplier Has Maritime Lien; Court Awards Full Invoice, Interest at Louisiana Judicial Rate and Custodia Legis Expenses

Three Fifty Markets Ltd. v. M/V ARGOS M, 2024 WL 1827250, 2024 U.S. Dist. LEXIS 76256 * (E.D. La., Apr. 25, 2024, Fallon, J.)

            M/V ARGOS M is a bulk cargo vessel under Liberian registry, owned by Argos Bulkers Inc. (Argos), a Marshall Islands corporation, and managed by Pontos Marine, Inc. (Pontos), a company based in Greece.[1] Both Pontos and Argos were controlled by the same person, Nikos Kekridis, a Greek citizen.[2] The vessel was then time chartered to Shimsupa GmbH (Shimsupa), a German company.[3] AUM Scrap and Metals Waste Trading LLC (AUM), a UAE company, guaranteed Shimsupa's obligations.[4] Both Shimsupa and AUM were controlled by Annamalai Subbiah, a citizen of India.[5] The time charter contained no-lien clauses which were not disclosed to Three Fifty Markets, Ltd., (Three Fifty).[6]

            AUM and Shimsupa, through a broker, arranged for bunker fuel to be delivered to the vessel in Las Palmas, Spain.[7] The fuel was delivered and consumed by the vessel but Three Fifty was never paid.[8]

            The first question presented was whether the choice of law provision in the Three Fifty General Terms and Conditions of Sale (GTCS) was enforceable. The GTCS provided for U.S. law to apply including the Commercial Instruments and Maritime Lien Act regardless of where the fuel is delivered.[9] The court found no public policy reason why the provision should not apply and declined to adopt the Vessel’s position that it was not a party to the contract and thus not bound by it. AUM had the authority to purchase the bunker fuel and the Vessel need not be a party to the contract. Furthermore, though the charter agreement had a no lien clause, this was not made known to Three Fifty.[10] Individuals authorized to purchase the fuel received the GTCS, made no objections it, accepted, signed for and consumed the fuel.[11]

            Judge Fallon held that AUM had presumptive authority to make the purchase on the behalf of the vessel and though this presumption may be overcome by showing the supplier had knowledge of the no-lien clause, the vessel failed to do so.[12]

            With respect to damages, the court awarded Three Fifty $629,600, the amount of the invoice but declined to award the 2% rate of interest in the GTCS finding it excessive.[13] Instead interest at the Louisiana judicial interest rate is reasonable and to start from the date on which the balance owed was overdue.[14] Pre-judgment interest was awarded in the amount of $61,511.06.[15]

            Next, $31,000.73 was awarded for custodia legis fees incurred by Three Fifty for its share of the expenses of National Maritime Services, Inc., a substitute custodian. An additional $530 in Marshall expenses were also granted.[16] Three Fifty also requested 5% interest on the custodia legis expenses as it provided no support for such an award.[17]

            The award for attorney’s fees was severed to be determined at another date.[18]

[1] 2024 WL 1827250 *1.

[2] Id.

[3] Id.

[4] Id.

[5] Id.

[6] Id. at *2.

[7] Id. at *3.

[8] Id. at *5 ($629,600 was due and owing.).

[9] Id.

[10] Id. at *6.

[11] Id. at *7.

[12] Id. at *8.

[13] Id. at *9.

[14] Id. (Prejudgment interest began to run on Nov. 11, 2022).

[15] Id.

[16] Id. at *9-10.

[17] Id.

[18] Id. at *8.