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Jaldhi Update - Clearing House Association L.L.C. Files Opposition to JaldhiPetition for Certiorari

The Clearing House Association L.L.C. ("the Clearing House"), an association of commercial banks, has filed a brief as amicus curaie with the United States Supreme Court in The Shipping Corporation of India v. Jaldhi Overseas Pte Ltd., in opposition to the Shipping Corporation of India's ("SCI") Petition for a Writ of Certiorari. The Clearing House's brief, which was filed on consent of the parties, came less than two (2) weeks after the respondent, Jaldhi Overseas Pte Ltd., filed a waiver of its right to oppose the petition. 

The Clearing House had also filed an amicus brief with the Second Circuit Court of Appeals in Jaldhi, urging the Court to overrule its prior decision in Winter Storm Shipping Ltd. v TPI (as it ultimately did). Its Supreme Court filing raises three (3) main points in opposition to SCI's petition:

First, the Clearing House argues that the petition should be dismissed as moot, as the District Court had already entered a final judgment dismissing the case; directed the Clerk of the Court to close all open docket entries; and ordered the release of all funds that had been attached by SCI prior to the District Court's Vacatur Order. The Clearing House argues that because these events took place before the Petition was filed on January 14, 2010, there is no longer a live controversy between the parties.

Next, the brief argues that the Second Circuit correctly found that there was no relevant federal law to determine a Rule B defendant's property interest in an EFT. The Clearing House argues that the Second Circuit properly concluded that Winter Storm's reliance on Daccarett, a civil forfeiture case, was misplaced becauseDaccarett had not considered the issue of ownership of the funds while in transit. The Clearing House further argues that there is no other federal law on point that was overlooked by the Second Circuit. Accordingly, the Clearing House argues that the Second Circuit properly looked to New York State law to determine whether EFTs can be considered a defendant's property, and cites three (3) reasons in support of this argument, including that (1) property interests are generally a matter of state law; (2) that the law of maritime attachment could potentially be disruptive to international banking practices and create uncertainty by placing intermediary banks in the middle of civil disputes; and (3) that New York and every other state have uniformly adopted Article 4A of the Uniform Commercial Code. Because there is no superseding federal law that would pre-empt the New York State law property rights set forth in Article 4A of the U.C.C., the Clearing House argues that the Court correctly concluded that EFTs in the temporary possession of an intermediary bank are not property of either the originator or beneficiary of the transfer.

The Clearing House's final argument is that there is no reason for the Court to review the opinion. Petitions for certiorari are rarely (i.e. - in only approximately 2% of all cases) granted by the U.S. Supreme Court. Those cases usually involve unique issues or splits in opinions between the Circuit Courts. The Clearing House argues that no such policy reasons exist here for the Court to review this case. Specifically, the Clearing House argues that: (1) the Second Circuit's decision was the "product of . . . judicial housekeeping", intended to remedy "enormous practical problems"; (2) that Jaldhi presents a "uniquely Second Circuit issue and remedy" that is unlikely to ever present a conflict with other Circuits; (3) that U.S.-based interests (with the exception of New York banks and the New York maritime bar) are not affected by the Jaldhi holding; and (4) that maritime commerce - as opposed to the maritime attachment industry - has benefited from the Second Circuit's decision.

On February 17, 2010, the Maritime Law Association filed a motion for leave to file an amicus brief. The matter has been scheduled for a conference March 19, 2010.

Read a copy of the Clearing House's Amicus Brief

For more information, please do not hesitate to contact us at info@chaloslaw.com

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