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LMAA Arbitration Clause in S&P Contract Instructive in Finding Maritime Jurisdiction

On July 20, 2009, the Judge Sand of the United States District Court for the Southern District of New York expressly addressed the circumstances in which a claim arising under a sale and purchase contract may be found maritime in nature in a case captioned Stemcor UK Ltd. v. Sesa International Ltd.

In Stemcor, the Plaintiff had obtained an order of attachment from the District Court authorizing attachment of the Defendant's property. Defendant submitted a Motion to Vacate, alleging that the contracts at issue sounded strictly in sale and purchase and did not fall within the Court's admiralty jurisdiction. The application was denied by the District Court. Thereafter, the Defendant moved for reconsideration, or in the alternative, certification of the matter for immediate interlocutory appeal to the Second Circuit Court of Appeals. The Court denied the motion, holding that: maritime transportation was integral to the contracts; demurrage costs sought by the Plaintiff are traditional maritime claims; and the contracts at issue contained an LMAA arbitration clause. The Court held that the "designation of LMAA arbitration is instructive as to the intent of the parties and suggests that the parties could predict with relative certainty that they were exposing themselves to the possibility of Rule B attachment." Judge Sand also highlighted that such provisions in the contracts implicated "the fundamental interest of maritime jurisdiction, which is the protection of maritime commerce."

To read a copy of the Order denying Defendant's motion for reconsideration and the request to certify the matter for interlocutory appeal, click here.

For more information concerning this decision or the powerful ex parte Rule B remedy, please feel free to call on us at info@chaloslaw.com.

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