Second Circuit Court of Appeals Issues Revised Hawknet Decision and Confirms Retroactivity of Jaldhi
On December 22, 2009, nearly six (6) weeks after issuing its decision in Hawknet, Ltd. v. Overseas Shipping Agencies, the Second Circuit Court of Appeals issued an amended decision, vacating its prior opinion of November 13, 2009 in light of plaintiff-appellant Hawknet Ltd.'s petition for rehearing. In short, the Court has maintained its ruling that The Shipping Corporation of India Ltd. v. Jaldhi Overseas Pte. Ltd. should be applied retroactively, but has revised its reasoning.
Although the Court previously ruled that Jaldhi should have retroactive application because it was a "jurisdictional ruling", the original Hawknet decision received a great deal of criticism from Rule B claimants for failing to take into account equity and the reliance interests disrupted by the decision. On November 30, 2009, the Plaintiff-Appellant in Hawknet had filed a Petition for Rehearing in the Second Circuit, arguing that the Hawknet Court had failed to apply a three (3) part analysis set forth by the United States Supreme Court to determine if this new rule of law should apply retroactively. The Petition further argued that applying Jaldhi retroactively would be inequitable in light of disruption to the reliance interests of Rule B plaintiffs.
In its revised decision, the Hawknet Court notes that the United States Supreme Court had previously held that "[w]hen this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review." Harper v. Virginia Department of Taxation, 509 U.S. 86, 97 (1993). The Court stated that because the rule announced in Jaldhi applied to the parties in that case, therefore it has retroactive effect to all cases open on direct review. The Court further noted that a reliance interest is insufficient to overcome the presumption of retroactivity.
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