2d Circuit Affirms that Defendant's Appearance and
Consent to Transfer Funds To Court's Registry in Rule B Action Does Not Waive Objection to Attachment

In India Steamship Company Limited v. Kobil Petroleum Limited, the Second Circuit Court of Appeals held that a Rule B defendant's general appearance and its consent to the funds being transferred to the Southern District registry to accrue interest is not a waiver of the objection to the attachment.

India Steamship Company Limited (ISC) attached $1,653,168 belonging to Kobil Petroleum Limited (Kobil) pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions as the funds passed briefly through New York from one foreign Kobil account to another. After these funds were attached, Kobil entered a general appearance before the court and consented to having the funds transferred to an interest bearing account in the Southern District's registry. Following the Second Circuit's decision in Shipping Corp. of India v. Jaldhi Overseas Pte Ltd. (585 F.3d 58 (2d. Cir. 2009), the District Court in Kobil ordered the attached funds be released to Kobil. ISC promptly appealed the court's order releasing the funds.

On appeal, ISC argued that Kobil waived objection to the attachment by entering a general appearance. Kobil argued that the general appearance only waived objection to jurisdiction over its person, not its property. To attach property, a court will have jurisdiction over the property in question and the authority to order attachment regardless of whether or not the court had jurisdiction over the property owner. Further, the Court rejected ISC's argument that Kobil had waived objection to the attachment by consenting to the transfer of funds. The court reasoned that a party should not have to choose between challenging an attachment and protecting the value of the attached asset. Here, Kobil consented to the fund transfer to protect the value of the attached funds while they were under the control of the Southern District registry. Accordingly, the Second Circuit affirmed the District Court's order to release the attached funds to Kobil.

Read a copy of the Second Circuit's decision

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