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Note: Petkim Petrochemicals Trading FZE (Buyer) was to arrange a commercial LC in favor of Argo Trade S.A. (Seller) to pay for the purchase of 2,000 to 3,000 metric tons of base oil. The oil was to be shipped to Gebze, Turkey, in a vessel nominated by Seller and accepted by Buyer. The agreed price was US$1,390 per ton CFR. The contract required Buyer to arrange an LC no later than three Geneva banking days before the window of Seller's performance. Buyer failed to arrange the letter of credit by the deadline, thus breaching the contract. Seller then sold the cargo at a loss, resulting in damages of more than US$1,000,000, which accrued from storage costs and a sale price that was lower than the contract price. Seller sued Buyer to recover the loss, seeking an ex parte maritime attachment.

The U.S. District Court for the Southern District of New York, Pauley, J., denied the request for the attachment and dismissed the case. The Judge ruled that there was a lack of subject matter jurisdiction, noting "[t]he fact that the contract requires the seller to ship the goods at seller's cost does not transform the agreement into a maritime contract". The Judge also noted that the failure to open an LC, on which the action was based, is not a breach of a maritime obligation.

[JEB/mjg]

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