Article

Note: Alphamate Commodity GMBH (Seller), a German international grain merchant, contracted with Animal Feed Libya (Buyer) for the sale of grain. The contract required Buyer to obtain commercial letters of credit to pay for the purchase. When Buyer failed to do so in a timely and satisfactory manner, Seller sued Buyer for breach of contract, seeking damages for lost sales, demurrage, and unpaid detention. A third party, CHS Europe SA (Intervenor), entered into a separate contract to sell corn to Buyer. After the corn was loaded on the ship but before Buyer paid Intervenor for the corn, Seller obtained a pre-judgment Rule B maritime attachment in the district court. The attachment was obtained to establish quasi in rem jurisdiction over Buyer. Seller posted a security bond for US$250,000 to cover demurrage and detention charges that Intervenor may incur if the attachment failed.

Intervenor joined the suit and moved to vacate the attachment claiming ownership never passed to Buyer. The U.S. District Court for the Eastern District of Louisiana granted the motion. On appeal, the United States Court of Appeals for the Fifth Circuit, Jones, C.J., granted the motion to vacate the attachment but remanded to determine the fate of the security bond. Seller claimed that ownership passed once the cargo was loaded on the ship. The appeals court did not consider this claim but rather considered Intervenor's claim of mootness and lack of jurisdiction.

The appeals court denied the mootness claim because the fate of the security bond was unknown. Furthermore, the court denied maritime jurisdiction because, contrary to Seller's claim, a contract is not a maritime contract just because goods are shipped by sea. Furthermore, the demurrage charges, though maritime, are not separable from the contract and cannot be ruled on as a separate maritime issue with maritime jurisdiction.

[JEB/njh]

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