Important New York Decision
In a decision handed down October 16, 2009, the federal court of appeals in New York overruled prior caselaw and held that electronic fund transfers ("EFT's") which are cleared by intermediary banks in New York are NOT property subject to prejudgment attachment pursuant to "Rule B," a U.S. procedural rule applicable in maritime cases. A copy of the twenty-five page decision in The Shipping Corporation of India v. Jaldhi Overseas Pte. Ltd is attached.
The decision specifically overrules a 2002 decision and a subsequent 2008 decision which had held that EFT's were "property" which could be attached pursuant to Rule B. Since then, creditors had attached millions of dollars as security for their claims, the merits of which were usually being decided elsewhere.
It is not clear whether a stay of the effect of the decision will be in place pending further review by the court en banc or by the U.S. Supreme Court.
It is also not clear what effect, if any, the decision will have on funds which are presently being held pursuant to, or as a result of, attachment orders issued since 2002.
We will provide updates as appropriate in this forum. Meanwhile, a member who has obtained security for its claims through attachment of an EFT in New York, or a member who has had its funds attached, should contact the relevant Claims Executive at the Club for further guidance.