1

KEANE & MARLOWE, LLP 

Attorneys for Defendants 

REPINTER INTERNATIONAL SHIPPING CO. S.A. 

 and MIACHART CORPORATION LLC 

197 Route 18 South - Suite 3000 

East Brunswick, New Jersey 08816 

(732) 951-8300 

Mary Ann C. Marlowe (MM-0723) 

Christopher P. Keane (CPK-4394) 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

------------------------------------------------------------x 

DEVAL DENIZCILIK VE TICARET A.S., 

 

 Plaintiff, 

 07 Civil 3397 (JGK)

-against- 

 ECF CASE 

REPINTER INTERNATIONAL SHIPPING 

CO. S.A. and MIACHART CORPORATION 

LLC., 

 Defendants. 

-----------------------------------------------------------x 

DEFENDANTSí/COUNTERCLAIMANTSí MEMORANDUM OF 

LAW IN SUPPORT OF MOTION FOR VACATUR OF RULE B 

ATTACHMENT AND SECURITY ON COUNTERCLAIM

FACTS

 The pertinent facts concerning Defendantsí efforts to tender substitute security to release 

the funds now attached pursuant to this Courtís April 30, 2007 Order are set out in the May 24, 

2007 Declaration of Defendantsí/Counterclaimantsí attorney, Mary Ann C. Marlowe (ìMarlowe 

Decl.î), to which the Verified Complaint and Verified Answer and Counterclaims are annexed as 

Exhibits 3 and 5, respectively. 

Case 1:07-cv-03397-JGK Document 13 Filed 06/13/2007 Page 1 of 13
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 This admiralty action was commenced by the Plaintiff, DEVAL DENIZCILIK VE 

TICARET AS., (ìDevalî) to obtain process of maritime attachment and garnishment (ìPMAGî) 

under Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the 

Federal Rules of Civil Procedure. Deval obtained an order for the issuance of PMAG against the 

assets of Defendants/Counterclaimants, REPINTER INTERNATIONAL SHIPPING CO. S.A. 

and MIACHART CORPORATION LLC., (ìRepinter-Miachartî) in the amount of 

USD1,187,769.26, including estimated future interest, attorneysí fees, and arbitratorsí fees.1 To 

date, USD434,425.87 has been restrained.2

 Devalís claims and the counterclaims of Repinter-Miachart arise out of a series of three 

charter parties entered into for the charter of the M.V. ORHAN DEVAL. All three charter 

parties call for London arbitration with English law to apply.3 

 Under the first charter, Deval was the ìhead ownerî and Repinter-Miachart were the 

charterers. Repinter-Miachart has counterclaimed for USD1,500,326.00 for damages arising 

under the same charter parties, including interest at the same rate and period as in Devalís 

complaint and the same estimates for lawyersí fees and arbitratorsí fees.4

 

 Repinter-Miachart have tendered a Letter of Undertaking (ìLOUî) issued by The 

Charters P&I Club for the full amount of Devalís alleged claims which, to date, Deval has 

refused to accept in return for the prompt release of the attached funds and vacatur of the Rule B 

attachment.5

 

 

1

 See copy of April 30, 2007 Order attached to the Marlowe Decl. as Exhibit 1. 2

 See paragraphs 24-25 of the Verified Answer and Counterclaims. 3

 See paragraphs 30-37 of the Verified Answer and Counterclaims. 4

 See paragraphs 19-22 of the Verified Answer and Counterclaims. 5

 See paragraphs 27-29 of the Verified Answer and Counterclaims. 

Case 1:07-cv-03397-JGK Document 13 Filed 06/13/2007 Page 2 of 13
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 Additionally, Deval has repeatedly and unreasonably refused to voluntarily provide 

counter security for Repinter-Miachartís counterclaims in an obvious attempt to gain a tactical 

advantage over Repinter-Miachart in the upcoming London arbitration.6

 The matter is now before the Court on Repinter-Miachartís Supplemental Rule E(4)(F) 

and Rule E(7) motion for the vacatur of the Rule B attachment, the release of the funds presently 

restrained on the basis of the substitute security tendered and for counter-security on their 

counterclaims. Repinter ñ Miachart seek an Order directing Deval, in part, to provide counter 

security in the amount of USD1,500,326.00. 

 

6

 See paragraphs 6-8 of the Marlowe Decl. 

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POINT I 

DEFENDANTSí ATTACHED FUNDS SHOULD BE RELEASED AND THE 

RULE B ATTACHMENT VACATED BASED UPON THE MORE THAN 

ADEQUATE SUBSTITUTE SECURITY TENDERED BY DEFENDANTS.

Supplemental Rule E(4)(f) provides in pertinent part: 

Procedure for Release From Arrest or Attachment. Whenever 

property is arrested or attached, any person claiming an interest in 

it shall be entitled to a prompt hearing at which the plaintiff shall 

be required to show why the arrest or attachment should not be 

vacated or other relief granted consistent with these rules. 

 As noted in the Defendantsí Verified Answer and Counterclaim at paragraphs 27-29 of 

the Marlowe Declaration, Defendantsí have tendered a letter of undertaking issued by Michael 

Else and Company Limited, agents for the Charterersí P&I Club, on behalf of Defendants in the 

amount of US$1,187,769.26 reflecting the full amount of Plaintiffís alleged claims in exchange 

for the prompt release of the attached funds and vacatur of the April 30, 2007 Order of 

Attachment. Defendantsí perfectly satisfactory tender has been repeatedly and unreasonably 

rejected by Plaintiff. 

 The sufficiency of the security tendered by Charterers is indisputable. The Charterers 

P&I Club is underwritten by the C.R.O. Farrell Syndicate, which, in turn, is managed at Lloydís 

by Limit Underwriting Limited. Limit Underwriting Limited is part of QBE Insurance Group, 

one of the largest managing agents operating within the Lloydís insurance market. Lloydís of 

London presently has a S&P security rating of A+. QBE itself is also rated A+ by S&P. 

 For the past two weeks, Plaintiff has wrongfully refused to accept Defendantsí tender of 

substitute security, knowing full well that letters of undertaking issued by the underwriting 

Case 1:07-cv-03397-JGK Document 13 Filed 06/13/2007 Page 4 of 13
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agents for Defendantsí P&I Club have historically and consistently been deemed acceptable 

security by both other Plaintiffs and this Court.7

 

 Initially, Owners herein conditioned their acceptance of Defendantsí tendered security 

upon a further guaranty from the syndicate which underwrites the insurance for Michael Else & 

Co. Defendants viewed such duplicative security as totally unnecessary and therefore, refused to 

issue such a ìre-guarantee.î 

 Most recently, just prior to the filing of the instant motion, Plaintiff unreasonably 

conditioned its acceptance of Defendantsí letter of undertaking upon Defendantsí agreement to 

forever forgo seeking counter-security in this matter.8

 In light of the well established sufficiency 

of Defendantsí tendered security, Plaintiffs proposed contingency was and is totally 

unacceptable. 

 Given all of the above, Defendantsí attached funds should be released and the Rule B 

attachment vacated. 

 

7

 In Lavena Shipping v. Brampton Shipping 05 CIV. 6263 (JSR) the Honorable Judge S. Rakoff directed the vacatur 

of the attachment therein over the same objection to the same form of Charterers Club LOU as has been registered in 

the instant case. 

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POINT II 

DEFENDANTS ARE ENTITLED TO COUNTERSECURITY IN THE 

AMOUNT OF USD1,500,326.00 FOR THEIR COUNTERCLAIMS

Supplemental Rule E(7)(a) of the Federal Rules of Civil Procedure provides: 

 (a) When a person who has given security for damages in 

the original action asserts a counter claim that arises from the 

transaction or occurrence that is the subject of the original action, a 

plaintiff for whose benefit the security has been given must give 

security for damages demanded in the counterclaim, unless the 

court for cause shown, directs otherwise. Proceedings on the 

original claim must be stayed until this security is given unless the 

court directs otherwise. (Emphasis added.) 

 It is axiomatic that claims and counterclaims between vessel owners and charterers 

arising out of a vessel charter are considered ìarising out of the same transactionî for purposes of 

Supplemental Rule E(7). Verton Navigation, Inc. v. Caribica Shipping Ltd., no. 90 Civ. 6940; 

1991 U.S. Dist. LEXIS 6722, *2-*3 (S.D.N.Y. May 1, 1991); Transportes Caribe, S.S. v. M/V 

Feder Trader, 860 F.2d 637, 638 (5th Cir. 1988). The claims and counterclaims of the present 

dispute all arise out of the three charter parties entered into between Deval, Repinter-Miachart 

and the two subsequent sub charterers of the Vessel.9 

 Deval has the authority to attach assets belonging to Repinter-Miachart up to 

USD1,187,769.26. To date, Deval has obtained security to the extent of USD434,425.87 

restrained pursuant to its PMAG. Accordingly, Plaintiff for whose benefit Defendantsí assets 

have been attached as security, must give security in at least the same amount as the security to 

which Plaintiff may lay claim. Failing such, the goal of Supplemental Rule E (7), to place the 

parties on equal footing as regards security and thereby afford reciprocal protection, will not be 

 8

 See paragraph 8 of the Marlowe Decl., see also paragraphs 27-29 of the Verified Answer and Counterclaims 9

 Copy of April 13, 2006 charter party entered into between Deval and Repinter-Miachart is attached to the May 23, 

2007 Declaration of Mary Ann C. Marlowe (ìMarlowe Decl.î) as Exhibit 4. 

Case 1:07-cv-03397-JGK Document 13 Filed 06/13/2007 Page 6 of 13
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realized. Result Shipping Co., Ltd. v. Ferruzzi Trading USA, Inc., 56 F 3d. 394, 399-400 (2d 

Cir. 1995); Doungbu Express Co., Ltd. v. Navios Corporation, 944 F. Supp. 235, 239 (S.D.N.Y. 

1996); Verton, supra; Titan Nav., Inc. v. Timsco, Inc., 808 F. 2d 400, 403 (5th Cir. 1987); Expert 

Diesel, Inc. v. Yacht Fishin Fool, 627 F.Supp 432, 433 (S.D.Fla. 1986); Eastern Transp. Co. v. 

U.S., 98 F.Supp. 36, 38 (S.D.N.Y. 1951). 

 Although some courts have held that the amount of security imposed on counterclaims 

should not exceed the amount provided by the original defendant, Defendants submit that this 

mechanical formula is not mandated by the discretionary language contained in Supplemental 

Rule E(7) and, furthermore, not well reasoned. Rather, Defendants/Counterclaimants strongly 

favor the approach advanced in the second edition of Mooreís Federal Practice: 

 A holding [precluding imposition of a larger bond on the 

counterclaim than that which was required of the original 

defendant]Öwould serve only to encourage sham suits and races 

to the court house. Suppose, by way of illustration two vessels 

collide and one suffers only minor damage and the other sustains 

very severe damage. If the owner of the slightly damaged vessel 

commences an action in rem against the severely damaged vessel a 

relatively small bond will be required by the owner of the severely 

damaged vessel. If the owner of the latter vessel is compelled to 

assert his much larger claim in the same action, it might be grossly 

unfair to limit the security for his claim to the amount of the bond 

he had to provide, since had he first commenced his action he 

could have compelled the posting of a bond large enough to 

compensate for the severe damages he alleges. In such a case, it 

might well be ìjust and reasonableî and more in keeping with the 

purposes of the rule providing for security on counterclaims to 

require that the original plaintiff post a larger bond to protect 

against the counterclaim than the original defendant had to post to 

protect against the original action. If courts are not alert to such 

facts, it might encourage the filing of sham suits by parties who 

know they are potential targets for large in rem actions. Similarly, 

a flat rule providing that security on counterclaims cannot exceed 

the amount of the original defendantís bond would encourage races 

to the courthouse by the least injured of the parties sustaining 

damages in a maritime occurrence. 

Case 1:07-cv-03397-JGK Document 13 Filed 06/13/2007 Page 7 of 13
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7A J. Moore & A. Pelaez, Mooreís Federal Practice ß (E.15) at E-737 (2d Ed. 1988). 

 This Court, in fact, permitted greater security on a counterclaim than a plaintiff obtained 

on its main claim in Verton, supra. In that case, defendant Caribica sought and was granted 

security via a Rule E (7) motion for its counterclaim in the amount of USD338,850.11 

representing charter hire withheld by plaintiff and reimbursement of expenses. The plaintiff had 

obtained a writ of attachment which was vacated by agreement after insurance proceeds 

belonging to the defendant in the amount of USD195,423.11 were paid into an escrow account 

held by the plaintiffís counsel. This Court rejected the plaintiffís argument therein that 

defendantís counterclaim was fully secured by a performance guarantee by a third party under 

the subject charter party. 

 Similarly, in Continental Shipping Ltd v. Telfair Intíl Corp., 1990 U.S. Dist. LEXIS 

11549 (S.D.N.Y. 1990), Judge Mukasy rejected the Plaintiffís argument that the Defendant had 

not shown the necessity for counter-security and acknowledged that the underlying purpose of 

Rule E (7) is to ìput the parties on equal footing.î In exercising his discretion under Rule E (7), 

he found it unnecessary to determine whether Defendant ìgenuinely and justifiably suffers such 

insecurity that Plaintiff should be required to provide insuranceÖ the purpose is to force litigants 

to put their money where there mouth is so to speak.î 

 In Spriggs v. Hoffstot, 240 F.2d 76 (4th Cir. 1957), a counterclaimant sought security in 

an amount equal to the amount of security it had posted despite the fact that its counterclaims 

amounted to far less. The Court, recognizing the original purpose of permitting security on 

counterclaims was to place the parties on an equal basis as regards security, thought literal 

application of Rule 50 (the former admiralty rule prior to unification) inappropriate. As stated by 

that Court: 

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When the rule gives the cross-libellant a right to ësecurity in the 

usual amount,í his bond need not necessarily be in the exact 

amount of the original libellantís bond; nor is it necessarily in the 

amount of the cross-claim, because as in the original libellantís 

caseÖso in the cross-libellantís case the amount is subject to the 

exercise of the judgeís discretion. 

Id. at 79. Thus, the Fourth Circuit concluded that in exercising the discretion built into the rule, 

the trial judge need not be governed by the amount of bond given by the original defendant nor 

even by the size of the counterclaim, and is free to set the bond in an amount that is ìjust and 

reasonable under all the circumstances.î Id. At 80. 

 Here, had Defendants/Counterclaimants brought their action first and attached Plaintiffís 

assets, they would have been entitled to attach an amount equal to their claim, i.e., 

USD1,500,326.00. The fact that their claims are fortuitously counterclaims should not limit this 

right. 

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POINT III 

IF PLAINTIFF DOES NOT PROVIDE COUNTER-SECURITY FOR DEFENDANTSí 

COUNTERCLAIMS, DEFENDANTS SHOULD BE ENTITLED TO WITHDRAW/VOID 

THE SUBSTITUTE SECURITY TENDERED AND ESTOPP PLAINTIFF FROM ANY 

FURTHER ATTACHMENT OF DEFENDANTSí ASSETS

 Rule E(7)(a) essentially provides that the Plaintiffís claim must be stayed until 

countersecurity is given, unless the Court orders otherwise. However, in the present case, the 

action is to be stayed in any event pending arbitration in London.10 Therefore, merely staying 

the proceedings would not be a remedy if Plaintiff fails to provide security. 

 It is firmly established that the purpose of Rule E(7) is to place the parties on an equal 

footing. See Washington-Southern Navigation Co. v. Baltimore & Philadelphia Steamboat Co., 

263 U.S. 629, 638-39 (1924.) See also Finecom Shipping Ltd. v. Multi Trade Enterprises AG., 

2005 U.S. Dist. Lexis 25761; 2005 AMC 2952 (S.D.N.Y. 2005). Clearly, when one party posts 

security and the other fails to comply with a court order to do the same, that policy is violated. 

 This Court has not been reticent to exercise its authority to vacate a plaintiffís attachment 

if the plaintiff fails to comply with an order requiring it to provide security for a defendantís 

counterclaim. See Verton Navigation, Inc. v. Caribica Shipping Ltd., no. 90 Civ. 6940, (JFK), 

1992 U.S. District LEXIS 6722, *4-*5 (S.D.N.Y. January 21, 1992). 

 In Seaboard & Caribbean Transport Corp. v. Hafen-Dampfschiffahrt A.G. Hapaghadac 

Seebaderdienst, 329 F.2d 538, 540 (5th Cir. 1964), a ship owner posted security in order to 

release its vessel which had been arrested by Charterer. The owner thereafter sought counter-

 

10 Rule E(7)(a) expressly provides as follows: When a person who has given security for damages in the original 

action asserts a counterclaim that arises from the transaction or occurrence that is the subject of the original action, a 

plaintiff for whose benefit the security has been given must give security for damages demanded in the counterclaim 

unless the court for cause shown, directs otherwise. Proceedings on the original claim must be stayed until this 

security is given unless the court directs otherwise. 

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security. The Fifth Circuit held that it was within the trial courtís broad discretion to release 

ownerís security since charterer was financially unable to post counter-security. Id. at 541. 

 In Titan Navigation, Inc. v. Timsco, Inc., 808 F.2d 400 (5th Cir. 1987), the Fifth Circuit 

again released security when a party claiming financial inability failed to post counter-security. 

According to the Court: 

[T]he exercise of the trial courtís discretion to order 

countersecurity is to be guided by the essential and equitable 

purposes of the Rule. In doing so, the Court must weight the 

importance of the security interests giving rise to the initial seizure, 

against the potential injustice of requiring the defendantcounterclaimant to post security without affording reciprocal 

protection. We believe the guidon for this analysis is the Courtís 

obligation to preserve the integrity of maritime liens . . . We can 

readily contemplate instances when permitting one party to enjoy 

security without requiring counter-security could result in injustice. 

For example, when no maritime lien or statutory right is involved, 

as in an action commenced quasi in rem under Rule B, there 

usually would be little or no reason to permit a complainant to 

enjoy unilateral security rights, absent strong justification ñ or in 

the terms of Rule E(7), ìcause.î (Emphasis added.) 

808 F.2d 404-405. 

 In the present case, as discussed supra, the substitute security tendered by Defendants is 

completely adequate to release the funds attached to date and further, to, vacate this Courtís Rule 

B Attachment Order dated April 30, 2007. Plaintiffís adamant refusal to accept the LOU 

tendered by Defendants in the full amount of Plaintiffís alleged claims is totally groundless for 

the reasons set forth above and in the Marlowe Declaration. It is universally acknowledged that 

security in this form is routinely accepted as security for the release of attached funds by Owners 

and Charterers alike. 

 Assuming for the moment that this Court agrees that 

Defendants/Counterclaimantsí tender of security is sufficient to release the funds now restrained 

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and vacate this Courtís April 30, 2007 Order of Attachment, Defendants respectfully request that 

Plaintiff be directed by this Court to post a comparable letter of undertaking issued by Ownersí 

Protection and Indemnity Club or a bank guarantee from a first class London or New York bank 

which is acceptable to Defendants in the full amount of Charterersí counterclaims within seven 

(7) calendar days of the date of any such Order by this Court. 

 In the event that Owners are unwilling or unable to comply, then Defendantsí respectfully 

request, in the alternative, that this Court enter an Order which will enable the Defendantsí to 

void The Charterersí Club LOU and serve to release the attached funds and vacate this Courtís 

April 30, 2007 Attachment Order . Defendants further request, in light of their good faith tender 

of full security for Plaintiffís alleged claims that, in this event, Owners be estopped from seeking 

subsequent Rule B attachments of Defendantsí assets in so far as the instant matter is concerned. 

 To permit Plaintiff to require additional security from Defendants pursuant to the present 

attachment order in light of the indisputable sufficiency of the LOU tendered and without 

compelling Plaintiff to post counter-security, would not only bring about a further injustice, but 

would undermine the very purpose of Rule E (7). 

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CONCLUSION

 For all the foregoing reasons, and those set forth in the May 24, 2007 Declaration of 

Mary Ann C. Marlowe, Esq. filed herewith, the funds of Defendants now restrained should be 

released, the present Rule B attachment now in place pursuant to this Courtís April 30, 2007 

Order should be vacated, Plaintiff should be ordered to provide counter security for the full 

extent of Defendantsí counterclaims and, should Plaintiff fail to comply with this Courtís 

directive within seven (7) calendar days of the date of the order, Defendants should be permitted 

to void The Charterersí Club LOU tendered to Plaintiff. Finally, in this event, Owners should 

be estopped from seeking subsequent Rule B attachments of Defendantsí assets insofar as they 

are sought for security in connection with the instant matter. 

Dated: New York, New York 

 May 24, 2007 

 KEANE & MARLOWE 

 Attorneys for Defendants 

 Repinter International Shipping Co. S.A. 

 and Miachart Corporation LLC 

 s/_______________________________ 

 Mary Ann C. Marlowe (MM 0723) 

 Christopher P. Keane (CK 4394) 

 A Member of the Firm 

 197 Route 18 South, Suite 3000 

 East Brunswick, New Jersey 08816 

 (732) 951-8300 

 300 Park Avenue ñ 17th Fl 

 New York, New York 10022 

TO: Freehill, Hogan & Mahar, LLP 

 Attorneys for Plaintiff 

 Deval Shipping & Trading Co. 

 80 Pine Street 

 New York, New York 10005 

Attn: Michael Unger, Esq. (MU 0045) 

 Lawrence Kahn, Esq (LK 5215) 

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