Court Opinion

ID: 9382210
Source: CourtListenerOpinion
Date Created: 2023-03-25 00:00:24.916917+00
Date Added: 2024-06-11T17:17:37.795749
License: Public Domain

Case: 22-20345    Document: 00516688844        Page: 1    Date Filed: 03/24/2023

          United States Court of Appeals
               for the Fifth Circuit                              United States Court of Appeals
                                                                           Fifth Circuit

                                                                         FILED
                                                                   March 24, 2023
                                No. 22-20345
                                                                    Lyle W. Cayce
                                                                         Clerk
   Corporativo Grupo R SA DE C.V.,

                                                         Plaintiff—Appellant,

                                    versus

   Marfield Limited Incorporated; Shanara Maritime
   International, S.A.,

                                                     Defendants—Appellees,

   Caterpillar Financial Services Asia Pte Ltd;
   Eksportfinans ASA; The Norwegian Government,
   represented by the Norwegian Ministry of Trade and
   Industry and Eksportkreditt Norge AS; KFW IPEX-Bank
   GmbH,

                                                     Intervenors—Appellees.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                          USDC No. 4:19-CV-1963
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                                   No. 22-20345

   Before Wiener, Stewart, and Engelhardt, Circuit Judges.
   Jacques L. Wiener, Jr., Circuit Judge:
         Plaintiff-Appellant Corporativo Grupo R SA DE C.V. (“Grupo R”)
   appeals some of the district court’s findings of fact and conclusions of law
   following a January 2022 bench trial. Grupo R asserts that the district court
   erred by (1) incorrectly interpreting and applying vessel mortgage
   recordation requirements under Panamanian law and (2) recognizing specific
   lien claims by parties who failed to obtain substitute security following the
   judicial sale of a vessel. We AFFIRM.
                             I. Factual Background
         In 2008, Intervenors-Appellees Caterpillar Financial Services Asia
   Pte Ltd (“Caterpillar”) and Eksportfinans ASA (“Eksportfinans”) provided
   a loan to Marfield Limited Incorporated (“Marfield”) for the construction
   of an offshore construction vessel named the M/V CABALLO MAYA
   (“MAYA”). To secure payment of this loan, Marfield executed and
   delivered a First Preferred Naval Mortgage to Eksportfinans and a Second
   Preferred Naval Mortgage to Caterpillar on December 19, 2008. As further
   security for outstanding sums owed to Caterpillar, Marfield executed a Third
   Preferred Naval Mortgage on April 17, 2014, encumbering the whole of the
   MAYA. The MAYA was flagged in Panama, so all three of those mortgages
   were submitted to the Panama Maritime Authority Directorate General of
   Public Registry of Property of Vessels (“PMA”), which is the central office
   for the recordation of Panamanian ship mortgages. The PMA reviewed all
   three mortgages twice and accepted them for recordation.
         In 2012, Caterpillar and Intervenor-Appellee the Norwegian
   Government (“Norway”) provided a loan to Shanara Maritime International
   S.A. (“Shanara”) for construction of another offshore construction vessel
   named the M/V CABALLO MARANGO (“MARANGO”). To secure this

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                                  No. 22-20345

   loan, Shanara executed and delivered a First Preferred Naval Mortgage to
   Caterpillar and Norway on February 9, 2012. The following year, KFW
   IPEX-Bank GmbH (“KFW”) provided a loan to Shanara to finance the
   acquisition of cranes for installation aboard the MARANGO. To secure
   payment of this loan, Shanara executed and delivered a Second Preferred
   Naval Mortgage to KFW on January 24, 2013. The MAYA was also flagged
   in Panama, so both mortgages were submitted to the PMA, which reviewed
   the mortgages twice and accepted them for recordation.
          Once construction of the MAYA and MARANGO was completed,
   Marfield and Shanara chartered the vessels to Oceanografia S.A. de C.V.
   (“Oceanografia”) for use in Mexico. The MAYA and the MARANGO were
   chartered there until early 2014, when the Mexican government seized the
   vessels in conjunction with its criminal investigation of Oceanografia. On
   February 28, 2014, Marfield and Shanara terminated their bareboat charters
   of the vessels with Oceanografia, and the vessels remained in the Mexican
   government’s custody. Shanara and Marfield could not generate revenue on
   the vessels and began to fall behind on their loan payments to Intervenors-
   Appellees Caterpillar, Norway, KFW, and Eksportfinans (collectively, the
   “Lenders”). Shortly after that, bankruptcy proceedings were commenced
   against Oceanografia in Mexico, and, on April 10, 2014, the Mexican
   government separately seized the MAYA and MARANGO in connection
   with the bankruptcy.
         In early 2014, Grupo R, a Mexican conglomerate in the oil, gas, and
   energy sector, initiated discussions with Marfield and Shanara to purchase
   the MAYA and MARANGO. On March 21, 2014, the parties entered into
   purchase agreements for the vessels. Shanara and Marfield were
   subsequently unable to obtain the release of the vessels from the Mexican
   government, which violated the deadlines set forth in the purchase
   agreements. Since the agreements are governed by English Law and contain

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   a London Maritime Arbitration Association dispute resolution clause, Grupo
   R initiated a London arbitration against Shanara and Marfield. Grupo R
   prevailed, and on May 30, 2019, a London Arbitration Panel entered awards
   of $5,000,000 against Marfield and $5,000,000 against Shanara.
         From the initial arrest of the vessels until December 2017, the Lenders
   executed a number of amendments to the original loan agreements to reaffirm
   Marfield’s and Shanara’s payment obligations, which remained unfulfilled.
   On July 10, 2015, the Lenders, Marfield, and Shanara executed two Standstill
   Agreements in which Shanara and Marfield admitted that their cancellation
   of the Oceanografia charters constituted “materially adverse” events of
   default under their respective loan agreements. To avoid the imposition of
   liens over the MAYA and MARANGO, Caterpillar provided additional
   financing to Marfield and Shanara in the form of four “protective advances,”
   or loans. In return, Marfield and Shanara executed four Preferred Naval
   Mortgages in favor of Caterpillar to secure the outstanding amounts due,
   then registered those mortgages with the PMA. The PMA reviewed each of
   the mortgages twice, then accepted them for recordation. Since 2014,
   Shanara and Marfield have made no loan payments to the Lenders on any of
   the nine mortgages issued.
                             II. Proceedings Below
         On May 30, 2019, Grupo R filed suit in the U.S. District Court for the
   Southern District of Texas seeking to attach the MAYA and MARANGO
   under the Texas Civil Practice and Remedies Code Section 61.001, et seq.
   Grupo R requested that the court attach the vessels so they could be sold at
   judicial auction to satisfy Grupo R’s arbitration awards. Grupo R attached a
   Certificate of Ownership and Encumbrance to its Complaint, identifying the
   First, Second, and Third Preferred mortgages over the MAYA and the

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                                            No. 22-20345

   MARANGO. At the time, the MAYA and MARANGO had been released
   from Mexican seizure and were located in Galveston, Texas.
          The district court granted Grupo R’s motion to attach the MAYA and
   MARANGO on June 4, 2019. Shortly thereafter, the Lenders moved to
   intervene in the case to assert their rights, seeking judgment against Marfield
   and Shanara in personam and the MAYA and MARANGO in rem. The
   Lenders caused the vessels to be re-arrested pursuant to Rule C of the
   Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture
   Actions. 1 Marfield and Shanara then filed an answer and counterclaim
   against the Lenders for declaratory judgment, fraud, and wrongful arrest.
          On April 22, 2020, the district court ordered the United States
   Marshals Service to put the MAYA and MARANGO up for sale at a judicial
   auction. At the auction, the MAYA was sold to Karadeniz Holding for the
   price of $1,700,000, which the district court confirmed on January 7, 2021.
   Caterpillar, which had been authorized by the court to credit bid the amount
   of its debt, was the successful high bidder on the MARANGO for
   $5,000,000. The court ordered Caterpillar to file a security bond in the
   amount of $4.95 million to confirm the sale of the MARANGO. Caterpillar
   filed the security bond on November 15, 2021, but Grupo R objected to its
   language. Grupo R expressed concern that the security bond would prevent
   Grupo R from collecting against the bond if the Lenders’ mortgages were
   ruled unenforceable against third parties like Grupo R. The district court
   directed Caterpillar to amend the bond in open court to assuage Grupo R’s
   concerns, and the parties executed an amended bond (the “Amended
   Bond”).

          1
              FED. R. CIV. P. SUPP. R. C.

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           On January 4, 2022, Grupo R, Marfield, and Shanara filed a
   stipulation of various facts, agreeing that the London arbitration awards were
   subject to enforcement and recognition under the New York Convention.
   The district court then entered an order and judgment recognizing and
   confirming the London arbitration awards. With this resolved, the parties
   could proceed to trial.
           On January 18, 2022, a three-day bench trial commenced to determine
   the priority of the Lenders’ foreign ship mortgages and Grupo R’s state-
   created liens, as well as the enforceability of the Lenders’ mortgages. At trial,
   Marfield and Shanara presented testimony from the parties’ corporate
   representatives, while the Lenders and Grupo R presented testimony from
   two Panamanian law experts, Jorge Loaiza for Grupo R, and Margareth
   Mosquera for Lenders. On June 7, 2022, the court issued its findings of fact
   and conclusions of law, holding, in relevant part, that (1) Marfield and
   Shanara are in default under the loan agreements; and (2) the Lenders’
   preferred ship mortgages related to said default outrank Grupo R’s state-
   created liens arising from Grupo R’s attachment of the MAYA and
   MARANGO under Texas state law. Grupo R timely appealed. 2
                                   III. Standard of Review
           Following a bench trial, the district court’s findings of fact are
   reviewed for clear error and its conclusions of law are reviewed de novo. 3 “So

           2
             Marfield and Shanara are no longer parties to this case because the MAYA and
   MARANGO were sold before trial and final judgment. Marfield and Shanara expressly
   waived the opportunity to file briefs on behalf of those vessels in a letter to this court dated
   November 14, 2022. See Letter from Robert E. Booth in re: Cause No. 22-20345, November
   14, 2022.
           3
            See Barto v. Shore Constr., LLC, 801 F.3d 465, 471 (5th Cir. 2015) (quoting Becker
   v. Tidewater, Inc., 586 F.3d 358, 365 (5th Cir. 2009)); Beatriz Ball, L.L.C. v. Barbagallo Co.,

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                                           No. 22-20345

   long as the ‘district court’s account of the evidence is plausible in light of the
   record viewed in its entirety,’ its findings must be affirmed, even if the court
   of appeals might ‘have weighed the evidence differently.’” 4
           The district court’s determination of foreign law pursuant to Rule
   44.1 of the Federal Rules of Civil Procedure is a question of law subject to de
   novo review. 5 When determining an issue of foreign law under Rule 44.1, “the
   court may consider any relevant material or source, including testimony,
   whether or not submitted by a party or admissible under the Federal Rules of
   Evidence.” 6 Although treated as a question of fact at trial, on appeal, “[t]he
   court’s determination must be treated as a ruling on a question of law.” 7
                                        IV. Discussion
           Grupo R makes two primary arguments on appeal. First, it asserts that
   the district court erred by incorrectly applying and interpreting Panamanian
   law in its determination of the relative priority of the parties’ lien claims.
   Second, Grupo R contends that the district court erred by recognizing
   Caterpillar’s and KFW’s lien claims in connection with the credit sale of the

   L.L.C., 40 F.4th 308, 315 (5th Cir. 2022) (citing Preston Expl. Co., L.P. v. GSF, L.L.C., 669
   F.3d 518 (5th Cir. 2012)).
           4
             Bates Energy Oil & Gas, L.L.C. v. Complete Oil Field Services, L.L.C., No. 20-
   50952, 2021 WL 4840961 (5th Cir. Oct. 15, 2021) (citing Anderson v. Bessemer City, 470
   U.S. 564, 574 (1985)).
           5
             See Iracheta v. Holder, 730 F.3d 419, 423 (5th Cir. 2013); Banco de Credito Indus.,
   S.A. v. Tesoreria Gen., 990 F.2d 827, 832-33 (5th Cir. 1993); FED. R. CIV. P. 44.1.
           6
               FED. R. CIV. P. 44.1.
           7
             Id.; see also Access Telecom, Inc. v. MCI Telecommunications Corp., 197 F.3d 694, 713
   (5th Cir. 1999) (citing FED. R. CIV. P. 44.1); Perez & Compania v. M/V Mexico I, 826 F.2d
   1449, 1450 (5th Cir. 1987).

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                                           No. 22-20345

   MARANGO when they failed to obtain substitute security following the sale.
   These arguments are discussed in turn below.
                A. Relative priority of the Lenders’ mortgages as to Grupo R’s state-
                     created liens
          On appeal, the parties dispute whether the Lenders’ liens created by
   the nine ship mortgages take priority over Grupo R’s liens that arose from
   the attachment of the MAYA and MARANGO under Texas state law. The
   relative priorities of the Lenders’ and Grupo R’s rights determine how the
   proceeds from the judicial sale of the MAYA and MARANGO should have
   been allocated. 8 The law of the forum provides the relative rankings of the
   liens, while Panamanian law governs the substance of the liens. 9 The ranking
   of liens in the United States, from highest priority to lowest priority, is as
   follows:
                         1. Custodia legis expenses;
                         2. Seamen’s liens for wages;
                         3. Salvage and general average liens;
                         4. Tort liens;
                         5. Preferred ship mortgage liens;
                         6. Liens for necessaries under CIMLA;
                         7. State-created liens that are maritime in nature;
                         8. Maritime liens for penalty/forfeiture for violation of
                             federal statutes;
                         9. Perfected non-maritime liens;
                         10. Attachment liens;

          8
            United States v. (One) 1 254 Ft. Freighter, M/V ANDORIA, 570 F. Supp. 413, 415
   (E.D. La. 1983), aff'd, 768 F.2d 597 (5th Cir. 1985).
          9
              Banco de Credito Indus., 990 F.2d at 832.

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                         11. Maritime liens in bankruptcy. 10
   “Once competing liens have been ranked according to class, the top priority
   liens will of course be paid first.” 11 Moreover, “[i]f the funds are insufficient
   to pay the next lower ranked class in full, the available funds will be
   distributed among claimants in that class according to rules operating within
   that class.” 12
           Under this ranking regime, Grupo R’s rights are classified as “state-
   created liens that are maritime in nature,” while the Lenders’ liens are
   classified as “preferred ship mortgages.” Grupo R’s liens arose when it
   caused the MAYA and MARANGO to be attached under Texas state law.
   The Lenders’ mortgage liens, on the other hand, arose when Shanara and
   Marfield failed to pay the mortgages over the MAYA and MARANGO,
   which had been executed in Panama and registered with the PMA. 13 The
   Commercial Instruments and Maritime Liens Act (“CIMLA”), 46 U.S.C. §
   31301 et seq., defines a preferred ship mortgage as a:
           mortgage . . . established as a security on a foreign vessel if the
           mortgage . . . was executed under the laws of the foreign country under
           whose laws the ownership of the vessel is documented and has been
           registered under those laws in a public register at the port of registry
           of the vessel or at a central office. 14

           10
                M/V ANDORIA, 570 F. Supp. at 415.
           11
             Id. at 415 (citing Rayon Y. Celanese Peruana v. M/V PHGH, 471 F. Supp. 1363
   (S.D. Ala. 1979)); see also G. Varian, Rank and Priority of Maritime Liens, 47 Tul. L. Rev.
   751 (1973); G. GILMORE AND C. BLACK, THE LAW OF ADMIRALTY, 596 (2d ed. 1975).
           12
                M/V ANDORIA, 570 F. Supp. at 415.
           13
                46 U.S.C. § 31301(6)(B).
           14
                Id.

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           The parties do not dispute that the Lenders’ preferred ship mortgage
   liens outrank Grupo R’s state-created maritime attachment liens, and the
   district court confirmed those rankings in its findings of fact and conclusions
   of law. 15 The threshold issue on appeal is whether the Lenders’ mortgages
   are valid and enforceable against third parties like Grupo R, allowing Lenders
   to exercise their priority over the proceeds of the judicial sale of the MAYA
   and MARANGO.
                B. Validity and enforceability of the preferred ship mortgages under
                   CIMLA and Panamanian law
           Grupo R and the Lenders agree that CIMLA and Panamanian law are
   implicated in the resolution of this lawsuit. At trial, it was undisputed that (1)
   the Vessels are registered under Panama’s flag; (2) the PMA is the public
   register or central office charged with recording vessel mortgages in Panama;
   and (3) all nine of the Lenders’ mortgages were recorded with the PMA,
   reviewed and accepted by the PMA before their recordation, and reviewed
   again by the PMA when it issued certificates confirming the mortgages’
   compliance with Panamanian law.
           Under CIMLA, “a mortgage on a foreign vessel is preferred so long
   as it was properly (1) executed and (2) recorded under the laws of the nation
   in which the foreign vessel is registered.” 16 For a preferred ship mortgage,
   CIMLA provides a cause of action in federal court “[o]n default of any term

           15
              Grupo R acknowledges the ranking of KFW’s preferred ship mortgage lien in
   relation to its state-created lien but contends that KFW waived its respective “preferred
   ship mortgage” ranking by failing to seek substitute security following Caterpillar’s credit
   bid for the MARANGO. This is a separate issue that is discussed further below.
           16
             Caterpillar Fin. Servs. Corp. v. IZTACCIHUATL, 510 F. Supp. 3d 404 (E.D. La.
   2020) (citing Governor & Co. of the Bank of Scotland v. Maria S.J., No. 98-1187, 1999 WL
   130632, at *2 (E.D. La. Mar. 10, 1999)); see also 46 U.S.C. § 31301(6)(B).

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   of the preferred mortgage.” 17 The mortgagee may bring a civil action or an
   admiralty action in personam against the mortgagor or guarantors to recover
   a deficiency. 18 The mortgagee may also “enforce the preferred mortgage lien
   in a civil action in rem for . . . a foreign vessel.” 19 As noted above, the parties
   agree that each of the Lender’s mortgages was executed in Panama and
   registered with the PMA. Accordingly, the Lenders’ mortgages are properly
   classified as “preferred ship mortgages” under CIMLA.
            The Lenders contend that the inquiry should end here, asserting that
   CIMLA “does not require Lenders to affirmatively establish all facets of
   Panama law before their mortgages can be recognized as preferred ship
   mortgages.” However, Grupo R takes the position that these preferred ship
   mortgages are unenforceable against third parties—such as Grupo R—
   because they fail to meet the substantive requirements for vessel mortgages
   under Panamanian law. This highly technical argument is discussed further
   below.
            The parties agree that Article 260 of Law No. 55 of 2008, the
   Commercial Maritime Law of Panama, governs the substantive mortgage
   recordation requirements under Panamanian law. The Panamanian
   government has apparently not issued an official English translation of the
   full text of Article 260 from the original Spanish version. The parties’
   Panamanian law experts, Loaiza and Mosquera, offered their own competing
   English translations of Article 260 at trial and in their expert declarations.
   Grupo R also pointed out that in 2011, the PMA published a “Merchant

            17
                 46 U.S.C. § 31325(b)(1).
            18
             1 SCHOENBAUM, ADMIRALTY & MAR. LAW § 9:5 (6th ed. 2020) (citing 46
   U.S.C. § 31325(b)(2)).
            19
                 46 U.S.C. § 31325(b)(1).

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   Marine Circular MMC-11” in English, which refers to Article 260 and
   includes a translation of the mortgage recordation requirements. On appeal,
   the parties dispute the meaning of Article 260’s third clause (“Clause 3”),
   which in its original form states:
                 Las fechas de pago del capital o cumplimiento de las
                 obligaciones garantizadas e intereses, o la forma de determinar
                 dichas fechas, salvo que la hipoteca se haya constituido para
                 garantizar obligaciones exigibles a requerimiento, futuras o
                 sujetas a condición suspensiva.
   Loaiza’s translation of Clause 3 of Article 260 is as follows:
                 Dates of repayment of principal, or for satisfaction of the
                 secured obligations, and of interest, or the method to
                 determine such dates, unless the mortgage has been granted to
                 secure obligations payable on demand, in the future or of
                 conditional compliance. (emphasis in original).
   Mosquera’s translation of Clause 3 is as follows:
                 The maturity dates of principal or of compliance with the
                 guaranteed obligations and interest or the form to determine
                 said dates, unless the mortgage is executed as security for
                 obligations repayable on demand, obligations subject to
                 suspensive condition or future obligations.
   The Merchant Marine Circular MMC-11’s translation of Clause 3 is as
   follows:
                 The dates for the payment of the capital of fulfilment of the
                 secured obligation and interest, or the method used to
                 determine said dates, except if the mortgage is created to
                 secure obligation payable on demand, future obligations or
                 obligations subject to precedent conditions.
   On appeal, the parties dispute whether the phrase “[l]as fechas de pago del
   capital” in the original version means “loan repayment schedule,” thereby
   requiring each registered mortgage to include a loan repayment schedule.

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           Grupo R asserts that all nine of the Lenders’ preferred ship mortgages
   are invalid and unenforceable against third parties because they do not
   include loan repayment schedules or their corresponding payment dates. At
   trial, Loaiza testified that “las fechas” literally translates to the plural phrase
   “the dates,” and that none of the preferred ship mortgages include dates of
   repayment of the loan interest or principal. Loaiza contended at trial that that
   a strict interpretation of Clause 3 is warranted because Article 9 of the
   Panamanian Civil Code states: “[w]hen the meaning of the law is clear, its
   literal word will not be neglected on the pretext of consulting its intent.” 20
   Loaiza asserts that the Lenders improperly attempted to add “maturity date”
   into Clause 3 when the literal translation does not support this. Grupo R
   claims that “[i]f the Panama legislature had intended Article 260, Clause 3 to
   be satisfied by the inclusion of a mortgage’s maturity date alone, they would
   have signaled that by writing the term ‘fecha de vencimiento’ into Clause 3’s
   text.” Relying on Mobile Marine Sales, Ltd. v. M/V Prodromos, 21 a case from
   another circuit, Grupo R contends that the review and certification of the
   nine mortgages by the PMA is of little persuasive significance as to their
   validity.
           The Lenders agree that none of the preferred mortgages include loan
   repayment schedules, but they dispute whether Clause 3 requires such
   schedules at all. Mosquera took issue with Loaiza’s strict interpretation of
   Clause 3, analogizing it to the Spanish translation of the idiom “it’s raining
   cats and dogs.” At trial, Mosquera testified that, although Loaiza’s
   translation of Clause 3 is technically correct, it does not reflect the true

           20
                Loaiza relied on his own English interpretation of Article 9 in support of this
   assertion.
           21
             776 F.2d 85, 89 (3d Cir. 1985) (“The certification of due registration by the
   Public Registry is of limited persuasiveness.”).

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   meaning of Clause 3 under Panamanian law. Mosquera testified that the
   inclusion of the loan maturity dates in each of the preferred ship mortgages
   was sufficient under Clause 3, because “the maturity date is actually the date
   of repayment of the capital and interest of any debt.” Mosquera further
   testified that inclusion of the maturity date is an acceptable and often-used
   way to satisfy the “dates of repayment of principal, or for satisfaction of the
   secured obligations, and of interest, or the method to determine such dates”
   under Clause 3. Mosquera explained that some lenders may choose to include
   a loan repayment schedule, but that most lenders opt to include only the loan
   maturity date.
           The Lenders alternatively contend that Grupo R had actual and
   constructive knowledge of the preferred ship mortgages and has not shown
   that it was prejudiced by the exclusion of loan repayment schedules from the
   preferred ship mortgages. The Lenders point out that Grupo R
   acknowledged that all nine mortgages were recorded with the PMA and
   available for review before initiating this lawsuit. The Lenders also point out
   that that Grupo R attached Certificates of Ownership and Encumbrance for
   the MAYA and MARANGO to the initial complaint, and these certificates
   contained information about the mortgages on the vessels. The Lenders thus
   contend that Grupo R had both actual and constructive knowledge of the
   preferred ship mortgages prior to initiating this lawsuit and that the primary
   purpose of mortgage registration—alerting third parties to the preferred ship
   mortgages—was achieved.
           Under Rule 44.1 of the Federal Rules of Civil Procedure, “[f]ederal
   courts are competent to make determinations of foreign law.” 22 Although

           22
             United States v. One Afghan Urial Ovis Orientalis Blanfordi Fully Mounted Sheep,
   964 F.2d 474, 477 (5th Cir. 1992) (citing FED. R. CIV. P. 44.1).

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   treated as a question of fact at trial, “[t]he court’s determination [of foreign
   law] must be treated as a ruling on a question of law” on appeal. 23 To deter-
   mine whether a mortgage is valid under foreign law, a court may consider
   “any relevant material or source, including testimony, whether or not sub-
   mitted by a party or admissible under the Federal Rules of Evidence.” 24
   “Courts frequently accept affidavits from foreign-law experts to guide their
   analyses of foreign law.” 25 When there are conflicting opinions offered by
   experts on foreign law, “it is not the credibility of the experts that is at issue,
   it is the persuasive force of the opinions they expressed.” 26
           The district court ultimately held that the Lenders’ preferred ship
   mortgages are valid and enforceable under Panamanian law. The court con-
   sidered testimony from both Loaiza and Mosquera at trial, as well as these
   experts’ corresponding declarations. The court pointed out that Loaiza had
   contributed to the 2019 and 2021 editions of the Maritime Law Desk Hand-
   book, in which he described Clause 3’s requirement as “the terms for the pay-
   ment of principal and interest, or of the maturity date or dates for compli-
   ance of the obligation secured by the mortgage, except in the case of mort-
   gages granted to secure obligations payable on demand, future or conditional
   obligations, when such stipulations are not required.” 27 Acknowledging its

           23
             Id.; see also Access Telecom, 197 F.3d at 713 (citing FED. R. CIV. P. 44.1); Perez, 826
   F.2d at 1450.
           24
                Banco de Credito Indus., 990 F.2d at 833 n.12 (quoting FED. R. CIV. P. 44.1).
           25
              IZTACCIHUATL, 510 F. Supp. 3d at 410 (citing McGee v. Arkel Int'l, LLC, 671
   F.3d 539, 546–47 (5th Cir. 2012) (considering affidavits from experts on Iraqi law);
   Authenment v. Ingram Barge Co., 878 F. Supp. 2d 672, 682 (E.D. La. 2012) (considering
   affidavit of expert on English law).
           26
              Itar–Tass Russian News Agency v. Russian Kurier, Inc., 153 F.3d 82, 92 (2d Cir.
   1998) (internal citation omitted).
           27
              CHRISTIAN BREITZKE, JONATHAN S. LUX, MARITIME LAW DESK HANDBOOK,
   Part II. Flag and Registration of Vessels and Mortgages of Vessels (Wolters Kluwer 2019,

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                                          No. 22-20345

   authority to make determinations of foreign law pursuant to Rule 44.1, the
   court stated that it was “not persuaded that a Panama Maritime Court would
   invalidate [Lenders’] mortgages.” The court explained that “the credibility
   and persuasive force of the opinion of [Lenders’] expert, Margareth Mos-
   quera, are greater than that of Plaintiff’s expert, Jorge Loaiza.”
           The district court directed the allocation of proceeds of the MAYA
   and the MARANGO pursuant to its conclusions regarding the liens’ relative
   priorities. The proceeds from judicial sale of the MAYA were to be allocated
   as follows: (1) $63,243.90 to Grupo R and $663,745.12 to Caterpillar for their
   custodia legis lien claims; and (2) any remaining proceeds to Eksportfinans for
   its First Preferred Vessel Mortgage over the MAYA. The proceeds from the
   credit sale of the MARANGO were to be allocated to Grupo R in the amount
   of $63,243.90 for its custodia legis lien claims, and the remainder of the
   Amended Security Bond released to Norway, KFW, and Caterpillar.
           Here, the district court sufficiently weighed the experts’ competing
   interpretations of Panamanian law and applied the correct meaning of Clause
   3. Both Loaiza and Mosquera are highly experienced and well-credentialed
   experts in the field of Panamanian law, but the persuasive force of Loaiza’s
   testimony was diminished during the district court proceedings. As noted
   above, he admitted to publishing a passage in a well-known maritime law
   treatise in which he endorsed Mosquera’s proposed interpretation of Clause
   3. During trial, Loaiza testified that this interpretation of Clause 3 only

   2021) (emphasis added). This text was not introduced into the record as an exhibit, but the
   district court was authorized to consider it under Rule 44.1 of the Federal Rules of Civil
   Procedure. FED. R. CIV. P. 44.1. During trial, Loaiza testified that he authored this portion
   of the treatise.

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                                         No. 22-20345

   applies to mortgages that are payable on demand or call for a single “balloon”
   payment, but he does not offer any evidentiary support for this position.
           When considered together, Loaiza’s, Mosquera’s, and the PMA’s
   translations of Clause 3 do not appear to preclude enforceability solely
   because a loan repayment schedule was omitted. Grupo R’s position appears
   to ignore the phrase “o cumplimiento de las obligaciones garantizadas e
   intereses,” or, as Loaiza translated it, “or for satisfaction of the secured
   obligations.” According to Mosquera, the PMA and Panamanian attorneys
   interpret this phrase to mean “maturity date.” Thus, it appears that there
   are two different avenues to achieve compliance with Clause 3: provide a loan
   repayment schedule or provide the maturity date of the loan in question.
           We are also not convinced that compliance with Article 260’s highly
   technical requirements is dispositive in this case. We previously held that it
   is “well established that the validity of a mortgage is dependent only on the
   existence of a debt actually secured by the mortgage and not on the
   description of the debt contained in the instrument.” 28 Further, other
   circuits have explained that foreign law plays a more limited role in
   determining the validity and enforceability of foreign mortgages under
   CIMLA. 29 In M/V Prodromos, the Third Circuit explained that “the stringent
   procedural requirements for perfecting domestic ship mortgages are not

           28
              Tropicana Shipping, S.A. v. Empresa Nacional “Elcano” de la Marina Mercante,
   366 F.2d 729, 733 (5th Cir. 1966) (emphasis added); see also Merchants Nat. Bank of Mobile
   v. Ward Rig No. 7, Off. No. 547149, 634 F.2d 952, 958 (5th Cir. 1981) (citing Tropicana
   Shipping for this same proposition); State Bank & Tr. Co. v. Lil Al M/V, No. CV 16-5053,
   2018 WL 6326448, at *3 (E.D. La. Dec. 4, 2018).
           29
             Oil Shipping (Bunkering) B.V. v. Sonmez Denizcilik Ve Ticaret A.S., 10 F.3d 1015,
   1023 (3d Cir. 1993) (holding that the Ship Mortgage Act—CIMLA’s precursor—
   “specifically speaks to a limited role for foreign law by making the preferred status of
   foreign mortgages dependent only on their compliance with the execution and registration
   requirements of the applicable foreign law”).

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                                         No. 22-20345

   imposed on foreign ship mortgages . . . to provide a simplified procedure for
   enforcing mortgages without destroying substantive rights.” 30 In fact, Grupo
   R’s heavy reliance on M/V Prodromos appears to work against it because the
   Third Circuit ultimately held that the mortgagees’ failure to include a
   technical requirement—the vessel’s navigation license number—did not
   render the mortgage invalid under Panamanian law. 31
          We conclude that the district court correctly held that the nine
   preferred ship mortgages at issue are enforceable under CIMLA and
   Panamanian law, and that the Lenders’ preferred ship mortgage liens enjoy
   priority over Grupo R’s state-created maritime attachment liens.
                 C. Whether Caterpillar and KFW waived their respective lien
                      positions in relation to the credit sale of the MARANGO
          Grupo R’s second primary contention on appeal is that KFW and
   Caterpillar waived their respective lien positions in relation to the judicial
   sales of the MAYA and the MARANGO. Grupo R asserts that “Caterpillar
   made use of a procedural tactic that allowed it to purchase the MARANGO
   via credit bid, such that no actual monies were provided.” Grupo R claims
   that this provided an unfair benefit to Caterpillar because it was never
   required to exchange or place any money in the court’s registry to stand as
   the res, or substitute security, for the MARANGO after the sale. Grupo R
   asserts that, by failing to seek substitute security, KFW forfeited its in rem

          30
               776 F.2d at 89.
          31
               Id. at 92.

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                                           No. 22-20345

   lien claim against the MARANGO, and that Caterpillar forfeited its custodia
   legis claim against the MARANGO.
          Grupo R claims that, by moving for substitute security following the
   MARANGO’s credit sale, it was the only party to preserve its lien claims.
   Grupo R insists that the Amended Security Bond responded only to Grupo
   R’s claims and made no exception for Caterpillar’s custodia legis costs, which
   arose as a separate claim. Grupo R claims that, as a result, Caterpillar was not
   entitled to reduce the Amended Security Bond by the amount of its custodia
   legis lien claim. Grupo R further contends that any judgment KFW may now
   possess exists solely in personam against Shanara, as it no longer has a valid
   lien claim against the Amended Security Bond.
          The Lenders counter that it would be absurd to require Caterpillar to
   lodge security for its own custodia legis claim. Moreover, the Lenders contend
   that KFW’s claim against the MARANGO is subject to a stipulation of pay-
   ment amounts between Caterpillar and KFW under an intercreditor agree-
   ment, obviating the need for substitute security. In support, the Lenders ref-
   erence Rule E(5)(a) of the Supplemental Rules for Admiralty or Maritime
   Claims, which states that “[w]henever process of maritime attachment and
   garnishment or process in rem is issued the execution of such process shall be
   stayed, or the property released, on the giving of security, to be approved by
   the court or clerk, or by stipulation of the parties.” 32
          The district court agreed with the Lenders, holding that their inter-
   pretation of Supplemental Rule E(5)(a) was correct. The court further held
   that the intercreditor agreement containing a stipulation of payment between
   KFW and Caterpillar was sufficient to secure KFW’s lien claim against the
   MARANGO. That court likened the stipulation to a “letter of undertaking,”

          32
               FED. R. CIV. P. SUPP. R. E(5)(a).

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   which “is customary in the maritime industry” and “is the functional equiv-
   alent of a bond for the purpose of securing a claim against a vessel.” The
   district court also noted that Grupo R did not offer any authority for its as-
   sertion that a secured creditor’s failure to seek substitute security constitutes
   lien claim forfeiture.
          We perceive no merit in Grupo R’s alternative arguments and there-
   fore affirm for the same reasons provided by the district court.
                                   V. Conclusion
          For the reasons detailed above, we AFFIRM the district court’s
   findings of fact and conclusions of law with regard to (1) the validity,
   enforceability, and relative priority of the parties’ liens following the judicial
   sale of the MAYA and MARANGO, and (2) the status of Caterpillar’s and
   KFW’s lien positions following the credit sale of the MARANGO.

                                          20