## Facts

- Contichem LPG chartered the M/V WORLD RAINBOW from Parsons Shipping Ltd. and alleged vessel unseaworthiness and delay damages of about $3 million.
- The merits dispute proceeded in a London arbitration.
- While arbitration was pending, Contichem sought ex parte provisional relief in the Southern District of New York under New York CPLR provisions.
- The court issued an ex parte temporary restraining order (TRO) and attachment-related restraints, conditioned on Contichem posting a $100,000 undertaking (bond).
- When served, the targeted bank account had no balance; afterward, Contichem transmitted funds it owed Parsons into the restrained account, and those funds became subject to the TRO.
- After a hearing, the court denied Contichem’s request for preliminary injunctive/attachment relief and vacated the TRO as invalidly obtained; the Second Circuit affirmed vacatur.
- Parsons then moved for reimbursement of damages and costs allegedly caused by the wrongful TRO, including attorneys’ fees.

## Issues

1. Whether a party wrongfully restrained by an invalidly obtained TRO may recover damages and costs, including attorneys’ fees, from the applicant that posted an undertaking.
2. Whether recovery for a wrongful TRO is limited to the amount of the undertaking (bond), absent extraordinary circumstances.
3. What causal connection and evidentiary showing are required to recover particular claimed items as TRO-caused damages rather than merits-related expenses.

## Decision

- The court granted Parsons’s motion for reimbursement of damages and costs attributable to the invalid TRO.
- The court held Parsons could recover damages proximately caused by the wrongful restraint, proved with reasonable certainty.
- The court treated the $100,000 undertaking as the source of recovery and the ordinary limit of Contichem’s liability for TRO-caused damages.
- The court distinguished compensable expenses incurred to dissolve/mitigate the TRO from non-compensable expenses tied to the underlying arbitration merits.

## Legal Principles

- A wrongfully issued TRO may support an award of damages to the restrained party for losses proximately caused by the restraint, when adequately proven.
- The injunction undertaking generally serves as security for such damages and ordinarily caps the applicant’s liability absent extraordinary circumstances or independent bases of liability.
- Recoverable items must be directly caused by the TRO and established with reasonable certainty; speculative losses are not awarded.
- Attorneys’ fees incurred to vacate or address the effects of a wrongful TRO may be recoverable as damages on the undertaking, while fees and costs related to the underlying merits dispute are generally not.

## Conclusion

The court ordered reimbursement for proven losses caused by Contichem’s wrongfully obtained TRO, applying bond-damages principles that require proximate causation and proof and that ordinarily limit recovery to the amount of the undertaking rather than the broader costs of the underlying arbitration dispute.


Contichem LPG v. Parsons Shipping Ltd., 170 F. Supp. 2d 416 (S.D.N.Y. 2001)