## Facts

- Cunard Steamship Company, Ltd. (an English corporation) and Salen Reefer Services A.B. (a Swedish entity) entered a time charter for the vessel *SCYTHIA* with a London arbitration clause.
- Cunard alleged Salen defaulted in late December 1984, causing about $1.1 million in unpaid charter-related obligations.
- On December 19, 1984, Salen commenced a bankruptcy proceeding in Stockholm; Swedish law provided for an interim administrator and a suspension of creditor actions.
- On January 9, 1985, Cunard obtained a maritime attachment in the Southern District of New York under 9 U.S.C. § 8 and Supplemental Admiralty Rule B(1), attaching funds owed to Salen by United Brands Company to secure Cunard’s claim in the London arbitration.
- Salen moved to vacate the attachment, arguing that U.S. courts should recognize the Swedish bankruptcy stay under international comity to preserve an orderly collective insolvency process.
- Cunard argued comity was improper because the Swedish court lacked personal jurisdiction over Cunard and in rem jurisdiction over the attached New York property, and because Cunard claimed inadequate notice of the foreign-law issues under Federal Rule of Civil Procedure 44.1.

## Issues

1. Whether international comity required U.S. courts to recognize the Swedish bankruptcy proceeding and stay of creditor actions, and therefore vacate Cunard’s maritime attachment.
2. Whether comity may be extended despite the foreign bankruptcy court’s lack of personal jurisdiction over the attaching creditor and lack of in rem jurisdiction over attached U.S. assets.
3. Whether reciprocity is a prerequisite to granting comity to a foreign bankruptcy stay.
4. Whether Rule 44.1 barred consideration of Swedish law due to alleged insufficient notice.

## Decision

- The Second Circuit affirmed the order vacating the attachment.
- The court held that comity was properly extended to the Swedish bankruptcy proceeding and its stay of creditor actions.
- The court rejected Cunard’s arguments based on the Swedish court’s asserted lack of jurisdiction over Cunard or the attached property.
- The court held reciprocity was not required to extend comity to the Swedish proceeding.
- The court found Cunard had adequate notice and opportunity to address Swedish law, satisfying Rule 44.1.

## Legal Principles

- U.S. courts may extend international comity to foreign bankruptcy proceedings when the foreign forum is competent and the process is consistent with basic fairness and U.S. public policy.
- A central comity consideration in insolvency is preserving collective administration and avoiding creditor-by-creditor preferences that disrupt equal treatment in a unified proceeding.
- Comity to a foreign bankruptcy stay does not require the foreign court to have personal jurisdiction over every creditor or in rem jurisdiction over each asset located abroad, so long as the foreign court properly administers the debtor’s insolvency estate.
- Reciprocity is not a precondition to comity in recognizing a foreign insolvency proceeding.
- Under Rule 44.1, a court may consider foreign law where the parties receive reasonable notice and an opportunity to present relevant materials on the foreign-law issues.

## Conclusion

The Second Circuit concluded that recognizing the Swedish bankruptcy stay through comity best served U.S. policy favoring orderly, collective insolvency administration, and therefore required dissolving Cunard’s maritime attachment obtained to secure a foreign arbitration claim.


Cunard S.S. Co. v. Salen Reefer Servs. AB, 773 F.2d 452 (2d Cir. 1985)