## Facts

- A charterer (E.A.S.T., Inc.) and a vessel owner (Advance Co., Inc. of Liberia) entered a time charter for the M/V *Alaia* containing a seaworthiness warranty and a London arbitration clause under English law.
- The vessel arrived in New Orleans for delivery under the charter; after inspection and survey, the charterer concluded the vessel was unseaworthy and rejected delivery.
- The charterer filed a verified in rem admiralty complaint against the vessel, asserting a maritime lien for breach of the charter and seaworthiness warranty.
- The charterer sought arrest of the vessel as security and an order compelling arbitration in London.
- The U.S. Marshal arrested the vessel in New Orleans.
- The owner appeared and moved to vacate the arrest, arguing the charter was not validly formed or remained executory and that no maritime lien could arise because performance had not begun and no cargo was loaded.
- The district court denied release without security, set bond and countersecurity amounts, and referred the merits to London arbitration while maintaining the arrest as security.

## Issues

1. Whether an alleged breach of a time charter at delivery (unseaworthiness) can give rise to a maritime lien supporting in rem arrest, even if the charter never proceeded to cargo carriage.
2. Whether a federal court may compel arbitration abroad under the Federal Arbitration Act and maintain maritime arrest/attachment to secure a potential arbitral award.
3. Whether the New York Convention prohibits prejudgment seizure of a vessel when the parties agreed to arbitrate in a foreign forum.
4. Whether the vessel owner could invoke the New York Convention to defeat the arrest.

## Decision

- The Fifth Circuit affirmed the district court’s refusal to vacate the arrest and its order referring the dispute to arbitration in London.
- The court held that the charterer made an adequate showing, at the arrest stage, that the charter was in effect and that the alleged breach could support a maritime lien.
- The court held that maintaining the vessel arrest as security was compatible with compelling arbitration under the Federal Arbitration Act and the New York Convention.
- The court rejected the argument that the New York Convention bars prejudgment arrest or attachment used to secure an eventual foreign arbitral award.

## Legal Principles

- A time charter’s breach, including breach of a seaworthiness obligation at delivery, may create a maritime lien in favor of the charterer that can be enforced through an in rem proceeding against the vessel.
- A federal court may order parties to proceed to foreign arbitration pursuant to a charter party arbitration clause while preserving traditional admiralty security remedies.
- Pre-award maritime arrest or attachment used solely to obtain security for a claim to be arbitrated is not inconsistent with, and is not prohibited by, the New York Convention as implemented in the Federal Arbitration Act.
- Security proceedings in admiralty may be treated as ancillary to arbitration: the court can refrain from adjudicating the merits while ensuring the claimant has security for a potential award.

## Conclusion

The Fifth Circuit upheld the arrest of the M/V *Alaia* as security and compelled London arbitration, holding that an alleged time-charter breach could support a maritime lien and that the New York Convention does not bar prejudgment vessel seizure used to secure a prospective foreign arbitral award.


E.A.S.T., Inc. of Stamford, Conn. v. M/V Alaia, 876 F.2d 1168 (5th Cir. 1989)