## Facts

- Flame S.A., a shipping and trading company, entered into four forward freight agreements (FFAs) in 2008 with Industrial Carriers, Inc. (ICI).
- The FFAs were cash-settled hedging contracts tied to future freight rates for specified maritime routes reflected in the Baltic Panamax Index; they did not contemplate carriage by a particular vessel or actual shipment by the parties.
- ICI defaulted on its payment obligations, and Flame obtained an English money judgment for nearly $20 million based on the FFAs.
- Flame obtained U.S. recognition of the English judgment and filed an action in the Eastern District of Virginia seeking a Supplemental Rule B maritime attachment of property belonging to Freight Bulk Pte. Ltd.
- Flame alleged Freight Bulk was ICI’s alter ego and that Freight Bulk’s vessel (and related property) could be attached to satisfy the judgment.
- Freight Bulk moved to vacate the attachment, arguing the federal court lacked admiralty jurisdiction because English law treated FFAs as non-maritime contracts.
- The district court denied the motion, holding U.S. law governs admiralty jurisdiction and the FFAs were maritime contracts under U.S. law.

## Issues

1. Whether a federal court deciding admiralty jurisdiction for enforcement of a foreign judgment must apply foreign law’s characterization of the underlying contract or U.S. maritime law.
2. Whether cash-settled FFAs tied to freight indices and shipping routes, without any specific vessel or contemplated carriage, are “maritime contracts” under U.S. law sufficient to support admiralty jurisdiction and a Rule B attachment.

## Decision

- The Fourth Circuit affirmed the order denying Freight Bulk’s motion to vacate the Rule B maritime attachment.
- The court held that admiralty jurisdiction in U.S. federal courts is determined under U.S. law, not foreign law.
- Applying U.S. law, the court held the FFAs were maritime contracts because their objective and commercial function bore a substantial connection to maritime commerce.
- The court rejected the argument that the absence of a specific vessel or intended physical carriage prevented the FFAs from being maritime contracts.

## Legal Principles

- Whether a contract is “maritime” for purposes of federal admiralty jurisdiction is a federal question governed by U.S. maritime law, even when the claim is based on a foreign judgment arising from a foreign-law contract.
- A contract may be maritime if its nature and principal objective have a substantial relationship to maritime services, maritime transactions, or maritime commerce; a named vessel or actual carriage is not required.
- Cash-settled FFAs referencing freight rates for identified maritime routes can qualify as maritime contracts when they function as risk-allocation tools used in the shipping business and are economically tied to ocean carriage.
- When admiralty jurisdiction exists for the underlying maritime claim, Supplemental Rule B attachment may be used to secure property to satisfy the claim, subject to Rule B’s procedural prerequisites.

## Conclusion

The Fourth Circuit held that U.S. law controls the admiralty-jurisdiction inquiry and that the forward freight agreements at issue were maritime contracts under that law, so the district court properly sustained the Rule B attachment sought to secure collection of the recognized English judgment.


Flame S.A. v. Freight Bulk Pte. Ltd., 762 F.3d 352 (4th Cir. 2014)