## Facts

- Container-leasing companies leased cargo containers used in an ocean liner service operated by Atlanttrafik Express Service Ltd. (AES Ltd.).
- A separate company, Sea Containers Ltd. (SCL), financed the acquisition of the liner service and organized a corporate structure intended to keep the liner business legally separate from SCL.
- AES Ltd. was incorporated as the holding company for the liner service through an intermediary entity, and the liner operation conducted business in AES entities’ names.
- The lessors sought an SCL guarantee of the container leases; SCL refused, and the lessors nonetheless entered into leases with AES entities.
- The liner operation failed, AES Ltd. entered liquidation, and substantial container-hire obligations to the lessors remained unpaid.
- The lessors sued (1) SCL and affiliated entities in personam under joint-venture, agency, and veil-piercing theories, (2) several vessels in rem asserting maritime liens based on the containers’ use, and (3) AES Ltd. seeking default judgment.

## Issues

1. Whether SCL and related entities were liable for AES Ltd.’s container-lease obligations under joint venture, agency, or veil-piercing/alter-ego theories.
2. Whether the lessors established valid maritime liens against the vessels for unpaid container hire, warranting in rem relief.
3. Whether the district court properly denied default judgment against AES Ltd. despite its failure to defend.

## Decision

- Affirmed dismissal of the in personam claims against SCL and affiliated entities.
- Held the evidence did not establish a joint venture because there was no agreement to share profits and losses and no showing of joint control.
- Held the evidence did not establish agency because there was no express or implied principal–agent relationship and SCL did not hold AES out as its agent; SCL also refused to guarantee the leases.
- Held veil piercing was unwarranted absent proof of fraud, wrongdoing, or domination rendering AES a mere instrumentality; the lessors knowingly contracted without an SCL guarantee.
- Vacated dismissal of the maritime lien claims against the vessels and remanded because the district court’s findings and legal conclusions were insufficient for appellate review.
- Vacated the denial of default judgment against AES Ltd. and remanded because the district court did not state reasons for refusing default relief.

## Legal Principles

- Joint venture liability generally requires proof of an agreement to share profits and losses and joint control over the enterprise.
- Agency liability requires manifestations supporting an express or implied principal–agent relationship; contracting in a subsidiary’s name and a sponsor’s refusal to guarantee tend to negate agency.
- Veil piercing requires more than financing or structural influence; it typically demands fraud or wrongdoing and domination so complete that the entity is a mere instrumentality.
- A trial court must make adequate findings of fact and conclusions of law to permit meaningful appellate review of complex maritime claims, including asserted maritime liens.
- A denial of default judgment should be supported by stated reasons sufficient to permit review, particularly where the defendant is in default.

## Conclusion

The court respected the corporate separation between SCL and AES and rejected joint-venture, agency, and veil-piercing theories of sponsor liability, but required further proceedings on the vessels’ potential in rem liability and on whether default judgment should enter against AES Ltd. because the district court did not provide sufficient findings and reasons.


Itel Containers Int’l Corp. v. Atlanttrafik Express Serv. Ltd., 909 F.2d 698 (2d Cir. 1990)