As we have addressed in our e-book International Practice: Topics and Trends, courts adjudicating international cases often look for guidance to maritime cases for purposes of seeing how that developed body of law addresses issues such as securing personal jurisdiction in international litigation. The teaching of the recent decision by the Second Circuit Court of Appeals in Sinoying Logistics Pte Ltd. v. The Hong Kong and Shainghai Banking Corp., No. 09-5368 (2d Cir. 8/31/10), seems to have broader applicability and is hence noteworthy not just in the maritime context.
Sinoying affirmed the district court’s sua sponte dismissal of a case for lack of personal jurisdiction after the district court found that the means of securing jurisdiction, through the attachment of assets, was invalid, and there was no other grounds for personal jurisdiction asserted or proved. The underlying dispute was between Sinoying and defendants Yi Da Xin Trading Corp and affiliates (YDX) alleging breach by YDX of a maritime contract (called a charterparty) for delivery of a vessel for YDX’s use in the port of Santa Cruz, Philippines. YDX canceled the charterparty and refused delivery of the vessel.
While the parties were resolving their dispute through arbitration in Hong Kong, Sinoying sued YDX in the Southern District of New York and sought to attach as pre-judgment security electronic funds transfers (EDFs). The EDFs either originated from or were intended for delivery to YDX and were cleared through banks in New York. YDX did not appear in the case, and the district court’s sole basis for jurisdiction was the attachment of assets.
However, the Second Circuit last year created a sea change, already noted, when it ruled that EFTs being cleared through a New York bank were not sufficient to constitute attachable property. Shipping Corp of India, Ltd. v Jaldbi Overseas Pte Ltd., 585 F.3d 58 (2d Cir. 2009). And without attachable property there was no basis for the assertion of personal jurisdiction over YDX in New York.
In its recent decision, the Second Circuit reaffirmed the ability of district courts, sua sponte, to revisit personal jurisdiction issues when the defendant has not appeared, that is, when the purpose of the inquiry is to determine if a default judgment would be entered. The Court of Appeals distinguished this type of case from a case where the defendant has appeared, where the law is that district courts should not raise personal jurisdiction issues sua sponte since defendants can consent to jurisdiction and waive objection to personal jurisdiction. The Court of Appeals did not discuss why attachment proceedings (where there might be in rem or quasi in rem jurisdiction and hence to that extent the defendant might be said to have appeared) should of necessity be treated like default cases.
The Court of Appeals also affirmed the fact that the district court acted sua sponte, but only after giving the plaintiff prior notice and an opportunity to be heard. It also handily applied Jaldbi retroactively and rejected the argument that the retroactivity analysis should be made case by case (except in two rare circumstances, relating to qualified immunity for governmental officials and habeas corpus petitions, which were inapplicable here).