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Vulnerable Ship-Owners and Operators Flood New York to Avoid Rule B Lawsuits

Lloyds List interviewed Thomas Belknap, a partner in Blank Rome’s New York office, on the recent registration of vulnerable ship-owners and operators in New York to circumvent Rule B lawsuits.

The registration was “an extremely effective and inexpensive tool” against litigation, said Mr. Belknap. 

Rule B claims against ship-owners, operators and charterers in Australasia and Europe have flooded the 45 district judges in the Southern District of New York over the last four months and now exceed 250, Blank Rome stated. 

Registering in New York or appointing an agent “has the effect of making them found here,” Mr Belknap said. There were appeals pending over this latest strategy, he added. 

He also highlighted a new conciliatory approach over the renegotiation of charters fixed at high levels during the market peak, instead of protracted legal action. 

“Many owners are starting to adjust to the new reality to avoid total calamity,” Mr. Belknap claimed. 

“It seems that with the market where it is, accepting substantially reduced hire may still be preferable to taking the chance of having to fix new business at current market rates.” 

Even “first rate” companies were having a hard time swallowing month after month losses on dry derivatives contracts, he added. 

Lawyers are at the frontline of maritime disputes worth billions between counterparties over ship hire and derivatives contracts. Maritime claims comprised an estimated 25%-30% of cases before this one district court, Mr. Belknap said. 

It was too early to say whether the flood of new filings would abate, he continued. 

“Many have found that the procedures for doing it were more complicated than it was worth as the flood [of cases] has increased and the logistics of doing it have become impractical,” Mr. Belknap stated. 


“New York Proves Attractive as Rule B Claims Rise” by Michelle Wiese Bockmann appeared in Lloyds List on January 23, 2009.  For more information on Lloyds List, please visit www.lloydslist.com.