Trade Arbed Inc. v. Toles Limited et al.

In Admiralty Practice, In Rem Actions and Arrest on (Updated )

This was an application to set aside the arrest of certain cargo belonging to the second Defendant. The underlying action was for breach of charter party. The Plaintiff had entered into a Gencon charter party with the first Defendant, the owner of the ship "Ideal", for the carriage of used axles to Newark on board the "Ideal". The second Defendant guaranteed the performance of the charter party by the owner and was also the shipper of a second cargo on the "Ideal". During the course of the voyage to Newark, the "Ideal" broke down and the Plaintiff was required to charter a second vessel to complete the voyage. The Plaintiff commenced arbitration against the Defendants in New York pursuant to the charter party and then brought this action against the Defendants in personam and against the cargo belonging to the second Defendant in rem to obtain security for the arbitration. The Plaintiff arrested the cargo belonging to the second Defendant. The court noted that the only claim against the second Defendant was that it had guaranteed the performance of the charter party by the vessel owner. The court held that this did not make the second Defendant’s cargo "the subject of the action" within the meaning of section 43(2) of the Federal Court Act. Accordingly, the court set aside the arrest and struck out the in rem portions of the Statement of Claim.