The end of rule B ?
Hereby we inform you about a Second Circuit case decided on October 16, 2009, The Shipping Corporation of India Ltd. v. Jaldhi Overseas Pte Ltd., which severely limits the scope of the type of property that may be attached pursuant to Rule B. The Court, in sum and substance, held that “electronic fund transfers (“EFTs”) being processed by an intermediary bank are not property subject to attachment under Rule B.” Since EFTs are no longer considered property of either the originator or the beneficiary, it cannot be “defendant’s property” subject to Rule B attachment.
The decision suggests that the attachment of EFTs has “threatened the usefulness of the dollar in international transactions.” In attempting to avoid Rule B attachments, many potential Rule B defendants conduct their cross-border transactions in a currency other than U.S. Dollars, causing a reduction in the use of the dollar as the preferred currency of international commerce. The large volume of maritime cases was filed between October 1, 2008 and January 31, 2009 and the resulting burden has been placed on the banks and the District Court Judges. The Court’s focus on the aforementioned reasoning and its weak legal rationale for reaching its conclusion lead us to believe that this was a result-driven decision and that the Court has succumbed to intense pressure from the garnishee banks to put an end to Rule B attachments of EFT transfers transiting through New York.
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