Bertling Bulk Services Pte, Ltd. v. Cofco International Freight S.A.

Background

Bertling Bulk Services agreed under a January 14, 2022 charter agreement to provide Cofco International Freight with a vessel to transport bagged coffee from Vietnam to Belgium. The agreement was governed by English law and required arbitration in London. Both parties submitted claims and counterclaims concerning the charter and voyage to that arbitration.

Bertling Bulk alleged that cargo was short-loaded and claimed $548,156.57, plus interest and costs. Cofco alleged that Bertling Bulk failed to outfit the vessel properly for the coffee bags and claimed $260,903.63 in damages and demurrage, plus interest and costs.

Bertling Bulk had filed this federal action and obtained an attachment of $790,500 as security for its claims. Cofco then moved under Federal Supplemental Rule E(7) for countersecurity—security for a defendant’s related counterclaims—in the amount of $473,163. Bertling Bulk did not oppose countersecurity generally, but argued that the amount should be reduced by $103,788.61.

Court’s analysis

Rule E(7) generally requires a plaintiff that has obtained security for its claim to provide security for a defendant’s related counterclaim, unless the court finds cause to order otherwise. The court explained that it has broad discretion under the rule, but that the merits inquiry is severely limited. Countersecurity is generally appropriate when the counterclaims are not frivolous.

The court found that the rule’s requirements were satisfied. Cofco had given security in the original action, had asserted counterclaims in the London arbitration, and those counterclaims arose from the same transaction—the chartered voyage—as Bertling Bulk’s claims.

Bertling Bulk relied on a statement in Cofco’s London arbitration filing that freight of $103,788.61 “would have been due,” arguing that this showed part of Cofco’s claim was frivolous. The court found there was reasonable room to debate the meaning and legal effect of that statement, which was conditional and referred to other contractual issues. Determining the value of the parties’ claims would require a deeper review of the merits and English legal procedures, matters to be decided in the London arbitration rather than by this court at this preliminary stage.

Disposition

The court concluded that Cofco was entitled to countersecurity of $473,163. It granted Defendant Cofco’s motion for countersecurity and ordered Plaintiff Bertling Bulk to post security in that amount within seven days of the opinion and order. The Clerk was directed to close the motion at Docket Number 16.