The plaintiff, Belcher Co of Alabama (Belcher), sued the defendant vessel in rem in the US for non-payment of bunkers. The vessel had been chartered from its owner, Chowgule Steamship Co Ltd (Chowgule), by Armada Bulk Carriers of Denmark (Armada). The lower Court, the District Court for the Southern District of Texas, dismissed the in rem arrest action on the ground that a previously filed attachment action in the Netherlands (a State party to the Arrest Convention 1952, a fact not expressly noted by the Court), in which the vessel had been attached and then released on posting of a letter of undertaking as security. Dutch law, unlike US law, does not recognise an in rem maritime lien, but does provide for attachment of a vessel based on an in personam maritime claim.

Held: The judgment dismissing the arrest in rem is reversed and the case is remanded for further proceedings consistent with this opinion.

The Fifth Circuit reversed dismissal on the basis that the in rem action (pursuant to Rule C of the US Admiralty Rules) technically involved different issues than the Netherlands action. In other words, attachment of a vessel in a nation that is a State Party to the Arrest Convention 1952 cannot be equated to an in rem Rule C seizure in the United States. Whereas the Dutch attachment action (via the Arrest Convention) would determine whether the owner had become personally liable to Belcher via the charterer Chowgule, the US in rem arrest action would determine whether the personified vessel was liable for the amount of the delivered/unpaid fuel and, subject to a judicial sale to satisfy the claim for the unpaid fuel, without any residual in personam liability for the owner. The Court ultimately ruled that Belcher's in rem arrest claim should not have been dismissed, but should have rather been stayed pending the outcome of the Dutch action.

The Court concluded that if Chowgule prevailed in the Netherlands action, its undertaking would be released, and only those issues unique to the in rem action need be determined in the United States Court. If, on the other hand, this action is dismissed and Belcher fails to prevail in the Netherlands action, it will be deprived of an opportunity to prove its claim in rem. No hardship is imposed on Chowgule by continuing the action, for the same undertaking posted in the Netherlands stands as security for the in rem action.