A US appeals court has sided with George and Stathis Gourdomichalis in their years-long, $18.5m legal battle over an abandoned bulker.
The federal Ninth Circuit Court of Appeals in San Francisco upheld a district court's February 2020 decision siding with the brothers over Pacific Gulf Shipping's attempt to enforce an arbitration award over the now-scrapped, 73,500-dwt Adamastos (built 1995).
The decision by the three-judge panel was unanimous.
"Viewing the record a whole, we agree with the district court that Pacific Gulf came away 'empty handed' from discovery," Judge Danny Boggs wrote in his 29 March opinion, noting more than 100,000 pages of documents were disclosed in the case and at least a dozen depositions taken.
Pacific Gulf, a low-profile charterer, had sought to hold the Gourdomichalis duo's Blue Wall Shipping and other companies of theirs' responsible for losses related to an aborted voyage by the Adamastos from Brazil to Japan and Singapore in 2014.
It sued in the US federal court for the Western District of Oregon in 2018 to arrest the 52,500-dwt Vigorous (built 2005) to cover its award won in London.
Pacific Gulf's Chalos & Co lawyers argued that the Gourdomichalis companies, including ship manager Phoenix Shipping & Trading, were successors to the Adamastos' registered owner Adamastos Shipping & Trading. Pacific Gulf also argued that all the companies were corporate alter egos.
US District Judge Michael Mosman ruled that while the Gourdomichalis brothers may have failed to notify Blue Wall's board that the Vigorous had been arrested previously by Pacific Gulf and may have misled investors about the ships' insurance arrangements with the American Club, neither meant domination by the duo or corporate illegitimacy.
He granted summary judgement to Blue Wall.
Chalos & Co did not return a request for comment on behalf of it or Pacific Gulf.
In his opinion, Boggs agreed, saying Pacific Gulf failed to establish that Blue Wall and the others were in fact successor companies along with standards to pierce the corporate veil and corporate illegitimacy.
He also cited an auditors report that there was no financial mismanagement at Blue Wall or its subsidiaries.
The Adamastos was sub-chartered by Pacific Gulf to South Korean logistics company Integris then to Japanese conglomerate Marubeni to bring soybeans from South America to East Asia.
But Brazilian authorities found 42 deficiencies aboard and detained the ship. The next day it broke free of its moorings and had to be towed back to an anchorage.
It stayed there for six months, with crew reportedly complaining of insufficient provisions, lapsed contracts and unpaid wages. The ships automatic identification system was set to broadcast its current port as "WELCOM [sic] TO HELL".
The ship was later declared abandoned.
Pacific Gulf first tried to enforce its arbitration award in South Africa in 2015, but the courts in that country ruled that the company had no case.
