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The U.S. Supreme Court on Monday declined to hear a petition from Sikousis Legacy Inc., which sought to overturn a Ninth Circuit ruling barring the seizure of the 800-foot tanker M/T Berica to enforce $10 million in arbitral awards against defunct gas shipping company B-Gas Ltd., now known as Bepalo LPG Shipping Ltd.

The decision leaves intact the Ninth Circuit's ruling that the Berica, owned by a separate entity within the Bergshav Group, could not be targeted because Sikousis Legacy failed to prove the tanker's owner was involved in hiding assets to avoid paying Bepalo’s debts.

Legal Challenge and Admiralty Law Principles

Sikousis Legacy argued that the Ninth Circuit improperly applied nonadmiralty rules derived from state law in a case that involved fundamental principles of admiralty law, such as maritime attachment and garnishment. The company warned that this approach could allow maritime debtors to shield assets through corporate restructuring, undermining quasi in rem remedies that are central to enforcing maritime debts.

"An obvious risk posed by the decision... is that it lays the foundation for novel workarounds to longstanding equitable principles," Sikousis Legacy wrote in its petition, adding that such legal maneuvers could render maritime attachment legally ineffective.

The Ninth Circuit had found that Sikousis Legacy failed to establish probable cause to hold the Berica’s owner or other entities in the Bergshav Group liable for Bepalo’s debts. The panel upheld U.S. District Judge Charles R. Breyer’s conclusion that there was insufficient evidence to show the Bergshav Group dominated or controlled Bepalo in a way that justified piercing the corporate veil.

Justices $10M Tanker Seizure Suit : Background of the Dispute

Sikousis Legacy’s claims arose after Bepalo chartered its liquid petroleum gas carriers to transport gas but allegedly failed to pay the full charter fees amid financial troubles exacerbated by the COVID-19 pandemic. Bepalo sought a six-month reduction in daily hire rates in May 2020, which was denied by Sikousis Legacy. The following month, the Bergshav Group initiated a restructuring in Cyprus.

By fall 2020, Sikousis Legacy initiated arbitration in London, where it ultimately prevailed, securing $10 million in awards against Bepalo. However, Bepalo declared insolvency, terminated its charters, and shut down operations, leaving Sikousis Legacy to pursue the Berica in U.S. courts as a means of enforcing the judgment.

Implications of the Decision

The Supreme Court's refusal to hear the case leaves unresolved broader questions about the application of admiralty law principles in disputes involving complex corporate structures. Sikousis Legacy had argued the Ninth Circuit's ruling undermined the unique remedies available in maritime law, potentially enabling debtors to evade judgments through strategic asset management.