Res can be substituted by security. Upon the giving of security, the court’s admiralty jurisdiction is automatically invoked. This happens because the stipulation for value takes the place of the res and has the same legal effect. Similarly, a letter of undertaking can take the place of actual res, and will be sufficient in the case. Conversely, the posting of bond within six months following the notice of claim is not jurisdictional, since the statutes and rules provide for a complaint to be filed within six months of filing the notice of claim. The rules governing attachment and release of vessels do not contain any provision for an order requiring a charterer to furnish security to the ship owner.
In Hartford Accident & Indem. Co. v. Southern Pacific Co., 273 U.S. 207 (U.S. 1927), the Circuit Court of Appeals for the Fifth Circuit had affirmed a decree requiring the stipulator in a limitation of liability proceeding to pay the value of respondent shipowner’s vessel and pending freight into court. Petitioner stipulator sought review of this decision. As an attempt to limit the liability caused when the shipowner’s vessel blew up damaging another vessel, the shipowner and the stipulator had entered into a stipulation. However, the shipowner’s petition for limitation of liability was denied and was directed to pay the value of the allowed claims into the court. Upon review, the U.S. Supreme Court affirmed the judgment and contended that “whenever a stipulation is taken in an admiralty suit for the property subjected to legal process and condemnation, the stipulation is deemed a mere substitute for the thing itself, and the stipulators are liable to the exercise of all those authorities on the part of the court, which it could properly exercise if the thing itself were still in its custody.”