U.S. Judge Blocks Antitrust Case
Against Shipping Giant Stolt

A federal judge barred the U.S. Justice Department from prosecuting shipping giant Stolt-Nielsen SA, ruling the government must stick to an agreement to give amnesty to the company and one of its top executives over their involvement in a scheme to fix prices in the global chemical-shipping business.

Judge Timothy Savage, of U.S. District Court in Philadelphia, ruled that the Justice Department was trying to use its own "inartful drafting" of the amnesty agreement to justify indicting Stolt and its executive vice president, Richard Wingfield.

The Stolt case has been closely watched as an indicator of the direction of the government's amnesty program, which grew out of a wider effort to break up cartels. Under the program, the first participant in a price-fixing ring that steps forward and cooperates with prosecutors gets immunity from prosecution and fines.

The Justice Department's revocation of the agreement with Stolt in March was the first time it had taken such a step. Some defense attorneys had predicted the action would make companies reluctant to cooperate in future cases.

Despite the judge's ruling, the antitrust case already has broken a global agreement by Stolt and other leading chemical-shipping companies to allocate customers and prevent price wars. Barring further appeals, the ruling could wrap up the government's prosecution of the companies, which has resulted in millions of dollars in fines and several criminal convictions. A Justice Department spokeswoman said the department is reviewing the opinion.

Stolt and Mr. Wingfield had been granted amnesty by the government in early 2003 and agreed to cooperate with the antitrust probe. But the Justice Department later revoked the amnesty and indicted them, arguing that they had failed to abide by terms that required "prompt and effective" action to halt the alleged activity. The Justice Department also suggested that Stolt, with headquarters in London but whose top executives are based in Connecticut, might not have been forthcoming with investigators.

According to Judge Savage's ruling, Justice Department attorneys argued the amnesty was granted on the assumption that Stolt had halted illegal activities in March 2002 but that the government afterward learned the illegal activities continued later that year. However, the only date mentioned in the amnesty agreement was Jan. 15, 2003. The judge ruled that, since the agreement didn't state illegal activity had to have halted by a certain date, the immunity to prosecution covered anything that happened before Jan. 15, 2003.

Judge Savage wrote that "due process requires prosecutors to scrupulously adhere to commitments made to suspects in which they induce the suspects to surrender their constitutional rights."

George J. Terwilliger III, a lawyer with White & Case LLP who represented Stolt, added, "For purposes of the amnesty program, it's critically important that companies be able to rely on the promises of the Justice Department."

The judge noted the antitrust case had succeeded as a result of the information provided by Stolt. Another shipping line, Odfjell Seachem AS, pleaded guilty and paid a $42.5 million fine, while Jo Tankers BV was fined $19.5 million.

Write to William M. Bulkeley at bill.bulkeley@wsj.com