Source: http://www.iclg.co.uk/practice-areas/shipping-law/shipping-law-2016/usa
Timestamp: 2016-10-01 08:44:31
Document Index: 306378620

Matched Legal Cases: ['§ 30509', '§ 30106', '§ 30508', '§ 31341', '§ 31342', '§ 31341', '§ 30104']

USA - Shipping Law 2016 · ICLG - International Comparative Legal Guides
Home Practice area Shipping Law Shipping Law 2016 USA
(i) Collision The conventions pertinent to collisions that the U.S. is a signatory to are the International Convention for the Safety of Life at Sea, also known as SOLAS, and the International Regulations for Preventing Collisions at Sea, also known as COLREGS. In addition, the navigation of vessels is also governed by many regulations and statutes addressing a wide range of topics, including the Inland Navigation Rules which govern all Inland waters including the Great Lakes, aids to navigation, anchorages, ports, bridges, cargo, and vessel requirements. Liability for a collision is established by proof of fault that caused the collision in whole or in part. The standards of care that mariners are held to are: (1) general concepts of prudent seamanship and reasonable care; (2) statutes and regulations germane to navigation and management of vessels; and (3) governing customs and usages. The most common cause of collisions is the failure to adhere to a statute or regulation, and fault is most often established through proof of violation of one or more of the COLREGS. The Pennsylvania Rule, which is a presumption of causation, is closely tied to fault. This rule provides that when a vessel involved in a collision, allision or grounding is shown to have violated a statute or regulation aimed at preventing the harm that occurred, that vessel is presumed to have caused the harm, at least in part, unless it can prove that the violation could not have been the cause of the accident. While this bar is high, it is not insurmountable.
U.S. collision law also includes several other presumptions of fault. The Oregon Rule provides that when a vessel under its own power collides with an anchored vessel or navigational structure, the burden of proving no fault is on the moving vessel. Similarly, the Louisiana Rule provides that when an unmoored and drifting vessel strikes a moored or anchored vessel or a structure, it is presumed to be at fault. Lastly, the presumption of negligence embodied by the doctrine of res ipsa loquitor also applies to collision cases.
Several statutes and regulations have been enacted since 1970 to address the pollution caused by vessels. The most recent of these is the Oil Pollution Act of 1990 (“OPA 90”), which was enacted in response to the Exxon Valdez spill in Alaska in 1989. OPA 90 sets forth liability of an owner or operator of a vessel, on- and offshore facilities, and pipeline owners when oil is discharged from the vessel or facility. Liability is strict and can result in removal costs and six different categories of damages. Criminal penalties can also be imposed. Only three defenses exist under OPA 90: (1) act of God; (2) act of war; or (3) act or omission of a third party. For the purposes of OPA 90, a third party does not include an employee, an agent, or an independent contractor of the vessel owner or operator. OPA 90 contains provisions, which limit liability to certain amounts depending on the size of the vessel or type of facility. This limitation, however, in some instances, only applies to damages and does not apply to removal costs. These limits on liability do not apply to a case of gross negligence, wilful misconduct or a violation of an applicable regulation. Limitation is also not available if the owner or operator does not report the spill. Finally, limitation under OPA 90 excludes any liability exposure under state law. Other statutes have been enacted, which also address pollution and pollution control. Many of these statutes work in conjunction with OPA 90. The Federal Water Pollution Control Act (“FWPCA”), also known as the Clean Water Act, was enacted prior to OPA 90 and was the primary legislation addressing spills of both oil and other hazardous material. The Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), which also predates OPA 90, addresses the discharge of substances other than oil. Both FWPCA and CERCLA establish liability parameters and set forth damage schedules. Both of these statutes are used as supplemental regulations to OPA 90, based on their similarities to the statute. (iii) Salvage / general average Salvage in the U.S. is governed by the General Maritime Law of the United States. Salvage can be either pure salvage or contract salvage. Pure salvage occurs when the salvor is a volunteer, while contract salvage occurs when parties enter into an agreement for salvage. The elements of a pure salvage claim are: (1) there must be a marine peril; (2) salvage efforts must be voluntary; and (3) the salvage effort must be successful in whole or in part. The amount of a salvage award is at the discretion of the court, which is weighed against the benefit enjoyed by the property owner, as well as the risk of the salvage effort. Courts will consider the following factors when setting a salvage award: (1) the time and labour expended by the salvor; (2) the promptitude, skill, and effort of the salvor; (3) the value of the property risked by the salvor and the danger to which such property was exposed; (4) the value of the property saved; and (5) the degree of danger from which lives and property are rescued. While the calculation of the award is never an exact science, the award cannot exceed the total value of the property that was salvaged. The U.S is a signatory to the International Convention on Salvage of 1989, which has criteria very similar to that of the courts above. Contracts for salvage are maritime contracts and are generally upheld, unless the amount contracted for is exorbitant, or if the salvor clearly took advantage of the property owner. Frequently, salvage operations in the U.S., as in the rest of the world, are performed under Lloyd’s Open Form Salvage agreements based upon the “No Cure-No Pay” rule.
With regard to general average, the principles of general maritime law still apply; however, general average is governed by the York-Antwerp Rules (the “Rules”). Rule A of the Rules provides that general average applies when an extraordinary sacrifice or expenditure is intentionally and reasonably made to preserve property in a common maritime adventure from peril. If nothing is saved, there is no interest liable to contribute to the sacrifice. Owners of cargo are frequently surprised when a ship carrying their goods has a grounding or mechanical breakdown at sea and the shipowner declares general average. This triggers the cargo owner’s duty to post security toward its potential general average obligation, as vessel, cargo and freight all contribute toward the general average expense. The main defense to a general average claim is that the vessel owner failed to exercise due diligence to make the vessel seaworthy at the inception of the voyage.
(iv) Wreck removal The owner, operator or demise charterer of a vessel which has sunk in navigable waters and which constitutes a hazard to navigation is required to mark and remove it, is liable to the government for any costs incurred by the government in marking it and removing it, and may be liable to third parties whose property may be physically damaged as a result of its failure to promptly remove the wreck or its failure to properly mark it. Wreck removal is governed by the Wreck Act. The Wreck Act imposes a non-delegable duty on a vessel owner to mark the wreck with day and night markings as soon as possible. The duty to mark continues until the wreck is removed or abandoned. If the wreck is in navigable waters, or if it creates a hazard for navigation, the Wreck Act also requires that the wreck be removed immediately.
The U.S. is not a signatory to the Convention on Limitation of Liability for Maritime Claims of 1976. Instead, limitation in the U.S. is governed by the Limitation of Ship Owner’s Liability Act (the “Limitation Act”). The Limitation Act provides that, in the event of a collision or other marine casualty, the ship owner (whether American or foreign) may be able to limit the liability to the post-casualty value of the vessel and its pending freight and have the benefit of concursus – all claims being heard in one court.
The Limitation Act allows a federal court to enjoin all pending suits and to compel all claimants to appear in the limitation action. The ship owner must file a complaint for limitation within six months of the casualty, and must post security in the value of the ship and the pending freight. This creates the limitation fund. If there are claims for personal injury, the ship owner must increase the limitation fund by $420 per gross ton of the vessel. The limitation court will then determine whether the ship owner is entitled to exoneration or limitation of liability. If liable, the ship owner will be entitled to limitation only if he can prove that he had no privity or knowledge of the negligence or unseaworthiness that caused the loss. If the ship owner is liable, but entitled to limitation, the limitation court will then distribute the limitation fund to the claimants. The limitation fund will be distributed on a pro rata basis if the claims exceed the fund, and some courts may take into consideration any priorities of any of the claims based upon the statute.
The U.S. Coast Guard has statutory authority to investigate marine casualties. Those casualties involving death, personal injury, or substantial damage to a vessel must be reported to the Coast Guard within five days. The Coast Guard also has the authority to bring criminal charges as part of its investigations. In the case of major marine casualties, where there is a loss of six or more lives, a loss of a vessel of at least 100 gross tons, property damage amounting to at least $500,000, or there is a serious threat of damage caused by hazardous materials, the National Transportation Safety Board conducts a formal investigation of the casualty. The NTSB then provides a comprehensive report and can make recommendations to the Coast Guard and other governmental agencies regarding changes to regulations.
In addition, in the event of oil spills, the Bureau of Safety and Environmental Enforcement (“BSEE”) is involved in the overseeing of oil spill response operations.
In 1936, the Carriage of Goods by Sea Act (“COGSA”) was enacted in the U.S. and incorporated the Hague Rules into domestic law. The Hague-Visby amendments and the Hamburg Rules are always a topic of discussion at major U.S. maritime industry events. However, they have not been incorporated into U.S. law.
COGSA governs “all contracts for carriage of goods by sea or from ports of the United States in foreign trade.” A contract of carriage is a prerequisite for the application of COGSA between the parties. Accordingly, COGSA only applies between U.S. and foreign ports. It does not apply to domestic carriage, unless it is incorporated into the bill of lading. COGSA does not apply to bills of lading issued under a charter party or other private contracts of carriage unless it is expressly incorporated as a contractual term.
The Harter Act, enacted in 1893, governs the carriage of cargo between domestic ports where a bill of lading is issued as a contract of carriage. The Harter Act imposes liability upon the carrier from receipt of goods until delivery, but does not permit the carrier to limit liability. COGSA can apply to purely domestic U.S. carriage where the bill of lading expressly states that COGSA shall govern the contract, and in such instances, the Harter Act will apply to the periods before loading and after discharge. 2.2 What are the key principles applicable to cargo claims brought against the carrier?
Under COGSA, the shipper is the party who supplies the goods to be transported, and the transporter is the carrier of the goods. The carrier is usually the ship owner or a person, such as a charterer, who has the right to operate the ship. It should be noted that while a contract of carriage is between the shipper and carrier, a consignee or transferee (or subrogated insurer) of a bill of lading can also be a proper party to sue the carrier for loss or damage to the goods in transit. The same rule applies for some other breach of contract of carriage actions.
COGSA imposes a duty on the carrier to “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.” A carrier also has a duty to issue a bill of lading that contains a description of the goods. In order to establish the carrier’s liability for loss or damage to cargo, the shipper must establish a prima facie case that the goods were damaged in the carrier’s custody. A shipper can do this by proving that (1) the cargo was delivered in good condition, and (2) it was discharged in a damaged condition. The shipper is not required to prove that the carrier was at fault or explain how the damage was inflicted. Both COGSA and the Harter Act provide that the bill of lading constitutes “prima facie evidence” of the receipt by the carrier of the goods “therein described.” A bill of lading that fulfils these requirements and has no notations of damage is called a “clean” bill of lading and may be relied upon to show that the goods were given to the shipper in good condition.
The carrier’s liability for lost or damaged cargo is limited to $500 per package. If the goods were not shipped as a “package”, then liability is limited to $500 per customary freight unit. The carrier cannot invoke a COGSA limitation unless it gave the shipper a fair opportunity to declare the actual value of the goods or at least declare a value in excess of $500 per package.
Arbitration clauses in a bill of lading are valid. Forum selection clauses and choice of law clauses have been consistently upheld as well. However, enforcement of a clause mandating a foreign forum may be denied if there is no opportunity for a U.S. court to review a foreign decision.
Under COGSA, the carrier can establish a claim for damages caused by “goods of an inflammable, explosive, or dangerous nature” where the carrier did not have actual or constructive knowledge of the goods. This includes goods that are not only named as hazardous or dangerous cargos under applicable international instruments and national regulatory regimes, but also goods whose danger is discovered during or after shipment. The shipper is strictly liable for these damages, unless the carrier had actual or constructive knowledge that the cargo was dangerous. A carrier can off-load or destroy inherently dangerous goods without liability if the carrier discovers the dangerous nature of the goods during the voyage. The carrier can also destroy or off-load dangerous goods that they are aware of if the goods become actively dangerous.
Passenger claims generally involve personal injury or death, but may also involve claims for lost or damaged luggage. Internationally, these claims are regulated by the Athens Convention. However, because the U.S. is not party to the Athens Convention, passenger claims are governed by the general maritime law of the U.S.
A ship owner owes passengers a duty to exercise reasonable care under the circumstances. In order for a passenger to succeed on a negligence action, the passenger must prove that the ship owner breached a duty owed to the passenger, the actions of the ship owner or one of his/her employees was the proximate cause of the injury, and that the passenger experienced actual harm and damages.
While ship owners may limit their liability concerning damage to a passenger’s luggage and other various related claims not involving physical injury, ship owners may not limit their liability concerning a passenger’s claim of negligence. Under 46 U.S.C. § 30509, the owner or agent of a vessel transporting passengers to or from a U.S. port, may not include in a contract, a clause limiting “the liability of the owner or agent for personal injury or death caused by the negligence or fault of the owner or the owner’s employees or agents” or “the right of a claimant for personal injury or death to a trial by a court of competent jurisdiction.”
Pursuant to 46 U.S.C. § 30106, maritime claims in the U.S. are typically required to be brought within three years of when the cause of action arose. However, pursuant to 46 U.S.C. § 30508(b), the owner can limit the time to bring a claim for personal injury or death to one year.
Finally, passenger claims are maritime contracts, which sometimes include forum selection clauses and/or mandatory arbitration clauses. These are generally enforceable as long as they are fundamentally fair, communicated to the passenger, and not utilised as a means of discouraging passengers from pursuing legitimate claims.
U.S. law differs from that of other countries because it makes no distinction between the process of obtaining security for a claim against a vessel owner and the process of obtaining security for a claim against a non-vessel owner. Instead, U.S. law provides for procedures to either obtain security from an in personam defendant (individual, corporation, etc.) or, in instances where a lien has arisen, directly against the property through an in rem proceeding.
In most foreign jurisdictions, a contractual bunker supplier would not be able to arrest a vessel for a claim relating to bunkers that they supplied to that vessel due to a lack of privity between the supplier and the vessel owner. The U.S., however, is an exception to this general rule, due to the fact that bunkers fall under the definition of “necessaries” found in the U.S. Maritime Lien Act. 46 U.S.C. § 31341. Necessaries generally mean any item which is reasonably needed for the operation of the vessel, such as bunkers. This act provides that a person providing necessaries to a vessel on the order of the owner, or a person authorized by the owner, has a maritime lien on the vessel and may bring a civil action in rem to enforce the lien. 46 U.S.C. § 31342. The act further provides that certain parties are presumed to have the authority of the vessel owner to procure necessaries. These parties include: the owner; the master; a person entrusted with the management of the vessel at the port of supply; or an officer or agent appointed by the owner or the charterer. 46 U.S.C. § 31341. A lien for providing necessary services or supplies to a vessel attaches only to the particular vessel which received the benefit of the service. The U.S. Maritime Lien Act is an exception to the general rule because it circumvents the issue of contractual privity, by establishing liability on the maritime lien based on a principle/agent relationship. This relationship creates a rebuttable presumption that any of the above-listed parties had the authority to procure necessaries for the vessel. Based on this presumed authority, the vessel owner becomes a party to the contract and is therefore liable under that contract. This presumption can be rebutted if there is proof that the bunker supplier knew that the charterer had no authority to bind the vessel and the vessel owner expressly precluded the charterer from creating any liens against the vessel. The language of the statute is clear in saying that unless this presumption is rebutted, the maritime lien is successfully established, which gives the bunker supplier, whether physical or contractual, the right to bring a civil action in rem to arrest the vessel. It is important to note that maritime liens for services or supplies provided by a foreign plaintiff to a foreign vessel in a foreign port do not give rise to a U.S. maritime lien.
Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims, which are part of the Federal Rules of Civil Procedure, allows a party to obtain a security for a claim against anyone whom he or she has a maritime claim against, including both vessel owners and non-vessel owners. Rule B provides for maritime garnishment and attachment when a plaintiff has an in personam maritime claim against a defendant. It is used when the defendant cannot be found in a judicial district in which the claim is to be brought, but property owned by that defendant, such as a vessel, can be found. Rule B attachment is generally used to (1) acquire jurisdiction over a defendant; (2) obtain security for a claim; or (3) to seize property in connection with the enforcement of a judgment. The property attached can be any property owned by the defendant, and does not have to be in any way associated with the underlying claim. Rule B attachment is frequently used in the U.S. to obtain a security for a claim that has been, or will be brought in a foreign arbitral tribunal.
A plaintiff wishing to attach their interest to the property of the defendant must obtain an order of attachment from the court, which is done on an ex parte basis. The court’s order will direct the U.S. Marshal to effect the attachment. The plaintiff must deposit with the Marshal a fee (typically $5,000–$10,000) to cover the costs of the attachment. This fee, along with the plaintiff’s attorney’s fees and other costs can be recovered from the defendant if provided by contract or if bad faith is found. Once the property is attached, the defendant must then post security in the form of a bond or other acceptable security for the underlying claim (not to exceed the value of the seized property) in order to get the property released. The property owner can also move for a post-seizure hearing and argue that the seizure was improper, and that the property should therefore be released. If the property is not released, and security is not posted, the property can be sold by the U.S. Marshal at public auction to satisfy the underlying claim.
U.S. Law also contains a unique procedure that allows a party to enforce a maritime lien directly against the property that the lien has attached to. Rule C of the Supplemental Rules for Certain Admiralty and Maritime Claims provides an in rem action of arrest against a defendant’s property that is the subject of the underlying lien claim. A Rule C action usually involves a vessel, but can also be asserted against other property such as cargo or freight. In a Rule C action, the vessel or property itself is named as the defendant, but the vessel or property owner can be named in personam as well. A Rule C arrest can only be brought by a plaintiff to enforce a lien it possesses on the vessel or property being arrested. Such a lien may arise for a multitude of things including collisions or allisions, other damages caused by the vessel’s master or crew, necessaries supplied to a vessel, a mortgage on the vessel, crew wages, personal injury, etc.
The process for obtaining a Rule C arrest is largely identical to the procedure under Rule B above. The plaintiff must obtain an order and warrant for the arrest of the vessel or property. The U.S. Marshal will then go make the arrest. The owner of the vessel or property must then post bond to secure the release of the property. If the ship owner fails to post bond, or does not appear to contest the arrest, judgment can be entered against the vessel or property itself, which can be sold by the U.S. Marshal at auction to satisfy the lien.
Several forms of security are allowed to be submitted in maritime arrests brought in U.S. courts. Rule E of the Supplemental Rules for Admiralty or Maritime Claims contained in the Federal Rules of Civil Procedure, provides that a bond can be submitted, which must then be approved by the court. The amount of the bond can be stipulated by the parties, and if the parties cannot agree, the court will fix the sum at an amount that will cover the amount of the plaintiff’s claim together with interests and costs. While the court has broad discretion in the setting of security, Rule E specifically provides that the bond cannot be set higher than twice the amount of the plaintiff’s claim or the appraised value of the property seized, whichever is smaller. While Rule E provides for a bond, courts will generally accept two other forms of security. These are a Letter of Undertaking from a P&I Club and a letter of credit from the defendant’s bank. The same Rule E guidelines regarding amount of the bond will generally be applied in setting the amount of either the Letter of Undertaking or a bank letter. However, some courts will not allow a Letter of Undertaking as security when such a letter does not comport with the court’s local admiralty rules. In that case, a Letter of Undertaking will only be approved upon agreement by the parties.
Evidence can be obtained through discovery. Discovery includes Initial Disclosures, which the parties are required to make soon after the suit is filed and served. The parties must produce all non-privileged information in its possession as part of its Initial Disclosures. The parties can then propound Interrogatories, Requests for Production of Documents and Things, and Requests for Admission. The Requests for Production provision specifically provides for inspection of land or other property. Witnesses can be examined through depositions taken under oath.
In the event that a party believes that evidence is being destroyed, that party should immediately file a motion for a protective order to preserve evidence. The party can also move the court for a temporary restraining order to prevent the spoliation of evidence. If a party refuses to produce a witness or requested evidence, the other party can file a motion to compel asking the court to compel the production of evidence or witness. Some courts consider spoliation of evidence to be an abuse of discovery which can lead to sanctions.
At the beginning of litigation in a federal court, parties are obligated to exchange Initial Disclosures, in which they list their witnesses, documents, any potentially responsive insurance, and an explanation of how the damages claimed (if any) are calculated.
The parties will then engage in written discovery with the parties, issuing requests for admissions, interrogatories and requests for production of documents. Discovery in U.S. proceedings is extremely broad, and the parties are obligated to produce all potentially relevant documentation and even documents that could lead to the discovery of relevant evidence.
The parties will then usually seek to depose witnesses (i.e. examine them under oath) to determine or memorialize their testimony. Parties will also usually produce expert reports on liability and damages, and the authors of those reports may also be deposed.
(i) Federal Courts The U.S. federal courts have original jurisdiction over maritime claims, but in some circumstances, admiralty claims can be filed in the courts of individual states. In federal court, suits are randomly assigned to the district judges, and there are no specialist admiralty courts or judges.
A typical proceeding in federal court commences with the filing of a complaint by the plaintiff. The complaint is a notice pleading, which means that the defendant must be given sufficient details of the facts alleged. The complaint must be served on the defendant within 120 days. An answer or responsive pleadings must be served within 20 days of service. The court will set the time and place for a scheduling conference and the parties must produce initial disclosures. Further discovery (disclosure of evidence) then follows, as discussed in Section 5 supra.
Once a sufficient amount of discovery has been completed, a party may move for summary judgment. This motion essentially asks the court to rule on the case on the basis of what the party argues are the undisputed facts.
Settlement conferences (which are very similar to mediations) are usually mandatory in federal courts, and take place before the magistrate judge.
If no settlement is reached, the case will proceed to trial. Admiralty suits (with the exception of claims of Jones Act Seaman) do not usually give rise to the right to a jury trial. The district judge will try the case and issue an order and reasons, followed by a judgment.
Parties have the right to appeal the district court’s judgment to the federal circuit court of appeals for the circuit in which the district court that tried the case is located. A party can further petition the U.S. Supreme Court for review, but such petitions are rarely granted. Additionally, the process of obtaining security for a claim against a vessel referenced in Section 4 supra is filed in federal court.
(ii) Arbitration Arbitration clauses are routinely enforced within the maritime context. Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S.528 (1995). A party seeking to enforce an arbitration clause when a lawsuit has already been filed will usually ask the court to stay or dismiss the lawsuit pending the conclusion of that arbitration.
There are a number of specialist arbitration bodies within the U.S., including the American Arbitration Association, as well as, various state-based maritime arbitration associations.
Mediation is strongly encouraged by the federal courts. As noted, parties are usually required to attend a settlement conference before a magistrate judge. Parties can also agree to a private mediation with one of the many qualified and experienced mediators within the maritime jurisdictions in the U.S.
As noted, discovery in litigation in the U.S. can be extremely broad. This can be both an advantage and a disadvantage in that it can result in extensive documentation. This overproduction can be extremely burdensome and expensive.
With regard to attorneys’ fees and costs, it is important to note that federal courts will usually not award these to the prevailing party unless the contract or a statute so provides.
Finally, since admiralty cases are traditionally heard without a jury, the risks inherent to a jury trial are avoided, except in certain circumstances, notably maritime personal injury and death litigation.
Individual state law most often governs the recognition of foreign judgments in U.S. courts. Most states have adopted either the Uniform Foreign Money-Judgments Recognition Act of 1962 or the Uniform Foreign-Country Money Judgments Recognition Act of 2005, which gives holders of foreign judgments the same rights and remedies as the holders of a domestic judgment. The remaining states apply the common law principles of comity to enforce foreign judgments.
Enforcement of a debt arising out of a foreign judgment must be initiated by civil action in a state or federal court, and the judgment creditor must establish a basis for the exercise of jurisdiction by the court attempting to enforce the judgment against the debtor’s property. A successful action then becomes a local judgment that is both enforceable under local law and entitled to full faith and credit in other courts within the U.S.
U.S. courts have been quite liberal in their recognition and enforcement of foreign judgments. As a result, once the party seeking the recognition of a foreign judgment has established the judgment’s existence, the burden is on the party resisting recognition to prove grounds for non-recognition.
The U.S. signed the Hague Convention on the Recognition and Enforcement of Foreign Judgments in 2009. It will apply where there is national diversity between the parties and/or where foreign enforcement of a judgment is desired. The general rule is that the enforcing country will recognise and enforce a final judgment of the original foreign court if jurisdiction is properly established under the treaty.
The enforcement of foreign arbitration awards is governed by the Federal Arbitration Act (“FAA”), which implemented the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 into domestic law in 1970. It requires contracting states, such as the U.S., to recognise written arbitration agreements that concern subject matter that is cable of settlement by arbitration. To implement a convention in a U.S. court, a party seeking to enforce arbitration agreements has two options: (1) file an action to compel arbitration in accordance with the terms of the agreement; or (2) at a later stage, file an action to confirm an arbitral award made pursuant to the arbitration agreement. U.S. courts are to refer the parties to arbitration, unless the court finds that the agreement to arbitrate is null and void, inoperative, or incapable of being performed. An award under the convention will be confirmed except where the court in the enforcing state finds:
(1) either of the parties were under some incapacity, or the agreement is not valid under the law prescribed by the parties or under the law where the award was made;
(2) proper notice was not received by the party against whom the award has been invoked;
(3) the award is outside the agreement;
(4) the arbitrating board or procedure was not in line with the agreement made by the parties;
(5) the award is not yet binding on the parties;
(6) the subject matter of the dispute is not capable of settlement by arbitration under the law of the enforcing country; and
(7) the recognition or enforcement would be contrary to the public policy of the enforcing country.
These exceptions are construed narrowly.
While there are many similarities between the General Maritime Law of the U.S. and other jurisdictions, particularly English law, there are some important unique aspects that are unique to the U.S. and commonly give rise to disputes.
(1) The Rights of Seaman Whether an injured person is or is not a seaman is an issue that is often disputed in the U.S. The issue is important because seamen are treated as wards of the courts and are afforded certain common law and statutory rights. First, if a seaman is injured in the course and scope of his employment, he is entitled to payment of maintenance and cure until such time as he reaches maximum medical cure, regardless of fault. Arbitrary and capricious failure to pay such maintenance and cure can result in punitive damages being awarded against the employer. Atlantic Sounding Co. v. Townsend, 557 U.S. 404 (2009). Second, a seaman is entitled to the benefits and protections of the Merchant Marine Act of 1920, more commonly known as the Jones Act, 46 U.S.C. § 30104, which allows him to recover damages from the employer and assert a claim of unseaworthiness.
Recently, the U.S. Court of Appeals for the Fifth Circuit (the Fifth Circuit has jurisdiction over District Courts in Louisiana, Mississippi and Texas) held that seamen may recover punitive damages for their employer’s willful and wanton breach of the general maritime law duty to provide a seaworthy vessel. McBride v. Etsis Well Serv., LLC 731 F.3d 505 (5th Cir. 2013) reh’g en banc granted, 743 F.3d 458 (5th Cir. 2014). The Fifth Circuit reasoned that unseaworthiness was established as a general maritime claim before the passage of the Jones Act, and that the Jones Act does not address unseaworthiness or limit its remedies. However, following a rehearing en banc, the Court reversed its previous ruling and affirmed the District Court’s ruling that punitive damages were not recoverable. The panel relied on the U.S. Supreme Court’s decision in Miles v. Apex Marine Corp., 498 U.S. 19 (1990). That case turned on whether loss of society was recoverable by the deceased seaman’s mother. The Court held that recovery for non-pecuniary losses, such as loss of society, was not permissible when liability was predicated on either the Jones Act or unseaworthiness. The en banc McBride panel held that Miles controlled, and because punitive damages are non-pecuniary, they were also not recoverable. The U.S. Supreme Court recently declined to review the Fifth Circuit’s en banc decision.
(2) Cabotage
Other provisions of the Jones Act also require that all goods transported by water between U.S. ports be carried in U.S. flag ships, built in the U.S., owned by U.S. citizens and (at least three-quarters) crewed by U.S. citizens or legal permanent residents. However, the U.S. Coast Guard can be petitioned to grant exemption letters for foreign individuals that are not part of the regular crew, but are instead specialists, professionals, or other technically trained personnel called in to handle emergencies or other temporary operations.
(3) Vessel Status In recent years, there has been significant litigation on whether or not floating structures qualify as “vessels,” with two opinions from the U.S. Supreme Court in the last eight years. In Stewart v. Dutra Constr. Co., 543 U.S. 481 (2005), the Supreme Court defined a “vessel” as any watercraft “used, or capable of being used, as a means of transportation on water.” Recently, in Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013), the Court revised this definition and held that a structure was not a vessel “unless a reasonable observer, looking at the [structure’s] characteristics and activities, would consider it designed to a practical degree for carrying people or things over water.” Post-Lozman, the courts have taken a narrower stance on what constitutes a vessel. For example, in the case of floating production facilities and similar structures, the courts evaluate the time and cost to dislodge them from the seabed. In recent years, courts in the Fifth Circuit have addressed the issue of whether vessels under construction undergoing sea trials are vessels “in navigation.” The term “in navigation” means “engaged in commerce and transportation on navigable waters.” In 2012, the Western District of Louisiana ruled that a ship undergoing sea trials is not a vessel “in navigation.” Frankie Duplantis v. Northrop Gromman Corp., C.A. No. 10-1575 (W.D. La. June 20, 2012).
The issue of vessel status is important in that it can have ramifications, for example, as to whether the court has admiralty jurisdiction, whether a contract involving the structure is a maritime contract, whether someone injured abroad is a Jones Act seaman, whether the owner of the structure is entitled to seek to limit its liability and many other situations.
(4) Injuries Not Compensable Under the Jones Act Under the Jones Act, a seaman can sue his employer for injuries caused by the employer’s negligence. However, this right only extends to injuries caused by physical perils. In Skye v. Maersk Line, Ltd., 751 F.3d 1262 (2014), the plaintiff suffered from left ventricular hypertrophy, which he alleged was caused by excessive duties and an erratic sleep schedule. The trial court found for the plaintiff, however, the appellate court reversed, holding that injury caused by work-related stress, as opposed to physical injury, is not cognizable under the Jones Act.
(5) Time for Filing Suit In cases involving personal injury or death, there is a three year statute of limitations. However, for all other claims, there is no statute of limitations. Instead, the doctrine of laches applies. Under this doctrine, which is an affirmative defense, a claim will be barred if there is an unreasonable delay in bringing the claim. Additionally, in order for the claim to be barred, the unreasonable delay must prejudice the defendant. Sometimes courts will look to analogous state law statutes of limitations for guidance in determining whether the doctrine of laches should bar the claim. Contributing firm
Anacarolina Estaba Bendfeldt