Interaction Between Admiralty and Bankruptcy Law: Effects of Globalization and Recurrent Tensions

Bankruptcy cases increasingly have international connections. In the realm of commercial bankruptcy cases, it is the rare case in which a commercial debtor's business does not have some international aspect. In some cases, the debtor has business operations in both the United States and abroad. In other cases, the debtor has manufacturing facilities located overseas and operations headquartered in the United States. In still other cases, the debtor may acquire raw materials or finished goods from suppliers located abroad. Cross-border lending has also become common.
In light of the trend toward globalization in commerce and finance, it is not surprising that maritime issues are increasingly implicated in bankruptcy cases. Unlike bankruptcy law, which can vary dramatically from nation to nation based upon the unique domestic social values attached to financial matters, given its origins  and purpose, maritime law is inherently international in nature. In addition to the obvious tension between admiralty and bankruptcy law, when a debtor in the maritime industry seeks bankruptcy protection, there are increasingly frequent tensions in the nonmaritime bankruptcies, when maritime creditors seek to exercise their admiralty law rights in bankruptcy court. For example: a retail debtor may have goods in containers aboard ships at sea at the time the case is filed; a construction debtor may utilize the services of a crane mounted on a barge or stevedoring services to offload its equipment in a foreign port; or an oil and gas service debtor may use the services of a marine contractor or ship architect to convert a trawler to a seismic research vessel or may use barges to transport oil, gas, and other petrochemi-cals.
The impact of bankruptcy law on the maritime industry, and the special admiralty doctrines by which that industry has historically dealt with debtors and creditors, has led to recurrent tensions. This Article will examine manifestations of some of these tensions since the 1985 publication of The Tulane Admiralty Law Institute Symposium on Admiralty Interface: Bankruptcy v. Maritime Rights. As shown below, while there have been some key developments, many of the questions from 1985 remain unanswered today.