Maritime Catastrophe Response — Civil and Criminal Counsel Investigation; Illustrative Recent Collision and Platform Case Law; Criminalization of Marine Negligence

To most people, nothing is more fascinating and newsworthy than a maritime disaster. A burning factory in Kentucky or a pipeline oil spill in Utah does not generate the same sense of drama and excitement as an equivalent amount of spilled oil from a burning ship or oil platform in Louisiana, Texas, or anywhere else. This Article partners a panel presentation at the 2011 Tulane Admiralty Law Institute. In this presentation, for illustrative purposes, the authors played back a United States Coast Guard Vessel Traffic Service (VTS) Automatic Identification System (AIS) Electronic Chart Display (ECDIS) for the M/T BOW FORTUNE--M/T STOLT ZULU collision at 81 Mile Point on the Mississippi River above New Orleans at about 0440 hours on May 19, 2006.

The Role of the P&I Clubs in Marine Pollution Incidents

The fire and explosion on the mobile offshore drilling unit Deepwater Horizon and the subsequent release of nearly five million barrels of crude oil into the Gulf of Mexico has been characterized as “the worst environmental disaster America has ever faced.” Although the oil spill occurred while the rig was operating as an offshore facility, among the many issues arising from the disaster is the adequacy of the current limits of liability applicable both to vessels and offshore oil exploration and production facilities under the U.S. Oil Pollution Act of 1990 (OPA 90), and the role of the marine insurance industry in meeting the costs of response and damages caused by such catastrophes. Pollution risks are borne primarily by the owner of the ship or facility concerned, who will normally insure against them, along with other marine liability risks, by separate liability cover. In the case of vessels, this is arranged most commonly by entering the vessel in one of the shipowners' mutual insurance associations, which specialize in providing cover of this kind, and which are more commonly known as Protection and Indemnity Associations, or P&I Clubs. This Article will discuss the law and practice of P&I insurance with particular emphasis on the liabilities arising from major marine pollution incidents.  

Hijacked: The Unlikely Interface Between Somali Piracy and the U.S. Regulatory Regime

As of March 4, 2011, 33 vessels and 711 crew members were being held hostage by pirates. The international community has engaged in various efforts to address the continuing problem of pirate hijackings with seemingly little success. The United States has also taken its own swipe at piracy through Executive Order 13,536, entitled “Blocking Property of Certain Persons Contributing to the Conflict in Somalia” (Order), that was issued by President Barack Obama on April 12, 2010. Upon its issuance, the Order created a great deal of confusion and consternation with respect to whether it prohibited the payment of ransom to pirates. The answer as it emerged has proved to be “yes,” “no,” and “maybe” and has resulted in a process whereby applications for guidance with respect to the payment of certain ransoms (and related insurance payments) are made to the Office of Foreign Assets Control of the U.S. Treasury Department (OFAC). The authors of this Article have both been actively involved in the development of the application process and have represented numerous clients seeking guidance with respect to ransom-related payments. This Article explains the Order and its import for piracy situations, and details the authors' experience with both the OFAC guidance process and related procedural and substantive issues that have arisen.  

Arbitration Law In Flux and Maritime Implications

Arbitration clauses are contained in many if not most maritime contracts, and maritime arbitration practice is a fairly settled process for resolving maritime disputes. But recent developments in the larger world of arbitration have unsettled some of the basic assumptions, and in a number of areas arbitration law is in flux. These developments bear watching by maritime practitioners, as they will undoubtedly impact the functioning of arbitration in the maritime context. . . .

Impacts of the Supreme Court Decision Regal-Beloit: Exporting Import Litigation

The United States Supreme Court's June 2010 decision in Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp. puts to rest an element of the controversy over the legal regime applicable to domestic losses to intermodal shipments originating from overseas. According to the Regal-Beloit Court, the Carmack Amendmentis not triggered when a domestic rail carrier accepts such imported cargo. Instead, the Carriage of Goods by Sea Act (COGSA) of 1936 can apply to both the ocean and inland legs of a multimodal import shipment. Thus, the Court's most recent decision gives further imprimatur to the use of Himalaya clauses in through ocean bills of lading to extend COGSA's application to subcontracting overland carriers who participate in a portion of the shipment's overall multimodal transportation.  

Limitation of Liability: Should It Be Jettisoned After the Deepwater Horizon?

Following the Deepwater Horizon incident, there was a great deal of criticism of the Limitation of Shipowners Liability Actand claims that the owner of the Deepwater Horizon was using a legal loophole to shortchange those injured and the survivors of those killed on the rig. For instance, Senator John Rockefeller IV, Chairman of the Senate Committee on Commerce, Science, and Transportation, said.. . .  

Hull Insurance and General Average -- Some Current Issues

This Article visits some current topics of interest in the area of hull and machinery insurance and general average. It examines the imperfect indemnity that can arise when the owner of a laden cargo vessel incurs expenditure in an unsuccessful attempt to salvage it after the operation of a maritime peril; recent developments in the evolution of the York-Antwerp Rules where, for the first time, we have two versions, the 1994 Rules and the 2004 Rules, existing in parallel with each other; the emerging phenomenon of pirates hijacking vessels for ransom; and the increasing trend towards absorbing general average up to a certain, previously agreed threshold under hull and machinery insurance policies.

Choice of Law and U.S. Maritime Liens

In an economic climate like the present, with plummeting markets and corporate failure an increasingly common phenomenon, creditors understandably give paramount importance to the search for security and priority of their claims. In the maritime context, the ancient device of the maritime lien has acquired fresh practical significance as a result. Access to a maritime lien does not guarantee recovery, but it puts a creditor in a far better position than rival claimants whose claims are unsecured. When a lien claimant proceeds in rem against a ship, other claimants often feel forced to bring their claims in the same court for fear of losing their rightful security and priority. As a result, disputes between claimants about security, priority, and the right to a maritime lien are often fought in forums that have little connection with the parties or the dispute, except that the ship happened to be in a particular port when it was arrested pursuant to the first in rem claim. Because of the international nature of the shipping business, it is often the case that U.S. courts are required in consequence to consider in rem actions brought by foreign claimants seeking recovery in claims governed by foreign law. The attractiveness of U.S. courts as a forum for in rem claims is enhanced by the fact that far more claims are secured by a maritime lien under U.S. maritime law than under the law of other countries. As a result, it is often the case that a plaintiff in a U.S. court seeks an in rem remedy that would not be available to it under the foreign law governing the underlying claim. The law governing such cases is complex and often confusing because it calls for an understanding of both admiralty procedure and choice-of-law principles. This Article is an attempt to explain the conceptual framework in which such claims should be understood.

At the outset, it is important to distinguish three choice-of-law questions. First, there is the question of what law governs the plaintiff's underlying claim, the cause of action that is the basis for its claim to redress. Second, there is the question of what law governs access to a maritime lien, the right to bring suit in rem on that claim against a ship or other property. Third, there is the question of what law should govern priority between competing maritime liens, the order in which the claims should be paid if the fund available in court is insufficient to satisfy them all in full.

These are different questions that demand different choice-of-law analyses. In many cases, perhaps most, the answer to the first two questions will be the same, with the result that the law governing the underlying claim also governs the availability of a maritime lien. Nevertheless, it is a mistake to think this must necessarily be so. Thus, for example, it is wrong to assume that a claim governed by a foreign law must necessarily be denied a U.S. maritime lien if the foreign law in question would not confer a maritime lien on that kind of claim. The second choice-of-law question (what law governs the maritime lien) may indicate that a foreign law claim has sufficient connection to the United States to be allowed access to a U.S. maritime lien. Conversely, it is wrong to assume that a claim governed by U.S. law must necessarily be secured by a U.S. maritime lien. The second choice-of-law question may indicate that a claim governed by U.S. law nevertheless has insufficient connection with the United States to warrant conferral of the security afforded by a U.S. maritime lien.

Whether or not the same law governs the first two issues (the underlying claim and the availability of a maritime lien), the answer to the third question (what law governs priorities) must always be U.S. law, the law of the forum (lex fori).

Some of these propositions may seem controversial (or just plain wrong, depending on your point of view), but they flow from the conceptual analysis undertaken in Part II, which deals with the ostensibly straightforward case where the underlying claim is governed by a foreign law that would confer a maritime lien on the claim in question. Part III deals with the consequences of recognizing that the first two choice-of-law questions (what law governs the claim and what law governs the maritime lien) are separate and independent. It focuses mainly, but not exclusively, on the first of the two situations described above, where the underlying claim is governed by a foreign law that would not confer a maritime lien on the claim in question, arguing that it should not follow necessarily that no U.S. maritime lien is available in such a situation. Part IV argues the converse proposition, namely that availability of a U.S. maritime lien should not flow automatically from the fact that the underlying claim is governed by U.S. maritime law. It deals with the second situation described above, where the underlying claim is governed by U.S. law but there is some foreign element to the case. Part V shows why the third question, that of priority, must always be governed by the lex fori.

The Aftermath of Norfolk Southern Railway v. James N. Kirby, Pty Ltd.: Jurisdiction and Choice of Law Issues

Contemporary transport contracts are often mixed contracts, as in the case of a through bill of lading or a combined transport document, in that they encompass transport both by sea and by land. From a maritime perspective, jurisdiction over mixed contracts is not a model of clarity. Before Norfolk Southern Railway v. James N. Kirby, Pty Ltd., the rule was rather simply stated but not so easily applied. A mixed contract did not fall within admiralty jurisdiction, except in two instances: (1) where the dominant subject matter of the contract was maritime in nature and the land-based element was relatively minor or incidental to the transaction or (2) where the maritime segment and land-based segment were severable. Under the latter approach, a court could exercise jurisdiction over the maritime dispute, but it could not exercise jurisdiction over a dispute involving the land-based segment.

First, this Article summarizes the United States Supreme Court's decision in Kirby. Second, the Article examines the question of whether the Court's decision expanding the scope of admiralty jurisdiction in “mixed contracts” cases has broadened the scope of  admiralty contract jurisdiction generally and specifically addresses “preliminary contracts.” Third, the Article examines the Court's approach to choice of law in regard to the applicability of federal versus state law. Finally, the Article will examine the impact of the decision in multimodal cases. Inasmuch as the last topic has been addressed elsewhere, this discussion will be brief so as not to be overly duplicative.

A Juxtaposition of Hull and Protection & Indemnity Coverages

There are several key areas of interrelated coverages found in standard hull and protection and indemnity (P&I) policies which continue to intrigue the courts. There are also certain issues collateral to these areas of coverage that bear preliminary discussion.