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Shipping & Transport
Can seafarers recover punitive damages from non-employer third parties under the general maritime law? Short answer: it depends on where you are. A recent Circuit Court of the City of Chesapeake, Virginia case is the latest example of inconsistent rulings on the availability of punitive damages under the general maritime law.
Under general maritime law, a vessel owner is entitled to the reasonable cost of repair of the vessel, unless this cost exceeds the pre-incident value of the vessel. But can the vessel owner also recover the post-repair loss of market value associated with so-called 'stigma' damages simply because the vessel was repaired following a maritime collision? The court in a recent case answered this question in the negative.
The court recently assumed that passengers aboard a charter fishing vessel were within the 'zone of danger', but still dismissed their claims based on insufficient evidence of injury. According to the court, mere presence in the zone of danger, without more, is insufficient to support a claim for purely emotional injuries under the general maritime law. In short, if you want the court to believe that you have genuine, compensable, emotional injuries, see a medical professional.
The Ninth Circuit recently held that punitive damages are available to seafarers who sustain injuries from unseaworthy conditions under the general maritime law. In doing so, it rejected a previous Fifth Circuit decision. The decision appears to suggest that if an owner knows of the unseaworthiness but does nothing, it is immune from punitive damages; yet, if an owner knows nothing, it may still be subject to punitive damages if the unseaworthy condition is sufficiently egregious in the opinion of the court.
The US Court of Appeals for the Fifth Circuit recently jettisoned the six-factor, fact-intensive Davis & Sons test for maritime contracts in favour of a "simpler, more straightforward test consistent with the Supreme Court's decision in Norfolk Southern Railway Co. v. Kirby". The decision will affect contractual indemnity provisions in offshore drilling contracts.
Maritime attachment permissible to obtain security for foreign arbitration, but only as adjunct to obtaining jurisdictionUSA | 06 December 2017
The US Court of Appeals for the Eleventh Circuit recently reinforced the availability of a maritime attachment as a means of obtaining security for a foreign arbitration. However, in so doing, the court highlighted that a maritime attachment must include an element of obtaining jurisdiction and may not be used solely to obtain security from a party already subject to the court's jurisdiction.
The US Court of Appeals for the Fifth Circuit recently ruled that the responsible party for an oil spill may obtain contribution for purely economic damages from another tortfeasor under the Oil Pollution Act 1990 irrespective of the general maritime law's economic loss rule. This decision provides some comfort to statutorily designated responsible parties that are held strictly liable in the first instance for significant costs relating to clean-up, remediation and third-party damages resulting from an oil spill.
Ride-hail services have quickly become a popular alternative to traditional taxi services in urban areas all over the United States. Uber launched in San Francisco in 2010 and has expanded rapidly to urban centres throughout the United States. Lyft operates in hundreds of US cities. The rapid growth of this new technology has left regulators and legislators struggling with how to balance the necessary regulation of ride-hailing services with promoting innovation and new technologies.
Over the years, a number of US Customs and Border Control (CBP) rulings have addressed the ability of foreign-flagged vessels to conduct certain activities relating to the offshore energy industry. CBP recently issued a notice of proposed modifications and revocations of its prior letter rulings relating to these activities, which would require them to be conducted by qualified vessels with coastwise endorsements under the Jones Act regulations.
Different insurance issues can arise depending on whether the insured owns and operates vessels, demise or time charters vessels or provides employees to work on vessels that it does not own, operate or charter. As complete coverage cannot be taken for granted, it is important for an insured to ensure that it fully details its marine-related operations to its broker and has appropriate coverage for personal injury claims arising from its maritime operations.
In a recent bareboat charter case, Malin International Ship Repair & Drydocks, Inc performed work for Oceanografia, for which the balance on its unpaid invoices was outstanding. Malin thus attached the fuel bunkers on board the vessel. Oceanografia argued that it did not own the fuel bunkers because the purchase price had not been paid; but the court held that the agreement to purchase the fuel, together with possession, was sufficient to allow for attachment.
In a recent case involving a product liability action against the retailer of a recreational boat, the defendant successfully disputed the allegations of negligence, strict liability, breach of contract and breach of warranty, as well as a claim under the Magnuson-Moss Warranty Act. The defence presented a much more streamlined case than the plaintiffs, which included relying on extensive cross-examination of the plaintiffs' witnesses in order to highlight the holes in their case.
In a recent case involving multiple courts and actions, Jewel Owner Ltd and International Shipping Partners secured a victory before the US Court of Appeals for the Eleventh Circuit. Not only did Jewel win its liability case, it also protected its settlement funds in another matter regarding a Rule B attachment and was awarded attorney's fees for doing so.
Norwegian Cruise Line recently secured a legally significant opinion in a Jones Act lawsuit brought by a US crew member. The opinion has been widely reported and heavily cited, as the case is the first to involve a cruise line defendant in a Louisiana court. Further, it comes at a time when the applicability of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards to US crew members is on appeal to the US Court of Appeals for the Eleventh Circuit.
Despite numerous attempts to resolve its salvage contract dispute with Pico, Mammoet Salvage Americas (MSA) was forced to commence arbitration proceedings pursuant to the terms of the contract. After more than 18 months of proceedings and several weeks of hearings, the arbitration panel recently awarded MSA over $28 million for Pico's breach of the clear language found in the contract and the addendum negotiated by the parties.
US courts continue to rule against physical fuel suppliers in the ongoing saga following the financial collapse of OW Bunker & Trading A/S. Separate courts in three leading maritime judicial circuits recently ruled that physical bunker suppliers contracted by OW Bunker to provide fuel to vessels were not entitled to maritime liens against the vessels. More decisions on this issue are expected at both the district and appellate court levels.
The shipping industry has made great strides in improving safety through improved training programmes, safety policies and safety programmes. However, in creating such programmes, it is important to consider the situation from the employees' perspective and avoid incentivising unwanted behaviours. Encouraging the reporting of incidents, illnesses or near misses for all events can create a culture of reporting that will make incident reporting second nature.
Even the safest and most careful companies will have an accident aboard one of their vessels where an employee gets hurt. When this happens, there is a real possibility that an employee could file a lawsuit against the company. The effective management and outcome of the case lies in preparing for litigation. In particular, when litigating a Jones Act personal injury claim, proper planning can help to turn the tide in your favour.
The collapse of OW Bunker A/S and its worldwide subsidiaries left a multitude of creditors seeking other methods of collecting payment for fuel ordered on credit by OW Bunker and delivered to numerous vessels. The US District Court for the Eastern District of Louisiana recently ruled that a fuel supplier that had contracted with OW Bunker to provide fuel to a vessel was not entitled to a maritime lien against this vessel.
In the past, most companies involved in the marine industry were specialised. However, the industry has changed and there are now fewer companies in the market, with each company often working in multiple areas. The efficiencies gained by service expansion have made the provision of marine services easier. However, as companies move beyond traditional business models, there are numerous pitfalls to avoid.
When an accident occurs on a vessel, an investigation is necessary to determine what happened, how it happened and how it can be prevented from happening in the future. A company can create a safer workplace while reducing its claim exposure by developing a plan to ensure that the documents generated during the investigative process are helpful in preventing a future accident while preserving its ability to defend a claim against an injured party.
Oil spills are a risk regardless of how safe and well trained your crew is. The federal government has developed a plan for responding to spill incidents and it is important to have a company plan that provides a response procedure that allows the government to be notified, manages the company's response to the incident and allows the government and the company to work together to minimise the effect of the spill.
Shipping companies attempt to minimise risk in a number of ways. However, despite best attempts to minimise exposure, 'acts of God' may occur that are beyond their control and that could cause damage for which they may be responsible. Nevertheless, some advance planning and an analysis of hurricane procedures could protect shipping companies from future liability.
The US District Court for the Southern District of Texas has ruled in a case arising from the disappearance of the ENSCO 74 during Hurricane Ike in 2008. The owners and operators of a ship which allided with the missing rig sued ENSCO for damages. The judge ruled that ENSCO had made a full good-faith search for the ENSCO 74, and thus was not negligent in failing to locate the ENSCO 74 or liable in damages to the ship interests.
In a recent Texas case the court held that Matthews Marine Inc had not breached its duty to the owner of a super-jumbo hopper barge that sank during Matthews's offloading operations. Although the court found that Matthews owed a duty to unload the barge in a reasonably safe, workmanlike manner, the plaintiff failed to prove a breach of that duty.
The Fifth Circuit Court of Appeals recently affirmed a lower court decision finding in favour of Smith Marine Towing in a suit filed against it by Cashman Equipment Corporation. The judge found that Cashman's position – that Smith would not be paid for its tug charter if its subsidiary was not paid by its customer – was not supported by the evidence.
The US Second Circuit Court of Appeal recently interpreted and enforced a provision in a through bill of lading issued by an upstream ocean carrier that designated the upstream carrier as the sole entity responsible to the cargo owners for damage, effectively relieving the railroads from liability to the cargo owners.
In Offshore of the Palm Beaches, Inc, DBA Freedom Boat Club v Lynch the Eleventh Circuit reviewed the district court's decision to lift the stay imposed in a limitation proceeding where there was only a single claimant, but the vessel had filed a limitation complaint before the claimant filed her state court claim.
The US Second Circuit Court of Appeals recently addressed the issue of whether US federal courts can exercise their exclusive admiralty jurisdiction to enforce a foreign judgment rendered by a non-admiralty court if the underlying claim is considered maritime under US legal standards. The Second Circuit's ruling may have a significant impact on the enforcement of foreign judgments in the United States.
The US District Court for the Eastern District of Louisiana has found in favour of Smith Marine Towing in a suit brought against it by Cashman Equipment Corporation. Both companies owed each other money for chartered vessels. Calculation of the final damages award came down to timing: once interest was taken into consideration, Smith owed Cashman only about $8,000, rather than the $2.5 million that Cashman had initially claimed.
The Oregon rule states that when a moving vessel allides with a stationary object in the water, the moving vessel is presumed at fault and must prove otherwise. A recent district court opinion provides useful guidance on navigating the troubled waters created by the presumptions in maritime law.
The US Fifth Circuit Court of Appeals recently explored Inland Navigational Rule 9 – the rule for navigating in a narrow channel – and its relationship to The Pennsylvania rule in connection with an allision that occurred on the Intracoastal Waterway in Louisiana. The Pennsylvania rule is a burden-shifting presumption for causation when, at the time of collision, a vessel is in actual violation of a statutory rule intended to prevent collisions.
The US Court of Appeals for the Fifth Circuit recently affirmed a decision rendered by the US District Court for the Eastern District of Louisiana enforcing a liquidated damages provision in a vessel sales agreement under maritime law. The court analysed the facts and enforced the provision in breach of a non-compete clause that prohibited the buyer from chartering out two tugboats purchased from the seller under the agreement.
The US Fifth Circuit Court of Appeals recently clarified the meaning of the phrase "acting in the course of employment" when considering whether an employer is liable for the negligent acts or omissions of its employee that causes injury to a co-employee in tort cases filed under the Jones Act, which extends the protections of the Federal Employers Liability Act to seamen.
To prevent vessels from operating with inadequate crews, the Coast Guard provides detailed requirements to which all operators of uninspected towing vessels must adhere when manning their vessels. As the costs of non-compliance can be severe, it is important to spend time analysing the make-up of crews to ensure that they comply with the applicable rules and regulations.
As one of the oldest forms of insurance, marine insurance has taken on many shapes and forms. Even under the simplest circumstances, selecting proper insurance can be difficult. In order to make informed decisions when procuring insurance, it is important to understand the basics of what types of insurance are available and what each type of policy covers.
A recent Fifth Circuit Court of Appeals ruling provides a clear example of the factors under consideration when determining whether a structure used in offshore oil and gas exploration can be classified as a vessel in navigation. It also provides an example of the 'sensible' rule, whereby a ship or similar structure should not be considered a vessel in navigation merely because it may sail at some point in future.
The US Court of Appeals for the Fifth Circuit recently examined whether in rem claims asserted under admiralty jurisdiction in the same complaint as in personam claims asserted under diversity jurisdiction must be tried together before a jury when the plaintiff has clearly expressed that the in personam claims are premised on diversity rather than in admiralty.
The US District Court for the Eastern District of Missouri recently held that punitive damages are available under general maritime law in unseaworthiness actions. The court followed a recent Supreme Court ruling which stated that the common-law tradition of punitive damages extends to maritime claims unless Congress has enacted a federal statute restricting its application.
In a dispute arising from a salvage agreement and operation, the US Court of Appeals for the Ninth Circuit recently affirmed two of its prior decisions, holding that the term 'arising under' in an arbitration clause is narrowly construed under federal arbitrability law.
The Supreme Court recently held that under the Federal Employer's Liability Act, an injury is caused by the railroad's negligence if that negligence played a part – no matter how small – in causing the injury to the employee. The decision is relevant to the maritime industry because the Jones Act incorporates the Federal Employer's Liability Act by reference for purposes of recovery for death or personal injury of seamen.
The US Fifth Circuit Court of Appeals recently overturned a decision by the Western District of Louisiana to dismiss a plaintiff's demand for economic loss arising from a maritime tort for failure to satisfy the physical damage requirement of the economic loss rule as set forth in Louisiana ex rel Guste v M/V TESTBANK.
For companies operating in the marine environment, US-based salvage laws can be confusing. If a crisis is added to the mix, it is a recipe for potential problems down the road. As such, it may be helpful for companies to gain an understanding about the various types of salvage, when a salvage claim exists and how best to respond to a potential salvage situation before an unfortunate event occurs.
A US district court recently issued an important ruling on burden of proof in denying a Jones Act personal injury claimant any additional recovery. It held that even though there was an obvious event that might result in a number of personal injuries, the plaintiff still had the burden of proving how he was injured and tying that injury to the defendant's negligence or other fault.
Carnival Cruise Lines recently secured a $24 million verdict against Rolls-Royce, which was found guilty of fraud by a unanimous jury. The jury found that at the time Rolls-Royce presented its Mermaid pod propulsion system to Carnival for operation on its largest and most prestigious ship, Rolls-Royce knew the pod was defective and not fully developed.
The US Court of Appeals for the Fifth Circuit has affirmed a district court order holding that in rem claims asserted under admiralty jurisdiction filed in the same complaint as in personam claims asserted in diversity must be tried together before a jury when the plaintiff clearly expresses its intent that the in personam claims be premised on diversity jurisdiction rather than in admiralty.
The Court of Appeals for the Sixth Circuit recently held that a violation of the Ports and Waterways Safety Act − failure to report immediately a hazardous condition to the nearest Coast Guard office − is a continuing offence and venue is proper in any district in which such offence began, continued or is completed.
The US Fifth Circuit Court of Appeals recently held that a protection and indemnity policy exclusion inserted into the maritime employer's liability policy excluded the alternate employment endorsement inserted in the same policy. The decision emphasises that when securing new insurance coverage, vessel owners and employers must be cognisant of all endorsements and exclusions in existing insurance policies.
The Court of Appeals for the Second Circuit recently reversed and remanded a district court decision holding that the Carmack amendment does not apply to an international multimodal shipment originated overseas under an intermodal through waybill. The appeal court retroactively applied the Supreme Court's reasoning in Kawasaki, which abrogated the binding precedent at the time.
The Supreme Court recently held that the Carmack amendment does not apply to a shipment originating overseas under a single through bill of lading. Under Kawasaki, a carrier which receives goods overseas and issues a single through bill of lading to include inland carriage governed by the Carriage of Goods by Sea Act is not considered to be a receiving rail carrier under the Carmack amendment.
The US Court of Appeals for the Ninth Circuit has affirmed a district court decision vacating a maritime attachment where the plaintiff, a bunker supplier, failed to show a contractual relationship with the defendant shipowner. The decision shows that a lack of contractual relationship between a shipowner and a bunker supplier is fatal to a maritime attachment.
The US Second Circuit Court of Appeals has again addressed the attachment of electronic fund transfers pursuant to Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. The court held that the rule that electronic fund transfers are no longer subject to attachment in the New York federal district courts pursuant to Rule B, established in Shipping Corporation of India, applies retroactively.
In a significant victory for international firms engaged in dollar-denominated international transactions, the US Court of Appeals for the Second Circuit has concluded that electronic fund transfers being processed by an intermediary bank are not property subject to attachment under Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure.
In 2008 the vessel Athena was arrested under Rules B and D of the Supplemental Rules for Admiralty and Maritime Claims. The claimant was involved in a shareholder dispute with the vessel's owner and demanded $15 million for its release. However, the courts found that the claims did not support federal admiralty jurisdiction and that the arrest was wrongful.
In a significant opinion underlining punitive damages as not only an accepted remedy in general maritime law, but now a remedy with a uniform rule, the US Supreme Court held that an injured seaman may recover punitive damages in a claim for wilful failure to pay maintenance and cure.
US Customs and Border Protection recently fully mitigated approximately $2.8 million in fines levied against two cruise ships for alleged violations of the Passenger Vessel Services Act. It found that the breaches were not wilful, as the cruises had had to be diverted due to a river closure by the US Coast Guard.
Under US admiralty law, a party may not recover purely economic loss damages in the absence of physical damage to property or damage to property in which the party holds a proprietary interest. However, under the Oil Pollution Act, pure economic loss damages may be recoverable when caused by the discharge or threat of discharge of oil onto the navigable US waters.