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EU Court of Justice – anti-suit injunction invalid within EU

Sat, 21 Nov 2009 14:31:03 GMT

The European Court of Justice (ECJ) ruled that a court in one Member State is without authority to order a party to litigation in that court not to commence court proceedings or to cease those proceedings in another Member State on the ground that they are contrary to an arbitration agreement. In the instant case, a dispute arose following an allision by a tanker owned by defendant with a dock owned by plaintiff. Suit was brought by plaintiff in a court in Italy. Defendant then obtained an anti-suit injunction from a court in London, based on a clause in a charterparty that provided for arbitration of disputes in London. The ECJ held that under EU regulations, no Member State has authority to obstruct the jurisdiction of a court of another Member State.

Allianz SpA v. West Tankers Inc., Case C-185/07 (ECJ, 10 February 2009).

Carmack Amendment applies to shipments under through bill of lading

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Ninth Circuit ruled that the Carmack Amendment applies to goods shipped from overseas to an inland location in the United States under a through bill of lading covering both the oceanic and the rail portions of the transport. In the instant case, the goods were damaged when the train on which they were being carried derailed. When the shippers filed claims, defendants asserted that the dispute had to be litigated, if at all, in Tokyo as provided in the through bill of lading, which had incorporated the Carriage of Goods at Sea Act (COGSA). The shippers contended that the liberal forum selection provision of COGSA did not apply; rather, venue was restricted by the Carmack Amendment. The district court granted carriers’ motion to dismiss and the shippers appealed. Recognizing a split in the circuits, the appellate court reversed, holding that the Carmack Amendment applied in this case. The matter was remanded to the district court to determine whether there had been compliance with the applicable provisions of the Carmack Amendment. Note: This issue may now be ripe for the US Supreme Court.

Regal-Beloit v. Kawasaki Kisen Kaisha, No. 06-56831 (9th Cir., February 4, 2009).

COGSA limitation of action provision extinguishes maritime lien

Sat, 21 Nov 2009 14:31:03 GMT

Over a vigorous dissent, the US Court of Appeals for the Third Circuit ruled that running of the one-year time-for-suit provision for cargo damage claims provided for in the Carriage of Goods at Sea Act (COGSA) extinguishes the related maritime lien on the vessel. In late 1992, plaintiff chartered a tanker to deliver two petroleum products. The charter party incorporated COGSA. During discharge, it was discovered that the two cargoes had become cross-contaminated while on the tanker. Defendant ship owner sought arbitration of the dispute in early 1993. Plaintiff did not present its claim, which was brought only against the ship owner in personam, to the arbitration panel until 1995, at which time defendant asserted that the claim was barred by the one-year limit in COGSA. Plaintiff subsequently discovered that the ship had been sold. Plaintiff had the ship arrested, asserting an in rem claim. The new owner, on behalf of the ship, moved to vacate the arrest warrant. When the motion was denied, the new owner appealed. The major issue was whether the arrest based on the in rem claim against the ship related back to the original arbitration. The court held that there was no relation back and that the in rem claim was controlled by COGSA. The dissent contended that the new in rem action related back to the original claim and arbitration.

Petroleos Mexicanos Refinacion v. M/T King A, No. 07-3402 (3rd Cir., January 27, 2009).

Kirby comes ashore

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Eleventh Circuit ruled that the Supreme Court’s 2004 decision in Norfolk Southern Railway Co. v. Kirby that a cargo owner’s recovery against a carrier is limited by the liability limitation to which the intermediary and the carrier agreed applies equally to non-maritime cases. The Kirby decision began with the statement: "This is a maritime case about a train wreck." In the instant case, plaintiff shipper contracted with defendant common carrier for shipment by truck of various loads of communications equipment. The master contract notified the shipper that third party carriers might limit their liability for loss and provided shipper with an opportunity to request excess valuation coverage. The contract and manifest between defendant common carrier and a third-party trucking company provided that liability would be limited to $200,000 per truckload unless excess liability was specifically requested and paid for in advance. No such election and payment were made. The truck and cargo were stolen en route. Plaintiff’s claim for full recovery was denied and litigation ensued. The court held that Kirby applies to land-based transportation contracts and that the Carmack Amendment requires only that the shipper be provided with a reasonable opportunity to choose between two or more levels of liability.

Werner Enterprises v. Westwind Maritime International, No. 07-15488 (11th Cir., January 12, 2009).

Bill introduced re homeland security grants

Sat, 21 Nov 2009 14:31:03 GMT

Representative Weiner (D-NY) introduced the

Homeland Security Transparency Act of 2009 (H.R. 625) to amend the Homeland Security Act of 2002 to direct the Secretary of Homeland Security to require, as a condition of receiving a homeland security grant, that a grant recipient submit reports on each expenditure made using grant funds. (1/21/09).

Bill introduced to fund transportation infrastructure projects

Sat, 21 Nov 2009 14:31:03 GMT

Senator Wyden (D-OR) introduced the

Build America Bonds Act of 2009 (S. 238) to provide $50,000,000,000 in new transportation infrastructure funding through bonding to empower States and local governments to complete significant infrastructure projects across all modes of transportation, including roads, bridges, rail and transit systems, ports, and inland waterways, and for other purposes. (1/14/09).

Bill introduced to improve the LHWCA compensation system

Sat, 21 Nov 2009 14:31:03 GMT

Senator Isakson (R-GA) introduced the

Longshore and Harbor Workers’ Compensation Act Amendments of 2009 (S. 236) to amend the Longshore and Harbor Workers' Compensation Act to improve the compensation system, and for other purposes. (1/14/09).

Court upholds conviction for failure to properly “maintain” ORB

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Second Circuit upheld the conviction of a vessel operator for failure to properly maintain an oil record book (ORB) while the vessel was within the navigable waters of the United States. In the instant case, the defendant was convicted at a jury trial for, among other things, having on board while in US waters an ORB with entries known to be materially inaccurate. Evidence showed that members of the crew, at the direction of the chief engineer, had discharged oily waste water directly into the ocean while the vessel was at sea and that the chief engineer had made entries in the ORB that did not reflect such improper discharge. On appeal, defendant argued that it could only be convicted for a violation of the Act to Prevent Pollution from Ships (APPS) if the ORB entries had been made while the vessel was in US waters (which was not the case here). The appellate court rejected that argument, finding that a violation of APPS occurs when the vessel enters US waters with an ORB that contains knowingly inaccurate entries.

United States v. Ionia Management S.A., No. 07-5801-cr (2nd Cir., January 20, 2009). Note: This court has adopted the rationale espoused by the Fifth Circuit in the recent case of United States v. Jho. While not condoning the use of magic pipes, personally, I consider both decisions to be flawed because I believe that there should be a requirement in the elements of the offense that the ORB be presented to a Coast Guard boarding officer or other government official before the offense can be said to have occurred. MARPOL regulations require only that full and complete entries be made in the ORB of all oil transfers and that the ORB be kept on board for examination by government officials. The purpose of APPS is to allow US officials to enforce MARPOL, not to create new offenses.

Interpretation of situs and employee provisions of LHWCA

Sat, 21 Nov 2009 14:31:03 GMT

Over a vigorous dissent, the US Court of Appeals for the Fifth Circuit ruled that an individual injured while repairing a saltwater disposal pump on a fixed oil and gas production platform located in state territorial waters is a maritime employee for purposes of the Longshore and Harbor Workers’ Compensation Act (LHWCA). The living quarters were on the platform, but the petitioner also performed duties related to an adjacent sunken barge used for oil storage and shipment. The court held that, for the purposes of the LHWCA, the docking facility on the barge qualified as a maritime situs and that the petitioner was a land-based maritime employee because he assisted in the cargo loading process.

Coastal Production Services Inc. v. Hudson, No. 06-60766 (5th Cir., January 14, 2009).

Assignment of tort claims disfavored

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Fifth Circuit ruled that, under general maritime law, assignment of tort claims from the injured party to one tortfeasor permitting the settling defendant to proceed against a co-tortfeasor is invalid. In the instant case, plaintiff’s vessel allided with and damaged a dock. The dock owner asserted a claim against the vessel owner, who contended that the allision was due to the disruption of its vessel’s VHF communications with attending tugs by the improper use of radios on nearby defendant’s vessel. Plaintiff notified defendant of the dock owner’s claim, but did not include defendant in the settlement negotiations with the dock owner. As part of that settlement, plaintiff received an assignment of the dock owner’s potential claim against defendant. Plaintiff then brought suit against defendant for damages to plaintiff’s vessel and for the damage to the dock. Following defendant’s motion for partial summary judgment, the trial court dismissed the claim for damages to the dock. Plaintiff appealed. The appellate court affirmed, holding that contribution claims between a settling defendant and a co-tortfeasor are prohibited.

Ondimar Transportes Maritimos v. Beatty Street Properties, Inc., No. 0820079 (5th Cir., January 9, 2009).

Attorneys’ fees may be awarded in interpleader case

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished opinion, the US Court of Appeals for the Eleventh Circuit ruled that, in an interpleader case, a prevailing plaintiff may properly assert a claim for attorneys’ fees. In the instant case, plaintiff ship owner brought an action against two companies which it alleged had asserted competing claims against equipment (cargo) that was in plaintiff’s possession. As part of its complaint, plaintiff sought recovery of return freight, demurrage, and its attorneys’ fees. Although plaintiff prevailed, the trial court denied recovery of attorneys’ fees, holding that attorneys’ fees were not generally recoverable in an admiralty action. On appeal, the circuit court held that a complaint for interpleader was not an action in admiralty and that attorneys’ fees could be recovered.

Kawasaki Kisen Kaisha, Ltd. v. All City Used Auto Parts, Inc., No. 08-14742 (11th Cir., January 6, 2009).

ECHR – bail of €3 million not disproportionate for serious pollution

Sat, 21 Nov 2009 14:31:03 GMT

The European Court of Human Rights (ECHR) issued a

press release stating that its Chamber judgment (available only in French) in the case of Mangouras v. Spain ruled that the 83-day pretrial confinement and bail of €3 million for the former master of the tanker PRESTIGE was not a violation of the European Convention on Human Rights and was not excessive given the seriousness of the pollution incident. Note: I don’t try to explain or justify decisions like this. I only report them. (1/9/09).

Removal of Jones Act claim from state court disfavored

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished opinion, the US Court of Appeals for the Fifth Circuit ruled that the defendant bears the burden of persuasion when it attempts to remove from state court to federal court an action for personal injury asserted under the Jones Act. In the instant case, defendant removed plaintiff’s case to federal court, asserting that plaintiff was not a seaman under the Jones Act. Plaintiff filed a motion to remand. After reviewing the affidavits and related documents submitted by the parties, the federal district court denied plaintiff’s motion. The plaintiff appealed. The appellate court reversed, holding that the evidence in the record was conflicting as to whether plaintiff was a seaman under the Jones Act and, since the burden was on the defendant at this stage to show that the plaintiff could not have been a seaman, the case should have been remanded to the state court.

Zertuche v. Great Lakes Dredge & Dry Dock Company, LLC, No. 08-40132 (5tth Cir., January 6, 2009).

Texas – Jones Act does not preempt state procedural requirement

Sat, 21 Nov 2009 14:31:03 GMT

The Supreme Court of Texas ruled that a state law respecting a procedural framework for claims for personal injury allegedly caused by silica and asbestos is not preempted by the federal law regarding claims for personal injury of crewmembers (the Jones Act). In the instant case, the plaintiff alleged injury from asbestos and silica while employed by defendant corporation aboard a vessel. He brought suit in state court under the Jones Act. Plaintiff failed to comply with certain procedural requirements of the state law and the defendant moved to have the case transferred to another court in accordance with the state law. Plaintiff opposed the transfer, arguing that the Jones Act preempted the state law. The court hearing the motion agreed with the plaintiff and the defendant appealed. The Texas Supreme Court reversed, holding that while the Jones Act prevails on substantive issues, state procedural law is not preempted.

In re Global Santa Fe Corporation, No. 07-0040 (Texas, December 5, 2008).

Canada – punitive damages not allowed in wrongful death action

Sat, 21 Nov 2009 14:31:03 GMT

The Supreme Court of British Columbia ruled that punitive or aggravated damages are not allowed in a wrongful death action brought under the Marine Liability Act. In the instant case, the families of the two individuals who are presumed to have died in the 2006 sinking of the ferry QUEEN OF THE NORTH brought an action against the vessel in rem and against the owners in personam. The court held that the Marine Liability Act was intended to be compensatory in nature and made no provision for award of punitive or aggravated damages.

McDonald v. Queen of the North, 2008 BCSC 1777 (December 24, 2008).

Court upholds designation of New Jersey as adjacent coastal state

Sat, 21 Nov 2009 14:31:03 GMT

The US District Court for the District of Columbia ruled that the Maritime Administrator was acting within his authority under the Deepwater Port Act when he designated New Jersey as an additional adjacent coastal state with respect to the application of Atlantic Sea Island Group LLC (ASIG) for a license to construct and operate a liquefied natural gas (LNG) import facility at a site to be located in the Atlantic Ocean approximately 13.5 miles off the coast of New York and 19 miles off the coast of New Jersey. The 45-day timeframe in the statute for such designation was held to be directory rather than mandatory.

ASIG v. Connaughton, No. 08-259 (DDC, December 8, 2008).

Seaman entitled to deference in asserting pro se motion

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished opinion, the US Court of Appeals for the Fifth Circuit ruled that, before a federal district court can deny a seaman’s motion for relief from judgment due to abandonment by counsel, the court must provide the seaman with a liberal opportunity to develop his position and the court must clearly articulate the basis of its denial. The matter was remanded to the district court for further consideration.

Associated Marine Equipment v. Jones, No. 07-30850 (5th Cir., December 8, 2008).

Michigan ballast water statute upheld

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Sixth Circuit has upheld the permit requirement of the Michigan Ballast Water Statute as a valid exercise of state authority. Plaintiff ship owners, shipping associations, port terminal, and port association had challenged the permit requirement and treatment system requirement of the state statute, asserting that they were preempted by federal law and violated the United States Constitution. The federal district court disagreed with these contentions and dismissed plaintiff’s complaint. Plaintiff’s appealed. The appellate court looked first at the standing of each of the plaintiffs. It recognized that the ship owners and shipping associations were directly impacted by the state law, but found that the other plaintiffs were not affected and thus lacked standing to challenge the law. The court then examined the pleadings and found them wanting as to the challenge against the treatment system requirement. This requirement provides that each ship that intends to discharge ballast water during port operations in the state must treat its ballast water with an approved system prior to such discharge. [Ironically, there is no currently approved system.] In the pleadings, though, plaintiffs never alleged that any of their vessels would discharge ballast water into waters of the state of Michigan. Therefore, the court found that the plaintiff ship owners and shipping associations lacked standing to challenge the treatment system requirement because their vessels would not be covered by its provisions. Finally, the court held that the state permit requirement was not preempted by federal law and that the state requirement was not barred by the US Constitution. The court noted that the state permit requirement was not onerous, requiring only the payment of $225 in fees and completion of several forms. In this circumstance, a state statute that is not preempted by federal law need only be rationally related to a legitimate government purpose; it need not provide a perfect solution. Note: It is extremely unfortunate that the court chose to interpret the pleadings in a manner allowing scrutiny of the important treatment system issue to be avoided.

Fednav, Limited v. Chester, No.07-2083 (6th Cir., November 21, 2008).

Award of prejudgment interest in maritime cases

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished decision, the US Court of Appeals for the Fifth Circuit ruled that an award of prejudgment interest is the rule rather than the exception in actions under general maritime law. In the instant case, an anchor of one of defendant’s ships lodged in and damaged plaintiff’s offshore pipeline. When the parties could not agree on the amount of damages, plaintiff brought suit. Defendant appealed the damage award, particularly the assessment of prejudgment interest. The court held that there were no special circumstances in this case to deprive plaintiff of prejudgment interest.

Transcontinental Gas Pipe Line v. Societe D’Exploitation du Solitaire, No. 07-31073 (5th Cir., November 10, 2008).

Electronic navigation and causation

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Fifth Circuit ruled that failure to train a master on how to properly use electronic navigation equipment does not make the vessel owner fully liable for an allision nor does it prevent the vessel owner from limiting its liability when there is insufficient evidence to prove that such failure to train was the cause of the allision. In the instant case, defendant’s fishing vessel allided with plaintiff’s offshore rig in the Gulf of Mexico. The allision occurred at night, after the master (who was navigating the vessel) turned on the lights on the bridge to examine a defective engine part and conduct related administrative activities. The evidence showed that the lights on the offshore rig were not functioning properly. Turning on the bridge lights severely degraded the master’s ability to detect unlit objects at sea. It also degraded his ability to observe radar targets. The vessel was equipped with an electronic chart that had an obstruction warning system. The vessel owner had not provided the master with training in use of the electronic chart system and he had never read the operating manual. Evidence indicated, though, that there were so many offshore rigs in this portion of the Gulf of Mexico that the master would not have received an effective warning of the obstruction. The court ruled that the allision was partially due to a mistake of navigation by the master and that, since the vessel was not rendered unseaworthy thereby, the owner was entitled to limit its liability.

Omega Protein v. Samson Contour Energy, No. 07-30725 (5th Cir., November 10, 2008).

Arbitration ruling only to be overturned for manifest disregard of law

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Second Circuit ruled that an arbitration panel, in construing an arbitration clause in an international maritime agreement to permit class arbitration when the clause is silent on that issue, did not manifestly disregard the law and the arbitration ruling may not be overturned on that basis.

Stolt-Nielsen SA v. Animalfeeds International Corp., No. 06-3474-cv (2nd Cir., November 4, 2008).

Carmack Amendment does not apply to ocean carriers

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Second Circuit ruled that the Carmack Amendment does not apply to ocean carriers that utilize an intermodal bill of lading. In the instant case, plaintiff cargo owner contracted with defendant ocean carrier for the transport of cargo from Rotterdam to Colorado via the port of Houston. The cargo arrived in Houston. Plaintiff directed defendant to hold the cargo because the consignee had not yet tendered payment. Defendant negligently released the cargo to the consignee, which shortly thereafter declared bankruptcy. Plaintiff sued defendant ocean carrier for its loss. Defendant moved for partial summary judgment to limit its liability under the Carriage of Goods at Sea Act (COGSA), which had been incorporated into the bill of lading, not only for the ocean transit, but for the entire intermodal shipment. Plaintiff argued that defendant had not complied with the additional requirements of the Carmack Amendment. The court held that the Carmack Amendment was not pertinent because it only applied to rail carriers.

Rexroth Hydraudyne B.V. v. Ocean World Lines, Inc., No. 07-1207-cv (2nd Cir., November 6, 2008).

Seafarer employment dispute is subject to arbitration

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of Appeals for the Ninth Circuit ruled that a dispute between a seafarer and the employer/ship operator is subject to arbitration where the employment contract specifically provides for arbitration of such disputes. Plaintiff employees served on a cruise ship operated by defendant employer. They brought suit, alleging that they were not fully and promptly paid wages due. Defendant moved to compel arbitration in accordance with the employment contract. Plaintiffs contended that their employment contracts were exempt from compulsory arbitration. The dispute required interpretation of the relationship between the Federal Arbitration Act (FAA) and the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Act. The court held that, since the employment contract must be considered as commercial, the exemption clause of the FAA applied and the arbitration provision of the contract was enforceable in accordance with the Foreign Arbitral Awards Act. Defendant employer was represented by Sandy Bohrer, Scott Ponce, and Paul Workman of this firm.

Rogers v. Royal Caribbean Cruise Line, No. 07-55071 (9th Cir., November 6, 2008).

Adequately protected plaintiff may not utilize maritime attachment

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished opinion, the US Court of Appeals for the Second Circuit ruled that a plaintiff who is already adequately protected by other means is not entitled to a maritime attachment against the interests of a ship owner. In the instant case, plaintiff had a bank guarantee for its underlying claim in India. Plaintiff separately sought a maritime attachment against defendant in federal court in New York. When that attachment was vacated, plaintiff appealed. The appellate court ruled that plaintiff had already obtained sufficient security for its potential judgment.

JS Ocean Liners v. Wing Leung Shipping, No. 07-2118-cv (2nd Cir., October 15, 2008).

LNG remaining on board as “heel” is not cargo

Sat, 21 Nov 2009 14:31:03 GMT

In an unpublished opinion, the US Court of Appeals for the Second Circuit ruled that a small amount of liquefied natural gas (LNG) remaining on board a carrier after discharge of the regular LNG amount is not cargo for purposes of supporting a maritime tort allegation against a third party that inflicted damage on the ship. In the instant case, and pre the charter party between the ship owner and plaintiff cargo owner, a small amount of LNG was left on board the ship following routine cargo discharge to serve as "heel", meaning that it was used to insulate the ship’s LNG storage tanks and was also available as fuel for the vessel. Subsequent to the routine discharge of the cargo, the ship suffered a collision with defendant’s submarine. When plaintiff cargo owner’s claim against defendant was denied, plaintiff appealed. The appellant court held that, since the "heel" remaining on board at the time of the collision was not cargo, plaintiff suffered no physical damage that would be necessary to support its claim for economic loss.

Gas Natural SDG v. United States, No. 07-2129-cv (2nd Cir., October 21, 2008).

Publication in Customs Bulletin Weekly is not notice to Customs

Sat, 21 Nov 2009 14:31:03 GMT

The US Court of International Trade ruled that publication of a case in the Customs Bulletin Weekly is not sufficient notice to the US Customs and Border Protection (CBP) to invoke the deemed liquidation rule. The US Court of Appeals for the Federal Circuit ruled in 1996 on the liquidation of various antidumping duties. The case was summarized and reported in 1997 in the Customs Bulletin Weekly, a government publication compiled and published by what was then the US Customs Service. CBP did not assess duties and accrued interest against Travelers (the importer’s surety) until 2005. Travelers contended that it should not be liable for the interest subsequent to the 1996 court decision. CBP asserted that it had no proper notice of the court decision. The court in this case ruled that publication of the earlier decision in the Customs Bulletin Weekly does not impute knowledge of the decision to Customs employees. We will leave it to the reader to draw useful lessons from this decision.

Travelers Indemnity Co. v. United States, No. 06-00151 (CIT, September 29, 2008).