admiralty law

Synonyms
admiralty

CITGO Asphalt Refining Co. v. Frescati Shipping Co., Ltd.

Issues

Where a charter agreement contains a “safe berth” clause, which provides that the charterer will designate a safe port as the vessel’s destination, is the safe berth clause a warranty for the ship’s safety or a promise that the charterer will exercise due diligence in selecting a safe port?

This case arises out of an incident in 2004 when the Athos I, a ship that CITGO Asphalt Refining Co. (“CARCO”) had chartered, collided with an abandoned anchor near CARCO’s designated port. This case asks the Supreme Court to decide how to interpret the charter agreement’s “safe berth” clause, under which CARCO was obligated to designate a safe destination port for the Athos I. CARCO argues that, under the safe berth clause, it was obligated only to exercise due diligence in selecting a safe port. Frescati Shipping Co. (“Frescati”), the Athos I’s owner, counters that the clause is better interpreted as a warranty of safety that gives rise to strict liability. The outcome of this case will determine the contours of a charterer’s obligations under safe berth clauses and the degree to which industry actors can efficiently bargain to allocate risks before accidents occur.

Questions as Framed for the Court by the Parties

Whether under federal maritime law a safe berth clause in a voyage charter contract is a guarantee of a ship’s safety, as the U.S. Courts of Appeals for the 2nd and 3rd Circuits have held, or a duty of due diligence, as the U.S. Court of Appeals for the 5th Circuit has held.

CITGO Asphalt Refining Company (“CARCO”) chartered a single-hulled oil tanker, the M/T Athos I, from an intermediary of Frescati Shipping Co., Ltd. and Tsakos Shipping & Trading, S.A. (“Frescati”) to deliver crude oil from Venezuela to CARCO’s berth in New Jersey. Frescati Shipping Co., Ltd. v.

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Great Lakes Insurance SE v. Raiders Retreat Realty Co., LLC

Issues

Is a provision of a maritime contract specifying which state’s substantive law applies in case of a contract dispute unenforceable if that choice is contrary to the strong public policy of another state whose law would otherwise apply?

This case asks the Supreme Court to decide whether state public policy can impact the enforcement of a choice-of-law provision in a maritime contract. Great Lakes Insurance disputed an insurance claim for Raiders Retreat’s yacht and contends that under the choice-of-law provision in their contract, federal maritime law or, alternatively, New York law applied. Great Lakes argues that such provisions are presumptively enforceable under federal maritime law unless they are contrary to federal public policy. Raiders argues that state public policy can override the presumption of enforceability of choice-of-law provisions, and the state law or Restatement provisions followed by many states should apply. The outcome of this case bears important consequences on whether federal or state law should govern questions of maritime commerce, and whether courts should prioritize uniformity of law over state sovereignty.

Questions as Framed for the Court by the Parties

Whether, under federal admiralty law, a choice-of-law provision in a maritime contract can be rendered unenforceable if enforcement is contrary to the “strong public policy” of the State whose law is displaced.

Raiders Retreat Realty (“Raiders”) is a company headquartered in Pennsylvania. Great Lakes Ins. SE v. Raiders Retreat Realty Co. (“Third Circuit”) at 227. Raiders owns a yacht, which has its hailing port in Pennsylvania. Brief for Respondent, Raiders Retreat Realty Co.

Acknowledgments

The authors would like to thank Professor Diogo Magalhães for his insights into this case.

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Lozman v. City of Riviera Beach

Issues

Does the definition of “vessel” in 1 U.S.C. § 3 include, and thus grant federal maritime jurisdiction over,  indefinitely-moored structures like Lozman’s houseboat that are capable of transportation where their owners never intend to use them in that way? 

 

The City of Riviera Beach seized Fane Lozman’s houseboat after he did not comply with new city regulations. The Eleventh Circuit Court of Appeals affirmed the district court’s holding that the indefinitely moored houseboat was a “vessel” for purposes of maritime jurisdiction under 1 U.S.C. § 3. Lozman argues that courts should interpret “vessel” purposively and that his houseboat was not a vessel because its purpose was not to transport people or goods. The City of Riviera Beach counters that the definition of “vessel” requires a capability test that asks merely if the structure is capable of transporting people or goods. Additionally, both parties and the U.S. Solicitor General argue the subsequent purchase and destruction of Lozman’s houseboat by the City of Riviera Beach does not render the case moot because of a $25,000 security bond that the City posted. The Supreme Court’s decision in this case may reshape the role of state and federal courts in some maritime matters. The decision could also expand current maritime legislation to apply to structures such as casino boats or floating homes, or remove federal legislative protections for maritime lenders.

Questions as Framed for the Court by the Parties

Whether a floating structure that is indefinitely moored receives power and other utilities from shore and is not intended to be used in maritime transportation or commerce constitutes a "vessel" under 1 U.S.C. § 3, thus triggering federal maritime jurisdiction.

The res in the putative in rem admiralty proceeding was sold at judicial auction in execution of the District Court’s judgment on a maritime lien and maritime trespass claim, Petn. App. 9a-10a, and subsequently destroyed, Petr. Br. 10-11. Does either the judicial auction or the subsequent destruction of the res render this case moot?

From March 2006 to April 2009, Fane Lozman docked his houseboat at the City of Riviera Beach (“the City”) Marina and used the houseboat as his primary residence. See The City of Riviera Beach v. That Certain Unnamed Gray, Two-Story Vessel Approximately Fifty-Seven Feet in Length, 649 F.3d 1259, 1262 (11 Cir.

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Northern Ins. Co. of New York v. Chatham County, Ga.

Issues

Whether a county is entitled to sovereign immunity from admiralty lawsuits.

 

Northern Insurance Company has sued Chatham County, Georgia, to recover for payments made on a boat that suffered damages when one of the county's drawbridges malfunctioned. Chatham claims that it is immune from liability due to Eleventh Amendment sovereign immunity. The issue before the Supreme Court is therefore whether counties and other municipalities are entitled to sovereign immunity from admiralty lawsuits. If the Court grants sovereign immunity, the quality of county-operated bridges may decline, insurance companies may raise their premiums, and the federal government may have to step in to impose extensive new regulations. If the Court holds that counties are not entitled to immunity, counties may have to dip into state funds to satisfy judgments rendered against it. This would lead to a depletion in resources, which may cause government-run programs like education and public welfare to suffer.

Questions as Framed for the Court by the Parties

Whether an entity that does not qualify as an "arm of the State" for Eleventh Amendment purposes can nonetheless assert sovereign immunity as a defense to an admiralty suit.

In October 2002, James Ludwig sailed his boat on the Wilmington River. See Brief for Petitioner at 3.

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Roberts v. Sea-Land Services

Issues

Whether, in order to determine the appropriate method for calculating the maximum and minimum compensation owed under Section 6 of the Longshore and Harbor Workers’ Compensation Act, “newly awarded compensation” means that compensation is awarded at the time the employee becomes entitled to the compensation, or at the time the administrative order directing compensation is issued.

 

In 2002, Petitioner Dana Roberts slipped on a patch of ice while working for his employer, Respondent Sea-Land Services. After the fall, Roberts claimed disability and sought compensation under the Longshore and Harbor Workers’ Compensation Act. Initially, Sea-Land paid Roberts, but, in May 2005, Sea-Land discontinued payments. An administrative law judge ordered Sea-Land to resume payments, but a dispute arose concerning the proper method for calculating payment. In this case, the Supreme Court will decide when Petitioner Roberts was “newly awarded compensation” under the Act. Roberts argues that this occurred in 2007, when the administrative law judge entered the compensation order. However, Sea-Land Services argues that the judge correctly determined that this occurred in 2002, the year Roberts became entitled to compensation. The Court’s decision will determine which fiscal year is used to calculate the maximum compensation owed. The result could substantially increase Roberts’s compensation under the Act, and will determine how such calculations are performed in similar federal compensation programs.

Questions as Framed for the Court by the Parties

The Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901-50 ("Longshore Act") provides generally for compensation for total disability in periodic payments at a rate of two-thirds of the "average weekly wage of the injured employee at the time of the injury," and for most partial disabilities the same fraction of the difference between that weekly wage and the worker's residual "wage-earning capacity." §§ 8-10, 33 U.S.C. §§ 908-10. But it has always imposed upper and lower limits on the rate payable as so determined.

Section 6(b) of the Act, 33 U.S.C. § 906(b), provides that the compensation rate cannot be more than twice "the applicable national average weekly wage," as determined for each fiscal year; nor can compensation for total disability be less than the lesser of half the "applicable national average weekly wage" so determined and the worker's full pre-injury earnings.

The question which fiscal year's limits are the "applicable" ones is addressed by § 6(c):

Determinations under subsection (b)(3) of this section with respect to a [fiscal year] shall apply to employees or survivors currently receiving compensation for permanent total disability or death benefits during such period, as well as those newly awarded compensation during such period. 33 U.S.C. § 906(c). The identity of the years whose limits are "applicable" under this provision has divided the two courts of appeals with the heaviest Longshore Act dockets.

The questions presented are simple and straightforward:

1. Whether the phrase "those newly awarded compensation during such period" in Longshore Act § 6(c), applicable to all classes of disability except permanent total, can be read to mean "those first entitled to compensation during such period," regardless of when it is awarded.

2. Whether the phrase "employees or survivors currently receiving compensation for permanent total disability or death benefits during such period" in § 6(c) can likewise be read to mean those "entitled to [such] compensation during such period," without reference to when it is received.

Petitioner Dana Roberts worked as a gatehouse dispatcher in Dutch Harbor, Alaska, for Respondent Sea-Land Services (“Sea-Land”). See Roberts v. Office of Workers’ Comp. Programs, 625 F.3d 1204, 1205 (9th Cir.

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Additional Resources

Business Law Daily, BLD Staff: U.S. Supreme Court to Hear LHWCA Case (Sept. 27, 2011).

Business Insurance, Roberto Ceniceros: Supreme Court to Hear Case Determining LHWCA Wage Time Frame (Sept. 27, 2011).

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Stolt-Nielsen S.A. v. AnimalFeeds International

Issues

Is reading a contract to allow class arbitration, when the contract does not expressly allow it, consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.?

 

AnimalFeeds filed a class action lawsuit against the four major parcel tanker transportation companies, including Stolt-Nielsen, alleging antitrust violations. As per a written contact between the parties, the case was referred to an arbitration panel. The contract, however, is silent as to whether class arbitrations are permissible. Stolt-Nielsen argues that the silence in the agreement should mean that class arbitration is not permitted, while AnimalFeeds claims the decision should be left to the arbitrators. The arbitrators decided to allow class arbitration, but the district court (S.D.N.Y.) refused. The Second Circuit reversed. The Supreme Court's decision will place an economic burden on the losing side and may affect international businesses decisions on whether to select a forum in the United States.

Questions as Framed for the Court by the Parties

In Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), this Court granted certiorari to decide a question that had divided the lower courts: whether the Federal Arbitration Act permits the imposition of class arbitration when the parties' agreement is silent regarding class arbitration. The Court was unable to reach that question, however, because a plurality concluded that the arbitrator first needed to address whether the agreement there was in fact “silent.” That threshold obstacle is not present in this case, and the question presented here - which continues to divide the lower courts - is the same one presented in Bazzle:

Whether imposing class arbitration on parties whose arbitration clauses are silent on that issue is consistent with the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq.

The Respondent in this case, AnimalFeeds International Corp., (“AnimalFeeds”) entered into international maritime agreements with the Petitioners parcel tanker transportation companies, Stolt-Nielsen SA, Stolt-Nielsen Transportation Group Ltd., Odjfell ASA, Odjfell Seachem AS, Odjfell USA, Inc., Jo Tankers B.V., Jo Tankers, Inc., and Tokyo Marine Ltd.

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Additional Resources

· Wex: Law about Admiralty

· Wex: Law about Arbitration

· American Arbitration Association's Policy on Class Arbitration

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