admiralty outline

7/30/2019 Admiralty Outline

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ADMIRALTY OUTLINE

I. JurisdictionII. Substantive Law of Admiralty

Article III, Sec. 2 - Constitution allows for admiralty jurisdiction without definingwhat is a case of what is admiralty

Jurisdictional quest is trying to define what the framers of the Constitution meant byadmiralty

Admiralty court sits without a jury in the federal jurisdiction28 U.S.C. 1333: admiralty/maritime jurisdiction which is counterpart to 9 of

Judiciary Act of 1789 (which never defined the meaning of admiralty)Authoritative Sources of Maritime: Congressional legislation and GeneralMaritime lawCertain amount of state law is applied in admiralty cases

A. HISTORICAL BACKGROUNDThe Constitution and theJudiciary Act of 1789 left the courts with the task ofworking out answers to 3 questions:

1. The scope and limits of the federal admiralty jurisdiction2. The scope and limits of the concurrent jurisdiction of common lawcourts over admiralty and maritime cases; and

3. The sources, nature and ultimately the content of the substantive lawapplicable in admiralty and maritime cases

First admiralty law question faced by US courts was the meaning of the constitutionaland statutory phrase admiralty and maritime

Admiral - commander of the seaAdmiralty - court hearing disputes arising from naval and marine mattersMaritime - of or pertaining to the sea

Historically, admiralty was used in referring to courts and to technicalities ofjurisdiction and procedure and maritime was used for substantive matters litigatedand the substantive law applied in those courts

DeLovio v. Boit(1815) whether a contract of marine insurance was within thejurisdiction Libelant brought action upon a policy of insurance that insured a vessel

against losses at sea Issue: what is admiralty jurisdiction? All cases of admiralty and maritime jurisdiction to the courts of the US

comprehends all maritime contracts, torts, and injured Policies of insurance are within the admiralty and maritime jurisdiction Admiralty contract jurisdiction does not depend on locality but extends all

over contracts which relate to the navigation, business, or commerce of thesea Language of the Constitution warrants the most liberal interpretation and

refers to that maritime jurisdiction which commercial convenience, publicpolicy, and national rights have contributed to establish

Infra corpus comitatus: within the body of a county

The Thomas Jefferson (1825) Justice Story passed up a chance to further expand American Admiralty

Jurisdiction

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In England, the admiralty judges had never claimed jurisdiction upriver furtherthan the ebb and flow of the tide

Libel claims wages earned on a voyage on the Missouri River Issue: Is there admiralty/maritime jurisdiction? Admiralty jurisdiction is found in cases where the service was substantially

performed, or to be performed, upon the sea, or upon waters within the ebband flow of the tide

This voyage was several hundred miles above the ebb and flow of the tideand therefore, the wages cannot be considered as earned in maritimeemployment

The Genesee Chief v. Fitzhugh (1851) opens the lakes and the waters connectingthem to the general jurisdiction of the district courts in admiralty Collision on Lake Ontario Schooner Cuba claims that the Genesse ran foul of her and damaged her so

seriously that as a result she sank with her cargo on board Proceeding was in rem and in admiralty under Great Lakes Act of 1845 which

extending the jurisdiction to the district courts to certain cases upon the lakesand navigable waters connecting the same

Question of jurisdiction and constitutionality of the Great Lakes Act because itwas narrower than the Constitution contemplated

Law contains no regulation of commerce and it is evident from the title thatCongress did not intend to exercise their power to regulate commerce

Goes against Thomas Jefferson with ebb and flow of tide Court rejected tidal limit There is clearly nothing in the ebb and flow of the tide that makes the waters

peculiarly suitable for admiralty jurisdiction, nor anything in the absence of atide that renders it unfit

There is commerce on the water and there need not be tide in thelake

NOTES: the constitutional grant of admiralty jurisdiction was not limitedby tidelands rule

The Eagle (1868) Eagle, tug, towing a brig and barge, grounded the brig on a shoal in Detroit

River causing the barge to collide with the grounded brig Owners of brig filed suit against tug and barge Issue: Did the District Court have subject matter jurisdiction? The 9 of the Judiciary Act of 1789 regards the district courts as having

conferred upon then a general jurisdiction in admiralty on lakes and thewaters connecting them

Great Lakes Act is no longer in effect

When a matter is in admiralty as per Article III, 2, Cl. 3 then:1. Congress has the power to provide substantive law governing the

resolution of the dispute. If Congress has not done so, the courts mustfashion a dispositive federal admiralty common law. Courts willaccord deference to, but are not bound by, the general maritime law of

nations. If there is no federal statute and no need for a uniform nationallaw, the courts may apply the law of the state with the most significantrelationship to the controversy under the maritime but local doctrine

2. Case may be heard in federal court without regard to diversity ofcitizenship or amount in controversy, but litigant will not have a

jury. Most admiralty cases may also be brought in state court undersavings to suitors clause with trial by jury if allowed. If admiraltyclaim arises under federal statute, orif it arises under maritimecommon law but the requirements ofdiversity are satisfied, the claimmay be heard in federal court as a law claim, with the right to trial by

jury. Regardless of the court in which an admiralty matter is brought, the

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substantive law which governs is federal admiralty law, unless themaritime but local doctrine applies

B. ADMIRALTY JURISDICTION IN CONTRACT CASES

In admiralty law, the nature and subject matter of the contract, not the

place of making or performance, govern

Contracts to furnish repairs or stevedoring services for a vessel are

maritime, but contracts to procure such services are not

Marine insurance contract is in admiralty, but a contract to obtain

marine insurance is not Contract to insure, supply, load or unload, tow, pilot or dock, a vessel is

in admiralty

Contracts to build or sell vessels are not in admiralty, but contracts to

lease vessels are

Insurance Co. v. Dunham (1870): admiralty jurisdiction extends overmaritime insurance policies

North Pacific Steamship Co. v. Hall Brothers Marine Railway andShipbuilding Co. (1919)Ship in need of repairs kept being taken in and out of the water Issue: Whether there is admiralty jurisdiction

Shipbuilding filed in personam against Steamship to recover balance due forcertain work and labor done, services rendered, and materials furnished

Just because the ship was dry docked does not take away from admiralty The contract for materials furnished and work performed in repairing

her under the circumstances was a maritime contract Any person furnishing repairs, supplies, or other necessaries, including the

use of dry dock or marine railway, to a vessel, whether foreign or domesticupon the order of a proper person shall have a maritime lien upon the vessel

General Rule: to be a maritime contract, the subject matter of the contractmust be directly and intimately related to the operation of a vessel andnavigation

Contracts that are not directly related to maritime matters and ship

navigation afford no justification for the application of the uniform admiraltylaw and are best left for decision under state law contract principles

An agreement involving the construction or drilling operations on a fixedplatform on outer continental shelf is not a maritime contract

An agreement to transport men and supplies to and from an offshoredrilling rig is within admiralty jurisdiction

Shipbuilding v. Ship repairOne cannot have a maritime lien against a vessel until the vessel is built

Sale of vesselsContracts to sell a vessel are non-maritime

Products liability contracts claimsClaims for breach of warranty involving ship construction are non-maritime

Kossick v. United Fruit Co. (1961) Petitioner was employed as chief steward on vessel of United Fruit and

suffered thyroid ailment Employer wanted petitioner to go to US Public Heath Service Hospital, but

respondent wished to be treated by a private physician Ended up going to Public health and received improper treatment and sued

respondent for $250,000 for bodily injury Issue: What is the interplay b/t state and maritime law?

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Contract for employment was a maritime contract What was the subject matter of the contract? Seaman giving up a right

guaranteed him by the maritime law whether he was right in his criticism inthe hospitals or not and the contract sprang from the maritime contract ofemployment

This alleged oral contract sprang from a maritime relationship This is a maritime contract b/c it concerns seaman, which concern

vessels, concerns the assertions of the rights under the maritimemaintenance and cure

Exxon Corp. v. Central Gulf Lines, Inc. (1991) Unpaid bill for fuels acquired for the vessel Hooper which is owned by Central

Gulf chartered by Waterman Waterman and Exxon negotiated a marine fuel requirements contract - they

would fuel them at ports where Exxon was located and when the vessels wereat non-Exxon ports, they would arrange for local suppliers to which Exxonwould pay and Waterman would pay Exxon

Exxon was Watermans agent in getting fuel from Arabian Marine in SaudiArabia

Arabian Marine billed Exxon, Exxon billed Watrman and Waterman filedChapter 11 never paying the bill in full

Central Gulf agreed to assume personal liability for the unpaid bill if a courtwere to hold Hooper liable in rem for that cost

Issue: Whether admiralty jurisdiction extends to claims arising from agencycontracts

Minturn v. Maynard - an agent who advanced funds for repairs and suppliesnecessary for a vessel could not bring a claim in admiralty against the vesselsowners - should this be overruled?

Holding: Minturn is overruled there is no per se exception of agencycontracts for admiralty jurisdiction

The true criterion in determining whether a contract falls within admiralty isthe nature and subject matter of the K, as whether it was a maritime contract,having reference to maritime service or maritime transactions

Courts should look to the subject matter of the agency contract and determinewhether the services performed under the contract are maritime in nature

When the nature and subject matter of 2 transactions are the same as they

relate to maritime commerce, if admiralty jurisdiction extends to one, it mustextend to the other

North Pacific v. Hall Brothers Marine Railway & Shipbuilding Co.(1919) If subject matter of contract is maritime, there is admiralty jurisdiction here Boat wasnt afloat Contract to certain amount of work would be done by pulling the vessel up on

the land so they could get to the bottom of the ship - almost rebuilt vessel A contract to repair a vessel is a maritime contract (getting vessel back

into commerce so it can serve maritime needs) Is this a contract for repair? Contract was peculiarly worded It becomes a vessel when it is launched and is in condition as was intended Contract to build a vessel and contract going to build a vessel are not

maritime contracts until the vessel was far enough along to functionas intended

Putting too much emphasis on the fact that part of the repairs would be doneon land

Court said locality of the contract was the rule under the Old English lawwhich was thrown off and we substitute subject matter of the contract, thecontracts nature is maritime

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Mixed Contract is not within admiralty jurisdiction unless it is wholly maritime

If the primary purpose is maritime, the contract is treated as wholly maritime,

despite its nonmaritime elements

Lease/Purchase agreement where they agreed that after a certain time either partycould exercise the purchase agreement

It is only the per se agency contract where the court has to look at the contract tosee nature and subject matter of contract

C. THE NAVIGABLE WATERS ISSUE

LeBlanc v. Cleveland(1999) LeBlanc and Ossen suffered personal injuries when their kayak was struck by

a recreational vehicle on the Hudson River operated by Cleveland and ownedby Grant

LeBlanc and Ossen sued Grant and Cleveland invoking federal admiraltyjurisdiction

A waterway at the situs in issue is navigable for jurisdictionalpurposes if it is presently used, or is presently capable of being used,as an interstate highway for commercial trade or travel in thecustomary modes of travel on water

Interstate commerce requirement - waters must be able to be used in foreigncommerce

Hudson River is navigable but this accident took place where there was nooutlet to the ocean or to another state because dams that had been built andthere are waterfalls

Before the dams were built, this river was fully navigable Daniel Ball calls for ordinary condition as highways of commerce Test to use ispresent capability of use as a highway of commerce but with

artificial obstructions there is no capability of use

D. THE VESSEL ISSUE

The term vessel is defined in 1 U.S.C. 3 : the word vessel includes everydescription of watercraft or other artificial contrivance used, or capable of beingused, as a means of transportation on water

Admiralty jurisdiction is basically defined by waters1. Ferry Boat - first question: Do the vessels operate in admiralty waters? If you

required activity itself to be interstate commerce, this wouldnt fit but theMississippi River is the largest navigable water in the US so it will always haveadmiralty jurisdiction

2. Highly intrastate activity on Mississippi River will be in admiralty

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Mixed Contracts

< Contracts with maritime component and a

non-maritime component

< If the maritime and non-maritime elements

are separable, the admiralty court willexercise jurisdiction over the maritimeportion

< If the non-maritime element of the contract

is incidental, the court will exerciseadmiralty jurisdiction over the entire claim

< Where the maritime and non-maritime

claims are bound together and cannot beseparated, the court will deny jurisdiction


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What is the test and why do you have to ask it? Are employees on River Boat Casinos in admiralty jurisdiction under the Jones

Act? Has to be a crew member on a vessel to be a Jones Act seaman Vessel status - if they contribute to the mission of the vessel and are more

than transitly connected with vessel Code defines various terms that will be applied 1 U.S.C. 3 - the word vessel includes every description of watercraft or

other artificial contrivance used, or capable of being used, as a means oftransportation on water

Vessel never required its own motor power any seaman who contributes to the function of the vessel will have a Jones Act

liability case

The Robert W. Parsons (1903) Contract for repair of canal boat Just because horses pulled a boat, doesnt take it out of admiralty jurisdiction What definition do they give us for future cases? Purpose for which the craft

was constructed and the business in which it is engaged - TWO PART TEST The movement function here is not merely incidental to its primary function

Manuel v. P.A.W. Drillings (1998)Clearest provisions on what is a vessel and what is not a vessel

E. THE EXCLUSIVE JURISDICTION OF THE FEDERAL ADMIRALTY COURTSAND THE CONCURRENT JURISDICTION OF COMMON LAW COURTS

Article III, 2 admiralty/maritime jurisdiction1789 Judiciary Act 9 had admiralty jurisdiction to the Federal Courts today 28

U.S.C. 1333:Original: the federal district courts shall have exclusive original cognizance of all

civil causes of admiralty and maritime jurisdiction savings to suitors, inall cases, the right of a common law remedy where the common law iscompetent to give it

Present: The district courts shall have original jurisdiction, exclusive of theCourts of the states, of any civil case of admiralty or maritime

jurisdiction, saving to suitors in all cases all other remedies to whichthey are otherwise entitled

What is saving the suitors clause about? Federal District Court have exclusivejurisdiction over admiralty matters but those courts can do something

called common law remedy where they can give it

The Moses Taylor(1866)o P contracted with owner of steamship as steerage passenger

o When he arrived in San Fran. He brought suit for bad food and bad

conditions.o California statute allowed for P to bring ship in rem

o If the action fell within the savings clause, then the state court could have

heard the action but since they held that it didnt fall under savings clause(common law remedy)

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Determination of vessel - Two part test

1. PURPOSE for which craft wasconstructed and

2. BUSINESS in which it is engaged


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o In admiralty actions you can go against the personal owner of the vessel in

personam but you can also go against the vessel itself as the in the actionand treat the vessel as the and if you are successful on the merits, have thevessel seized and sold to satisfy the judgment in your favor

o Look at federal admiralty courts, you didnt get a jury

o Remedy available in common court was a common remedy in 1789

o Broken down into in personam and in rem in personam is not as radical

o In personam could be brought in state court of common law in 1789; in rem

admiralty action could not, it had to be brought in a state admiralty court in1789o Common law could not entertain on an in rem action

o Saving the suitors clause is in personam actions, concurrent jurisdictions and

in rem is federal admiralty

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In 1860s during the Civil War the Supreme Court decides to givessomething back to the states to make up for Genesee Chiefgives back concurrent jurisdiction to all in personam suits and keepexclusively the in rem suits


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Hard core admiralty jurisdiction is maritime commerce

o In rem

actionexclusive toadmiralty

o The state

legislature

passesstatute authorizing courts to take jurisdiction over maritime in remjurisdiction. If case goes on, then he is to sell the vessel out fromunder owner. Defect is not that state courts couldnt create in remaction, they are talking about state courts the legislature hasauthorized the state courts to get the in rem action and they CANNOTdo this

Rounds v. Clover Foundry & Machine Co. (1915)o Lien placed on vessel for supplies used

o State court ordered vessel sold and goes to appeal

o Was this an in rem or in personam action?

o It was in personam b/c they sued the owners themselves and not the ship and

therefore the state court has jurisdictiono Does fall under saving suitors clause b/c it was in personam action

In rem: Federal JurisdictionIn personam: Concurrent jurisdiction admiralty/law Exception - if

Congress makes a certain type of case even though inpersonam if in the statute it provides for exclusive admiraltyjurisdiction

Thornsteinsson v. M/V Drangur(1990)o Seamen asserted claims for wages against a ship that had been seized in

Iceland and sold in foreclosure to the o Icelandic jurisdiction in the in rem foreclosure proceeding was based on

constructive possession of the vessel via the vessels papero raises defenses of laches and execution sale as clearing all liens

o Court held that actual, not constructive, seizure is needed in order to put

claimants on notice as to the execution saleo Laches defense involved analysis of actual notice to the seamen

o Factors emphasized:

o Whether seamens employer knew of seamens claims when suit was

filed in Ireland, and if so;o Whether the employer had an obligation to inform either the Icelandic

court or the vessel purchaser at the auction ando Whether the purchaser was prejudiced by enforcement of the claims

Madruga v. Superior Court(1954) Admiralty Jurisdiction over partial actions

o Supreme Court ruled that under the Savings to Suitors clause of28 USCA1333, Federal and State courts have concurrent jurisdiction to order thepartition of ships in a proceeding in personam and there is no federaladmiralty rule barring judicial partition of a vessel unless the ownershipinterests are dead locked

o Court held not in rem action

o Wanted to partition the vessel

o Not going against vessel so it is not in rem

o Partition suit between co-owners of vessel is not in maritime this was held in

certain jurisdictions

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Option a P has o If he has diversity, he can choose to

bring his admiralty case in federallaw

o If he doesnt want federal law he

comes in state court and getsjurisdiction there under saving the


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F. THE DISTINCTIVENESS OF THE FEDERAL ADMIRALTY COURT ANDSOME FUNDAMENTAL FEATURES OF ITS PROCEDURE

Two sides of Federal Court1. Sitting in admiralty2. Sitting in law

1. The two sides of federal courtRomero v. International Terminal Operating Co. (1959)

Seaman who lost his leg on Spanish ship. Injured at port in New Yorkand struck by cable

Sued on law side in Federal District Court, even though it is hard core

admiralty case

Sues under Jones Act (negligence action of seaman against employer),

unseaworthiness and maintenance and cure

Saving the suitors: go to federal admiralty, federal law (if diverse) or

state

Federal law Jones Act (federal question) provides jury trial in federal

trial

Problem is with unseaworthiness and M&C not provided by federal

statute, they arise under general maritime law

Only way to do it is under the savings to suitors clause Problem is

that under this clause when you bring general maritime claims at lawthere has to be diversity and there is no diversity

Can he come in under federal question with general maritime claims?

Federal question jurisdiction (1875) came after Judiciary Act (1789)

Maritime granted in 1789, Federal question granted in 1875

Did Congress intend the federal question jurisdiction to include

general maritime law? NO, you had admiralty jurisdiction in 1789

Rule: GML clams (unseaworthiness/M&C) CANNOT be brought at

federal law exercising 28 U.S.C. 1331 federal question jurisdiction;they must be brought under 28 U.S.C. 1331 diversity jurisdiction

A maritime common law claim does not fall within the courts federal

question jurisdiction

Romero bars removal as a federal question under section 1441(b)

o If the seaman is an American citizen or resident, or in a blue water seamans

case if the vessel is an American flag vessel or is owned by American citizensor a shipowner whose base of operations is in the US, American maritime

law should apply and the court should take jurisdictiono Other maritime cases commenced in state court ordinarily may be removed to

the law side of federal court, if the requisites for diversity jurisdiction arepresent or if there is federal question jurisdiction

o However, a maritime common law claim does not fall within the courts federal

question jurisdiction under 28 USC 1331 although it arises under theConstitution

2. Admiralty Procedure Before 1966o Originally admiralty, equity and law were different classes, each having their

own procedural rules

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Romero Pendent Jurisdiction: regular pendent jurisdictionallows you to take state claim and federal claim together. Here, 2federal claims, one in law and one in admiralty allows generalmaritime claims pendent to Jones Act and the Jones Act jury canhere all cases


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o 1938 combined law and equity into one class, and admiralty into one class

o No jury in admiralty

o Jury available at law

3. Admiralty Procedure since 1966o 1966 combine admiralty rules into FRCP

o After 1966 imperfect merger with admiralty

o Some rules might not apply

o There are 8 9 supplemental rules for cases of admiralty procedure within

rem, etc. which they couldnt merge with FRCPo These rules shall not be interpreted as providing a jury in admiralty

o Merger made it easier for judges and lawyers

o Wanted all cases to be treated the same, procedure wise

o Big Problem jury trial in hybrid case that has elements of admiralty and civil

elements

Advisory Committee Notes FRCP Rule 9(h)o Since they merged admiralty with common law, you are going to get more

cases with admiralty component and law component

o Under savings the suitors clause you will get more admiralty and law

o Problem with what to do with cases; at one time try admiralty before judge

and law before jury (7th amendment right)

o When they merged they didnt want two fact finderso Provide cases may be tried together through supplemental jurisdiction

o 9(h) if you have 2 grounds for being in federal district court, one admiralty

and one law then you will go in at law unless you designate your claim as onein admiralty or maritime jurisdiction

o Counterclaim relies on diversity what do you do with this when a case has

come in under admiralty HYBRIDo Not getting a jury in admiralty is traditional, not constitutional but it would

harm your basis for your denying jury in admiralty

4. The Right to Jury Trial in Hybrid CasesSphere Drake Insurance PLC v. Shree Corp. (1999)

o Case concerning insurance claim on lost gems

o Underwriters want declaratory judgment admiralty claimo Shree brought compulsory counterclaim and wanted jury trial

o Issue: Whether a in an admiralty case is entitled to a jury trial of the s

compulsory counterclaims which are premised upon non-admiraltyjurisdictional grounds

o Rule 38(a) of FRCP provides the right to a jury, whether statutory or

constitutional, shall be preserved inviolateo Underwriters motion to strike Shrees jury demand is denied

o Always want to avoid 2 fact finders in a case

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A plaintiffin personam maritime claims has three choices1. File suit in federal court under the federal

courts admiralty jurisdiction2. File suit in federal court under diversity

jurisdiction if the parties are diverse and theamount in controversy is satisfied

3. File suit in state court


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o Jury trial argument is probably the most strongest when asserts a

compulsory counterclaim that falls outside admiralty jurisdiction

Ghotra v. Bandila Shipping, Inc. (1998)o Captain killed on ship and survivors brought WD action against vessel owner

and vesselo Had in rem and in personam claim

o In rem action is admiralty and in personam is law question

o P were denied a jury trial

o Issue: Whether district judge committed constitutional and legal error indenying the P the right to a jury trial for claims brought under the courtsdiversity jurisdiction

o P bringing two claims himself

o Rule: under the 7th Amendment, the Ghotras were entitled to a jury

trial on the claims brought under the courts diversity jurisdictiono Can bring an in personam and in rem action when claim arises out of single

occurrenceo Fitzgerald the 7th Amendment neither requires jury trials nor forbids

o Giving this in rem action to jury is so in teeth with savings with suitors clause

5. Impleader under Rule 14(c) in an admiralty action may bring into the lawsuit a party who may be wholly or

partly liable, either to the plaintiffor to the

6. Possessory, petitory, and partition actions, including actions totry title to vessels

Really in rem actions, but not really they are much more like attachments

7. Limitation of liability proceedingsExclusive federal jurisdiction

8. Equitable remedies in admiralty casesEquitable remedies (injunction ordering something other than money damages) ouradmiralty courts have no jurisdiction to give equitable relief

9. Personal Jurisdiction1. There must be a legislative authorization for the exercise of jurisdiction

over the 2. There must be enough of a relationship b/t the and the forum to justify

the conclusion that the can be haled into court there without offendingthe constitutional guarantees of due process

Authorizations for personal jurisdiction1. State long-arm statutes (Rule 4(k)(1))2. Jurisdiction over foreign defendants who have significant nationwide

contacts while lacking minimum contacts with any state (Rule 4(k)(2))3. Maritime attachment and garnishment (Rule B)4. Actions in rem (Rule C)

United Rope Distributors, Inc. v. Seatriumph Marine Corp. (1991)o Very maritime, lost cargo during voyage - but we need personal

jurisdictiono Sued in Federal District Court in Wisconsin

o Seatriumph contends they cant get personal jurisdiction in Wisconsin

o Long arm statute was predicated upon minimum contacts with the

stateo Federal courts acquire personal jurisdiction only to the extent the state

law authorizes service of process

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o Rule 4(e) specifies that service of process may be made under the

circumstances prescribed by state lawo United Rope lost, cant bring suit in Wisconsin

Nissho v. M/V Star Sapphire (1995)o Jurisdiction over foreign nations who have significant nationwide contacts

while lacking minimum contacts with any state (Rule 4(k)(2))o Cargo contamination case company from Sweden foreign

o Two types of jurisdiction

o Specific: when the cause of action relates to or arises out of the scontact with the forum

o General: jurisdictions exists where the has such systematic and

continuous contacts with the forum that it is not unreasonable tosubmit to jurisdiction in that forum

o There is no specific jurisdiction

o Rule 4(k)(2) authorizes personal jurisdiction over foreign for claims arising

under federal law when the have sufficient contacts with the US as a wholeto justify the application of the US law, but without sufficient contact with anysingle state to support jurisdiction there

o Both charterer and owner maintain significant control of vessel and they

brought it to TXo had systematic and continuous contacts with the US therefore, there is

jurisdiction over

Blueye Navigation v. Oltenia Navigation (1995)o Concern attachment (to get PJ over and to have a fund if they win on the

merits from which judgment can be paid) and garnishmento Garnishment attachment of personal debt/obligation

o Borrowed loan, breach of charter contract and withdrew vessel after most of

loan was spento Bank arrested ship

o brought suit in London seek declarations that they had no liability to P

o Suit is to seek to attach assets of found in this district

o Jurisdiction is obtained only by attaching property quasi in rem

o P had no property to attach to get jurisdiction over

o If maritime claim and he is not found in district, then attachment isappropriate

o motion to dismiss is granted for lack of jurisdiction

RULE C In rem Action procedureo Problem: when you go in rem, you go after ship and you treat ship as ,

the owner is not the actual in the in rem action, its the property that is the

o Under venue rules, you can hit the ship wherever you find it seizure is really

important because ships are very easily moved around the worldo In rem exists to execute lien and if successful on the merits to sell it

o Strict Personification Theory doctrines whereby the holder of a maritime

lien can use in rem process to force a judicial sale of the vessel regardless ofthe owners personal liability for the debt (treat ship as ). Personify theship and make it a personal

o China famous case where British ship came into New York harbor and US

ship rammed it and the owner of the Kentucky sues the British ship in rem anddefense is that there can be no in rem jurisdiction without an underlyingpersonal jurisdiction of the owner and this owner was not in any wayresponsible for this because this was a compulsory pilot held English shipresponsible

10. Constitutional and prudential limitations on admiraltys broadpower to seize ships

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Amstar Corp. v.S/S Alexandros T. (1981)o Amstar claimed a cargo of raw sugar was damages

o Brought action against vessel in rem and against owner in personam

o Rule C marshal arrested the ship in the in rem proceeding and pursuant to

Rule B attached it in the in personam proceedingo Issue: Is Rule C constitutional?

o By enforcing maritime liens through the arrest of vessels in rem proceedings,

admiralty enables people engaged in maritime commerce to obtain redress

for certain kinds of injuries caused by the vessel and its crew without seekingcompensation abroad from the vessels ownero The arrest of a vessel has an important economic effect on the owner

o Notice prior to arrest would in many instances enable the owner to frustrate

judicial enforcement of the lien by simply ordering the master to put out tosea

o Requirement of due process is the opportunity to be heard at a meaningful

time and in a meaningful manner Rule C provides the shipowner anopportunity to be heard before a maritime lien is ultimately enforced by sale

o Holding: a pre-arrest hearing need not be afforded the shipowner

o Even though goods are damaged, the consignee is required to accept them

from the carrier unless they are completely worthless

11. Removal will get you in trouble: Savings suitor clause gives P choice where to hold hearing; one of

which is state court yet if you can freely remove those actions tofederal court you have defeated one of the purposes of saving thesuitors clause (letting P make his choice)

General provision for removal of civil actions from state to federal

court, 28 U.S.C.A. 1441, applies to maritime actions commenced ina state court, but not such actions may be removed

A Jones Act claim commenced in a state court is not removable, even if there isfederal jurisdiction independent of the Jones Act, such as diversity jurisdiction

12. Admiralty Appeals

A final judgment in a suit brought as an admiralty claim in federal court isreviewable in the same fashion as judgments in other cases. 28 U.S.C.A.1291

A trial judges findings of fact shall not be set aside unless clearly erroneous

FRCP 52(a)

An interlocutory judgment of a federal court sitting in admiralty may be

reviewed under Rule 54(b), which permits the trial court to convert into afinal judgment an order disposing of all of the claims of one party in amultiparty suit, or an order disposing of one of several claims between thesame parties

Some states apply their own appellate standards in reviewing appeals in

maritime matters this is acceptable in savings to suitor cases, but not inreview of Jones Act jury trials, since the right to a jury verdict is an integralpart of the seamans substantive rights under the act, and the weight of the

jurys verdict should not be diminished by a state appellate review standard

G. The Sources of the Substantive Law Applied in Admiralty andMaritime Cases

Three tribunals:1. Admiralty side2. Law side3. State court

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Four bodies of law:1. Federal statutes2. Federal nonstatutory maritime law3. State statutes4. State caselaw

o No place in the Constitution does it give Congress the power to enact any

maritime legislationo Congress is not a source of federal maritime law

Courts have used several constitutional grants from Article I in order togive Congress the power:

a. Originally thought commerce clause gave Congress power to enactsubstantive rules in maritime law (Interpret commerce clausenarrowly)

b. Then, the admiralty grant ofArticle III, 2 (judicial grant, notsubstantive law making grant) along with sweeping clause (necessaryand proper clause) It is necessary and proper for them to carry outtheir admiralty and maritime jurisdictional grant that the havesubstantive rules to base their decision on, therefore, it is an impliedpower only thing against that is that states could have maintainsubstantive law making power and federal courts could have beenthere to interpret enactments

o Original thought: substantive rules of GML as found in constitution when it

was enacted, plus those decisions of federal courts, were the real rules ofdecision that the courts should rely on

o Courts have always had a great power to mold GML

o Real power of admiralty law was in federal judges (particular appeal judges)

having power to mold GML and to interpret acts of Congresso In the last 20 years Miles v. Apex the Supreme Court has said that

Congress has to slavishly follow dictate offederal statute heavycongressional supremacy

o Only bounds on Congress maritime law is if you find an act of Congress

unconstitutionalo

Courts very seldom find the acts of Congress unconstitutional

Problem with State law v. maritime law Congress will win this fight because ofSupremacy Clause of Constitution

1. THE LESSER DIFFICULTY: THE MARITIME AUTHORITY OFCONGRESS

Congress gets its admiralty and maritime authority from Article III,

2 by way of the Necessary and Proper Clause

2. THE GREATER DIFFICULTY: NONSTATUTORY FEDERALMARITIME LAW VS. STATE LAW

Fight between the general (nonstatutory) maritime law comes into

potential conflict with state law

Ballard Shipping Co. v. Beach Shellfish (1994)o Raise question of RI state law and whether it is preempted by Supreme Court

decisiono Oil tanker ran aground and spilled oil in bay

o Is state statute preempted?

o Robins decision said you cant recover for purely economic loss without

impacto Shellfishers had only economic loss

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o Court looks toJensen state legislation affecting maritime commerce if it

interferes..look first to congressional legislation to see if state law is out ofstep, then look to GML to see if state law is out of step

o Where did federal maritime law originate?

o RI decision is not in conflict with Robins b/c it is not maritime law

o Congress did not intend preemption

o Rhode Island Compensation Act as reasonably construed and applied is not

preempted by admiralty clause of the Constitution

Southern Pacific Co. v. Jensen (1917)o Employee of Southern Pacific CO. died

o Family sued under NY law for workmans compensation which was awarded

o He was on gangway, vessel equipment, on navigable waters of US therefore

maritime torto Why did she want to invoke state law as opposed to maritime law or some tort

provision of state law? This was fresh NY law; she didnt bring it in maritimeb/c he wasnt a seaman and the LHWCA wasnt established until 1927

o Even if you apply comparative damages, they were going to fully blame this

man and take him out of federal and state whereas workmans compensationis no fault

o Maritime law at this time did not have workmens compensation (1927

LHWCA)

o To a maritime tort, could the state compensation law be applied? Actconflicted with the constitution and could not apply NY state law to a maritimetort

o NY workers compensation statute could not be constitutionally applied

o To allow state compensation awards would destroy the very uniformity in

respect to maritime matters which the Constitution was designed to establish

o There is no federal compensation scheme, no GML compensation if you jump

these two cases, it is an area where uniformity of law is required. Ifcompensation law of different states can be applied, then there would be nouniformity.

o But this is a longshoreman, not a seaman that travels from jurisdiction to

jurisdictiono Passed amendment to saving to suitors clause, even though this case wasnt

under this clause: saving to suitors the workmens compensation of anystatecomes up in Supreme Court again, and Congress : excluding mastersand members of vessels

o Cant get uniformity by just excluding members supreme court has found

substantive enactment of Congress to be unconstitutionalo Court ruled that if a longshoremans injury or death occurred on navigable

waters, state worker compensation law could not apply. The decision leftmaritime workers, other than seaman, without an adequate remedy againsttheir employers in work-related injuries occurring on water

1927 LHWCA gave Congress what it wanted

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3 part test where state law may or may not apply to a casein admiralty jurisdiction

1. If it contravenes the essential purposeexpressed by an act of Congress

2. Works material prejudice to the characteristicfeatures of the GML

3. Interferes with the proper harmony anduniformity with that law in its international andinterstate relations


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Jensen 3 part rule (apply state law if it is not inconsistent with policy, or if it is

not inconsistent with policy under GML)

In no place does it say you have to apply state law

If you are coming in under savings to suitors clause in state or federal court

under diversity jurisdiction, the same law applies as would apply infederal admiralty

AbsentJensen, unless Jensen authorizes application of state law, undersavings to suitor cases they are not authorized to apply state law

Savings to Suitors has to be merely with forum, not substantive law tobe applied

Chelentis v. Luckenbach decided this in 1918

Today, when state law applies the substantive law does not apply justbecause it is a savings clause case it must jump the Jensen case

If you have matters of procedure come up in state court for savings,you can apply state procedural law to maritime case even though youcouldnt apply state substantive law

Erie Railroad Co. v. Tompkins (1938)

PA citizen injured while walking along train track

RR argued he was trespasser and under PA law they arentliable to trespassers

Judge applied federal law there is general federal common law

Erie appealed arguing under opposition to Swift

This only applies to diversity matters

In diversity they must apply state law

Savings clause is the reverse Erie doctrine b/c in Erie they haveto apply state law wherein savings cases federal maritime lawapplies

Reverse Erie Doctrine: case is in state court but maritime law applies exceptwhere the controversy or issue falls under the maritimebut local doctrine, but even there state law is being

applied in admiralty

Savings suitor: apply federal maritime lawAlways have a conflict b/t state and federal law

34 of the 1789 Judiciary Act is known as the Rules of Decision Act

In 28 U.S.C. 1652 provides: The laws of the several states, except wherethe Constitution or treaties of the United States or Acts of Congress otherwiserequire or provide, shall be regarded as rules of decision in civil actions in thecourts of the United States, in cases where they apply

Pope & Talbot v. Hawn (1953)

When you can apply state law to maritime action

Hawn injured on P&T vessel in PA waters Issue Whether maritime recognized contributory negligence or to apply PA

law

Maritime law has comparative negligence where PA law has contributorynegligence as a bar

Court held that maritime law was comparative and they werent going toapply PA law because it was a maritime tort

Cause of action is an injury to a seaman aboard a vessel

While states may sometimes supplement federal maritime policies, a statemay not deprive a person of any substantial admiralty rights as defined incontrolling acts of Congress or by interpretative decisions of this Court

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Court extended the duty of seaworthiness to persons who were not membersof the crew, but who were aboard the vessel doing work traditionallyperformed by a member of the crew

Negligent conduct causing loss to others constitutes a traditional maritimetort

1972 the LHWCA was amended to provide that nonseamen can no longer sue on thebasis of unseaworthiness

Kossick v. United Fruit(1961) Hospital case if anything went wrong the boss would re-pay

What is the source of law whether alleged contract is maritime

Court held that the maritime contract would upset uniformity of maritimelaw if they used state law

NY Statute of Frauds disallow oral contracts but maritime contract doesnot disallow oral contracts

Uniformity is required under maritime law

This is a Jensen case the notion that if such a limited and essentially localtransaction as the contract here in issue were allowed to be governed by alocal statute of frauds it would disturb the uniformity of maritime law, istoo abstract and doctrinaire a view of the true demands of maritime laws

Deals with hardcore maritime commerce: the relationship between the shipownerand the cargo ownerCarriage of goods has been statutized comprehensively covered by federal statute

Two types of carriage1. Public

a. Liners that have scheduled routes that you can send cargo on to

various placesb. Common carriersc. What they can put in their contract is covered by Harter and

COSGAd. Bill of lading very little freedom of contract b/c before statutes

came in in 1893, Harter Act and COGSA (Carriage of Goods by SeaAct 1936), this carriage was under GML relationship of ship tocargo; when cargo is lost or damaged, who has to pay for the loss?

2. Privatea. Charter parties leasing vesselsb. Not as concerned with chartersc. Freedom of contract

With GML, there was freedom of contract for common carriers the ship wasan insurer of the goods and no matter how or why the goods were damagedor loss, the ship had to pay for it except for a few circumstances

Didnt have to establish the ship was negligent

Ship interest began to write contracts (bills of lading), they put in exculpatoryclauses that ship will not be responsible for a number of things

Ships began to exempt almost everything from liability

England held ships could exempt even their own negligence

US Courts held that this was against GML policy of the US you couldntcontract out of your own negligence

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English could carry at a lower rate than US, b/c US had to bill responsibilityinto rate system therefore English would get all of the business

Congress passed in 1893 the Harter Act: compromise between differentinterests; even though we know ships are responsible for everything, thatwould destroy shipping industry; for certain causes of loss the ship is/is notresponsible

Ships were given negligence in the master and crew of the vessel which causedamage or loss to cargo

Rest of shipping world looked at our experience, and there is International

Convention COGSA is passed in 1936 essentially a copy of the Harter Act except where

in the interim they had found some defects in Harter Act so changed thoseparts

Did not repeal the Harter Act

HARTER ACTAct passed by Congress making a statutory allocation of the risks between shipperand carrierRequires carrier to use due diligence in sending out a seaworthy vessel at thecommencement of the voyage and holds the carrier responsible for its negligence inthe handling of the cargo during the voyage

COGSACongress provided that the Harter Act would remain applicable to the situations notwithin the reach of this new legislation

COGSA HARTER ACT

Applies to every bill of lading which isevidence of a contract for the carriage ofgoods by sea to or from ports of the US

Applies to all voyages, including thosebetween American ports and betweenAmerican ports and foreign ports

Applies only to the risks of the voyagebetween loading at the port of departureand unloading at the port of destination

Allocates the risks from delivery to thecarrier until redelivery to the cosignee ata fit and customary wharf

Applies between loading and unloading On voyage between American port andforeign port, this act applies from

delivery to the shipper until loading andfrom unloading at the port of destinationuntil delivery to the consignee

Carriers failure to use due diligence tosend out a seaworthy vessel imposesliability upon the carrier only if theunseaworthiness was a cause of thedamages to the goods

On voyage between American ports,absent permissible agreement, this actapplies at all times between delivery andredelivery

Prohibits a carrier from limiting itsliability to less than $500 per package

When this act applies the parties maystipulate that their rights will begoverned by COGSA either:

1. from delivery to loadingand from unloading to

redelivery, in voyagesbetween American andforeign ports

2. For the entire voyage,in shipments betweenAmerican ports

If the vessel owner defaults in its duty touse due diligence to send out aseaworthy vessel, it may not claim thebenefit of exculpatory language in Harteror in the Bill of Lading

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COGSA HARTER ACT

Carrier may limit its liability for damageto any amount

Parties may not avoid COGSA and Harter by stipulating to foreign law which imposesless responsibility upon the carrier, or by adopting a forum selection clause whichwould have the same effect

The Germanic (1905)o

Unloading vessel covered with ice and at the same time they are fueling ito Ships rolls from one side to the other

o Ships eventually sinks and damages cargo in the ship

o Cargo owner wants to recover from ship

o Depends on cause of loss was it the ship or the cargo?

o What happened to the ship happened because of the way the cargo was being

unloadedo Primary purpose: unload the cargo

o Harter Act will be applied to foreign vessels in suits brought in the United

States

The Hague Rules of 1921 = COGSA

Visby Amendments amended the COGSA, but not in the United States

International Community private organizations of maritime groups fromvarious countries

1921 International Law Associations Maritime Law Committee: formulateuniform model rules to govern ocean bills of lading

1. Carrier required to exercise due diligence to make the ship seaworthy2. Carrier liable for proper and careful handling, loading, stowage,

carriage, custody, care and unloading of the cargo3. Carrier not liable for faults or errors in the navigation or management

of the ship

Hamburg Rules comprehensive re-doing of COGSA that is in effect in someplaces, but not in the United States

US has traditional COGSA Ship is responsible for cargo damage when ships agents are hands on cargo

Ship is responsible if it fails to use due diligence

Cargo is responsible if ship uses due diligence to be seaworthy

Most controversial and likely to be changed letting ship off the hook for damage tocargo due to errors in navigation and management of vessel

THE CARGO CLAIMANTS ACTION UNDER COGSA

1. The Plaintiffs Prima Facie Case

A lot depends in cargo cases on the burden of proof

Burden of proof if the cargo demonstrates that it turned the cargo over tothe vessel in an undamaged condition and if cargo establishes that the shipturned it out damaged, that makes a prima facie case for the cargo againstthe ship

The initial burden is with the P (shipper or consignee) who must establisha prima facie case that the goods were damaged or lost while in thepossession of the carrier

Shipper can meet the burden by showing the goods were delivered to thecarrier in an undamaged condition and were not redelivered, or wereredelivered in a damaged condition

Bally, Inc. v. M/V Zim America (1994)

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o Zim shipping Ballys leather goods

o Goods placed in sealed containers makes it easier to load/unload

o Upon destination, containers were not weighed

o Perfect case that burden of proof is going to control this case because the

seals on the containers were still in tacko Receiving manager of warehouse noticed one container was short

o Did cargo make out its prima facie case?

o Arguing the point of outturn whether it was when containers were unloaded

or when trucking company delivered the containers

o Satisfied they turned it in in good condition but did not satisfy the second partconcerning loss in possession of the ship

o P establishes a prima facie case for recovery under COGSA by demonstrating

that the goods were damaged while in the carriers custodyo Burden can be met by proving

o Delivery of the goods to the carrier in good condition and

o Outturn by the carrier in damaged condition

o When the consignee proves its prima facie case, the burden shifts to the

carrier to show that the loss or damage falls within one of the COGSAexceptions

2. Burdens of Proof Lekas & Drivas, Inc. v. Goulandris (1962)

o Bringing cargo back from Europe and route had to be changed due towar and it took a year to get back

o British government made it go around Africa

o Soft Cheese and olive oil was the cargo

o Ship was damaged and needed to be dry docked; unloaded cheese and

covered it with tarpso Ship is not responsible for restrain on princes

o Plaintiff has burden of proof

o It was not negligent for master to not sell cargo b/c they were overdue

on voyage and cheese was small part of the cargo and wereresponsible to transport other cargo

The Harter/COGSA burden of proof structure has sometimes been analogized to aping-pong game because the burden moves back and forth between the plaintiff anddefendant

EXPECTED PERILS1. Fire COGSA 4(2)(b)

Fire Statute of 1851: vessel owner was not responsible for losses caused byfire on board unless such fire is caused by the design or neglect of such owner

Fire is exemption under COGSA 4(2)(b)

A carrier seeking exoneration under the fire provisions first must prove that

the damage was caused by fire

If it meets this burden, the weight of authority is that the shipper then must

prove the fire was caused by the design or neglect of the shipowner

Westinghouse v. Leslie Lykes(1984)o Westinghouse shipped several electric rotors aboard Lykes which were placed

in No. 4 holdo Fire started in No. 3 hold where cotton was stored cotton is very difficult to

extinguisho Crew members heard a clanking noise but did not check it out

o 12 hours later after the clanking was hear, smoke was observed

o Access could not be obtained to No. 3 b/c bags of flour had been stowed over

the manhole cover in No. 3 upper tween deck

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o Cargo brought action against Carrier for damage to its cargo, and Carrier

asserted the defense of Fire statuteo In a maritime cargo claim, the initial burden is on Cargo to prove

good order bad order that he delivered the goods to the carrier inapparent good order and condition that upon return were damaged

o Reject courts conclusion that stowage was brought about by design and

neglect of shipowner so as to overcome fire defenseo Evidence showed only that the stowage plan called for the manhole to be

covered with sacks of flour and that the stowage plan had been prepared in

the Lykes cargo layout department in New Orleanso Carrier not liable

Fire is an exemption in favor of ship, which is a quasi exemption; exemption only ifyou cant show involvement of owner with itIf this had not happened by fire, then you would have had a completely different caseOnce you bring in fire, burden of proof is singular

2. Perils of the Sea COGSA 4(2)(c)

Thyseen, Inc. v. S/S Eurounity(1994)o Thyseen purchased steel from Europe and made arrangements with to ship

it

o Vessel owner warranted a good shipo Ship hit a storm and there was discrepancy on how what caused the entry of

watero District Court P had proved a prima facie case by evidence that the cargo

was in good order at loading but damaged at outturn; had failed to provethat the damage to the cargo was due to a peril of the sea

o Peril of the sea occurs when conditions are of an extraordinary

nature or arise from irresistible force of overwhelming power, andwhich cannot be guarded against by the ordinary exertions of humanskill and prudence

o There was no peril of the sea

o Severe storms occur on a regular basis in the Atlantic and that the winds,

waves and cross seas experienced by the Vessel were to be expected

therefore the Vessel has not proven that it is entitled to exoneration based ona peril of the sea

Peril of the sea is close to an act of god

A storm would be a peril of the sea under certain circumstances, but not hereb/c it was foreseeable that this might happen

Peril of sea is movement of sea that such the best skill of the mariner cantact against it

3. The Q Clause COGSA 4(2)(q) The Catch-All Exemption

Q Clause itself states that the burden of proof shall be on the person claiming the

benefit of this exception to show that neither the actual fault or privity of the carriernor the fault or neglect of the agents or servants of the carrier contributed to the lossor damage

Quaker Oats Co. v. M/V Torvanger(1984)o Quaker purchased 500 tons of tetrahydrofuran and chartered to

transporto Analysis of samples showed that the peroxide content was well within

commercially acceptable levelso Samples taken upon arrival revealed peroxide contamination in one of

the tanks

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o Quaker sued asserting rights under COGSA for recovery of expenses

incurred in purging the peroxide from the tetrahydrofurano District Court Quaker had established a prima facie case by

producing evidence that the tetra. Was within purchase orderspecifications upon delivery to and that at least a portion of it wasno longer in that condition when tendered to P after shipment. rebutted prima facie case and the burden of proof was back on P andQuaker failed to carry burden.

o Carriers rebuttal was not good enough

o

Carrier must further prove that the damage was caused by somethingother than its own negligenceNotes:

o Q clause only requires the carrier to prove that neither its negligence nor

the negligence of its agents or servants caused the losso Q clause will remain substantially unchanged

THE PACKAGE LIMITATIONo If the burden of proof has shifted from the cargo claimant to the carrier

and back again, the court concludes that the carrier is liable for cargodamage

o Once liability is established, it is necessary to calculate damages

o Issue is whether the package limitation will apply and if so, how it will

applyo COGSA 4(5): carrier is generally entitled to limit liability to $500 per

package or customary freight units

What is a package and when can a container itself be a package?Basic idea how you can maintain similar break down between right of carrier andright of cargo after container revolution to make is analogous to same situation priorto container revolution

Fishman & Tobin, Inc. v. Tropical Shipping and Construction Co.(1999)o Cargo (Fishman) sues carrier (Tropical Shipping) for damages relating to cargo

losso Tropical Shipping admits liability but asserts CGOSA 4(5) limits its liability to

$500 per packageo The MacClenny Products Cargo

o 5000 mens jackets put in 40 foot container; put on the reembarque

and commercial invoice to which Tropical Shipping issued a bill oflading

o Bill of lading described the shipment as one forty foot container said to

contain 5000 mens jacketso Container lost overboard

o MacCLenny asserts that each individually wrapped jacket it a package

and Tropical is liable for $241,557.96o Tropical asserts that the container alone was the package and they are

limited to $500o The Fishman & Tobin Cargo

o 27,908 boys pants assorted into bundles not exceeding a dozen pair ofpants that was held together by a 3inch wide paper band; placed in 39cartons which were placed in a 40 foot container that Tropical supplied

o Bill of lading one 40 foot container said to contain 39 big packs

containing 27,908 units of boys pantso F&T argued that each paper bundle container constitutes a package

and Tropical is liable for $190,600.60. Tropical argues that each bigpack containing boys pants is a package and that its liability is $19,500or $500 for each lost big pack

o The COGSA and its limitations of Liability Provision

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o COGSA 4(5) limits a carriers liability to $500 per package, unless the

shipper explicitly declares a higher valueo Requires courts to look not at the larger unit of transport into

which goods are consolidated, but at the smaller unit, orpackage, into which goods are prepared

o MacClenny Packages

o Follows second Binladen rule: when the bill of lading lists the number

of containers as the number of packages, and fails to disclose thenumber of COGSA packages within each container, the $500 liability

limit applieso F&T Packages

o Nowhere in the commercial documents, however, does the shipper

describe the cargo as bundles of boys pantso $19,500

In a container package what is a package? Standard ship is using to charge theshipment

Henley Drilling Co. v. McGee (1994)o Sea Barge (ocean carrier) agreed to transport drilling equipment belonging to

Henley from Houston to Puerto Rico and back to Houston

o Shipper arranged cargo insurance with McGeeo On return shipment to Houston, Sea Barge retained a stevedore to stow the

drilling rig aboard the barge but when ship arrived at Houston, the drilling rigwas no where to be found

o Henley sued Sea Barge, McGee and shipper (shipper and McGee subrogated)

o Sea Barge moved for partial summary judgment contending their liabilities

could not exceed the $500 per package limit imposed by COGSAo District court granted SJ on ground that the drilling rig constituted a package

under COGSA 4(5); McGee appealedo Carrier must provide the shipper some notice of COGSA package/CFU

liability limitationo Bill of lading in this case afforded fair opportunity notice sufficient to satisfy

whatever essential requirements are imposed by the other courts

o Notice was contained in valuation clauseo Issue: Whether actual or constructive notice affords the shipper fair

opportunity? YESo Follows the 9th Circuit decline to expand the fair opportunity requirement

o Affirmed drilling rig was a package

Have to give fair opportunity to cargo to know that they can pay more and stipulate ahigher value on their property so they arent stuck with $500A lot of people are willing to take the $500 because as odds go, these things donthappen often enough

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Application of COGSAs liability limitations tocontainerized shipping:

1. When a bill of lading disclosed thenumber of COGSA packages in a

container, the liability limitation of4(5)applies to those packages; but

2. When a bill of lading lists the number ofcontainers as the number of packages,and fails to disclose the number ofCOGSA packages within each container,the liability limitation of4(5) applies tothe containers themselves


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Today, the one thing that has changed is that they do require causation deviation must be causally related to your loss

Deviation to save life or property at sea are examples of reasonable deviationDeviation to load cargo or passengers are examples of unreasonable deviation

NEGLIGENT THIRD PARTIES

COGSA 3(6) protects the carrier and the ship from suits filed more than one

year after delivery of goods COGSA 1(a) says only that the term carrier includes the owner of the vesselor the charterer who enters into a contract of carriage with a shipper If cargo is damaged at the hands of an independent contractor, the carrierwho issued the bill of lading may well be liable for the loss 3rd parties performing a carriers duties were automatically entitled to thebenefit of the carriers exculpatory rights

Robert Herd & Co. v. Krawill Machinery Corp. (1959)o ISSUE: Whether the provisions of4(5) of the COGSA or the parallel

provisions of an ocean bill of lading, limiting the liability of an ocean bill oflading, limiting the liability of an ocean carrier to a shipper to $500 perpackage of cargo, also apply to and likewise limit the liability of a negligentstevedore

o Nothing in COGSA limits liability from anyone but carrier

o Stevedore is liable for damages

o Only reason why they cant take carrier is $500 limitation

o If Congress wanted to say that independent agents could be a part of

limitation, it should have said soo Absence something in contract, then they didnt have limited liability

o Stevedores are liable for damage caused by their negligence

Himalaya Clause: Professor Robinson said what if carrier has to hold agentharmless

Since nothing in contract, couldnt take advantage of limitation but they canput something in the bill of lading

Favors agents Gives protection to assist carrier

Independent agent has to be of the carrier in privity of contract

Not that important if the ship is responsible

Exculpatory provision which seeks to extend non-carriers the protectionsavailable to the carrier under COGSA

Instead of giving it to common carrier with published route, you privatelycontract with owner of the ship for entire vessel

1. Demise or Bareboat Charter

Charterer takes possession and operates the ship during theperiod of the charter as though the vessel belonged to thecharterer (ex. tenant who rents a home)

Charterer provides the vessels master and crew and pays theoperating expenses

Permits a shipping company to supplement its fleet, perhaps ona temporary basis

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Bareboat charter: permits a company to acquire a vesselwithout incurring the full rights and obligations of legalownership

Demise charterer may sublease

If demise charter has been perfected, the owner is relieved of isobligations as owner and operator of the vessel for the term ofthe charter

2. Voyage and Time Charters

Obtains the use of the ship in a more limited sense while ownercontinues to operate the vessel

The owner provides the vessels master and crew and pays thenormal operating expenses, while charterer obtains thecommercial benefit of having its cargo carried (taxi or limoservice)

a. Voyagei. Specifies amount due for carrying a specified cargo on

specified voyageii. Owner agrees to carry a specified cargo by a named ship on

a single voyage from one specified port or range of ports toanother specified port or range of ports

iii. Freight will be barred on the amount of cargo actually

loaded on the vessel, with a penalty for failing to load a fullcargo

iv. Vessels normal operational costs are paid by the ownerv. Charterer will be in a position to influence how quickly

loading and unloading take place provisions for demurrageto create an incentive for charterers to load and unload thevessel as quickly as possible

vi. Charterer is permitted a certain amount of time, for loadingand unloading the vessel. If these operations exceed theallowed time, then charterer must pay the ownerdemurrage at a rate established in the charter party, as aform of liquidated damages for the delay

b. Time

i. Specifies the amount due for each day that the vessel is onhireii. The owner agrees to employ a named ship as directed by

the charterer for the number of voyages that can becompleted within a specified time period, with charter hirepaid at a specified daily rate

iii. Time charterer is liable for the costs directly connected withthe use of the vessel

iv. It is in the charterers interest to ensure that every aspect ofthe operation proceeds expeditiously

v. Typical time charter will include a cesser of hire clausespecifying the circumstances under which the vessel will beconsidered

3. The Slot or Space Charter SLOTHIRE enable charterer to obtain a specific number ofslots on a container vessel

Slot charters enable 2 or more carriers to combine theircapacities and offer more frequent service on their routes

Charterer simply hires a part of the owners vessel, such as aspecified hold or deck, or a specified part of the vesselscarrying capacity

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o Most occur because of bad weather (mostly fog which lessen visibility) and

when 2 mariners are not on same wave lengtho Maritime law imposes a duty upon the vessel and its operator to protect the

vessels seamen and passengers from harmo Crew and passengers injured in a collision of two or more vessels are likely to

proceed only against the vessel on which they were serving or being carriedo That vessel, if at fault, may be a joint tortfeasor with the other vessels and will

be liable to its passengers and crew for the full amount of their damageso When a vessel owner makes his claim for the damages to his vessel against

the other vessels involved in the collision, he will join with it his claims forcontribution for the damages he has paid to his crew and passengers

o While the usual collision case involves collision between two moving ships, the

same rules usually regulate accidents in which a moving ship collides with astationary ship or a fixed object, or a ship runs aground, or a ships movementcauses damage to another vessel or to other property

o The basis of liability in collision cases is fault; there is no recovery unless

there has been negligence in the navigation or operation of the vesselo A court may reject a plaintiffs claim in a collision case by finding that the

accident was inevitable or was caused by an Act of Godo General test of fault is whether the person navigating the vessel acted as a

reasonably prudent mariner at the time of the accidento Vessels, because of their size and the lack of friction, may not quickly

decrease speed, stop or change courseo Collision between them frequently can be avoided only if the mariners in

charge of the vessels discover any risk of collision at the earliest possible timeand promptly engage in a course of conduct which is designed to avoidcollision and with which both mariners are familiar

o International Rules called Collision Regulations COLREGS were adopted by

the USo Congress then unified one set of rules, the Inland Rules, which apply to all

vessels upon the inland waters of the US, and to vessels of the US on theCanadian waters of the Great Lakes to the extent that there is no conflict withCanadian law

o Violation of a custom may constitute fault if the custom is firmly establishedby proof and well understood and is not in conflict with the Rules of theRoad Hal Antillen

The Jumnao Jumna collided with flotilla which hit a pier

o Trial Court determined the incident was the result of an inevitable accident, in

the sense of admiralty law and awarded no damageso Test to use: could the collision have been prevented by the exercise of

ordinary care, caution and maritime skill?o If no negligence can be imputed to either vessel there is a presumption that

they are navigating in a lawful manner and where no fault can be shown theaccident may be said to be inevitable

Inevitable: act of God; when all precautions reasonably to be required havebeen taken, and the accident has occurred notwithstanding

The Pennsylvaniao Involved a collision on the high seas between 2 British ships, the Steam Boat

Pennsylvania and the bark Mary Troopo Collision took place in a heavy fog

o PA was proceeding too fast for the circumstances, and the bark, contrary to

the provisions of the British Merchant Shipping Act, was ringing a bell insteadof sounding a fog horn

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o When the look out on the PA was first ported, then put to starboard, but

before the steamboat had moved her length, it struck the bark, which was cutin half and sank

o There was mutual fault

o When a ship violates a statutory rule it contributes to the cause of the collision

o Burden rests upon the ship of showing not merely that her fault might not

have been one of the causes, or that it probably was not but that it could nothave been

The breach by a vessel of its duty to others will not give rise to liabilityunless it is the cause in fact of the damages

In determining cause in fact, the collision claimant often is aided by therule in The Pennsylvania and by the Major/Minor Fault rule

Pennsylvania rule is that if a vessels negligence is a violation of astatutory duty, the burden shifts to that vessel to prove that itsconduct did not and could not have caused the accident

Major/Minor Rule provides that if the fault of a vessel isuncontradicted and sufficient in itself to account for the accident, thereis a presumption that the other vessel was not at fault, or that its faultdid not contribute to the collision genesis of the rule was a desire toalleviate the harshness of the former collision rule of divided damageswhich provided that each vessel at fault was liable for its per capita

share of all damages incurred in the collision, regardless of thedegrees of fault of the offending vessels

Hal Antillen NV v. Mt. Ymitos MSo Noordam (passenger liner) collided with Mt. Ymitos (cargo ship)

o Waters governed by navigation traffic laws COLREGS

o Heading toward each other starboard to starboard, Mt. Ymitos made sudden

turn and Noordam couldnt avoid collisiono District Court 90% Mt. Ymitos and 10% fault to Noordam

o Cant sue custom of starboard to starboard passing COLREG 14 provides

that vessels will ordinarily pass port to porto Proximate cause of collision was poor seamanship of Mt. Ymitos and her

imprudent turn to starboard moments before the collisiono In maritime collision cases, the court must allocate liability

proportionate to the comparative degrees of the parties fault

Puerto Rico Ports Authority v. M/V Manhattan Princeo Manhattan Prince collided with pier in Puerto Rico

o PRPA brought in rem action against vessel for damages caused to facilities

o Sujeen (owner of tanker) brought action for damage to blow by Crowley and

compulsory pilot (tugboats hired to help tanked dock)o Was PRPA responsible for negligence of pilot?

Gaines Towing and Transportation v. Atlantia Tankero Gaines towing owned the tug Patricia which was moored at a dock for unload

sand. Coast Guard issued a slow bell broadcast to request passing vessels toreduce their speed. The Atlantia, although it reduced its speed, created a 3 to4 foot wall of water which caused the Patricia to strike the berth causingextensive damages

o District Court Patricia was properly moored and Atlantia proceeded through

the channel at the correct speed BUT Atlantia should have taken additionalprecautions

o Supreme Court affirms an issue of liability but damages were based on errors

of lawo When a vessel is damaged in a collision or other marine casualty, the amount

of recovery depends on whether it is deemed a total or constructive loss orwhether its partial damage justifies repair

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o A vessel is considered a constructive total loss when the damage is repairable

but the cost of repairs exceeds the fair market value of the vesselimmediately before the casualty

o Damages for loss of use may not be awarded when the vessel is a

constructive total losso District Court remarked that the damages may have exceeded the value of

the vessel and therefore, loss of income is essentially out of the questiono If the vessel was a constructive total loss, the court should have

awarded damages in an amount equal to the pre-collision market

value of the vessel, and should not have awarded any damages forloss of use of the vessel

United States v. Reliable Transfer CO.o Mary Whalen, a tanker owned by Reliable Transfer, was stranded on a sand

bar outside of NY Harboro There was supposed to be a flashing light maintained by the Coast Guard to

mark the breakwater, but there was no lighto District Court 25% fault to vessel 75% fault to Coast Guard but under

admiralty rule of divided damages, the US was liable for damages to vesselo Issue: Should there be comparative fault in vessel collisions or should

divided damages remain in effect?o US is the only maritime nation not adhering to the rule of the proportional

faulto When two or more parties have contributed by their fault to cause

property damage in a maritime collision or stranding, liability forsuch damage is to be allocated among the parties proportionately tothe comparative degree of their fault, and that liability for suchdamages is to be allocated equally only when the parties are equallyat fault or when it is not possible fairly to measure the comparativedegree of their fault

o That a vessel is primarily negligent does not justify its shouldering all

responsibility, nor excuse the slightly negligent vessel from bearing anyresponsibility at all

Divided Damages Rule: each vessel now is liable to the other

offending vessel in contribution for that part of the total damagesproportionate to its fault, and is liable for its per capita share onlywhen the respective faults of the vessels are equal, or whenproportionate fault cannot be determined

United States v. Atlantic Mutual Insurance Co.o Cargo owners shipped goods on steamship Nathanial Bacon owned by the

USo Collided with Esso Belgium and cargo was damaged; ships also damaged

o Bill of lading contained Both-to-Blame Clause: requires cargo owners to

indemnify the carrier Bacon for any amounts the Bacon loses becausedamages recovered by the cargo owners from the Belgium are included in theaggregate damages divided between the two ships

o Issue: Is the Both-to-Blame clause valid?o General Rule: common carriers cannot stipulate for immunity from

their own or their agents negligenceo The Harter Act took away the right of the cargo owner to sue his own carrier

for cargo damages caused by the negligent navigation of the carriersservants or agents

o It did not deprive the cargo owner of his tort action against the noncarrying

shipo It would be anomalous to hold a cargo owner, who has an unquestioned right

under the law to recover full damages from a noncarrying vessel, can be

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compelled to give up a portion of that recovery to his carrier because of astipulation exacted in a bill of lading

o Both to Blame clause is invalid must only chose one

o Ship does have to indirectly pay the sum of the damages

o If there are 2 ships in collision, then the carrier might have to indirectly pay

for cargo damages, if carrier shares the loss with another ship in mutual faultcase, then carrier may have to contribute to some of cargo damages

o Both to Blame was declared to be a violation of Harter Act

A. INTRODUCTIONo Equitable doctrine in GML

o If the ship is in danger of being destroyed and if destruction is

inevitable and the master in charge of ship decides to do somethingharmful to vessel or to rid itself of cargo, then we shouldnt let the lossbare the entire loss we should spread it around to all interestsinvolved

o There must be voluntary sacrifice by the master to move the peril

from all interest involved and those whose property is saved mustcontribute to those whose property was lost

General Average applies only when1. There is a danger to which both vessel and cargo are

exposed;2. The danger is imminent and apparently inevitable,

which means that there is no probable escape exceptby inflicting loss upon one of the interests;

3. There is a voluntary sacrifice, such as jettisoning cargoor stranding the vessel

4. The attempt to avoid the common peril is successful,and

5. The party seeking contribution from the owners of theother interests is free from fault

The Olerono If a vessel be laden to sail and it happens that a storm overtakes her at

sea, so violent, that she cannot escape without casting some of the cargooverboard for lightening the vessel and preserving the rest of the lading,as well as the vessel itself; then the master may do so as he thinks fit

Noteso Average: damage or loss of ship or cargo

o General average is restricted to voluntary sacrifices and expenditures

for the common benefito Common justice dictates that where two or more parties are engaged in

the same sea risk, and one of them, in a moment of peril, makes asacrifice to avoid the impending danger or incurs extraordinary expenses

to promote the general safety, the loss or expenses so incurred shall beassessed upon all in proportion to the share of each in the adventureo Owner of the property that has been sacrificed is not made whole; instead,

the owners of the property saved contribute an amount so that eachproperty owner suffers the same percentage of loss

o Law of average is part of the general maritime law

B. THE SACRIFICENeed voluntary sacrifice in part of cargo in order to save the rest of the cargo

Barnard v. Adams (1850)o Recovery for loss of ship which ran ashore and cargo was uninjured

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o Transferred cargo to another ship and sold beached ship because it would

have cost more than the ship was worth to get it off the beacho Argument of jury - If the ship was going to be lost by storm anyway, their

beaching the ship would not entitle them to recovery they didnt sacrificeanything

Three factors for general average6. A common danger; a danger in which ship, cargo and

crew all participate a danger imminent and apparentlyinevitable, except by voluntarily incurring the loss of a

portion of the whole to save the remainder7. There must be a voluntary jettison.or casting awayof some portion of the joint concern for the purpose ofavoiding this imminent perilor, in other words, atransfer of the peril from the whole to a particularportion of the whole

8. This attempt to avoid imminent common peril mustbe successful

o Ship wants contribution from cargo for general compensation loss

o If the common peril is directed from the common venture to a certain portion

of venture, then that is the sacrifice they wanto

Ship shouldnt suffer anymore than its proportional losso Ship has the same right to demand contribution that the owners of the cargo

would have had against her, had it been cast into the sea to insure her safety

Notes:It has long been debated whether a voluntary stranding ought to constitute ageneral average act

Ralli v. Troop (1895)o Fully loaded vessel was morred at port when fire broke out in cargo hold

o Port authorities took direction and put vessel aground

o Master removed part of the cargo and wanted to get more, but port

authorities wouldnt let him

o Port authorities scuttled the vesselo Rest of cargo was saved in a damaged condition

o Vessel owners claimed general average contributions from cargo that was

savedo Must meet 3 criteria to meet the general average act

o If 3rd party orders action, then there is no protection under general

average, but if master agrees to action, there is protection under generalaverage

o Voluntary sacrifice cant be to save some third party not under the venture

o Court comes down on who made the sacrifice

o USSC would not allow general average this was not a voluntary sacrifice

o Motive of the port authorities was unclear and in order to constitute a

general average, the sole object of the sacrifice must appear to have been

to save the vessel and cargoo A sacrifice of vessel or cargo by the act of a stranger to the

adventure, although authorized by the municipal law to make thesacrifice for the protection of his own interests or those of thepublic, gives no right of contribution

C. THE PERILNavigazione Generale Italiana v. Spencer Kellogg & Sons, Inc. (1937)

o Mincio was stranded on a muddy river bottom and anchors were run out

o When it finally came free, it ventured to New York where it dropped off its

cargo and was dry docked to assess damages

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o Owner of Mincio asserted general average lien

o If the danger be real and substantial, a sacrifice or expenditure made in

good faith for the common interest is justified, even though the advent ofany catastrophe may be distant or indeed unlikely

o Elements of general average were met

o Any time a ship cannot move in its element, the ship is in peril

o There must be a fair reason to regard a vessel in peril in order to require a

contribution in general average. While the courts in some cases haveused expression indicating that both in general average and salvage cases

it is essential that the property at risk be subject to an immediatelyimpending dangero When a vessel is stranded she and her cargo are practically always in

substantial peril

NOTESIf there is a peril, but the master is mistaken as to its degree and takes more drasticaction than necessary, general average can still be allowed

D. VESSEL FAULTo American law, before the passage of the

admiralty outline

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