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FORUM SELECTION CLAUSE IN A BILL OF LADING IS VERY DIFFICULT TO BEAT
It would seem reasonable that a U.S. shipowner would provide in its bill of lading that all shipments carried to and from the United States will be subject to U.S. law and that any suits by the cargo owner must be filed in a specified U.S. court. It would seem equally reasonable that a foreign shipowner's bill of lading would provide that any claims against it would be subject to the laws of its own country and that any suits against it must be filed in its country.
Well, it depends. If the claim involves a choice of foreign law, the foreign choice of law will not stand up in a U.S. court because the
U.S. Carriage of Goods by Sea Act, 1936, is "compulsorily" applicable under U.S. law to all shipments carried to and from the United States.
But the clause providing that all suits must be filed in the foreign shipowner's country will usually be upheld by a U.S. court. There is no U.S. law requiring that all cargo loss or damage suits against an ocean carrier must be filed in the United States. Therefore, if an American importer chooses to ship with a Japanese carrier, he may have to comply with a foreign forum clause specifying that suits must be filed only in Tokyo.
Continue Reading...
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UNTRAINED CREWMEMBERS THEMSELVES CAN RENDER A VESSEL UNSEAWORTHY
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Unseaworthy Seaman is Awarded More Than a Million Dollars ______________________ The Second Circuit has ruled that a vessel can become unseaworthy simply because some crewmembers are not trained to handle a specific task, such as handing the anchor while the vessel is rolling. The Appeals Court affirmed not only the finding of negligence for allowing a tug to severely roll because it was navigating abeam the sea, instead of straight into it, while the men were trying to anchor, but the Court also found that the vessel became unseaworthy when the inexperienced crewmembers tried to deal with the difficult circumstances. One of them was the plaintiff who was injured when a line became taut and struck him. He had never handled an anchor on a vessel like this tug, which had an open stern without bulkheads to hold onto for leverage or stability. When a suit was filed by one of the seamen whose inexperience and lack of training had rendered the vessel unseaworthy, he was awarded $500,000 in past and $700,000 in future pain and suffering. Continue Reading...
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| AAA SETS UP OPTIONAL APPELLATE ARBITRATION RULES FOR APPEALING ARBITRAL AWARDS Most charter parties contain arbitration clauses because it is easier, less costly and more efficient to arbitrate a dispute than to resort to the courts, with all their rules, technicalities and appeals that can last for years. The parties can choose a maritime expert panel available from a number of arbitration societies in New York, London or elsewhere. There was always the expectation of finality once the arbitrator made an Arbitral Award. When maritime arbitrators decide the issues in a dispute, their authority under maritime law is finished. According to the rule of "functus officio," their authority over the dispute is ended once and for all. Without a maritime appellate option in arbitration rules, the loser usually went running to a federal court with a complaint that the arbitrators were guilty of "manifest disregard" of the law. In 2008, the Supreme Court ruled in Hall Street Associates that the limited grounds for appeals stated in the Federal Arbitration Act are exclusive and cannot be expanded by terms of a private contract. It led some federal courts to conclude that appeals on the grounds of "manifest disregard" were no longer valid. Continue Reading... |
PORT OF REFUGE: A CONTINUING PROBLEM FOR THE INDUSTRY
Partner Alfred "Fred" Kuffler was a featured speaker at the Connecticut Maritime Association's Shipping 2014 conference, which took place in Stamford, Conn. from March 17 - 19.
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USS SOMERSET COMMISSIONING
Partner Timothy Bergère attended a gala reception on board the USS
Somerset, named in honor of the 43 lives lost on Flight 93 in Somerset, Pa. as
part of the September 11, 2001 attacks. The gala took place February 27, the
eve of the commissioning of the vessel.
He is pictured with
Captain Thomas L. Dearborn, commander of the USS Somerset (above, right).
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| CONNECT WITH MONTGOMERY MCCRACKEN: 
 
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MONTGOMERY MCCRACKEN SECURES ARBITRATION AWARD IN ICC COURT FOR CLIENT SWEETENERS PLUS
Montgomery McCracken achieved a favorable result in the International Chamber of Commerce (ICC) International Court of Arbitration on behalf of client Sweeteners Plus, a Lakeville, N.Y.-based processor and distributor of all types of liquid and dry sweeteners. The case involved diversion of more than $7 million, which had been placed in an escrow account intended to cover payment of a large shipment of sugar to be supplied by Panamanian company Archangel Worldwide Investment (AWI). AWI failed to deliver the sugar, claiming that their employee was never authorized to make the sale, nor remove the funds from the escrow account.
The ICC found in favor of Sweeteners Plus, deciding that AWI was fully bound by the terms of the sugar sale contract and that its sales-person acted with apparent authority. The ruling is particularly significant because the panel also adopted the test for jurisdiction advocated by our client, based on where the misconduct happened rather than using a test based on the laws of the country where the employee was hired.
An article about the case appeared in the April 2014 issue of
MEALEY's International Arbitration Report
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| FIFTH CIRCUIT ALLOWS SEAMEN TO RECOVER PUNITIVE DAMAGES FOR VESSEL UNSEAWORTHINESS The Fifth circuit has ruled that punitive damages are available to a seaman under general maritime law, although such a remedy is not allowed under the Jones Act, which was passed in 1920 to give mariners the special privilege of suing their employers for negligence that causes injury or illness. The same year, Congress passed the Death on the High Seas act ("DOSHA"), which authorizes survival and wrongful death remedies for seamen, but not punitive damages, although seamen have traditionally been treated as "wards of the Court" under maritime law, similar to widows and orphans. Actually, "punitive damages" have been awarded in general maritime actions, though not always designated as such. They were awarded, for example, for "willful and wanton misconduct" in maintenance and cure cases. They were intended to deter future violations. Continue Reading... |
| GOODS SHIPPED IN SEALED SEA CONTAINERS REQUIRE ACTUAL PROOF OF GOOD ORDER OF THE CONTENTS ____________________________________________ A Carrier Has No Duty to Issue Receipt for What It Cannot See
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Most dry cargo shipped in international trade these days may be moved along the way by several carriers - ships, trains, trucks, etc. - before arriving at destination. Most dry cargo is also shipped in sealed containers, which are not opened until final destination. Different laws, foreign and domestic, may apply to the various carriers that handled different segments of the through transport. To complicate matters further, shippers usually hire freight forwarders to arrange the logistics of through carriage with various carriers, and sometimes they will issue bills of lading themselves, which, under U.S. law, adds them to the list of participating carriers. When the sealed containers are finally opened at destination and shortage or damage to the goods is discovered, which carrier does one sue? And, how about the freight forwarders? If an ocean carrier issues a through bill of lading from warehouse to warehouse, and arranges to subcontract land segments of the through transport, that simplifies things and the ocean carrier can be sued. Continue Reading... |
| "HOOK TO HOOK" CLAUSE CAUSES APPEALS COURT TO REVERSE ITSELF _________________________________________ Stevedore Also Working for Shipper Loses $500 Limit _________________________________________ In our Fall/Winter 2013 Issue, we reported on a decision of the Fifth Circuit involving a stevedore that was hired by a shipper to receive and store a very large boiler until the ship arrived in port. When the ship arrived, the stevedore loaded the boiler onto its trailer and delivered the unit to ship's side. The company also had an exclusive contract with the shipowner to load cargo as its stevedore. The stevedore was told by the ship's port captain that the boiler was not close enough to the ship's side for the ship's hook to lift it. While maneuvering its truck to be able to come close to the lifting hook, the trailer tipped over and the boiler sustained damage amounting to $284,415. Continue Reading...
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| FOR "WRONGFUL ARREST" OF A VESSEL, BAD FAITH, AND MALICE OR GROSS NEGLIGENCE MUST BE PROVEN BY THE SHIPOWNER To recover damages for "wrongful arrest" of a vessel under maritime law, the Owner must prove the arrest was made in "bad faith, malice or gross negligence." This is similar to proving "malicious prosecution" under common law. However, advice of competent counsel, honestly sought and acted upon in good faith, can be a complete defense to an action for malicious prosecution under common law. Under maritime law, an honest belief may also be enough. However, problems may arise in maritime law where a charterparty requires the charterer to provide bunkers or other supplies or services to the vessel. In a recent case, the charterer ordered bunkers from a supplier in Korea to be delivered to the vessel at a Panama port. The order provided that the seller's usual terms would not apply to the order. The next day, the seller emailed a confirmation of the order subject to the seller's usual terms and conditions, which provided that the fuel was being sold "on the financial credit of the vessel" and the buyers promise to pay. The terms also provided that the seller would have a right to assert a maritime lien on the vessel if the buyer failed to pay. Continue Reading... |
PLEADING LIMITATION AS A DEFENSE IN AN ANSWER MAY RESULT IN DOUBLE LOU'S
When an
in rem suit is filed against a vessel, arrest of the vessel can be avoided by the Owner putting up a special bond or a Letter of Undertaking issued by its P&I Club insurer. A Letter of Undertaking (LOU) is the functional equivalent of a bond and, in the maritime industry, will avoid an arrest of a vessel and provide security for the Claimant.
A special bond or LOU given as security for a specific claim is different from a general bond or LOU posted by a Shipowner when it files a Limitation of Liability proceeding to force all Claimants regarding the same incident to file their claims in the same court. A general bond, under Admiralty Rule E(5), requires court approval and is "conditioned to answer the judgment of the Court in all or any actions that may be brought." Continue Reading... |
MARITIME ASSOCIATE MELANIE LENEY ELECTED TO ALICE PAUL INSTITUTE BOARD
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Associate
Melanie Leney has been elected to the board of trustees of the Alice Paul Institute, a nonprofit whose mission is to promote gender equality. Leney also served as co-chair of the Alice Paul Equality Awards Gala, of which the firm was a sponsor.
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MATTEO BONUZZI JOINS MMWR TRAINEE PROGRAM
Matteo Bonuzzi of Genoa, Italy is participating in the Montgomery McCracken Trainee Program for foreign lawyers. He graduated from the Universitá Degli Studi di Genova with the equivalence of a J.D. degree in 2011 before beginning a Master's of Law program at New York University School of Law. He recently sat for the New York Bar Exam.
Bonuzzi had the privilege to be appointed Junior Research Scholar at NYU in 2013, and under the tutorship of the Dean, conducted legal research on the relationship between International law and the European Union legal system, with emphasis in claims brought by private parties against member states on EU institutions for violation of WTO laws.
Recently, Bonuzzi has been engaged by the Complex Litigation Center in the Philadelphia Court of Common Pleas to assist Judge Arnold L. New with legal research in respect to asbestos cases.
Bonuzzi will participate in the firm's intern program until July, 2014.
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Montgomery McCracken's Maritime and Transportation practice serves all sectors of the maritime industry including ship owners, charterers, pilots, cargo owners, shipyards, terminals, commodities traders, non-vessel operators and non-vessel operating common carriers. The multifaceted practice includes cargo and products claims; bankruptcy and restructuring; corporate and finance matters; sustainable growth; and defense of criminal investigations, including corporate compliance matters.
Articles in this newsletter were prepared with assistance by
M.E. DeOrchis.
For additional information, please contact any of the attorneys within the firm's
Maritime and Transportation
practice group.
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| Attorney Advertising This publication should not be considered legal advice and should not be relied upon without consultation with appropriate professional advisers. This publication is intended to provide general information only and nothing in it should be acted upon without consultation with legal counsel. Receipt of this publication does not create an attorney-client relationship between the recipient and Montgomery McCracken.
Montgomery McCracken Walker & Rhoads LLP is a Pennsylvania Limited Liability Partnership. The firm is headquartered at 123 S. Broad Street | Philadelphia, PA 19109. R. Montgomery Donaldson is the firm's responsible partner for the Delaware office. Louis A. Petroni is the firm's responsible partner of the New Jersey offices. Pursuant to applicable U.S. Treasury Regulations (Circular 230), we must advise you that this communication is not intended or written to be used, and cannot be used, by a recipient for avoiding tax penalties that may be imposed on the recipient under U.S. federal tax laws. For more information on Circular 230, visit our website. Under New York's Rules of Professional Conduct, this material may constitute attorney advertising. © 2014 Montgomery McCracken Walker & Rhoads LLP. |
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