Admiralty.docx

ADMIRALTY Topics covered in this course Titanic case It involves salvage It also involves admiralty jurisdiction Admiralty jurisdiction This involves Subject matter jurisdiction This area is still evolving Admiralty jurisdiction is based directly on the constitution This will take us classes We ll look at admiralty jurisdiction in tort claims and We ll see the General Maritime Law We ll understand what kind of cases can be brought into federal courts We ll look at the role of international law Arbitration We ll also look at arbitration Marine Insurance This is central to admiralty law In US there s case law In England it s a statutory law to which the US courts make reference to sometimes Charter Parties We ll look at charter parties which is a contract Most of the disputes is subject to arbitration Bills of Lading This are Contracts for the charter of goods There s a whole body of law arising to bill of ladings We ll look at the Carriage of goods Seaman s Claims for Personal Injury and Death A lot of people fall overboard Practice in Admiralty cases There are special admiralty procedures This allow for arrest of ships attachments or seizures of bank accounts We ll look at how to sue the US government the government is often a party in admiralty cases Limitation of Liability This limits claims A ship owner becomes the plaintiff Oil spills Case law Punitive damages Introduction to the course RMS Titanic v Haver US Court of appeals Appellee RMS Appellant Haver Facts The saved people from the titanic and some lifeboats were taken to NY Another ship took bodies and took them to Nova Scotia Haver discovered the Titanic at the bottom of the North Atlantic in Salvage efforts began years later Procedural Posture In a federal trial court exercising constructive in rem jurisdiction awarded exclusive salvage rights as well as ownership of recovered artifacts to RMS Titanic Inc Two years later it entered an injunction protecting the rights of RMS against any person in the world prohibiting to do salvage operations including conducting search survey taking pictures or video and entering the wreck site with that intention In the order the court enjoined the appellants Haver and DOE as well Haver and DOE appealed arguing lack of personal jurisdiction over them from the trial court lack of jurisdiction of the court over the wreck the scope of the injunction was too broad Issue Whether a US court has jurisdiction over the Titanic That is whether a US court can regulate the salvage rights in the wreck of the Titanic which lies in international waters Holding The court has constructive in rem jurisdiction over the Titanic The court affirmed in part and reversed in part The Appeals court decided that Haver and DOE could not conduct any salvage operations of the site the that they could visit the site as long as their activities did not constitute any salvage effort or interfere with RMS salvage rights Rationale No theory permits a court to adjudicate the rights of persons over which it lacks personal jurisdiction with respect to a vessel in international waters that has never been within the court s territory Not does any such theory authorize an injunction prohibiting persons from viewing and photographing a wreck when the salvor is not actively conducting salvage operations The trial court justified its personal jurisdiction over Haver and DOE and to enter an injunction against them because it had constructive in rem jurisdiction over the wreck itself based on the presence within the judicial district of physical items salvaged from the wreck This way it protected the salvor in possession when it is impossible to bring the entire wreck into the judicial district at a single point in time However the appeals court denied this saying that having in rem jurisdiction doesn t give the court in personam jurisdiction Since the salvors are still performing operations the in rem case is still pending Constructive in rem jurisdiction authorizes the court to enjoin DOE Haver and the whole world against interfering with RMS operations Rules Jurisdiction in Constitution US Constitution article III extends the judicial power of federal courts to all cases of admiralty and maritime jurisdiction Jurisdiction Analysis re authority of US courts to adjudicate salvage rights in shipwrecks in international waters requires inquiries into the nature and scope of admiralty jurisdiction the applicability of salvage law as part of the common law of maritime nations jus gentium The reach of an admiralty court s in rem jurisdiction Jurisdiction in rem for the court to have in rem jurisdiction the court must have jurisdiction over the res the property which is named as defendant The court must have exclusive custody and control over the property To exercise in rem jurisdiction over a ship the ship must be within the district in which the in rem complaint is filed How in rem jurisdiction works An in rem action for enforcing a salvage claim depends on the court s having jurisdiction over the res But only if the court has exclusive custody and control over the property it has jurisdiction over the property so as to be able to adjudicate rights However the ship must be within the district in which the in rem complaint is filed Possession while the res must be in custodia legis in the court s possession this possession may be actual or constructive Constructive Possession Constructive in rem jurisdiction less than physical seizure A court can exercise in rem jurisdiction over an entire ship when only a part of it is present in the court Possession of a thing gives you undistructive possession of the whole All of the artifacts from the vessel form part of a single piece of property that is subject to the salvage operation This is a fiction but in a way is a reality because salvors are viewing this operation from the salvors point of view as a single operation Limits of in rem The limits of in rem jurisdiction as traditionally understood are defined by the effective limits of sovereignty itself If a court has in rem jurisdiction it doesn t mean it has personal jurisdiction In order to enforce salvage rights against a third party for which the court has in rem jurisdiction the court must obtain personam jurisdiction over the third party through the service of process Law of finds and Law of Salvage Law of finds a person who discovers a shipwreck in navigable waters that has been long lost and abandoned and who reduces the property to actual or constructive possession become the property s owner The courts disfavor its application Law of Salvage it assumes that the property being salved is owned by another and thus that it has not been abandoned The property remains from the owner The owner of the property remains the owner of the property Salvage Claim it most often applies to ships that haven t sunk but to ships that have been in a collision and the ship needs to be rescued so the ship doesn t sink Danger invites Rescue salvage is the maritime law equivalent of that as in No Cure No Pay This is a standard form of contract it s an open-form contract and in the industry the terms are well known Us law in this area is consistent with the ius gentium The whole concept here is a rescue-reward This happen as an operation of law in salvage law there s no consent no written contract If the owner of the property is in distressed the salvor is permitted to salvage regardless of the owner consent There are some cases where the owner of the property can refuse salvage Requirements for salvage that he has rendered aid to a distressed ship or its cargo in navigable waters in this case the Titanic doesn t seem so distressed that the service was voluntarily rendered without any preexisting obligation arising from contract or otherwise to the distressed ship or property That the service was useful by effecting salvage of the ship or its cargo The salvage must protect the property Lien Upon rendering salvage service a salvor obtains a lien in the saved property by operation of law to secure payment of compensation and award due from the property owner Duties of salvage Law of salvage imposes duties of good faith honesty and diligence in protecting the property in salvor s care Class notes The wreck sat on the bottom of international waters for many decades it was discovered in the s and salvage became a possibility Private salvers wanted to take over the titanic case Some ship wrecks have treasures but the salvors wanted to know that if they invested a lot of money they would get protection for their investment and they came up with a legal technique that worked So they asked a court in the US to exercise admiralty jurisdiction over the entire wreck on the basis of constructive in rem jurisdiction The issue of this case is How can you protect property in international waters The titanic case is still pending What s the power of the court The court has power over the wine decanter because it s physically present in the court So the court has power over that decanter but the RMS want protection over the other things that are lying in the bottom of the ocean miles away from the US The court wants to give exclusive rights to RMS and enforce it against third parties The parties ask for salvage rights The court order that was first entered was drafted by the lawyers The idea was to never break up the collection and not sell it That was the understanding and it was under that footing that the salvage rights were granted RMS want to prevent others from salvaging things from the Titanic Law of injunction Focal point of the case Injunction What is the essential requisite for an injunction You must show irreparable harm Whenever you have an injunction you must have an irreparable harm Irreparable harm You can t be compensated by money damages Why did the district court thought the injunction was so important It s in the interest of the world to protect the rights of salvage It also talks about the public interest Public interest the Titanic has a historical significance What do we think about this Because it has become a big issue Should the court be involved in it There s a treaty from the UN to protect the wrecks Is it a compelling argument RMS filed a claim of declaratory judgment for which you need a controversy What is argued in the appeal There s no jurisdiction in personam no jurisdiction in rem but especially that the injunction is too broad Also there s an argument that there s a subject-matter jurisdiction so what s the source of power of the jurisdiction here Sources of power of jurisdiction Constitution article III this is the basis of admiralty jurisdiction This is the basis for the court power to hear and decide on admiralty cases Jurisdiction of admiralty It comes from article III of the constitution It s really broad The scope is really broad What law governs in admiralty cases It covers maritime cases Ius Gentium law of nations How do we know this law is consistent with the law of other nations Because the judge says that what he says is consistent with the law of other nations and is very important This law comes practices of navigation and seaman He talks about shared sovereignty Which means that if this opinion was wrote somewhere else in the world would have been the same If you have jurisdiction in rem you make it work through a maritime lien You can get a maritime lien How is a lien enforced By bringing an in rem action Ultimately the lien is enforced by the sale of the property noticed by the entire world and the proceeds go to the lien holder Central to this idea is that the court has power over this thing it has exclusive control and custody of the object Jurisdiction in rem is very important Here we are going to deal with constructive in rem jurisdiction Does this constructive in rem jurisdiction really works Law of salvage Should there be a right to salvage In this case the judge says that there is a salvage right and that it should be protected In this case the court goes to extremes to protect it Owner of Titanic it hasn t been decided whether the ship is abandoned if it is then the law of finds would come in UNESCO convention adopted about years ago with the intention of protecting underwater cultural heritage including shipwrecks in most cases prevents salvage marine ecologists don t think that salvors should be able to plunder the wrecks They say that the public interest is in protecting the shipwreck Pictures and documentals of Titanic is this part of the salvage right It is not a right since the ship is in a public space so everybody can look at it and take pictures What about IP rights Why shouldn t that be part of the salvage rights How is RMS suppose to make money and what a reward Salvage has a reward for rescuing things for going through the danger you don t rescue property by taking pictures If the salvor went through the difficulties of finding the ship then shouldn t that be a value as itself No answer RMS Titanic v The Wrecked and Abandones Vessel US Court of Appeals Facts and Procedural Posture The concept of the exhibitions wasn t bringing enough money The question was how to turn this into a money making operation This was a profit foundation As decided by the court RMS is the salvor-in-possession of the Titanic and the true sole and exclusive owner of any items salvaged from the wreck So RMS obtained an inchoate lien Order The court discovered that RMS was going to sell some of the artifacts Therefore the court issued a sua sponte order in prohibiting RMS to sell the artifacts Order RMS submitted to the court a supplemental report in describing the formation of a foundation that would purchase the artifacts from RMS The district court issued again a sua sponte order until a hearing was held At the hearing the court noted that the people from the Foundation and RMS were the same and that would create irreconcilable conflicts of interest with respect to the principal s duties to the public corporation and the non-profit organization However the court also stated that if an agreement between RMS and another potential buyer was entered into it should be brought to the court for approval Court order of September Following the hearing the court entered another order dated September stating that the previous orders designed to prevent sales of the artifacts were proper and were necessary when entered RMS appealed the order Issue Whether RMS can appeal the order of September Whether RMS as a salvor has the right to sell the saved artifacts Holding RMS can appeal the order because a change had occurred RMS cannot sell the artifacts because under the law of salvage RMS doesn t become the owner of the items but the salvor-in-possession and it s only the owner of the lien not the artifacts RMS only has the exclusive possession of the artifacts to earn money for further salvage efforts Although the June is ambiguous the court was clearly applying the law of salvage Ruling Although the trial court stated that no appeal could be made against an interim order for which no factual or legal change had occurred plus RMS had not appealed the previous orders The circuit court decided the following Appeal on the order The court of appeals decided that the new developments that preceded the September order were sufficiently material to justify RMS appeal While the court may not have explicitly expanded its earlier injunctions it acknowledged that the earlier injunctions were designed to prevent sales of individual artifacts and that the new order prevented sales of the artifacts together as a group Salvage Law By saving property at sea salvors do not become the property owner rather they save it for the owners and become entitled to a reward from the owner or from his property The salvor receives a lien in the property not title to the property Enforcing salvor s award the principal method of enforcing a salvor s award is through the recognition of a salvor s lien This lien arises from the moment salvage service is performed and it secures the payment of the as-yet-to-be-determined salvage award If the owner appears and pays the salvage reward determined by the court the lien is discharged and the owner takes the property If the owner does not appear then the case continues as an in rem action and the court determines the award sells the property and from the proceeds pays the salvor Requirement for salvage award Existence of a marine peril Voluntary action by the salvor Successful salvage Factors for determining the salvage award The Blackwall Factors Labor by salvors Promptitude skill and energy displayed in rendering the service The value of the property employed by the salvors in rendering the service and the danger to which the property was exposed The risk incurred by the salvors The value of the property saved The degree of danger from which the property was rescued The degree to which the salvors have worked to protect the historical and archeological value of the wreck and the items salved This is NOT a Blackwall Factor but a factor for Columbus-America case Maximum sum An award cannot exceed the value of the property itself The salvage award is therefore limited by the value of the property saved after all of the appropriate factors are taken into account If the proceeds are inadequate then the court might award the salvor title to the property Only after the reward is determined can it seek to enforce the lien The salvor doesn t have a direct right to the title in the property Class notes What are the salvors rights The court finds that the June order was ambiguous but that it still applied the law of salvage Court talks about RMS misunderstanding The court has to decide the salvage right then the lien then apply a salvage award and if the salvage right is greater than the value of the property then the property becomes the owner of the salvaged artifacts Law of finds requirements Abandonment Intent to own Why RMS didn t advance the law of finds argument Because they wanted the exclusive right to posses everything and to get that the law of salvage was a better tool because the law of finds doesn t grant an exclusive right to be a finder Salvage claim conversion to finds claim how does it become to law of finds The owner haven t really been identified so who s getting the benefit of it There s no owner challenging it s just the court deciding whether it s right RMS Titanic v The Wrecked and Abandoned Vessel US District Court Facts Same as previous case On October a French Maritime Affairs Administrator executed a Proces-Verbal which is an official record of oral proceedings The Proces-Verbal transfers title of all of the artifacts pursuant to article of the decree deterimining the regime of the wreck at sea Issues Whether the court will recognize a Proces-Verbal issued by a French Maritime official which purpots to award RMS title to artifacts raised from the wreck of the Titanic in Whether RMS will be permitted to present evidence and argument at the October hearing that it should in its possession under the law of the finds Whether the court should make an in specie salvage award Holding The court will not exercise its discretion to recognize the French administrative proceeding which produced the Proces-verbal under the principles of International Comity RMS is estopped from arguing that it is the owner of the artifacts under the law of finds Judicial estoppel The court is not inclined to exercise its discretion to make an in specie award of the artifacts following the October hearing because it would permit RMS to disperse the artifacts at will contrary to all previous restrictions Ruling Proces-verbal The extent to which a US court will give effect to the laws and decrees of a foreign nation is a matter of international comity Comity It s a recognition which one nation allows within its territory to the legislative executive or judicial acts of another nation having due regard both to international duty and convenience and to the rights of its own citizens International comity is a practice not a rule of law Recognition of Foreign law Where a foreign court renders a judgment following what appears to have been a fair trial with the participation of all interested parties an American court should give effect to that court s judgment and should not evaluates its merits In this case the Proces-Verbal did not result from a full and fair adversary proceeding before a court for the following reasons The administrator lacked authority under French Law to award title to artifacts without making Factual Findings Regarding the Cost of the Salvage Service and the Value of the Saved Property The court remitted to RMS this artifacts as its property under article that says that salvage of little value may be remitted as the salvor property because it would produce no appreciable amount of sale The administrator made no factual findings regarding the value of the artifacts Recognition of Process-Verbal would be contrary to US Public Policy Since Congress enacted the Titanic Maritime Memorial Act of with the purpose to protect the scientific cultural and historical significance and with the guideline that all artifacts should be kept together Even though the guidelines are advisory the do reflect public policy and the Proces-Verbal would contradict them RMS Permission to present evidence and argue that it should be awarded title of property to the artifacts As long as RMS remains salvor-in-possession of the Titanic wreck this court will not entertain argument that RMST should be awarded title under the law of finds Law of finds and law of salvage cannot be simultaneously applied to a shipwreck and property recovered from it Law of finds the court is called upon to adjudicate who among multiple claimants to previously unowned res has the most valid claim to ownership based upon circumstances The party must have an intent to own abandoned property The court doesn t have authority to prohibit other from also attempting to recover the abandoned property Law of salvage the court has authority over property Doctrine of Judicial Estoppel It prevents a party from prevailing in one phase of a case on an argument and then relying on a contradictory argument and then relying on a contradictory argument to prevail in another phase A party may not change its position simply because his interests have changed especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him Factors for applying judicial estoppel The party s present position must be clearly inconsistent with its earlier position The court should consider whether the court was persuaded by the party s earlier position The court should consider whether the party would derive an unfair advantage by the assertion of the new position if it were not estopped from doing so In this case the application of the factors above mentioned gives the conclusion that estoppel should be applied to RMS First RMS made factual assertions that are inconsistent with been awarded the title of the artifacts RMS represented that it was diving with the intent of recovering the artifacts for the public benefit Second the court was persuaded in naming it sole salvor-in-possession and was convinced that RMS lacked the intent to acquire ownership of the artifacts Third RMS would have an enormous unfair commercial advantage over all the other would-be salvors who have been precluded over a decade from recovery operations Determining the Salvage Award See previous case for the factors Maximum sum The maximum sum that can be awarded to all parties for the successful salvage of property lost at sea is the present market value of the property Co-salvors The total award must include the contributions of all co-salvors Reduction The amount would be reduced to the extent that a salvor has already been monetarily rewarded by virtue of its possession of salvaged artifacts its salvage award should be accordingly reduced In specie salvage award The court transfers the title to the party of all the artifacts in lieu of holding a judicial sale to satisfy the salvor s lien This is entirely a matter of the court s discretions Why would it happen if it becomes apparent to the court that the proceeds of any sale would clearly be inadequate to pay the salvor its full reward then the court might as a matter of discretion award the salvor title to the property in lieu of the proceeds of sale thus saving the costs of sale Class notes Why do RMS want the judge to adjudicate the rights of the items given by France Maybe RMS is afraid that there would be a claim later on There s no clear answer Arguing the law of finds the court says that you can t have your cake and eat it too Interesting part of the case the salvage award All the money from the exhibitions has to be credited as well as the tv shows and all the licenses because all that goes into the salvage award January ADMIRALTY JURISDICTION Subject matter jurisdiction Class notes This is distinct from diversity jurisdiction and person jurisdiction Federal courts can only see certain cases Having admiralty and maritime jurisdiction just means that federal courts can hear about admiralty cases Some matters are exclusive jurisdiction and other are shared jurisdiction If there s diversity jurisdiction then it can be filed in a state jurisdiction In admiralty jurisdiction general maritime law will govern the admiralty jurisdiction The concept of jurisdiction is not a settled thing and there s still a lot to be said It is a process that will go on forever Sandra Day O Connor wrote a lot of important decisions in admiralty jurisdiction Then we ll see the Kirby case and when you compare those cases you ll see the evolution Authorities on US Admiralty Jurisdiction Class Notes The constitution gave Congress the power over admiralty jurisdiction Supplement pg USCA A There are some cases that can be brought in state court and in federal court upon the plaintiff s choice There are some cases that can only be brought in federal court this are cases with special procedures such as arrests or certain procedure in special Acts When we say state court we also mean federal court with diversity jurisdiction Main causes of action within the admiralty jurisdiction Tort Basic test for tort Locality Rule or the Maritime Nexus Rule Locality It must occur in navigable waters or High seas the injury must arise out of a traditional maritime activity or maritime nexus Injury cases oil spill cases ship collision cargo claims which generally arise under contract and are treated as contract cases Contracts Test the subject matter of the contract must be of maritime nature Uniform Maritime Law this is a key in admiralty The courts are concern with a uniform maritime law around the world The concern with uniformity goes at the beginning of the admiralty jurisdiction in the US De Lovio case involves this matter Tort cases Non commercial vessels are also within the AJ If something goes wrong in navigable waters then it is going to be of AJ The Constitution Pg Article III Section the judicial Power shall extend to all cases in law and equity arising under this constitution the Laws of the US and treaties made or which shall be made under their Authority to all Cases of admiralty and maritime Jurisdiction The First Judiciary Act of Sep Section The district court shall have exclusively of the courts of the several states cognizance of all crimes and offences that shall be cognizable under the authority of the US committed within their respective districts or upon the high seas and shall also have exclusive original cognizance of all civil causes of admiralty and maritime jurisdiction including all seizures under laws of impost navigation or trade of the US where the seizures are made on waters which are navigable from the sea by vessels of ten or more tons burthen within their respective districts as well as upon the high seas saving to suitors in all cases the right of a common law remedy De Lovio v Boit US court for the District of Massachusetts Facts L Esperanza was slaving ship owned by De Lovio It had a Spanish flag and was set out to West Africa and then back to Cuba The ship left in De Lovio s agent in the US secured insurance in Boston that covered the voyage Slavery was a crime on the high seas to Great Britain and the US The Ship was seized by a British warship in June When De Lovio made his claim to the insurer the underwriters had substantive defenses to paying such as fraud and illegality The underwriters moved to dismiss De Lovio s action in admiralty for lack of jurisdiction Issues What is the true nature and extent of the ancient jurisdiction of the admiralty How far it has been abridged or altered by statutes or by common law decisions What causes are included in the delegation by the Constitution to the judicial power of the US of all cases of admiralty and maritime jurisdiction Ruling Admiralty and maritime jurisdiction include jurisdiction of all things done upon and relating to the sea in other words all transactions and proceedings relative to commerce and navigation and to damages or injuries upon the sea Admiralty jurisdiction jurisdiction over maritime contracts and concerns However in the US constitution the word maritime is also added Maritime jurisdiction includes all maritime contracts torts and injuries which are in the understanding of the common law as well as of the admiralty Neither the judicial act nor the constitution limit admiralty jurisdiction in any respect to place locality It is bounded only be the nature of the cause over which it is to decide The language of the Constitution will warrant the most liberal interpretation and it may not be unfit to hold that it had reference to that maritime jurisdiction which commercial convenience public policy and national rights have contributed to establish There is no solid reason for construing the terms of the constitution in a narrow and limited sense of the English statutes The advantage resulting to the commerce and navigation of the US from a uniformity of rules and decisions in all maritime questions authorize us to believe that national policy as well as juridical logic require the clause of the constitution to be so construed as to embrace all maritime contracts torts and injuries or in other words to embrace all those causes which originally and inherently belonged to the admiralty before any statutable restriction The delegation of cognizance of all civil cases of admiralty and maritime jurisdiction to the court of the US comprehends all maritime contracts torts and injuries Class notes re De Lovio Why did the insurer claim fraud Why there wasn t jurisdiction according to the district court It doesn t say much They say it s a claim of insurance and therefore is not an admiralty case Then Justice Story came along and he was very interested in admiralty and De Lovio had the opportunity to publish his essay through the opinion Why is this decision monumental for this course Because it states a broad admiralty jurisdiction Justice Story was trying to give admiralty jurisdiction and expansive application He also wanted to emphasize the great importance of uniformity Contracts issue in De Lovio Jurisdiction extend to all contracts relating to Navigable Waters Class notes When the constitution was written the court had the idea of locality that came from England where admiralty jurisdiction was construed upon the flow of the tides This concept lasted in the US for quite a while until a major development happened in the US the Steamboat Once the steamboat was in use the whole activity of navigation changed Therefore the concept of navigable water changed The court then gave navigable water a new meaning Until the case of Genesee Chief the court gave navigable water a new meaning If you have a body of water in between two states that is capable of being used in interstate commerce it is considered as navigable waters and would justify the locality test Jackson v The Magnolia Supreme Court Facts The steamboat Wetumpka crashed against the Magnolia on the Alabama River Issue Question of jurisdiction Rule The admiralty law of England was the admiralty law of the US at the period of the adoption of the Constitution The locality of the admiralty jurisdiction in England was within the ebb and flow of the tide But it most be obtained a standard as to that jurisdiction in the US far more uniform and rational than that furnished by the tides It is now affirmed that the jurisdiction and powers of the admiralty extend to all waters that are navigable within or without the territory of a state Navigable waters practicable waters navigable in a certain sense Internal water course whether in its natural condition or as improved under the authority and with the resources of the states or a canal or a mill-pond some of which are known to cover many acres of land and this court can convert rivers without tides into seas which would not by this doctrine be brought with the the grasp of the admiralty Adimiralty jurisdiction is for navigable waters only This concept is not extended to inland waters Class notes The Jackson case is just to give a sense of the legal debate at the time and how difficult it was to get the court to move along The court didn t want to expand the concept of navigable waters Authority on Great Lakes Admiralty Jurisdiction An act extending the jurisdiction of the District Courts to certain cases upon the lakes and navigable waters connecting the same The US district court shall have the same jurisdiction in matters of contract and tort arising in upon or concerning steamboats and other vessels of twenty tons enrolled and licensed for the coasting trade and at the time employed in business of commerce and navigation between ports and places in different States and Territories upon the lake and navigable waters connecting said lakes as it is in navigation and commerce upon the high seas within the admiralty and maritime jurisdiction The maritime law of the US shall be te rule of decision in such suits The Genesee chief v Fitzhugh Supreme Court Admiralty and maritime jurisdiction is confined to public navigable waters Facts There was a collision on Lake Ontario between the Cuba which was on her from state of Ohio to New York state and the Genesee which was going up the lake Issue Question of Jurisdiction Issue Whether the is constitutiona Ruling The proceeding is in rem extending jurisdiction of the district courts to certain cases upon the lakes and navigable waters connecting the same The act contains no regulations of commerce it merely confers a new jurisdiction on the district courts If this law is constitutional it must be supported on the ground that the lakes and navigable waters connecting them are within the scope of admiralty and maritime jurisdiction The only objection made to the jurisdiction is that there is no tide in the lakes and it is said that admiralty and maritime jurisdiction is confined to the ebb and flow of the tide As it is said in England However if it is a public navigable water on which commerce is carried on between different states or nations the reason for the jurisdiction is precisely the same Thus the admiralty and maritime jurisdiction is confined to public navigable waters The lakes and waters connecting the states are undoubtedly public waters and are within the grant of admiralty and maritime jurisdiction in the constitution of the US Class notes This case deal with the Act of that provided the right to jury trial in the Great Lakes cases In admiralty jurisdiction you don t get a jury unless there s a statute that requires it Missing a case Lake of the Ozarks Note on completing the navigability formulation The formulation of admiralty jurisdiction based upon navigability soon embraced rivers The new formulation left to be decided many fact-specific cases on the navigability of lakes and rivers sited entirely within a single state The formulation turned next to deciding how the occurrence fit the outlines of tort and contract set out in the then-new procedure of code pleading The locality test for maritime torts Class notes The injury occurs in land but the cause is in the water Is it a maritime case The Plymouth case brought this dilemma up to the Supreme Court The Plymouth Supreme Court Every species of tort occurring upon the high seas or navigable waters is of admiralty jurisdiction Facts The Falcon anchored in the Chicago River navigable water besides the wharf of Hough Kershaw the vessel took fire and the flames set wharf and packing-houses on fire Hough Kershaw filed a libel in admiralty against the owners of the Falcon and attached a vessel of theirs called the Plymout Issue whether the tort having been committed partly on water and partly on land was of admiralty jurisdiction Ruling These cases depend upon the nature and subject-matter of the contract whether a maritime contract and the service a maritime service to be performed upon the sea or other navigable waters though made upon land The true meaning of locality in cases of maritime torts is that the wrong and injury complained of must have been committed wholly upon the high seas or navigable waters to be within the admiralty jurisdiction The jurisdiction of the admiralty doesn t depend upon the fact that the injury was inflicted by the vessel but upon the locality the high seas or navigable waters where it occurred Every species of tort however occurring and whether on board a vessel or not if upon the high seas or navigable waters is of admiralty cognizance Note on joinder in ship-to-shore casualties The actions could not be joined in admiralty because under The Plymouth admiralty had no jurisdiction of the bridge s claim A recent opinion offered no hope that the territorial scope of waters could be stretched ashore Crowell v Benson Where navigability is not in dispute the locality of the injury whether it has occurred upon the navigable waters of the US determines the existence of the congressional power to create the liability prescribed by the statute The extension of admiralty jurisdiction Act Pg The admiralty and maritime jurisdiction of the US shall extend to and include all cases of damage or injury to person or property caused by a vessel on navigable water notwithstanding that such damage or injury be done or consummate on land Suit may be brought in rem or in personam The Executive Jet Formulation Maritime nexus requirement to traditional maritime activity There s a plane that crashes in lake next to airport Rule Maritime locality is not sufficient predicate for admiralty jurisdiction in aviation tort cases There must be a maritime nexus to a traditional maritime activity Maritime locality is not sufficient to bring the tort within federal admiralty jurisdiction but that there must also be a maritime nexus some relationship between the tort and traditional maritime activities involving navigation or commerce on navigable waters A traditional maritime activity as well as a maritime locality is necessary to invoke admiralty jurisdiction over torts Traditional maritime activity Class Notes It satisfied the locality test but is this enough The court had a problem admitting it was enough So the court added a new factor the wrong had to have a significant connection with maritime activity Foremost v Richardson Supreme Court by Justice Marshall Facts Two pleasure boats crash They are fishing boats for pleasure There s also a water ski boat A person dies in the crash Rule Traditional maritime activity doesn t have to be a commercial one The Executive Jet test doesn t mean that the connection with traditional maritime activity is an exclusive commercial one The Executive Jet test applies to all vessels without regard to their commercial or noncommercial nature The party seeking to invoke maritime jurisdiction must show a substantial relationship between the activity giving rise to the incident and traditional maritime activity but it doesn t have to be a commercial one The admiralty and maritime jurisdiction of the US shall extend to and include all cases of damage or injury if it had a disruptive impact on maritime commerce Class notes The district court concluded that it wasn t admiralty jurisdiction Why did the Supreme Court take this case Some of the justices thought it was absurd that this case would be in admiralty jurisdiction However Justice Marshall wrote it He was a great admiralty jurisdictions justices If we assume that the river is navigable then we fall in the locality requirement But this wasn t a problem It was easy to determine the locality rule Once we satisfy the locality rule then we look at Executive Jet which established that only locality wasn t enough that a maritime nexus is also needed Justice Marshall didn t say that executive jet was wrong but he just added to it He added that the traditional maritime activity didn t have to be a commercial one Sisson v Ruby Supreme Court by Justice Marshall Pg Fire in a marine set out by a yacht Rule It adds to the Executive and Foremost test Potentially disruptive impact on maritime commerce The Sisson test added to the other tests held that the admiralty jurisdiction would extend to such cases if in addition to situs Locality the activity giving rise to the incident bears a substantial relationship to traditional maritime activity doesn t have to be a commercial one the incident poses a potential hazard to maritime commerce which is ambiguous and Class There is subject matter jurisdiction for liability action So the district court has jurisdiction over Sisson s limitation claim Marshall adds that there has to be Potentially disruptive impact on maritime commerce to determine the locality test What is the rationale for adding this Concurring of Justice Scalia he rather wants a simple bright line rule of locality Jerome Grubart v Great Lakes Dredge Supreme Court by Souter There s water flooding into the tunnel Is there admiralty jurisdiction It adds to the Sisson test As long as it was engaged in traditional maritime activity the allegedly wrongful activity will involve such traditional maritime activity and will meet the second nexus prong admiralty jurisdiction would attach The possible involvement of other non-maritime parties does not affect the jurisdictional inquiry as to the maritime party Executive test locality is not enough to bring a tort in admiralty jurisdiction there must also be a maritime nexus The Foremost test overextended the Executive Jet test Foremost requires federal courts to ask whether the tort bore a significant relationship to maritime commerce and whether the accident had a potential disruptive impact on maritime commerce The Sisson test added to the other tests held that the admiralty jurisdiction would extend to such cases if in addition to situs the incident poses a potential hazard to maritime commerce which is ambiguous and the activity giving rise to the incident bears a substantial relationship to traditional maritime activity doesn t have to be a commercial one Class notes Does it matter that the injuries were land-based parties We have the situs the relationship to maritime activity and the hazard disruption in maritime commerce Bottom line of the case non-maritime parties Doesn t change the rule it s still the same It s a confusing case because is wordy Subject matter for maritime contracts Maritime contracts Ship sale is a maritime contract Ship repair is also a maritime contract Building a ship is not a maritime contract Insurance co v Dunham Supreme court Issue Whether the contract was a maritime contract Whether it depended not on the place where the contract was made but on the subject-matter of the contract Whether the District Court sitting in admiralty had jurisdiction to entertain a libel in personam on a policy of marine insurance to recover for a loss Rule The best criteria for the character of a maritime contract is the system of law from which it arises and by which it is governed In this case the contract of insurance sprang for the law maritime It is unknown to common law There is admiralty jurisdiction over policies of marine insurance Class If there s a maritime contract then you ll have admiralty jurisdiction North pacific v Hall Bros Supreme Court Rule A contract for building a ship or supplying materials for her construction is not a maritime contract Repairing a ship is of admiralty jurisdiction A contract for repairing a ship is maritime there is no difference in character as to repairs made upon the hull of a vessel dependent upon whether they are made while she is afloat while in dry dock or while hauled upon land The nature of the service is identical in the several cases and the admiralty jurisdictions extends to all Class Ship building contract is not a maritime contract Ship repairs are maritime contract Once the ship is launched it becomes within AJ Before it s built it s not a ship Kossick v Untied Fruit Co Supreme Court Pg Issue Whether state or law controls the case because the contract is governed in the state Rule Oral contracts are generally regarded as valid by maritime law If a contract is sufficiently related to peculiarly maritime concerns is of admiralty law The fact that maritime law is federal law and therefore supreme by virtue of article III of the Constitution carries with it the implication that wherever a maritime interest is involved no matter how slight or marginal it must displace a local interest no matter how pressing and significant Where contracts of the kind alleged in this complaint known to be a normal phenomenon in maritime affairs federal law will apply Class notes This case involves the statute of Frauds The statute says that will certain agreements but that doesn t mean that they will enforce all the oral agreements Why is maritime law so flexible here Maritime law recognizes oral contracts In the shipping industry oral contracts happen all the time Maritime and Local this is discretionary judges can analyze the public policy behind the maritime law Note on mixed contracts The Ada this case has been overruled It is well established that a contract enforceable in admiralty must be wholly maritime Note on Punitive damages in admiralty cases Punitive damages are rare in maritime cases Punitive damages in personal injury and death cases punitive damages were barred by a recent Supreme Court case Punitive damages for intentional harm in a property damage case were not barred Note on equitable remedies in admiralty Nineteenth century federal judges asserted that in admiralty they had no power to grant equitable remedies Kynoch v The SC Ives Courts of admiralty have no general jurisdiction to administer relief as courts of equity Marine Transit Corp v Dreyfus Courts of admiralty may be empowered to grant injunctions as in proceeding for limitation of liability There can be no question of the power of Congress to authorize specific performance when that is an appropriate remedy in a matter within the admiralty jurisdiction Farrel lines v Ceres Terminals Rule The admiralty court can grant any equitable relief even when the relief is subsidiary to issues wholly within admiralty jurisdiction In proper cases admiralty courts may issue injunctions including anti-suit injunctions In this case the court has the power to enjoin the defendant from pursuing the Italian action Products East River v Transamerica Supreme Court Facts In Shipbuilding a wholly owned subsidiary of Seatrain announced it would build the four oil-transporting supertankers in issue Stuyvesant Williamsburgh Brooklyn and Bay Ridge Shipbuilding contracted with respondent known as Transamerica Delaval to design manufacture and supervise the installation of turbines East River chartered the Brooklyn Each petitioner operated under a bareboat charter by which it took full control of the ship for or years as though it owned it with the obligation to return the ship to the real owner Each charter assumed responsibility for the cost of any repairs Procedural Posture Complaint filed alleges tortuous conduct on the part of Delaval and seeks million in damages for the cost of repairing the ships The first four counts allege that Delaval is strictly liable for the design defects in the turbines The th count alleges that Delaval negligently supervised the installation of a valve in the Bay Ridge The first second third and fifth counts clearly fall within the admiralty jurisdiction The claims satisfy the locality requirement from The Plymouth The injuries of the turbines of the Stuyvesant and the Bary Ridge happened in high seas The injury of the Williamsburgh and Brooklyn was discovered in port Maritime nexus when it happens in high seas there s no need to establish the nexus It is clearly met for the ships were engaged in maritime commerce Issue Whether a commercial product injuring itself is the kind of harm against which public policy requires manufacturers to protect independent of any contractual obligation In other words whether injury to a product itself may be brought in tort Holding No it may not be brought in tort A strict products-liability theory or recovery is unavailable to the charters Rule No products-liability claim lies in admiralty when the only injury claimed is economic loss A manufacturer in a commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself Seely case Product value and quality are the purpose of express and implied warranties A claim of non-working product would be brought as a breach-of-warranty action or the customer could reject the product and sue for breach of contract Rationale Products Liability Products liability is part of maritime law including strict liability People need more protections from dangerous products than is afforded by the law of warranty In the traditional property damage cases the defective product damages other property In this case there was no damage to other property Rather the defectively designed turbine damaged only the turbine itself The installation of Delaval was wrongly done Two poles of cases Seely the law of warranty precludes imposing tort liability if a defective product causes purely monetary harm Santor a manufacturer s duty to make non-defective products encompassed injury to the product itself whether or not the defect created an unreasonable risk of harm Safety and insurance rationales behind strict liability apply equally where the losses are purely economic There s no difference between economic loss and personal injury because they are caused by the defendant s conduct Between the two poles are various cases that would permit a products-liability action under certain circumstances when a product injures only itself They differentiate between the disappointed users and the endangered ones And only for the endangered ones permit the use of tort The court adopts Seely Damage to a product itself is most naturally understood as a warranty claim Such damage means that the product has not met the customer s expectations or it received insufficient product value Product value and quality are the purpose of express and implied warranties A claim of non-working product would be brought as a breach-of-warranty action or the customer could reject the product and sue for breach of contract The manufacturer can restrict its liability The charterers took the ships in as is and assumed full responsibility for them The contractual responsibilities were clearly laid out Class notes Torts on high seas are also involved in the locality test Products-liabiltiy claims are maritime torts The locality in the high seas is enough no need of the requirements February New Titanic Case Key point salvage law applies to historic wrecks The negotiators of the UNESCO treaty tried to avoid this decision because they didn t want salvage law to apply to historic wrecks The decision about not having in rem jurisdiction over the artifacts in France is emphasizing what in rem is It s an interesting point - Uniform Maritime Law cLASS NOTES uniformity in Maritime law is very important We try to have uniformity in foreign law Occasionally the US rejects uniformity because Congress might not think that the treaties were tough enough such as the pollution treaties Maritime actions in Federal Courts Note on Maritime Cases in the US If there were federal and state admiralty courts there would be a well-understood boundary called admiralty jurisdiction and a uniform maritime law for admiralty cases Alas a maritime case may be tried in federal court under the admiralty jurisdiction the federal question jurisdiction or dthe diverisity jurisdiction Or the case could be tried in state court The supreme court has the ultimate power to produce a uniform maritime law Note on exclusive admiralty jurisdiction Congress implemented exclusive admiralty jurisdiction in the federal district court because Congress conferred it to them in the Judiciry Act of through article III of the Constitution which vested the judicial power of the US in such inferior courts as the congress may from time to time ordain and establish Congress shared some admiralty and maritime cases with the state courts in the Judiciary Act of retroceding concurrent jurisdiction in the saving the suitors clause concurrent jurisdiction did not mean that two courts might try the same case at the same time but lawyers could take within the same family of maritime cases a case to federal court or state court The US District Courts have exclusive original trial jurisdiction of the following maritime actions Prize cases Actions in rem Actions in personam Actions against the US under the Suits in Admiralty Act Possessory petitory and partition actions in rem Actions to foreclose preferred ship mortgages under the Ship Mortgage Actions fro exoneration from or limitation of liability Actions under the death on the high seas Act can be brought in state or federal court upon election of plaintiff but the law is federal Supplemental Jurisdiction recent development which takes parties and claims away from the states and into federal jurisdiction case-by-case rather than by subject-matter classes Romero v International Terminal Supreme Court Rule An admiralty case is not a federal jurisdiction case Admiralty jurisdiction does not derive from section Getting into federal court in admiralty case is not a federal question If you get an admiralty case is not a federal question Facts Spanish man signed on as a member of the crew of a Spanish steamship Compania was the Spanish line that operated it Romero was injured when struck by a cable on the deck Rationale Romero filed suit in the District Court of New York The complaint claimed damages from four separate corporate defendants from NY which acted as the husbanding agent for Compania s vessels while in the port of NY Jurisdiction of the court was invoked under the Jones Act and section re a federal question jurisdiction In a pre-trial hearing the court dismissed the complaint for lack of jurisdiction because the Act didn t provide a right of action for an alien seaman against a foreign ship owner The claims under the general maritime law were also dismissed because the parties were not of diverse citizenship The court of appeals affirmed Contacts with the US were insufficient but it left complete diversity of citizenship among Spanish subject Romero and three US corporations and so the action was remanded Class notes Insufficiency of contacts is regarding the Jones Act The court said that there isn t a jurisdiction so there s no federal jurisdiction Authority on supplemental jurisdiction USCA - Supplemental Jurisdiction Except as provided otherwise the district courts shall have supplemental jurisdiction over all other claims that are related to claims in the action within such original jurisdiction that hey form part of the same case under article III Diversity cases are excluded The statute says nothing about admiralty cases The district court may decline to exercise supplemental jurisdiction over a claim under subsection a if The claim raises a novel or complex issue of Sate Law The claim substantially predominates over the claim or claims over which the district court has original jurisdiction The district court has dismissed all claims over which it has original jurisdiction In exceptional circumstances there are other compelling reasons for declining jurisdiction Class notes If there is admiralty jurisdiction the court can also exercise admiralty jurisdiction under non-admiralty actions So when there s an admiralty case with a non-admiralty they can join them Note on Supplemental Jurisdiction in Admiralty The capacity of federal courts to hear and decide cases is limited by subject matter jurisdiction Another principle enables federal courts to draw into existing federal cases claims and parties that are clearly outside the reach of federal subject matter jurisdiction The second principle calls both for close reading of the Constitution and for broad thinking about the proper functioning of US courts in the federal system Article III of Constitution confers upon federal courts the judicial power of the US over cases that involve federal questions and admiralty and maritime cases and controversies Pendant jurisdiction is not obligatory It is a doctrine of discretion Supplemental jurisdiction is very convenient in admiralty cases and the courts use it without questioning its applicability - Maritime cases in state courts The Moses Taylor There is concurrent jurisdiction between federal and state court The plaintiff can go to a federal court with admiralty jurisdiction or staying in federal with diversity jurisdiction or he can go to state court It nails down the concept that an in rem action can only be brought in a federal court The ss ss clause didn t apply because it s an action in rem The action in rem is a civil law remedy not a common law remedy Because not common law remedy not saved by savings to suitors clause Only common law remedies are saving to suitors clause The Lewis v Lewis Clark Marine MISSING OUTLINE Note on the Removal of Maritime Cases You get sued in state court and you get it removed to a federal court General maritime law won t change You can get a different kind of jury Why is removal important If you don t like the judge or the jury then you could ask for removal It s very used in practice for those reasons You can remove because of diversity If it s admiralty case can you remove it to a federal court Just because it s admiralty you can t remove it The mere existence of admiralty jurisdiction gives a legitimates basis for removal Diversity jurisdiction is good for removal If there s a case brought in state court that has admiralty jurisdiction can you remove the case You cannot remove a Jones Act case because Congress wanted to give the right to choose the form and keep it So Jones Act cases have to stay in State Court If you have a maritime case you can remove it If you have an admiralty case the removal will not affect the law that applies It only affects the forum Garret v Moore-McCormack Co What do you have to prove to have a valid release Release Relinquishment of the rights for which you have a right to sue Why the release wasn t valid Under Federal law who has to prove what The burden is under the one who sets up the release as defense to prove its validity Under state Law who has to prove what The other way around This release is invalid Admiralty law prevails The court has the power to declare federal and state law unconstitutional if they are in violation of maritime law This is a major source of power of the court Court doesn t say that there is no scope for state law to operate There s room for state law to operate as long as it s not in conflict with maritime law The supreme court decides what maritime law is and once they do so that is the law of the land and everything conflicting it is unconstitutional The New York law was later used as a model for federal law Dissent By Justice Holmes the common law is not a brooding omnipresence in the sky but the articulate voice of some sovereign or quasi-sovereign that ca be indetified State Law in Maritime Cases Southern Pacific v Jensen This is a tragedy This is a to decision As a plaintiffs lawyer is a compelling case A guy died What happened He banged his head driving a truck in and out of the ship broke his neck and died This is contributory negligence Note on Uniform Maritime Law and Maritime-But-Local Yamaha Motor Corp v Calhoun MISSING Wilburn Boat v Fireman s Fund MISSING Norfolk Southern Railway Company v James N Kirby US Parties Kirby and his insured are the claimants ICC non-vessel operating carriers intermediaries Hamburg Carrier Norfolk Railway Kirby ICC H N B L B L Kirby has contracts with ICC in a bill of lading form ICC contracts with H through another bill of lading H contracts with N Facts Kirby an Australian manufacturer hired International Cargo Control ICC to arrange for delivery of machinery from Australia to Huntsville Alabama through end-to-end transportation Limitation clause bill of lading contract that ICC issued to Kirby designated Savannah Ga As the discharge port and Huntsville as the ultimate destination and set ICC s liability limitation lower than the cargo s true value using the default liability rule in the Carriage of Goods by Sea Act COGSA for the sea leg and a higher amount for the land leg Himalaya clause the bill of lading also included this clause which extends liability limitations to downstream parties Kirby separately insured the cargo for its true value with Allianz Inc ICC hired a German shipping company Hamburg Sud to transport the containers which issued its own bill of lading to ICC designating Savannah as the discharge port and Huntsville as the ultimate destination This also adopted the default rule Hamburg hired Norfolk Railway to transport the machinery from Savannah to Huntsville The train derailed causing an alleged million in damages Procedural Posture Allianz reimbursed Kirby and then joined Kirby in suing Norfolk in a Georgia Federal District Norfolk argued that Kirby s recovery could not exceed the liability limitation in the BOL The district court agreed and granted Norfolk partial summary judgment Kirby appealed The court reversed saying that Norfolk could not claim protection under the ICC s Himalaya clause because it had not been in privity with ICC when that bill was issued and because linguistic specifity was required to extend the clause s benefits to an inland carrier It also held that Hamburg was not bound by the Hamburg Sud bill s liability limitation because ICC was not acting as Kirby s agent when it received that bill Issue Whether federal law governs the BOL Whether Norfolk is entitled to the liability limitation of both BOLs from the Himalaya clause Whether traditional agency law rather than the Great Northern rule should govern here Holding Federal law governs the interpretation of the ICC and Hamburg Sud bills Norfolk is entitled to the protection of the liability limitations in both BOL The court of appeals erred in concluding that the Himalaya clause requires such linguistic specificity or privity rules The Herd case simply says that contracts for carriage of goods by sea must be construed like any other contracts by their terms and consistent with the intent of the parties The Great Northern rule should rule There was no traditional indicia of agency between Kirby and ICC Ruling When a contract is a maritime one and the dispute is not inherently local federal law controls the contract interpretation The bills are maritime contracts To ascertain a contract s maritime nature the court looks at the nature and character of the contract The true criterion is whether it has reference to maritime service or maritime transactions Fundamental interest of maritime jurisdiction is the protection of maritime commerce The fact that the bills call for the journey s final leg to be by land does not alter the contracts essentially maritime nature The shore is now an artificial place to draw the line Cargo owners can contract for transportation across oceans and to inland destinations in a single transaction The assimilation of land legs into international BOL should not render bills for ocean carriage nonmaritime contracts According to Kossick so longs as a bol requires substantial carriage of goods by sea its purpose is to effectuate maritime commerce and thus it is a maritime contract The body of law governing the BOL provides a limitation of liability The Hamburg and ICC bills are maritime contracts because their primary objective is to accomplish the transportation of goods by sea from Australia to US Kossick fringe benefit Through bills of lading cargo owners can contract for transportation across oceans and to inland destinations in a single transaction The case is not inherently local Kossick When state interest cannot be accommodated without defeating a federal interest as is the case here then federal substantive law should govern The touchstone here is a concern for the uniform meaning of maritime contracts Applying state law to cases such as this one would undermine the uniformity of general maritime law Confusion and inefficiency will inevitably result if more than one body of law governs a given contract s meaning ICC bol liability limitation Himalaya clause these clauses extend the benefit of its liability limitation to all agents carriers and all independent contractors whatsoever These conditions for limitations on liability apply whenever claims relating to the performance of the contract evidenced by this BOL are made against any servant agent or other person including any independent contractor whose services have been used in order to perform the contract COAGSA package limitation operates as a default rule but it also give the option of extending its rule by contract the plain language of the Himalaya clause indicates an intent to extend the liability limitation broadly and corresponds to the fact that various modes of transportation would be involved in performing the contract Because it is clear that a railroad was an intended beneficiary of the ICC bill s broadly written clause Norfolk s liability is limited by the clause s terms The same liability limitation in a single BOL for international intermodal transportation often applies both to sea and to land A single Himalaya clause can cover both sea and land carriers downstream Hamburg bol libility limitation Great Northern rule when an intermediary contracts with a carrier to transport goods the cargo owner s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed The intermediary is not the cargo owner s agent in every sense but it can negotiate reliable and enforceable liability limitations with carriers it engages This is a limited agency rule Great Northern rule requisite The Great Northern rule only requires treating ICC as Kirby s agent for a single limited purpose when ICC contracts with subsequent carriers for liability limitations Limited agency rule rationale tracks industry practices if liability limitations negotiated with cargo owners were reliable while those negotiated with intermediaries were not carriers would likely want to charge the latter higher rates resulting gin discrimination in common carriage this decision produces an equitable result since Kirby retains the right to sue ICC for any loss exceeding the liability limitation to which they agreed Class notes Why is there a Himalya clause Because the separate agents will be liable This is a diversity case so federal law should apply Justice O Connor rejects the application of state law O Connor affirms the power of the court to decide maritime law Norfolk wanted maritime law to apply so their contract would be a maritime contract and the himalaya clause would apply to them February Charters The basic means of separating ship investment from ship operation is chartering Charter parties a charter is a maritime contract A service contract performed over time that is to be administered within the terms stated according to the customs of the trade so as to produce sensible commercial results Charter is the agreement Chartering is the process that leads to concluding or fixing the charter The charter party is the document that records the agreement In the administration of a long-term service contract not every deviation from literal performance is a breach of contract Not every breach of contract is compensable and Not every compensable breach is fundamental so as to terminate the obligation to perform on both sides Class notes Disponent Three main types Denisse or variable charter party gives the charter the exclusive right to use the vessel and the charter is responsible for the navigation of the vessel Time charters contract for a period of time Voyage charter contract for a specific voyage There can be hybrids It s common to have a vessel subject to a number of charter parties at the time and sub-charter parties This is important because when it comes to the bills of lading there are indemnity claims that can go up in the chain of charter parties Principles that apply to all charter parties The first question when we have a charter party is what law governs must charters are governed by English and US law If US law applies then the general maritime law applies Under the general maritime law contracts are valid and enforceable The UCC doesn t apply Arbitration plays a very important role most conflicts are resolved in arbitration Arbitration agreements are enforceable only if they are written Star SS Soc v Beogradska Plovidba The Junior K Queen s Bench Division Facts Plaintiff - Star Steamship Society a Lebanese concern which was the owner of the vessel Junior K Defendants - Beogradska Plovidba a Yugoslav corporation and they were the proposed charterers The critical events took place on October on that day there were various telex exchanges and telephonic discussions between the brokers who acted on behalf of the parties The last telex was from the plaintiff s brokers to the defendant s brokers - the recap telex See page There were no phone conversations It is common ground that the contract is concluded by the dispatch and receipt of the recap telex On October the defendants indicated that they didn t wan to proceed with negotiations It was viewed as a repudiation of a concluded contract by the plaintiffs On October they accepted that alleged repudiation subject to damages On august leave was granted to the plaintiffs to issue and serve proceedings against defendants The defendants now apply to set aside that order and service pursuant to it The owners sought damages for the charterers repudiation of the charter the proposed charterers denied that a charter was fixed Issue Whether the contract was concluded What is the meaning of subject to details Holding There was no binding contract Rationale The recap telex had all the essential terms of the charter-party The plaintiffs argue that subject to the details of Gencon charterparty had been specifically raised in the negotiations which remained unresolved If there has been a complete and unqualified acceptance of an offer a contract comes into existence even if the parties intend to reduce the agreement to writing However in negotiations parties are free to stipulate that no binding contract shall come into existence despite agreement on all essentials until agreement is reached on yet unmentioned and unconsidered detailed provisions The Gencon charter-party is a detailed and well-known standard form The parties had in mind a contract on the Gencon form but they had not yet considered the details of it subject to details on the Gencon charterparty the owners made clear that they did not wish to commit themselves contractually until negotiations had taken place about eh details of the charterparty It is a common occurrence that some of the detailed provision of the Gencon form to be amended during the process of negotiation It was stipulated that there was to be no contract until agreement had been reached on the details of the Gencon charter-party Great Circle v Matheson The Cluden the suggestion made in this case is that details are unimportant and that one can simply go back to the printed form doesn t always work There is no unanimity in the US Arbitration award in the US until all terms have been agreed no fixture has been concluded The expression subject to details enables owners and charterers to know where they are in negotiations and to regulate their business accordingly It is a device which tends to avoid disputes and the assumption of those in the shipping trade that it is effective to make clear that there is no binding agreement at that stage ought to be respected Note on subject to details Letter of intent a record of agreed terms without having an enforceable agreement if negotiations are not completed It contains a reservation clause which states that the document is non-binding and unenforceable In charter party brokering practice the negotiations are recorded in the recapitulation and the reservation is expressed as subject to details However the Second Circuit has a contrary understanding of subject to details shown in the Great Circle Lines v Matheson case Great Circle Lines v Matheson Second Circuit a fixture sub details is an agreement on the main terms of a charter party including the printed form to be used subject only to negotiating details the parties did not manifest were material to the charter Barebones and fixtures Charter parties are formed in two stages First significant main terms are negotiated through brokers These terms are considered the barebones and include the name of the charterer mane of owner ship and its characteristics time and place of delivery duration of charter place of redelivery hire rate printed form upon whish the contract is base other terms These main terms where agreed upon are entitled a fixture Details after a fixture has been reached the parties continue to negotiate details amending the form contract specified in the fixture These minor issue flesh-out the original agreement or fixture The details include speed of vessel ship s condition cargo capacity etc Where no amendment of details is agreed upon the terms of the printed form govern In recent litigation the Second Circuit maintained and even strengthened position US Titan v Guangzhou Zhen Hua Shipping The Bin He Zhen Hua calls for the overruling of Great Circle Lines But the court says that unpopular though it may be Great Circle Lines is binding precedent and they would not overrule a prior decision of a panel of this court absent a change in the law by higher authority or by way of an in banc proceeding of this Court Note on canceling and Laytime After a charter has been fixed the chartered ship may arrive in port late or early The charter party may provide for both possibilities If the ship is late the charterer may cancel the charter which is drastic relief Uniform General Charter GENCON Canceling Clause a should the vessel not be ready to load on the cancelling date the Charterers shall have the option of cancelling this Charter Party b Should the owners anticipate that the Vessel will not be ready to load by the canceling date they shall notify the charterers stating the expected date and the charterers may cancel or agree to a new cancelling date The remedy is only to cancel there are no damages if there s a different representation then the charterer can claim damages If the ship is early the charterer will not have to begin paying charter hire until a fixed date if the voyage charterer contains a negotiated rider laytime shall not commence before date Both laytime and canceling can be covered by adding and if notice of readiness to load shall not have been tendered before pm on date Charterers shall have the option of canceling this charter party If a charter party specifies no readiness-to-load date in the case of a voyage charter or delivery date in the case of a time charter the owner s obligation is simply to tender the vessel with reasonable dispatch If the owner does that but the vessel nevertheless misses the canceling date the charterer may cancel but it has no action for damages since the owner didn t breach This means that the only remedy is to cancel there cannot be actions for damages Laytime In Voyage Charters laytime is very important For payment of freight the charterer gets a certain amount of time to load and discharge the cargo Sometimes the amount of time will be specified sometimes it s expressed That time is referred as to laytime It usually exceeds the time in the contract so the charterer will have to pay extra freight to the owner this extra payment is called demurrage Under most voyage charters there will be a provision which outlines exceptions of the running of laytime Once the laytime expires and the vessel goes into demurrage there are no exceptions and the charter has to pay demurrage Once in demurrage always on demurrage This is known as an extended freight Abby v States Marine Corp US court of appeals Facts The time charter party contained a typical off-hire clause in the event of loss of time the payment of hire shall cease for the time thereby lost And if the speed is reduced the time lost and the cost of extra fuel shall be deducted Delivery of the vessel was to take place no later than December at pm From December to about pm on December the vessel was being repaired in Norway But delivery was tendered there at about pm on December The charterer s surveyor inspected the vessel and found no defects A certificate of delivery was signed The vessel sailed that day At about pm a steel shaft broke and the vessel stopped at about pm They had to repair the vessel and the total delay on January was of days On Jan the charterer informed the owner s agent that if refused to accept delivery and that they cancelled the charter party Procedural Posture Appeal from an interlocutory decree for the Aabys the owners of the Norwegian diesel Tento which was entered after the trial of alibel by them for damages from the appellant States Marines repudiation of a twelve month time charter of the ship Issue Was repudiation justified Was there a warranty of seaworthiness Holding Repudiation was not justified days delay in the course of a -months time charter is insubstantial as to frustrate the purpose of the charter Rule Warranty of seaworthiness The right to repudiate depends upon whether the object of the charter is substantially frustrated by the breach Rationale From the fact that the shaft broke almost immediately after the delivery of the vessel it could properly be inferred that it was defective at the time of delivery The exercise of diligence to discover the defect is immaterial But this doesn t mean that there was necessarily a breach of the undertaking expressed here as the vessel on her delivery to be tight staunch strong and in every way fitted for the service Such an undertaking seems to be equivalent to a warranty of seaworthiness that is implied in all contracts concerning vessels in the absence of an express and unambiguous stipulation to the contrary Not every defect needing repair or causing damage amounts to a breach of undertaking Repudiation by a charterer is permissible only where the breach of the owner s undertaking of seaworthiness is so substantial as to defeat or frustrate the commercial purpose of the charter Warranty of seaworthiness an insubstantial breach of it not going to defeat the object of the contract will not justify repudiation Class notes Warranty of seaworthiness will come up in bills of lading We ll see it again in injury cases and we ll see that works in a different way We ll also see it in insurance contracts and it will work in a different way So we have to be careful when using this word If the defect was apparent at delivery and the charterer would have not accepted the vessel then the charterer had a right to repudiate the contract However since the vessel was already accepted the standards are different Two day did not frustrate the commercial purpose of the charter Note on Warranties and Covenants Charter parties contain a number of representations concerning the vessel Time charters describe the vessel s condition and seaworthiness gross and net tonnage deadweith carrying capacity volume capacity engine horsepower and present location Fuel and speed are important for time charters Voyage Charters a voyage charterer who pays lump sum freight will be concerned with the vessel s deadweight carrying capacity for a heavy cargo or with its cubic capacity for a light cargo Warranties These are representations of a chartered vessel s characteristics The consequence of breach of warranty is to avoid the contract The charter party is spoken of as a covenant in which the shipowner warranted the usefulness of the ship In an action for breach of contract fault is irrelevant but plaintiff must plead and produce evidence that the breach caused harm In an action for breach of warrant causation is not part of the plaintiff s case If neither charterer nor owner can produce evidence of why the breach occurred only that id did occur with harm to the plaintiff judgment goes for the plaintiff Charter parties are unregulated private contracts between well informed equals and fairness is not a factor Covenant and warranty demonstrate the parties desire for certainty in allocating losses between parties and their insurers not their desire in fairness Class notes There is some confusion as to the appropriate legal terminology Doesn t matter what label you use but if there s a breach when did it occur and what is the consequence of the breach Mobil Shipping Transp v Wonsild Liquid Carriers US court of appeals for the Second Circuit Facts In late Mobil Shipping Mosat chartered a freighter named the Alsterstern from Wonsild Under the charter Wonsild warranted that the vessel shall be in good working order and condition and in every way seaworthy and fit for the carriage of the cargo The vessel lost power while proceeding to a discharge and crashed into the discharge berth A surveyor hired by Wonsild determined that the vessel could navigate if the vessel sailed at the safest speed in favorable weather and the hull damage was monitored The vessel s captain said he could navigate to Hong Kong before making the repairs Mosat told Wonsild that it was contemplating a discharge of the Hong Kong cargo in Singapore and it instructed the vessel to remain in Singapore Wonsild told Mosat that the costs of doing that would be bear by Mosat since the vessel was able to navigate Mosat directed Wonsild to have the remaining oil discharged in Singapore Mosat paid the full freight as if the cargo had been transported to Hong Kong Mosat incurred in additional costs to off-load the oil store it and obtain another vessel Procedural Posture Mosat commenced a breach of contract in the southern district of New York The court held that Wonsild breached its contractual warranty that the vessel would be seaworthy throughout the voyage There was a heightened standard because the vessel was transporting hazardous oil Issue Whether the vessel was seaworthy Holding No the ship was not seaworthy Therefore Wonsild breached its contractual obligation that the vessel would be fit to carry the oil throughout the voyage The district court opinion is correct and is affirmed Rationale Seaworthiness A vessel is seaworthy when it is reasonably fit to carry the cargo which she has undertaken to transport In this environmentally -sensitive era consideration of the potential environmental impact of a disaster comports with modern notions of what goes into the seaworthiness calculus The vessel must be equipped to store and transport the fluid safety The hazardous nature of the cargo is a relevant factor when determining the seaworthiness The seaworthiness depends on timing upon delivery or afterwards Latent Defect the mere existence of a latent defect doesn t terminate ipso facto the liability either under COGSa or under the Hague-Visby Rules Wonsild decision of not repairing the vessel was a superseding intervening act breaking the chain of causation that is necessary to excuse its failure to perform its contractual obligations The shi Authority on Safe Ports Berths and Places New York Produce Exchange Time Charter Party Form NYPE Trading Limits the vessel shall be employed in lawful trades between safe ports and safe places Berths the vessel shall be loaded and discharged in any safe dock or at any safe berth of safe place that charterers or their agents may direct Uniform General Charter GENCON See pg American President Lines v United States When a charterer directs a vessel to a port the captain believes to be unsafe the is confronted with a difficult dilemma He may refuse to comply and assume the risk that the port was not unsafe Or he may attempt to comply and making the risk of making miscalculation in seeking to avoid danger In any case the charterer is not relieved of legal responsibility of the consequences of his breach of contract unless the course followed by the captain is so imprudent that it can fairly be said to be an intervening act of negligence To constitute an intervening act of negligence the course followed by the captain must entail an unreasonable risk Note on Safe Port Safe Berth and Safe Place A charterer s covenant that the vessel will be ordered to safe berths or safe ports is commonly described as a warranty New York is considered a safe port for all but very deep draft vessels To be safe a port or berth must be safe not simply for some vessels but for the chartered vessel The charterer is obliged to nominate a specific berth and not simply a loading or discharging area The place must be one at which the vessel can lie This is appropiate language to refer to her specific berth while at anchor but is wholly inappropriate if place is cosntrued to include an area as large as Hingham Bay The natural meaning of safe place is a place entirely safe not an area only part of which is safe Class notes The safe port berth has to be practically safe for the vessel The safe berth warranty requires that the berth can leave the loading port without being exposed to risk of physical damage The warranty can vary for geographical reasons Basic concepts of negligence can apply The safe port warranty is not absolute it can be waived Orduna S A v Zen-Noh Grain Corp US court of appeals for the Fifth Circuit Facts In March a steel loading arm fell from a grain elevator on the Mississippi River onto the deck of the motor vessel Trebizond which was loading cargo in the berth below This damaged the ship and delayed its departure Orduna the shipowners sued its voyage charterers Euro the owner and operator of the elevator Zen-Noh the design engineer of the structure F P and the loading arm manufacturer Procedural Posture The district court found Zen-Noh F P liable Euro was also found liable but was granted indemnification from Zen- Noh and F P Rule A charter s party s safe berth clause doesn t make a charterer the warrantor of the safety of a berth Instead the safe berth clause imposes upon the charterer a duty of due diligence to select a safe berth Rationale The master on the scene rather than a distant charterer is in a better position to judge the safety of a particular berth The master is an expert in navigation The charterer is usually a merchant The charterer customarily chooses ports and berths based on commercial as opposed to nautical grounds The standard safe berth clause doesn t compel the master to take a vessel into an unsafe berth Class notes This case is wrong The policy issues is wrong in this case Why is this a violation of public policy The analysis is strange because the charterer is selecting the port because it has more knowledge of selecting the port than the owner If the second circuit would have have this case it would be different There are some clauses where it says that the obligation of the charterer is to select a safe port and if the parties agree then it shouldn t be a matter of public policy Earn Lines v Sutherland The Claveresk US court of Appeals for the Second Circuit Facts Sutherland time-chartered Claveresk to Earn Line for about five years The charter party contained the usual breakdown and restraint princess clauses Sutherland received a formal requisitioning letter from the governemtn The substraction of the steamer from Earn Line s service was treates as a refusal by Sutherland to perform the charter party and a repudiation thereof Rationale Contracts of carriage voyage charthers and other short-term agreements may be terminated by restraint of rulers as well as any other exception if there is enough of it The charter party was terminated by frustration But there was no breach therefore there can be no damages Note on Frustration of Charter Parties Requisition is one form of frustration New York Produce Exchange Time Charter Party see pg If the vessel is requisitioned by the government during the charter party the vessel shall be deemed to be off hire This period shall count as part of the period provided for in this charter party If the requisition exceeds x time the charter party may be cancel and no consequential claim may be made by either party War and civil insurrection also may frustrate a contract Wong Wing Fai v United States Frustration of a charter party is a change of conditions so radical that accomplishment of the commercial object of the charter is made impossible When a charter is frustrated the charter is canceled and the parties are released from their respective obligations The charter party can be cancelled when the government of the shipowner has requisitioned the ship when war between the government of the shipowner and the destination country becomes imminent while the ship is en route and when the ship has been destroyed Class notes In order to have frustration of contract you must have an unforeseen event for which there s no allocation of risk in the contract and which renders performance of the commerciality of the contract impracticable Time Chartering It s always a condition that the vessel is seaworthy It s the owner s crew under the charterers command Owner provides crew and operates the vessel under the charterer s direction The owner has the obligation to load the vessel and direct the same The charterer must pay the hire Charterer must pay for fuel Charterer must designate safe ports and berths for the loading and unloading of the cargo Charterer must redeliver the vessel on time at an agreed place A time charter contemplates a number of different trips or rarely only one trip So the charterer will take the vessel to numerous places As a quid pro quo for the agreement the owner requires that the charterer agree to designate safe ports and berths to load the cargo and discharge the cargo In a time charter the charterer has more options and the owner won t know in advance were those places are going to be So the safe port and safe berth are important in voyage charterer the safe ports are specifically mentioned Authority on Time Chartering New York Produce Exchange Time Charter Party Form NYPE See pg Confers only the use of the chartered vessel upon the charterer The charterer acquires no property interest in the vessel See pg A time chartered vessel remains in the owner s possession during the charter period A time charterer is liable to the owner only for damage resulting from negligence in loading stowing or discharging or from a breach of a charter party warranty that the charterer will order the vessel loaded only at safe ports and places or from the carriage of dangerous or injurious cargo contrary to the terms of the charter See pg - Voyage chartering Contract is for a voyage from A to B Owner employs crew and is in charge of navigation of vessel Owner loads cargo provided by charterer There may be a safe port safe berth provision In a voyage charter the safe port and safe berth are specifically named before the voyage starts Authority on voyage chartering Uniform General Charter GENCON A voyage charter or trip charter focuses on the cargo instead of the vessel It is a contract of affreightment COA a contract for the carriage of goods from one or more loading ports to one or more discharging ports on one or a series of voyages This contract from a commercial point of view means the carriage of a specified quantity of cargo during a specified period on vessels to be designated by the shipowner See pg - Remedies for Breach of Charter The basic remedy is damages It tries to put the parties in the position as if no breach had happened Relief for Breach of Charter Clyde Commercial v West India A vessel was quarantined for days according to government s orders Article - in the event of the loss of time from deficiency of men or for more than hours the payment of hire shall cease until she be again in an efficient state to resume her services and the charterer was entitled to deduct charter hire for that time Detention by quarantine authority is a restraint of princes or people This exception relieves the owner from liability to the charterer for the delay so caused The case is to be treated as if no delay had occurred Note on Off-Hire and Damages Hire continues to run from the time the vessel is placed at the charterer s disposal until the vessel is placed back at the disposal of the owner except with the charterer is relieved from making a hire payment for a cause included in the general exceptions clause clause or when an event occurs that calls for the cessation of hire under the off-hire clause clause If the owner is shielded from liability under the general exceptions clause the charterer has to pay even if unable to use the vessel The right to off-hire did not depend upon loss of profits but upon the fact that the vessel was not in a thoroughly efficient condition Off-hire provides a floor for recovery where the charterer s loss of use arises from a listed cause Off-hire also provides a ceiling on compensation for the charterer s loss of use Class notes This clause deals with the scenario that there s a problem which suspends the use of the vessel and which suspends the payment of the hire See clause in page of the supplement United Transp V Berwind-White Coal-Minning The Kerry Range The court granted a solatium compensatory damages to the injured shipowner in the difference between what he did earn and what he would have earned during the time that would have been required to fulfill the charter of which he was wrongfully deprived Where the shipowner breaches the charter party damages are the difference between the cost of charter and the cost of transportation by substitute means Osaka Shosen Kaisha v Pacific Export Lumber The Saigon Maru The contract of affreightment doesn t create a lien The lien created by the law must be mutual and reciprocal The obligation between ship and cargo is mutual and reciprocal and does not attach until the cargo is on board or in the master s custody The lien of the cargo owner upon the ship is limited by the corresponding and reciprocal rights of the shipowner upon the cargo Kraus Bros Lumber v Dimon SS The Pacific Cedar Lack of knowledge by the parties at the time of the payment that the freight demanded was excessive should have no bearing on the existence of the lien Luckenbach v Pierson It involves a time charter The withdrawal of a vessel from a charter party means that the owner shall deprive the charterer of any further enjoyment or use of the vessel and take it into his own exclusive possession This can be done even where the vessel is at sea provided she is light but if there be any cargo on board no withdrawal can be made until the cargo be relanded if the vessel is at the loading port or until it be discharged if she is at sea or at destination Class notes The owner has the right to withdraw the vessel of use from the charterer If the charterer fails to pay hire the owner can withdraw the vessel The right to withdraw is very important Charter parties and bills of lading Authorities on issuing bills of lading Liner Bill of Lading The form begins with lines on which to list the Shipper consignee vessel and port of discharge See pg and Continental v Polish Where terms of the charter party are expressly incorporated into the bills of lading they are a part of the contract of carriage and are binding upon those making claim for damages for the breach of that contract just as they would be if the dispute were between the parties to the charter agreement To incorporate a charter party it must me specifically refer and use unmistakable language indicating that it is incorporated By mentioning the location and parties involved we find that the specification of the date of the charter party along with the references to charter parties made on the bill s face and overleaf suffice to identify the relevant charter party with the specificity needed to give effect to the intended incorporation Note on conflicts of documentary terms The voyage charter party governs the relations between the owner and the cherterer shipper with respect to the vessel and the voyage charter party is a private an unregulated contract The cargo is usually covered by a bill of lading issued by the owner to the charterer shipper The bill of lading applies as private contract and the owner is a bilee for hire not a common carrier Continental Grain v Puerto Rico Maritime Shipping The duty to load stow trim and ultimately discharge a vessel s cargo generally falls on the shipowner who also bears the consequences of any failure However the parties can alter this Parties entering into charter contracts for private carriage of goods at sea are free to allocate risks contractually either by express contractual provision or by allocating specific duties concerning the cargo and the voyage with the result that the responsibility for cargo loss fall son the party who agreed to perform the duty involved In private carriage the burden of proving the cause of the damage remains always with cargo Under COGSA by contrast cargo need only establish a prima facie case of causation then the carrier has the burden to show that the damage did not result from its negligence Bills of Lading Carrier liability for cargo casualty Cargo casualty without carrier liability Authorities on cargo casualty without carrier liability The Niagara v Cordes In the absence of legislative provisions carriers by water are insurers and liable in all events for every loss or damage except when it happens without any fault or negligence on the part of the carrier Harter Act Section The owner of a vessel transporting merchandise to any port in the US shall exercise due diligence to make the vessel seaworthy The vessel owner charterers agent or master shall not be held liable for losses arising form dangers of the sea acts of God public enemies or the inherent defect quality insufficiency of the package or for loss resulting from any act or omission of the shipper or owner of the goods or from saving or attempting to save life or property at sea Carriage of goods by Sea Act section Rights and immunities of Carrier and Ship see pg United Nations convention on the Carriage of Good by sea Hamburg Rules Art - Basis of Liability The carrier is liable for loss or damage of goods and delayed delivery if it took place while the goods were in his charge unless the carrier proves that he took all measures that could reasonably be required to avoid the occurrence Note on Cargo Casualty without carrier The authorities let escape the carrier from liability for cargo loss or damage if the carrier can prove that some other cause produced the casualty No liabilities causes Causes outside the carrier s control International acts by the carrier to save life or property Causes within the shipper s control Unseaworthiness of the vessel Authorities on seaworthiness of the vessel The Niagara v Cordes A carrier s duty when transporting goods is to provide a seaworthy vessel Harter Act Section The duty to exercise due diligence from the owner of the vessel shall not be lessened weakened or avoided Harter Act Section The owner of any vessel transporting merchandise that exercised due diligence to make the vessel seaworthy will be responsible for loss or damages resulting from faults or errors in navigation but it won t be liable for dangers of the sea acts of God or public enemies or from the defect of the goods or for attempting to save life or property at sea Carriage of goods by sea act section The carrier shall be bound to exercise due diligence to a Make the ship seaworthy b Properly man equip and supply the ship c Make the holds refrigerating and cooling chambers and all other parts of the ship in which goods are carried Any agreement relieving the carrier from negligence fault or failure in the duties provided in this section or lessening such shall be null and void Carriage of good by sea act section The carrier will be liable for loss or damage arising from unseaworthiness only if caused by want of due diligence Whenever loss or damages has resulted from unseaworthiness the burden of proof the exercise of due diligence shall be on the carrier Neither the carrier nor the ship shall be responsible for loss or damage arising from p latent defects not discovered by due diligence United Nations Convention on the Carriage of Goods by sea The Hamburg Rules Part II article Basis of Liability The carrier is liable for loss as well as from delay if the occurrence took place while the goods were in his charge unless the carrier proves that he took all measures that could reasonable be required to avoid the occurrence Martin Fuller v The Southwark Supreme Court Facts The Southwark was a vessel belonging to International Navigation Co A shipment of beef was carried in this vessel The meat was required to be kept chilled during the voyage The vessel had a refrigerating system The meat was received under a bill of lading Across the bol there was a disclaimer which said that the vessel owner wasn t responsible for the meet including defects to the refrigeration system The refrigeration system broke down Upon the arrival of the ship at Liverpool the meat was decomposed Procedural Posture The trial court and the appeal court exonerated the vessel Issue Whether the terms on the bol are enforceable and thus the owner is not liable Holding The terms of the bol are not enforceable and the owner is liable To permit the parties the enforcement of the bol would be to allow the parties to enforce a contract in violation of the positive terms of the statute Reverse and remanded Ruling Harter Act governs this case The effect of this act is to limit the liability of the vessel owner in particular conditions Before the owner can have the benefit of the relief provided by section he must have exercised due diligence to provide a seaworthy vessel The test for seaworthiness is Whether the vessel is reasonably fit to carry the cargo which she has undertaken to transport Seaworthiness also depends on the vessel being fit to the particular cargo to be transported A vessel must be able to transport the cargo which it is held out as fit to carry or it is not seaworthy in that respect The shipper has no control over the apparatus It is under the supervision and care of the vessel owner inspected and operated by those in his employ The burden of proof is on the owner The right of the carrier to be exonerated in the respects named in the Harter Act depends upon the exercise of due diligence upon his part in discharging the primary duty of providing a seaworthy vessel This initial duty was not done in this case The vessel owner had not sustained the burden cast upon him to establish the fact that he has used due diligence to furnish a seaworthy vessel The Harter Act relieves carriers from some of the harsher rules of obligation in force before its passage but this relief is conditioned upon the discharge of the carrier s duty to use due diligence to provide that which it holds out to the shipper it is competent to furnish a seaworthy vessel duly equipped and provided for the purposes of the voyage Thyssen Inc v The Eurounity Court of appeals Second Circuit Facts Thyssen and Associated are importers of steel products They purchased a quantity of hot rolled steel in Europe for the purpose of resale and made arrangements to ship the steel from Belgium to Savannah and Houston aboard the vessel Atlantic Lines the charterer of the vessel issued the bol The bol included notation that the steel was rust stained partly rust stained and wet before shipment Prior to the loading of the vessel Atlantic Lines had entered into a charter party with Licetus the owner of the vessel Licetus warranted that the vessel was in a thoroughly efficient condition Licetus guaranteed that the vessel s hatch was watertight The charter party also included that claims for loss or damage to the cargo due to unseaworthiness would be owners and claims for damage due to bad stowage or handling would be charterers The vessel encountered a storm and water entered the cargo holds Ruling Liability Peril of the sea a peril of the sea occurs when conditions are of an extraordinary nature or arise from irresistible force or overwhelming power and which cannot be guarded against by the ordinary exertions of human skill and prudence There isn t a general standard to determine peril of the sea it s dependant upon the facts of each case In this case the weather conditions were not unusual in the wintertime in the North Atlantic The weather conditions were foreseeable and the wind waves and cross-seas were to be expected therefore the vessel has not proven that it is entitled to exoneration based on a peril of the sea Note on when unseaworthiness occurred The crew might be negligent but not the owner It depends on the timing The Silvia It was carrying sugar On the compartment next to it it had spare sails and ropes The compartment was left open even though it could have been opened in two minutes There was a storm and a glass port was broken in the compartment next to the sugar one which made the sugar get wet Since the ship was fine at the time it left the port the ship was seaworthy International Nav Co v Farr Bailey Mfg Co bales of burlaps were consigned to the libellant and a bol was given Water entered the compartment and the burlaps were damaged The ship had been inspected at port and seemed to be fine The omission to securely cover the porthole was a fault in management and within the exemption in section of the Harter Act The obligation of the owner in section of the Act is to exercise due diligence to make the vessel seaworthy but that obligation was don tdone when this vessel sailed with a hole in her side Whether the duty of seeing that it was closed devolved on officers of the ship or the foreman of the stevedores or on all of them the obligation was to use due diligence to make her seaworthy before she started on her voyage and the law recognizes no distinction founded on the character of the servants employed to accomplish that result The Folmina Supreme Court Facts The Folmina sailed from Japan to New York with a large shipment of rice The BOL contained the exception of perils of the sea and a provision that the ship is not liable for sweat rust decay vermin rain or spray The rice was damaged when it arrived in NY The damaged was caused by sea water The ship was carefully examined during and after the delivery and the decks hull side plating and rivets of the ship were found to be intact and free from leaks No adequate means of access of sea water were found Ruling If goods are received in good order on board and are to be delivered in like good under the BOL but if the goods are damaged the burden lies upon the carrier to show that it was occasioned by one of the perils for which he was not responsible Proof that the damages was caused by seawater doesn t proof that it was caused by peril of the sea The carrier has the burden to proof a connection between damage by the seawater and the exception against sea perils In this case there was a failure to prove whether the presence of the seawater was caused by an accident negligence or any other cause Since the carrier couldn t prove it the damage is resolved against him Riverstone Meat v Lancashire Shipping Co Muncaster Castle House of Lords Facts cases of canned ox tongue were shipped in good order on board the Muncaster Castle In the BOL it said that carrier were entitled to all privileges rights and immunities contained in the Australian Sea-Carriage of Goods Act Water was discovered after days of sailing and it had damaged of the cases The cause of the seawater was because a fitter negligently failed to secure the nuts on the inspection cover evenly so they loosened up and seawater entered Issue Whether the respondents discharged the vessel seaworthy - Yes they did Whether the carrier is responsible for the negligence of the fitter - Yes they are resp Ruling The fitter was an independent contractor By entrusting the vessel to reputable ship-repairers the carriers didn t perform their duty to exercise due diligence They were vicariously liable for negligence of a servant of an independent contractor The shipper is entitled to recover from the carrier Negligent care and custody of cargo Authorities on care and custody of cargo See pg The Niagara v Cordes When the master receives the goods it is his duty to take all possible care of them in their passage and make due transport and safe delivery Harter Act Section Stipulations relieving from liability for negligence It s not lawful for the owner of the vessel master or agent to insert in the BOL that they shall be relieved from liability for loss or damage arising from negligence fault or failure in loading stowage custody or proper delivery The clause will be null Carriage of Goods by Sea Act section The carrier shall properly and carefully load handle stow carry keep care for and discharge the goods carried United Nations Convention on the Carriage of Goods by Sea Hamburg Rules The carrier is liable for loss damage or delay delivery if the occurrence took place while the goods were in his charge unless he proves that they took all measures that could reasonably be required to avoid it Knott v Botany Mills Supreme Court Facts Bales of wool were taken on board at Buenos Ayres and were stowed in a temporary wooden bulkhead which wasn t tight The ship also took wet sugar The wool was damage by the sugar drainage The ship was seaworthy and the damage was caused by negligence of those in charge of the ship and cargo Issues Whether this damage to the wool was loss or damage arising from negligence fault or failure in proper loading stowage custody care or proper delivery or cargo within the first section of Harter Act Or Whether was damage or loss resulting from fault or errors in navigation or in the management of said vessel within the third section of that act And Do the words in the first section any vessel transporting merchandise or property from or between ports of the US and foreign ports include a foreign vessel transporting merchandise from a foreign port to a port of the US Ruling The damage arose from negligence in loading or stowage for the cargo and not from fault or error in the navigation or management of the ship There was no fault or defect in the vessel herself The ship was seaworthy The negligence consisted in stowing the wool far forward without taking care subsequently that no changes of loading should bring the ship down by the head The ship and her owner must therefore answer for the damage Schnell v The Vallescura Supreme court of US Facts Shipment of onions on board of the Vallescura From Spain to NYC The onions were received in good condition but arrived in decay The damage was caused by improper ventilation of the cargo The failure to ventilate was due in part by the heavy weather and by neglect of eh master and crew in failing to keep them open at nigh tin fair weather Ruling The failure to ventilate was not a fault or error in navigation or management of the vessel from the consequences of whichit may be relieved by section of the Harter Act The management was of the cargo within the meaning of section and In general the burden rests on the carrier to bring himself within any exception relieving him from the liability because he is a bailee intrusted with the goods with respect to the care and safe delivery When the carrier succeed in establishing that the injury is from an excepted cause the burden is then on the shipper to show that the cause would not have produced the injury but for the carrier s negligence But if the carrier delivers damaged goods by causes unknown he is subject to liability The carrier must bear the entire loss where the injury appears to be from sea peril and or negligent stowage and he fails to show what damage is attributable to sea peril Errors in Navigation or Management of the Vessel Authorities on Navigation or Management See pg The Niagara v Cordes Carriers are insurers and liable for damages unless it happen by the act of God the public enemy or other accident whithout fault or negligence on the part of the carrier Harter Act section If the owner exercises due diligence to make the vessel seaworthy neither the vessel the owner nor the agents will be responsible for damage resulting form errors in navigation or management of the vessel Carriage of good by sea Act section Neither the carrier nor the ship shall be responsible for loss or damage arising from Act neglect or default of the master mariner pilot or the servants of the carrier in the navigation or in the management of the vessel United Nations Convention on the Carriage of Goods by Sea The Hamburg Rules Art - the carrier is liable for loss damage or delay if the goods were in his charge unless the carrier proves that he took all measures that could reasonably be required to avoid the occurrence Mississippi Shipping Co v Zander Co The Del Sud US court of appeals th circuit Facts Coffee was loaded into the Del Sud Sweater damaged the goods The water entered through a fracture caused by the pressure of the ship s weight at contact with the dock When the Del Sud left the Port of Santos she bore the open wound and was unseaworthy Ruling The Harter Act says in section that the owner must exercise due diligence to make the vessel seaworthy before and at the beginning of the voyage This means that to respect with the cargo being loaded the vessel must be seaworthy at the time of the receipt of cargo and must continue in that state until the ship sails The voyage commenced at the time the wound to the ship was sustained The damage thus occurred after the voyage had begun therefore the failure of the master to inspect and repair the damage was an error in navigation and management and excused under section At Santos Montevideo and Buenos Aires the master stood as any other servant of the shipowner and any failure to exercise due diligence to make the vessel seaworthy with respect to cargo loaded at each respective port would be chargeable to the owner But at subsequent ports and with respect to cargo previously loaded the acts of the master are those of management and navigation excusable under section unless the particular activities are those concerning the care custody receipt and delivery of cargo The initial damage was occasioned as a result of error in navigation The voyage had begun and there wasn t a failure of the master to exercise due diligence at Santos to make the vessel seaworthy The error was one in management of the vessel unaffected by any act of the owner Note on cargo losses from errors in navigation or management If error in navigation causes a collision and the collision causes cargo loss the carrier is not liable But the carrier must exercise due diligence to make the vessel seaworthy Under the COGSA when