During the past year, U.S. courts have addressed a number of issues with maritime significance, including resolving a longstanding dispute between Florida and Georgia regarding the consumption of shared interstate waters that drain into the Gulf of Mexico, and addressing the scope of liability under an infrequently enforced statute designed to bolster sanctions against the Cuban government.
Also during the past year, Congress and U.S. federal agencies have made important changes to existing laws that will broaden the applicability of the Jones Act to a wider range of offshore industries. At the international level, the blockage of the Suez Canal in March 2021 temporarily overshadowed the COVID-19 pandemic as the most significant development affecting the global maritime and shipping industries. These developments, and more, are discussed in this Chapter below.
In Florida v. Georgia,1 the U.S. Supreme Court unanimously ruled that Florida failed to establish that Georgia’s overconsumption of interstate waters in the Apalachicola-Chattahoochee-Flint River Basin harmed Florida’s river wildlife and ecosystem and caused the collapse of Florida’s oyster fisheries. The Supreme Court has original jurisdiction to apportion interstate waters between states. In a dispute that has spanned decades, Florida sought a decree requiring Georgia to reduce the relative water consumption of its residents, which continues to increase due to the expansion of metropolitan Atlanta, repeated droughts, and increased agricultural demand.
In 2018, when the case was last heard by the Supreme Court, the Court remanded the matter to a Special Master for further findings.2 Pursuant to that directive, the Special Master recommended that relief be denied, because Florida failed to show serious injury caused by Georgia’s alleged overconsumption of interstate waters. In its April 1, 2021, unanimous decision authored by Justice Barrett, the court agreed with the Special Master’s recommendation and overruled Florida’s exception to the Special Master’s Report.
The Apalachicola-Chattahoochee-Flint River Basin provides a critical source of water for both states. In Georgia, the Chattahoochee River serves as the primary source of water for the city of Atlanta, and the Flint River is the irrigation source for much of Georgia’s agricultural industry. In Florida, the Apalachicola River provides a critical source of fresh water for animals and plant life located in the Florida Panhandle, including Florida’s oyster fisheries.
Florida and Georgia, as riparian states, have an “equal right to make a reasonable use” of the River Basin according the Court. Accordingly, Florida needed to show by clear and convincing evidence that (1) Georgia’s water consumption threatened or caused actual injury “of serious magnitude” and, if so, (2) the benefits of apportionment substantially outweighed potential harm. Here, the Court determined that Florida failed to prove the first prong, namely that Georgia’s water consumption was the cause of the collapse of the oyster fisheries or that the consumption harmed river wildlife and plant life. According to the Special Master and the Court, Georgia provided persuasive evidence of countervailing factors that contributed to the collapse of Florida’s fisheries, including the overharvesting of oysters, changing rainfall and droughts, and actions by the U.S. Army Corps of Engineers.
In Havana Docks Corp. v. Norwegian Cruise Line Holdings, Ltd.,3 Plaintiffs, Havana Docks Corp. (Havana Docks) brought suit against Norwegian Cruise Line Holdings, Ltd. (NCL), arguing that NCL violated Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (the LIBERTAD Act, the Act, or Title III). The LIBERTAD Act of 1996 sought to bolster sanctions against Cuba, to usher in democratic institutions, and to protect U.S. nationals from takings by the Castro regime. However, backlash was swift from many international trading partners, leading consecutive U.S. administrations to suspend the Act’s provisions every six months. In 2019, however, the Trump administration ended the suspension, citing Cuba’s authoritarian political system and close relations with Russia and China.
Once the suspension was lifted, Plaintiffs were able to allege that Defendants violated the Act by “trafficking” in property confiscated from Plaintiffs in 1960. Specifically, Plaintiffs argued that NCL regularly embarked and disembarked its passengers via the Havana Cruise Port Terminal in Havana, Cuba, commercial waterfront real property to which Havana Docks alleged having a certified claim of entitlement. In their Motion to Dismiss, NCL asserted three arguments: (1) Havana Docks lacked Article III standing because they could not allege injury in fact that was fairly traceable to NCL; (2) application of Title III to NCL’s pre-May 2019 activities violated the ex post facto clause as a retroactive and punitive measure; and (3) application of Title III to NCL’s pre-May 2019 activities violated the Due Process Clause of the U.S. Constitution, because NCL did not have fair notice of its potential liability under Title III before that date.
First, the court determined that Havana Docks had Article III standing. In response to NCL’s contention that the confiscation could only be traced to the Cuban government, the court found that the origin of the confiscation
does not explain how its continued use . . . makes Plaintiff’s harm less tangible today. . . . Havana Docks’ injury is “real” because it is not receiving the benefit of its interest . . . and NCL’s subsequent trafficking in the confiscated property has undermined Plaintiff’s right to compensation for that expropriation.4
Moreover, although the court recognized that a favorable outcome on its Title III action would not give Havana Docks back its confiscated real property interests, it would sufficiently compensate Havana Docks for the value of its property interests, thus establishing the necessary redressability element under Article III.
Second, the district court was similarly unpersuaded by NCL’s argument that the application of the Act would be retroactive in violation of the ex post facto clause of the U.S. Constitution. The Court reasoned that the Act explicitly set forth an effective date of 1996, and its distinct provisions allowed the President to suspend that effective date, or after taking effect, to suspend an aggrieved party’s right to bring an action. Thus, liability attached when the Act went into effect in 1996, and the “consistent suspension of the right to bring an action under [the Act] did not affect this liability.”5
Finally, NCL contended that it lacked fair notice, as required by the Due Process Clause, as to the possibility that the Act could be retroactively applied to conduct that took place during the suspension period from 1996 to 2019. NCL also asserted that it lacked fair notice to the retroactive application of conduct that the federal government had encouraged, namely travel to Cuba and an increase in commercial relations.6 The court, however, having already determined that the Act’s application was not retroactive, rejected NCL’s Due Process Clause arguments. The court emphasized that government encouragement, even if it existed as a factual matter, does not absolve parties from their obligations to comply with federal law.
Notwithstanding the court’s dismissal of NCL’s motion to dismiss, this case remains ongoing, with both parties preparing to conduct discovery. As recently as May 10, 2021, the court ordered NCL to produce certain communications relating to its lobbying and political strategy, as well as correspondence with Consultores Maritimos S.A. (a Cuban government department specializing in maritime law) and with cruise industry trade association groups.
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In Neptune Shipmanagement Servs. (PTE.), Ltd. v. Dahiya (hereinafter Neptune),7 the U.S. District Court for the Eastern District of Louisiana granted Plaintiffs’ motion for summary judgment to confirm an arbitral award won by Defendant, which arose out of an injury that Defendant sustained on the high seas in 1999. The dispute originally began when Defendant Vinod Kumar Dahiya, an Indian national, sued the Plaintiffs, a group of ship owners and insurers, in Louisiana state court for burns Dahiya sustained in international waters while employed by Neptune Shipmanagement Services, a Singapore-based crewing agency.8 Plaintiffs removed the action to the Eastern District of Louisiana, invoking the Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention), and moved to compel Dahiya to arbitration pursuant to the terms of the parties’ employment contract. Dahiya successfully moved to remand, and the court denied Neptune’s motion to compel arbitration. However, after winning US$579,988 in damages at trial, Dahiya lost on appeal and was compelled to arbitrate the dispute in India. In 2020, Dahiya prevailed in the years-long arbitration and obtained an award of approximately US$130,000 (Award). Shortly thereafter, Dahiya revived, in state court, the issue of the arbitration clause’s enforceability, after which Neptune successfully removed to federal court and defeated Dahiya’s motion to remand, thereby setting the stage for the October 2020 Neptune decision.
In Neptune, Plaintiffs sought summary judgment on three related remedies: (1) judicial confirmation and recognition of the Indian arbitrator’s Award; (2) a permanent injunction barring Defendant from further attempts to litigate the Award and all other claims stemming from the underlying 1999 injury; and (3) a declaratory judgment that a Letter of Undertaking (LOU) issued by plaintiff Britannia Steam Ship Insurance Association (Britannia)—in which Britannia agreed to satisfy any final judgment against the Plaintiffs up to US$2,000,000.00—will be, upon the Plaintiffs’ satisfaction of the Award, a legal nullity.
As to the first issue, the Neptune court considered whether the Award falls within the New York Convention, as codified and implemented into Section 2 of the Federal Arbitration Act (FAA) (9 U.S.C. §§ 201–208). Because, as the court explained, the Convention applies to arbitral awards (1) made in one state and sought to be enforced in another (in this case India and the United States, respectively) and (2) arising out of a commercial dispute where at least one party is not a U.S. citizen, the Award fell within the scope of the Convention and was therefore presumptively confirmable under the FAA. The court rejected Defendant’s challenges under the limited exceptions to confirmation enumerated in the Convention, emphasizing that “[f]ederal district courts sitting in secondary jurisdiction under the Convention may not overturn international arbitration awards on flimsy and indefinite grounds.”
The court, likewise, was unpersuaded by Defendant’s argument that because only Neptune was a party to the employment deed containing the arbitration clause at issue, all other Plaintiffs lacked standing to seek confirmation of the award. Relying on the doctrine of equitable estoppel—which allows non-signatories to enforce arbitration agreements under certain circumstances including, in the Fifth Circuit, based on the “intertwined-claims test”—the court found that all of the Plaintiffs bore some practical or legal connection to the injuries that Dahiya suffered.9 Accordingly, the court held the Award legally binding between Defendant and each of the Plaintiffs, any or all of which were thereby entitled to enforce the Award.
As to the second issue—a permanent injunction barring Defendant from re-litigating the Award and related issues—the court concluded that Plaintiffs satisfied each of the four necessary prerequisites. First, the court determined that there was a likelihood of success on the merits of Plaintiffs’ case; indeed, the court stated that confirmation of the Award and the “corresponding finality it promotes” constituted “actual success on the merits.” Second, the court determined that Plaintiffs would suffer irreparable injury in the absence of an injunction, because they would remain subject to “never-ending litigation of Dahiya’s futile attempts to resurrect a defunct state-court judgment and set aside a confirmed arbitration award.” Third, the court determined that the balance of equities weighed in favor of issuing an injunction; indeed, as the court observed, Plaintiffs were “asking to pay [Defendant] the damages he was granted in arbitration,” while Defendant’s position was “resisting that attempt to the collective detriment and expense of virtually everyone else.” Finally, the court determined that an injunction would not disserve the public interest, but would instead “decisively” favor the public interest by saving courts and taxpayers the resources of continuing to field “Defendant’s forlorn attempts to achieve a different outcome” and prevent Defendant from bringing “vexatious parallel proceedings.”
Lastly, the court determined that Plaintiffs were entitled to a declaration, under the Declaratory Judgment Act, that the LOU issued by Britannia would be canceled and returned to Britannia upon Plaintiffs’ satisfaction of the Award. The court observed that the requested declaration would serve a “substantial interest” of Plaintiffs in ending the protracted litigation, while at the same time avoiding prejudice to the Defendant who had already been awarded relief.
The Jones Act,10 which regulates maritime commerce in the United States, requires that goods moved between U.S. ports be transported on vessels owned and crewed by U.S. citizens and built in the United States. In the context of offshore windfarms, the applicability of the Jones Act has long been uncertain, given that many windfarms are situated on the Outer Continental Shelf (OCS), outside of the U.S. territorial sea, and therefore beyond the scope of U.S. law unless covered by the Outer Continental Shelf Lands Act (OCSLA). 11 Historically, OCSLA’s jurisdiction has been interpreted as applying only to structures used for extracting oil and minerals from the sea floor; as such, it was for a long time unclear whether windfarms were covered by the OCSLA and, by extension, the Jones Act.
That ambiguity changed in January 2021 when Congress, through the National Defense Authorization Act, amended Section 4(a) of the OCSLA to explicitly include installations and devices attached to the OCS related to “non-mineral energy resources.”12 Confirming the practical effect of this amendment, on January 27, 2021, the Customs and Border Patrol (CBP) for the first time expressly found that the Jones Act applies to wind installations on the OCS.13 In question was whether the Netherlands-flagged M/V FLINTSTONE would violate the Jones Act by travelling from U.S. ports to wind turbines in the OCS southeast of Martha’s Vineyard to install scour protection. Citing the newly added OCSLA language, the CBP observed that the OCSLA extended the reach of U.S. law to wind energy installations attached to the OCS and, therefore, that the M/V FLINTSTONE would be in violation of U.S. law if it were to proceed with its proposed activities.
On October 10, 2020, Justice Nigel Teare delivered his final decision as an Admiralty Judge in the English High Court of Justice in a case involving a collision that occurred in the Suez Canal on July 15, 2018. The three vessels involved in the collision were the following: (1) the Osios David, a 31,538 GRT bulk carrier that was laden with 53,640 MT of fertilizer and en route from Lithuania to India at the time of the collision; (2) the Sakizaya Kalon, a 4,425 GRT bulk carrier that was laden with 61,650 MT of barley and en route from Russia to Saudi Arabia at the time of the collision; and (3) the Panamax Alexander, a Greek-owned 38,928 GRT bulk carrier that was laden with 63,000 MT of feed barley and en route from Latvia to Iran when the collision occurred.
Eight vessels were proceeding through the southern section of the Suez Canal when a container vessel at the head of the convoy, the Aeneas, was forced to anchor due to engine issues. The Sakizaya Kalon, the seventh vessel in the convoy, and the Panamax Alexander, the eighth vessel in the convoy, were in communication leading up to the collision. Although the Panamax Alexander was notified that the Sakizaya Kalon planned to moor, the Panamax Alexander delayed going to full stop or mooring. As a result, the Panamax Alexander collided with the Sakizaya Kalon, following which both vessels collided with the sixth vessel in the convoy, the Osios David. The collision, which caused damage to all three vessels, formed a triangle blocking the Suez Canal.
The owners of the Sakizaya Kalon and the Osios Davis brought suit against the owners of the Panamax Alexander, while the owners of the Osios David brought suit against the owners of the Sakizaya Kalon. Collectively, the collision led to US$18 million in claims for damages; the Admiralty Court heard all suits and countersuits together. In the 2020 decision, Justice Teare held that the Panamax Alexander was “wholly responsible for all of the collisions.” In doing so, the Court determined that the Panamax Alexander violated three of the International Regulations for Preventing Collisions at Sea (1972): (1) Rule 5 (requiring vessels to maintain a proper lookout); (2) Rule 7 (requiring vessels to be aware of whether a risk of collision exists); and (3) Rule 8 (requiring vessels to take action to avoid a collision).
It was the ship seen around the world (and from space) when the M/V Ever Given, one of the largest container ships ever built, found itself grounded and stuck in the Suez Canal for over six days, from March 23, 2021, to March 29, 2021. Although accounts of the incident differ, most believe that a perfect-storm combination of high winds, a dust storm, and loss of electrical power caused the vessel to lose its ability to steer while navigating the waterway. The temporary loss of maneuverability ultimately led to the ship’s grounding, diagonally, across the canal, with the bow wedged into one bank of the canal and the stern nearly touching the other.
During the six days required to free and re-float the massive vessel, which is roughly the size of the Empire State Building, the Suez Canal was effectively impassable for all cargo vessels. For an industry already reeling from the ongoing effects of the COVID-19 pandemic, the blockage of the Suez Canal’s vital waterway was another catastrophic setback. Some reports estimated that the global shipping industry suffered US$400 million in damages for each hour the Ever Given remained lodged in the Suez Canal.
Through a coordinated international effort, the vessel was eventually freed from the Canal’s sands and navigable traffic resumed. But that was not the last of the Ever Given’s woes. As of early July 2021, the Suez Canal Authority (SCA) was still holding the vessel (as it had since it was freed on March 29, 2020), in an attempt to ensure that its owners, the Japanese company Shoei Kisen Kaisha, and insurers pay compensation. The SCA has demanded payment in the amount of US$916 million to cover the cost of the rescue operation, damage to the canal banks, and lost revenues. A compensation settlement is expected to be reached by middle of July that would finally allow the vessel to leave Egyptian waters. At the same time, the Ever Given’s owners and insurers have initiated various legal efforts to place a cap on all claims at US$115 million, including a limitation of liability action against the ship’s operators, Evergreen Marine Corp., under the UK Merchant Shipping Act of 1995 and the establishment of a limitations fund under the International Convention on Limitation of Liability for Maritime Claims 1976 (or Brussels Convention), pursuant to which a ship may limit its liability following an accident according to its tonnage, except where it is proved that the loss resulted from “personal act or omission, committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result.”14
1. 141 S. Ct. 1175 (2021), available at https://www.supremecourt.gov/opinions/20pdf/22o142_m648.pdf.
2. Florida v. Georgia, 585 U.S. ___, 138 S. Ct. 2502 (2018), available at https://www.supremecourt.gov/opinions/17pdf/142%20orig_h3ci.pdf.
3. Havana Docks Corp. v. Norwegian Cruise Line Holdings, Ltd., 484 F. Supp. 3d 1215 (S.D. Fla. 2020).
4. Id. at 1228.
5. Id. at 1236.
6. Id. at 1237.
7. No. CV 20-1525, 2020 WL 6059647 (E.D. La. Oct. 14, 2020).
8. See, e.g., Dahiya v. Talmidge Int’l Ltd., 487 F. Supp. 3d 529, 531–33 (E.D. La. 2020). Talmidge is the owner of the EAGLE AUSTIN, the ship on which Dahiya was working when he sustained the injury.
9. Id.
10. 46 U.S.C. § 55102.
11. 43 U.S.C. §§ 1331–1356.
12. See section 9503 of the National Defense Authorization Act for the Fiscal Year 2021, Pub. L. No. 116-283, H.R. 6395, 116th Cong. (2021), amending section 4(a)(1) of 43 U.S.C. § 1333(a)(1).
13. See U.S. Customs and Border Protection Ruling, H309186.
14. In the United States, a vessel owner, pursuant to the Limitation of Liability Act, is entitled to limit its liability after a maritime incident or casualty to the post casualty value of the vessel and the pending freight, except when the loss occurred due to its “privity or knowledge.”