March 01, 2015

What the General Litigator Needs to Know about Handling a Maritime Case

Maritime practitioners should be aware that other jurisdictions’ laws may be applicable to their cases and the rules for sorting through them.

Bruce G. Paulsen

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From the time early man placed goods on log rafts to carry them downriver, waterborne commerce has been at the center of trade. Today, 90 percent of all goods are shipped by sea. Shipping is by far the cheapest form of transport and is not likely to be replaced by any other form in our lifetimes.

Since the days of the Phoenicians and perhaps before, shipping laws developed to reflect the realities of transport by sea. Maritime transport has always been dangerous, and despite the technological leaps in the course of the past century, the oceans remain a hazardous place for ships, cargoes, and seafarers. Ships also move from jurisdiction to jurisdiction and are exposed to a variety of legal regimes. Ships burn, sink, or run aground. Cargoes become damaged or lost. Crew members can be injured or killed at sea or during cargo operations. Also, in shipping, the assets move. Parties who extend credit to ships routinely watch their security sail away. Banks that lend into the shipping market have their collateral travel around the world and exposed to dangerous situations. These and many more realities of shipping have driven and shaped maritime law for centuries. General practitioners who take the time to understand this will position themselves to do well in cases that present maritime issues.

In a single voyage, one ship might touch upon many nations. Accordingly, shipping is an international business, which presents issues of international law, both private and public. It is typical of a shipping company to be headquartered in Athens, listed on the NASDAQ, domiciled in a jurisdiction favorable to the registration of vessels (such as the Republic of the Marshall Islands, Liberia, or Panama), and do business worldwide. The jurisdictions where vessels are registered are known as flag states. The places where ships call are known as port states. All flag states and port states have different legal regimes. Shipping contracts, whereby ships are leased by their owners to others (called charters), contain arbitration clauses that choose the law of particular nations. As a result, over time, U.S. courts, including the Supreme Court, have created choice-of-law rules specific to maritime cases to try to untangle the very complicated question of what law applies in any given case. Maritime practitioners thus need to know that other jurisdictions’ laws may be applicable to their cases and appreciate the rules for sorting through which law applies when.

Civilized maritime nations, including the United States, have long sought uniformity in legal matters related to shipping. The wellspring for shipping law is English law, and American decisions often will follow English ones where there is no U.S. maritime precedent on point. With vessels going from place to place and crossing from one legal regime to another, the more uniformity and predictability in the law, the easier it is for commercial operators to know what they are getting into when they send their ships to specific ports. But although uniformity is a laudable goal, it is not often achieved. Accordingly, to be an adequate maritime practitioner, it is important to know something of both the law and the lawyers in the places where your clients’ vessels call and are registered.

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