Author: Blank Rome LLP

Chambers USA 2018 Honors Blank Rome Maritime Attorneys and Practices

Band One: Shipping Litigation (New York) — Nationwide

What the team is known for: “Esteemed practice with significant experience handling high-profile maritime litigation for national and international clients. Highly regarded for crisis response and offering additional expertise in alternative dispute resolution. Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events, as well as in a host of cybersecurity issues. Increasingly active in shipping bankruptcy disputes, having recently acted in a number of Chapter 15 cases. Represents a range of clients including P&I Clubs, operators, investment banks, owners and private equity funds.”

Strengths: “One client finds Blank Rome to be an ‘impressive team’ who do ‘a really good job communicating proactively.’ Another client says the firm consists of ‘very professional, hugely experienced partners who provide succinct, clear advice.’” Continue reading “Chambers USA 2018 Honors Blank Rome Maritime Attorneys and Practices”

Significant Opportunity to Provide Comments Concerning Maritime Regulatory Reform

Jonathan K. Waldron, Matthew J. Thomas, and Emma C. Jones

On May 18, 2018, the Office of Information and Regulatory Affairs (“OIRA”), within the Office of Management and Budget (“OMB”), published a Request for Information (“RFI”) seek­ing public input as to how the federal government may best reduce burdens in the maritime sector. Comments are due on July 16, 2018.

This RFI was spurred by Executive Order 13771, published on January 30, 2017, by President Trump as one of his first initia­tives after taking office, which aims to reduce regulation and control regulatory costs, and Executive Order 13777, published shortly thereafter on February 24, 2017, which aims to enforce the regulatory reform agenda. The RFI seeks public comment to help identify existing rules affecting the maritime sector that are inefficient, redundant, obsolete, unnecessary, or otherwise not justified. Ultimately, OIRA intends to communicate any regulatory reform suggestions to the Regulatory Reform Task Force established for the maritime sector. Continue reading “Significant Opportunity to Provide Comments Concerning Maritime Regulatory Reform”

Oi Brasil and Competing Foreign Main Proceedings: Creditors Can’t “Weaponize” Chapter 15

Michael B. Schaedle and Rick Antonoff

A Fight over the Effect of Consolidation

According to the Manhattan Bankruptcy Court’s thoughtful and well-written December 4, 2017, decision in In re Oi Brasil Cooperatief U.A.,[1] a bondholder, Aurelius Capital Management (“Aurelius”) forced the straight Dutch liquidation of Oi Brasil Cooperatief (“Coop”) in order to revoke the prior recognition as a foreign main proceeding in the Manhattan Bankruptcy Court of a broader Brazilian reorganization of Coop and its operating affiliates, the Oi Group, a Brazilian telecommunica­tions consortium. In that Brazilian reorganization, Coop was to be consolidated substantively with other Oi Group members. This consolidating effect, according to the court, would limit Aurelius recoveries to a single pathway in a unitary capital structure and prevent additive recoveries for the holder on bond guaranties.[2]

Aurelius Criticized for Insisting on Dutch Recognition in Order to Preserve Guaranties

Specifically, the court found that Aurelius was an active participant in the hearing on the Oi Group’s Brazilian proceeding’s recognition in June and July of 2016, negotiating rights reservations to act in the Netherlands in its own interest, but never challenging the propriety of Brazil as the Oi Group’s (and Coop’s) “center of main interest” or “COMI.”[3] At the same time, the court ruled that even as Aurelius participated in the first-filed New York Oi Group chapter 15, it intended to challenge the Brazilian recognition of Coop by seeking to liquidate Coop in the Netherlands through a Dutch trustee.[4] According to the court, these Dutch-centered tactics were in aid of an Aurelius strategy to achieve higher recoveries at the Coop level of the Oi Group restructuring in the Netherlands outside of the Brazilian reorganization (where ratable recoveries for Aurelius would be lower after consolidation), while intercompany claims for the benefit of Coop and in aid of this Netherlands-centered strategy were pursued by a Dutch trustee in a Dutch home court.[5] Continue reading “Oi Brasil and Competing Foreign Main Proceedings: Creditors Can’t “Weaponize” Chapter 15″

The Ocean Is Awash with Plastic: How Can the Maritime Industry Help?

Joan M. Bondareff and Jeanne M. Grasso

The eight-part series, Blue Planet II, narrated by Sir David Attenborough last year on BBC, seems to have awoken the public’s attention to the crisis of our oceans being littered with vast amounts of plastic, fishing gear, and other types of marine debris. As a result, cities, states, and nations around the world, as well as major cruise lines, are proactively looking at ways to reduce plastic to keep it from entering the sea.

The Extent of the Problem

Most plastic or marine debris comes from land-based sources, including from rivers that enter the sea, especially from coun­tries with less responsible garbage practices. For example, according to the BBC, most garbage in the ocean comes from 15 nations around the Pacific Rim, including China, Indonesia, the Philippines, Sri Lanka, Vietnam, and Thailand.

According to a study published in Nature magazine and also reported in USA Today in March 2018, the “Great Pacific Garbage Patch,” a collection of floating plastic trash halfway between Hawaii and California, has grown to more than 600,000 square miles—an area twice the size of Texas. The trash is said to come from the Pacific Rim as well as North and South America. Since the garbage patch is in international waters, no nation has stepped up to clean it up. (Id.) Continue reading “The Ocean Is Awash with Plastic: How Can the Maritime Industry Help?”

The Future of the “Safe Port” Warranty: Smooth Sailing or Murkier Waters?

Emma C. Jones

In an age when cybersecurity breaches regularly make headlines, and autonomous vessels are appearing on the not-so-distant horizon, it’s important to consider how age-old contracts like maritime charter parties will fare in the face of rapidly changing technology and the security risks that come with it.

The “safe port” warranty is a tenet of charter party language, and an unsafe port or berth is often asserted in commercial negotiations as justification for damages resulting from delays or damage at port. While there is not a great deal of case law analyzing the warranty in the context of modern technological risks and threats, the cases and arbitration awards that we do have provide an interesting background against which to con­sider the potential for an expansion of the definition of the safe port warranty in an increasingly tech-based world. Continue reading “The Future of the “Safe Port” Warranty: Smooth Sailing or Murkier Waters?”

Gulf Coast Update: The Fifth Circuit Establishes a New “Maritime Contract” Test

David G. Meyer

Whether a particular contract is “maritime” is a legal question that can often arise in disputes subject to potential adjudication in the U.S. court system. There can be several reasons for this. One reason concerns determining whether a civil action can be heard in federal court versus state court. If a maritime contract is at issue, a case might be litigated in federal instead of state courts, and/or a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant.

Knock for Knock Defense and Indemnity Clauses

Another area where the issue regularly arises concerns con­tracts connected to oil and gas exploration and drilling activities in both inshore and offshore waters of the Gulf of Mexico. By way of background, oilfield services contracts in the Gulf of Mexico region routinely contain what are known as “knock for knock” defense and indemnity clauses. In a typical knock for knock scheme, each company on a job agrees to indemnify, defend, and provide additional insured coverage to the others so that each is liable for injury to its own employees, regardless of fault. The intent underlying this is to apportion the insurable risk each contracting party bears to their relative size and role in the venture. Theoretically, this allows smaller companies to compete for jobs without potentially cost-prohibitive insurance premiums, and costs are further reduced by a decreased need to litigate the issue of liability among multiple defendants, as liability is assumed irrespective of fault or negligence of any other party. Continue reading “Gulf Coast Update: The Fifth Circuit Establishes a New “Maritime Contract” Test”

U.S. Coast Guard Publishes Final Rule That Increases the Marine Casualty Reporting Thresholds

Jeanne M. Grasso, Jonathan K. Waldron, and Sean T. Pribyl

 

 

 

On March 19, 2018, the U.S. Coast Guard published its long-awaited final rule on Marine Casualty Reporting Property Damage Thresholds. In what was widely viewed as a common-sense and non-controversial adjustment, the final rule amends the monetary property damage threshold amounts for reporting a marine casualty and serious marine incidents (“SMI”). These amended thresholds ease the reporting burdens for industry stakeholders and also reduce the administrative burden on the U.S. Coast Guard associated with investigating these incidents.

Marine Casualty Reporting Requirements

Generally, when a marine casualty or accident occurs on navigable waters (within 12 nautical miles), or involving a U.S.-flag vessel wherever it is operating, the owner, operator, master, or person in charge of the vessel involved may have an obligation to immediately report it to the U.S. Coast Guard. Not all marine casualties are reportable, as such reporting is dependent on the type of incident, e.g., grounding, allision, loss of propulsion, injury requiring professional medical treatment, or property damage, and whether the damage meets property damage thresholds. U.S. Coast Guard regulations consider a marine casualty to be reportable when it meets distinct criteria, and has therefore developed regulations that define reporting thresholds and the manner of reporting a marine casualty or an SMI, which also requires drug and alcohol testing. See 46 CFR Subpart 4. Continue reading “U.S. Coast Guard Publishes Final Rule That Increases the Marine Casualty Reporting Thresholds”

A Note from the Chair

Mainbrace | March 2018 (No.1)

John D. Kimball

As CMA Shipping 2018 convenes, we are more than a year into the Trump administra­tion and it is fair to say that the U.S. regulatory framework for the shipping industry has seen some changes. In this issue of Mainbrace, we drill down on relevant developments in “Trump and the Maritime Industry: A Look Back and Forward.” Additionally, we offer an update on the Jones Act, an important subject that continues to be a focal point for our industry, as well as offer a report on developments concerning the vexing topic of ballast water management.

In our law practice, we have continued our long-term focus on maritime environmental matters and regularly advise our clients on compliance measures. Avoiding problems is a sure way to achieve profits and value, which is the key theme of this year’s CMA conference. Along those lines, this issue of Mainbrace includes suggested tools to strengthen environmental compliance. We also continue to encounter distressing mat­ters involving cybersecurity, and offer a cautionary tale for the shipping industry that we hope our readers will take time to consider, as well as provide a thoughtful analysis on recent varying decisions and approaches from New York bankruptcy courts regarding territorial limits of U.S. Bankruptcy Code avoidance powers.

Lastly, technology continues to develop in the shipping industry and we provide a look ahead to developments in the areas of Smart Ships, drones, and innovative collabora­tion. I expect we will be focusing on these topics for some years to come.

We hope you enjoy this issue of Mainbrace and always welcome your feedback and sug­gestions for future articles.

Ballast Water Management: The Conundrum Continues

Mainbrace | March 2018 (No.1)

Jeanne M. Grasso and Sean T. Pribyl

It has been about 15 months since the U.S. Coast Guard (“USCG”) type-approved the first three ballast water man­agement systems (“BWMSs”) in December 2016; three more BWMSs have been type approved since. Yet, ballast water management remains one of the most challenging and frustrating regulatory issues of the past decade because of inconsistencies in the international and domestic regimes. This is largely because the United States is not party to the International Maritime Organization’s Convention on the Control and Management of Ships’ Ballast Water and Sediments (the “Convention”). Rather, the United States regulates ballast water unilaterally under the National Invasive Species Act, which differs in certain ways from the Convention, especially when it comes to approving equip­ment to meet the standards set forth in the Convention and the USCG’s implementing regulations. As such, ballast water compliance challenges remain far from resolved. In some cases, for example, especially with respect to USCG compli­ance date extensions, the policies continue to evolve on an ad hoc basis, often causing confusion. Continue reading “Ballast Water Management: The Conundrum Continues”

After Flurry of Hurricane Waivers, Calls for Coastwise Changes Recede

Mainbrace | March 2018 (No.1)

Matthew J. Thomas, Jonathan K. Waldron, and Jeanne M. Grasso

 

 

 

In September 2017, in response to Hurricanes Harvey, Irma, and Maria, the Department of Homeland Security (“DHS”) issued a series of widely publicized waivers allowing carriage of cargo by non-coastwise qualified vessels in the Gulf region and to and from Puerto Rico. Public interest in the Jones Act spiked in mid-September, and some members of Congress introduced legislation for longer-term relief, particularly for Puerto Rico. Although controversial, the waivers for the most part seemed to achieve their intended goal, allowing for additional capacity to be available to move certain critical cargoes, particularly in the energy and other bulk sectors. As discussed in more detail below, the way the waivers were granted was rel­atively unique in the context of hurricanes, and some con­troversy arose with regard to the Puerto Rico waiver. The waivers, however, expired as planned with no significant fanfare or controversy, and broader political and public interest in the Jones Act sub­sided after a flurry of activity. Continue reading “After Flurry of Hurricane Waivers, Calls for Coastwise Changes Recede”