Category: Arbitration/Litigation

Thomas H. Belknap, Jr.

This article highlights some recent legal developments relevant to maritime arbitration although, as will be seen below, not all of the developments specifically involve maritime cases. This fact serves as a good reminder that maritime arbitration in the United States is but a subset of a broad and well-developed body of law relating generally to international and commercial arbitration.

Recent Supreme Court Jurisprudence

Although the United States Supreme Court has not recently decided a case specifically addressing maritime arbitration, it has been active in the past few years in deciding cases that are directly relevant to arbitrating maritime claims. For instance, in Coinbase, Inc. v. Bielski, 143 S. Ct. 1915 (2023), the Supreme Court held that a district court must stay its proceedings while an interlocutory appeal on the issue of arbitrability is pending. Notably, an interlocutory appeal on this issue is generally only available where the district court has denied a petition to compel arbitration, and not when such a motion has been granted.

ZF Automotive US, Inc., 142 S. Ct. 2078 (2022): The Court held that a party may not use 28 U.S.C. § 1782 to obtain discovery in aid of foreign arbitration because a foreign arbitral panel is not a “foreign tribunal” within the meaning of the statute. This resolved a circuit split in which some circuits had found that such discovery was available, and others found not. Notably, discovery in aid of foreign proceedings is still often available in support of foreign court proceedings and can be a powerful discovery tool.

Badgerow v. Walters, 142 S. Ct. 1310 (2022): The Supreme Court held that in applications to compel arbitration under § 4 of the Federal Arbitration Act (“FAA”), a federal court must “look through” the complaint to the subject matter of the action to decide whether it has subject matter jurisdiction. Thus, for instance, if the dispute involves a maritime contract, that fact will give the federal court subject matter jurisdiction to decide the petition. On the other hand, where a party seeks to challenge or confirm an arbitration award under § 9 or 10 of the FAA, the court may not consider the subject matter of the underlying dispute but may only analyze whether subject matter jurisdiction exists over the enforcement action—i.e., of a contractually agreed arbitral award. As a result, absent diversity jurisdiction, federal courts will rarely have subject matter jurisdiction to enforce arbitral awards under the FAA, even where the underlying dispute arose under a maritime contract. That said, where the dispute concerns an award governed by the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (aka the New York Convention), federal subject matter jurisdiction will still exist on the basis that the Convention is a “treaty obligation” of the United States.

Morgan v. Sundance, Inc., 142 S. Ct. 1708 (2022): The Court held that a district court need not find “prejudice” as a condition to finding that a party has waived its right to stay litigation or compel arbitration under the Federal Arbitration Act; waiver of an arbitration clause should be construed just as any other contract provision.This is in keeping with the general principle that while arbitration is to be favored, contract terms relating to arbitration should not be given special treatment or be construed differently from other contractual terms.

Continue reading “Recent Developments Affecting U.S. Maritime Arbitration”

Keith B. Letourneau

What do avocados, bananas and citrus fruit all have in common in Texas? A large percentage reach our shores by ship. But you know how bananas and avocados ripen on the kitchen counter. How are they kept fresh from grove to store, and whose responsibility is it when the produce arrives in damaged condition, or the buyer fails to pay for these commodities?

Container ships with dedicated refrigerated containers (reefer ships) regularly transport perishable fruit from Central and South America to U.S. ports on the Gulf, East and West Coasts. The U.S. Carriage of Goods by Sea Act (“COGSA”) governs the transportation of cargo by ocean common carriage between the United States and foreign ports. Common carriage means that the ocean carrier makes its cargo space available to the public, as opposed to private carriage, which dedicates its cargo space to one or a select few shippers.

COGSA creates a burden-shifting scheme to assess liability when cargo arrives in damaged condition. The shipper (that is, the party whose cargo is transported) can present a prima facie case of liability by proving that it delivered the cargo in sound condition at the load port, the cargo arrived in damaged condition at the discharge port and the shipper suffered monetary damage as a result. The burden then shifts to the carrier to prove that it exercised due diligence and one of COGSA’s 17 exceptions to liability apply, for example: perils, dangers and accidents of the sea; inherent vice of the cargo; latent defects of the cargo not discoverable by due diligence; or an act, neglect of the master, mariner or servants of the carrier in the navigation or management of the vessel. If the carrier satisfies that hurdle, the shipper must then prove that the carrier’s negligence caused the damage. Note that carriers generally disclaim any liability for damage to cargo carried above deck (because of exposure to the elements) and so shippers should be aware as to whether the bill of lading includes any such disclaimer and where their cargoes will be stowed aboard the vessel.

Continue reading “Maritime Transportation: Whose Responsibility Is It When Produce Arrives in Damaged Condition?”