Arbitration/Litigation Archives

The Limitation Act in the United States: A Deeper Look

Thomas H. Belknap Jr., Emma C. Jones, and G. Evan Spencer ●

This article follows on a 2021 MAINBRACE article, “The Gateway to Federal Court: Admiralty Jurisdiction and Limitation of Liability,” which discussed the practical use of the Shipowners’ Limitation of Liability Act, 46 U.S.C. § 30501, et seq. (“Limitation Act” or the “Act”) in admiralty cases in U.S. Federal Courts. Following a recent Marine Casualty Seminar where the authors presented on this topic, this article will expand on the scope of the Limitation Act and provide more detail on the process for a limitation proceeding pursuant to the Limitation Act.

Substantive Characteristics of the Shipowner’s Limitation Act

A vessel owner may be able to limit its liability to the vessel’s post-casualty value plus then-pending freight (the “limitation fund”) if it did not have knowledge or privity of the acts of negligence or conditions of unseaworthiness that caused the incident. Whether a potential limitation petitioner is an owner able to limit its liability depends on the degree of control the putative owner exercises over the manning, operation, and navigation of a vessel. This means that entities other than the registered owner may be entitled to limit liability, including vessel managers, shareholders of a vessel-managing entity, former vessel owners, trusts holding legal title, and others. To evaluate whether a given entity may be able to limit liability, it is best to start with the question: Is this entity subject to shipowner’s liability because of its exercise of control over the vessel? If so, that entity should be a proper limitation petitioner.

The Casualty Occurred, Now What? Preserve the Evidence!

Noe S. Hamra and Neil P. McMillan ●

After a marine casualty occurs, there will be many immediate actions for the relevant parties, including the vessel’s owner, manager, insurers, and counsel (“vessel interests”), to handle. Every incident has its own unique challenges, and this article will highlight some considerations regarding the preservation of evidence. Preservation of evidence is a critical step in the face of government investigations and in anticipation of litigation.

As a starting point, vessel interests will need to assemble an internal investigation team to assist with the initial response and investigation. This will include technical experts, consulting experts, and counsel who can assist with making sense of things in the immediate aftermath and in providing guidance and legal advice to the vessel’s crew.

The Rise of Nuclear Verdicts for Jones Act Seamen: Transforming Maritime Personal Injury Litigation

William R. Bennett III and Holli B. Packer ●

Introduction

The maritime industry, long governed by a unique set of laws and traditions, is facing a new and formidable challenge: the rise of “nuclear verdicts” in personal injury cases, particularly those involving Jones Act seamen. These outsized jury awards, typically defined as verdicts of $10 million or more, are reshaping the landscape of maritime litigation, insurance, and risk management.[1] As the frequency and size of these verdicts increase, shipowners, insurers, and maritime employers are grappling with the implications for business operations, insurability, and the broader rule of law.

Drivers of Nuclear Verdicts in Jones Act Cases

Nuclear verdicts are not a new concept in American tort law but their proliferation in maritime personal injury cases is a relatively recent trend. The Jones Act grants seamen the right to a jury trial and, in many cases, access to state courts, which have proven more likely than federal courts to produce nuclear verdicts. In the context of the Jones Act, these verdicts pose serious financial consequences for shipowners and their insurers. Insurers must analyze future risk and consider the possibility of a nuclear verdict, and at the same time quote a reasonable premium.

Service of Process in Arbitration Enforcement Actions

G. Evan Spencer and Noe S. Hamra ●

Maritime disputes often find their way to arbitration. Whether the arbitrations are sited in the United States or another country, collection of arbitration awards frequently requires that the prevailing party initiate a civil lawsuit to recognize and enforce the arbitration award in a U.S. federal court. In instances where the award debtor is foreign, serving process pursuant to U.S. rules often presents a significant hurdle to enforcing the award.

Rule 4 of the Federal Rules of Civil Procedure (“FRCP”) provides that service of process can be effected on a foreign defendant by any internationally agreed means that is reasonably calculated to give notice or, if no such agreed means exists, by service reasonably calculated to give notice that is in compliance with the foreign country’s laws or in a manner otherwise not prohibited by that country’s laws or international agreement. Without effective service of process, U.S. courts are usually reticent to award a default judgment, and may be forced to grant a motion to dismiss under FRCP Rule 12(b).

The most common internationally agreed means of service arises under the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”). The Hague Convention provides for service through a ratifying country’s Central Authority, which is the governmental body designated to facilitate service of process. Service via the Central Authority is reliable and relatively cost effective, but can take a significant amount of time—sometimes more than six months—to accomplish, leading to increased delay and expense in enforcement actions.

V.O.S. Selections, Inc. and the Sword of Yoshida

By way of executive order, the Trump administration has imposed tariffs on its global trading partners under the International Emergency Economic Powers Act (“IEEPA”), which gives the president powers to deal with national emergencies stemming from “any unusual and extraordinary threat” that comes in whole or in large part from outside the United States. The tariffs have taken two forms: targeted tariffs against China, Mexico, and Canada relating to the importation of illegal narcotics (fentanyl) into the United States (though little evidence supports any such importation from Canada); and so-called “Reciprocal Tariffs” pertaining to perceived trade imbalances, which have been implemented as of August 7, 2025, against nearly all countries with any significant trade relationship with the United States, except as otherwise negotiated through bilateral trade deals with individual nations.

In V.O.S. Selections, Inc. v. United States, the Court of International Trade (“CIT”) combined challenges from various shipping importers and 12 states arguing that these tariffs are unconstitutional and violative of U.S. law, and that such tariffs require congressional approval. On May 28, 2025, the CIT ruled that IEEPA’s statutory authority for the president to “regulate . . . importation” does not extend to imposing unlimited tariffs under the Supreme Court’s major questions doctrine, which limits federal agencies from broadly construing their powers from vague or implied grants of authority, or the Trade Act, which limits tariffs imposed to respond to balance of payment problems to 15 percent and a maximum duration of 150 days. These tariffs also require an extensive investigation by the U.S. Trade Representative before implementation, which has not occurred. The CIT also ruled that Congress cannot delegate such unlimited power under the Constitution, which assigns Congress the exclusive powers to “lay and collect Taxes, Duties, Imposts and Excises,” and to “regulate Commerce with foreign Nations.” Quoting Supreme Court precedent addressing the nondelegation doctrine, the CIT noted that delegation of such authority, of course, is permitted “as long as Congress ‘lay[s] down by legislative act an intelligible principle to which the person or body authorized to [exercise that authority] is directed to conform,’” which means when Congress “meaningfully constrains” the president’s authority.

Navigating Maritime Arbitration: The Experts Speak, Second Edition

We’re pleased to share that Navigating Maritime Arbitration: The Experts Speak, Second Edition, co-edited by Blank Rome’s John Kimball, is now available.

This collection of essays concerning virtually all aspects of maritime arbitration provides the most up-to-date and comprehensive guidance and will be helpful to all those who are engaged in the process. Many experienced maritime arbitrators and attorneys contributed to the publication, including Blank Rome’s Thomas H. Belknap, Jr., partner and co-chair of the Maritime practice group, and senior associate Noe S. Hamra.

Recent Developments Affecting U.S. Maritime Arbitration

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.

Maritime Transportation: Whose Responsibility Is It When Produce Arrives in Damaged Condition?

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.

Can Foreign Corporate Defendants Be “Found” by Registering and Appointing an Agent Post Mallory?

Lauren B. Wilgus and Noe S. Hamra

Post Mallory v. Norfolk Southern Railway Co., are foreign corporate defendants “found within the district” for purposes of Rule B by registering to do business in New York and appointing an agent for service of process?

Introduction

For years, federal courts in the Second Circuit consistently held that registration with the New York Department of State to conduct business in New York, and designation of an agent within the district upon whom process may be served, constituted being “found within the district” for purposes of Rule B of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure (the “Admiralty Rules”). This precedent was clearly established in STX Panocean (UK) Co. v. Glory Wealth Shipping Pte Ltd., 560 F.3d 127, 133 (2d Cir. 2009), where the Second Circuit unequivocally held that “a company registered with the Department of State is ‘found’ [within the district] for purposes of Rule B….”

However, subsequent developments in the law of personal jurisdiction combined with the absence of clear legislative statements in the New York registration statutes[1] have cast doubt on the continuing viability of STX Panocean’s holding, and the extent to which a court can exercise general jurisdiction over foreign corporate defendants, especially under New York law.

Blank Rome Named “Law Firm of the Year” in Admiralty & Maritime Law in U.S. News – Best Lawyers® 2023 “Best Law Firms”

Our firm was named “Law Firm of the Year” in Admiralty & Maritime Law in the 2023 “Best Law Firms” survey by U.S. News & World Report – Best Lawyers®. Only one law firm per legal practice area received the “Best Law Firm” recognition.

Our Maritime practice group was also ranked Tier 1 nationally and ranked Tier 1 regionally in Houston, New York City, and Washington, D.C., in Admiralty & Maritime Law.

To view Blank Rome’s full rankings, please click here.

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