Welcome to the summer 2017 edition of Mainbrace. To say we live in interesting times would be a serious understatement. We read headlines on a daily basis that challenge traditionally accepted notions of how governments operate, creating uncertainty as to how they will do so in the future. When you couple that uncertainty with the stiff headwinds faced by the maritime industry in recent years—vessel overcapacity in certain sectors, tight margins, cutbacks in the offshore-service sector, and the promulgation of new and expensive ballast water and air emissions regulatory regimes—the pressure to operate in a fiscally sound, fundamentally safe, and legally responsible manner has never been greater.
A recent state court decision highlights a division among state, district, and circuit courts on the availability of punitive damages for general maritime law claims. In a unanimous opinion, the Washington State Supreme Court in Tabingo v. American Triumph LLV ruled that punitive damages are recoverable by seaman with a claim for unseaworthiness where the employer acts recklessly.1 Plaintiff Allan Tabingo was working as a trainee deckhand on a fishing trawler when he was seriously injured by a hatch cover closing on his hand, resulting in the amputation of two fingers. Tabingo alleged the vessel was unseaworthy because the vessel operator was aware of the faulty control handle for at least two years, but failed to take any measure to repair the handle. He brought suit against the vessel owners and operators, claiming negligence under the Jones Act as well as a general maritime claim of unseaworthiness, for which he requested punitive damages. A unanimous Washington Supreme Court reversed the trial court’s decision to hold that punitive damages are an available remedy in a claim for unseaworthiness.
Any company doing business abroad is subject to the long reach of the Foreign Corrupt Practices Act (“FCPA”). Small or privately held companies, just like large or public companies, are subject to the criminal specter of the FCPA. The operative inquiry is whether the company is operating and/or transacting any type of business abroad with the government, government-owned entities, or involving foreign officials—either directly, through joint ventures, or indirectly, through agents. A foreign official also includes employees of entities owned by the government.
Although the FCPA was first enacted in 1977, it was not widely enforced until the turn of this century; since then, the law has resulted in a steady flow of significant corporate settlements. Indeed, in approximately the last two decades, enforcement of the FCPA has increased exponentially, with the second-largest number of enforcement actions having been brought in 2016 (2008 had the greatest number). Before the FCPA, no country considered bribing a foreign official for business purposes to be illegal—it was simply considered a cost of doing business abroad. The United States was the first country to outlaw the practice and recently published a comprehensive resource guide to compliance with the act.
Despite the continuing turmoil in Washington, D.C., over the Russian investigation into the Trump campaign, Congress is continuing to carry out its regular business of funding the federal government and authorizing agency programs. This article reviews the status of Coast Guard and related legislation, the FY 2017 final budget, and the proposed budget for FY 2018. Movement on Coast Guard, MARAD, and FMC Bills Both the Senate Commerce, Science and Transportation Committee (“Commerce Committee”) and the House Transportation and Infrastructure Committee (“T&I Committee”) have reported out bills to authorize the programs and operations of the U.S. Coast Guard. As of this writing, the bills have to go to their respective floors for final votes and then be reconciled in conference, but we expect a favorable outcome before the August recess. The Senate reported its bill (S. 1129) on May 18, 2017. The “Coast Guard Authorization Act of 2017” reauthorizes the activities of the Coast Guard for fiscal years 2018 and 2019, and contains the following significant provisions: Continue reading “Congress Moving Full Steam Ahead on Coast Guard and Related Maritime Bills”
Once thought to be a mere concept on the distant horizon, Unmanned Surface Vessels (“USVs”) are garnering increasing attention in the maritime industry as a means to cut costs, increase efficiency, and enhance safety. While some view USVs as more akin to futuristic science fiction, in reality, unmanned vessels are far from a novel concept—Nikola Tesla envisioned maritime drones in his November 8, 1898, patent for “Method of and apparatus for controlling mechanism of moving vessels or vehicles.” More recently, unmanned and autonomous technology has been developed in multiple industries, in particular in the subsea sector.
Projections of practical implementation into the maritime surface sector have rapidly shifted from a mere concept decades away to the immediate future. Today, innovators are not only developing USV technology, but are also conducting on-the-water testing of USVs. As a result, the potential applications and benefits of unmanned technologies are driving investment and shaping the conversation of both regulators and the industry. The question is no longer if, but when. And the answer to when, in some regards, is now.
Question: I have to certify that my subsidiary that owns a vessel is not on the Arab League’s boycott blacklist. Can I do that?
Answer: If you are subject to the U.S. anti-boycott rules, the answer is “no,” but your subsidiary can provide the certification for itself. This is discussed more fully below.
A frequent issue that vessels and cargo bound for ports in the Middle East encounter is compliance with U.S. anti-boycott provisions. The issue may also arise in connection with restrictions in charter agreements for vessels. These provisions provide that a U.S. person engaged in almost any type of commerce cannot comply with or support an unsanctioned foreign boycott. These anti-boycott provisions were promulgated in response to the Arab League’s boycott of Israel, which remains the primary focus of the U.S. anti-boycott regulations. To avoid penalties, persons that trade with or in countries with a non-sanctioned boycott, such as the Arab League’s boycott of Israel, should familiarize themselves with the requirements of U.S. law.
Critical evidence, needed for the resolution of a dispute abroad, may be located in the United States. A key witness may reside in the United States, or important financial or other documentary evidence may be found only in this country. As we have discussed in previous articles,1 section 1782 of the United States Code (“section 1782”) offers a powerful tool for the collection of evidence in the United States for use in foreign legal proceedings. The statute allows either a foreign tribunal or a party to foreign proceedings to apply directly to a U.S. federal court for an order directing that a witness be examined or that evidence be disclosed for purposes of a foreign legal proceeding. The procedure is highly efficient; by taking advantage of section 1782, foreign litigants can often avoid and bypass the unwieldy and time-consuming requirements of letters rogatory or requests for evidence collection under the Hague Convention on the Collection of Evidence Abroad in Civil or Commercial Matters.
In the last days of the Obama administration, U.S. Customs and Border Protection (“CBP”) proposed a major change in coastwise policy in its Proposed Modification and Revocation of Ruling Letters Relating to Customs Application of the Jones Act to the Transportation of Certain Merchandise and Equipment Between Coastwise Points (the “Notice”). The Notice, which was published in the CBP Customs Bulletin, proposed the modification of HQ 101925 (October 7, 1976), a seminal letter ruling upon which CBP and the industry have relied on for over 40 years when applying the Jones Act to vessels engaged in offshore construction, maintenance, and repair activities. (See CBP Customs Bulletin and Decisions, Vol. 51, No. 3, January 18, 2017, available here.)