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Now Available—Print Edition of MAINBRACE: December 2021
Category: Mainbrace | December 2021
Note from the Editor
Thomas H. Belknap, Jr., Editor
When I wrote the introductory note for the December 2020 issue of Mainbrace, I certainly hoped that by this time COVID-19 would be a distant memory. But as I write this, we are once again looking at more uncertainty ahead, and it seems that our collective ability to adapt and adjust will continue to be tested for the foreseeable future.
And on the very topic of needing to adapt, I hope you have been able to catch some of our recent Mainbrace Live webinar presentations. Following the successful launch of this new series in the spring, we presented four panels this fall covering topics as diverse as COGSA, marine casualty investigations, maritime liens and arrests, admiralty and maritime jurisdiction, shipowner limitation of liability, maritime environmental developments, and the role of insurance in ship finance. If you missed them, you can still view the recorded sessions (see the section after our articles below). We are pleased to note that this series has been very well received, so keep an eye out for more sessions next spring.
This issue of Mainbrace complements our recent Mainbrace Live webinar series to some extent, as several of the articles are companion pieces to this fall’s webinar presentations. In addition, we have included a number of other articles likely to be of interest to our maritime clients, on such topics as maritime cybersecurity, EU data transfer considerations, and Chapter 15 of the Bankruptcy Code. We hope you enjoy this issue!
We also take this opportunity to wish everyone a Happy Holiday Season and a healthy and prosperous 2022!
What If the Ever Given Grounding Had Occurred Here?
Jeffrey S. Moller
The timing of the Ever Given’s grounding in the Suez Canal could not have been better, at least as far as my admiralty law students at Drexel University and I were concerned. The incident occurred right after we covered the subject areas of casualties, cargo losses, and the potential liability of pilots. And just in time for me to add this extra-credit question to the final exam: “If the maritime law of the United States were applicable to the Ever Given incident, who would be liable for what, why, or why not?”
Background
As readers will no doubt remember, Ever Given became hard aground by both its bow and stern across a single-lane portion of the Suez Canal in March. The pilots, who were employees of the Suez Canal Authority (“SCA”) lost control of the ship in a severe wind/sand storm, partly because of the enormous sail area created by the multi-tier deckload of containers.
While costly salvors worked to free the ship, one of the most important shipping shortcuts in the world was completely impassable. Hundreds of ships at each end had to either wait or take the long route around the Cape of Good Hope. These ships were loaded with livestock, agricultural products subject to spoiling, and parts inventories for the world’s “just in time” manufacturing economy. The SCA claims to have lost millions in passage fees. The ship was at least slightly damaged both bow and stern; owners of its cargo suffered delays and/or damage.
Continue reading “What If the Ever Given Grounding Had Occurred Here?”The Gateway to Federal Court: Admiralty Jurisdiction and Limitation of Liability
Noe S. Hamra and Zachary R. Cain
In the United States, state and federal courts operate on a dual track, with the difference that state courts are courts of “general jurisdiction” (hearing all cases not specifically reserved to federal courts), while federal courts are courts of “limited subject matter jurisdiction” (hearing cases involving “diversity of citizenship,” raising a “federal question,” or “sounding in admiralty”).
Admiralty and Maritime Subject Matter Jurisdiction
As it relates to admiralty and maritime subject matter jurisdiction, the U.S. Constitution states in Article III, Section 2 that “[t]he judicial Power shall extend. . . to all Cases of admiralty and maritime Jurisdiction…” The first statute defining the boundaries of admiralty jurisdiction was enacted in 1789 (known as the First Judiciary Act. (Chapter 20, section 9, 1 Stat. 73)). The current statutory grant of admiralty jurisdiction, however, can be found at 28 U.S.C. § 1333(1), which gives federal district courts original jurisdiction over “any civil case of admiralty or maritime jurisdiction, saving to suitors in all cases all other remedies to which they are otherwise entitled.” Some kinds of maritime cases—typically those involving in rem remedies against a vessel or cargo—are subject to the exclusive jurisdiction of the federal courts. Under the “savings to suitors” clause, on the other hand, state courts have concurrent jurisdiction over admiralty claims when a state court is competent to grant relief, which is in most instances where in personam jurisdiction may be had in a state court.
Continue reading “The Gateway to Federal Court: Admiralty Jurisdiction and Limitation of Liability”Marine Casualty Investigations: Legal Standards
Zachary J. Wyatte
Without a doubt, shipping industry stakeholders should always strive to have zero days lost due to accidents. But, equally, the industry should also always be prepared to immediately respond to and investigate unfortunate events when they occur. In this regard, it is critical to understand the investigative process that sets in motion after a significant marine casualty occurs.
Our experience investigating and providing legal representation for clients following a marine casualty has shown that, despite decades of implementing international safety protocols, advancements in ship design, and an industry-wide focus and dedication to improved safety, marine casualties will continue to occur; maybe not as often, but they will happen. Simply put, following all the safety protocols put in place may not be enough to avoid a casualty. Indeed, vessels of all sizes, large and small, transiting the world’s oceans, subject themselves to influences beyond their control that create the inherent risk of a casualty occurring.
Continue reading “Marine Casualty Investigations: Legal Standards”Maritime Decarbonization
Stefanos N. Roulakis and Vanessa C. DiDomenico
As the international shipping industry prepares to reduce emissions, there are many recent developments that present both obstacles and opportunities that must be explored while preparing to set sail on the challenge.
IMO Timeline and Introduction to Initial Strategy
Shipping is already the most carbon-friendly form of transportation. Despite carrying approximately 90 percent of the world’s goods, shipping only accounts for about 2.9 percent of global greenhouse gas emissions. While the maritime industry and its regulatory body, the International Maritime Organization (“IMO”), rightly are trying to reduce this number, the outsized role of shipping in the world economy and its relative impact on global emissions should be the starting point of any analysis.
A key aspect in the debate on how to decarbonize centers is between the difference in gross output as opposed to efficiency. The IMO’s strategy contains targets for both types of metrics. The current goal seeks to cut overall greenhouse gas (“GHG”) emissions by at least half by 2050 (using 2008 as a baseline). On the efficiency side, the shipping industry seeks to reduce GHG emissions per transport work by 40 percent in 2030 and 70 percent by 2050.
Continue reading “Maritime Decarbonization”Maritime Law Primer: Maritime Liens and Arrests under U.S. Law
Alexandra Clark and Emma C. Jones
MARITIME LIENS
What is a maritime lien?
A maritime lien is a non-possessory right in a vessel that gives the lienholder a right to proceed in rem against the property. In the United States, maritime liens are based on the fiction of a “personified” vessel. Under this legal fiction, a vessel is considered to be a legal person separate and distinct from its owner or operator and can be held liable for torts and contractual obligations. A person claiming to hold a maritime lien against a vessel may file suit in rem against the vessel and have the court order the arrest of the vessel to secure their claim.
Maritime liens arise by operation of law. Although parties may waive or surrender the right to a maritime lien by contract or otherwise, they may not agree to confer a maritime lien where the law does not provide for one. Maritime liens are governed by the Commercial Instruments and Maritime Liens Act (“CIMLA”) and general maritime law.
Continue reading “Maritime Law Primer: Maritime Liens and Arrests under U.S. Law”Can the Biden Administration Meet Its Offshore Wind Goals?
Joan M. Bondareff and Dana S. Merkel
UPDATE: In the first week of his presidency, President Biden, by Executive Order, set a goal of doubling offshore wind by 2030—an ambitious goal to help put the United States on a path to meet its commitments under the Paris Climate Accords, which President Biden rejoined. To implement the general goal, the three lead departments—Interior (“DOI”), Energy (“DOE”), and Commerce (“DOC”)—subsequently committed to working towards a specific 30 gigawatts (GW) goal by 2030 while protecting biodiversity, promoting ocean co-use, and creating tens of thousands of jobs. (See FACT SHEET: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.) This article describes the progress made thus far in meeting this goal and discusses any remaining impediments.
Current Progress on Offshore Wind in the United States
To date, the Biden administration, along with previous administrations, have:
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- Approved 18 offshore wind leases in federal waters;
- Approved the largest offshore wind farm to be constructed in federal waters (e., the Vineyard Wind project off the coast of Massachusetts);
- Identified five new Wind Energy Areas (“WEAs”) for potential leasing in the area of the New York Bight;
- Began the process of identifying additional WEAs in the Gulf of Mexico and off California; and
- Issued several notices of intent to begin the environmental review process under the National Environmental Policy Act (“NEPA”) for additional wind farms off New York, North Carolina, and South Carolina.
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These steps alone have moved the administration closer to meeting or even exceeding its 30 GW goal with a total of 35,000 megawatts (MW) plus in the pipeline, according to a recent definitive report from the DOE’s National Renewable Energy Laboratory. (See Offshore Wind Market Report: 2021 Edition Released.)
Continue reading “Can the Biden Administration Meet Its Offshore Wind Goals?”Carriage of Goods by Sea Act Fundamentals
The Carriage of Goods by Sea Act (“COGSA”) defines the basic relationship—duties, liabilities, rights, and immunities—between ocean carrier and cargo owner. COGSA was passed in the United States in 1936 and its enactment was the result of various concerns by Congress. In the early nineteenth century, carriers were strictly liable for cargo damage, with only few limited exceptions to liability for an act of God, public enemies, and inherent vices. By the second half of the nineteenth century, carriers began issuing bills of lading containing exculpatory clauses that sought to reduce or eliminate a carrier’s liability altogether. Therefore, a compromise occurred in 1893 when Congress enacted the Harter Act, which sought to achieve uniformity in the rules of liability applied in international shipping and to strike a balance between carriers’ efforts to reduce liability and cargo owners’ efforts to impose liability regardless of fault. The Harter Act allowed carriers who furnished a seaworthy vessel and exercised due care with the cargo to be exempt from most liability. Currently, the Harter Act has not been repealed and does govern certain transactions where COGSA does not. Below is a detailed exploration of the key differences between the Harter Act and COGSA.
Differences Between the COGSA and the Harter Act
COGSA applies by force of law to contracts for the carriage of goods by sea, to or from foreign ports and U.S. ports. The Harter Act applies to the carriage of goods to or from U.S. ports. COGSA preempts the Harter Act with respect to contracts of carriage pertaining to foreign trade. COGSA does allow for parties to incorporate its provisions for the contract of carriage for voyages between U.S. ports. In fact, it is not uncommon for parties to do so. The question may be asked why a carrier would agree or even want to expand coverage: one reason could be that COGSA provides carriers with a wide array of defenses, and where liability does exist it can be limited.
Continue reading “Carriage of Goods by Sea Act Fundamentals”Changing EU Data Transfer Requirements Create New Challenges
Karen H. Shin and Alex C. Nisenbaum
Businesses in the maritime industry may not think of themselves as engaged in significant processing of personal data. However, global shipping and logistics companies regularly transport personal data around the globe. This may include passenger data, sensitive employee data, and customer business contact information used for fulfillment and marketing purposes, all of which are vital to the operations of the business.
As a result, businesses in the maritime industry need to address compliance with a myriad of quickly evolving privacy laws around the globe, including evolving requirements for employees and business contacts in major ports in California and a newly active agency to enforce Brazil’s recently passed omnibus privacy law.
The requirements relating to cross-border transfer of personal data from the European Economic Area (“EEA”) to other jurisdictions, in particular the United States, is an acute challenge for the maritime industry. Legal requirements for such transfers have undergone substantial changes in the past 15 months that require global businesses to assess and make changes to data transfer compliance strategies.
The European Union’s General Data Protection Regulation (“GDPR”) empowers regulators to impose fines of as much as four percent of global annual revenue for cross-border data transfer missteps or step in and halt non-compliant transfers, which could result in significant operational disruption. Accordingly, companies in the maritime industry cannot overlook compliance with regulatory requirements relating to cross-border data transfer.
Continue reading “Changing EU Data Transfer Requirements Create New Challenges”