Proctor in Admiralty

Lack of posts.

I apolgize for the lack of posts lately.  I am beginning work on a new project that has me fully occupied at the moment.  However I will resume posting in a couple of weeks and expect to begin sharing the posting duties with Lynn Krieger, a maritime lawyer from San Franciscom who has agreed to work with me on Proctor in Admiralty to make it a first rate site for maritime law information.

The Jury in the McDonald's Scalding Coffee Case awarded Punitives of $2.7 million...

Today's post is not about a maritime or transportation matter but is about an arbitration run amok. Law.com published a post today about a Los Angeles Superior Court Judge affirming a $4.1 billion arbitration award for wrongful termination.  (Jaw dropping, isn't it?) The article is essentially an interview with Michael D. Young, a partner at Alston & Bird and blogger who wrote about the extreme award on his firm's labor and employment blog.

It appears that the defendant company in the arbitration did not take the case seriously and did not understand the binding nature of this form of ADR.  Their unwillingness to participate fully and their subsequent bizarre behavior apparently indicated to the arbitrator that the defendant was not treating the case with more that a smidgen of gravitas:

The [retired] judge set the hearing for the arbitration, and the defendant wrote a letter to the arbitrator saying, "I'm not going to show up." When there wasn't any information forthcoming from the defendant, what the arbitrator did was look at what information was available about the financial situation of the company and applied adverse inferences against the defendant, essentially filling in the gaps in the story presuming it would come out in favor of the plaintiff. That was really where the numbers started to scale. 

It is a sober reminder to attorneys and an educational lesson for clients that alternative dispute resolution is just that, an alternative, and not something to be treated lightly. See the award here.

Pirates change tactics . . .

The U.S. Navy's Fifth Fleet, Combined Maritime Forces, issued a Special Maritime Advisory  June 9, 2009 warning shipowners and operators about changes in the tactics of Somalia based pirates. According to a press release detailing the Advisory:

Merchants are urged to use the weather to their advantage, planning new routing off the east coast of Somalia due to the start of the southwest monsoon season. The message further details the pirates’ extended range of operations off the Eastern Somali coast, stretching all the way to and beyond The Seychelles, with the use of “mother ships.” These larger vessels allow them to operate further out from shore, providing an afloat staging platform for their attacks. Another new tactic highlighted in the advisory is the potential move into the southern Red Sea. Finally, pirates have also recently increased their number of attacks during the hours of darkness, highlighting the need for heightened vigilance of merchant mariners during both day and night time transits through the high risk areas.

The Fifth Fleet of the United States Navy is responsible for naval forces in the Persian Gulf, Red Sea, Arabian Sea and coast off East Africa as far south as Kenya. The Combined Maritime Forces ("CMF") are comprised of approximately 36 ships from Australia, France, Germany, Italy, Pakistan, Canada, Denmark, the U.S. and U.K., as well as other naval forces and personnel from several other nations. The CMF patrols more than 2.5 million square miles of international waters to conduct both integrated and coordinated operations to defeat terrorism, prevent piracy, reduce illegal trafficking of people and drugs, and promote the maritime environment as a safe place for mariners with legitimate business.

400 Years of transportation on the Hudson River

400 years ago Henry Hudson, a Dutch explorer engaged by the Dutch East India Company to find an alternate way to the Orient sailed up the tidal river that now bears his name and found . . . Albany.  This week New York marks the 400th anniversary of that historic voyage with a flotilla of historic, reproduction and modern day vessels sailing the 140 miles from the mouth of the river to Albany.  There are numerous articles and accounts on line including this editorial from the New York TImes discussing the environmental reclamation of the river and this article from the Smithsonian Magazine online describing the construction of a reproduction of the ONRUST, the first covered deck vessel built in New York which played an important role in exploration of the mid Atlantic region during the early 17th century.

For more insight into Henry Hudson and his famous voyage along with the celebration underway, check out both Henry Hudson 400 and Hudson 400 plus NY400 and ExploreNY400.  I am sensing a theme!

2261 square feet of living space?

I came across an interesting post  by blogger Melissa Hincha-Ownby about the growing use of old shipping containers, also known as boxes (on the East Coast) and cans (West Coast) for constructing office space.  The author references the popularity of containers as a basis for home construction by citing the existance of a section of Bob Vila's website devoted to the trend.

The article mentions a new 12 container office building under construction in Providence, Rhode Island and also cites Shipping Container Architecture, a website devoted to webpage devoted to listing as many examples of the use of shipping containers as architectual elements as the author, Zack Smith can find.

My curiosty peaked, I found numerous other website and blog postings devoted to the subject of recycling shipping containers as housing, office space and hotel rooms.  Fast Company blogger Michael Cannell had a particularly interesting post with numerous comments discussing the design of architect Adam Kalkin. Kalin has designed the Quik House - a prefabricated kit house from recycled shipping containers. It has three bedrooms and two and one-half baths in its 2,000 square foot plan.

  

Given the number of vessels laid up around the world, the number of idle containers must be staggering.

Combating Piracy

Multiple news sources are reporting today about two piratical attacks that were defeated earlier today.  CBS News reported that the Canadian warship HMCS WINNIPEG, responded to a distress call by the M/V MARIA K, a Lebanese flagged cargo ship.  The crew reported rocket propelled grenade fire from the pirates. The HMCS WINNIPEG dispatched three naval helicopters to assist the MARIA K, about 60 miles from the WINNIPEG. The pirates broke off pursuit, and turned their attention to another nearby container ship, the US Flagged MAERSK VIRGINIA.  A CBS correspondent, sailing on the WINNIPEG reported that an Italian Naval helicopter joined the Canadian aircraft and with the helicopters hovering overhead, the pirates gave up their attempted hijacking and threw their weapons overboard before their boat was boarded by the Italian Navy.

Earlier in the week, I came across an interesting interview concerning combating piracy.  Reuters reported on an interview with Igal Hasson, a former Israeli Navy commando turned consultant, who advocates a two pronged attack to deter piratical activity.  "There are two levels that need to be dealt with at the same time -- the level of international coordination, and the level of simple counter-measures installed on each individual vessel as a matter of policy," he told Reuters in an interview.

 Hasson suggests continued development of joint naval activity in pirate-rife areas, to deter or fend off attacks with "command and control" centers to monitor mayday calls and coordinate quick rescue missions as is being coordinated through the European Naval Task Force - Operation Atalanta.  Hasson’s focus however, is on the use of armed guards – 2 to 4 well trained and armed sharp shooters to ward off potential attackers is his preferred method of protecting individual vessels though he also recommends travel at faster speeds with evasive maneuvering and the use of electrified fencing as additional, non-lethal strategies.

Shipping Podcasts from Coracle

Just learned about a site promoting podcasts about the shipping industry.  I picked up on shippingpodcasts.com, a Coracle website from a tweet promoting a podcast from Maritime Executive Magazine about armed guards on US Flagged vessels, following up on my post from yesterday.

Coracle, a UK based company offers online courses concerning the shipping and commoditiy industries.  The course offerings include introdcution to shipping, specific courses in port agency, legal principles of shipping and dry bulk and tanker chartering among others.  If anyone has taken one of the Coracle courses, please let me know if you found it useful.  

U.S. Coast Guard issues new anti-piracy requirements

The Navy Times is reporting that the US Coast Guard updated anti-piracy guidelines Tuesday for U.S. Flagged commercial vessels operating off the coast of

Somalia

.  The new requirements mandate the use of guards on vessels transiting around the Horn of Africa but allow ship owners to decide whether to use armed or unarmed guards.

 According to the Navy Times article:

 All U.S.-flagged vessels must submit plans for combating terrorism and piracy that incorporate the guidelines by May 25.

 Most vessels that move through high-risk areas such as the

Gulf of Aden

have had some type of plan, but the measures now must be approved by the Coast Guard, said Rear Adm. Brian Salerno, assistant commandant for marine safety, security and stewardship.

 The directive requires that ship owners “assess and plan for their vulnerabilities,” he said. “If they haven’t taken adequate measures, then we can suggest they take more stringent ones.”

 There are multiple issues involved with placing armed guards on board commercial vessels.  The basic areas of concern include but are not limited to: liability issues involving crewmembers; international regulatory requirements; and insurance related issues as well as union issues concerning the crewing contracts with vessel operators.

 

Liability Issues:

 The use of armed personnel while at sea might give rise to Jones Act negligence for failure to provide a "reasonably safe place to work" or numerous other bases for findings of negligence by the employer in personam.  Further, it might result in a finding of unseaworthiness, creating claims against the vessel operator in personam and against the vessel in rem as improper operations by contractors has been found to create an unseaworthy condition. 

 A seaman assumes the risks normally incident to his perilous calling but as to perils resulting from unreasonably unsafe working conditions and/or negligence of fellow employees, the common law doctrine of “assumption of risk” has been eliminated by the Federal Employees Liability Act (“FELA”) which is made applicable to seamen by the Jones Act.    While liability for injury caused by combating pirates (or incidental to the combating of pirates) is novel in the modern age, it should be noted that soon after the M/V MAERSK ALABAMA was hijacked, numerous websites of law firms specializing in plaintiffs’ seamans’ claims began listing themselves with tags to piracy related matters and calls for carriers to “ensure” the safety of the crew from piracy and Richard E. Hicks, Chief Cook aboard the vessel, filed suit in Texas claiming unseaworthiness of the vessel for failing to better protect the crew from pirates.

 

International Regulatory Requirements:

 A decision to carry armed guards aboard commercial vessels will require a review and potentially modifications to the vessel’s International Ship and Port Facility Security Code (“ISPS”) plan.  Additionally, these vessels are required to have a designated Ship Security Officer (“SSO”) to oversee implementation of the vessel’s security plan and both the plan and the SSO will likely need a greater level of knowledge to manage a plan which includes armed response to security concerns.

 Nowhere in the ISPS Code is there a discussion of the engagement or use of armed guards or the use of firearms on board vessels, whether by members of the crew or hired guards, although the ISPS Code recognizes that ships will employ outside contractors to provide security services, especially in port. Additionally, the ISPS Code recognizes that "[a]t all times the Master of a ship has the ultimate responsibility for the safety and security of the ship."  Presumably any limitations as to how this responsibility is carried out would be dictated by other authorities, such as the

Flag

State

.  The ISPS Code appears to contemplate the situation that while ship's personnel (and any locally-hired security service) will keep a close watch on the vessel, the response to acts of violence will necessarily have to be made by governmental authorities, a presumption which makes sense in the context of a vessel in port.

 Specifically related to piracy and armed robbery against ships, the International Maritime Organization (“IMO”), the United Nations Agency concerned with the safety of shipping and cleaner oceans, has issued written guidance to the maritime industry suggesting that an armed response to any attack is discouraged: "Aggressive responses, once an attack is underway and, in particular, once the attackers have boarded the ship, could significantly increase the risk to the ship and those on board…The carrying and use of firearms for personnel protection or protection of a ship is strongly discouraged ... Carriage of arms on board ship may encourage attackers to carry firearms thereby escalating an already dangerous situation, and any firearms on board may themselves become an attractive target for an attacker. The use of firearms requires special training and aptitude and the risk of accident with firearms on board ship is great. In some jurisdictions, killing a national may have unforeseen consequences even for a person who believes he has acted in self-defense.” 

Insurance Related Issues:

 The carrying of armed personnel may violate the rules of the basic insurance that vessel owners have in place including cover from Protection and Indemnity Associations (“P&I Clubs”) and

Hull

and Machinery Insurance Policies.  Some brokers have suggested in articles and promotional materials and that hull underwriters may give a discount to owners who employ armed guards to protect their assets.  However, the use of these guards may in fact violate some rules of the P&I Club and written opinions from P&I Clubs would be warranted prior to the use of such guards.

 Requiring the use of guards, armed or otherwise and the updating of security plans certainly makes sense in this age of increased frequency of piratical attacks.  However, owners of US Flagged assets will need to give significant attention to these and other issues before submitting their plans in the next 12 days.  It will also be interesting to see if other Flag States follow suit with the imposition of similar requirements on their fleets.

Tweeting Transportation and Logistics

Earlier this week I promised a post on Twitter in the Transportation and Logistics industry.  What follows is a list (in no particular order) of who I am following on Twitter that post regualrly on transportation matters.  Please let me know who else you are following and follow me on Twitter @marcmarling.

@freightforum

@tradewindsnews

@lloydslist

@jtweed

@shipbroking

@clar_key

@csaynor

@eyefortransport

@orwellais

@logisticsnews

@ajot

@primaryfreight

@tweetgistics

@transportcargo

@jonesact

@joc_updates

@cruiselaw

@maritalk

Support for the Rotterdam Rules

As I mentioned in a post earlier this week, the so-called Rotterdam Rules are gaining traction in the US as industry group and trade associations voice support for the UN Convention designed to replace the international hodgepodge of laws regulating the carriage of cargo through ocean shipping.  In the US, the Carriage of Goods by Sea Act, or COGSA has been the law since 1936 with nary an amendment.  According to the Journal of Commerce, on May 5, the National Industrial Transportation League ("NITL") or "NIT League" voted unanimously in support of the new rules.  This is hardly a surprise as the rules are well favored by most shippers and counsel for the NIT League stated as much during her remarks to the Maritime Law Association of the United States during their debate and subsequent vote of support on May 1.  According to the article:

“The development of compatible worldwide standards applicable to the loss and damage of maritime cargoes is long overdue,” said Mark Maleski, NITL chairman and supply chain logistics director for retailer J. C. Penney.

Uniformity and consistency are notably lacking in the liability rules governing maritime shipping today, said Peter Gatti, executive vice president of the NITL, which represents some 700 U.S. companies involved in domestic and international transport.

Also, the current U.S. law, the Carriage of Goods at Sea Act, hark back to a time when cargo was shipped in boxes, crates and bags, rather than on pallets or in containers.

COGSA is the U.S. law enacting the “Hague Rules,” an international convention dating to 1924. “We all know the world has changed significantly since that time,” Gatti said.

“The Rotterdam Rules will reflect current shipping practices, contain significant improvements over existing cargo liability conventions, promote harmonization among trading partners, reduce legal obstacles and will allow shippers, carriers and third parties to customize their contracts to meet their commercial needs,” he said.

A push for congressional action will be forthcoming and the major question will be whether action takes the form of a submission of the Convention by President Obama for the advice and consent of the Senate or whether domestic legislation is introduced as a means of adopting the rules.  The case for the former suggests that the principles of international uniformity are so important that the US should adopt the Rules as drafted.  The latter would provide opportunity for various trade groups and lobbyists to push for changes to the international rules, the result of which may be better for some special interests but certainly worse for the furtherance of the principle of uniformity providing certainty to shippers, consignees and carriers the world over. 

We will continue to track developments and have established a separate category for tagging these posts.  I hope this site can develop a significant discussion of the Rotterdam Rules, so please let me hear from you.