Maritime Litigation

Generally, maritime litigation is like any other federal litigation. maritime litigations have a number of unique features that have survived from old days. Admiralty Law and Maritime Law developed from medieval sea codes intended to promote international maritime commerce. Established admiralty courts intended to provide internationally accepted, efficient means of resolving maritime disputes. Without admiralty courts, traders, ship owners and operators would be reluctant to trade to foreign ports. Without admiralty courts, crew members, ship owners, operators could be subjected to the risks of local prejudices, unknown laws and delayed proceedings.

From 1795 until 1966, United States district court sitting under its admiralty jurisdiction followed separate Admiralty Rules, intended to facilitate the purposes of federal admiralty jurisdiction. In 1966, Admiralty Rules were unified with the Federal Rules of Civil Procedure. A few special admiralty rules were retained as the Supplemental Rules for Admiralty or Maritime Claims. Maritime litigation is now conducted under the Federal Rules. However, it would be a mistake to assume that a maritime case is the same as any other federal case. Besides Supplemental Rules, maritime litigation involves a number of other unique rules and practices. A federal case is a maritime case when the plaintiff elects so. In some cases, nature of the case as a maritime case will be obvious. Only jurisdictional basis for the case stated in the complaint is the federal maritime jurisdiction. A complaint could also be brought under the district court’s federal question or diversity jurisdiction, then plaintiff will have to make Rule 9(h) election. After Rule 9(h) election, case will be designated as a maritime case under Rule 9(h) of the Federal Rules of Civil Procedure.

Usually, defendant cannot overturn a Rule 9(h) election. Rule 9(h) election plaintiff will govern the case going forward, even if the defendant brings a counterclaim and asks for a jury.

On the other hand, some federal judicial circuits have limited the ability of plaintiff to control a case through a Rule 9(h) election. For example, insurance coverage cases. Ship insurer company denies coverage under an insurance policy on the basis of alleged breaches of warranties by the insured ship owner. Ship insurer may file suit for a declaratory judgment confirming that the insurance policy does not apply to the damage for one reason or another. In the complaint for declaratory judgment, insurance company may make Rule 9(h) election. Insurance company ask that the case will be tried to a judge alone, without a jury. Ship owner may file a counterclaim for breach of the contract of insurance, asserting diversity jurisdiction and requesting a jury. As a result, some courts have held that the ship owner is entitled to a jury on the basis of the United States Constitution’s Seventh Amendment and the Saving to Suitors Clause. Ship owners right cannot be undone by an insurance company inverting the nature of the case through a declaratory judgment action. Some courts have held that admiralty cases are not subject to the Seventh Amendment’s right to a jury trial and therefore the Rule 9(h) election in the first-filed case governs.

If plaintiff decides to try a case under the federal court’s admiralty and maritime jurisdiction by making a Rule 9(h) election, or if the case can only be brought under the court’s admiralty and maritime jurisdiction, that decision will affect a number of rules governing the case, including:

 

  • the effect of the defendant’s action in bringing in a third-party defendant who may be liable to the original plaintiff (a process known as “impleader”)
  • whether the case can be tried to a jury
  • whether the case will be subject to the rules governing which federal court may hear the case (the “venue” statutes)
  • whether the case may be subject to maritime remedies under the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions)
  • whether the case may be subject to interlocutory appeal under the more flexible rules governing admiralty cases.

Third Parties can be brought into a federal maritime case. Cases brought under a federal court’s maritime jurisdiction are subject to very flexible rules for joining third parties into the case. Maritime rule on impleading a third party helps to facilitate the maritime goal of providing an efficient disposition of maritime controversies. Generally, in a usual federal case, a defendant can bring into the case third party who may be liable to the defendant for all or part of the claim because of a right of indemnification or contribution. On the other hand, under the special admiralty rule, defendant can bring in a third party who may be liable to either the original defendant or to the original plaintiff and that third party must defend against the original complaint as if the plaintiff had sued both the defendant and the third party from the beginning. Benefit of that arrangement is that the defendant does not have to wait until it becomes liable to the plaintiff before it brings complaint for indemnification or contribution against the third party, but can force the third party to step up to directly defend against the underlying case.

Until 1966, maritime cases were governed by a special set of Admiralty Rules, although the last set of Admiralty Rules were drafted in 1920. Over time, Admiralty Rules were not able to keep up with the developments in the Rules of Civil Procedure. Hence, as a cooperative effort by United States American Bar Association and Maritime Law Association led to the adoption by United States Supreme Court of unified Rules of Civil Procedure that incorporated Admiralty Rules to the extent possible. But, certain rules dealing with in rem actions and remedies did not fit neatly within the Rules of Civil Procedure generally and so were retained as the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions.

Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions:

Rule A: Scope of Rules identifies the cases to which Supplemental Rules apply: maritime attachment and garnishment, actions in rem, possessory, petitory, and partition actions, actions for exoneration or limitation of liability, and forfeiture actions in rem arising from a federal statute.

Rule B: In Personam Actions: Attachment and Garnishment provides rules for the exercise of the traditional maritime remedy of attachment, in which a plaintiff can obtain both jurisdiction over the defendant and security for a maritime claim by seizing the property of the defendant.

Rule C: In Rem Actions: Special Provisions is the rule that governs the right of maritime arrest of a ship or cargo to enforce a maritime lien.

Rule D: Possessory, Petitory, and Partition Actions describes how parties can initiate an action to establish title or rights in a ship or cargo against other claimed owners.

Rule E: Actions in Rem and Quasi In Rem: General Provisions sets out the procedure that applies to in rem and quasi in rem cases brought under Supplemental Rules B, C, and D. It sets out how to serve the process against the property, how to obtain the release of the property, how to post alternate security for the claims involved, and how to dispose of the property.

Rule F: Limitation of Liability sets out the procedure for a shipowner to exercise its rights under the Shipowner’s Limitation of Liability Act, including the procedure for filing the complaint for exoneration or limitation, how to obtain the injunction against other claims to carry out the concursus process, how to send security for the claims, and where the case should be heard.

Rule G: Forfeiture Actions in Rem is the rule governing statutory forfeiture actions.

Generally, complaint in a maritime case is just like a complaint in any other federal case. However, there are a couple of additional differences:

  • Maritime case brought in federal court could also be subject to the court’s diversity or federal question jurisdiction, a plaintiff should make an election under Rule 9(h) whether the plaintiff wants to proceed as an admiralty case (with no jury, and subject to the other special maritime provisions) or as a diversity case (with a jury, but not subject to the special maritime provisions)
  • Complaints in maritime cases subject to the Supplemental Rules typically must be more detailed than the simple notice pleading complaints allowed in civil cases. While complaints in civil cases are sufficient if they put the defendant on notice of the claims against it, complaints in maritime cases must spell out the who, what, where, and how of the matter in detail sufficient to show what happened and why the plaintiff is entitled to relief
  • Complaint must be verified by the plaintiff (not just signed by the attorney) so that it serves, in effect, as a form of affidavit. Those additional pleading requirements are imposed because the filing of a complaint in a matter subject to the Supplemental Rules can often provide some immediate, ex-parte relief to the plaintiff, such as the pre-judgment attachment of the defendant’s property under Supplemental Rule B, the arrest of a ship or its cargo under Supplemental Rule C, or an injunction against claims under Supplemental Rule F.

Depending on the case, plaintiff has time limit to open maritime case. Maritime Statutes of Limitations:

  • Claim for personal injury or wrongful death arising out of maritime tort must be brought within three (3) years after the cause of action arose
  • Claim for salvage or salvage services must be brought within two (2) years. Time period can be extended if the plaintiff did not have reasonable opportunity to seize the aided ship within the jurisdiction of the court or within the territorial waters of the plaintiff’s country during that period)
  • Claim arising under Carriage of Goods at Sea Act (COGSA) must be brought within one (1) year from the date of delivery of the goods involved or the date when the goods should have been delivered

Maritime contracts (charter-parties) are typically not subject to specific limitation periods. However, maritime contracts (charter-parties) are instead subject to the traditional maritime doctrine of laches. Laches is an equitable doctrine. In other words, amount of time that should reasonably be allowed to plaintiff is left to discretion of the court. Court may look at an analogous federal or state statute of limitations to establish a general presumption of timeliness. Nevertheless, court is not bound by those statutes. Court will look at whether the plaintiff’s delay in bringing suit was unreasonable and whether defendant was prejudiced by the delay. Defendant might point to the loss of evidence or the unavailability of witnesses as circumstances showing prejudice. If defendant can show prejudice, then the burden shifts to the plaintiff to show that the defendant was not really prejudiced. Decision of a district court judge with regard to the applicable laches period is typically given great deference by the Courts of Appeal. Courts of Appeal review those decisions under an abuse of discretion standard which is significantly different than cases brought under court’s diversity jurisdiction. In a diversity case, a federal court will follow the applicable state limitation period. Depending on the states, state time limitation periods for contract cases are typically lengthy, some states it is six (6) years.

A person can bring a maritime claim against the United States. United States has consented to waive sovereign immunity with regard to admiralty and maritime claims, under a set of acts known as the Suits in Admiralty Act (SIAA) and Public Ship Act (PVA). Suits in Admiralty Act (SIAA) and Public Ship Act (PVA) are similar, but have slightly different applications. Suits in Admiralty Act (SIAA) was enacted in 1920 to provide a waiver of sovereign immunity for admiralty claims in personam against the United States arising from the use of government owned or operated merchant ships. Purpose of the Suits in Admiralty Act (SIAA) was to provide a right for persons injured by United States owned or operated ships to seek relief as if ships were privately owned. While protecting the ships against the traditional risks of maritime arrest or attachment and the attendant inconvenience, expense, and delay that would result. But, originally Suits in Admiralty Act (SIAA) was limited to merchant ships and did not waive sovereign immunity with regard to claims arising out of incidents caused by public ships such as warships. Public Ship Act (PVA) was enacted in 1925, as a follow-on to Suits in Admiralty Act (SIAA). Public Ship Act (PVA) waives the sovereign immunity of the United States with regard to admiralty claims in personam for damages caused by a public ship of the United States. United States Supreme Court has held that claims for damages caused by a public ship do not just include cases in which the public ship is the physical instrument causing the damage, but also includes cases arising from the negligence of the personnel of a public ship in the operation of ship. United States Court of Appeals for the Eleventh Circuit held that the sovereign immunity waivers of the Public Ship Act (PVA) and Suits in Admiralty Act (SIAA) jointly cover all relevant admiralty claims involving public ships. As to deciding which statute applies to a specific case, United States Court of Appeals explained that claims seeking relief for damages caused directly by a public ship or by the negligent operation of the public ship fall under Public Ship Act (PVA). Suits in Admiralty Act (SIAA) covers all remaining admiralty claims, including those simply involving public ships.

Limitation period for maritime claims against the United States is two (2) years. Limitation period under both the Public Ship Act (PVA) and Suits in Admiralty Act (SIAA) is two (2) years. But, before a party can file suit under Suits in Admiralty Act (SIAA), a party must first exhaust its administrative remedies. In other words, party must first submit an administrative claim for the damages incurred and allow sufficient time for agency to decide whether to grant or deny the claim. Usually, a party must allow at least sixty (60) days for an agency to make its decision. Two (2) year limitation period and the administrative claims process are part of the waiver of sovereign immunity, they are jurisdictional in nature. In other words, they cannot be waived by a court for any equitable reason. If the complaint is filed late or without first following the administrative process, district court will lack jurisdiction over the claim.

Practically, a party can enter in maritime cases as what is called restricted appearance. A party can make an appearance to defend against an in rem maritime arrest or quasi in rem maritime attachment claim and declare that the appearance is strictly limited to the defense of the in rem or quasi in rem claim and does not constitute an appearance in the federal judicial district for any other purpose. Usually in United States, non-resident parties almost always make limited appearances, to avoid the risk of having to defend against unrelated lawsuits.

Mostly, in non-maritime cases, the parties have to wait until the district court case is over and a final decision is given before parties can appeal any of the rulings in the case. But, admiralty cases are subject to more flexible rules that allow an interlocutory appeal of any decision that determines the rights or liabilities of the parties in an admiralty case. Process of maritime interlocutory appeals has its basis in the traditional maritime procedure of bifurcated trials in which the court first reaches a final decision on liability. Then courts move on to determine damages. Hence, parties can avoid costly litigation over damages until all the issues related to deciding who is liable are finally decided by the Court of Appeals.

Generally, maritime cases reflect their traditional heritage derived from specialized courts created to provide prompt and efficient resolutions for international maritime commercial disputes. Judges handling maritime cases typically exercise significant discretion to adjust the procedure and evidentiary requirements to accommodate commercial nature of international maritime litigation.