Offshore operations in the Gulf of Mexico and on the Outer Continental Shelf generally are subject to contractual arrangements that present significant legal issues for the practitioner negotiating or litigating the contracts. This Article presents a discussion of the relevant choice-of-law analysis for these contracts and the substantive law under alternate regimes for indemnification provisions, insurance and “additional insured” provisions, release agreements, consequential damage caps, liquidated damage provisions, and other clauses limiting remedies otherwise available at law.
Classification Societies and Limitation of Liability
Consonant with the vicissitudes and perils of maritime ventures, limitation of liability is a well-entrenched and long-established precept of federal maritime law, benefiting shipowners and mercantile interests alike. For over a century and a half, shipowners, vessel managers, and bareboat charterers have invoked the Limitation of Liability Act of 1851 (Limitation Act) to shield themselves from significant claims brought on behalf of cargo interests, crewmembers, and third parties. Likewise, the United States Carriage of Goods by Sea Act (COGSA) and its attendant package limitation have effectively limited ocean carriers' exposure to cargo claims. By virtue of Himalaya clauses and similar contractual provisions inserted into bills of lading, charter parties, and service contracts, several other parties--stevedores, terminal operators, warehousemen, and rail carriers, to name a few--have also gained the benefits of limited liability. Even the liability of vessel owners, operators, and demise charterers, with respect to environmental claims, is subject to limitation.
Historically, classification societies have played an integral role in the development of safety in shipping and maritime commerce. Yet their unique function and episodic contact with the vessels and offshore structures that they class and/or certify have left classification societies in a precarious position vis-à-vis shipowners and other maritime venturers. Although certain international conventions, as well as federal maritime law, offer limited liability to nearly all parties to a maritime enterprise, classification societies per se have not enjoyed such recognition. As both the M/V ERIKA and M.T. PRESTIGE oil spills have demonstrated, third-party claims against classification societies can result in potential liability exposure that vastly exceeds their net worth or insurable liability.
An international convention developed and adopted by the world's maritime nations that addresses the scope of a classification society's duties and provides for limitation of liability is one answer to the question of class liability. Realistically, such an undertaking likely would take years to implement, and whether those countries of strategic maritime importance would adopt such a convention remains an open question. In the absence of a convention, the issue of unlimited liability of classification societies is one for the courts and commentators to address.
Part II of this Article defines the role of classification societies and their surveyors in the maritime world. Part III traces the historical development of the liability of classification societies in the United States and, based upon this legal framework, Part IV argues that the only third-party claim cognizable in admiralty against a classification society is negligent misrepresentation. Part V proposes that a third party's reliance upon the representation that a vessel is “in class” cannot be a limited or partial reliance. Instead, the stated reliance must be analyzed in conjunction with all class representations, including those representations that portend a limitation of liability of the classification society, whether such a limitation provision is found in the Class certificate or other document upon which the third party relies, the classification contract, or even the applicable Class rules. This Article concludes by arguing that such a limitation of liability provision should be enforced against both those in privity as well as third parties that claim beneficial status or reliance on a classification society's representation that a vessel or structure was “in class.”
Allocation of Marine Risks: An Overview of the Maritime Insurance Package
Those engaged in maritime commerce are exposed to considerable risk in the day-to-day course of their business. Whether it be the owner of a vessel, the cargo on board, or the operator of the terminal at which the vessel calls to load that cargo, risk of loss and risk of liability attaches to all those involved in marine operations. This Article examines in summary fashion the various marine insurance policies and the coverage those policies afford those involved in maritime commerce.
Port Security Inside Out: A Systems Approach to Safeguarding Our Nation's Ports
In the wake of the terrorist attacks of September 11, 2001, Congress quickly realized that the porous nature of ports and waterways throughout the United States made them an attractive target for transportation security incidents. While there was a patchwork of regulations that endowed the United States Coast Guard with the authority to address port security, Congress adopted far-reaching legislative measures to bolster existing port security regulations and enhance maritime domain awareness. Both the Maritime Transportation Security Act of 2002 and the SAFE Port Act of 2006 seek to create a comprehensive and layered approach to preventing and responding to events that have the potential to disrupt the flow of waterborne commerce.
Smoother Seas Ahead: The Draft Guidelines as an International Solution to Modern-Day Piracy
Piracy is an increasing problem for commercial trade. As the oceans are used by all and controlled by no one, a regulatory vacuum exists with respect to laws guiding state responses to piratical acts. This Article promotes the Draft Guidelines as the most appropriate response to this international conundrum.
New Horizons: An Analysis of Public Markets Financing of Shipping Ventures and the Impending Waves of Shipping Securities Litigation
Over the past one hundred years, the scope and variety of financial instruments used in the maritime field have evolved profoundly, and markedly so, over the past decade. IPOs, high-yield debt offerings, and SPACs are among some of the financing products shipping companies are relying on today to grow and maintain their businesses. The following traces the historical development of these products and their current usage in the shipping world. This Article then looks at the securities law implications upon the shipping industry, its new investors, and maritime law in general.
Thoughts on Professionalism in the Twenty-First Century
A perceived decline of professionalism in the legal profession has been the subject of much discussion in the academic and legal communities. This Article explores three aspects of professionalism: the evolving definition of professionalism in light of the changing legal profession, the effects of those changes on lawyers and the legal profession, and suggestions for highlighting and heightening professionalism in the future.
Plus CA Change: The Protean World of the Maritime Specialist
Admiralty attorneys traditionally have been excepted from the general ban on lawyers holding themselves out as specialists. That special status imposes a heightened ethical obligation on proctors to ensure that they achieve and maintain the highest levels of competence. This Article addresses the appropriate scope and means of preserving and enhancing competence in a field that comprises an increasing array of intricate and disparate subject matter.