Admiralty Law

Admiralty Law:

9/14/10
Legal Writing: Open topic. Who should control high sea law?
-Donǯt write limitation of liability. Congress will change laws so donǯt wrote on in.
- Journal of Commerce, Maritime Journal.
-Blend this course and IBT.
- Oil spill law: criminalize negligence?
- Long weekend in October, deadline for an outline.
- (Jones Act)
- unsettled issue in law, and do research, this is not an essay.
-16-24 pages singled, legal memorandum text with citation in the text.
- Rule #1 of Legal Writing: brief work. Every sentence must have a subject and a
verb.
- Due date: sometime in mid-january.



y Jurisdiction
o Navigable waters: open oceans, inland water, closed water in one
state, not subject to federal maritime jurisdiction.
o Trans state boundary recreational/commercial vassel crashed,
Federal maritime jurisdiction.
o P.31: transboundary lake, potential disruptive effect on traditional
maritime activity, therefore Federal M. Jurisdiction.
o La Guardia to SC US airway on Hudson: ?? good arg on both sides.
o Stewart case: what is vassel: simplified to: stationary platform barge.
In boston harbor, Stewart was a tagman. Not Jones Act seaman,
o DiGiovanni: same tag man, working in spud barge, tug moved a lil bit.
While spuds were down, vassel wasnǯt moving, moving the barge
down the water is engaging in transportation in navigable water.
Same tugman is now a Jones Act seaman, b/c vassel engaged in
transportation in navigable water.
o 1USC
vassel: means of transportation by water. Vassel status if your boat
moves away in your dock.
o Subject matter jurisdiction
Torts jurisdiction: Collision, property damage, personal injury,
Contract jurisdiction: building not maritime jurisdiction b/c
building happens on land
y Repairing is in maritime jurisdiction b/c used in n.
water.
Contract to sell a used vassel: no maritime j. w/ caveat of
additional work on the vassel. Seller repairing vassel bf selling
thatǯs maritime portion of jurisdition, but you can sever that.
Contract to dock: maritime contract
Wage employment of sailors: maritime jurisdiction contract
Pilot:
Marine contract: m. jur. Financing insurance premiums m.
juri.
y En banc: all the circ. judges sit on the panel, not only 3
judges on appeal.
Contracts to fuel/supply/food & liquor: all maritime contracts,
therefore m. jurisdiction.
No statute of frauds: except of salvage claims, 2 year SoL.
Only limitation in maritime law is doctrine of laches. Unduly
delay in maritime law that the other party is prejudiced. How
long is case-by-case. For guidance, look at state statute for SoL.
General maritime law: 3 yr lim in Mass, FL 4 yr., Ct 2yrs (adjust
to fed law). substantial/precedural.
Fed. Maritime law: 3 yr lim
Comparative fault rule: admiral law itǯs pure comparative law.
If case is admiralty: where there might be diversity. State to
fed. b/c there is diversity or fed Q.
Admiralty alone is not sufficient reason to bring to Fed. Ct.
Claims:state common law is competent to provide remedy in
law. vassel itself should be responsible for debt.
Assessory partition:
The difference between admiralty and maritime law has
historically been that admiralty law was limited to
disputes involving torts and contracts on the high seas.
Maritime law gradually developed to include all other
types of legal disputes that arose on the high seas and
other navigable waters. Torts are legal wrongs, and the
term "high seas" refers to oceans beyond the territorial
jurisdiction of a country. Navigable waters generally are
any body of water that functions as a highway for
commerce between countries or states. The distinction
between admiralty and maritime law faded with time and
U.S. courts now use the terms interchangeably.

y Marine insurance
o Insurance form had been e-mailed tonight.
Chapter 17. Marine Insurance
-legalized gamble: betting on risk.
- Lloyds of London: collection of underwriters.
- different from land insurance b/c marine policies are not unregulated.
- marine policy is agreed parils(?) policy.
- yacht policy: ocean green policy. Risk policy. If anything fortuitous happen, hull
policy
hull policy: property component
- perils policy: 45 foot racing yacht in chesapeake bay. Under marine
policy, this is not peril.
o Big recreational policy
o Small recreational policy
o Agreed value policy: if vassel is lost, constructive total loss (incurs
damage, after investigation) sinker/ fire/have it towed. written on
a ACV (actual cash value)ǥǥ.(?????)
o Utmost good faith (Uberrima fide): owner of vassel must fully
disclose everything material about the vassel to the underwriter.
In determining the ownership/ condition of the vassel.
In premium to charge the risk/
Appraisers: marine surveyers. Anybody lending money
would also want to see the equity etc.
Smaller recreational vassels would depriciate in value like
cars, but not large recreational not so much, military
vassels actually value increases (military vassels are self-
insured)
Loss history of vassel owner and vassel crew: licensed
personnel? Commendable license masterǥwarranties.
Background of the crew also relevant and material.
Forgetting to tell any of these would be breach of duty.
Underwriter can devoid the policy. They return the
premium as if the policy never existed.
Call the insured in , consult they can get a lawyer, examine
under oath.
cf) liability policy
17.1 origins and functions
marine insurance contract is expressed in insurance policy, a standard form
contract containing various clauses that define the agreements.; insured
(assured/policy holder) agrees to pay a premium, insurer
(carrier/underwriter/assurer) agrees to indemnify the insured if certain losses or
damage occur to defined interests that are at risk in a marine venture.
- insurance is carried on by the underwriters.
- insurance company of North America (1792) first marine insurance company
formed in the US.
- American Hull Insurance Syndicate (1920 ) has numerous subscribing insurance
companies including many major foreign companies.

- in theory, marine insurance policy is a contract of indemnity. b/c amount
recoverable is measured by the extent of the insuredǯs pecuniary loss.

Wilbur boat policy: 16 year old boy boards with 20 year old female. Parents find out,
vassel 20 miles south of key west.
Separate part of policy said vassel masters license from TX
Breach for warranty b/c outside of key west. Ambiguity of policy. How do you
construe the policy. Federal ct jurisidciton or FL law? If there is ambiguity, then itǯs
construed against the underwriter. Not so in first circuit in Maine.
- You have to comply
- warranty of seaworthiness(?) inception of policy, if the vassel breaks during
voyage, the owner must do due diligence to save.
- if vassel goes down in a storm, presumption of seaworthiness.
- sinks on clear calm day, presumption of seaworthiness does not apply, but
not burden to overcome.
- doesnǯt have to be proximate cause. Claim itself would be avoided.
- condition subsequent,
- condition precedent: underwriter cures problems.
- recreational boating policies.
- standard exclusion for (size/horsepower)ǥ
- they donǯt own it and get into accident. Look the other partyǯs insurance.
- watercraft exclusion doesnǯt apply if doesnǯt own the boat, but liability still
applies if somebody is injured.
- homeowners policy covers liability for recreational boat. Anybody
operating with permission of the owner. Liability coverage. The kids, household
members.

- clauses policies
- perils clause: perils policy, perils of sea duration is 1 year. Agreed value
policy. Deductible size of vassel, etc. etc. 1000, 5000 dollars. Recreational
vassels.
- marine adventure clause: certain types of activities loading unloading
bunkering(fueling) break down of machine, defect of the hull, excluding
defect in boat itself.
o Latent defect with deligence of owner would not have been
discovered. Failure of the owner to maintain adequately, therefore
itǯs not covered by the cl.
- Neg. in charters.. clause: inch mari clause???
-tug boat example:
- scuttling in the vassel: barrelerty ; excluded peril. policy doesnǯt say If
you sink your own vassel we are not gonna say.

- total loss: agreed value policy insured compensated separately by
underwriter. Segregation.
- Segregation: collision, insurance carrier will pay you whether itǯs cash
value, agreed value. Underwriter persues the other party to get money
thatǯs segregation.
o Notify broker immediately.
o Tell client (insured) act prudent uninsured, and as if everything
out of your packet.

- take look at the last cl. Of the policy : worse strikes exlusion. And war risk policies.

- subject matter of marine insurance
1. the ship
2. cargo
3. freight
4. earnings and commission
5. interests in maritime property
6. liability that may be incurred by the owner or charter of a vessel
7. freight, demurrage, defense


- three principal categories of marine insurance policies:
1. hull insurance
2. cargo insurance
3. protection and indemnity (P&I) insurance, taken by the shipowner,
charter, other person in a similar position to unsure against 3
rd
party and other
liabilities not covered by the hull policy.


17.2 definition and jurisdiction
- maritime insurance: contract whereby the insurer undertakes to indemnify the
assured, in a manner and to the extent agreed, against marine losses, losses incident
to the marine adventure. (accident/fortuity)
- maritime perils; perils consequent on, or incidental to, the navigation of the
sea, perils of the seas, fire, war perils, pirates, rovers, thieves, captures, seizures
restraints, like kind or which may be designated by the policy.
- bankǯs mortgage intrest in a vessel was a policy of maritime insurance.
- over great lakes is not maritime.
- longshore worksǯ action for bad faith breach of insurance contract was not within
admiralty jurisdiction.

- substance difference in marine insurance and non-marine insurance.
o Amount recoverable is based on values when risk commences, rather
than the time of loss (as in non-mari)
o Marine insurance law, a contract may be ratified after the insured has
become aware of the loss. Nonmaritime law, the position in England is
disputed and may be different.
o Ȃ marine insurance law statements in the policy are more likely to be
construed as warranties
o certain kinds of increase in trisk automatically discharge the insured.
o Marine insurance law the broker is liable to the insurer for payment of
premium.
o Maritime doctrine of constructive total loss does not apply in non-
marine insurance law
o Previous declinature of cover is not a material matter for disclosure in
marine insurance law.



17.3 contract formation
- broker uses a promissory doc called Dzslipdz
- kinds of slips:
1. original slip (formerly handwritten)
2. off slip, typed copy
3. signing (closing) slip used for signing and accounting
4. electronic version of original slip.

- slip prepared for placing includes these data:
1. type of insurance
2. type of policy
3. name assured
4. name of ship
5. period/insurance/voyage covered
6. insured interest
7. sum insured and insured value
8. tradeing limits and/or warranties
9 . conditions
10. rate of premium
11. deductions, including brokerage.

-Dzlinedz denotes an acceptance of a risk by the underwriter.
- broker will ask a Dzleaddz underwriter to accept a line, which makes it easier
to persuade following underwriters to participate.
- each underwriter normally accepts only a portion of the uninsured.
- if slip is oversubscribed (more than 100%), each line is Dzsinged downdz
proportionately to make it 100%.
- Upon completion the broker informs the participating underwriters and
sends a confirmation, Dzcover notedz to client (assured).
- the brokerǯs policy department prepares the policy form.
- issued through Lloydǯs or Institute of London Underwriters.
* slip marine insurance policies

- Contract formation issues
o Marine Insurance Act (1906) § 21: contract of marine insurance is
deemed to be concluded when the proposal of the assured is accepted
by the insurer, whether the policy is then issued or not; for the
purpose of showing when the proposal was accepted, reference may
be made to the slip or covering note or other customary memoranda
of the contract.
o Oral contracts are binding.
o Can be concluded without formalities. (O,A,C still necessary)
o All thatǯs required is agreement on material terms
o Other terms may be settled according to business practice or
arbitration.
o Contact formed before the issuance of policy. Slip/binder is the
crucial doc.
o Initially a slip (contract formation)Nondisclosure issuance of
policy. Contract is still effective.


17.4 policy
- subject matter
- anything subject to a lawful marine adventure may be insured.
o Hull and machinaery insurance for damage to ship
o Cargo insurance loss/damage of cargo
o Freight insurance covering freight ayable by a third party as well as
the profit earned by a shipowner in employing his ship to carry his
own goods.
o Protection and indemnity (P&I) insurance covering 3
rd
party liabilities
o Freight, demurrage, defense (FD&D) insurance
o War risk insurance
o Strike insurance
- floating policies: policy on goods which leaves the name of the ship and other
particulars to be defined later. In the Us, Open cargo policies cover all cargo
shipped within a certain period of time.

- Two kinds of policies
o Time policy: definite period of time, cover may be provided that is
renewable automatically and can continue in effect for an indefinite
period.
o Voyage policy: port-to-port
- valued policy: specifies the agreed value of the subject matter insured. Binding and
conclusive.
- unvalued policy:
- slip is admissible as evidence of misrep.


17.5 marine insurance intermediaries
brokerǯs duties
- duty to carry out the assured instructions
-duty of reasonable care (of a professional)
- fiduciary duty to his client.

Brokerǯs liability to thired parties.
17.6 applicable law: wilburn boat
- Wilburn Boat Co v. Firemanǯs Fund Ins. Co. (1955)
- Supreme Court reversed denial of recovery, on the grounds that no federal
admiralty rule existed to deal with the consequences of warranty breaches in
marine insurance policies and this matter should be resolved by applying state law.
- application of the Wilburn Boat doctine: marine insurance in the US will be
dominated by state law rules. Fed court will apply state law. (favors assured)
- if state laws conflic, the law of the state with the greatest interest in the issue
prevails.
- international choic of law conflicts are resolved under principle of Dzascertaining
and valuing the points of contacts b/w the transaction, and the states and govǯt
whose competing laws are involved.dz

17.7 breakdown of uniformity

17.8 jurisprudential interpretation of wilburn boat
17.9 legacy of wilburn boat: conflicts and confusion

17.10 hull insurance

17.12 protection and indemnity insurance

17.20 claims handling

17.26 need for a new law on marine insurance
o
y Salvage

9/20/10
- swine flu.
- Collision liability:
- American club, insurance clubǥ charge premium once a year. P&I Standard
steam ship, American club,
- Breach of Uberrama Fide. Or breach of certain provision of the policy.
- Must make claim within reasonable time. Grounds of notice on denying the
claim.
- Once claim presented, the underwriter has to
- Declaratory judgment action: insurance co (P) rights and liabilities of each
party.
- Maritime contract: you can bring the claim in state, but bring it to Fed
because no jury. But D will remove it.
- Make a policy in anullity, or void the claim.
- 176 being consumer protection bad faith carrier insurance. Unregulated.
- Practice of underwriters and brokers are regulated by
- Defense insurance: claims made against the insured. Primary duty is to the
insured. Course of, no coverage, you canǯt tell the insurance carrier that
policy does not cover the insureǯs incident.
- No matter who pays you, your duty is to the insured. Donǯt tell the adjuster.
Just say, DzI cannot comment on thatdz
- Defense; indemnity. Duty to defend is always greater than duty to indemnify.
- Based upon judgment. Standard of coverage for defense: you lay P complaint
and policy. Underwriter breaches duty to defend: liable for total amt of
settlement.
- 176 d. =consumer protection as to insurance; 93A also applies. Treble
damage available.
- Havenǯt seen treble damages in MA, but Exxon case (Mass) will have affect on
punitive damage and treble damage.
- J. Wolfe. 29 civil action open on the matter. Watch the brokers, brokers,
underwriters, malpractice if they get premium and doesnǯt compensate (not
give money w/ bs reason)

SALVAGE
- rescue (a wrecked or disabled ship or its cargo) from loss at
sea
- Qot quaQtum meruit
- iQceQtive to people to save property at sea.
- 1o salvage for saviQg life. OQly applies for property
- &ommoQ law based.
- elemeQts for salvage to occur
o mariQe peril
o Qeeds to be voluQtary Qot by some duty
fire dept.: Qo voluQtariQess. Local harbormasters
may have protocol to help ships.
o 6ome degree of success; gotta save some property.
- 86 1avy, 86 coast guard. PreexistiQg duty uQless captaiQ
orders to abaQdoQ ship.
- 0asoQ v. 6hip: 6paQish ship. Vassel got towed,salvage
award.
- Officious iQtermeddlers:
- 6kill (promptitude), value of the property self, Qot iQsured
value of mariQe property. Post salvage; value of equipmeQt
salvor puts iQto risk.
- :hat peril will the vassel save itself from? Time it will take
the salvor to save the property.
- ProfessioQal salvor (equitable uplift), chaQce salvor.
- :ith their equipmeQt aQd recreatioQal purpose.
- 0otive coQcept: other iQterest iQvolved. Vassel owQer`s
iQterest, iQsuraQce carrier`s, lieQ holder`s iQterest. 50% is
about the maximum. 8Qder salvage law, gettiQg 50% is rare.
- 6hoppiQg 6pree case: additioQal fee based oQ the leQgth of
the boat.
- $mico: BrittaQy, blue water, eveQ with moderQ
commuQicatioQs, Qo cure Qo pay, whatever the court will
give us.worst oil spills iQ BriQttaQy.
- $riaQo: iQvolves crew member. &rew member became ill,
ship owQer doesQ`t have the duty to seek medical care.
$mber. coast guard will kQow where ships are.
- Treasure salvage:
- Widow case:
- Archeological ship wreck: archeological value see sovereign to seek value.
Go to state here without touching what you found. Enter into partnership.
Contract type of salvage. Deal made beforehand. Carribean European statesǥ
military property. Military vassels. National govǯt never abandons property,
never ever never!
- Specific to other laws, something you prove
- Salvage awards: 1999 intǯl salvage convention- where the salvor not
successful in saving property but expends time and material to reduce the
damage, they are entitled to quantum meruit. (reasonable compensation for
services).
- Fishing boat is dragging and gets unexpected stuff net.
- Military claims act (legislative)
- When you get into a fight about archeological stuff, you have to do it in state
under 11
th
Amd. Donǯt bring it to fed court.

Maritime liens and mortgages.
International charter mortgage.

10/5/2010- voyage charter
y Demise/ Bareboat: whole of the vessel.
o Bareboating: run the vassel for one entire week and operate by
owner.
o Vessel is seaworthy.
o Send marine surveyor; do joint survey (charter and owner).
o Take inventory.
o Charter and owner hires surveyor and inventory taker.
o If you donǯt do it in case of collision, itǯs evidence spoilage.
y Time charter: what cargo itǯs going to
o One or two weeks.
o Owner maintains the control of the vessel.
y Voyage charter
o Control of the vessel: owner. Point A to B.
o Vassel carrying freight
o Contract of freightment:

y Reciprocal duties: trading limits of the vessel, certificated to
y Insurance. Master during voyage charter. Forms. Benedicts on admiralty
y Insurance, depends on the credit of the charter of the vesse and not the
vessel itself.
y Vessel: overlap of returning; charge for underlap. Not so important. When
you charter a vessel and a signed agreement.
y Fixture: maritime contract. Enforceable in admiralty court.
o Tall ships are coming into Boston. Govǯt pays premium rates on
charters. Look at the dates.
y Legal bareboat charters
o Demise/ bareboat charters:
Pro hac vice: only certain vessels between one port to another
port in the US.
Pay per head. Foreign built vessels. US operated/owned
vessels can carry passengers for hire.
Might be foreign built but not subject to coast guard inspection.
Classic yacht.
Charter vessel and become pro hac vice owner.
Only applicable for demise charter.
# of people on board. Under private legislation a lot of vessels
became grandfathered in.
46 CFR subchapter h Ȃ larger ships, t- small ships ; chartering,
inspection requirement.
2001, 2002 passanger act.
Nevigation circular. Size of the vessel, where operation, #
people in addition to the crew., what they were doing.
Wedding, not passenger for hire.
Nevigation vessel inspection circle. (NVIC)
46 CFR, 43 CFR
o Federal Military cannot enforce civic law, army, nave, marine corps,
coast guard can enforce civil law. (posse comitatus)
Can go w/o warrant to search the vessel.
Tell your client to shut their mouth, because itǯs obstruction of
Fed inspection, w/o warrant and custom.
Harbor masters: whatǯs happening in harbor.
o Supplemental rules
Enforcing maritime lien. Sued in
Difference b/w supplemental and state process is ex parte, so
you donǯt have to give notice to the D when attaching the
vessel. You can use rule b and d without notice.
Once you do that, you have to give notice.
Under state law, you have to give advance notice when attach.
Expectation in admiralty is different,. Vessels are highly mobile
we have this law to supply secure compensation and
necessaries, whether it is tort or contractual.
Only reason to obtain security for debt is insurance policies.
Why do we have these rules, how do we use these rules. To
benefit client but not to take advantage of the rules, once we
start to abuse the rule, then the rule will disappear.
Statutory because federal rules of c/p
McDuggles: substantive due process. Procedural is you follow
the rules by sending letter, substantive, you shouldǯve done
something more. The spirit.
Practice under supplemental rules.