Maritime Law

Subscribe to Maritime Law
There are important differences between maritime arrest and attachment.

“A ship may be here today and gone tomorrow, not to return for an indefinite period, perhaps never. Assets of its owner . . . within the jurisdiction today, may be transferred elsewhere or paid off tomorrow.”[1] This problem, aptly described by the Ninth Circuit and all too familiar to those transacting business in the maritime industry, constitutes one of the primary justifications for the centuries-old doctrines of maritime attachment and arrest. Both maritime attachment and arrest provide a claimant, who might otherwise be left without a remedy, with the important ability to obtain pre-judgment security and, practically speaking, force the defendant to respond to a suit.[2] However, the doctrines are distinct, and the distinction is often lost on the unfamiliar.

To utilize maritime arrest, the claimant must have a maritime lien on the property to be seized.[3] A maritime lien can arise in a number of situations, including the provision of necessaries to a vessel (such as bunkers, supplies, repairs, or any other goods and services that benefit the vessel), wages of the master and crew, damages arising from maritime torts and contract maritime liens.[4] “Although the property to be arrested usually is a vessel, any property that is subject to a maritime lien can be arrested, including intangible property . . .”[5] Once a claimant can establish that property subject to a maritime lien can be found within the territorial district of a federal court, the claimant can have that property seized by the United States Marshal.[6] Further, the owner of the seized property is only entitled to its release upon posting adequate security with respect to the lien amount. Alternatively, the seized property can be sold to satisfy the lien; however, if the amount received is insufficient to satisfy the lien, the owner of the property is not liable for the balance because the action is solely against the seized property, not the owner.[7]

Like maritime arrest, maritime attachment can also be utilized for the pre-judgment seizure and potential sale of the debtor’s property to satisfy a judgment.[8] Beyond this basic similarity, however, maritime attachment and arrest differ significantly. Maritime attachment is, on the one hand, broader than maritime arrest. It is ostensibly available to anyone with a maritime-based claim. Further, any property belonging to the debtor, which is found within the territorial district of a federal court, is subject to attachment.[9] Thus, unlike with maritime arrest, the property need not have any relationship with the claim itself.[10] Further, maritime attachment allows a claimant to obtain a personal judgment for the full sum due against the owner of seized property, and the owner remains liable for the balance of the judgment if the property seized is insufficient to satisfy it.[11] On the other hand, maritime attachment is more limited than maritime arrest because it is only available to a claimant who can establish that the debtor is not subject to personal jurisdiction within the applicable judicial district.[12]

While the distinctions between maritime attachment and arrest are important, and the use of these powerful tools must be analyzed carefully, both remain vital resources for anyone transacting business in the maritime industry. This is especially true given the ease with which assets, especially vessels, can be tracked and located in today’s marketplace.

________________________________________

[1] George A. Rutherglen, The Contemporary Justification for Maritime Arrest and Attachment, 30 Wm. & Mary L. Rev. 541 (1989) (quoting Polar Shipping Ltd. v. Oriental Shipping Corp., 680 F.2d 627, 637 (9th Cir. 1982)).

[2] See William Tetley, Arrest, Attachment , and Related Maritime Law Procedures, 73 Tul. L. Rev. 1895, 1928-29 (1999).

[3] Ravenna Tankers Pte., SRL v. Omni Ships Pte. Ltd., Nos. 13–127, 13–221, 2013 WL 2153544, *4 (E.D. La. May 15, 2013).

[4] See Tetley, supra note 2, at 1929-30.

[5] Ravenna Tankers, 2013 WL 2153544, at *4.

[6] See Tetley, supra note 2, at 1933.

[7] Id.

[8] Belcher Co. of Alabama, Inc. v. M/V Maratha Mariner, 724 F.2d 1161, 1165 (5th Cir. 1984).

[9] Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263, 268 (2d Cir. 2002) (overruled on other grounds by Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte. Ltd., 585 F.3d 58 (2d Cir. 2009)).

[10] Id.

[11] Belcher Co. of Alabama, 724 F.2d at 1165.

[12] Rule B of the Supplemental Rules for Admiralty and Maritime Claims.

The scenario may be all too familiar. A vessel owner is involved in a commercial relationship with a valuable customer, when a marine casualty involving the vessel occurs. The customer makes a written demand on the vessel owner to pay the costs of repair plus consequential damages. Liability on the part of the vessel owner is not a lock, but fairly clear. The quantum of damages is substantial, but the potential consequential damages are uncertain. Settlement negotiations are ongoing, and partial payments are made. Moreover, there is always the commercial relationship to consider. At what point should the vessel owner file a complaint for limitation of its liability, pursuant to the Shipowners’ Limitation of Liability Act, or risk it being found untimely for failure to file within six months of receipt of a written claim?

In In re: Marquette Transportation Company, L.L.C., No. 12 – 31182 (5th Cir. May 31, 2013), the Fifth Circuit concluded that if the customer’s initial demand letter revealed a “reasonable probability” that the claim will exceed the value of the vessel, then the vessel owner must file the limitation complaint within six months of receipt of that letter. “When there is uncertainty as to whether a claim will exceed the vessel’s value, the reasonable possibility standard places the risk and the burdens associated with that risk on the owner.”  Id. at 4. As I have previously cautioned, “If in doubt, file the Complaint for Limitation of Liability.”

Under the particular facts of this case, Great Lakes’ dredge ran aground while under the tow of Marquette’s tug, requiring repairs that were not completed until 17 days later. On February 24, 2011, Great Lakes made a written demand on Marquette, stating Marquette was negligent and that Great Lakes would hold Marquette responsible for repairs in excess of $600,000, as well as consequential damages. The parties engaged in settlement negotiations, and reimbursement for certain repairs were made, but it was not until December 7, 2011, that Great Lakes finalized its calculations of its consequential damages, and made written demand on Marquette in excess of $4.5 million. Within six months of receipt of the December letter, Marquette filed its limitation complaint and posted a bond for the limitation fund in the amount of $2.1 million.

The district court and Fifth Circuit concluded that Marquette should have filed the limitation complaint within six months of receipt of the initial demand letter, even though the quantum of consequential damages was uncertain. As a result, Marquette’s limitation complaint was dismissed as untimely.

An often contentious issue in maritime litigation involving both personal injury and property damage is whether the wheelman in charge of a towing vessel that exceeds 26′ violated the so-called “twelve-hour rule.” According to 46 U.S.C. § 8104(h), “an individual licensed to operate a towing vessel may not work for more than 12 hours in a consecutive 24-hour period except in an emergency.” It is important for a company to make sure its wheelmen understand how investigators clock a 24-hour period, and what the courts consider “work.”

To provide guidance to summarize and clarify the work-hour limitations for licensed operators, the United States Coast Guard (“USCG”) issued a policy letter, G-MOC Policy Letter 4-00, Rev-1. According to the USCG, except in emergencies, a licensed operator of a towing vessel “may not work in excess of 12 hours in any consecutive twenty-four (24) hour period.” The Federal District Court for the Eastern District of Louisiana, interpreting the language of the statute, as well as the USCG Policy Letter, has held that in determining whether the 12-hour rule was violated “the countdown starts from the time the injury occurred, going back 24 hours.” Mercer v. Chem Carriers LLC, 790 F. Supp.2d 478, 481 (E.D. La. 2011)(relying on language, i.e. “Up to the time of the collision”, used by the U.S. Fifth Circuit Court of Appeals in Archer Daniels Midland Co. v. M/V Freeport, 909 F.2d 809, 810-11 (5th Cir. 1990)).

Though the term “work” is not defined by statute or regulation, the term “rest” has been defined as “a period of time during which the person concerned is off duty, is not performing work (which includes administrative tasks such as chart corrections or preparation of port-entry documents), and is allowed to sleep without being interrupted….” 46 CFR § 15.1101(a)(4). Given the definition of “rest,” it might be difficult for companies to keep track of whether their wheelmen are adhering to the 12-hour rule. Most towing companies establish six hour watch-keeping policies aboard their vessels. That is, crew members work six hours on-watch and six hours off-watch. Most wheelmen record the times they go on-watch and off-watch in the vessel’s log. But what a wheelman does after his relief comes on watch could be just as important.

Indeed, if a wheelman spends his entire six hour watch behind the “wheel” and then spends 30 to 40 minutes instructing or helping other crewmembers and/or tankering barges, one can see where the 12-hour rule might be violated. Another consideration to take in to account is whether travel time to and from the vessel would be included in the definition of “work.” Thus, all activities of a “licensed operator” could be considered by a USCG officer investigating an incident or a court in determining whether a wheelman is compliant with the “12-hour rule.” Because a wheelman’s “work” schedule may be different than his watch schedule, it may be wise for companies to implement policies that a wheelman mark down the time period he is off-duty, i.e., at “rest.”

Resources: 46 U.S.C. § 8104 – Watches G-MOC Policy Letter 4-00, Rev-1