December 14, 2021
Maritime Law: An Albatross for Contractors Navigating Marine Construction
“Ah! Well a-day! When evil looks, Had I from old and young! Instead of the cross, the Albatross, About my neck was hung.” 1
Contractors and subcontractors performing construction over water may find themselves encountering maritime law for the first time. Like the ancient mariner’s encounter with an albatross in The Rime of the Ancient Mariner, a contractor may be able to use maritime law to safely guide it through rough seas, or, if not careful, a contractor may find itself with maritime law hung, like an albatross, around its neck. This article gives an overview of key maritime law issues to demystify this historical body of law and answers some basic questions.
What is admiralty jurisdiction?
The Constitution gives federal courts jurisdiction over all maritime cases. This jurisdiction gives litigants the opportunity to remove state court cases to federal court and to avoid a jury trial. The purpose of admiralty jurisdiction in federal court is to protect and ensure the uniform treatment of nationwide maritime commerce and extends to maritime contracts and accidents. Any contract which relates to the navigation, business, or commerce of the sea is a maritime contract. Even contracts with mixed obligations on land and sea can fall within admiralty jurisdiction – such as construction contracts with a waterborne component. Admiralty jurisdiction also extends to maritime accidents – those that occur on navigable waters and have a maritime nexus.
When does maritime law apply?
For contracts, maritime law typically applies if the contract is related to activity on navigable waters and the parties expect a vessel to play a substantial role in performing the contract. But maritime law doesn’t exist in a vacuum. Where maritime law is silent on an issue, courts supplement maritime law with state law. If a contract provides that a certain state law will supplement maritime law, a federal court will honor the parties’ choice of law. If the contract is silent, a court will apply the choice of law rules of the state where the federal court sits. Most states apply the law of the state with the greatest interest in the contract. As discussed below, some federal statutes dictate that the law of the adjacent state applies.
What is maritime law?
Maritime laws include certain regulatory requirements, general maritime law, and various statutes.
Regulatory Safety and Environmental Enforcement
The United States Coast Guard (“USCG”) is responsible for safeguarding vessel traffic in U.S. waters, inspecting vessels for safety, and documenting U.S. flagged vessels. The USCG also enforces the coastwise trade laws of the United States and vessel manning requirements. On the Outer Continental Shelf, the USCG has agreements with other federal agencies to coordinate inspection, investigation, and response activities.
General Maritime Law
General maritime law honors the parties’ freedom of contract and generally enforces the parties’ intent if stated clearly and unequivocally. It even enforces a contractual indemnity for a party’s own negligence. General maritime law provides for certain claims by injured persons against a vessel. Passengers can sue for simple negligence.
Seamen though, have more than one claim. They can sue for injuries sustained due to an unseaworthy condition, even if unknown that renders a vessel not reasonably fit for its intended purpose. This is a strict liability standard.
A seaman also has a claim for maintenance and cure for any injury or illness regardless of cause if the onset occurred while the seaman was in the service of the vessel. “Maintenance” is a subsistence wage (roughly equivalent to the value of the room and board enjoyed on board the vessel) and “cure” is medical care until the seaman reaches maximum medical improvement. This broad maintenance and cure obligation can give rise to many claims for ongoing dental and healthcare, including for heart attacks and cancer, not just treatment for injuries. Maintenance and cure claims should be handled with caution. There are few defenses to such claims, and if a contractor wrongfully denies maintenance and cure, it can be liable for punitive damages.
The Jones Act2
The Jones Act gives seamen negligence claims against their employer. Jones Act cases can be challenging to defend because seamen have a featherweight burden to establish that the employer’s negligence was a cause of the accident.
The Longshore and Harbor Worker’s Compensation Act (“LHWCA”)
As its title suggests, the LHWCA provides worker’s compensation benefits to longshore and harbor workers. It also applies to offshore installations on the Outer Continental Shelf to provide worker’s compensation benefits to maritime workers who are not seamen. The LHWCA also invalidates an indemnity from an employer of a longshore or harbor worker to a vessel owner.
The Outer Continental Shelf Lands Act (“OCSLA”)
The OCSLA makes the U.S. Constitution and federal laws applicable to any artificial island permanently or temporarily attached to the seabed on the Outer Continental Shelf for the purpose of generating energy – like offshore oil and gas and windfarm developments. Where federal law is silent, the OCSLA adopts the law of the adjacent state as surrogate federal law. In OCSLA cases, courts will not honor the parties’ choice of law, but will apply the law of the adjacent state as surrogate federal law. Given these differences from maritime law, accidents on the Outer Continental Shelf usually involve arguments over whether the OCSLA or maritime law applies to the accident and to indemnity provisions in contracts.
Several other federal statutes could apply to maritime commerce and may also give rise to federal question jurisdiction – giving litigants another avenue to get into federal court.3
What is a vessel?
To the average person, this seems like a simple question. But, considering the types of structures used as work platforms during construction, for gaming activities over water, and for generating energy, the question is not that simple. Whether a structure qualifies as a vessel hinges on whether the structure is practically capable of maritime operations and transporting persons or things over water. A watercraft is not capable of being used for maritime transport if it has been permanently moored or otherwise rendered incapable of transportation or movement.
Why does it matter?
To be able to determine if an injured worker is a seaman, or if a contract is governed by maritime law, a contractor will have to know whether a particular work platform or situs is a “vessel”.
Who is a seaman?
A seaman is a maritime worker whose duties contribute to the mission of a vessel and whose connection to a vessel, or identifiable fleet of vessels, in navigation is substantial in duration – typically at least thirty percent (30%) of the seaman’s work time.
Why does it matter?
Seamen are considered “wards of the admiralty courts” and enjoy special protection not enjoyed by other employees under state worker’s compensation statutes. Indeed, they can sue their employers under the Jones Act for workplace illnesses or injuries. Seamen have claims for negligence under the Jones Act and claims for unseaworthiness and maintenance and cure under the general maritime law. Claims by seamen give rise to considerable damages and should be carefully handled by risk managers and outside counsel. Also, when a claimant is not a seaman, the LHWCA may apply and can make an indemnity provision unenforceable.
What law governs indemnities?
If a contract is a maritime contract, maritime law applies. If the contract is not maritime, state law will apply. If the OCSLA applies, the law of the adjacent state applies.
Why does it matter?
Many states have statutes that invalidate indemnification of a party’s for its own negligence. As a result, most onshore contracts have negligence based indemnities.
Maritime law, with few exceptions, enforces indemnities for a party’s fault. Most maritime contracts contain reciprocal, “knock-for-knock” indemnities where the parties indemnify each other for their own injury and damage claims and those of their employees regardless of the other party’s fault.
As onshore contractors move into the maritime space, they need to understand the indemnity scheme in maritime commerce and avoid ending up in the gap between a negligence based indemnity with the owner and a knock-for-knock indemnity with a vessel.
When working in maritime commerce, a contractor should recognize the critical questions to ask: (i) whether the work platform is a vessel, (ii) whether an injured worker is a seaman, (iii) whether the contract is a maritime contract, and (iv) whether and which state’s law will apply – remembering that on the Outer Continental Shelf, the OCSLA will act as a choice of law trump card and dictate application of adjacent state’s law. Figuring out the answer to these questions may mean the difference between winning and losing an indemnity fight.
Maritime law includes rules, procedures and limitations that, like the albatross, may provide a contractor a path to smoother seas. A contractor that understands maritime law may be able to use it to its advantage. Without such an understanding, a contractor may end up in uncharted and dangerous waters, with maritime law hung around its neck by an opponent.
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