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South Texas College of Law Houston
Reed, Harry L.

Professor Reed
Fall 2008
a.       Freight means the money paid for the shipment, and the
b.       Cargo is what is being shipped. 
c.        Cabbatige Laws:
a)       laws that restrict internal shipping to those ships that are part of the
b)       coastwise trade which means the vessel must be
1)       Built in the US,
2)       never sold to foreign interests outright, and
3)       at least 75% ownership of US persons.
c)       This applies if a boat or ship is transporting goods or persons
d)       from a point in the US to another point in the US;
e)       the statute (Jones Act) is set up to pierce all corporate veils
f)        as to whether the vessel actually is a “coastwise” ship.   
EFFECT: The penalty for hauling people or property between points w/in the US, is forfeiture of the ship and/or cargo.
HYPO: most cruises to AL start in Vancouver, otherwise if going from Seattle to AL, then have to be a US Flag under Cabittage Laws.
EXCEPTION-Work Rigs and Platfoms: many platforms have a percentage of foreign ownership; if several companies own, then may not qualify b/c they cannot verify that their financial holdings are at least 75% US securities. A statute was passed in 58, to ease the statute so that the 75% rule didn’t apply to work rigs and platforms. 
NUANCE: To fly the US flag in foreign commerce, the ship has less stringent requirements, it simply has to have the skipper and majority of the officers and some of the crew US citizens, but have strict standards for enrolling in the coast wise trade.
HISTORICAL & POLICY DEVELOPMENT: most Maritime nations have cabbitage laws that require that their internal shipping, from one river point to another, or coast to another coast w/in the country, is part of the nation’s internal commerce. There was a feeling, partly national security, partly a subsidy to the ship industry of the nation, we need this internal commerce, and if they allowed international ships in there, than if we become dependent, and they are called back, that would leave us high and dry. The US Cabbitage law emanates from the Jones Act (better known for its personal injury laws) exists as § 27 of the Merchant Marine Act of 1920. Sometimes GM has not been able to qualify for Coastwise trade b/c their stock is owned over 25% foreign. Say, a co has a certain % of citizens in an affiliate, and 80-90% of assets of that affiliate are in the US, than can have a vessel not self-propelled big, or self-propelled but only to 500 tons. 
Now, you can have a US owner and a foreign person lease it as a charter. This is basically though a straw man transaction. E.g., Vietnamese woman who wanted to get a ship to engage in what is legally considered a cost-wise trade business, well Reed told them to get a US owner and lease it to her. There is no need today for coastwise trade, since they have a monopoly under §27 of the Jones Act. Now, France, get some of your vessels busy in foreign commerce where they say that 50% of commerce coming in and out must be in a french vessel, this would be a good idea for the US to engage in such a practice to help out the merchant marines in the US. Now, instead they have subsidies for merchant marines, in the 70’s to get about 20 vessels in foreign commerce.        
d.       Bottoms: modern ships carry cargo on the top (historically held in the bottom of the ship), but the “bottom” is still term used for describing the area of the ship where the cargo is held.
e.        Libel: the term used for a lawsuit at admiralty.
f.        Proctor: a word that means agent and has ecclesiastical overtones, was what an admiralty lawyer was called until the unification of the admiralty rules of procedure w/ the FRCP in 1966. 
g.        Libel: was the admiralty term for complaint or petition. The plaintiff was termed the libelant, and the defendant the respondent. 
h.       Prize: a vessel or cargo of a belligerent power captured by the other naval vessel or privateer.     
i.         Ships: ocean going vessels are ships. 
j.         Boats: Inland water crafts (i.e., crafts on lakes, ponds, rivers). 
The development of Admiralty Law & Commerce
England’s structure of Common Law Courts (arranged in ascending order)
1)       Supreme Court of Judicature = The Judicature is the trial level, and has divisions
2)       High Court of Justice;
3)       High Court of Appeals;
4)       House of Lords w/ seven law lords, over the High Court of Appeals. 
CHANCERY: handled matters in equity. 
PROBATE/DIVORCE/ADMIRALTY: these didn’t fit in the CL (Kings Division), and not in in the Court of Chancery. 
THE HIGH COURT OF THE ADMIRAL: In the UK, Admiralty was in the court of the high admiral until the late 19th century.
1)       The Lord High Admiral had equal stature as the lord high constable and treasurer; 
(1)     He ran the navy and had JD over
(2)     disputes between the merchant marines
(3)     occurring on the high seas or w/in the ebb and flow of the tide,
(4)     until the CL courts and Admiralty clashed, resulting in the Admiralty JD
(5)     being restricted to hearing cases against a particular vessel, i.e., only the legal person of the vessel was before the court where a collision between two ships occurred.   
RELIEF: The only relief was to sell the vessel in rem (title against the whole world) and divide the pay off among the plaintiff claimants, and if left over the owner got the remainder money from the sale. This was all they could do originally. In Rem actions were peculiar to Admiralty.
                Standard as to whether CL, Equity or Admiralty = depends on what the p seeks
(1)     If damages sought: it’s a CL case, and only a lump sum could be awarded.    
(2)     If seeking Equity: go to Chancery court. 
(a)     Chancery JD was invoked only when
(b)     An award of damages would be inadequate
(c)     To compensate the p. 
EFFECT of “INADEQUATE?” Asking the court to compel another to take action or inaction. This is termed asking for “in kind relief.” Typically, the p is asking for an injunction. A negative injunction sought to preclude behavior. Positive/Mandatory injunctions sought to compel action (usually force someone to give something; more common).
1)       Admiralty developed from cases
2)       Applying a uniform international law termed
3)       The General Maritime Law,
4)       followed by all maritime nations. 
EFFECT: The General Maritime Law is still in force, the Congress has never adopted, and though the Art. III § 2 gives Fed JD to Admiralty actions, it doesn’t say what law to apply, so they assumed the Gen Maritime Law would be applied.
AUTONOMY of NATION SPECIFIC COURTS: Applying this, England would go one way, and US another if applied today. However, there is a uniformity around the world w/ General Maritime Law. Congress has power to change some of this though, and for a long time it was considered after the passing wrongful death statutes (didn’t have at original CL), on land. But the admiralty law did not have until the 20’s a wrongful death action, passed then by congress. 
v      There is no SOF in Admiralty, for Ks, can and are made w/o written instruments.
v      Admiralty has always normally awarded pre-judgment interest, whereas the CL did not; today the CL courts do by statutes, TX does by case law. 
v      Admiralty apportions the negligence (fault) among the parties (some states still follow contributory negligence) [more flexible than CL]. 
v      Adjudication of disputes at Admiralty are resolved quicker than CL. 
v      Admiralty cases are bench trials only, whereas CL utilized the jury. However, there are statues that require, in admiralty disputes, a jury to be the fact-finder.
v      Admiralty Jurisprudence based on case precedent from the General Maritime Law. 
Dominant Changes in the Shipping Industry
–          FIRST: Economic Unhealth of the Merchant Marine
(1)     The economic health of the merchant marine has significantly declined
(2)     Because of environmental and OSHA laws, and Unions, it has become
(3)     More expensive to be in the shipping industry, thus priced themselves out of job. 
EFFECT: There are down to well under a thousand merchant marine ships now.
NUANCE: The seafairer’s union was more reasonable. 
CONGRESS: tried several subsidy programs to get ships to build and fly the flag, but never worked b/c foreign shipping undercut the US costs. 
POSSIBLE HELP-Cargo Preference Laws: One thing that would help US shipping, is that some countries have cargo preference laws, e.g., “up to a certain amount of cargo that imports and exports to France must move in and out of France bottoms.” Now, most import and export move on foreign vessels.
INTERNATIONAL TRAVEL: vessels in the coast wise trade, from US port to US port must fly the US flag, else a foreign ship is subject to forfeiture. Thus, it is in international shipping where the sickness has developed since foreign ships have undercut US merchant marines.   
–          SECOND: Fewer Passenger Liners and the Boom of the Cruise Industry
(1)     There are few liners that
(2)     carry passengers anymore;
(3)     Since WWII, the cruise industry has boomed, and
(4)     Most Cruise ships today are foreign (just like most shipping boats)    
E.g., the QEII and the Titanic were passenger liners. Passenger liners have been replaced by airplane travel.  
–          THIRD: The Boom of the Pleasure Craft Industry
(1)     The pleasure craft industry
(2)     Has boomed in recent times. 
NUANCE: today, billions are invested in pleasure craft. They are beginning to make a few waves in admiralty. Issues such as are they really vessels? Ordinary people can now afford to get out in the sea in nice boats.   
–          FOURTH: Containerization
(1)     Steel containers are leased and bought for the
(2)     Purpose of moving goods from one point to another
(3)     Aboard ships; these containers
(4)     Are efficient and require less manpower because they
(5)     Mostly are moved by heavy equipment and can
(6)     ride atop flatcars pulled by trains, or placed on trucks. 
DIMENSIONS: usually eight foot by eight foot by twenty foot made of steel, put them on railroad, to port, to a ship, by mechanics, not by human labor. 
EFFECT: Makes the costs of goods cheaper, and has revolutionized shipping. For example, it costs thousands more to ship from chesapeake bay to florida versus shipping from NY to Japan. Maritime is so cheap as long as time is not an issue (this has been, and still is an enduring quality of maritime commerce that has not changed). If you have Toyotas off the line, or fungible goods (e.g., sparkplugs) you have a stream of boats coming continuously and is cheaper than ground transportation…that’s why Houston port did not feel downside in late 80’s, you get 400 more miles cheaper if you come into Houston, versus New Orleans.] HISTORICAL: it used to take a lot of human labor to handle cargo
– FIFTH: Technology  
1)       As of 1900, half of the commerce was still moving under sail; 
2)       steam engines (ships) didn’t get off the ground until after the Civil War; 
3)       Sailing had the advantage for price b/c no need for fuel. 
4)       Not left much of commerce by sail anymore. 
ROBERT FULTON: invented the steam engine, was interested in naval warfare. 
-SIXTH: The Change in the Salvage Industry at Sea
1)       Whereas the CL does not reward good Samaritans (in fact it may punishes you if you undertake to help someone and do it negligently)
2)       Admiralty law is different and at admiralty
3)       we don’t call them good Samaritans, but a
4)       Salvor and is entitled to a reward. 
POLICY: admiralty law encourages persons to help eachother on the sea. This “business” was designed to be applied by individual ships who happened to be in the right place at the right time. 
CHANGE: Since WWII there is an actual business that make ships solely for salvage. There is a law of salvage. It has become of business where boats wait on wrecks, instead of one mariner helping another and getting a reward. Plus, salvage has gotten into a new arm recently of salvaging ancient wrecks. Such as the titanic. And then bring pieces up. There is real money involved here. Say a ship goes down w/ 3 to 4 million in gold boullion. Today if you find a treasure wreck…such as a Spanish galleon…there is a great deal of money to be made in salvage due to an increase in technology.    
-Admiralty JD in General-
POLICY: The fundamental interest, giving rise to maritime JD is the “protection of maritime commerce.”
Originally and still the Modern UK:
A.      Admiralty JD applied to disputes occurring
B.      On the high seas
C.      And those occurring as far as the tide came (to the ebb and flow of the tide).
EFECT: originally, disputes that occurred on inland waters, such as lakes ponds, and ri

legs down to the sea floor, and the barge will ratchet itself up. SO now it’s not actually floating…is it a vessel when standing up? Now then when finished its get under way to another location is it then a vessel? The admiralty extension act covers a lot of situations, but these are freak structures. Some of these float by anchored by cables, whereas some have motors that keep an equilibrium, and others look like a ship that has a drill. 
EXCEPTION-“Oar Powered:” In practice, oar powered boats do not come under admiralty JD. Otherwise, no requirement on what moves the structure. 
EXCEPTION-“Dead Ships:” a vessel which is permanently withdrawn from navigation is a “dead ship” and is not a vessel for maritime purposes. 
MAJOR REPAIRS: A vessel undergoing major repairs may be sufficiently withdrawn from navigation to lose temporarily its status as a “vessel” for maritime matters. It is an issue of fact w/ the following factors = the nature of the cost of the repairs, whether the owner remains in control of the vessel, and whether the repairs require an invasion of the “watertight integrity” of the vessel.   
HYPO: horse drawn boats qualify as “vessels?” The court says that how it is propelled doesn’t matter as long as it’s on navigable in fact waters… Is there any requirement not be propelled by horses? No. And none that it be propelled by machinery or sail.   
—Congressional Definition:
1)       1 U.S.C.A. § 3 provides that a “vessel” includes
2)       every description of watercraft or other artificial contrivance (contraption) used,
3)       or capable of being used, as a means of transportation
4)       of people or property on water. 
IMPORTANCE: in many cases, whether a matter is “in admiralty” depends upon whether it has a sufficient relationship to a “vessel:”
v      Maritime liens and preferred ship mortgages attach only to “vessels,”
v      Limitation of liability (act) is available only to the owner or demise charterer of a “vessel.” 
v      An injured employee may qualify as a seaman, thereby gaining the benefits of maintenance and cure, the Jones Act, and the Warranty of Seaworthiness, only if his employment has the requisite connection w/ a “vessel.”
v      ML, in order to have a salvage claim, to get the reward, CJ Tauney said 150 years ago in dictum that it has to be a “vessel” to trigger salvage law. 
USUALLY: the issue of whether a structure is a “vessel” usually arises in cases involving ships under construction, ships which have been withdrawn from navigation, and certain special function structures used for harbor work, the production of minerals from the seabed and subsoil of navigable waters, and harbor recreation (e.g., gambling casino boats and houseboats).   
—Non-Traditional Structures as “Vessels:” The 5th circuit asks
1)       For what purpose was the craft constructed and the
2)       Business in which it is engaged
PURPOSE PRONG: If the owner constructs or assembles a craft for the purpose of transporting passengers, cargo, or equipment across navigable waters and the craft is engaged in that service, the structure is ML a “vessel.” In many cases, the purpose for which the craft is constructed or assembled can be inferred form the use to which the craft is put by the owner. 
E.g., an assembled rig for the purpose of transporting a workover rig across navigable waters to plug and abandon wells at various sites on navigable waters is a vessel. 
BUSINESS PRONG: evaluating the importance of the craft’s transportation function is the key to determining the craft’s status as a “vessel;”
1.       Where the transportation function of the craft at issue
2.       Is merely incidental to its primary purpose
3.       Of serving as a work platform the craft is ML not a “vessel;”
4.       Conversely, where the use of the craft is transporting
5.       Passengers, cargo, or equipment was an important part
6.       Of the business in which the craft was engaged, the court is ML going to find,
7.       That the craft is a vessel, even if it also say served as a work platform. 
MATTER OF LAW: whether a structure is a “vessel” is a matter of law for the courts. 
EMPHASIS: emphasis is placed on the manner in which the structure is attached to the shore or the ocean bottom, whether it is registered and equipped for navigation, and the extent to which it is moved.
NUANCE: the fifth circuit gets most of the offshore mineral production cases. 
HYPO: court found that a rig is a “vessel” but doesn’t look, smell, or move like a ship as traditionally imagined. Is this a work platform or a vessel? 
HYPO: whether a barge is a “vessel.” Court looks to purpose of making the barge, and the service engaged in. Here, it was not self-propelled, had no quarters, but does move some people and property, but its incidental to its main purpose. Thus, not a vessel.
NUANCE: Courts have a tendency to find “vessel” status to find the p as a seaman, b/c they are more kind than land based remedies. On land, an employer is insulated by worker’s comp laws, but if someone else than can sue for unlimited amount. However, at admiralty, there is no limit on how much you can sue your employer when injured in maritime commerce.