A common defense in maritime personal injury and property damage litigation is the “Act of God,” also known as force majeure.  It is premised on the argument that the event causing an injury or loss is the result an extraordinary and unexpected manifestation of the forces of nature that was unforeseeable and could not have been protected against by reasonable diligence.  The trouble is, more often than not marine casualties are at least partly the result of some substandard human conduct; and when a party’s own negligence or wrong-doing contributes to a casualty, it will not be exonerated by blaming an Act of God.  Consequently, this defense is rarely successful.

But this approach worked in the case of Wendelboe v. Seariver Maritime, Inc., et al.  In that case, Seariver prevailed in a lawsuit brought by the chief engineer/safety coordinator of the Exxon New Orleans who was injured after being battered by an unusually large wave that crashed over the ship’s main deck.  Another crew member was washed from the deck and lost at sea by the same wave.

The chief engineer sought to hold Seariver liable, arguing that the accident resulted from its negligence in exposing him to the risk of harm or because of some unseaworthiness of the ship.  The court rejected the claims of fault by Seariver and instead found that the accident was caused by a rogue wave that occurred during a relatively calm spell after a recent period of rough weather.  The court also observed that Seariver had shipboard practices and policies in place to promote the safety of its crew during expected heavy sea conditions.  Because the accident was caused by an unexpected and unusual natural force, without any culpability on the part of Seariver, the chief engineer had no basis to recover against Seariver.

A defendant bears a difficult burden in proving that an accident was caused solely by an “Act of God.” To succeed with this defense, the defendant must prove that the accident was attributable to natural causes and that it was not negligent in contributing to the accident.  Seariver Maritime met this heavy burden in this case and was found to be free from fault, accordingly.

Note: This article first appeared in WorkBoat magazine, and it can be found on WorkBoat’s website.

With increasing frequency, mandatory arbitration clauses are being written into maritime contracts.  You may have run across them in charter parties, towage and salvage agreements, articles of employment and even cruise line tickets.  Nowadays, people are more willing to embrace arbitration over formal litigation for dispute resolution because it is typically perceived as less expensive and more “user friendly.”  Recently, however, cases out of the Supreme Court and the Fifth Circuit have broadened the potential reach of mandatory arbitration clauses contained in contracts.

In the Fifth Circuit case of Todd v. Steamship Mutual Underwriting Association, Ltd., the court found that a mandatory arbitration clause contained in an insurance agreement between Delta Queen Steamboat Co. and its liability insurer could be enforced against a Delta Queen employee.  The significance of that holding is that the court concluded that the arbitration agreement was enforceable against the employee who was not even a party to the contract that contained the arbitration requirement.  In that case, the employee had successfully sued Delta Queen, but was unable to recover his monetary award because of Delta Queen’s bankruptcy.  Therefore, he filed a direct suit against Delta Queen’s insurer to recover the sums to which he was found to be entitled.  Relying on a clause in its insurance policy, Steamship Mutual argued that it was not subject to suit by the employee because of the mandatory arbitration requirement.  The employee countered that the arbitration clause was not applicable to him because he was not a party to that insurance contract.

Guided by the U. S. Supreme Court decision Arthur Anderson LLP v. Carlisle, the Fifth Circuit concluded that under some circumstances, a third party can, in fact, be bound by the contractual obligations created between other parties.  On instruction from the Fifth Circuit, the district court painstakingly considered the applicable state and English laws that were applicable to the insurance policy and concluded that the employee could be bound by the policy language because he was basically seeking to enforce and benefit from that contract between Delta Queen and the insurer.  As a “third party beneficiary”, the employee was bound by the terms of the contract, even though he was not a party to that contract.

While the Todd and Carlisle cases do not stand for the enforcement of arbitration clauses against third parties in all situations, they signal a trend toward compelling alternative dispute resolution in cases where there is a significantly close relationship between the parties to the contract and a third party against whom the arbitration is sought to be enforced.  Thus, when entering into contracts, be aware that your own rights and remedies may be influenced by other relationships of those with whom you are dealing.

Note: this article first appeared in WorkBoat magazine, and the electronic version of the article is also available on WorkBoat‘s website.