Maritime Law--MLC Detentions Continue: Are You Ready?

October 28, 2013

As I have been blogging for the last year, the Maritime Labor Convention ("MLC") came into force internationally on August 20, 2013. Within two weeks, the first vessels were detained for non-compliance.

On September 3rd during a port state inspection of the Liberia-flagged offshore supply vessel ATLANTIC CARRIER, the Danish Maritime Authority observed that the crew had employment contracts that were not MLC compliant. The vessel was detained for 24 hours while the issues were corrected and she was then permitted to leave port and continue her operations in the North Sea.

ATLANTIC CARRIER: picture provided courtesy of Maritime Executive magazine

Around the same time period, LIA M was detained in Canada. The crew complaints included unpaid wages; a collective bargaining agreement that failed to list the vessel's name, a date or a wage scale; crew with no money, no shampoo, toothpaste or other items; a crew member who had twice been refused access to a doctor; and crew members having been forced to sign blank employment contracts.

However, the requirement that each crew member has a valid employment contract is only one aspect of seafarers' rights under the MLC. Shipowners are also required to implement measures relating to seafarer wages and hours of work, accommodation, food and catering, health protection, medical care, welfare and social security protection. In addition, a shipowner has to ensure that the ship carries an on-board complaints procedure. This must enable seafarers to raise issues about MLC compliance without retaliation. If the seafarer's complaint is not satisfactorily dealt with, he may bring it to the attention of the next port state control inspector, who in turn has the power to detain the ship.

About a month later, the Panamanian-flagged bulk carrier KOUYOU was detained in the port of Quebec, Canada, after maritime labor officials determined that crew were owed more than $51,000 in back pay. This was the third detention in Canada of a vessel under the MLC. This discovery was reported by the Maritime Executive to have been made by an inspector with the International Transport Workers Federation (ITF) and Unifor union. What was more surprising is that it was discovered that the involved crew had paid a total of $6,600 in fees to obtain their jobs. Recruitment or placement fees paid to manning agents are illegal under the MLC.

Although August 20th was the landmark date on which the MLC entered into force internationally, there is an important point to note. Ratifying states have 12 months from the date of ratification to enact the MLC into their domestic law and commence enforcement via flag and port state control. Therefore in principle, one would expect to see a phased introduction of the MLC by different flag states around the world over the coming months. Thus, shipowners whose vessels fly the flag of a state that has recently ratified might be tempted to think that they have time before their vessels need to be MLC compliant.

However, the "no more favorable treatment" provisions of the MLC I have been stressing again and again need to be remembered. In effect, these provisions require ports of states where the MLC has already entered into force to inspect all vessels for compliance, regardless of the flag they fly. This means that shipowners' interests may be best served if they take steps to ensure their vessels are MLC compliant now.

If you are interested in contacting me, you may do so by writing to me at mov@chaloslaw.com.

Maritime Law-Chasing Whistleblower Bounties

October 22, 2013

In August, I spoke to the North American Maritime Ministries Association on the topic of Legal Issues Affecting Seafarers and Ship Operators in Whistleblower Scenarios. You can read more about NAMMA here => NAMMA. Since this presentation, I have been asked to opine on other sorts of whistleblower scenarios. I recently noted that the Securities and Exchange Commission has just obtained a record $14 million whistleblower bounty for an in-house counsel whistleblower against his own company, which certainly may have some in-house counsel wondering if they should squeal on their clients. 

The Corporate Counsel magazine on October 14th cites a growing number of in-house counsel and compliance officers filing whistleblower-related claims against their own companies. I find this a disturbing trend, as these cases present a host of issues not present in an ordinary whistleblower claim, such as the plaintiff’s use of privileged communications, attorney work product, and confidential client information. In my view, an in-house counsel claim leaves a company particularly vulnerable. However, it would appear that states are starting to enact ethics opinions directly addressing the growing concern. 

Corporate Counsel reports that the New York County Lawyers’ Association issued an ethics opinion stating that New York in-house or outside corporate counsel cannot ethically collect whistleblower bounties for providing confidential information about their clients to the SEC. In addition, a U.S. Supreme Court case earlier this year made it harder to prove that an employee was retaliated against for whistleblowing. The ruling required a stronger showing of causation from the plaintiff.

However, I could not find any such ethics  opinions issued here in Florida. If you know of one, please let me know where I can find it. 

Given the current status of whistleblower law, there may appear to be a narrowing trend in the U.S. for whistleblower plaintiffs. However elsewhere, the whistleblowing concept is gaining broader ground. The Financial Times has reported that the United Kingdom, which enacted a new whistleblower law this year, is now considering whether to begin paying U.S.-style whistleblower bounties.

So for those of you overseas, you will need to watch what we do over here!

If you are interested in receiving a copy of my Powerpoint presentation to NAMMA (as it addresses some of these concepts) or are interested in contacting me, you may do by writing to me at mov@chaloslaw.com.

Maritime Law-What you need to know about the MLC

October 14, 2013

Given my work on the subject, the Professional Mariner magazine had me guest blog an article on the Maritime Labor Convention ("MLC"). It was incidentally posted on August 20, 2013, the implementation date for the MLC. You can find the complete article here => Professional Mariner Magazine.

I continue to be barraged by questions related to applicability of the MLC in given scenarios. The answer is simple, the MLC will apply to ships of all tonnages, whether publicly or privately owned, which are “ordinarily engaged in commercial activities.” The MLC does not provide a definition for what constitutes this quoted language and there has been some debate in yachting circles as to whether yachts are included. Some flag states have been publishing their narrow interpretation of this language as a way to encourage these vessel owners to change flags. However, this interpretation is not an answer to the “no more favorable treatment” clause which is a principle of the MLC.

So in other words, when port states which have ratified the MLC verify foreign ships’ compliance with the MLC in their ports, the intended system of port state enforcement will allow those ships carrying the MLC Certificate issued by its flag state to avoid inspection, whereas those that do not will be subject to inspection, resulting in possible delays. If the flag state of the vessel is one which has issued a narrow interpretation of the "ordinarily engaged in commercial activities" language, this may cause detention issues. I am not saying that it will. What I am saying is that given the policy of the MLC of “no more favorable treatment” to ensure that ship owners are not able to evade minimum obligations to their seafarers by failing to implement MLC under a non-ratifying flag state, if port state control believe that the vessel is ordinarily engaged in commercial activities, it will be in violation of MLC.

If you are interested in contacting me, please feel free to do so at mov@chaloslaw.com.

Maritime Law-Busy Week With New Decisions on Punies, Time Bars and Penalty Wages

October 09, 2013

This week bring us 3 new decisions which touch on the following issues in this order: punitive damages for unseaworthy vessels, time bars in salvage actions and penalty wages.

The first case is McBride v. Estis Well Service LLC, No. 13-30714 (5th Cir. Oct. 2, 2013). This case arose out of an accident aboard ESTIS RIG 23, a barge supporting a truck-mounted drilling rig. The principal issue was whether seamen could recover punitive damages for their employer's willful and wanton breach of the general maritime law duty to provide a seaworthy vessel. Like the doctrines of maintenance and cure, unseaworthiness was established as a general maritime law right before the passage of the Jones Act. Therefore, the Court reasoned that as punitive damages were available under the general maritime law and the Jones Act did not address unseaworthiness or limit its remedies, the court accordingly reversed and remanded, concluding that punitive damages remained available as a remedy for the general maritime law claim of unseaworthiness.

The second case is Williamson v. Recovery Ltd. P'ship, No. 11-3723/12-3949 (6th Cir. Oct. 2, 2013). The facts in this case are interesting. The Nineteenth-Century steamship S/S CENTRAL AMERICA sank in the Atlantic Ocean in 1857, taking down with her tons of gold. The wreckage was discovered more than 130 years later by explorers led by Thompson. Thompson is a fugitive from the law. Those who assisted Thompson in locating the wreck signed non-disclosure agreements in exchange for a percentage of the net recovery, but none had received payment. In defending the suit brought by these plaintiffs, Thompson's business entities asserted a two-year statute of limitations for actions in salvage and three counterclaims. The District Court rejected the time-bar argument and granted summary judgment against all counterclaims. While an interlocutory appeal was pending, the District Court granted prejudgment attachment and an injunction against one of the entities and Thompson, forbidding them from divesting certain assets. The Sixth Circuit agreed that the time bar does not apply, affirmed summary judgment against the counterclaims  for failure to raise an issue of fact material to the disposition of the case and upheld the injunction.

The issue of interest in this case, despite the history, the parties involved and the legal procedural maneuvers, is the issue related to time bar. Thompson's business entities cited the 2-year statute of limitations in salvage (46 U.S.C. section 80701(c)) to suggest that the plaintiffs were time barred in their quest for remuneration. However, the Sixth Circuit found that as there was a contract between Thompson and the plaintiffs, this was not a pure salvage situation but rather, a contract salvage situation, to which the statute does not apply. This case is good reading for anyone wanting a good  history read on the S/S CENTRAL AMERICA or a good summary on contract versus pure salvage.

The third case is closer to home--Wallace v. NCL (Bahamas) Ltd., No. 12-15204 (11th Cir. Oct. 1, 2013). Here, plaintiff seafarers who worked aboard cruise ships operated by NCL filed suit under the Seaman's Wage Act, 46 U.S.C. section 10313 et seq, claiming that NCL did not pay them their full wages because their compensation did not take into account the amounts they were required to pay their helpers to complete their work on embarkation days. The Eleventh Circuit concluded that the District Court made findings of fact which were supported by the record that there was no evidence of willful, arbitrary or other misconduct on the part of NCL in failing to pay wages. Accordingly, the Eleventh Circuit affirmed the judgment of the District Court.

If you are interested in receiving copies of any of these decisions or wish to reach me, you may do so by contacting me at mov@chaloslaw.com.