Maritime Law--Miami Home for Arbitration of Panama Canal Dispute

July 31, 2014

It is generally presumed that big arbitrations generally go to New York or London. However, the case between the Panama Canal Authority ("ACP") and the contractor consortium constructing the Panama Canal known as Grupos Unidos por el Canal ("GUPC") have recently begun preliminary discussions for arbitrating their $1.6 billion dispute regarding alleged cost overruns on the largest infrastructure project in the Western Hemisphere.  

Photograph taken from news.nationalgeographic.com July 31, 2014

Miami's legal community has focused over the past 15 years on developing the expertise and venues to handle arbitration cases, particularly for disputes arising in Latin America. This is especially important, as Miami has the legal expertise, the language capabilities and the cultural experience to handle disputes arising out of Latin America.

The Dispute at Issue

According to previous statements from ACP and GUPC, the disagreement began in 2012, three years after GUPC beat out Bechtel with a lower bid and began building a series of larger canal locks to accommodate larger ships. GUPC is comprised of Sacyr Vallehermoso, a Spanish contractor leading the consortium, Impregilo of Italy, Jan de Nul of Belgium and CUSA of Panama.

In October 2012, GUPC filed a claim for $585 million in unforeseeable concrete design changes. ACP rejected the claim and it was submitted to the Dispute Adjudication Board of the International Chamber of Commerce ("ICC").

The ICC had yet to ruled when GUPC presented a disruption claim for $900 million December 23, 2013. A week later, GUPC threatened a work stoppage starting January 20, 2014 if ACP did not pay the combined claims, which amounted to half of the original project cost.

ACP claimed a breach of contract and insisted on holding GUPC to its original bid of $3.2 billion.

Work stopped for a few weeks in February, then resumed at a 30 percent level because GUPC did not have the cash flow to rehire all of its subcontractors. A breakthrough came March 15 when insurer Zurich North America provided a $400 million surety bond, and GUPC and ACP each put up matching funds of $100 million.

The parties will discuss scheduling this week and negotiate the rules of the road on how to proceed with the exchange of information. The parties are following the ICC rules.

One way or another, the Panama Canal expansion will get done, and the project partners will settle their differences, but what international arbitration experts will remember is they worked out their problems in Miami.

If you are interested in learning more about the details of this unique arbitration or wish to contact me in general, you may do so at mov@chaloslaw.com.

Maritime Law-"The Costa Concordia: What If This Happened in U.S. Waters?" (08/14/2014)

July 23, 2014

On August 14, 2014, the Admiralty Law Section, the Federal Litigation Section and the Broward County Chapter of the Federal Bar Association is presenting the seminar "The Costa Concordia: What if this Happened in U.S. Waters?" This seminar will take place at the Riverside Hotel, 620 East Las Olas Boulevard, Fort Lauderdale, Florida 33301 and will be from 8:30 a.m. to 5:00 p.m. The anticipated Florida CLE credits will be 7.0 hours and Florida Admiralty and Maritime Law Certification Credit will be available.

The seminar agenda is impressive and includes the following:

Seminar Agenda

8:30 – 8:40 a.m.                  

Welcoming Remarks and Introductions

Speaker: Patricia Olney, Seminar Chair

8:40 – 9:00 a.m.                  

Short Update on Status of Litigation over Costa Concordia

Speaker: Atillio Costabel

9:00 – 9:30 a.m.                  

Forum Selection/Jurisdiction

Speaker: Allan Kelley

9:30 – 10:35 a.m.               

Salvage/Recovery and Pre-Planning for a Disaster

Moderator: Michelle Otero Valdes; Speakers: Art Meade, VP/General Counsel, Crowley Maritime Corp.; Michael Brown, Area EVP Marine, Arthur J. Gallagher

10:30 – 10:50 a.m. 

Morning Break

10:50 a.m. – Noon              

Peculiar Maritime Remedies and Damages: In rem prospects, Bankruptcy,  Bonds, and Maritime Liens

Moderator: Demetrios Kirkiles; Speakers: George Chalos, Allan Kelley

Noon – 1:15 p.m.

Lunch (on premises) with Speaker Patrick O’Keefe, Upcoming FBA National Director and Maritime Attorney, New Orleans, LA

1:15 – 2:05 p.m.

Criminal Law Considerations

Moderator: Capt. Alan Richard; Speakers:

Stephen Darmody; Jamie Raich, AUSA; George Chalos

2:05 – 2:55 p.m.

Personal Injury: Crew and Passengers Panel with

Plaintiff and Defendant  Perspectives

Moderator: Jacob Munch; Speakers: Andy Waks; Ryon Little

2:55 – 3:10 p.m.                 

Afternoon Break

3:10 – 4:10 p.m.                  

Geographical and Multi-Agency Administrative Issues of a Disaster Including  Ethical Concerns Where Practicing in an Non-Home District/State

Moderator: Jody Foster; Speakers: Lindsey Brock; Capt. Michael Kucharski

4:10 – 5:00 p.m. 

Appellate Aspects and Updates on Recent Pertinent Case Law

Speakers: Patricia Olney; Philip Parrish

You can sign up for the seminar at FBA.org. If you are interested in learning more about the seminar, are interested in sponsoring this seminar or want to contact me in general, please feel free to contact me at mov@chaloslaw.com.

Maritime Law--Can Fisherman's Case Recast Sarbanes-Oxley?

July 12, 2014

Can a law written to punish the "Enrons" of the world for shredding or doing away with records also be used to convict a Florida fisherman who tossed his undersized catch into the sea in an effort to avoid penalties?

That is the question before the U.S. Supreme Court in a case it has accepted to hear in its next term. The case involves the Sarbanes-Oxley Act, specifically 18 U.S.C. § 1519, which makes it a crime to destroy “any record, document or tangible object” with the intent to obstruct an investigation. In this case, fish were deemed by the government to be a “tangible object.”

The case arose when government agents boarded John Yates’ boat, F/V MISS KATIE, and found 72 undersized red grouper fish, some several inches shorter than the 20-inch keeper limit. Yates, a commercial fisherman, was ordered to turn over the undersized catch when he came to port. However, a crew member testified at trial that Yates told the crew to throw the undersized fish overboard and replace them with others. The U.S. Court of Appeals for the Eleventh Circuit upheld Yates’ conviction, finding in part that a fish fits within the definition of a “tangible object” as defined under the Sarbanes-Oxley Act.

In the SCOTUS briefing, the three key arguments against the government include the following:

1. The statute criminalizes ambiguous conduct without providing a workable definition of the phrase “tangible object.”

2. The statute extends criminal law into economic activity that would be better handled by civil enforcement.

3. Congress drafted the statute to apply to financial and white-collar crimes, not fishing.

The Yates case has the potential to affect Sarbanes-Oxley more broadly than mere fishing, depending on the court’s ruling. If the Court simply refuses to apply the statute to circumstances like those of the fisherman at issue here, that ruling would have little impact on Sarbanes-Oxley at large. However, if the Court strikes down the provision as void for vagueness or on similar broad grounds, companies regulated by Sarbanes-Oxley will be able to breathe a sigh of relief that this provision will not be available for prosecutors to wield in circumstances Congress never had in mind.

Thus, this case is important to all companies and their general counsel because if the Court were to uphold a broad requirement not to destroy a ‘tangible object’ unrelated to records or documents, it would raise all forms of compliance difficulties for companies.

If you are interested in receiving a copy of the Eleventh Circuit opinion, please feel free to contact me atmov@chaloslaw.com.

Maritime Law-Presentation at the Newport Charter Show on MLC

Photograph of Newport Boat Show taken from newportboatshow.com

July 02, 2014

On June 24, 2014, I had the pleasure of speaking at the Newport Charter Show on the topic titled "The Climate on Crewing has Changed; The Maritime Labor Convention 2006 Enters Into Force".

I have been writing continuously on the entry into force of the Maritime Labor Convention, commonly referred to as the “MLC”. On August 20, 2013, the MLC entered into force and institutes minimum standards of living conditions, fair employment practices and other employment protection for vessel crew on a worldwide basis. While many yacht owners and operators are under the impression that the MLC does not affect them, the MLC in fact directly impacts the operations of every vessel engaged in charter service.

The presentation covered: 

• Significant changes in the manager-employee climate as it relates to full and part time crew
• The issues of ratification by the various flag states; who this will affect and what the affected industry players should know about the new requirements

The 1 hour presentation was followed by two case scenarios that were given to the audience to review, handle and discuss. The two case scenarios went into other legal areas, including the Jones Act, repatriation of crew, handling STCW issues in light of injured/ill crew, handling crew employment contracts whether or not the vessel is subject to MLC and other such issues. The presentation was attended by individuals representing crew placement services, maritime attorneys, yacht brokers, marine insurance brokers, operators, captains and others with a stake in the implementation of MLC on yachts.

Photograph of Newport Harbor from history.com

The feedback I have received thus far from the presentation was that it was extremely helpful and presented in such a way that made it easy for those responsible for implementing the MLC to take back to their owners/operators for further discussion.

A copy of the show event schedule can be found here => Newport Charter Show Event Schedule. If you are interested in learning more about the show or the presentation given, please feel free to contact me at mov@chaloslaw.com.