Court of Appeals Issues Significant Ruling

Friday, November 07, 2003
The Fifth Circuit Court of Appeals recently issued a significant ruling benefiting ship mortgagees and other maritime creditors with decisions in two related cases stemming from the bankruptcy of Commodore Cruise Lines (“Commodore”). In one case, the Fifth Circuit Court of Appeals in New Orleans ruled that AmWest Surety Ins. Co. ("AmWest") and other sureties who provided the $15 million bond required by the FMC for cruise operators calling at U.S. ports to secure refunds for passengers (an "FMC Bond"), had no lien on the Commodore Ships, and also ruled that Harris Trust & Savings Bank ("Harris Bank") which provided credit card services to Commodore under a merchant services agreement (and which provided refunds to passengers), also did not have a lien. If AmWest and Harris were to succeed on their claims, they would have had priority over not only the ships' mortgagee banks in collecting the proceeds from the auctions of the Commodore vessels, but would also have greatly diminished, if not eliminated, recoveries by holders of traditional maritime lien claims. Concerning AmWest, the Fifth Circuit ruled that despite the fact that the law requires an FMC Bond for a cruise line to operate, the Bond was not a maritime contract, and that the Bond was not a "necessary" giving rise to a lien. The court also rejected the sureties’ alternative argument that they were subrogated to the claims of the passengers. Passengers do not have liens for refunds when a cruise vessel does not sail. Similarly, the Fifth Circuit found that Harris’ generic credit card merchant services agreement was not a maritime contract and that the credit card processing services provided by Harris were not “necessaries” giving rise to a maritime lien. Bruce G. Paulsen of Seward & Kissel LLP represented the mortgagee EffJohn International Cruise Holdings, Inc. in both cases.
Maritime Reporter January 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Bangladesh Aims to be World's 'First Solar Nation

Residents of Islampur, a remote village in the northern Bangladeshi district of Naogaon, were stunned one night last summer when the darkness was suddenly illuminated

India Not Pressurized by US-China Deal

Indian Prime Minister Narendra Modi said a climate deal between the United States and China does not put pressure on India, but that global warming itself was reason to take action.

U.S., India to Seal Nuclear Deal

The United States and India have reached a breakthrough on two issues holding up civil nuclear cooperation between them, U.S. President Barack Obama told a news conference in New Delhi on Sunday.

Maritime Security

Naval Air Forces Holds Change of Command

Commander, Naval Air Forces (CNAF) held a change of command ceremony aboard the aircraft carrier USS John C. Stennis (CVN 74) at Naval Air Station North Island Jan.

Irving Celebrates Canadian AOPS Build Contract

Government of Canada & Irving Shipbuilding mark signing of $2.3 billion AOPS build contract; 3,600 Jobs across Canada generated from Irving’s NSPS commitments to

US Naval Ship Aground off Japanese Coast

The U.S. Navy and Japanese authorities are working to refloat a Military Sealift Command vessel after it ran aground Thursday off the coast of Okinawa.   The Sgt.

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Navigation Pipelines Port Authority Ship Repair Ship Simulators Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0798 sec (13 req/sec)