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 February 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

IACS and European Commission Hold Joint Workshop to Kick Off European Shipping Week

The International Association of Classification Societies (IACS) held a joint workshop in Brussels with the European Commission to kick off European Shipping Week, the association announced today.

Cosco Boxship Detained Over Illegal Arms

Colombian authorities detained a vessel operated by China's largest shipping group for illegally transporting thousands of cannon shells, about 100 tonnes of gunpowder

Kvichak, Vigor Announce Merger

Merger positions combined company to play a dominant role in recapitalization of North Pacific fishing fleet and emerging Arctic oil gas operations. Kvichak

Maritime Security

Ten Migrants Die in Mediterranean, a Thousand Rescued

At least 10 North African migrants died when their rubber boat overturned in the southern Mediterranean while almost a thousand more from a total of seven vessels

Cosco Boxship Detained Over Illegal Arms

Colombian authorities detained a vessel operated by China's largest shipping group for illegally transporting thousands of cannon shells, about 100 tonnes of gunpowder

US, Australian, Indonesian Navies Commemorate Battle of Sunda Strait

Senior officials from the United States, Australia and Indonesia paid their respects to the crews of USS Houston (CA 30) and HMAS Perth (D 29) during a wreath laying ceremony March 1,

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Pod Propulsion Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction 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: 0.0869 sec (12 req/sec)