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 September 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

Foster Wheeler & MDM Engineering Merged

Foster Wheeler AG announced today that an indirect wholly owned subsidiary of the Company has completed the acquisition of MDM Engineering Group Limited (“MDM”)

New York, London Juxtaposed by New Maritime Event

On November 13, the newly formed New York Maritime Consortium, a coalition of leaders from New York Maritime Inc. (NYMAR), the Society of Maritime Arbitrators (SMA),

Yara Reports Strong 3Q Results

Yara International ASA delivered strong third-quarter results, with record fertilizer deliveries and continued margin benefit from lower European gas price. "Yara

Maritime Security

General Dynamics is Link Govt-level Security to Consumer Smartphone

General Dynamics C4 Systems recently received the Defense Mobile Classified Capability (DMCC) contract from the National Security Agency (NSA). As part of the contract,

Chief of Naval Personnel Visits Naval Special Warfare

Chief of Naval Personnel (CNP) Vice Adm. Bill Moran visited Naval Special Warfare (NSW) Sailors during an all hands call on Joint Expeditionary Base Little Creek-Fort Story, Oct.

EUCAP Nestor Train 30 Somali Coast Guards

On 21 October, the European Union’s Maritime Capacity Building Mission in the Horn of Africa and Western Indian Ocean (EUCAP Nestor) celebrated the successful completion of a two month Mentoring,

 
 
Maritime Careers / Shipboard Positions Maritime Security Navigation Offshore Oil Pipelines Pod Propulsion Port Authority Ship Electronics Ship Repair 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: 0.0775 sec (13 req/sec)