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Maritime Casualty

Is Your Contract Governed By General Maritime Law?

Is Your Contract Governed By General Maritime Law?

In the absence of express provisions to the contrary, maritime contracts are to be governed by and interpreted under general maritime law.  In other words, contractual disputes will be resolved under maritime law (rather than state law) if the applicable contract is a maritime contract.

Is the Contract Maritime in Nature?

When determining whether a contract is maritime, courts will first examine the contract itself to see if it is “maritime in nature.”  If the subject matter of the contract (i.e. the type of goods to be provided or services to be performed) is traditionally treated as maritime in the relevant jurisprudence, the contract itself will likely be maritime.  For example, contracts for vessel repair services are traditionally treated as maritime.  See Diamond Offshore Co. v. A & B Builders, Inc., 302 F.3d 531, 549 (5th Cir. 2002).

Davis Factors to Identify When Maritime Law Applies

If the historical treatment of similar contracts does not resolve the issue of whether a maritime contract exists, courts within the U.S. Fifth Circuit will then undertake an analysis consisting of six questions.  These questions (known as the “Davis factors”) are:

  1. What does the specific work order in effect at the time of injury provide?
  2. What work did the crew assigned under the work order actually do?
  3. Was the crew assigned to work aboard a vessel in navigable waters?
  4. To what extent did the work being done relate to the mission of that vessel?
  5. What was the principal work of the injured worker?
  6. What work was the injured worked actually doing at the time of the injury?

Davis & Sons, Inc. v. Gulf Oil Corp., 919 F.2d 313, 316 (5th Cir. 1990).  The Fifth Circuit most recently applied the Davis factors in Baloney v. Ensco Offshore Co., No. 13-30796, 2014 WL 2526851 (5th Cir. June 5, 2014).  In that case, the court analyzed a master service contract in which the parties contracted to perform non-destructive x-ray and magnetic particle testing on a jack-up rig.  Finding that the work to be performed was “integral to the [jack-up rig’s] primary purpose,” the Court held that the contract was maritime and that general maritime law applied.

The enforceability of certain contractual provisions, such as defense and indemnity clauses, may hinge on the substantive law applicable to the contract.  For this reason, it is important to know whether your contract is a maritime contract.

Allen & Gooch is providing this legal update for informational purposes only. This article should not be construed as legal advice or a legal opinion as to any specific facts or circumstances. You should consult your own attorney concerning your particular situation and any specific legal questions you may have.