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Section 2 of Article III of the United States Constitution gives original jurisdiction in admiralty matters to the federal courts. The federal courts have exclusive jurisdiction over most admiralty and maritime claims pursuant to 28 U.S.C. § 1333. Under this statute, federal district courts are granted original jurisdiction over admiralty actions "saving to suitors," a right to file suit for most of these actions in state court.
Despite the savings to suitors clause, certain actions are only permitted to be filed in admiralty in federal court. Those include all in rem maritime actions. This includes suits seeking forfeiture of ships to enforce maritime mortgages and liens, petitions to limit a shipowner's liability to the value of a ship after a major accident, and actions seeking to partition ownership of a ship. However, the vast majority of maritime actions, such as suits for damage to cargo, injuries to seamen, collisions between vessels, wake damage, and maritime pollution cases may be brought in either federal court or state court by virtue of the savings to suitors clause.
In federal courts in the United States, there is generally no right to a jury trial in admiralty cases. However, Congress has created some limited rights of jury trial in seamen's personal injury actions brought under the Merchant Marine Act of 1920 (the Jones Act) where a jury trial is otherwise permitted. In state courts, the right to trial by jury is determined by the law of the state where the case is brought. Consequently, admiralty cases brought in state courts can be tried before a jury.
A state court hearing an admiralty or maritime case is required to apply the admiralty and maritime law, even if it conflicts with the law of the state, under a doctrine known as the "reverse-Erie doctrine." The Erie doctrine, derived from Erie Railroad Co. v. Tompkins, directs that federal courts hearing state actions must apply state law. The "reverse-Erie doctrine" directs that state courts hearing admiralty cases must apply federal admiralty law. This distinction is critical in some cases.
For instance, U.S. maritime law recognizes the concept of joint and several liability among tortfeasors, while many states do not. Under joint and several liability, where two or more people create a single injury or loss, all are equally liable, even if they only contributed a small amount. A state court hearing an admiralty case would be required to apply the doctrine of joint and several liability even if state law does not contemplate the concept.
One of the unique aspects of maritime law is the ability of a shipowner to limit its liability to the value of a ship after a major accident. An example of the use of the Limitation Act is the sinking of the RMS Titanic in 1912. Even though the Titanic had never been to the United States, upon her sinking the owners rushed into the federal courts in New York to file a limitation of liability proceeding. The Limitation Act provides that if an accident happens due to a circumstance which is beyond the "privity and knowledge" of the ship's owners, the owners can limit their liability to the value of the ship after it sinks.
After the Titanic sank, the only portions of the ship remaining were the 14 lifeboats, which had a collective value of about $3,000. This was added to the "pending freight"—which means the ship's earnings from the trip from both passenger fares and freight charges—to reach a total liability of about $91,000. The cost of a first-class, parlor suite ticket was over $4,350. The owners of the Titanic were successful in showing that the sinking occurred without their privity and knowledge, and therefore, the families of the deceased passengers, as well as the surviving passengers who lost their personal belongings, were entitled only to split the $91,000.
Another example was when Transocean filed in the U.S. District Court for the Southern District of Texas in 2010 to limit its liability to just its interest in the Deepwater Horizon which it valued at $26,764,083. This was in the wake of billions of dollars liabilities resulting from the Deepwater Horizon oil spill that followed the sinking.
The theory behind the Act was that a shipowner who properly equipped and crewed a ship shouldn't be liable for something that happens when the ship is out of his control. Modern ships are seldom out of the control of their shoreside owners, but the Act remains a viable protection to them.
The Limitation Act doesn't just apply to large ships. It can be used to insulate a motorboat owner from liability when he loans his boat to another who then has an accident. Even jet ski owners have been able to successfully utilize the Limitation Act to insulate themselves from liability. An unusual application involved the case Grubart v. Great Lakes Dredge and Dock Company, where a vessel performing piling operations in the Chicago River punctured a tunnel and caused the 1994 Chicago flood of many underground areas of the city's downtown; the courts ruled that the vessel was in navigable waters covered by the admiralty law limitation clause.
Claims for damage to cargo shipped by ocean carrier in international commerce into and out of the United States are governed by the Carriage of Goods by Sea Act (COGSA), which is the U.S. enactment of the Hague Rules. One of its key features is that a carrier is liable for cargo damaged from "hook to hook," meaning from loading to discharge, unless it is exonerated under one of 17 exceptions to liability, such as an "act of God," the inherent nature of the goods, errors in navigation, and management of the ship. A shipowner is generally entitled to limit its liability to $500 per package, unless the value of the contents is disclosed and marked on the container. There is significant litigation as to what constitutes a "package" for purposes of determining liability under COGSA. This practice has resulted in substantial and continuing litigation in the United States. Federal Courts in the United States, however, are reluctant to treat an ocean shipping container as a single COGSA package. The statute of limitations on cargo claims is one year.
Seamen injured aboard ship have three possible sources of compensation: the principle of maintenance and cure, the doctrine of unseaworthiness, and the Jones Act. The principle of maintenance and cure requires a shipowner to both pay for an injured seaman's medical treatment until maximum medical recovery (MMR) is obtained and provide basic living expenses until completion of the voyage, even if the seaman is no longer aboard ship. The seaman is entitled to maintenance and cure as of right, unless he was injured due to his own willful gross negligence. It is similar in some ways to workers' compensation. The doctrine of unseaworthiness makes a shipowner liable if a seaman is injured because the ship, or any appliance of the ship, is "unseaworthy," meaning defective in some way. The Jones Act allows a sailor, or one in privity to him, to sue the shipowner in tort for personal injury or wrongful death, with trial by jury. The Jones Act incorporates the Federal Employers Liability Act (FELA), which governs injuries to railway workers, and is similar to the Coal Miners Act. A shipowner is liable to a seaman in the same way a railroad operator is to its employees who are injured due to the negligence of the employer. The statute of limitation is three years.
Not every worker injured on board a vessel is a "seaman" entitled to the protections offered by the Jones Act, doctrine of unseaworthiness, and principle of maintenance and cure. To be considered a seaman, a worker must generally spend 30% or more of his working hours onboard either a specific vessel or a fleet of vessels under common ownership or control. With few exceptions, all non-seamen workers injured over navigable waters are covered instead by the Longshore and Harbor Workers' Compensation Act, 33 U.S.C. §§ 901–950, a separate form of workers' compensation.