Territorial courts are legislative courts created by Congress pursuant to its constitutional power.[i] Article I of U.S. Constitution grants power to Congress to create tribunals inferior to the Supreme Court. They are not constitutional courts created by Article III of the Constitution. Congress vests territorial courts with jurisdiction similar to federal district courts. Territorial courts are established for the territories of the United States. These courts exercise a combination of federal and local jurisdiction.
A case in admiralty does not arise under the constitution or laws of the U.S.[ii] In American Ins. Co. v. 356 Bales of Cotton, 26 U.S. 511 (U.S. 1828), the court held that the territorial courts of Florida are not constitutional courts but legislative courts. The Court further held that the gerneral rule that admiralty jurisdiction could only be exercised in constitutional courts did not apply to the territories where Congress exercised the combined powers of the general government and a state government.
Admiralty jurisdiction can be exercised by territorial courts.[iii] In “City of Pan.”, 101 U.S. 453 (U.S. 1880), the court held that state courts have no jurisdiction in admiralty cases, nor can courts within the states exercise such jurisdiction, except such as are established in pursuance of Article III of U.S. Constitution. The court further held that admiralty jurisdiction, including jurisdiction in prize cases, is vested in the territorial district courts. Also, the district courts of the territory should exercise the same jurisdiction in all cases arising under the Constitution and laws of the U.S., as is vested in the circuit and district courts of the United States, and also of all cases arising under the laws of the territory.
[i] Howard v. United States, 22 Ct. Cl. 305 (Ct. Cl. 1887)
[ii] Doucette v. Vincent, 194 F.2d 834, 846 (1st Cir. Mass. 1952)
[iii] “city of Pan.”, 101 U.S. 453 (U.S. 1880)