The U.S. constitution empowers federal courts to decide cases relating to admiralty jurisdiction. Federal courts exclusively deal with actions in rem while exercising admiralty jurisdiction. However, state courts are also given the power to adjudicate certain admiralty matters like those that deal with actions in personam unless the case falls under the exclusive maritime jurisdiction of federal courts.
Generally, federal courts and state courts use general maritime law in resolving maritime disputes. However, when general maritime law is silent concerning an issue, state laws that do not conflict with the general maritime law can be applied.[i] State rules are applied because the intention of federal courts is to aid maritime commerce through uniform decisions.
State laws can be applied when there is no settled admiralty rule in an issue. In government maritime tort liability cases also, state laws can be applied. However, application of state laws should not defeat an admiralty case which has merit.[ii] State laws can also be applied when the issue is of local significance.[iii] When a claim arises from a ship owned by a state resident, is anchored in state waters and injury took place in the state, state law can be applied to resolve the issue when there is no settled admiralty provision.
According to general maritime law’s economic loss rule (Robin’s rule) announced by the U.S. Supreme Court in Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303 (U.S. 1927), in most maritime tort actions, a party sustaining no damage to property cannot recovery consequential economic losses. In other words, pure economic loss arising from a tort is not available in admiralty law. However, exercise of admiralty jurisdiction does not automatically displace a state law. An action in tort is available for pure economic loss when state law provides damages for remedial actions taken by states when a water body is destroyed as a result of releasing hazardous substance into the water.[iv]
In order to assess whether a state rule can be preempted certain factors are to be considered. The factors are as listed.
- Whether state law conflicts with general admiralty principles.
- Whether state law hinders proper harmony and uniformity of admiralty law in its international and interstate relations.
- Whether state law makes substantive changes in general admiralty law.
- Whether state law interferes with characteristic features of maritime law or commerce.
According to the U.S. Supreme Court’s Wilburn Boat decision, marine insurance questions in the U.S can be resolved by referring to federal maritime law. However, it should be controlled by the law of a state.[v] This decision can only be applied when there is no established admiralty rule to cover maritime insurance disputes and there is no need to create a federal admiralty rule that governs the issue in deference to state insurance laws. Therefore, under maritime law, courts can determine the ambit and efficacy of marine insurance policy provisions and the results of breaching the provisions by applying state insurance laws.[vi] However, maritime protection and indemnity policy even though part of insurance are uniquely maritime in nature. When issues are of unique nature, general maritime rules should be adopted to attain uniformity in admiralty decisions.[vii]
Admiralty law does not expropriate state tort law claims when the general admiralty law is silent regarding the claim and when there is no conflict between state law and federal law. State law can supplement federal admiralty law when there is a provision for additional maritime tort remedy.[viii]
In certain circumstances, state law can be applied in maritime wrongful death actions as well. In matters relating to carriage of goods by sea, violation of maritime contract is dealt by state laws. Application of state law should always be to fill the gap in federal admiralty law.[ix] State contract law has no intersection with federal maritime law. State courts have jurisdiction where there is a right of common law remedy and when the common law is adequate remedy to the issue.[x] When contracts between parties are not of maritime nature, state law applies to decide on any dispute arising out of violation of contract.[xi]
Generally, federal courts have exclusive jurisdiction over claims for injuries occurring to workers on the water, and state laws can be applied when the injury occurred on land.[xii] A person working in a ship in navigable waters can receive worker’s compensation if he is injured during the course of his/her employment. State laws provide worker’s compensation only if the worker is not directly connected to navigation and maritime commerce. However, use of state compensation laws should not affect uniformity of admiralty law.[xiii]
[i] Kalmbach, Inc. v. Insurance Co. of Pennsylvania, Inc., 422 F. Supp. 44 (D. Alaska 1976)
[ii] Greene v. Pac. King Fisheries, 1993 U.S. Dist. LEXIS 21393 (W.D. Wash. 1993)
[iii] Jordan v. Frederick Leyland & Co., 7 F.2d 386 (D. La. 1925)
[iv] In re Complaint of Nautilus Motor Tanker Co., 900 F. Supp. 697 (D.N.J. 1995)
[v] Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310 (U.S. 1955)
[vi] Molina v. TL Dallas (Special Risks) LTD, 547 F. Supp. 2d 102 (D.P.R. 2008)
[vii] Continental Cas. Co. v. Anderson Excavating & Wrecking Co., 189 F.3d 512 (7th Cir. Ill. 1999)
[viii] Neal v. McGinnis, Inc., 716 F. Supp. 996 (E.D. Ky. 1989)
[ix] Senator Linie Gmbh & Co. Kg v. Sunway Line, 291 F.3d 145 (2d Cir. N.Y. 2002)
[x] Johnson v. G. T. Elliott, Inc., 152 Va. 121 (Va. 1929)
[xi] Shaw v. Int’l Boat Rentals, Inc., 2005 U.S. Dist. LEXIS 29176 (S.D. Tex. Oct. 31, 2005)
[xii] Nat’l Maint. & Repair v. Ill. Workers’ Comp. Comm’n (Gale), 918 N.E.2d 581 (Ill. App. Ct. 5th Dist. 2009)
[xiii] Wells v. Industrial Comm’n, 277 Ill. App. 3d 379 (Ill. App. Ct. 1st Dist. 1995)