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New Marine Insurance and Seaman's Arbitrability Decisions

A couple of interesting decisions have come down from the First and Fourth Circuit Courts of Appeal that are of interest to maritime practitioners. The first, relates to a marine insurance policy and its applicability resulting from a vessel seizure; the second, relates to the arbitrability of maintenance and cure, seaman's wages and other such claims.

In Markel Am. Ins. Co. v. Diaz-Santiago, the First Circuit Court of Appeals affirmed the trial court below. In 2008, MDS purchased a vessel and executed a note in favor of FirstBank, secured by a preferred ship mortgage under an agreement that required that they maintain insurance. In 2009, Customs and Border Protection seized the vessel as part of a drug enforcement action. The search and seizure damaged the vessel, significantly decreasing its value. Customs notified FirstBank, which initiated an administrative forfeiture proceeding, intervened in the criminal case, obtained voluntary dismissal of the indictment against the vessel, then submitted an insurance claim for "loss of the vessel including, without limitation, the value of the Bank's collateral, legal fees incurred in attempting to secure its release, as well as any applicable costs and interests." The insurer denied the claim. The district court granted FirstBank partial summary judgment and awarded $74,512.50 in attorneys' fees for costs and expenses incurred in securing release of the vessel and defending the validity of the policy. 
In Aggarao, Jr. v. Mol Ship Mgmt. Co., the Plaintiff, a citizen of the Philippines, brought suit against defendants for damages arising from severe injuries he sustained aboard the M/V Asian Spirit in the Chesapeake Bay near Baltimore. The Plaintiff's complaint alleged multiple clams against defendants, including unseaworthiness, maintenance and cure, breach of contract, violation of the Seaman's Wage Act, 46 U.S.C. 10313(i), and negligence under general maritime law and the Jones Act, 46 U.S.C. 30104. The court affirmed the district court's judgment that the arbitration clause at issue was enforceable and that the Plaintiff must arbitrate his claims against defendants in the Philippines. Nevertheless, the court vacated the dismissal of the case and remanded for reinstatement thereof, for assessment of the injunction request, for entry of a stay pending arbitration to ensure that the Plaintiff would have an opportunity at the award-enforcement stage for judicial review of his public policy defense based on the prospective waiver doctrine, and for such other and further proceedings.
You may click on the name of the decision above to obtain a complete copy of the decision. Otherwise, please feel free to contact me to obtain a copy of either of these decisions at miamipandi@comcast.net or mov@chaloslaw.com.


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  1. joseph billApril 12, 2012 at 8:41 AM

    choosing the right marine insurance policy is really a tough task,one have to see all the facts before considering the right policy for their boat. This is really very good blog and one can study both the claims in this blog before choosing the right marine insurance policy for their boat.

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