Thursday, May 26, 2016

In the May 2016 issue of
Long Island Boating World magazine,
Tim covers maritime law issues involving defense of a salvage
claim by a vessel owner. In the appellate court decision from the
United States Court of Appeals, First Circuit, the plaintiff appellant
boat owner raised the legal issue of duress when the defendant
appellee brought a salvage claim.

See the Long Island Boating World article Duress Raised as a
Legal Issue in a Salvage Lawsuit...

The concept of duress is a well-established element of our legal
system. In general, duress can include threats of violence,
economic coercion, or other forms of pressure. In business
dealings, people sometimes use the cliché that they felt as if a
“gun was pointed at their head.” Duress is a legal defense. That
means it is presented to justify why someone acted a certain
way in a given situation. The defense is based on the reasoning
that undue pressure can make people do things they wouldn’t
ordinarily do.

A criminal defendant might raise the defense of duress, arguing
that his false testimony was the result of being threatened with
bodily harm if he told authorities what really happened. In a non-
criminal context, a real estate agent might argue that a contract
should be deemed void because she signed it under duress,
believing that signing it was the only way to keep her job at a
brokerage firm.

The concept of duress was recently raised in a marine salvage
action. A boat was anchored in Buzzard’s Bay, Massachusetts.
The depth sounder malfunctioned and the boat drifted and ran
aground. Shortly thereafter, the vessel owner entered into a
salvage agreement with a local towing company. The vessel
owner later attempted to rescind the contract on the grounds
that he signed it under duress.

Although duress is a concept that crosses the boundaries of
many areas of law, salvage on the water is a unique element of
maritime law. Salvage is deemed to take place when someone
acts voluntarily to save a vessel in peril and such action is
successful. Dating back to the age of sail, salvage is based on
the premise that one who risks life and limb to assist another
vessel and its cargo should be monetarily rewarded.

In the case at hand, the matter was originally slated to be heard
by a panel of three arbitrators. The decision of the arbitrators
would be binding. After the arbitration got underway, the vessel
owner filed a preliminary injunction against the arbitration. In
general, injunctions are legal remedies that call for action (or
refrain from action) of some kind, such as an injunction to stop
the closing of a school. The vessel owner wanted the salvage
agreement to be declared unenforceable on the grounds he
entered it under duress.

The lower court hearing the matter ruled against the vessel
owner, denying the injunction. The arbitrators ruled in favor of the
towing company and ordered the owner to pay a salvage award
of roughly $60,000. On appeal, the higher court upheld the lower
court’s decision. The higher court pointed out that the vessel
owner hadn’t challenged the validity of the arbitration clause in
the complaint and that it was for the arbitrators to resolve the
duress claim.

Pivotal in the matter was the distinction between salvage and
towage. The parties were in dispute as to which of the two took
place here. A fundamental difference between towage and
salvage is that the former is generally billed at a set rate. For
instance, three hours of towing services billed at $200 an hour
would amount to towage bill of $600. In contrast, a claim for 20%
of the value of a $100,000 sportfisherman grounded hard on a
submerged barge would amount to a salvage award of $20,000.

The contract here contained a clause in which the parties agreed
to binding arbitration. Arbitration is a form of alternate dispute
resolution commonly used in maritime law. While a comparison
between arbitration versus traditional litigation could fill volumes,
one of the attributes of maritime arbitration is that it is supposed
to result in quicker and more economical resolutions of disputes
than courtroom trials.

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