In general, federal maritime law supplements and overrides most state and other federal laws. The underlying goal is uniformity of the legal rights and remedies that affect the world of shipping and maritime commerce.
One area where the existence of maritime law that overrides state law is most relevant is the law of contracts. The application of maritime law can influence anything from the type of damages that are recoverable for a breach of contract to the enforcement of contractual insurance and indemnity obligations.
To fall within the scope of maritime law, the relationship between the parties and the nature of the services typically determine whether a contract is governed by maritime or state law. However, even what might appear to be an obvious example of a contract that should be governed by maritime law isn’t always the case. For example, a contract to build a vessel is generally not a maritime contract, while a contract to repair a vessel is.
To determine whether your contract is governed by maritime or state law, courts have identified general factors that apply. In 1870, the U.S. Supreme Court ruled that the application of maritime law to contracts is determined by the nature and subject matter of the contract and whether the services rendered pertained to maritime service or maritime transactions. This somewhat vague test has been refined over the years.
In 2004, the Supreme Court embraced a more “conceptual approach” and focused instead on whether the principal objective of the contract is maritime commerce. Since then, the U.S. Fifth Circuit Court of Appeals, which encompasses the Gulf states of Texas, Louisiana and Mississippi, has applied a two-part analysis which considers whether the contract provides services to facilitate the drilling of the production of oil and gas on navigable waters and, if so, whether the contract provides or whether the parties expect that a vessel will play a substantial role in the completion of the contract. In cases not related to oil and gas exploration and development, courts will consider the nature and extent of the involvement of the vessel crew in carrying out the services contemplated by the contract.
While there is no clearly defined litmus test for determining whether maritime law applies to a contract, the primary focus is the relationship with and/or impact on maritime commerce and the involvement of a vessel.
