Shipping Lawyer Shipping Lawyer 4 — Questions and Answers
Question 1: Under US law, what is 'cabotage' and which statute primarily governs it in the maritime context?
- The right of foreign vessels to transit US internal waters; governed by SOLAS
- The reservation of domestic trade routes to nationally flagged vessels; primarily governed by the Jones Act (Correct answer)
- The licensing of marine pilots in US ports; governed by 46 USC Chapter 211
- The inspection regime for US-flagged vessels; governed by the Port Safety Act
Correct answer: The reservation of domestic trade routes to nationally flagged vessels; primarily governed by the Jones Act
Cabotage refers to the transport of goods or passengers between points within a country, and the Jones Act (46 USC §55102) restricts US domestic maritime cabotage to qualified US vessels.
Question 2: Which international convention establishes the liability regime for oil pollution damage caused by ships and requires compulsory insurance?
- MARPOL 73/78
- The Civil Liability Convention (CLC) (Correct answer)
- The Oil Pollution Act (OPA 90)
- The Bunker Convention 2001
Correct answer: The Civil Liability Convention (CLC)
The CLC (1969, as amended by the 1992 Protocol) establishes strict liability for ship owners for oil pollution from persistent oil cargo and mandates compulsory P&I insurance up to specified limits.
Question 3: A shipper wants to avoid COGSA's $500 per-package liability limit. What is the most effective legal mechanism to achieve this?
- File a complaint with the FMC requesting a higher declared value
- Declare the true nature and value of the goods on the bill of lading before shipment (Correct answer)
- Purchase marine cargo insurance, which replaces COGSA limits by law
- Invoke the Hamburg Rules, which have higher limits and apply automatically
Correct answer: Declare the true nature and value of the goods on the bill of lading before shipment
COGSA Section 4(5) allows shippers to break the $500 per-package limit by declaring the true value of goods in the bill of lading, after which the carrier's liability is limited to that declared value.
Question 4: In the context of international trade finance, what role does a 'letter of credit' play in conjunction with a bill of lading?
- It replaces the bill of lading as the primary transport document
- It is a bank's conditional undertaking to pay the seller upon presentation of complying documents including the bill of lading (Correct answer)
- It serves as the shipper's insurance policy for cargo in transit
- It exempts the buyer from paying import duties upon presentation
Correct answer: It is a bank's conditional undertaking to pay the seller upon presentation of complying documents including the bill of lading
A letter of credit (LC) is a bank instrument under UCP 600 whereby the issuing bank commits to pay the seller/beneficiary upon presentation of a complying set of shipping documents, typically including a negotiable bill of lading.
Question 5: Under the Ship Mortgage Act (46 USC §31321), what must a preferred ship mortgage on a US-flagged vessel include to be entitled to preferred status?
- Registration with the FMC and state commercial lien filing
- Recordation with the US Coast Guard National Vessel Documentation Center (Correct answer)
- Filing under UCC Article 9 in the vessel's home port state
- Notarization by a US consul in the vessel's port of registry
Correct answer: Recordation with the US Coast Guard National Vessel Documentation Center
A preferred ship mortgage must be recorded with the US Coast Guard's National Vessel Documentation Center; only after proper recordation does it receive preferred status over most other maritime claims.
Question 6: What is 'arrest of a vessel' in admiralty practice and under which procedural rule is it governed in US federal courts?
- A criminal sanction imposed by the USCG for safety violations; governed by 33 CFR
- A civil prejudgment seizure of a vessel to obtain security for a maritime claim; governed by Supplemental Admiralty Rule C (Correct answer)
- An administrative detention ordered by Customs and Border Protection for tariff violations
- A port state control detention for MARPOL violations; governed by IMO guidelines
Correct answer: A civil prejudgment seizure of a vessel to obtain security for a maritime claim; governed by Supplemental Admiralty Rule C
In rem arrest under Supplemental Admiralty Rule C allows a claimant to seize a vessel as security for a maritime claim by filing a verified complaint and obtaining a warrant of arrest from the court.
Question 7: Which convention governs the liability of carriers for passengers and their luggage on international sea voyages?
- The Warsaw Convention as extended to maritime transport
- The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL) (Correct answer)
- SOLAS Chapter III on passenger safety
- The Montreal Protocol adapted for sea carriage
Correct answer: The Athens Convention relating to the Carriage of Passengers and their Luggage by Sea (PAL)
The Athens Convention (1974) and its 2002 Protocol (PAL 2002) establish the liability regime and compulsory insurance requirements for sea carriers transporting passengers on international voyages.
Shipping Lawyer Shipping Lawyer 4
Under US law, what is 'cabotage' and which statute primarily governs it in the maritime context?