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Second Circuit Court Of Appeals Confirms That Breach Of A Shipbuilding Contract Does Not Give Rise To A Maritime Claim

By Summary Order dated December 4, 2009, the Second Circuit Court of Appeals has affirmed the long-standing U.S. rule that a dispute arising from a contract to build a ship does not fall within the federal courts' admiralty jurisdiction.  Primera Maritime Limited v. Jiangsu Eastern Heavy Industry Co. Ltd., No. 09-0642-cv (2d Cir. Dec. 4, 2009) (Summary Order).

Plaintiff-Appellant Primera Maritime had appealed from an Order of the District Court dismissing its Verified Complaint for lack of subject matter jurisdiction. Primera Maritime argued, inter alia, that the recent decisions of the Supreme Court and the Second Circuit Court of Appeals, namely Norfolk S. Ry. Co. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (2004) and Folksamerica Reinsurance Co. v. Clean Water of New York, Inc., 413 F.3d 307 (2d Cir. 2005), had implicitly overruled the Supreme Court's long-standing rule that breach of a shipbuilding contract does not fall within the Court's admiralty jurisdiction. 

While the Court agreed with Primera Maritime that the language of Kirby and Folksamerica appeared "disfavor" per se admiralty rules, the Court nonetheless stressed its obligation to follow "well-established" Supreme Court precedent, holding "[u]ntil the Supreme Court declares that contracts for ship construction are maritime in nature, disputes arising from such contracts will not give rise to the federal courts' admiralty jurisdiction."

Read a copy of the Second Circuit's Summary Order

For more information concerning this decision, please do not hesitate to call on us at info@chaloslaw.com

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