Southern District of New York Strikes Expert Interpreting Marine Insurance Policy

On June 21, 2022, Magistrate Judge Gorenstein of the Southern District of New York (S.D.N.Y.) issued an Opinion & Order in Navigators Insurance Company v. Goyard, Inc., 20-cv-6609, striking Plaintiff’s expert on the basis that his opinion was an impermissible legal conclusion interpreting the insurance contract at issue.

In 2019, Navigators Insurance Company (“Navigators”) issued a marine cargo insurance policy to Goyard.  The policy provided coverage for goods during shipping and when held in certain specified locations.  In June 2020, various goods were damaged and/or stolen from Goyard’s NYC location.  Goyard submitted a claim under the policy seeking to recover losses associated with damage and theft of the goods.  Navigators denied the claim and sought declaratory relief for a finding that the losses were not covered under the policy because of a “strikes, riots and civil commotion” exclusion.

Navigators expert prepared a report opining on the meaning and effect of various provisions of the policy as they applied to the claim and concluded that Goyard’s stolen goods were not covered, as they were taken by looters participating in riots.  In turn, Goyard moved to strike the expert opinions on the grounds that it would not help the trier of fact as required by Fed. R. Evid. 702(a).

The Court granted the motion to strike the report, holding that the expert report was an impermissible legal analysis of the policy which usurps the trier of facts role in finding the facts and applying those facts to the law.  In support of the decision, the Court performed a detailed analysis of Fed. R. Evid. 702(a), focusing on the fact that an expert’s primary function is to help the trier of fact and while an expert may opine on an issue of fact within the jury’s province, he/she may not give testimony stating ultimate legal conclusions.

To read the full opinion, please click here.

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Maritime Risk Podcast: Why are Marpol detentions and prosecutions still occurring?

In the latest edition of The Maritime Risk Podcast, Shoreline CEO Captain Thomas Brown sat down with George Chalos to discuss MARPOL detentions and prosecutions in the United States.  Specifically, the discussion centered around the question: “Why are MARPOL prosecutions in the US as prevalent today as they were 25 years ago?”  The podcast can be accessed and listened to here:, as well as Apple and Spotify.

For assistance or additional information regarding MARPOL and/or APPS, please contact us at

U.S. Supreme Court Rules 1782 Discovery Not Available for Private Arbitration

Over the past twenty (20) years, there has been a split in the U.S. District and Circuit Courts as to whether 28 U.S.C. §1782, which permits district courts to order testimony or the production of evidence “for use in a proceeding in a foreign or international tribunal”, applies to private adjudicatory bodies such as foreign private arbitrations.   Our prior summaries of the legal tug of war which has taken place over the past thirty (30) months, can be accessed here.  Previously, the Sixth Circuit and Fourth Circuit Courts of Appeals had ruled that the answer was yes; while the Second, Fifth, and Seventh Circuits had all ruled that the statute did not cover private arbitrations.  District courts around the country came down on both sides.  Two (2) recent cases were consolidated so that the U.S. Supreme Court could resolve this disputed question.

Writing for a unanimous court, in ZF Automotive US, Inc., et al. v. Luxshare, Ltd., (consolidated with Alixpartners, LLP, et al. v. The Fund for Protection of Investors Rights in Foreign States), 596 U.S. __ (2022), Justice Barrett delivered the opinion of the U.S. Supreme Court this morning, Monday June 13, 2022.  In a short opinion, the Court held that the statute reaches “only governmental or intergovernmental adjudicative bodies, and neither of the arbitral panels involved in these cases fits that bill.” Although the lower courts had analyzed lots of different aspects of the statute and legislative history, the U.S. Supreme Court held that the “key phrase for purposes of this case is “foreign or international tribunal.’”  Id., p. 1. Justice Barrett points out that if, the word “tribunal” stood alone, that would be good reason to include private arbitral bodies as those types of bodies for which discovery could be ordered as the word is generally understood to be quite broad.  Id., at p. 6.   However, tribunal does not stand alone and when read in context with “foreign or international,” the U.S. Supreme Court held that tribunal, with those modifiers, “is best understood as an adjudicative body that exercises governmental authority.”  Id., at 7.  Comparing the definitions and meanings of the words, the Court summed up the phrase as follows: “So understood, “foreign tribunal” and “international tribunal” complement one another; the former is a tribunal imbued with governmental authority by one nation, and the latter is a tribunal imbued with governmental authority by multiple nations.” Id., at p. 9.

Although the U.S. Supreme Court resolved the question by simply reviewing and interpreting the statutory language, the remainder of the opinion explained that the Court’s holding and 1782’s focus on governmental and intergovernmental tribunals is further confirmed by both the statute’s history and the comparison to the Federal Arbitration Act (“FAA”), 9. U.S.C. §1, et seq.  The Court explained that the primary purpose of 1782 was comity with other nations; so why would Congress lend the resources of the district courts to aid purely private bodies adjudicating purely private disputes abroad, which by way of example could “include everything from a commercial arbitration panel to a university’s student disciplinary tribunal.” Id., at p. 10.  Finally, to allow broader discovery than the FAA allows domestically in the United State would place the statute in great tension and a “notable mismatch” between discovery available in foreign arbitrations compared to limited discovery available from district courts in domestic arbitrations. Id., at p. 11.

In assessing whether either of the bodies in the cases before it were “governmental or intergovernmental” the U.S. Supreme Court explained they were not.  The first case was a private arbitration and the opinion rejected the idea that simply because a private arbitration was subject to the laws which govern and enforce them, that does not turn the panel into a “governmental adjudicative body.” Id., at 12.  The ad hoc arbitration panel was a harder question for the Court to answer, though ultimately the ruling was that the ad hoc panel although involving foreign nations, it was not the intent of Russia and Lithuania for the panel to exercise governmental authority, rather it simply was the result of an agreed mechanism for the formation of an arbitration panel to resolve a private dispute, all of which occurred because of the parties voluntary consent to arbitration; not because “Russia and Lithuania clothed the panel with governmental authority.” Id., at p. 15. In closing, the opinion left open that future sovereigns may imbue an ad hoc arbitration panel with official authority.  Under such a limited case, 1782 would be available.

A copy of the U.S. Supreme Court’s Opinion may be read here.

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Chalos & Co, P.C. Obtains Complete Defense Verdict Following a Bench Trial in the Eastern District of New York

Michael Chalos and co-counsel Frank Ambrosino, with the assistance of Melissa Russo, successfully defended HMS Bounty Organization, LLC (“HMS Bounty”) and Robert Hansen (collectively the “Defendants”), in a recent bench trial before the Honorable Diane Gujarati in the United States District Court for the Eastern District of New York.  Judge Gujarati issued her decision on April 11, 2022 finding that the Plaintiff, Acadia Insurance Company (“Acadia”), had failed to prove any of its claims against the Defendants and granted judgment in favor of Defendants.

In 2014, Acadia filed a declaratory judgment action against Defendants seeking to have an insurance policy issued to the Defendants for the HMS BOUNTY (the “Vessel”) (a wooden replica of the famous British naval vessel) declared void ab inito, or alternatively, to find that there was no coverage under the policy based on alleged breaches of the duty of utmost good faith, absolute implied warranty of seaworthiness, implied negative warranty of seaworthiness, implied negative modified warranty of seaworthiness, crew warranty and compliance, express warranty of seaworthiness and warranty to comply with state and federal regulations.

The Vessel was purchased by the Defendants in 2001 to be utilized as an authentic square-rigged sailing vessel for educational and training purposes.  The Vessel was operated as an uninspected recreational vessel and a moored attraction vessel throughout the entire time the Defendants owned the Vessel.   In 2008, Plaintiff began providing protection & indemnity and hull & machinery coverage to the Vessel.  The Vessel was lost on October 29, 2012 after encountering Hurricane Sandy on its final voyage.  When the Vessel left New London, Connecticut several days before the loss, the testimony indicated that it was in good condition and the weather encountered was pleasant.  The intended heading of the Vessel was to avoid the hurricane. However, due to Sandy’s erratic changes of direction coming up the east coast of the United States, the Vessel’s course was altered by its Master on several occasions to avoid the storm. It was not until the Vessel sailed for two (2) days that the weather started to worsen, when the Vessel’s and the hurricane’s paths crossed. As a result of the heavy weather encountered, the bilge pumps and generators failed and were unable to keep up with the water ingress.  The Court found that the evidence presented was that the Vessel never intended to sail through Hurricane Sandy but rather planned to avoid the hurricane up until the moment it was encountered.  Acadia was promptly notified of the loss of the Vessel; paid the policy limits for hull & machinery, liability and loss of earnings portions of the policies; and, nearly six (6) months later issued its first reservation of rights letters and thereafter nearly two years later filed an action to recover the payments made.

Judge Guajarati engaged in a detailed analysis of the various types of seaworthiness warranties contained in the policy issued for the Vessel.  The Court was clear that the burden was on the insurer (i.e. – Acadia) to prove the unseaworthiness of the Vessel.  After hearing multiple fact and expert witnesses, the Court found that Acadia had failed to prove by a preponderance of the evidence that the Vessel was unseaworthy at the time the policy was first issued, subsequently renewed, or at the time of the loss.  The Court also held that while Acadia highlighted certain facts they believed indicated that the Defendants violated the duty of utmost good faith, those same facts were not shown to be material or to have been relied upon by Acadia when making their decision to bind coverage.  While Acadia also raised claims related to crew warranties and violations of federal regulations, the Count found that Plaintiff had not articulated what regulations with respect to the crew had been violated.  Finally, the Court held that the Defendants had carried their burden to show that the loss of the Vessel was caused by several covered perils of the sea under the Acadia policy.

To read a copy of the decision, click here.

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OFAC Issues Determination to Expand Russian Sanctions to Marine Sectors

On March 31, 2022, the Office of Foreign Assets Control (“OFAC”) issued a “Determination Pursuant to Section 1(a)(i) of Executive Order 14024.”  This determination allows the Department of Treasury in conjunction with the Secretary of State to sanction any person who operates in the electronic, aerospace, and marine sectors of the Russian economy.  OFAC has not specially defined what it considers to be the “marine sector.”  Given the broad inclusion of additional industries subject to sanctions, we expect OFAC will specifically define the types of entities within each sector to be targeted.  We will continue to monitor OFAC guidance and provide updates as they become available.

To read a copy of the Department of Treasury Determination Click Here.

To read a copy of Executive Order 14024 Click Here.

If you have any questions as to how the sanctions may impact you, contact us at

Chalos & Co, P.C. Featured in Benedict’s Maritime Bulletin

George M. Chalos and Briton P. Sparkman were recently published in Benedict’s Maritime Bulletin for their article, “Case of First Impression – Is an Agreement on Security a Maritime Contract?”  The article provides a detailed analysis of the Third Circuit Court of Appeals’ decision in Nederland Shipping Corporation v. United States of America, 2021 U.S. App. LEXIS 33920 (3d Cir. Nov. 16, 2021).  The Third Circuit reversed the district court’s dismissal for lack of subject matter jurisdiction in a landmark ruling, holding that the primary objective of the Agreement on Security was maritime commerce and therefore it was a maritime contract subject to the Court’s admiralty jurisdiction.  The Third Circuit also found that the vessel owner had the right to pursue the statutory cause of action for damages in the district court pursuant to 33 U.S.C. § 1904(h).

To read the article in full, please download here.  Reprinted from 20 BENEDICT’S MAR. BULL. [1] (First Quarter 2022) with permission.

For more information about the article and/or about the Court’s decision and how it may apply to specific facts and circumstances, please do not hesitate to contact us at

President Biden Issues Executive Order Banning all Russian Energy Imports into United States

Earlier today, President Biden issued an Executive Order (“EO”) prohibiting Russian energy imports in the United States.  The EO specifically states that additional sanctions are needed to expand the previously issued EO’s due to the Russian Federation’s unjustified, unprovoked, unyielding, and unconscionable war against Ukraine is a violation of international law and threatens the peace, stability, sovereignty, and territorial integrity of Ukraine.

The new energy ban prevents U.S. persons from importing into the United States Russian origin crude oil, petroleum, petroleum fuels, oils, and products of their distillation, liquified natural gas, coal, and coal products.  The EO also prohibits U.S. persons from making new investments into the Russian energy sector.  The goal of the latest EO is to further deprive the Russian government of the economic resources needed to continue its invasion of Ukraine.

We will continue to monitor the ever changing Russian sanctions landscape.  If you have any questions as to how the newly imposed sanctions may impact you, contact us at

To read a copy of the latest executive order click here.

U.S. Imposing Harsh Financial Sanctions on Russia in Response to Invasion of Ukraine

On February 21, 2022, President Biden issued Executive Order 14065, entitled “Blocking Property of Certain Persons and Prohibiting Certain Transactions with Respect to Continued Russian Efforts to Undermine the Sovereignty and Territorial Integrity of Ukraine” in response to Russian actions against Ukraine.  The U.S. had previously issued Executive Order 14024, entitled “Blocking Property with Respect to Specified Harmful Foreign Activities of the Government of the Russian Federation” to assist in targeting specific bad actors in Russia seeking to harm properly elected democratic institutions.  The U.S. is utilizing both Executive Orders to impose harsh financial sanctions on the Russian government and officials.  The sanctions are focused on targeting the Russian financial system to make it difficult for Russia to bear the costs associated with maintaining its military action in Ukraine.

The U.S. Department of Treasury has issued a series of four (4) directives aimed at targeting the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federation, the Ministry of Finance of the Russian Federation, as well as entities and individuals close to Vladimir Putin and Russian leadership.  The newly issued directives prevent U.S. banks and U.S. persons from processing transactions, maintaining correspondent bank accounts or payables through accounts for Russian banks, providing new debt with a majority date longer than fourteen (14) days, and participating in the ruble bond market.

The Department of Treasury has also identified and targeted specific banks including State Corporation Bank for Development and Foreign Economic Affairs Vnesheconombank (VEB), VTB Bank Public Joint Stock Company, Public Joint Stock Company Bank Financial Corporation Otkritie, Promsvyazbank Public Joint Stock Company, Sovcombank Open Joint Stock Company, Joint Stock Commercial Bank Novikombank, and several of the financial institutions’ subsidiaries.  As a result of the targeted blocking directives, all property and interest in property of these entities in the possession or control of U.S. persons and U.S. financial institutions are blocked and must be reported to the Office of Foreign Asset Control (“OFAC”).  The U.S. government officials believe the coordinating targeting of the Russian financial system through heavy sanctions (and support from the European Union, Great Britain, and Japan, among others), will disrupt Russia’s attempts to prop up its depreciating currency and restrict the ability of Russia to sustain its military action against Ukraine.  On Saturday, February 26, 2022, Russian Banks were removed from the international SWIFT program, which restricts the ability of financial institutions to send and receive funds globally beyond the borders of Russia.

In addition, the U.S. Department of Justice announced that it would be forming an interagency law enforcement task force, KleptoCapture, charged with seizing assets of Russian oligarchs in the U.S. in an effort to enforce the current sanctions.

President Biden and U.S. members of Congress have promised that further and harsher sanctions against Russia will continue in an effort to halt Russia’s military action against Ukraine, including the announcement on March 2, 2022 that sanctioning the Russian oil and gas industry could be next.  We will continue to monitor the dynamic and evolving landscape as new sanctions are announced and imposed.

If you have any questions as to how the newly imposed sanctions may impact you, contact us at

To Read a Copy of Executive Order 14065 Click Here.

To Read a Copy of Executive Order 14024 Click Here.

To Read a Copy of Directive IA Click Here.

To Read a Copy of Directive 2 Click Here.

To Read a Copy of Directive 3 Click Here.

To Read a Copy of Directive 4 Click Here.

To Read a Copy of the Department of Justice Press Release Click Here.

Rules For Thee And Not For Me – U.S. Government Not Liable For Oil Spill Damages

On February 8, 2022, the U.S. Court of Appeals for the 11th Circuit issued a decision affirming the district court’s dismissal of admiralty claims brought by a vessel owner against the United States for oil-removal damages for a spill caused by the U.S. Army Corp. of Engineers (the “Army Corps”). See Savage Servs. Corp. v. United States, Slip Op. No. 21-10745 (11th Cir. Feb. 8, 2022).  The 11th Circuit held that as a matter of statutory construction, the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C.S. § 2701 et. seq., does not authorize a claim against the federal government, and because Congress intended through its enactment of OPA’s comprehensive remedial scheme to displace the government’s generally broad sovereign immunity waiver afforded through the Suits in Admiralty Act of 1920 (“SAA”), the Plaintiffs common law admiralty claims against the government could not survive. Id.

The facts of the dispute are straightforward.  On September 8, 2019, the M/V SAVAGE VOYAGER, a vessel owned by Plaintiffs Savage Services Corp. and Savage Inland Marine LLC, was pushing two tank barges along the Tennessee-Tombigbee Waterway, a manmade system of canals, locks, and dams linking the Tennessee River in Mississippi with the Tombigbee River in Alabama. The Plaintiffs alleged that as the vessel was entering one of the locks, the lock master began de-watering the lock chamber without proper notice to the crew and without ensuring that the tug and tow were fully secured within the miter walls.  The boat lift in the lock was at all times operated by the Army Corps.  As a result, the vessel incurred damage (including the puncture of a cargo tank), crude oil was released into the lock channel, and expensive removal operations were undertaken which Plaintiffs claimed led to nearly $4 million in damages.

The Plaintiffs filed suit in the U.S. District Court for the Southern District of Alabama and alleged admiralty jurisdiction. Specifically, Plaintiffs sought to hold the government responsible for the damages and removal costs on the basis that the Army Corps was solely responsible for the incident.  In support of the claim of subject matter jurisdiction, the Plaintiffs argued that the incident involved a vessel on the navigable waters of the United States and as such, invoked the court’s admiralty and maritime jurisdiction.  Plaintiffs alleged that since its claim arose under admiralty, the government was a proper defendant due to its waiver of sovereign immunity for admiralty claims pursuant to the SAA.

The government moved to dismiss the claim for spill removal cost, arguing that the OPA statute exclusively controlled in oil spill-recovery actions and that the United States has not waived its sovereign immunity under OPA. In granting the motion to dismiss, the district court held that because OPA was enacted by Congress specifically to ‘assign responsibility’ for oil-spill cleanup costs and did not contain any waiver of sovereign immunity, there was no ability to sue the government under SAA as a side-step to OPA’s exclusivity.  In comparing the statutes, the Court held that Congress through OPA (which was enacted some seventy (70) years after the SAA), had effected an “implied repeal of the general sovereign immunity provision in the SAA as it pertains to oil-spill cleanup damages.”

The 11th Circuit agreed and affirmed the decision below. The Court ruled that the plain language of the OPA makes clear that the United States was not an entity against which a contribution claim could be brought, holding that there was no mention of the United States in the list of “persons” responsible under OPA.  Furthermore, other statutes such as the Comprehensive Environmental Response, Compensation, and Liability Act and the Clean Water Act used explicit language waiving the government’s sovereign immunity and subjecting the United States to civil liability in those statutes.  The omission in OPA was further evidence that the government had not waived its sovereign immunity.  Finally, the 11th Circuit found that where there was a conflict between the broad waiver under the SAA and the narrower OPA, the OPA’s comprehensive remedial scheme displaced the waiver provision in the SAA.  The OPA was, as other courts had found, a party’s exclusive remedy for claims for clean-up costs related to oil spills.  The Court observed that, for purposes of interpretation, detailed statutes generally pre-empt more general ones.  This was especially true, the Court reasoned, because OPA was the more recent statute and, by its language, was intended to take precedence over preexisting legislation on the same subject. Although OPA did not repeal the older, more general SAA, the Court held that it did create a discrete exception to it. Id. at 46.

The government’s immunity from responsibility from its own oil spills or spills which it causes third parties to have is directly at odds with the United States’ pursuit of environmental compliance and enforcement worldwide.  This lack of accountability is especially contrary to the prosecution (both civilly and criminally) of vessel owners, operators, and seafarers under various statutes and enforcement regimes such as the Clean Water Act, Clean Air Act, and the Act to Prevent Pollution from Ships (APPS – 33 U.S.C. § 1901, et seq.).

Although it would seem the 11th Circuit’s ruling means that the government can never be liable for causing an oil spill (or the damages incurred in removing/remediating a spill), the 1st Circuit Court of Appeals has held that OPA has not completely supplanted the more general SAA.  As it relates to claims against the United States for common law negligence under the general admiralty law of the United States, the 1st Circuit held that such claims could be pursued against the government for spills caused by a public vessel.  Ruling that OPA is explicit in leaving all claims and causes of action which are not specifically addressed by the statute intact in the case Ironshore Specialty Ins. Co. v. United States, the Court permitted a claim for negligence against the government for a spill from a public vessel. Id.  871 F.3d 131, 139-140, 2017 AMC 2138 (1st Cir. 2017). The 1st Circuit explained that under “Admiralty and Maritime Law,” the OPA states: “Except as otherwise provided in this Act, this Act does not affect . . . admiralty and maritime law.” 33 U.S.C. § 2751(e). The 1st Circuit reasoned that since public vessels lie outside the sweep of OPA liability, any preexisting admiralty and maritime law that applied to public vessels before the OPA’s passage survives its enactment, including the SAA.

To read a copy of Eleventh Circuit’s opinion in Savage, click here.

To read a copy of the First Circuit’s opinion in Ironshore, click here.

For more information about these decisions and how they may apply to specific facts and circumstances, please do not hesitate to contact us at