Surety Bond Under Act to Prevent Pollution from Ships Confers Admiralty Jurisdiction on Court. APPS Damage Section Waives U.S. Sovereign Immunity
Nederland Shipping Corp. v. United States Nederland Shipping Corp., 18 F.3d 115 (4th Cir., Nov. 21, 2021).
M/V Nederland Reefer arrived in the port of Wilmington, Delaware with a cargo of fruit and was detained by the U.S. Coast Guard for allegedly violating the record book provisions of the Act to Prevent Pollution from Ships (APPS). Nederland signed a security agreement with the U.S. government for $1 million as well as other provisions to release the vessel. The agreement also provided that any disputes over the agreement would be resolved in the United States District Court for the District of Delaware.
After the replacement crew was on the vessel, the vessel did not receive clearance for departure until 17 days later despite numerous emails from counsel for the vessel who maintained that the vessel was sustaining economic losses due to the unreasonable delay.
Several months later, Nederland sought a declaratory judgment in federal court, asserting admiralty and federal question jurisdiction, seeking relief to declare the agreement null and void and damages. The U.S. government moved to dismiss for failure to state a claim and lack of subject matter jurisdiction. The trial court agreed there was no subject matter jurisdiction and dismissed the claim.
The panel of the Third Circuit reversed holding that the agreement for the release of the vessel is a maritime contract based on Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14 (2004) and Kossick v. United Fruit Co., 365 U.S. 731 (1961). The primary purpose of the agreement was to put the vessel back into maritime commerce. The court distinguished Angelex Ltd. v. United States (Angelex I), 723 F.3d 500 (4th Cir. 2013) on the basis that in that case there was no security agreement.
Finally, the panel addressed whether APPS, namely, 33 U.S.C. §1904(h), gave the court federal question jurisdiction. The U.S. maintained that this provision does not waive the government’s sovereign immunity and is subject to the Tucker Act; and thus the claim must be brought in the Federal Court of Claims.
The court held that §1904(h) provides more than a cause of action; it also provides a remedy, namely money damages. As such, this provision of APPS waives the government’s sovereign immunity.
