The Vikings Are Coming!

American Cruise Lines v. United States, 2024 WL 1122340 (2nd Cir. March 15, 2024).

            The Vikings established a settlement in Newfoundland at L’Anse aux Meadows in the 11th Century and “discovered” North America long before Christopher Columbus.[1] For unknown reasons, the intrepid Norsemen abandoned the site. Like Pershing’s refrain on his arrival in France in World War I, “Lafayette, we are here!” and MacArthur’s similar promise to the Philippines in World War II, “I have returned!” So have the Vikings.

            American Cruise Lines brought a challenge to the decision of the Maritime Administration (MARAD), arguing that the charter agreement between Viking[2] and River 1, LLC., a subsidiary of Edison Chouest Offshore[3] did not violate the cabotage laws of the U.S. The Passenger Vessel Service Act of 1886, which prohibits foreign owned vessels from engaging in “coastwise trade,” that is, transport of passengers between two coastwise points in the U.S.[4] The Shipping Act of 1916 requires approval from the Secretary of the Treasury and MARAD of any sale or charter of a U.S. documented vessel to a non-U.S. citizen.[5]

            The agreement between Viking and River 1 required River 1 to construct a vessel for Viking and then charter the vessel to Viking to operate cruises on the Mississippi River. Pursuant to the agreement, River 1 would operate the vessel while Viking’s employees would manage on-board entertainment.[6] River 1 sought the required approval of the agreement as a “time charter” prior to starting construction. This would protect both parties from enforcement of the cabotage laws under 46 C.F.R. § 221.13(b)(2).[7] After the notice and the comment process, MARAD determined that the agreement was a permissible time charter under the regulations. American Cruise Lines challenged the decision on several grounds.

            Initially, American Cruise Lines standing was challenged. But, the court determined that the company hand standing to challenge the MARAD decision.[8]

            The review of the Court of Appeals is limited to whether the decision was arbitrary and capricious.[9] The panel applied “Blackletter Maritime Law” to determine if the agreement was a time or demise charter and held that the decision was reasonable.[10] First, and most importantly, River 1provided the crew to operate the vessel and its master would oversee all vessel operations.[11] Though Viking could request replacement of the master, its bases were limited to “unsatisfactory performance” and it had no control over the replacement.[12] The master would always be paid and selected by River 1 which was also responsible for the care and maintenance of the vessel.[13] Though Viking set the itinerary, this was consistent with a traditional time charter.[14]

            MARAD further supported its final determination that the agreement was not an impermissible transfer of control to a foreign corporation with its regulations for commercial fishing vessels promulgated under the American Fisheries Act.[15]

            American also challenged the decision-making process of MARAD which the court found meritless.[16] The panel cautioned that its opinion is based solely on the record before it. Nonetheless, the agreement provides a template for the future.

[1] https://themaritimeexplorer.ca/2021/11/23/lanse-aux-meadows/

[2] Viking River Cruises is a Swiss Corporation and established a U.S. subsidiary, Viking USA, LLC.; See American Cruise Lines, 2024 WL 1122340 at *1.

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] American Cruise Lines, 2024 WL 1122340 at *1.

[8] Id. at *2.

[9] Id. at *3.

[10] Id.

[11] Id.

[12] American Cruise Lines, 2024 WL 1122340 at *3.

[13] Id. at *3-*4.

[14] Id. *4.

[15] Id.

[16] Id. at *5.