Charter Party “No Lien” Clause Enforced

Types : Alerts

In Cal Dive Offshore Contractors, Inc. v. M/V SAMPSON, the U.S. District Court for the Southern District of New York considered a claim by vessel manager Cal Dive Offshore Contractors, Inc. (“Cal Dive”) for unpaid services against the vessel in rem, the owner CVI Global Lux Oil and Gas 4 S.a.r.l (“CVI”), and CarVal investors, LLC (“CarVal”) as owner’s agent.  Following a trial, the district court held that Cal Dive’s maritime lien and in personam claims failed.  Cal Dive has since filed an appeal, which remains to be decided.

The relationship between the parties began in order to secure pipelaying contracts in the Gulf of Mexico.  For that purpose, Cal Dive and Oceanografia, S.A. de C.V. (“OSA”) entered into a Bid Cooperation Agreement.  In connection with the work, OSA chartered the M/V SAMPSON from CVI with CarVal acting as owner’s agent.  Under the terms of the charterparty, CVI would provide the crew for the vessel and OSA would supply additional personnel to handle the pipelaying work.  However, due to obligations under the pipelaying contract, Cal Dive was responsible for the overall management of both the operation and pipelaying responsibilities of the vessel.

Accordingly, CVI entered into a Ship Management Agreement with Cal Dive for the crew members to operate the vessel.  Concurrently, OSA contracted with Cal Dive for the additional personnel to handle the pipelaying work.  OSA and Cal Dive ultimately agreed on the exact crew members Cal Dive would supply for this work.  The vessel was deployed and subsequently Cal Dive invoiced CVI for the work of the marine crew and OSA for the pipelaying personnel.  While CVI paid, OSA did not make full payment and then filed for bankruptcy.  Cal Dive filed claims against the vessel, CVI, and CarVal to recover the unpaid amounts.

At trial, two CarVal witnesses gave credible testimony that Cal Dive was aware of “no lien” provision in the charter party between CVI and OSA.  In fact, Cal Dive, as ship manager, had to know the terms of the charterparty in order to address the day-to-day operational needs of the vessel.  This included communicating the “no lien” clause to third-party vendors supplying the vessel.  Between the testimony and evidence that Cal Dive had received a copy of the charter party, both before and after the execution, the district court found that Cal Dive had actual knowledge of the “no lien” clause in the charter party.  Accordingly, the district court dismissed Cal Dive’s maritime lien claim against the vessel because, in contracting with OSI for the pipelaying personnel, Cal Dive was fully aware of the “no lien” clause.

In deciding a previously filed motion for summary judgment, the district court had already dismissed Cal Dive’s in personam claim against CVI.  Since CarVal was clearly CVI’s agent, acted within the scope of its authority, and was not personally negligent, the in personam claim against CarVal must likewise fail.

Clearly, the effectiveness of a “no lien” clause can hinge on whether the parties involved had prior knowledge of the restriction.  As Cal Dive had actual knowledge of the clause, it was precluded from recovering on the basis of a maritime lien.