fall 2013 newsletter - aba tips admiralty & maritime law committee

Uniting Plaintiff, Defense, Insurance, and Corporate Counsel to Advance the Civil Justice System

Fall 2013

Carbon nanotubes (CNTs) holdpromise for many beneficialapplications. However, there havebeen concerns and calls for amoratorium raised over “mountingevidence” that CNT may be the“new asbestos,”1 or at leastdeserving of “special toxicologicalattention” due to prior experienceswith asbestos.2 The shape and sizeof some agglomerated CNTs aresimilar to asbestos—the most“desirable.” And because CNTs forstructural utility are long andthin—characteristics thought toimpart increased potency to

asbestos fibers—discussions ofparallels between these twosubstances are natural. Thus, giventhe legacy of asbestos-relatedinjury and the thousands of caseslitigated each year, consideration ofpossible implications of the use ofCNTs in research and in consumerproducts is prudent.

First reported in 19913, CNTsepitomize the emerging field ofnanotechnology, defined by someas the “ability to measure, see,manipulate, and manufacturethings usually between 1 and100 nanometers.”4 CNTs are a typeof carbon-based engineerednanoparticle generally formed by

Uniting Plaintiff, Defense, Insurance, and Corporate Counsel toAdvance the Civil Justice System

Fall 2009

Toxic Torts and EnvironmentalLaw Committee

IN THIS ISSUECarbon Nanotubes: The Next Asbestos . . . . . . . . . . . . . . . . . . . . . . . 1

Editor’s Message . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Tatera v. FMC Corporation: When Is A Product No A Product? . . . 3

Mexico’s National Wastes Management Program. . . . . . . . . . . . . . . 4

Environmental Risk During Restructuring And Bankruptcy . . . . . 5

Upcoming TTEL Programs And Meetings . . . . . . . . . . . . . . . . . . . . 6

Limitations Of Toxicogenomic Studies To Assess Toxic ExposuresAnd Injury From Benzene . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Burlington Northern: The Requisite Intent For Arranger LiabilityUnder Cercla . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

2009-2010 TIPS Calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Continued on page 18

CommitteeNewsCommitteeNews

CARBON NANOTUBES: THE NEXT ASBESTOS?Fionna Mowat, Exponent, [email protected] Tsuji, Exponent, [email protected]

1 Miller, G. 2008. Mounting evidence that carbonnanotubes may be the new asbestos. Friends of theEarth Australia. Available at http://nano.foe.org.au.2 The Royal Society and Royal Academy ofEngineering (RS/RAE). 2004. Nanoscience andnanotechnologies. Royal Society and Royal Associationof Engineers. London: The Royal Society. Available athttp://www.royalsoc.ac.uk/.3 Iijima, S. 1991. Helical microtubules of graphiticcarbon. Nature (London) 354:56–58.4 National Science and Technology Council (NSTC).2007. The National Nanotechnology Initiative. StrategicPlan. Washington DC: NSTC, Committee onTechnology, Subcommittee on Nanoscale Science,Engineering, and Technology. December. Available athttp://www.nano.gov/ NNI_Strategic_Plan_2004.pdf.

There is an absence of case law which addresses whether a fishing permit is an appurtenance for the purpose of including its value in the Limitation Fund. The current

value of certain types of fishing permits greatly exceed the value of the fishing vessel. Scalloping permits, for example, are the most highly valued type of fishing permit in the country.2 In the past two years, the highest sale price of a scallop vessel and permit totaled $5 million, with an average sale price of $4.55 million for both the vessel and permit.3 In early 2013, the value of one scallop permit reached as high as $4 million.4

Accordingly, vessel owners should expect claimants in future Limitation of Liability Actions to attempt to include the fishing permit with the vessel for the purpose of determining the value of the Limitation Fund.

LIMITING THE VESSEL OWNER’S LIABILITY TO THE VALUE OF THE VESSEL AND…ITS FISHING PERMITS?By: Kirby Aarsheim1

Admiralty and MaritimeLaw Committee


IN THIS ISSUE:Limiting the Vessel Owner’s Liability to the Value of the Vessel and…Its Fishing Permits? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1Message From The Chair . . . . . . . . . . . . . . 3Trade Talk: Robin Minturn, Chevron Shipping Co . . . . . . . . . . . . . . . . . . . . . . . . . 5The Norwegian Continental Shelf - Offshore Contracting Risks . . . . . . . . . . . . 8The Curious Case Of Maritime Law In High Tech Employment: Seasteading Fills The Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Year In Review . . . . . . . . . . . . . . . . . . . . . . 102013 - 2014 TIPS Calendar . . . . . . . . . . . . 30

1 Kirby Aarsheim is an associate at Clinton & Muzyka, P.C., a maritime defense firm servicing clients in the New England area as well as internationally. Her family is involved in the scallop fishing industry, which provides her with insight on commercial fishing operations. She can be reached at [email protected] or 617-723-9165. This article is intended for scholarly and academic purposes only. 2 Telephone interviews with A. Nelson Long Jr., a broker at Athearn Marine Agency, Inc., (August 22, 2013 and August 29, 2013). Athearn Marine Agency, Inc. has been engaged in the brokerage of commercial fishing vessels and related services since 1946. Mr. Long has been an owner and commercial fishing vessel broker for over thirty-seven years. 3 Id.4 Id.

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Admiralty and Maritime Law Committee Newsletter Fall 2013

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ChairJames P Koelzer

Robins Kaplan Miller & Ciresi2049 Century Park E, Ste 3400Los Angeles, CA 90067-3208

(310) 229-5443Fax: (310) [email protected]

Chair-ElectPamela Annette PalmerMorris Polich & Purdy LLP1055 W 7th St, Ste 2400

Los Angeles, CA 90017-2550(213) 891-9100

Fax: (213) [email protected]

Last Retiring ChairLaurie J SandsRiker Danzig et al

1 Speedwell Ave, Headquarters PlazaMorristown, NJ 07960-6838

(973) 451-8534Fax: (973) 451-8763

[email protected]

Scope LiaisonDavid Vandiver Wilson IIHays McConn Rice & Pickering1233 West Loop S, Ste 1000

Houston, TX 77027-9109(713) 654-1111


Council RepresentativeG Glennon Troublefield

Carella Byrne et al5 Becker Farm Rd, Ste 200Roseland, NJ 07068-1788

(973) 994-1700Fax: (973) 994-1744

[email protected]

Membership Vice-ChairK. Blythe Daly

Holland & Knight LLP31 W 52nd St, Fl 11

New York, NY 10019-6111(212) 513-3570


Newsletter Vice-ChairChristopher NolanHolland & Knight LLP31 W 52nd St, Fl 11

New York, NY 10019-6111(212) 513-3307


Technology Vice-ChairGlenanne Bowden

Robins Kaplan Miller & Ciresi2049 Century Park E, Ste 3400Los Angeles, CA 90067-3208

(310) [email protected]

Vice-ChairsJames Wilson Bartlett IIISemmes Bowen & Semmes25 S Charles St, Ste 1400

Baltimore, MD 21201-2400(410) 539-5040


Philip C BrickmanFowler Rodriguez Valdes-Fauli

400 Poydras St, Fl 30New Orleans, LA 70130-3245

(504) 523-2600Fax: (504) 523-2705

[email protected]

Michael J DalyPierce Atwood LLP

10 Weybosset St, Fl 4Providence, RI 02903-2818


Janice R HugenerThe Hugener Law Group1 Sansome St, Ste 3500

San Francisco, CA 94104-4448(415) 944-9413


Christopher HamiltonHamilton Miller & Birthisel LLP

100 S Ashley Dr, Ste 1210Tampa, FL 33602-5313

(813) 223-1900Fax: (813) 223-1933

[email protected]

Grady S HurleyJones Walker et al

201 Saint Charles Avenue, 48th FloorNew Orleans, LA 70170-1000

(504) 582-8224Fax: (504) 589-8224

[email protected]

Anne L KulesaPO Box 751

Bartonsville, PA 18321(570) 517-1482

[email protected]

Joseph KulesaFisher & Fisher Law Offices LLC

3041 Route 940, Suite 107Mount Pocono, PA 18344-1324

(570) 839-8690Fax: (570) 839-7675

[email protected]

Harmony Iris Loube JonesHolland & Knight LLP

800 17th St NW, Ste 1100Washington, DC 20006-3962


Jessica Link Martyn416 S Vanpelt St

Philadelphia, PA 19146-(757) 687-7706

[email protected]

Olivia Calhoun Palmer8694 Glascow Island LaneEdisto Island, SC 29438


Jefferson Poole3531 Helms Ave

Culver City, CA 90232-2414

Giuseppe RosaGiuseppe L Rosa Esq & Associates

4 Piazza G FracastoroCavaion Veronese, VR 37010

39 04 5803 0630Fax: 39 04 5803 [email protected]

Pamela L SchultzSeverson & Werson

1 Embarcadero Ctr, Fl 26San Francisco, CA 94111-3745

(415) 677-5627Fax: (415) [email protected]

Ryan F Tennant1240 Appling Dr, Unit 301

Mount Pleasant, SC [email protected]

Raymond Timothy WaidPhelps Dunbar LLP

365 Canal St, Ste 2000New Orleans, LA 70130-6534



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Dear AMLC Colleagues:

It promises to be another exciting year for our group. We are already off to a strong start.

Last month, we had our first regional event in New Orleans, Louisiana, and it was a fantas-tic success. Many thanks to Ray Waid, Phelps Dunbar, the Tulane Maritime Law Journal, and everyone who participated and supported this event.

We are planning the next regional event for in Los Angeles, California. Our goal is to con-tinue to have regional events to provide more value to our members and give more maritime lawyers reasons to join our committee.

We are also resuming work on our recreational boating book and we need authors. Please contact me if you are interested in this publishing opportunity.

In addition, our Fall meeting is just around the corner. Please join us for a chat about the application of the Pennsylvania Rule in the Great Lakes, which will be followed by a networking event.

Stay tuned, because we have a lot more planned for the year! In the meantime, I look forward to seeing everyone in Minneapolis for the ABA TIPS Fall Leadership Meetings. The AMLC will have its meeting on Friday morning, October 11, 2013.

All the best,

Jim KoelzerChair, Admiralty and Maritime Law Committee

MESSAGE FROM THE CHAIR

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©2013 American Bar Association, Tort Trial & Insurance Practice Section, 321 North Clark Street, Chicago, Illinois 60654; (312) 988-5607. All rights reserved.

The opinions herein are the authors’ and do not necessarily represent the views or policies of the ABA, TIPS or the Admiralty and Maritime Law Committee. Articles should not be reproduced without written permission from the Copyrights & Contracts office ([email protected]).

Editorial Policy: This Newsletter publishes information of interest to members of the Admiralty and Maritime Law Committee of the Tort Trial & Insurance Practice Section of the American Bar Association — including reports, personal opinions, practice news, developing law and practice tips by the membership, as well as contributions of interest by nonmembers. Neither the ABA, the Section, the Committee, nor the Editors endorse the content or accuracy of any specific legal, personal, or other opinion, proposal or authority.

Copies may be requested by contacting the ABA at the address and telephone number listed above.

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www.americanbar.org/tips Register today for the Tort Trial & Insurance Practice Section’s Fall Leadership Meeting. Offering valuable CLE programming, various networking events and public service opportunities, this is a meeting you won’t want to miss!

Fall Meeting CLE Programs

Wednesday, October 9, 2013 Commercial Transportation: Four Hot Topics for the Trucking Lawyer Electronic Data Recorders or the Proverbial “Black Box”: Questions Concerning Admissibility Preservation and Ownership of the Data After a Motor Vehicle Accident

Thursday, October 10, 2013 When Passing the Bar is a Lifelong Challenge More Diligence is Due: What Every Lawyer Must Know About Insurance 2014 Health Insurance Market: New Challenges Dialog with General Counsel

Friday, October 11, 2013 Advanced Theories of Recovery and Subrogation 201

Register Today!

Hotel Reservations Please call the hotel directly at 612/349-4000 or toll free at 800/229-8280 to make your room reservation. The room block will be held until exhausted or until Tuesday, September 17, 2013 at 5:00pm (CST).

Thank You to Our Sponsors For Their Generous Support!


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Q. Robin, tell us what prompted you to get into the maritime legal industry?

R. I have always been interested in international business and entered law school with intention of getting my Juris Doctor and a Masters in International Affairs (a 4 year program). After paying for my first year of law school I decided to amend my goals and stick with just a JD (3 years). My interest in international issues and my previous work as divemaster led me to take my first admiralty class. After the first few classes, I knew that I wanted to be part of the maritime industry.

Q. Can you describe your experience of working at Chevron Shipping Co.?

R. Chevron Shipping is a fast paced and challenging environment. Chevron owned or chartered, ships are trading worldwide twenty-four (24) hours a day - 365 days a year. As an attorney for Chevron Shipping, I support projects and vessels in multiple jurisdictions and

time zones. I am always looking at domestic and international issues. Despite this high pressure environment, Chevron Shipping always takes the time to do it right.

Q. What are your views on hiring outside counsel?

R. I look for outside counsel firms that have not only a good maritime background, but can address a host of other issues that may arise in a transaction including tax issues. Primarily, I utilize outside counsel for transactional work outside of the United States but rely heavily on U.S. counsel for litigation matters. I appreciate working with outside counsel that

are sensitive to budget issues and who are willing to offer not only legal advice but creative solutions.

Q. What legal issues are coming across your desk with some frequency these days?

R. These days I am dealing with a lot of charter negotiations, shipyard repair contracts, Customs/Jones Act issues, and letters of indemnity related to cargo

TRADETALKFor our eighth “Trade Talk” piece, and our fourth in a row featuring woman leaders in U.S. shipping, we are

pleased to spotlight Robin Minturn, in-house counsel at Chevron Shipping Co. Chevron Shipping transports crude oil, refined products, liquefied petroleum gas and liquefied natural gas (LNG) for Chevron customers worldwide.

During 2012, it managed approximately 2,100 deep-sea tanker voyages using a combination of single-voyage charters, short- and medium-term charters, and company-owned and bareboat-chartered vessels. Headquartered

in San Ramon, California, Chevron also maintain regional offices in the major trading centers of Houston, London and Singapore. It offers a full range of marine services: technical and marine operations consulting, commercial arrangements, risk management, and transportation support. Historically, Chevron commissioned

its first tanker ship—an oil-fired steamer dubbed the George Loomis—in 1895. In 1920, it launched the first American tanker equipped with diesel-electric-drive propulsion. The fleet has grown steadily from the days when

barrels of oil were rolled onto the decks of sailing ships to the technically advanced tankers of today. Chevron owns a one-sixth interest in each of seven LNG carriers that transport cargos for the North West Shelf Venture in Australia. In 2012, it ordered eight new vessels to modernize the fleet and increase LNG coverage. To protect

the environment, all ships in Chevron-owned and bareboat-chartered fleet have double hulls. Below are excerpts from our interview with Robin which address her views on the maritime industry, issues concerning the hiring of

outside counsel, and the rise of the Texans of Houston.


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issues. The worldwide and domestic tanker markets are very challenging these days for different reasons. As your readers are aware, the worldwide tanker market is experiencing very low rates which is putting increased financial pressure on owners. Conversely, the U.S. market for tankers and tank barges is extremely tight and presents very different commercial and legal issues.

Q. For our practitioners, which maritime event(s) do you get the most out of?

R. In addition to ABA events, I always enjoy attending the Maritime Law Association meetings. The committee meetings are extremely valuable in helping me stay aware of what is going on in the industry. Additionally, if you need to network with international counsel, I recommend attending an international WISTA

(Women in International Shipping & Trading Association) event. Through WISTA I have made contacts in various regions of the world that have proved invaluable when different situations have arisen.

Q. In addition to the AMLC newsletter, of course, which maritime publication do you find most useful?

R. I receive a number of law firm publications from both domestic and international law firms and these are extremely helpful. Trade publications from BIMCO and bulletins from P&I clubs are also useful. The Coast Guard’s homeport website also contains a wealth of information including reports from the various advisory committees.


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Opportunities toBecome Involved

n Publication in the AMLC Newsletter or TIPS Law Journal

n Networking Opportunities

n CLE and Webinar Opportunities

n Leadership Positions

n Mentoring Relationships

n Law Student Writing Competition

Join Subcommitteesn Plaintiff

n Defense

n Insurance

n International

n Law Students/Young Lawyers

n Academic (Professors/Authors)

Additional InformationFor more information regarding the benefits that membership in the AMLC can provide to you, check out our webpage at http://ambar.org/tipsadmiralty and join our group on LinkedIn. The Committee is open to all, including non-lawyer maritime professionals, law students and lawyers in every practice area who want to keep abreast of developments in the field.

Benefits of AMLC Membership

Q. Thank you for taking time to speak with us today. As a final question, being located in Houston, Texas, which team which team is more likely to win a championship this year, the Houston Texans or the Houston Rockets? (Because you attended Tulane Law School, we can add the New Orleans Saints to the question).

R. My prediction is that the Texans will win a championship this year. However, the question you

should be asking is who has the better fan experience. I have lived in five different cities with NFL teams (Cincinnati, Houston, New Orleans, Nashville and Philadelphia). I have to give it to Houston and New Orleans. As I watch August or late December games, I am grateful for the air conditioning and heat provided by indoor stadiums!

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Offshore oil and gas exploitation involves resources, property, and equipment of enormous value. These assets are utilized within a restricted area, together with a large number of contractors,

in operations with an inherent risk of loss, damage or pollution. Consequently, adequate contractual regulation and insurance are required to limit the involved parties’ risk exposure.

In the Norwegian sector of the North Sea, significant efforts have been made to draft standard form contracts and develop contractual mechanisms intended to assist parties in managing these risks. The standard contracts NTK 07 (Norwegian Total Contract), NF 07 (Norwegian Fabrication Contract) and NSC 05 (Norwegian Subsea Contract) are well known and widely used for construction, fabrication and installation work. However, oil companies often use their own standard contracts for drilling or other work required for exploring and exploiting an oil field.

The distribution of risk among these different forms may vary substantially. And oil companies are increasingly requiring extensive deviations from these standard contracts, as well as industry standard ‘knock-for-knock’ limitation and indemnity principles. In addition, the peculiarities of Norwegian law may further affect the contractual obligations of parties.

This article examines the interplay of these various factors, including an example taken from a recent judgment of the Norwegian Court of Appeal in which the owners of a shuttle tanker were held liable for the loss caused following a collision by its ship with a floating storage and offloading unit (FSO).

Pollution liability

Due to the extensive liabilities that may arise, pollution liability is an important part of risk management in offshore contracts.

Pursuant to the Norwegian Petroleum Activities Act2, licensees and operators are held jointly and severally liable for damage or loss as a consequence of effluence or discharge of petroleum from any facility (other than supply and support vessels or ships that transport petroleum in bulk) in connection with petroleum activities. This pollution liability applies without regard to fault. However, the contractors involved are exempted from liability. And licensees and operators may only claim recourse against a contractor if the contractor has caused the pollution damage by willful misconduct or gross negligence. These rules are mandatory, and apply for the benefit of the contractor.

Most offshore contracts will also contain provisions whereby the operator indemnifies the contractor from claims arising from a blow out or pollution from the reservoir, well, or property of the operator. However, exceptions from these pollution indemnities are increasingly being seen, especially where the pollution is caused by the contractor’s gross negligence or willful misconduct. Such an exception is allowed under Norwegian law. However, many offshore contracts may also contain provisions whereby contractors are held liable for all damage caused by pollution emanating from their own equipment. In that circumstance, such an allocation of liability is contrary to the mandatory rules of the Norwegian Petroleum Activities Act, and thus will not apply.

The ‘knock for knock’ principle

Liability for loss or damage to the parties’ property and personnel is usually regulated in accordance with the ‘knock for knock’ principle. This doctrine subjects each party to liability for loss or damage to its own personnel and property regardless of cause, and requires each party indemnify the other for liabilities arising out of its own losses. The reciprocal indemnities are in effect reciprocal exclusions of liability. This principle is closely connected with the parties’ ability to procure insurance, and provides for a predictable and reasonable apportionment of liability.

THE NORWEGIAN CONTINENTAL SHELF – OFFSHORE CONTRACTING RISKSBy: Oddbjørn Slinning1


1 Oddbjørn Slinning is a partner with Wikborg, Rein & Co in Oslo, Norway. Slinning’s practice focuses on maritime law and insurance law issues, including issues related to newbuilding and conversion projects for ships and offshore installations, sale/purchase/affreightment of ships and offshore installations, and project finance of ships, rigs and similar assets. Slinning managed Wikborg Rein’s office in Japan from 2005 to 2008. He has also worked for a period of time at Wikborg Rein’s London office. Slinning can be reached at [email protected]. 2 Act of 29 November 1996 No. 72 relating to petroleum activities, chapter 7 [http://www.npd.no/en/Regulations/Acts/Petroleum-activities-act/]

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http://www.npd.no/en/Regulations/Acts/Petroleum-activities-act/


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In 2011, when Marty Hu graduated from Stanford University’s computer science program, he entered “the hottest Silicon Valley job market for

software engineers since the dot.com crash a decade ago.”2 He faced multiple options upon graduation. He had interviews with and was sought after by several top-ranked, high-tech companies like Google and Microsoft.3 But instead of taking a position with a prestigious Silicon Valley company, he opted to form his own start-up.4

Hu wasn’t the only student being pursued by the traditional powerhouses of the Bay Area’s technologically progressive employers. In 2011, SimplyHired.com estimated nearly “40 [percent] of the 130,000 open positions in Silicon Valley [were] for software engineers.”5 The region, commonly known for its computer and technology prowess, continued to add thousands of jobs in the past two years despite an otherwise crippling economic recession.6 However, high-tech businesses continued to have trouble finding the right individuals to staff the world’s largest and most advanced companies in the world despite the overwhelming efforts to attract new computer science graduates.

To those companies, the easy solution would be to hire workers within the U.S., like Hu. However, this remedy is not nearly as simple as it seems. For these employers, there are a diminishing number of potential employees in the U.S. who are prepared to work in the information technology, computer engineering, and programming sectors. This, combined with rising wages for in-demand employees, presents a major problem for companies in northern California who are interested in finding cost-effective solutions to their Human Resource

issues. Compounding the issue, a countless number of recent graduates, like Hu, are passing up conventional jobs in established companies to start their own innovative businesses.

In response, many companies turn their sights overseas and utilize the United States’ visa system for highly-skilled engineers and tech employees with training in foreign localities. These high-tech companies are interested in making it easier for highly-skilled engineers and technology experts from India and China to come to the United States to work.7 Unfortunately, obtaining a visa for these potential employees can be difficult. The U.S. sets a yearly quota of around 65,000 visas for highly-skilled immigrants and the competition to get those visas is fierce. In response to the limited slots for employees, high-tech companies often establish foreign branches of their company in counties like India and China. Outsourcing provides Silicon Valley with another solution to an on-going problem and presents glitches of its own. However, in a place where new ideas spur growth and innovation, there is a constant search for new and differing solutions to an ever-present employment issue.

One solution that has been presented to companies in northern California has its roots in well-defined maritime law. The proposed answer is a ship that will float twelve miles off the coast of California and is being built by a company called Blueseed. This revolutionary start-up company is looking to bypass the problematic and potentially treacherous visa system that might solve all of these companys’ problems by refitting a ship “turn[ing] it into a floating incubator anchored in international waters” and allowing employees to live and work on a high-tech oasis on the Pacific.8 Blueseed

THE CURIOUS CASE OF MARITIME LAW IN HIGH TECH EMPLOYMENT: SEASTEADING FILLS THE GAPBy: Bill Gutek1

1 Bill Gutek is a May 2013 graduate of the University of Miami School of Law in Coral Gables, Florida. He can be contacted at [email protected], 941-468-3827. 2 Dan Simon, Silicon Valley Experiencing New Hiring Boom, CNN, Apr. 5, 2011, available at http://articles.cnn.com/2011-04-05/tech/silicon.valley.job.market_1_software-engineers-job-market-simplyhired?_s=PM:TECH (last visited Mar. 18, 2013). 3 Id. 4 Id.5 Id. 6 Id. In March 2011, Silicon Valley added 1,200 jobs and was on track to produce thousands more in the coming years due to the innovations in “social media, mobile and cloud computing.” 7 Alan Gomez, Start-up Floats a Solution to Tech Industry’s Visa Problem, USA TodAy, Dec. 5, 2011, available at http://www.usatoday.com/news/washington/story/2011-12-04/Blueseed-visa-tech-jobs-cruise-ship/51646138/1 (last visited Mar. 18, 2013). 8 Timothy B. Lee, Startup Hopes to Hack the Immigration System with a Floating Incubator, ARS TechnicA, Jan. 2012, available at http://arstechnica.com/tech-policy/news/2011/11/startup-hopes-to-hack-the-immigration-system-with-a-floating-incubator.ars (last visited Mar. 18, 2013).


http://articles.cnn.com/2011-04-05/tech/silicon.valley.job.market_1_software-engineers-job-market-simplyhired?_s=PM:TECH

http://articles.cnn.com/2011-04-05/tech/silicon.valley.job.market_1_software-engineers-job-market-simplyhired?_s=PM:TECH


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Year In ReviewEnjoy a recap of the AMLC’s activities this last year.

FALL: OCTOBER 2012

The ABA year runs August to August and the first TIPS meeting of the year was held in the second week in October, 2012 at the La Quinta Resort and Club in La Quinta, California.

An unidentified Californian cat infiltrates the hotel room of Immediate Past Chair Chris Nolan and attemps to do harm to his poor Mets hat.

Chair Laurie Sands, Vice Chair Blythe Daly, and Chair Elect Designee Pam Palmer take in some sun before admiralty committee meetings in La Quinta.


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Leaders from two of the ABA TIPS section’s committees held a program at the SMU Dedman School of Law to tell students about careers in international law and in the practice of admiralty and maritime law. The students who attended learned a lot about those areas and about how (and why) they can become active in the organized bar.

Pictured here are the speakers on the SMU Career Panel in Admiralty and International Law:

Prof. Mark E. Wojcik, The John Marshall Law School (Chicago), Chair of the ABA TIPS International Committee

Laurie J. Sands (New Jersey), Chair of the TIPS Admiralty and Maritime Committee

Blythe Daly (New York), Membership Vice Chair of the TIPS Admiralty and Maritime Committee

Raymond Ward (New Orleans), Vice Chair of the TIPS Admiralty and Maritime Committee

WINTER: FEBRUARY 2013

The ABA mid year meeting was held in Dallas, Texas during the first week of February, 2013.

Christopher Nolan (New York), Immediate Past Chair of the TIPS Admiralty and Maritime Committee and Vice Chair of the TIPS International Committee

Christopher Hamilton (Florida), Vice Chairof the TIPS Admiralty and Maritime Committee


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In April, 2013, members of the AMLC traveled to the St. John’s School of Law for a discussion of the practice of insurance law, including the changing legal landscape for lawyers and clients in this area.

Pictured:

• Christopher R. Nolan, Partner, Holland & Knight; Vice Chair, TIPS Admiralty and Maritime; International Law Committee

• Ettie Ward, Professor of Law, St. John’s School of Law; Vice Chair, TIPS Alternate Dispute Resolution Committee

• Thomas M. McNally, Chief Operations Officer, Staff Counsel, Chubb & Son; Chair, TIPS Staff Counsel Committee

• Laurie J. Sands, Counsel, Riker Danzig Scherer Hyland Perretti, LLP; Chair, TIPS Admiralty & Maritime Committee

• John B. Cartafalsa, Jr., Managing Attorney, Zurich Staff Legal


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The panel discussion brought together admiralty practitioners and lawyers from the United States Coast Guard, the United States Navy, and the Federal Maritime Commission for a talk pertaining to the practice of admiralty and government law, obtaining government and private practice jobs in this market, and the interaction among lawyers in the federal government and private practice.

The panel, moderated by Jessica Link Martyn of Troutman Sanders LLP, included: Christopher Nolan of Holland & Knight LLP, Raymond Waid of Phelps Dunbar LLP, Laurie Sands of Riker Danzig Scherer Hyland & Perretti LLP S, Eric Lee of the Federal Maritime Commission, LT Matt Dursa USN with the General Litigation Division of the Office of the Judge Advocate General, and LCDR Brandy Parker USCG who serves as Legal Counsel at the Coast Guard Intelligence Coordination Center.

SPRING: MAY 2013

Washington, D.C. and Norfolk

On Friday, April 26, 2013, members and guests of the AMLC gathered in Washington, D.C. at the offices of Holland & Knight LLP for a lively discussion entitled “Admiralty Practice in the 21ST Century: Maritime Government Lawyers And Private Practitioners.”

Watch the Program Video on YouTube

http://www.youtube.com/watch?v=xD5gnSJ5anI


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Ray Waid, Laurie Sands, and Canadian guests Rebecca Bush and Tamara Tomomitsu travel to the RTI sailing event in style.

Arrival in Annapolis

Rebecca Bush heads out for a sail.

Chair Laurie Sands and Chair Elect Jim Koelzer sail on by.

Member Ted Dunlap, TIPS members Chuck Eppolito and Ari Magedoff (or part of him behind the ropes) and Vice Chair Jessica Martyn lead their team.

Following the program, The RTI Group, LLC sponsored a sail on the Severn River touring Annapolis and the Naval Academy for all of our guests and welcomed the committee with open arms.


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Members Daniel Maland, Ray Waid, Chris Nolan, and Tamara Tomomitsu sail to

victory in an non-existent competition.

The good folks at RTI and the AMLC join up for food and drinks following the afternoon of sailing. No Jones Act claims made, no Limitation Act petition filed,

no Lloyd’s Open Form necessary.


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Mike Daly attemps to avoid being blown away.

AMLC invades San Fran by all modes of transporation

AMLC Law Student Writing Competititon winner Kathyn Munson of Tulane Law School, Vice Chairs Phil Brickman and Mike Daly take in the beautiful San Fran day.

Americas Cup winner Team Oracle

Summer: August 2013

The ABA Annual meeting is held in August, 2013 in San Francisco, coincidentally during the trials for the Americas Cup.


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Finally, AMLC recruitment of new members starts early. This year we welcomed Chair Elect Pam Palmer’s twin girls Addie and Daisy to the long-term planning committee.

Chair Elect Jim Koelzer accepts the TIPS award for innovation on behalf of the AMLC.


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Scalloper – F/V INSPIRATION5

The Object of the Act

The rule of limited liability for vessel owners has been administered in the courts of admiralty in Europe and applied in England by statute for nearly two centuries.6 The concept of permitting vessel owners to limit their liability reached the shores of the United States following the landmark case of The Lexington.7 As a result of the uneasiness produced among vessel owners by The Lexington decision, and in an effort to protect the maritime industry in the United States, Congress passed the Limitation of Liability Act.8

The Limitation of Liability Act of 1851 restricted in personam liability of vessel owners to the value of the vessel and its pending freight.9 The Limitation Act was first amended in 1872 and again in 1920.10 In the Act’s 1936 amendment, Congress established the protocol for limitation of liability jurisprudence.11 The Limitation Act was intended to promote the manufacture of ships,

encourage the business of navigation, and, in that respect, put this country on the same footing with other countries.12 Courts applying the statute should not limit the right of the injured party to a recovery beyond what is necessary to effectuate the purposes of Congress.13

What are Fishing Permits?

In 1976, Congress enacted the Magnuson Act, which was later renamed the Magnuson Stevens Act, “at a time when overfishing of coastal waters was commonplace, threatening the existence of a number of species of fish.”14 The Magnuson Stevens Act was passed in response to overfishing and inadequate conservation measures “which were threatening future commercial and recreational fishing, as well as the very survival of species.”15

To efficiently manage the conservation directives of the Magnuson Stevens Act, Congress also “created eight regional fishery management councils composed of state fishery managers, the regional NMFS [National Marine Fisheries Service] fisheries administrator, and qualified fishing industry, academic, and environmental representatives.”16 Each council controls the fisheries seaward of the states comprising it.17 The primary responsibility of the councils is the development of fishery management plans (FMPs) that establish rules for each fishery to meet national conservation and management standards established in the Magnuson Stevens Act.18

FMPs often established the implementation of fishing permits as a method of gaining control of the fishery. For example, the management plan for the Atlantic Ocean scallop fishery was amended in 1994 to establish an “open access” scallop fishery that provided for either “limited access” or “open access general category” scallop permits.19

LIMITING THE VESSEL...Continued from page 1

5 Martin Mack, Nantucket Waterfront News, http://nantucketwaterfrontnews.blogspot.com (December 8, 2011).6 Am. Car & Foundry Co. v. Brassert, 61 F.2d 162, 164 (7th Cir. 1932) aff’d, 289 U.S. 261, 53 S. Ct. 618, 77 L. Ed. 1162 (1933).7 N.J. Steam Navigation Co. v. Merch.’s Bank of Boston (The Lexington), 47 U.S. 344, 12 L. Ed. 465 (1848). In The Lexington, the owners of a steamboat that burned on Long Island sound were held liable for approximately $18,000 in coin, which had been shipped upon the steamer and lost.8 Id.9 Act Mar. 3, 1851, ch. 43, 9 Stat. 635 (1851).10 See Admiralty Rules 51-55, 254 U.S. app. (1920). See also Death of the High Seas Act, 41 Stat. 537 (1920), codified at 46 U.S.C. app. § 761 et seq.11 See N. Healy & D. Sharpe, Cases and Materials on Admiralty (3d ed. 1999).12 Am. Car & Foundry Co., 61 F.2d at 164.13 Id.14 See Hall v. Evans, 165 F. Supp. 2d 114, 123-24 (D.R.I. 2001) (citing Parravano v. Babbitt, 837 F.Supp. 1034, 1040 (N.D.Cal.1993), aff’d, 70 F.3d 539 (9th Cir.1995), cert. denied, 518 U.S. 1016, 116 S.Ct. 2546, 135 L.Ed.2d 1066 (1996) (citing 16 U.S.C. § 1801(a))).15 Id. (citing Lovgren v. Byrne, 787 F.2d 857, 861 (3d Cir.1986)).16 Id. A.M.L. Int’l, Inc. v. Daley, 107 F.Supp. 2d 90, 93 (D.Mass. 2000) (citing 16 U.S.C. § 1852(a)(1)).17 Id. (citing 16 U.S.C. § 1852(h)).18 Id. 19 Gen. Category Scallop Fishermen v. Sec’y of U.S. Dep’t of Commerce, 720 F. Supp. 2d 564, 568 (D.N.J. 2010) aff’d sub nom. Gen. Category Scallop Fishermen v. Sec’y, U.S. Dep’t of Commerce, 635 F.3d 106 (3d Cir. 2011) (citing Amendment 4 to Atlantic Sea Scallop FMP, 59 Fed. Reg. 2757 (Jan. 19, 1994)).

http://www.westlaw.com/find/default.wl?ft=Y&referencepositiontype=S&rs=ap2.0&rp=%2ffind%2fdefault.wl&serialnum=1932129106&fn=_top&referenceposition=164&findtype=Y&vr=2.0&db=0000350&wbtoolsId=1932129106&HistoryType=F

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Under the federal rules and regulations designed to protect declining fishing stocks and otherwise conserve fishery resources, the fishing history and fishing permits of a vessel are integral to the value of the vessel itself.20 The amount and species of fish that a particular vessel is licensed to catch often depends on that vessel’s fishing history, and certain species cannot be fished at all except by, or in place of, vessels that have previously held permits to do so.21

Fishing Permits are Not Appurtenances to be Included in the Limitation Fund

Courts have carefully scrutinized the value of the vessel for determination of the Limitation Fund. The earliest version of the Limitation Act expressed that the liability of the owner of any vessel shall “in no case” exceed the value of his interest in the vessel and her freight then pending.22 In Place v. Norwich & N.Y. Transportation Co., the Supreme Court concluded that the proper valuation of the steamer was at the termination of the voyage, which was her value after she sunk and was lying on the bottom of the sea.23

Soon after, the Supreme Court concluded that appurtenances of the vessel were also to be included when assessing the value of the vessel.24 In The Main v. Williams, the Supreme Court stated that “[i]n assessing the value of the ship, the custom has been to include all that belongs to the ship, and may be presumed to be the property of the owner,-not merely the hull, together with the boats, tackle, apparel, and furniture, but all the appurtenances, comprising whatever is on board for the object of the voyage, belonging to the owners, whether such object be warfare, the conveyance of passengers, goods, or the fisheries.”25 The Supreme Court must have included the term “fisheries” as a reference to a

component of the vessel other than fishing permits, such as fishing gear, since fishing permits were not in existence at the time of the decision and were not implemented until many years later.

To be included in the vessel’s value, the vessel’s appurtenances must also be intended for the object of the voyage and part of what the owner risked on the vessel for the object of the adventure.26

Fishing permits are distinguishable from appurtenances in Limitation of Liability matters in two key ways: (1) Fishing permits are not part of what is risked by the vessel and (2) Fishing permits do not belong to the vessel owner.

First, fishing permits survive the vessel no matter the loss and are therefore not part of what the vessel owner risks on the vessel during its voyage.27 The value of the fishing permit, which is not impaired due to the sinking, cannot be included in the vessel’s fair market value for the purpose of determining whether the vessel was a constructive total loss.28 When a vessel sinks, its fishing permit does not go down with the ship; it may be applied to a replacement vessel.29

Second, a fishing permit is not the property of the vessel owner. The issue of fishing permit ownership has been litigated in cases involving governmental takings of fishing permits. Courts analyzing the ownership of fishing permits have consistently concluded that holders of fishing permits issued pursuant to the Magnuson Stevens Act do not possess a valid property interest in such permits.30 A fishing permit holder typically cannot assign, sell, or transfer his permit.31 Scalloping permits, for example, cannot be transferred or assigned absent attachment to the vessel.32

20 PNC Bank Delaware v. F/V MISS LAURA, 381 F.3d 183, 185 (3d Cir. 2004) (citing 16 U.S.C. § 1801 (2000) and Gowen, Inc. v. F/V QUALITY ONE, 244 F.3d 64, 68 (1st Cir. 2001) (some fishing vessels “are valuable significantly, and sometimes almost entirely, because of their permits”).21 See id. (citing 50 C.F.R. § 648.4(a)(1)(i)).22 Place v. Norwich & N.Y. Transp. Co., 118 U.S. 468, 490-93, 6 S. Ct. 1150, 1155-56, 30 L. Ed. 134 (1886).23 Id.24 The Main v. Williams, 152 U.S. 122, 131, 14 S. Ct. 486, 488, 38 L. Ed. 381 (1894) (citing the English Court cases The Dundee, 1 Hagg. Adm. 109 and Gale v. Laurie, 5 Barn. & C. 156, 164 (“The real object of the act in question was to limit the liability of vessel owners to their interest in the adventure.”)).25 Id. (Emphasis added).26 See In re Pac. Far E. Line, Inc., 314 F. Supp. 1339, 1350 (N.D. Cal. 1970), aff’d, 472 F.2d 1382 (9th Cir. 1973), (citing The Main, 152 U.S. at 131; The Walter A. Luckenbach, 14 F.2d 100 (9th Cir. 1926); The Buffalo, 154 F. 815 (2d Cir. 1907)).27 Id.28 F/V Sailor, Inc. v. City of Rockland, 324 F. Supp. 2d 197 (D. Me. 2004), aff’d, 428 F.3d 348 (1st Cir. 2005).29 PNC Bank Delaware, 381 F.3d at 185.30 Gen. Category Scallop Fishermen, 720 F. Supp. 2d at 576 (citing Am. Pelagic Fishing Co., v. United States, 379 F.3d 1363, 1373-75 (Fed. Cir. 2004)).31 Am. Pelagic Fishing Co., 379 F.3d at 1374 (citing Conti v. United States, 291 F.3d 1334, 1341 (Fed. Cir. 2002) (The court concluded that the vessel owner’s swordfishing permit fell short of conferring a cognizable property interest because the Department of Commerce required the owner to obtain a permit to harvest swordfish in the Atlantic Swordfish Fishery in the exercise of its authority under the MSA.)); see also 50 C.F.R. § 648.4(k) (Transfer. A permit issued under this part is not transferable or assignable. A permit will be valid only for the fishing vessel, owner and/or person for which it is issued.”).32 50 C.F.R. § 648.4(k).






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33 Am. Pelagic Fishing Co., 379 F.3d at 1374.34 Id.35 Gowen, 244 F.3d at 67-70. 36 Gowen, Inc. v. F/V Quality One, CIV. 99-371-P-C, 2000 WL 893402 (D. Me. June 14, 2000), aff’d, 244 F.3d 64 (1st Cir. 2001) (citing SS Tropic Breeze v. Tropical Commerce Corp., 456 F.2d 137, 141 (1st Cir. 1972)) (Emphasis added). 37 Gowen, 244 F.3d at 69.

The right to use a vessel to fish depends entirely on the regulatory scheme.33 The government retains the right to revoke, suspend, or modify the fishing permit at all times, and a fishing permit does not confer exclusive fishing privileges. This “absence of crucial indicia of a property right, coupled with the government’s irrefutable retention of the right to suspend, revoke, or modify” the fishing permit “compels the conclusion that the permit bestow[s] a revocable license, instead of a property right.”34

The classification of fishing permits has been raised recently in the context of maritime liens. The First Circuit famously held in Gowen, Inc. v. F/V QUALITY ONE that a vessel’s fishing permits were appurtenances subject to a lien on the vessel.35 However, ownership of a fishing permit is not required for the attachment of a maritime lien. A “long-standing principle of the maritime lien system is that all equipment—or appurtenances—aboard a vessel, as well as the vessel itself, are subject to the lien

regardless of ownership.”36 Further, the First Circuit addressed the issue of ownership by stating that courts have repeatedly upheld maritime liens upon equipment merely leased to the owner.37 Although the permits might be appurtenances subject to maritime liens, that rationale does not extend to actions for Limitation of Liability, which classifies appurtenances solely as those that belong to the vessel owner.

Conclusion

Because a fishing permit does not belong to the vessel owner and is not risked during the voyage, a fishing permit cannot meet the requirements of appurtenances as defined in Limitation of Liability cases. Furthermore, Congress’s intention in passing the Limitation of Liability Act was to protect the maritime industry in the United States, so it seems unlikely that Congress would approve of tripling the value of the vessel by including the vessel owner’s revocable license to fish.










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The ‘knock for knock’ principle has been broadly adopted in the international offshore industry, and has been applied in both the Norwegian Fabrication Contract 2007 (NF 07) and the Norwegian Total Contract 2007 (NTK 07). The standard indemnity clause within these offshore contracts also states that the knock for knock principle shall apply regardless of the form of liability, whether strict or by negligence.

The reciprocal indemnities between the company and contractor extend only to the parties included in the definition of the company and contractor groups. It is therefore important to apply wide definitions of the company and contractor groups to ensure that all potential claimants are included.

Contractual exclusions and limitations of liability

Another well established principle in offshore contracts is that parties shall indemnify each other against their own consequential losses. And while this principle may be well established, the scope of the indemnity often varies greatly. Key issues include whether the indemnity applies regardless of fault, and whether it embraces other companies in the family or group, or only the parties themselves.

Any indemnity needs to be carefully drafted, to ensure that it excludes the full extent of the losses contemplated. Under English law, the definition of consequential loss may be narrower than under Norwegian law. For example, loss of profit arising directly in the natural course of events would under Norwegian law be regarded as a consequential loss and thus would be excluded. However, the result of the same loss may be more uncertain under English law.3

Some offshore contracts will also include a limit to the contractor’s aggregate liability. This is a risk management tool aimed at limiting the contractor’s overall exposure under the contract. The agreed cap should ideally represent a fair allocation of risk based on the contractor’s risk and remuneration.

Gross negligence, willful misconduct

While contracts often contain these exclusions and limitations of liability, it is quite common that a party

will only benefit from these to the extent that the loss or damage is not caused by willful misconduct or gross negligence. Again, an example is the mandatory allocation of pollution liability in the Norwegian Petroleum Activities Act, and similar carve outs often found in the contracts of offshore parties.

Further, a general principle of Norwegian contract law holds that a party may not rely on a limitation of liability clause, if loss or damage is caused by the willful misconduct or gross negligence of the leading personnel or top management of the party seeking to rely on the exclusion. This principle has to some extent been codified as a general rule in the Norwegian Contracts Act4 section 36, which provides that a contract may be set aside in part or full, or modified if that contract is unreasonable or in conflict with good business practice. Similar provisions can be found in the Swedish and Danish contract acts, which generally coincide with the Norwegian provision. However, if a limitation clause clearly states that it shall apply regardless of the form of liability, whether strict or by negligence, then it is significantly less likely that it will be set aside.

When contemplating their total exposure, contracting parties should be aware that English civil law has no defined concept of gross negligence. The English system distinguishes only between those actions that are negligent, and those that are not.5 However, the distinction between ordinary negligence and gross negligence is clearly recognized in Norwegian law. While ordinary negligence will be held by Norwegian courts to exist in situations where a contractual party has failed to act in a prudent and reasonable manner, the Norwegian Supreme Court has described gross negligence as a “qualified blameworthy behavior giving rise to strong reproach for a lack of attentiveness”.

The “Njord Bravo” judgement6

A recent judgment of the Norwegian Court of Appeal answered the question whether a Teekay controlled group of companies, which owned the shuttle tanker “Navion Hispania”, were liable for the damage and loss suffered by the licensees as a consequence of its collision with the FSO “Njord Bravo”.

The collision was caused by a blackout and resultant loss of control onboard the “Navion Hispania”. The

3 [2006] 1 Lloyd’s Rep. 6734 Act of 31 May 1918 No. 4 relating to contracts5 [1951] 2 KB 759; [1997] 2 AII ER 7056 LG-2012-77280[http://www.lovdata.no/lr/lrg/lg-2012-077280.html]

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Court of Appeal found that the blackout was caused by fuel starvation, which was directly related to the crew and managers of the vessel not following company procedures and best practice with regards to fuel treatment. The Court also found that the crew began to experience problems due to the dirty fuel three days prior to arrival at the Njord field. It was the practice of the crew onboard to drain HFO filters to the overflow tank, and then pump the content of the overflow tank back into the fuel system. The Court of Appeal also pointed out additional acts or omissions by the owners that contributed to the collision.

The owners, as subcontractors of Statoil who purchased the oil from the licensees, argued that they were not liable for the licensees’ consequential loss (i.e. loss of production and loss of profit). The owners claimed that any potential liability was excluded in the contract between Statoil and the licensees, to the benefit of Statoil’s subcontractors. The Court found that while the owners were in principle covered by this liability exemption, that provision should be set aside as the vessel was not in compliance with applicable rules and regulations at the time of the collision. As well, the repeated acts and omissions by the owners amounted to gross negligence. In the opinion of the Court, that conduct alone was enough to set aside the limitation of liability clause.

Subsequently, the owners made an indemnification claim against their contracting party Statoil under the contract of affreightment (CoA). The CoA contained a relatively standard ‘knock for knock’ and indemnification clause by which Statoil as charterer agreed to indemnify the owners of “Navion Hispania” for any loss or liability with respect to:

a) Loss of or damage to property of the Charterer and or the Charterer’s Group, whether owned, hired leased or otherwise provided by the Charterer and or the Charterer’s Group, arising from or related to the performance of this CoA

b) [...]

c) Consequential Loss of the Charterer and/or the Charterer’s Group arising from or relating to the performance of this CoA.

The “Charterer’s Group” was defined as “the Charterer, its Affiliates, its Licensees, its Agents, its Contractors and Subcontractors”. While Statoil is often a licensee in the North Sea, they were not a licensee on the Njord field. Hence, Statoil argued that the indemnity clause did not apply - as the licensees to whom the owners were liable were not Statoil’s licensees. The language of the “Charterer’s Group” definition thus stated that the indemnity would only apply for claims from licensees, when Statoil was also a licensee. The Court of Appeal accepted this argument, and again concluded that the indemnity provision would in any case not have applied considering the collision was caused by the owner’s gross negligence.

The “Njord Bravo” judgement is an illustration of the importance of ensuring that indemnity and limitation clauses are carefully drafted to ensure that they exclude the full extent of the losses contemplated by the parties.

Wikborg Rein partner Gaute Gjelsten acted for Statoil and its liability insurer Gard.

VISIT US ON THE WEB AT:

www.ambar.org/tipsadmiralty


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9 David C. Yang, Globalization and the Transnational Asian “Knowledge Class, 12 ASiAn L.J. 137, 141 (2005). The H1 visa was established by Congress in the 1950’s. 10 Id.11 Id. 12 Id. at 142. 13 8 U.S.C. § 1184(i)(1) (2006). 14 Craig S. Morford, H to B or Not to Be: What Gives foreigners the Right to Come Here and Create American Jobs?, 6 ohio ST. enTRepReneURiAL BUS. L.J. 299, 310 (2011). 15 Yang, supra note 9, at 145.16 Norman Matloff, On the Need for Reform of the H-1B Non-Immigrant Work Visa in Computer-Related Occupations, 36 U. Mich. J.L. RefoRM 815 (2003). 17 Hyacinth Leus, Practice Tips: Using the H-1B Visa to Fill Staffing Needs with Foreign Professionals, L.A. LAw. at 24 (Oct. 2000) (The goal of this investigation is to prevent wage depression among similarly situated employees in the U.S.).18 Id. at 25. 19 Morford, supra note 14, at 321.

is attempting to provide an alternative to outsourcing work to other countries with more favorable benefits to the companies who might use their service.

This article will address the importance of foreign employees who seek work in the U.S. with specific focus on employment in Silicon Valley. First, it will discuss the employment solutions—including visas and outsourcing—utilized by both employers and employees in Silicon Valley to build a rapidly growing industry. Further, it will discuss the legal problems employers face in getting these visas for their employees and the economic impact such issues have presented. Finally, it will also address the impact companies like Blueseed will have on employment decisions in comparison to the visas or alternative employment solutions currently available to tech companies.

I. Silicon Valley’s Employment Solutions

A . H-1B Visas

The H-1B visa is the most significant achievement in American immigration policy to accommodate highly skilled workers who seek employment in the United States. The new H-1B visa replaced the H1 visa after the passage of the Immigration Act in 1990.9 The old H1 visa allowed for skilled workers—designated “Aliens of Distinguished Merit and Ability”—to work in the U.S. who intended to come to work for a limited amount of time and return to their home country.10 The visa did not contain any restrictions on the amount of people that could be admitted. It allowed for thousands of highly-skilled workers to enter the country on a temporary basis only to bring the skills learned in the U.S. back to their home countries.11 The most prominent issue with the H1 was employers wanted or even needed these employees to stay long-term, preferably permanently, and did not wish to compete with former employees who they had trained after returning to their

home countries.

In response to demand to change the restrictions of the H1 visa, Congress established the H-1B visa which allowed for those with bachelor’s degrees who wished to stay in the U.S. permanently to apply.12 The change liberalized the restrictions on the total number of applications by allowing only applicants who wanted to stay permanently. Additionally, the visa is now tailored to those who wish to apply to a “specialty occupation” which requires the worker possess a theoretical or practical application of a body of highly specialized knowledge in that specialty.13 As such, the program “governs most admissions of temporary immigrants into the U.S. for employment in science and engineering.”14

The H-1B has time limitations, however. It allows employers who seek skilled foreign workers to sponsor a foreign worker for up to six years.15 Throughout the six years, the worker may apply to obtain permanent residency through green card status.16 Additionally, several steps of bureaucratic red-tape were put in place to issue the visa more because of the potential for its abuse by employers using it as a cheap alternative to local hiring. For example, a potential employer must prove to the Department of Labor the wage it is offering is higher than either the “actual wage” the same employer pays to other similarly situated employees in the geographical area or the “prevailing wage” for that position.17 Once the Department of Labor has approved the request, the employer must then petition the Immigration and Naturalization Service for the visa itself in the hopes the visa cap has not been reached.18 The cost of the visa application alone can be upwards of $5000.19

B . Outsourcing and Offshoring

While many other programs exist for foreign employees to come into the U.S. through a visa program, perhaps the most highly utilized alternative is to “outsource” or “offshore” the work to a foreign locality. Outsourcing occurs when a company “turns over responsibility, in whole or in part, for an internal

THE CURIOUS CASE...Continued from page 9






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20 Brad Peterson, When and Why Companies Outsource and Offshore, 912 pLi/pAT 11, 15 (Sept.-Oct 2007). 21 Id. at 15, 19-20. Common business functions to outsource in the IT field are infrastructure and operations, network management, business continuity/disaster recovery, application development and maintenance, desktop management, voice/data telecommunications, hosting, help desk, and end-user support. 22 Leus, supra note 17, at 25. 23 Id.24 Peterson, supra note 20, at 15, 19-20. Additionally, the outsource provider might have better technology, skills and assets to enhance the company’s service to its customers. 25 Id. Some estimates indicate that customers receive a 30 percent to 50 percent savings of their onshore costs. Additionally, the number of available personnel in India, for example, is much greater because more people graduate from India’s colleges each year. 26 Id. at 20.27 See generally id. at 20. 28 Id. at 20-23. 29 Claire Cain Miller and Jenna Worthham, Silicon Valley Hiring Perks: Meals, iPads and a Cublicle for Spot, The new yoRk TiMeS, Mar. 25, 2012, available at http://www.nytimes.com/2011/03/26/technology/26recruit.html (last visited Mar. 18, 2013).30 Id. 31 Gomez, supra note 7. 32 Roger Waldinger and Christopher L. Erickson, Temporarily Foreign? The Labor Market for Migrant Professionals in High Tech at the Peak of the Boom, 24 coMp. LAB. L. & poL’y 463, 466-67 (2003) (explaining that even though students can both attend school on F-visas and can also work and gain valuable experience with American employers).

business function to an outside supplier.”20 In the context of the information technology industry, the company in the U.S. would outsource a processes ranging from network management to help desk functions.21

Outsourcing is used in two ways. First, the company can contract with another business to simply do the work for them.22 Second, the company can offer telecommuting employment to foreign workers by sending the work directly to the employee’s home country and establish a subsidiary in that foreign location.23 Both situations pose unique benefits and disadvantages. However, if done properly, the benefit of reducing the overhead costs of employees in the home country is passed along to the company and its customers in both cases.24 This is undoubtedly the main driver for outsourcing. The potential advantages of outsourcing include costs savings and available personnel who are not otherwise available in the home country.25

Outsourcing is not without its drawbacks. Cultural differences may lead to difficulty in communication between the foreign country and company management.26 These cultural differences can include language barriers, expectations in outcome, and even time-zone differences.27 Further problems include distance, loss of flexibility, poor infrastructure, data and intellectual property protection, and even geopolitical risk.28 However, despite the limitations on outsourcing, companies have shown a willingness to take certain risks in order to provide cheaper services and products to its customers.

II. Silicon Valley’s Need for Foreign Employees

A . Demand for Local Employees

Silicon Valley corporations have seen a steady influx of foreign-trained immigrants seeking to be among their ranks. Foreign born engineers and scientists increasingly populate the American workforce, particularly with respect to high-tech science and engineering companies.

Yet, companies have shown a willingness to employee foreign-born employees when there is a shortage of assistance in the United States.

Seeking local talent to construct its employee base, Silicon Valley companies often recruit students from nearby universities, like Stanford and UC-Berkeley, to find their future employees.29 In particular, employers salivate at the possibility of getting students within their globally-renowned computer science departments.30 These universities provide a diverse and rich student body from which these companies can select the cream of the crop. In many situations, however, even these student bodies are filled with talented foreign students who simply do not have the legal capacity to stay in the U.S. after graduation. Instead, many head students find work in their home countries after failing to secure work visas to stay within the U.S.31

The issue of recruiting foreign-born students is not unique to universities in northern California. It is hard to deny the role foreign students play in science and engineering in higher education. These students comprise 12 percent of undergraduates in these areas and an astounding 40 percent of those enrolled in graduate engineering, math, or computer science programs.32 The American university system is a breeding ground for the best employees for high-tech employers.

With the amount of prospective employees from foreign countries and students with the potential to stay in the United States, the visa system offers solutions to employment issues. However, it also presents some serious problems that employers have to face on a daily basis.

B . The Impact of Visa Policy on Employers and Foreign-Born Employees

The past few decades have revealed a transnational development in information technology. This


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33 Yang, supra note 9, at 137. 34 Id. at 138. 35 Morford, supra note 14, at 307. The increase was from 65,000 yearly to 115,000 in 1999; to 107,500 in 2001; to 195,000 in 2002; and reverted back in 2003 to 65,000. 36 Id. at 319. 37 Matloff, supra note 16, at 829.38 Id. 816. 39 Id. at 845.40 American Competitiveness in the Twenty-First Century Act, pUB. L. no. 106-313, 114 Stat. 1251 (2000). Congress limited the number available visas to 65,000 after the tech bubble crash in the late 1990’s and early 2000’s. 41 Yang, supra note 9, at 144. Noting that H-1B visa applicants are fighting over a limited number of spots and in some instances high-tech employees might be losing to other professions like dancers or entertainers who have bachelors’ degrees. 42 Morford, supra note 14, at 306. 43 Id. at 321. 44 Id. Google spends upwards of $20 million per year on H-1B visa applications and has a full-time immigration team comprising of twenty lawyers and support staff. 45 Leus, supra note 17, at 24. 46 Matloff, supra note 16, at 830.47 Id. at 830.

international interaction allows global expansion of business to “overcome constraints of time and space… [to] organize much of the world’s economic activity, resources, and labor.”33 With that being said, the world labor force does not enjoy the relatively unrestricted movement that capital enjoys.34 This restricted movement of labor is uniquely affecting certain industries within the U.S. In particular, the labor issue has presented a very serious consideration for sophisticated companies who wish to employ technology proficient employees.

The H-1B visa is the perfect fit for Silicon Valley employers. It provides long-term employment solutions—at least six years with the potential for more if the employee gets full citizenship—at a cheaper rate than local labor. Further, the H-1B specifically addresses the needs of Valley employers by allowing highly-trained, bachelor degree recipients. Due to the visa’s benefits and the domestic technology industry’s rapid expansion, the demand for the H-1B has recently seen drastic increases. In fact, Congress enacted temporary increases in the number of available visas to 195,000 per year.35 Approximately 60 percent of all H-1B admissions are in computer-related occupations.36 This was a significant increase considering the U.S. government originally limited the total visas to 65,000 when the program was first established in 1990. The number of H-1B work visas increased by 352 percent from 1990 to 1995 in the computer programming industry alone.37

The increase in available visas came at the behest of computer industry lobbyists who claimed an increase was necessary to fill the high-tech labor shortage.38 One of the claims made by these lobbyists was there was a shortage of college students enrolled in computer science programs.39 In other words, there was not enough local labor to fill the needs of high-tech employers and not enough visas to go around either. However, even a

concerted effort to increase the number of available visas could not solve the problem. Congress has been unwilling to increase the visa cap in recent years, and it has even decreased the number of available visas.40

Another problem arises for Silicon Valley from the limitations placed on the total number of H-1B visas. Although this style of visa allows for bachelor degree recipients to work in the United States, it is not exclusive to professional positions like computer scientists and engineers. Anyone with a bachelor’s degree who intends to reside indefinitely can apply. As a result, potential Silicon Valley employees are competing for a limited number of spots with other bachelor degree recipients who seek to work in other industries.41 Companies who opt for the vias system’s use might not have anywhere to turn because they are unable to find Americans with a similar skill set.42

Similarly, the cost of obtaining an H-1B visa can be prohibitive. The lawyer fees, filing fees, and other administrative expenses can cost an applicant’s potential employer approximately $5000.43 While it might not matter to large companies like Google, these costs either pile up or make it impossible for small businesses to obtain the same talent.44 Adding to the potential visa costs, it may take up to 60 days, under the best circumstances, to obtain45 the visa from the Department of Labor, which can hinder solving the urgent needs for immediate assistance.

However, with all the problems presented by the H-1B visa, employers in Silicon are still utilizing them in droves. In 1990, one-third of all programmers and engineers were foreign-born.46 By 2000, that number had increased to 54 percent.47 The dramatic increase in the number of foreign-born employees emphasizes the ever-present need for employees who can utilize the


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48 Keith Naughton, Outsourcing: Silicon Valley East, newSweek (Mar. 6, 2006) (The average annual income in India is $737 when compared to $42,027 in the United States).49 Stuart D. Levi, Outsourcing: A Practical Guide to Law and Business, PLIREF-OAPG s, § 9:2 India (2012).50 Keri Toomey, Fewer Tech Companies Are Sending Jobs Overseas, BDO USA Survey Finds, available at http://www.bdo.com/news/pr/1952 (last visited Mar. 18, 2013). 51 Id. The survey took place between December 2011 to January 2012. 52 Levi, supra note 49.53 Id. (citing a forecast from the National Association of Software and Service Companies or “NASSCOM”).54 Id. In 2007, the total IT outsourcing market in china was $1.073 billion and is expected to grow to $2.904 billion in 2012. 55 Sourcingline, XMG Global Issues 2009 Outsourcing Year-End Revenue Forecast, Sept. 23, 2009, available at www.xmg-global.com/press_releases/pr090923.html (last visited Apr. 8, 2012). Prediction based on estimates made in 2009. According to the survey, India accounts for $48 billion or 44.8 percent and China accounts for $28 billion or 25.9 percent.56 Levi, supra note 49, at § 9.3.57 Sam Williford, Is Silicon Valley the next Detroit?, econoMy in cRiSiS, Nov. 8, 2010, available at http://economyincrisis.org/content/silicon-valley-next-detroit (last visited Mar. 18, 2013). However, it is unclear from the article if these jobs are call center based or more engineering/programming focused positions. 58 Id. (citing P.V. Kannan, the founder of “24/7 Customer,” an IT firm based in India and California). 59 News Release, Bureau of Labor Statistics, U.S. dep’T of LABoR (Apr. 10, 2012). Addressing the unemployment rate in the San Jose-Sunnyvale-Santa Clara region in February 2012.

H-1B visa as a means to enter the country and work for the high-tech Silicon Valley firms.

In response to the limitations placed on obtaining the H-1B visas, employers turn to a variety of possible solutions to stem any gap in need for employees. However, despite the visa solutions available to Silicon Valley employers, these companies are not completely satisfied with the limitations placed upon the solutions.

In the recent past, tech companies, especially those in Silicon Valley, have utilized outsourcing as a more efficient method and cost-effective business practice. One of the primary reasons tech companies outsource is the significant reduction in employment costs. The most heavily used country for Silicon Valley outsourcing is India. Many factors have led to outsourcing success, including the significant reduction in labor costs. In India, a college-educated worker earns a fifth of what his American counterpart.48 This reduction provides a savings for both the company and its customers, and its potential cannot be ignored by large companies wishing to reduce costs and looking to employ capable and qualified individuals. Additional benefits to companies who wish to outsource to India include a geographic location with an “advantageous time difference,” commitment to quality, improving infrastructure and a “business-friendly regulatory environment.”49

With all the potential benefits afforded by outsourcing to India, many companies have decided to utilize these benefits to their advantage. According to a 2009 study of 100 technology company chief financial officers, 62 companies said they were outsourcing services or manufacturing.50 However, recently, high-tech firms have been less likely to outsource. According to the same study performed in 2012, 32 companies, or nearly half of those in 2009, say they outsource services.51 Outsourcing is a significant and effective way for Silicon

Valley to solve its employment needs and continue to provide cheaper services to its customers.

C . Why does this matter? It’s the Economy .

Though the use of visas provides a means for companies to fill their open positions with individuals holding the requisite talent from all over the world, the visa system often falls short. In return, the costs to the U.S. economy are large. For example, outsourcing to India in the information technology sector is estimated at $47 billion and captures more than half of all outsourcing in the world.52 That number was expected to grow from 13 percent to 15 percent in 2012.53 Similarly, in China, the outsourced information technology market was expected to grow at an annual rate of 22 percent in 2012.54 The total global outsourcing market is estimated at $474 billion.55 China’s offshoring and outsourcing market is estimated to be around $56 billion by 2015.56

Many argue the bottom line is this: the loss of potential American jobs. According to Indian IT leaders, at least 350,000 jobs have been outsourced to India over the past ten years.57 Some have described this job shift as an “abundance of highly intellectual labor no longer constrained by borders.”58 High-tech markets, especially Silicon Valley, are at a high risk of outsourcing because of their high cost and the relative ease in utilizing employees in other countries with the same, if not better, skill-sets. At a time where the unemployment rate in the Silicon Valley area is 9.1 percent - the national average is 8.7 percent - and with such high demand for high-tech employees, it is important to encourage domestic employment.59

III. The Solution: Utilizing Maritime Law

A . A History of Seasteading: The Birth of Blueseed

A self-proclaimed solution to the immigration problems Silicon Valley is currently facing, Blueseed

http://www.bdo.com/news/pr/1952


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60 Patri Friedman & Brad Taylor, Seasteading and Institutional Evolution (Apr. 12, 2011) (Unpublished Paper Presented at the Association of Private Enterprise Education Conference), available at http://www.seasteading.org/files/research/governance/Friedman&Taylor_2011_Seasteading_APEE.pdf?214c59. 61 Id. 62 Shannon Renton Wolf, Making Waves: Circumventing Domestic Law on the High Seas, 14 Hastings Women’s L.J. 109, 116 (2003).63 Id. 64 Friedman and Taylor, supra note 60.65 Id. 66 Id.; see also Pirate Radio or The Boat That Rocked (Universal Pictures 2009). 67 Friedman and Taylor, supra note 60.68 Id.69 See generally www.womenonwaves.org (last visited Mar. 18, 2013). 70 See generally Steven R. Swanson, Google Sets Sail: Ocean-Based Server Farms and International Law, 43 conn. L. Rev. 709 (2011). The patent is held by Google. 71 Id. at 714. 72 Id. at 716.73 Id. at 715, 741-750. 74 Blueseed LLC, http://www.blueseed.co/faq.html#offer (last visited Mar. 18, 2013) [hereinafter Blueseed—FAQ]. 75 Id.

takes admiralty and maritime law and uses it as a solution to employment law’s pitfalls. Blueseed adopts Seasteading as the answer. Seasteading is the “establishment of permanent, autonomous communities on the ocean” accomplished through the use of ships.60 The motivation behind establishing these communities is allowing individuals to establish permanent settlements with the power to “set their own rules.”61 Blueseed is harnessing the recognized power of international maritime and admiralty law.

According to the United Nations’ Law of the Seas Convention, the sovereignty and jurisdiction of a coastal country extends beyond land to the seas immediately surrounding it.62 The jurisdictional territory extends twelve miles off the coast of the country.63 By operating outside the twelve-mile limit and the country’s jurisdictional territory seasteaders, like Blueseed, can circumvent undesirable immigration or visa laws.

There are few Seasteading examples being used to sidestep the laws of a nation; however, it is not unprecedented. These various Seasteading organizations have utilized the freedom of operating in international waters for multiple goals. Some utilize Seasteading for profit maximization and others use it for political gain. In some situations, by trying to maximize profits, the organization ends up influencing the laws of the nation they are attempting to circumvent.

For example, prior to World War II, floating casinos operated outside the U.S.’s territorial waters in order to serve a customer base demanding access to gambling.64 In reaction, the U.S. government outlawed these vessels’ ownership and made it illegal to transport people to these ships.65 Additionally, in the 1960’s, “pirate radio” stations floated off the European coasts to broadcast illegal rock-and-roll directly to citizens.66 Initially, the British

government battled these stations by making it illegal for businesses to advertise on pirate radio stations.67 Ultimately, however, the demand for rock-and-roll radio overcame the British government’s ability to block rock-and-roll music and the English parliament relaxed its broadcasting laws.68 Finally, a political statement in Seasteading is seen in the Dutch non-profit organization “Women on Waves.” With the goal of providing safe and legal abortions, Women on Waves sails to countries where abortions are illegal, picks up women seeking abortions, sails into international waters and performs otherwise illegal abortions in international waters.69

More recently, high technology firms have understood and applied the Seasteading benefits to technology. The most recent patent for a Seasteading-esque solution to a high-tech problem is placing “server farms” in international waters.70 These farms are servers connected to a network providing information to other computers on the network.71 Server farms can be large and require enormous amounts of energy.72 By patenting a water-based server farm drawing power from ocean currents, waves and tides, companies would anchor these farms in international water, outside any state’s jurisdiction, thereby avoiding any environmental or regulatory implications that might come from operating the same server within the jurisdiction.73

B . Blueseed: What is it and what can it offer?

Blueseed’s aim is to attract “top entrepreneurial and technology talent from all over the world to Silicon Valley, where they can create companies and jobs, and develop disruptive and innovative technologies.”74 However, these entrepreneurs/workers will not reside in Silicon Valley. Instead, for $1,200 per month, these potential employees will reside on the Blueseed vessel, which provides all the amenities of a cruise ship.75 The




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76 Id. 77 Gomez, supra note 7. 78 U.S. Citizen and Immigration Services H-1B Cap, March 15, 2013, available at http://www.uscis.gov/portal/site/uscis/ menuitem. (last visited March 18, 2013). The program does provide for an extra 20,000 visas if the applicant has a master’s degree or higher.

workers will either service firms within Silicon Valley, without having to apply for costly, burdensome visas, or they have the option of forming their own businesses and selling their ideas to start-up investors who reside in northern California. Managers on the mainland would be free to go and come from the vessel via shuttle, and employees would have access to California through easier-to-obtain B1 (business) and B2 (tourist) visas.76

C . Potential legal issues with Blueseed

i . Passage of New Laws Limiting Blueseed

While it is true Blueseed will initially operate under the auspices of international maritime and admiralty laws and circumvent the U.S. visa laws, there may be potential legal implications for companies utilizing Blueseed’s services. There is dangerous precedent existing for these types of Seasteading adventures that could ultimately lead to the industry’s demise. Additionally, the U.S. government could change visa policy entirely and force companies like Blueseed out of business.

Not surprisingly, countries are not fond of having their laws circumvented; in the past, countries have combated against Seasteading operations. In the U.S., the government outlawed the transportation of individuals to gambling ships as a means to dissuade gambling by U.S. citizens in international waters. In the U.K., the government outlawed advertising on “Pirate Radio” stations and essentially destroyed these vessels’ revenue streams. One such application in the Blueseed context would be to make it illegal to transport workers—be they foreign or U.S. citizens—to and from these ships. By limiting the amount of transportation to and from the vessel, the U.S. could dissuade individuals from working on the ship or from further investmening in the project. Perhaps even more significant, laws like these could remove the advantage of being able to bring management aboard to train and communicate with employees. Similarly, due to the vessel’s dependence on B1 and B2 visas to get shipboard individuals to the U.S., another law could limit or revise the visas’ allowance from these types of vessels.

The government could attempt to discourage the use of international ships as a means to dissuade potential employees and employers from utilizing the service(s) provided by Blueseed and, instead, encourage them to apply for available H-1B visas. Even though the vessel

itself operates outside the United States’ territorial jurisdiction, it does not mean the government cannot exert some control over the vessel’s operation and occupants. Laws directly pertaining to visa issues also pose a threat to these ships’ existence. For example, in the past, the government has shown a willingness to alter the number of outstanding visas—especially the critically used H-1B—when companies in Silicon Valley inform Congress of the necessity for an increase. The number of available visas exploded from a mere 65,000 in the early 90’s to an astonishing 195,000 in 2002 when needs for employees were at its peak. It is undoubtedly true if the U.S. government appreciates a substantial need for an expansion in the number of available H-1B visas, it has been more than willing to accommodate an industry proven to be a significant sector of the economy. Furthermore, if the government sees many companies are using solutions like Blueseed, it becomes easier for the government to change its visa policies.77 However, recent trends have proven otherwise. For the 2014 fiscal year, the government has maintained the limit of H-1B visas to 65,000.78

IV. Comparing Blueseed to Visas and Outsourcing

A . H-1B

When compared to the H-1B visa, Blueseed appears to be a brilliant solution for large companies who frequently use this visa type. In terms of time limitations, the H-1B has a six year limit before the employee has to return to his or her home country. Blueseed does not have any similar temporal limitation, except for however long the employee is willing to stay on the ship. Additionally, companies can still apply for the H-1B visa as the individual does his or her work from the vessel. In essence, the ship can serve as an international, non-jurisdictional holding area for employees who have yet to obtain a visa. Further, it can be used for employees who reach their six year H-1B limit and want to continue their employment. Also, due to the ship’s proximity, it provides managers some employee oversight (albeit not the same as H-1B employees who are physically located in the same site as managers).

Furthermore, Blueseed might even be able to offer a cheaper solution to a visa application. While $5000 per application might not seem like much, smaller companies could utilize Blueseed at a cheaper rate


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79 H-1B employees must be hired at the market rate—on average computer programming jobs in the U.S. pays somewhere between $60,000 to $80,000. However, employees are paid $8,952 in China, $5,880 in India or $5000 in the Russian Federation. Essentially, Blueseed provides companies have an arbitrage situation where they can pay employees anywhere between average market rate in the U.S. and similar outsourcing costs and be in a better position than hiring an H-1B employee. See Naughton, supra note 48.80 Blueseed—FAQ, supra note 74.

VISIT US ON THE WEB AT:

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without having to pay for visa applications. Keep in mind, there is no wait to get on the ship. Compared to a sixty day wait period for the H-1B, companies needing immediate local assistance can pay for a spot on the vessel and, theoretically, have the individual working the next day. The most alluring aspect of Blueseed is the savings associated with payment. In not having to apply for the H-1B, the company does not need to submit any salary information to the Department of Labor and can evade the requirements established to prevent wage depression. By circumventing these requirements, companies can hire employees who reside on Blueseed at a much cheaper rate than their H-1B counterparts.79

Nonetheless, Blueseed is not without its limitations, even when compared to the H-1B. Blueseed is limited to the amount of people it can fit on the vessel—an estimated 1,000 total.80 When companies are already over-applying for available H-1B’s by the tens-of-thousands, a mere 1,000 openings is unlikely to make a dent in the overall demand for employees. As such, Blueseed cannot be seen as a permanent solution to the employment problem.

B . Outsourcing

If used effectively, Blueseed provides some benefits when compared against the advantages of outsourcing. For example, Blueseed allows for management to be closer to its employees and ensure the problems normally associated with outsourcing are either diminished or eliminated. Time-zone differences, distance, and poor infrastructure can be completely eliminated through Blueseed. The ship’s location can also benefit companies who are worried about either intellectual property theft or geopolitical risks. Positioned outside any nation’s control and with the benefits of infrastructural security,

Blueseed provides the basic security controls of home with the outsourcing cost benefits.

However, certain problems cannot necessarily be eliminated by the ship’s proximity. For example, expectations in outcome, loss of flexibility, and other cultural differences might not be alleviated even with local managers at the helm. With that said, companies in Silicon Valley have already shown a willingness to export their employment solutions overseas and take on outsourcing risks, while simultaneously mitigating those risks. It is unlikely for the same companies, who already have established subsidiaries in foreign localities, to withdraw their positions in exchange for a boat with limited space. However, less established companies with lower risk thresholds might be willing to invest in Blueseed’s endeavor.

V. Conclusion

Blueseed might initially appear as though it provides a viable solution to Silicon Valley’s issue of hiring well-trained, high-tech employees from across the world without having to either outsource or apply for difficult-to-get visas. In some circumstances, Blueseed can provide companies an answer to these problems. However, it is not a silver bullet to the high-tech industry’s employment issues. Blueseed remains an interesting solution utilizing admiralty and maritime law solutions to an ever-present employment problem and it will undoubtedly be used, albeit in limited circumstances. However, perhaps the most exciting feature of Blueseed’s work is its ingenuity and use of international admiralty and maritime law, which might very well carry over into other areas of law where companies or individuals are looking to avoid undesirable decrees.


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2013-2014 TIPS CALENDAROctober 20138-13 TIPS Fall Leadership Meeting Minneapolis Marriott Hotel Contact: Felisha A. Stewart – 312/988-5672 Minneapolis, MN Speaker Contact: Donald Quarles – 312/988-5708

13 Symposium: Animal Shelter and Rescue Law Hyatt Regency Contact: Ninah F. Moore – 312/988-5498 Jacksonville Jacksonville, FL

17-18 Aviation Litigation Fall Meeting Ritz-Carlton, Washington, DC Contact: Donald Quarles – 312/988-5708 Washington, DC

November 20136-8 Fidelity & Surety Committee Fall Meeting The Fairmont Contact: Donald Quarles – 312/988-5708 Copley Plaza Boston, MAJanuary 201416-18 40th Annual Midwinter Symposium on Insurance The Driskoll Employee Benefits Austin, TX Contact: Ninah F. Moore – 312/988-5498

21-25 Fidelity & Surety Committee Waldorf~Astoria Hotel Midwinter Meeting New York, NY Contact: Felisha A. Stewart – 312/988-5672 Speaker Contact: Donald Quarles – 312/988-5708

February 20145-11 ABA Midyear Meeting Swissotel Chicago Contact: Felisha A. Stewart – 312/988-5672 Chicago, IL Speaker Contact: Donald Quarles – 312/988-5708

20-22 Insurance Coverage Litigation Committee Arizona Biltmore Midyear Meeting Resort & Spa Contact: Ninah F. Moore – 312/988-5498 Phoenix, AZ

fall 2013 newsletter - aba tips admiralty & maritime law committee

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