Fifth Amendment Due Process, Foreign Shipowners, and International Law

Steven R. Swanson | Article

Ninety percent of world trade moves on ships. These vessels are often owned by one party, managed by another party, then chartered and subchartered to additional actors. The shipowners and their home ports are spread across the world, creating the serious need for a predictable, uniform, and simple set of admiralty law rules that resolve disputes and make trade flow smoothly. In addition to appropriate substantive maritime law rules, it is important that the vessels’ owners be subject to process in national courts to allow for fair and convenient adjudication of disputes for all maritime players.

Prior to the adoption of Federal Rule of Civil Procedure 4(k)(2), most federal courts required that a plaintiff establish admiralty jurisdiction under the state’s long-arm statute without violating Fourteenth Amendment Due Process Clause requirements. A plaintiff with a valid admiralty claim (or other claim based on federal law) could not bring a cause of action against a foreign defendant unless that defendant had minimum contacts with some state. Although a few federal statutes considered contacts with the United States as a whole, a claim lacking such statutory support suffered the more restrictive approach.

After a failed attempt to persuade the United States Supreme Court to fashion a national contacts test for suits based on federal law, Congress passed Rule 4(k)(2), providing federal courts nationwide service of process for federal law claims when there is no state court jurisdiction and the federal court’s exercise of jurisdiction does not violate due process requirements. Although Rule 4(k)(2) seemed designed to address issues like those relating to U.S. courts’ exercise of jurisdiction over foreign vessel owners, the courts have had great difficulty defining when due process norms have been met. In particular, the presence of vessels with differing charter arrangements has led to a maze of decisions that are neither predictable nor convincing.

The time has come to bring order to these chaotic cases. In an attempt to do so, this Article will examine Rule 4(k)(2)’s history and provisions. It will then review the major relevant Supreme Court authority defining constitutional due process requirements. Next, it will evaluate the varying admiralty decisions attempting to hale foreign vessel owners before American courts based on contacts made by their charterers. Finally, this Article will show that the confusion in this area stems from the courts’ failure to understand the maritime industry and the legal relationships between shipowners and charterers and will better define the parameters of Fifth Amendment due process analysis. Courts should recognize that in the case of time and voyage charters, the vessel’s entry into U.S. ports should be a contact for the owner for the purposes of due process. In addition, it may be time to refocus Fifth Amendment due process analysis in cases involving foreign defendants by considering international legal concerns, rather than the individual burdens on the defendant.