American Cruise Lines argues Viking deal violates maritime charter law

MANHATTAN (CN) — American Cruise Lines on Friday asked the Second Circuit to overturn a decision by the U.S. Maritime Administration allowing Viking, a European cruise company, to control a luxury river-cruise ship on the Mississippi River.

That decision wrongfully allowed Viking to participate in "U.S. citizen-reserved coastwise trade," American Cruise Lines argued, bringing the European company into direct competition with its American counterpart.

The U.S. Maritime Administration is responsible for approving transfers of vessels from U.S. citizens to non-citizens, as required by Congress. In this case, the agency granted the transfer in control to Viking because it determined that the agreement would not qualify as a “bareboat charter," a type of lease that gives the charterer complete control over the vessel.

But American Cruise Lines disagrees, saying the agency-approved charter gives the Switzerland-based Viking cruise company complete control over the U.S.-based vessel. That's because the agreement allows it to absorb all costs and risks associated with ownership and grants it complete control over the vessel’s operation, the American company argued.

“They have influence and ultimate authority,” Jonathan Brightbill, an attorney with the D.C. firm Winston & Strawn who's representing American Cruise Lines, said on Friday.

While the river-cruise ship in question, River 1, maintains control of the ship’s manager, the charter allows Viking to demand the ship’s management team and manager be replaced “in the event that the performance by the owner of its obligations under this charter is not satisfactory.”

According to American Cruise, that provision allows Viking to exercise exclusive authority over River 1 and violates the Maritime Administration’s trade reservation.

“This remarkable clause confirms that River 1 does not, in fact, have ‘exclusive authority’ to appoint a new vessel manager,” American Cruise says in its brief. “Viking can, as a practical matter, reject such a manager and continuously force appointment of a new manager until one that Viking desires is selected.”

The United States pushed back on this interpretation, saying Viking can only replace the ship’s manager in limited instances.

“Vikings’ right to replace the master is not an unquestionable veto right,” Casen Ross, an attorney representing the United States, said Friday.

After the Maritime Administration determined the charter could be approved, the agency provided detailed summaries of their responses to both Viking and River 1’s requests for the charter to the public to allow for a public comment period.

But, American Cruise Lines said, the agency failed to provide enough information to the public through these short summaries.

Still, the panel of judges on the Second Circuit seemed unconvinced during Friday’s oral arguments.

“You made a lot of comments. Does that mean the notice was sufficient?” U.S. Circuit Judge Myrna Perez, a Joe Biden appointee, asked.

Perez was joined in the proceeding by U.S. Senior Circuit Judge Guido Calabresi, a Bill Clinton appointee, and U.S. Circuit Judge Anne Nardacci, a Joe Biden appointee. The panel on Friday did not indicate when or how they would rule.  

In response to Perez's question, Brightbill said the agency had failed to provide a detailed statement for the public to meaningful assess and comment on Viking’s charter, therefore essentially removing the public's ability to provide meaningful comment.

“If it has made any material mistakes in its finding, then it has failed to provide notice,” Brightbill said.

Follow @NikaSchoonover

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