Swiss company rightly controls Mississippi River cruise ship, Second Circuit rules

MANHATTAN (CN) — The Second Circuit affirmed Friday that a European cruise company has the right to control a luxury ship on the Mississippi River, refuting a U.S. cruise line's claims that officials wrongfully forced it to compete with a foreign entity in "U.S. citizen-reserved coastwise trade."

In dispute was how much control over the operation was granted to the Switzerland-based company, Viking, under a charter with American company River 1 that was approved by the U.S. Maritime Administration. The agency said the agreement wouldn't qualify as a “bareboat charter,” a type of lease that gives the charterer complete control over the vessel.

American Cruise Lines challenged the decision, claiming it granted Viking impermissible control over the U.S.-based cruise ship and noting that the charter required Viking to absorb certain standard operating costs and business risks.

A panel of Second Circuit judges disagreed, finding the agency was right to approve the agreement.

“The agreement between River 1 and Viking does not grant Viking exclusive possession and control of the cruise ship in any way that blackletter maritime law recognizes as sufficient to create a bareboat charter,” U.S. Circuit Judge Myrna Perez, a Biden appointee, wrote in a 20-page opinion.

Joining Perez on the panel were U.S. Senior Circuit Judge Guido Calabresi, a Clinton appointee, U.S. District Judge for the Northern District of New York Anne Nardacci, a Biden appointee sitting by designation.

Under the agreement River 1, a subsidiary of shipbuilding company Edison Chouest Offshore, was responsible for constructing a cruise ship that Viking would charter for cruises along the Mississippi River. Employees of River 1 would manage maritime activities and Viking employees would handle the onboard entertainment operation.

While the appellate court acknowledged the agreement required Viking to absorb operating costs and business risks, it noted that responsibility does not fall on the European company entirely.

“The business risks associated with maritime activities remain with River 1, which is required to maintain the ship in good working order, procure insurance and fuel, and assume liability for navigation- and maritime-related issues,” Perez wrote.

The charter also stated that Viking may request that the ship’s vessel master be replaced in the event of an “unsatisfactory performance.” During oral arguments, American Cruise Lines said that clause gave Viking excessive influence over the ship’s management.

“They have influence and ultimate authority,” Jonathan Brightbill, an attorney representing American Cruise Lines, said during arguments.

However, Perez noted, while Viking can request a replacement, the company does not have authority over who the replacement will be. “The vessel master is always selected and paid by River 1,” Perez wrote. “Further, the agreement gives River 1’s vessel master the power to decline any Viking request that she deems unreasonable or determines could create a safety risk.”

The Second Circuit panel also disagreed with American Cruise Lines' claim that the Maritime Administration failed to provide sufficient information about the charter through the summaries provided to the public. The agency opened a 60-day period for the public to submit comments and responded to them when it released its decision to approve the charter.

“If American Cruise Lines or any other interested party feels that MARAD’s review was not demanding enough, that is an issue they shall have to take up with Congress,” Perez wrote.

Neither party's attorneys responded to a request for comment.

Follow @NikaSchoonover

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