[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
FILED
U.S. COURT OF APPEALS
No. 05-10862 ELEVENTH CIRCUIT
________________________ May 1, 2006
THOMAS K. KAHN
D. C. Docket No. 03-62225 CV-JIC
DRESDNER BANK AG, Dresdner Bank AG in Hamburg,
NORDDEUTSCHE LANDESBANK-GIROZENTRALE
KREDITANSTALT FUR,
Plaintiffs-Cross-
Defendants-Appellants,
BLOHM AND VOSS GMBH, et al.,
Intervenor-Plaintiffs,
AKTINA TRAVEL, S.A.,
Intervenor-Plaintiff-
Appellee,
MONACO TELECOM INTERNATIONAL,
Intervenor-Plaintiff-
Cross-Claimant,
versus
M/V OLYMPIA VOYAGER, a 157.90 meter Blohm
Voss GmbH motor vessel, Hull No. 961, Greek official
number 10750, her engines, tackle equipment, rigging,
dinghies, furniture, appurtenances, etc., in rem,
and Olympic World Cruises Inc., her owner, in personam,
Defendant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(May 1, 2006)
Before DUBINA, MARCUS and COX, Circuit Judges.
PER CURIAM:
In this admiralty appeal, we consider whether United States law was
properly applied to govern a transaction between a Liberian shipowner and a
Greek travel agency for travel services benefitting a Greek-flagged cruise vessel
while it was in a United States port. We find that Greek law–not United States
law–should have been applied. Thus, we reverse.
I. Introduction
This appeal arises out of an action filed by Dresdner Bank AG in Hamburg,
Kreditandstalt Fur Wiederaufbau, and Norddeutsche Landesbank-Girozentrale
(collectively, “the Banks”) to foreclose a preferred ship mortgage on a foreign
vessel. The Banks filed a complaint in the Southern District of Florida in rem
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against the M/V Olympia Voyager (“the Vessel”), a Greek-flagged passenger
cruise vessel, and in personam against Olympic World Cruises (“OWC”), the
owner of the Vessel.
The district court entered a default judgment of foreclosure against the
Vessel and ordered it sold. Subsequently, numerous parties filed claims or
motions to intervene to assert claims against the Vessel or the proceeds of its sale.
In response to these claims and motions, the district court entered an order
requiring the Banks to provide security for any claims found to be superior in
priority to the preferred ship mortgage, and allowing the Banks to stand in the
shoes of the Vessel to defend against all claimants asserting such priority. On
January 13, 2005, the district court entered a final judgment in favor of Aktina
Travel, S.A. (“Aktina”) on its claim against the Vessel. The Banks appeal.
II. Background
Aktina is a Greek travel agency, which contracted with the operators of the
Vessel to provide airline tickets for crew members to use to travel to and from the
United States, either before boarding or after disembarking the Vessel. The parties
contracted in Greece, and Aktina provided the travel arrangements from Greece by
telephone and other electronic means. Aktina filed a motion to intervene in this
action, claiming that it was entitled to a maritime lien under the Commercial
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Instruments and Maritime Liens Act (“CIMLA”), 46 U.S.C. § 31301 et seq., which
grants priority to creditors holding maritime liens for necessaries provided in the
United States over those holding preferred mortgages on foreign vessels. See 46
U.S.C. §31326.
No written agreement between the parties existed, so the district court
engaged in a choice-of-law analysis prior to determining the existence of a
maritime lien under CIMLA. The court first determined that a conflict existed
between United States law, which would afford a maritime lien to Aktina, and
Greek law, which would not. Next, the court applied the factors laid out in Gulf
Trading & Transport Co. v. The Vessel Hoegh Shield, 658 F.2d 363, 366-68 (5th
Cir. Oct. 7, 1981) (Unit A), to determine which nation’s laws should apply. The
court ultimately determined that United States law should apply. The court based
this determination substantially on two factual findings: (1) that the place of
performance of the contract was the United States, and (2) that the subject matter
of the contract consisted of airline tickets, and that these tickets were located in
the United States.
After finding that United States law properly applied, the court found that
Aktina was entitled to a maritime lien under CIMLA, and that this lien’s priority
was superior to that of the Banks’ preferred ship mortgage. The court fixed the
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amount of the lien at 137,405.26 euro. Then, recognizing that United States
district courts cannot award damages in foreign currencies, the court converted the
award to 146,787.52 United States dollars.
III. Contentions of the Parties
The Banks contend that the district court erred in its determination that
United States law should apply to this transaction. Alternatively, the Banks
contend that even if the district court correctly chose United States law, it erred in
finding that Aktina is entitled to a maritime lien under CIMLA. Aktina agrees
with the district court’s characterization of both the place of performance and the
location of the subject matter of the contract as the United States, and contends
that the court’s decision to base its choice-of-law determination substantially on
these factors was correct. Aktina also contends that the district court properly
found that CIMLA applies and that, once applied, CIMLA grants Aktina a valid
maritime lien.
IV. Standards of Review
We review choice-of-law determinations de novo. Sigalas v. Lido
Maritime, Inc., 776 F.2d 1512, 1516 (11th Cir. 1985). The factual findings
underpinning a choice-of-law determination are reviewed for clear error. Szumlicz
v. Norwegian America Line, Inc., 698 F.2d 1192, 1196 (11th Cir. 1983). A finding
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of fact is clearly erroneous when the entirety of the evidence leads the reviewing
court to a definite and firm conviction that a mistake has been committed. United
States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 542 (1948).
When reviewing the judgment of a district judge sitting in admiralty with no jury,
we may not set aside the court’s findings of fact unless they are clearly erroneous.
McAllister v. United States, 348 U.S. 19, 20, 75 S. Ct. 6, 8 (1954); Harbor Tug &
Barge, Inc. v. Belcher Towing Co., 733 F.2d 823, 825 (11th Cir. 1984); Sisung v.
Tiger Pass Shipyard Co., 303 F.2d 318, 322 (5th Cir. 1962). We review
conclusions of admiralty law de novo. Venus Lines Agency, Inc. v. CVG Int’l
America, Inc., 234 F.3d 1225, 1228 (11th Cir. 2000).
V. Discussion
A. Choice of Law
No written contract between the parties existed, and the district court
conducted a choice-of-law analysis. The district court correctly resolved the first
issue in any such analysis–whether a conflict of laws exists. See Brewer v.
Memphis Pub. Co., Inc., 626 F.2d 1238, 1242 n.7 (5th Cir. 1980). The district
court properly concluded that the application of United States law leads to the
conclusion that Aktina is entitled to a maritime lien for the travel services
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provided, while the application of Greek law leads to the opposite conclusion.
Thus, we must move to the next step–determining which nation’s law to apply.
Generally, to determine which law to apply in an admiralty case, courts
examine several factors, as outlined in Lauritzen v. Larsen, 345 U.S. 571, 583-92,
73 S. Ct. 921, 928-33 (1953), and Romero v. Int’l Terminal Operating Co., 358
U.S. 354, 382, 79 S. Ct. 468, 485 (1959). These factors include: (1) the situs of
the claim; (2) the law of the flag of the vessel; (3) the allegiance of the seamen; (4)
the allegiance of the shipowner; (5) the place of the contract; (6) the access to a
foreign forum; and (7) the law of the forum making the choice of law. In Hellenic
Lines Ltd. v. Rhoditis, 398 U.S. 306, 309, 90 S. Ct. 1731, 1734 (1970), the
Supreme Court added the additional factor of the shipowner’s base of operations.
See also Thorsteinsson v. M/V Drangur, 891 F.2d 1547, 1555 n.9 (11th Cir. 1990)
(remanding in part for a determination of the applicable law to apply and
instructing the district court to apply the foregoing cases).
Nevertheless, we agree with the district court that the Supreme Court's
conflicts jurisprudence in admiralty cases does not squarely apply here, as those
cases, beginning with Lauritzen, generally address choice of law in maritime tort
actions, while this action concerns a maritime contract. The Lauritzen Court
provided a list of factors to be considered in a Jones Act case, and the two major
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Supreme Court cases applying and expanding Lauritzen both arose out of tort. See
Rhoditis, 398 U.S. at 307, 90 S. Ct. at 1733; Romero, 358 U.S. at 355, 79 S. Ct. at
471. Thus, the Supreme Court has not specifically laid down a choice of law
approach in maritime contract cases. Like the district court, we think that the Fifth
Circuit's opinion in Gulf Trading & Transport Co. v. The Vessel Hoegh Shield,
658 F.2d 363, 366-368 (5th Cir. 1981) (Unit A), provides the proper analysis for
choice-of-law problems in maritime contract cases like this one, and we adopt it
today as this circuit's approach.1
In Hoegh Shield, the Fifth Circuit distinguished Lauritzen and applied the
Second Restatement of Conflicts of Law, Sections 6 (Choice-of-Law Principles)
and 188 (Validity of Contracts and Rights Created Thereby), as well as
governmental interest analysis, to hold that the proper choice of law in the contract
dispute before it was the United States. Id. The contract in Hoegh Shield involved
the physical provision of necessaries in the form of supplies and fuel by an
American supplier directly to a foreign vessel in what was then an American port,
1
The decisions of the former Fifth Circuit rendered before October 1, 1981 are binding on
this circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc). After that
date, however, only the decisions of the continuing Fifth Circuit’s Administrative Unit B are binding
on this circuit, while Unit A decisions are merely persuasive. Stein v. Reynolds Sec., Inc., 667 F.2d
33, 34 (11th Cir. 1982). See generally, Thomas E. Baker, A Primer on Precedent in the Eleventh
Circuit, 34 Mercer L. Rev. 1175 (1983).
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the Panama Canal Zone. Id. at 364-65. Applying in this case the analysis that the
Hoegh Shield court conducted, the result clearly points to Greek law.
To conduct a choice-of-law analysis based on the Restatement, the court
must determine which sovereign entity has the “most significant relationship” with
the transaction at issue. See Eugene F. Scoles, Peter Hay, Patrick J. Borchers, &
Symeon C. Symeonides, Conflict of Laws §2.14 (4th ed. 2004). Section 6 of the
Restatement outlines several general principles to be considered when making this
determination. However, for a contract dispute such as this one, the Restatement
provides more specific factors in §188 to effectuate the general choice-of-law
principles outlined in § 6. See Restatement (Second) Conflicts of Law §188(2).
These factors are: (a) the place of contracting; (b) the place of negotiation; (c) the
place of performance; (d) the locus of the subject matter of the contract; and (e)
the domicile of the parties.
Here, the district court found that both the place of contracting (factor (a)),
and the place of negotiation (factor (b)) were Greece, and this finding is not
challenged on appeal. In addition, factor (e), the domicile of the parties, also
points to Greek law because the domicile of Aktina is Greece, the domicile of
OWC, the owner of the Vessel, is Liberia, and the domicile of the sole shareholder
of OWC, Royal Olympic Cruises, is Greece. The Vessel also flew a Greek flag.
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None of these facts are in dispute, probably because the district court placed little
importance on them. Instead, the court found that the most important factors were
(c), the place of performance, and (d), the locus of the subject matter of the
contract.
As to the place of performance, the district court concluded that the services
were “for the physical transport of crew members to and from the United States.”
(R.10-373 at 17.) This factual conclusion is clearly erroneous, and it is the
principal conclusion upon which the district court's ruling rests. The services
provided by Aktina did not include the physical transport of any crew members.
Aktina is not an airline–it is a travel agent. The service that it provided was the
purchasing of plane tickets. This service was entirely performed in Greece. And,
the district court left out of its analysis other important aspects of performance,
such as payment and breach. Aktina invoiced the cost of the tickets to OWC in
Greece. OWC was to pay the invoices in euro, and OWC breached the contract in
Greece by not paying the invoices. Thus, these aspects of performance bolster the
conclusion that the place of performance was Greece.
The district court’s conclusion based on factor (d), the locus of the subject
matter of the contract, is also questionable. The court characterized the subject
matter of the contract as tickets, and said that these tickets were uniformly located
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in the United States. But it is clear from the record that roughly half of the tickets
were not picked up in the United States, but in airports around the world–primarily
in Greece. This is because roughly half of the arrangements were made to ensure
that crew members could travel to the United States and make arrangements on
their own to join the Vessel there. The district court correctly found that each of
the tickets was in the United States either at the beginning of a flight or at the end
of it, but each ticket was also in another country–most often Greece–at the other
end of each flight. To conclude, then, that the locus of the subject matter of the
contract was solely the United States was erroneous.
Once this error and the erroneous factual determination that the place of
performance was the United States are corrected, the § 188 factors point
overwhelmingly to Greece. And, the Restatement states that, when one state is
both the place of negotiation and the place of performance of a contract, that
state’s law should usually govern the contract. Restatement (Second) Conflicts of
Law §188(3). In this case, Greece was both the place of negotiation and the place
of performance, and in the absence of other significant factors pointing toward
United States law, Greece’s law should apply.
Section 6 of the Second Restatement of Conflicts of Law contains the
general factors that courts should consider in any choice-of-law analysis. The
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parties have not briefed the application of these factors, and the district court did
not rely on them. However, we briefly review them to determine whether they
establish that the United States has a more significant relationship than Greece to
the transaction at issue, despite our conclusion based on the § 188 factors. The § 6
factors are: (a) the needs of the international system; (b) the relevant policies of
the forum (here, CIMLA); (c) the relevant policies of other interested states (here,
Greece’s maritime law that does not provide maritime liens for necessaries); (d)
the protection of justified expectations; (e) the policy underlying the field of law in
question; (f) the interest in predictability and uniformity; and (g) the ease in
determining and applying the relevant law. Of these factors, three–(a), (e), and
(f)–do not favor either nation’s laws. Two–(b) and (g)–favor the application of
United States law. The remaining two–(c) and (d)–favor the application of Greek
law. Thus, after reviewing the § 6 factors, we conclude that they do not establish
that the United States has a more significant relationship than Greece to the
transaction at issue here.
After applying the Restatement analysis, the Hoegh Shield court further
supported its conclusion with a brief governmental interest analysis, from which it
concluded that the United States had the stronger interest in the case before it. See
Hoegh Shield, 658 F.2d at 368. In this case, as with the § 6 Restatement factors,
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the parties have not argued that governmental interest analysis resolves the choice-
of-law issue, and the district court did not conduct a governmental interest
analysis. Nevertheless, consistent with Hoegh Shield, we review the competing
interests of the United States and Greece as to the application of their laws to this
transaction. We conclude from this review that Greece’s interests outweigh those
of the United States.
The United States has an interest in ensuring that United States suppliers,
and those supplying goods and services to ships in United States ports, are
protected from the defaults of vessels after receiving their supplies or services.
CIMLA supports this policy. However, similar to the United States’s interest as to
maritime transactions in its territory, Greece has a strong interest in ensuring that
those who negotiate contracts in Greece will receive the benefit of their bargains.
Greece also has an interest in determining the proper protections and priorities for
Greek corporations and foreign vessel operators when they deal with each other.
To apply United States law to what is almost completely a Greek transaction
would violate Greece’s interests in governing transactions within its borders,
while it would do little to serve the United States’s interests under CIMLA. Thus,
governmental interest analysis favors the application of Greek law.
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Based both on our analysis of the factors outlined in the Second
Restatement of Conflicts of Law and on our analysis of the competing
governmental interests in this case, we hold that Greek law is the proper law to
apply to the transaction between Aktina and the Vessel. The district court erred in
applying United States law.
B. No Maritime Lien Exists
Once the proper choice of law is made, it becomes clear that Aktina is not
entitled to a maritime lien superior to the Banks’ preferred mortgage lien. No
provision of Greek law provides for such a lien. Greek law establishes a statutory
lien system, but statutory lien rights do not carry priority over preferred ship
mortgages on foreign vessels. See 46U.S.C. § 31326.
VI. Conclusion
Based on the foregoing, Aktina is not entitled to payment of its receivables
from the proceeds of the foreclosure sale of the Vessel. Accordingly, we reverse
the district court’s judgment as to Aktina and remand for entry of judgment in
favor of the Banks on Aktina’s claim.
REVERSED AND REMANDED.
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