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Maritime Update: When is a vessel a vessel for indemnity purposes?


In the recent decision of “BW Offshore United States v. Tvt Offshore” by Judge Jane Triche Milazzo in the Eastern District of Louisiana, the court addressed the vessel status of  the BW PIONEER. This structure was and is a floating, production, storage and offloading unit (FPSO) owned by BW Offshore, LLC (“BW”) and used to produce oil and gas from the Chinook and Cascade oil fields in the Gulf of Mexico.

BW entered into a Master Service Agreement (“MSA”) with TVT Offshore (TVT) to provide manpower to BW related to the BW PIONEER. Separately, TVT entered into a Service Agreement (“Agreement”) with Petrolis, in which Petrolis would, at TVT’s request, contract with qualified individuals and send them to work on various offshore jobs on an “as-required” basis.  Both contracts contained mutual indemnity clauses.

Pursuant to the MSA, BW requested TVT provide qualified riggers and rope access technicians for work on the BW PIONEER. In turn, TVT asked Petrolis to provide these workers per the terms of the Agreement. The plaintiff, Louis de Jager, was provided by Petronis to fill one of the spots. While the team was detaching and lowering a  piece of equipment, it fell to the deck crushing and traumatically amputating de Jager’s leg.

De Jager filed suit for personal injuries naming BW and TVT as defendants. BW filed a crossclaim against TVT seeking indemnity alleging that TVT violated the MSA. Both TVT and BW filed third-party complaints against Petrolis, seeking defense and indemnity for the claims asserted in de Jager’s suit. Petrolis and TVT both filed motions for summary judgment seeking dismissal of the contractual indemnity claims against them arguing that the Outer Continental Shelf Lands Act (OCSLA) required the Court to apply Louisiana law to the contracts at issue. They further argued, based on an application of Louisiana law, that the Louisiana Oilfield Indemnity Act (“LOIA”) nullified the indemnity provisions of their respective contracts as contrary to public policy. BW opposed both Motions, arguing that maritime law governs this dispute.

The outcome for these motions turned on which law applied to the contracts at issue. In order to appropriately consider whether the contracts are to be interpreted under maritime law or must be interpreted under Louisiana law, the Court correctly noted it must first determine whether the BW PIONEER is a vessel. Both Petrolis and TVT argued the BW PIONEER was not a vessel.

In analyzing the motions, Judge Milazzo noted that “spars” are large oil production platforms that float on the ocean’s surface but are moored to large anchors in the seabed. Recently, the courts had repeatedly found these structures are not vessels, citing the fact that they have limited movement capabilities, lengthy period of the time and expense were necessary to disconnect and render such spar structures capable of marine transport and the permanence of their attachments to the sea floor. By contrast, Judge Milazzo noted that FPSOs, such as the BW PIONEER, are not only practically capable of maritime transport, but are imminently capable of such. They can detach from the well and relocate under their own power within six hours, transporting the crew, equipment and stored oil along with them.

The parties also argued the fact the BW PIONEER has not moved from its location since 2009 should indicate to the Court that it is not a vessel. Judge Milazzo remarked that such an argument was not persuasive. She correctly noted that the 5th circuit has repeatedly rejected the idea that a vessel loses its status merely because it is taken out of navigation. For instance, a jack-up rig remains a vessel while in position and lifted out of the water. Here, the BW PIONEER was even more readily capable of being placed in navigation than a jack-up rig. The fact that it had not moved from location since 2009 was found to be of no legal significance.

As a result, the Court found that the BW PIONEER was and is a vessel. After the required analysis of the factors to determine whether Louisiana state law applied to the dispute, Judge Milazzo concluded the MSA and the Agreement were maritime in nature. “Because maritime law applies of its own force, state law cannot apply through OSCLA. The LOIA is therefore inapplicable to this suit and cannot be used as a basis to nullify the indemnity agreements in the contracts.” She therefore denied the motions by TVT and Petrolis for summary judgment.

If you have any questions, please feel free to contact Bill Schwartz at (504) 569-2900 or wschwartz@bhbmlaw.com.


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