Florida’s Overseas Shipholding Group (OSG) has fired back in a legal battle launched by Oslo-listed shipowner AMSC, alleging the Norwegian company’s actions forfeited $4m of the money it is pursuing because its representatives tried to recruit crew members while inspecting a tanker.
The retort by the US tanker company comes almost four months after AMSC, formerly known as American Shipping, filed the lawsuit in a federal court in New York alleging that OSG breached a contract, in part, by failing to pay a fee due at the end of the bareboat contract. AMSC has seized $4.5m in OSG’s cash.
In their formal answer denying the allegations, OSG’s Holland & Knight lawyers argued that actions by AMSC during the process to redeliver the 46,900-dwt Overseas Los Angeles (built 2007) violated the bareboat charter of the vessel, which has been renamed Seakay Star under its new bareboat charter with Philadelphia’s Keystone Shipping.
The lawyers, led by partner Christopher Nolan, argued that an agreement for so-called deferred principal obligations was voided by the attempts to recruit OSG crew on the ship.
“Over $4m of the alleged $4.5m sought by plaintiffs in regard to the redelivery of the M/V Overseas Los Angeles has been forfeited by plaintiff’s own wrongful acts as a direct result of its breach of defendants’ right of quiet enjoyment,” OSG said in the answer.
Keystone did not immediately respond to TradeWinds’ requests for comment on OSG’s answer. AMSC chief executive Pal Lothe Magnussen declined to comment for this story.
The Overseas Los Angeles was one of 10 vessels that AMSC had on long-term charter to OSG, three of which were handed back to Norwegian company late last year.
OSG has alleged that in August 2022, as part of an inspection of the tanker, a Keystone employee identified only as Captain A, as well as a consultant of both Keystone and AMSC identified as Person B, boarded the vessel at Port Everglades in Fort Lauderdale, Florida, under the auspices of performing an inspection before the end of the charter.
‘Assertive’ recruitment
“While onboard the vessel and during active cargo operations, the owner’s appointed representatives assertively recruited multiple shipboard officers as well as OSG’s fleet manager, all of whom were employed by charterer at the time, to join Keystone,” OSG’s lawyers said.
“This flagrant conduct exceeded the scope of the limited inspection to which the charterer had agreed with the owner, and more notably, substantially interfered with the vessel’s operation, the charterer’s possessory rights, and quiet enjoyment to which the charterer is entitled.”
The alleged recruitment effort came amid a tight labour market for the US citizen crews that are needed to operate a Jones Act vessel in the domestic trade lanes plied by the Overseas Los Angeles.
OSG chief executive Samuel Norton recently told TradeWinds in an interview that there is still a crew shortage after the Covid-19 pandemic shut down a key training centre and led to accelerated retirements.
‘Disruptive’ Person B
In the litigation, OSG alleged that Person B was approved to board the vessel on the condition that the consultant limit questions to those pertinent to the ship’s condition and abstain from soliciting employees on the MR tanker. That is not what happened, and the consultant was ejected from the ship, the tanker company’s lawyers wrote.
“Despite the charterer’s explicit instructions, Person B continued to be disruptive and interfere with the redelivery of the vessel and, as a result, Person B was ordered by OSG’s fleet manager to depart the vessel.”
In its answer to the AMSC lawsuit, OSG contended that the actions represented a breach of the bareboat charter’s guarantee of “quiet enjoyment” of the Overseas Los Angeles, a right the lawyers described as a sacrosanct because it ensures safety of the tankers during cargo operations. The contract’s terms identified a loss of quiet enjoyment as grounds for forfeiture of the deferred principal, they wrote.
But as TradeWinds has reported, AMSC’s complaint described events differently.
The company’s lawyer, William Bennett at firm Blank Rome, alleged that OSG violated the shipowner’s right to have a surveyor and a representative of classification society American Bureau of Shipping board the ship.
“OSG was extremely uncooperative, refused AMSC’s commercially reasonable and common industry request to have its surveyor and an ABS representative ride the M/V Overseas Los Angeles for the purpose of inspecting the vessel,” Bennett wrote in the complaint against OSG.
As TradeWinds has reported, the two sides have started talks to attempt to settle the case.
District Judge Katherine Polk Failla has ordered both sides to appear for a pre-trial conference in September.
