Obtaining an Admiralty Surety Bond
Purchasing an Admiralty Surety Bond (Admiralty Bond) from a surety company can be quite challenging because these are a highly specialized type of surety bond. Because of the complex nature of these obligations, we recommend that you contact us directly to discuss the idiosyncrasies of these bonds.
Parties that file actions involving admiralty actions usually are required to post some type of government-approved security. A bond or other form of security is filed with the court through the use of a stipulation by the party required to provide the security.
Plaintiffs have these options to secure admiralty actions:
- Surety Bonds
- Cash Collateral (liquid assets)
- General Bonds
- Letters of Undertaking
- Special Bonds
- Other specialized arrangements can be made by the parties involved
About Admiralty Bonds
Admiralty Surety Bonds are utilized in cases that involve seagoing vessels. These vessels are at risk of unique perils such as storms, navigational errors, collision, explosions, smuggling and many more. Cases that fall within admiralty jurisdiction are most often tried in Federal Courts.
To initiate an admiralty action, the plaintiff files a complaint. In cases in which an arrest or attachment will occur, that complaint must be verified by an affidavit from the claimant. Actions involving the arrest or attachment of a vessel or other property and those for limitation of liability require that specified parties provide some form of security.
The high level of risk and investment in vessels has led to the development of 2 maritime procedures that can involve the use of bonds. The first involves prejudgment procedural remedies that include arrest and attachment. The second is a procedure based on the U.S. Limitation of Shipowners Liability Act of 1851 that allows a ship-owner to petition for limitation of its liability for individual claims.
When a claim results in a maritime lien, the vessel, its cargo, or any freight against which the liens arises is subject to arrest (or seizure), by a U.S. Marshal, as ordered by a U.S. judge. To obtain a release of a vessel from arrest, a ship-owner must post security using an approved security option. The amount of the required security is approximately 150 to 200 percent of the sum of the claim. The security amount provides necessary compensation for all costs (direct and indirect) associated with the seizure. Often it makes the most financial sense for a ship-owner to get an Admiralty Surety Bond to satisfy the security requirements.
Attachment (Maritime) is a remedy, similar to arrest, and can be utilized in admiralty and maritime complaints. In an attachment, the claimant must set aside security to pay the expenses that the Federal court might award against the party. Often, depending on the circumstances, it makes the most financial sense for a ship-owner to get an Admiralty Surety Bond (or Admiralty Bond).
Limitation of Liability
The U.S. Limitation of Shipowners Liability Act creates a procedure to limit a shipowner’s responsibility for individual claims to the value of the owner’s equity in the vessel at the end of the voyage.
Those in need of an Admiralty Bond are advised to contact us directly regarding this very complicated/specialized bond.