Similarly, it has not always been easy for the courts to know whether a contract includes shipping, trade or trade with the sea. For example, a case in which it is a contract to build a ship is not the jurisdiction of the Admiralty, but a contract to repair a ship. Moreover, the courts were inconsistent in ruling on whether a case involving a contract to sell a vessel was competent for the admiralty. In one case, the court held the purchase of a cargo ship that had been in service for some time, had a “clearly salty taste”. Since trade requires ships, sailors and fuel, the court found no justification for the contracts with the crew and fuel to fall within the Admiralty`s jurisdiction, but not the contracts to which the vessel itself is involved. In another case, a buyer sued a seller for fraud related to the sale of a ship. The court found that there was no admiralty jurisdiction because the fraud took place on land where the contract was entered into. The false statements on the vessel, which were indeed made on board the vessel, were not sufficient to support the Admiralty`s jurisdiction. Neither the Constitution nor the Justice Act of 1789 defined the types of cases constituting admiralty and sea matters, so that the federal courts had to set the limits of that jurisdiction.
In most cases, the Supreme Court in England rejected the limits and gave federal courts broad admiralty jurisdiction over civil contracts and misdemeanours. In DeLovio v. A drink of 1815, Justice Joseph Story, who served as a district judge on the Circuit Court for the District of Massachusetts, ruled that federal courts had admiralty jurisdiction over naval insurance contracts, regardless of where the contract was executed. (English Admiralty Courts exercised jurisdiction only for contracts concluded and executed at sea.) Story`s definition was eventually taken up by the Supreme Court and the Admiralty`s jurisdiction over contracts for freight transport, ship charter, ship repair and services such as tugs and piloting services, which had previously been tried by the State Court. The Second Circuit had the opportunity to consider the issue of the shipbuilding contract in Primera Maritime Limited v. Jiangsu Eastern Heavy Industry Co. Ltd. None of the district courts had been brave enough to conclude that Exxon and Kirby had effectively quashed the previous Supreme Court precedent because a contract to purchase ships was not maritime, although the point was raised in several cases before the preliminary proceedings. During the appeal process, the Second Circuit found that the applicant “rightly stated that the conceptual approach in these cases suggests that modern principles disapprove of the rules of konse as such, which are based on the place of creation or delivery of the contract.” In the end, the Second Circle was not prepared to conclude that the previous precedent of the Supreme Court had been repealed and, in its “synthesis order,” it concluded that “[d] it is strictly stated that shipbuilding contracts are maritime in nature, that disputes arising from such contracts do not result in the jurisdiction of the federal courts.” So maybe this issue is waiting for the right case to extend to the Supreme Court.