Colin Winchester Appointed New Associate Justice of the Marshall Islands High Court

New Associate Justice Colin WInchester

New Associate Justice Colin WInchester

After a long vacancy, the Marshall Islands has appointed Colin Winchester to serve as Associate Justice of the High Court. He replaced former Associate Justice Dinsmore Tuttle beginning his service in November 2016. Associate Justice Colin Winchester came to the Marshall Islands from Utah where he engaged in private law practice, served as General Counsel to the Utah Administrative Office of the Courts, as an elected County Attorney, and as an Assistant Utah Attorney General. For four years prior to taking his position in the Marshall Islands, he served as the Executive Director of the Utah Judicial Conduct Commission.


First Ever Woman Elected President of the Marshall Islands

The Hon. Dr. Hilda C. Heine was sworn in as the RMI’s first female president of the Marshall Islands on Wednesday, January 27, 2016. She was voted in by the Nitijela after the ousting of former President Casten Nemra two weeks into his presidency by a vote of no confidence. Dr. Heine is the first female leader of any independent Pacific island nation.

Dr. Heine has served as Deputy Minister of Education and former Secretary of Education and has held many leadership positions. She is credited with facilitating and improving significant educational and community programs and initiatives. She completed her undergraduate degree at University of Oregon (1970), her Masters of Education in Curriculum and Instructions at the University of Hawaii (1975) and her Educational Leadership Ed.D. at the University of Southern California (2004).


Marshall Islands Appoints New High Court Associate Justice

Dinsmore Tuttle

Associate Justice Dinsmore Tuttle joined the Marshall Islands High Court in August 2014. Before assuming the position with the High Court, Justice Tuttle earned a J.D. in 1982 from the University of Denver College of Law. After law school, she practiced law for 14 years, first as a criminal defense public defender, and then in mixed civil and criminal private practice. Justice Tuttle was appointed to the bench in Colorado in 1997 and presided over a state district court for 16 years. During her time as a judge, she presided over every type of civil and criminal case filed at all levels in a state trial court and handled appeals from lower courts.

While on the bench, Justice Tuttle served on the Board of Directors for local and state legal services and was on the Executive Council for the Colorado Bar Association. She also was involved actively in committees devoted to domestic relations and access to justice issues and in legal training for students, lawyers and judges, and she served on two Supreme Court committees.

Justice Tuttle was the recipient of the 2007 Colorado Judicial Institute Magistrate of the Year Award. In 2012, the commission on judicial performance unanimously recommended Justice Tuttle be retained. Justice Tuttle resigned her position in the U.S. courts in November 2013, and worked with the American Bar Association in the Philippines, before joining the Marshall Islands High Court.


Marshall Islands Legal Opinions For Ship Mortgages

In connection with term and revolving facilities, loan agreements, or shipping mortgages, called “Preferred Ship Mortgages,” for vessels registered under the flag of the Marshall Islands, the banks and financial institutions lending money to the vessel owners often require shipping mortgage legal opinions. In preparation for rendering such a legal opinion, Marshall Islands counsel must review and investigate the loan documents, organizational documents of the borrower, resolutions adopted and certified copies of corporate minutes or written consents relating to the organization of the borrower and to discussions held or actions taken with respect to the transactions contemplated by the loan documents, and any documents, agreements and certificates as considered necessary or appropriate in connection with the opinion rendered for that certain transaction.

Upon review of the relevant documents, Marshall Islands counsel may opine, among several other things, as to whether the borrower is the sole owner of record; that the Preferred Ship Mortgage duly filed constitutes a preferred mortgage in accordance with Marshall Islands maritime law; and that there are no liens of record against the vessel other than the Preferred Ship Mortgage.

Marshall Islands Lawyers will review the relevant documents and expeditiously draft a shipping mortgage legal opinion appropriate to the transaction. We can also draft the shipping mortgage itself and assist with the recordation of the shipping mortgage in accordance with Marshall Islands maritime law.



Marshall Islands Ship Mortgages and Maritime Liens: Recording

Title 47, Chapter 3 of the Marshall Islands Revised Code (“MIRC”) governs Marshall Islands ship mortgages and maritime liens. It is referred to as the Preferred Ship Mortgage and Maritime Liens Act (the “Act”).

A sale, conveyance, hypothecation, mortgage or assignment of mortgage of any vessel is not valid against any person other than the grantor or mortgagor, his heirs or devises and persons having actual notice unless the instrument evidencing such transaction is recorded with International Registries, Inc. (“IRI”). 47 MIRC 302. A valid mortgage, which at the time it is made includes the whole of any vessel, will have a preferred status as of the date of its recordation. 47 MIRC 303.

International Registries, Inc. (IRI), headquartered near Washington, DC, in Reston, Virginia, in the United States, is the “central office of the Maritime Administrator, in the United States of America” for purposes of the Act, and its 25 offices in major shipping and financial centers around the world are duly authorized agents having full authority to record ship mortgages, conveyances, bills of sale, and other maritime documentation. 47 MIRC 302.

IRI will record such instruments in the order they are received in appropriate indexes showing: (a) the name of the vessel; (b) the names of the parties; (c) the time and date of receipt of the instrument affected; (d) the interest in the vessel transferred or affected; and (e) the amount or amounts of the direct or contingent obligations, including advances and repayments, that are or may become secured by the mortgage. 47 MIRC 302.

IRI will not record a mortgage unless it states the interest of the mortgagor in the vessel and the interest so mortgaged. Further, a mortgage or instrument of release or discharge will not be recorded unless it bears an apostille issued by a competent authority of a State Party to the Hague Convention of 5 October 1961, as amended, or has been acknowledged or is submitted with such other proof of due execution. 47 MIRC 305.

IRI will record a mortgage or related instrument submitted to it in proper form and will, upon request, issue a Certified Extract of the Preferred Mortgage Index of the public register as evidence of recordation of a Preferred Ship Mortgage. Furthermore, upon request, IRI will issue a Certificate of Ownership and Encumbrance (“COE”) setting forth all recorded mortgages, encumbrances and related instruments with respect to a vessel registered in the Marshall Islands as of the time and date of its issuance. 47 MIRC 307.


Marshall Islands Attorneys: Who Can Practice in the Courts of the Marshall Islands?

All counsel appearing before the Marshall Islands courts are subject to the Marshall Islands Rules for Admission to the Practice of Law and for the Practice of Law (2007) (the “Rules”). The term “counsel” means both attorneys and trial assistants. To be admitted as a Marshall Islands attorney, one must complete a comprehensive application process, pass a written bar examination, meet morals and character requirements, and graduate from an approved law school. An “approved law school” is any law school approved by the American Bar Association, a law school in a nation other than the United States, which uses the common law as a background for study and which is an accredited institution in that country, or any other law school approved by the Supreme Court.

Trial assistants are citizens of the Marshall Islands, who may be admitted without passing the bar examination and without graduating from an approved law school, however, they may only serve as counsel for and give advice regarding limited civil and criminal matters. Trial assistants may be admitted to practice law in Marshall Islands courts, when there is a shortage of attorneys.

All counsel admitted to practice must be familiar with the Constitution of the Republic of the Marshall Islands, the Acts of the Marshall Islands Nitijela, published rules of procedure of the Marshall Islands courts, and case decisions of the Supreme Court (particularly those relating to the customs and traditions of the Marshallese people). All Marshall Islands attorneys and trial assistants must stay current in their knowledge of the statutes, legal decisions, and treaties, which apply to the Marshall Islands, directly or indirectly. Also, all attorneys and trial assistants must be aware of new developments in Marshall Islands law generally.

All Marshall Islands attorneys and trial assistants are bound by the American Bar Association Model Rules of Professional Conduct and must abide by them or potentially face disciplinary action, including suspension from practice, or disbarment.

Lastly, to practice law in the Marshall Islands, all attorneys and trial assistants must show their continued commitment to the Marshall Islands by either residing or maintaining an active practice in the Marshall Islands, as defined in the Rules. If this requirement is not met, such counsel may not be admitted or, if admitted, be placed on an “Inactive List.”


Case Brief: Shareholder Derivative Suit – DryShips, Inc.

In its October 5, 2011 opinion, the Marshall Islands Supreme Court affirmed the decision of the Marshall Islands High Court in a derivative suit whereby the Plaintiff, shareholder of DryShips, Inc. (a Marshall Islands corporation headquartered in Athens, Greece), sued the Board of Directors dismissing Plaintiff’s amended complaint. Plaintiff alleged that Defendants breached their fiduciary duty of good faith, committed waste by approving transactions that were not the product of good faith business judgment, and were unjustly enriched at DryShips’ expense. Plaintiff, however, did not make a demand on the DryShips Board before instituting the action against Defendants.

In the amended complaint, Plaintiff asserted that any such demand would have been “futile and useless … because the Board is incapable of making an independent and disinterested decision to institute and vigorously prosecute this action.” Absent a demand on the Board, Defendants moved the High Court to dismiss the amended complaint. The High Court agreed with Defendants and dismissed the amended complaint, concluding that it did “not contain particularized allegations that raise a reasonable doubt that at the time the lawsuit was filed a majority of the directors were disinterested and independent or that the challenged transactions were the product of a valid exercise of business judgment.” Although Plaintiff was permitted to move for leave to amend the amended complaint, he chose to appeal the High Court’s decision.

Applying Delaware law as required by the Marshall Islands Revised Code (52 MIRC, Part I, § 13), the Supreme Court affirmed dismissal of the amended complaint concluding that Plaintiff did not meet the two-part test for demand futility set forth in Aronson v. Lewis, 473 A.2d 805 (Del. 1984), overruled in part on other grounds by Brehm v. Eisner, 746 A.3d 244 (Del. 2000). Under that test, courts “must decide whether, under the particularized facts alleged, a reasonable doubt is created that: (1) the directors are disinterested and independent and (2) the challenged transaction was otherwise the product of a valid exercise of business judgment.” Aronson, 473 A.2d at 814.


U.S. Law Guides Marshall Islands Law And Practice

United States law guides and influences Marshall Islands law and practice. As
a former U.S. Trust Territory, the Republic of the Marshall Islands modeled its
Constitution on the United States Constitution, and therefore, it is influenced by the
American legal system. Although the courts are not bound by foreign law, Article
1, Section 3 provides that “[i]n interpreting and applying this Constitution, a court
shall look to the decisions of the courts of other countries having constitutions
similar, in the relevant respect, to the Constitution of the Marshall Islands.”

With regard to corporate law, the Marshall Islands closely follows U.S. law,
particularly the laws of the State of Delaware. The Marshall Islands Revised Code
(“MIRC”) explicitly instructs the courts to look to Delaware corporate law. The
Marshall Islands Business Corporations Act “shall be applied and construed to make
the laws of the Republic … uniform with the laws of the State of Delaware.” See 52
MIRC, Part I, § 13.

With regard to maritime law, the Marshall Islands has adopted the common law of the United States. The Marshall Islands Revised Code provides that as long as it does not conflict with Marshall Islands law, “the non-statutory general maritime law of the United States of America is hereby declared to be and is hereby adopted as the general maritime law of the Republic.” See 47 MIRC § 113.

Furthermore, in the Marshall Islands all attorneys are bound by the American Bar
Association Model Rules of Professional Conduct. See Rule 5(f) of the Marshall
Islands Rules for Admission to the Practice of Law and for the Practice of Law
(2007). In addition, the Marshall Islands Rules of Civil Procedure (“MIRCP”) are
modeled after the United States Federal Rules of Civil Procedure. The 2013 MIRCP
were adopted on February 4, 2013, and became effective on March 4, 2013.


What is the Trust Company of the Marshall Islands?

The Trust Company of the Marshall Islands (TCMI) and its parent company, International Registries, Inc. (IRI) through a joint venture agreement with the Marshall Islands government, is authorized by legislation to administer the maritime and corporate programs for the Marshall Islands. The TCMI acts as registrar and registered agent for Marshall Islands non-resident companies.

The Marshall Islands government initiated the ship registry program in 1988 and in 1990 adopted the Maritime Act, which is a modern law in line with shipping industry standards.  To aid the ship registry program, the Marshall Islands also enacted the Marshall Islands Associations Law in 1990, which encompasses the Business Corporations Act, Partnership and Limited Partnership Act, Unincorporated Associations, and the Limited Liability Company Act.  These laws are modeled on U.S. corporate law with flexibility for organization of corporate governance and with modifications suitable for off-shore companies, such as electronic or facsimile filings, bearer shares (allowing ownership by way of physical possession of the stock certificates), and no requirement for apostilles or notarizations by consular officials for the execution of documents.  As a result, the Marshall Islands ship registry has become one of the largest and fastest growing registries in the world.