In offshore operations, whether a contract is deemed “maritime” has major consequences. The classification determines the application of either federal maritime law or state law, along with its oilfield or construction anti-indemnity statutes for states such as Texas or Louisiana. The difference often decides whether the defense, indemnity, and insurance-related obligations in the contract survive (under maritime law) or are voided (under certain state’s laws), directly impacting risk allocation between operators and contractors.
Current Fifth Circuit Framework
Two recent United States Fifth Circuit Court of Appeals decisions highlight where the law currently stands, and what contractors and operators should keep in mind when drafting and enforcing service contracts. This is particularly important given that the case law generally ignores or gives little weight to contractual choice-of-law provisions in these types of contracts, even when the parties designate federal maritime law under the hope that the indemnity obligations will be enforceable.
The Doiron Two-Step Test
Since 2018, courts within the Fifth Circuit have applied the two-inquiry test from In Re Larry Doiron, Inc., 879 F.3d 568 (5th Cir. 2018):
- Does the contract to provide services to facilitate the drilling or production of oil and gas on navigable waters?; and
- Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract?
An affirmative answer to both questions classifies the contract as maritime, subject to federal maritime law. Whereas, a negative answer to either question means that state law applies, either directly if the claim arose onshore or in state waters, or through the Outer Continental Shelf Lands Act (“OCSLA”) if the claim arose offshore on the OCS.
Earnest v. Palfinger: Vessel’s Role, Not Its Use, Guides Maritime Contract Classification
Recently, the Fifth Circuit has narrowed the scope of maritime contract classification, specifically with regard to the role of a vessel in a contract. In Earnest v. Palfinger Marine USA, Incorporated, 90 F.4th 804 (5th Cir. 2024), the Fifth Circuit reversed the district court and held that a contract for the upkeep of lifeboats on an oil production platform was a maritime contract.
In finding that the contract was not a maritime contract, the district court focused on the fact that the lifeboats were not used in connection with traditional maritime activities but were instead safety equipment required for the operation of an OCS platform. The Fifth Circuit disagreed and emphasized that the “use” of the vessel is less important than whether a vessel plays a substantial role in the performance of the contract. The lifeboats were central to Palfinger’s contract, even though they weren’t used to perform the work. This decision is significant in clarifying that a contract may still be deemed maritime even if the vessels involved are not directly engaged in “maritime commerce” at the moment of the contracted services, so long as they play an integral role in facilitating a maritime commercial activity.
Offshore Oil Services v. Island Operating Company: Incidental Vessel Use Isn’t Enough
Just this month, the Fifth Circuit reached the opposite conclusion in Offshore Oil Services, Inc. v. Island Operating Company, Inc., et al, 2025 WL 2541914 (5th Cir. Sept. 4, 2025). In this case, the dispute arose after a contract operator was injured during a personnel basket transfer from a vessel onto a platform on the Outer Continental Shelf.
The issue before the Court was whether the Master Service Contract (“MSC”) between the operator and owner of the platform was a maritime contract, such that indemnity would be owed to the vessel owner and platform operator from the contractor’s employer. The Fifth Circuit found that the MSC covered lease and production operations, not vessel services, and therefore was not a maritime contract.
According to the Fifth Circuit, the vessel use was limited to transportation, which was merely incidental to the work itself. The Court emphasized that simply referencing vessels, or using them for crew transport, does not transform a contract into a maritime one. The Court rejected arguments that actual vessel use (e.g., water transfers, equipment loading) automatically made the contract maritime, clarifying that such tasks do not override the parties’ expectations or the contract’s scope.
Further, the Court distinguished Earnest, noting that the contract there involved repair and maintenance of vessels necessary to support offshore drilling and production of oil and gas (i.e., maritime commerce), which inevitably gave the vessel a substantial role. By contrast, the MSC at issue contemplated no requirements resembling such work, but instead called for services traditionally related to oil and gas production that courts have consistently considered nonmaritime, even when performed on an offshore platform. The Fifth Circuit echoed Doiron’s central holding: contracts for non-maritime services do not become maritime simply because employees occasionally perform vessel-related tasks.
Key Takeaways for Operators and Contractors
These cases confirm that the Fifth Circuit is applying Doiron narrowly. Contracts for non-maritime services do not become maritime merely because they reference vessels or employees occasionally perform vessel-related tasks. The existence of a vessel and the contemplation between the parties of the role that a vessel will play in the execution of the contract is crucial. The vessel must play an integral role in facilitating a maritime commercial activity for the contract to be deemed maritime. Operators and contractors should draft MSCs with this framework in mind, as classification can determine whether indemnity obligations survive under maritime law or are invalidated by a state’s anti-indemnity laws.
Lauren Guichard Hoskin is a member of Kean Miller’s Offshore Energy & Marine group and practices in the firm’s New Orleans office. She has successfully handled and resolved lawsuits involving maritime personal injury claims, oil and gas casualty and property damage claims, drilling accidents, well blowouts, and various breach of contract disputes.