Everyone likes harmony whether it’s Kansas belting out "Carry on my Wayward Son" or the simple no-drama setting of shipboard unity. Sadly, harmony isn’t something you find in maritime law.
Take for example, the 1851 Limitation of Liability Act which upends the maritime claimant creating an ugly sound and unfair outcomes. We’re told that the act was intended to foster investment in shipping. The law protects vessel owners (and a limited class of owner-like interests) by allowing them to invoke bankruptcy-like protections. After a loss, the vessel owner brings a lawsuit raising the act’s protections. Once triggered, the act requires that all claimants file a claim in a specific court within a short period of time and if the owner ultimately shows they didn’t have any “knowledge or privity” of the negligence causing the loss, the owner’s liability is limited to the dollar amount of the vessel after the loss – usually not much.
This act is a ship show. It has the effect of shortening statutes of limitation requiring claimants who might still be receiving medical treatment, file and prove their claim in federal court within months of the loss. It’s used by vessel interests to drag claimants into a courtroom they didn’t choose. In many instances, it strips claimants of a right to a jury trial in state court. And collaterally because of the expensive burden of complying with the federal rules, it removes value from a claimant’s recovery. Worse, and despite insurance being purchased for this very reason, courts (incredibly) don’t allow insurance policies to be added to the pot along with the post-casualty vessel value.
The Limitation of Liability Act’s raw unfairness was spotlighted after 34 people died in an inferno aboard a dive boat off California in 2019. A new bill (H.R. 5329) proposes legislation intended to extinguish these unfair outcomes. The bill is in its infancy so specifics are missing. But it’s a good sign.
I hope to see changes not only to the financial compensation aspect, but the process as well.
