Limitation of Liability Act

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Injured on an Offshore Vessel? We Represent Injured Workers Nationwide.

According to maritime law, the vessel’s owner may be responsible for any losses or damages that occur during the voyage. Yet, many ship owners make an effort to escape liability under the Limitation of Liability Act for mishaps and fatalities that take place on their vessel. This enables owners in some situations to reduce their liability if the vessel’s unseaworthiness that resulted in the loss occurred without the owner’s knowledge. The statute covers both cargo losses, such as the loss of property, goods, or merchandise, as well as personal harm losses like fatalities and crashes.

Because the obligation is restricted to the worth of the vessel and its “freight then pending” after the loss happened, injured sailors quickly learn the significance that this act has in determining the amount and availability of compensation available. This could imply that an injured offshore worker’s damages claim won’t be completely compensated. As a result, the legislation has come under growing fire for being outdated in light of more modern approaches that make it simpler to invest in maritime commerce without worrying about endless liability. Yet, the act continues to be a major factor in determining how much an overseas worker can be paid.

Why Does the Limitation of Liability Act Exist?

The original purpose of the Limitation of Liability Act was to shield ship owners from bankruptcy. The statute was created during a moment in history when the marine and shipping sectors were far more dangerous than they are now. Legislators feared that lawsuits from injured crew or unhappy merchants would cripple the American shipbuilding and shipping industries as ships encountered calamities like unexpected weather, pirates, invasions by foreign governments, fatal illnesses, and other major perils at sea.

The Limitation of Liability Act was developed in order to lessen the significant risks that shippers and ship owners faced on each journey. A shipowner would be entitled to limit their entire financial obligation under the Limitation of Liability Act to the ship’s value. The merchant who owned the cargo would only be permitted to sue the ship owner up to the whole value of the ship if, for example, the crew had to discharge cargo during a storm in order to rescue themselves. Bear in mind that a ship’s owner in 1851 had no means of getting in touch with his boat or captain, thus anything that occurred at sea was ultimately not his fault. It safeguarded shippers, improved the profitability and reduced the danger of foreign trade, and ultimately aided America’s development.

But in recent years, the law has been applied in a way that its creators never would have imagined: safeguarding big businesses from being held responsible for their wrongdoing. You see, the maritime environment in America in 1851 lacked the resources it does now. They lacked the technology that we use to forecast the weather. They lacked satellite GPS, whereas we do. They lacked the long-distance communication technology that allows ship owners to stay in constant contact with their ships, whereas we do. With all of those resources in place, the only maritime tragedies that occur are those brought on by the owner’s willful misconduct or bad safety procedures.

Yet, because the Limitation of Liability Act is still in effect, businesses with the technology of the twenty-first century can shield themselves from financial accountability by utilizing a regulation created more than 150 years ago for tiny shipowners.

Modern Uses of the Limitation of Liability Act of 1851

Despite a history of engine failure TOTE maritime’s ship El Faro steamed directly into a hurricane in October 2015. The outcome was that the ship sank, killing the 33 crew members. Investigators questioned whether TOTE had coerced the captain into taking the faster, more hazardous route after listening to recorded communications between the captain and TOTE Maritime that showed the captain had wished to go around the storm on a slower route. Other records revealed that TOTE’s ships had a history of unexpected power outages, and the El Faro in particular had 23 U.S. Coast Guard-reported deficiencies. The El Faro is thought to have lost power during the hurricane, which ultimately led to the ship’s demise.

The Limitation of Liability Act of 1851 was used by TOTE Maritime as soon as it was learned that the El Faro had vanished. They basically said they weren’t going to try to make things right with the spouses and kids they had hurt by their irresponsibility by filing for protection under limited liability. Also, they used it to make every mourning family member forfeit their right to file a lawsuit by either bringing it to court right away or not at all.

The History of the Jones Act

They filed an insurance claim with their insurer for the ship even though TOTE was adamant that it was only worth a tiny sum (thus reducing each family’s total potential compensation to a pittance). They effectively intended to make money off the destruction of their own vessel and the loss of 33 lives since the value they claimed in their own insurance application was higher than the value they claimed under the Limitation of Liability Act. The value of each person’s life exceeded the value of their vessel, but it made no difference. Today’s Limitation of Liability Act does the same thing by equating a person’s life to a tiny portion of the worth of a sinking ship.

Truth Aquatics, The Limitation of Liability Act & the 2019 California Boat Fire

After a California diving boat fire left many dead in September 2019, Truth Aquatics sued their own surviving crew and the relatives of 34 deceased in what is likely one of the most severe abuses of the Limitation of Liability Act. Early on Labor Day morning, The Conception, a dive boat, caught fire while on a trip off the Santa Cruz Island shore. 34 individuals were sleeping below deck when the fire prevented the captain and four crew members from reaching them. The Coast Guard asked the crew if there were fire extinguishers on board in a call that was recorded between them, but there is no audible response. The following day, the corpses of 25 passengers were discovered, and the nine remaining passengers were assumed dead.

Only 4 days after the sad loss of 34 lives and the injuries of 2 crew members, Truth Aquatics Inc. filed the limited liability claim, forcing scores of bereaved people to employ attorneys when they should have been grieving.

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