Sea History 179 - Summer 2022

Page 36

photo by dick bell, tampa bay times, 1980

The insurer of the owners will be the principal beneficiary of the ruling. This is because most applicable marine insurance policies are claused so as to limit the liability of the insurer to the extent of the liability of the shipowner pursuant to limitation. Thus, it could be that the insurer may be called to reimburse the shipowners for the approximately $41,000 of the presumptive limitation fund, and no more. This would amount to the shipowner and its insurer dodging a bullet: avoiding nearly all liability for the financial losses to the estates of the 34 people who died in the fire and to those who survived with injuries. Most employers are legally fully responsible for harm caused by their employees, and they have to buy insurance that covers that liability. The original 1851 theory of the Limitation Act was that shipowners—because ships are often “out of reach”—have little ability to oversee or control the actions of the masters and crews of their ships (as distinct from shoreside employers), and therefore should not have to bear the full legal liability for their actions, unless those actions were known to or controllable by the owners—in other words, were within the owners’ “privity or knowledge.” But this statutory protection amounts to a subsidy in favor of the shipowner (and their insurers). Not a subsidy in the form of a direct payment but a subsidy in the form of relief from some sorts of liability, it’s typically assumed that such shelter from liability translates into lower insurance premiums for the subsidized industry. Subsidies are creatures of the political process, of course, and there’s typically a lively discussion about the wisdom of any given subsidy. But putting to one side the basic wisdom of the 1851 subsidy, a significant question that follows is: at whose expense does the subsidy come? In the case of the Limitation Act, the answer is: at the expense of those who suffer from the acts of the shipowner—namely the individual(s) who suffer personal injury or property damage—mostly the “ordinary citizens,” in other words. This is the underlying reason for most of the criticism of the Limitation Act. So, let’s take a moment to compare the Limitation Act to some of the similar2 protections3 that exist in some other industries. In aviation, for example, the Montreal Convention limits claims by passengers on international flights to something less than USD $200,000 per person. (Smaller limits apply to losses of property, etc.). The Convention requires notice to passengers of the limits that apply, and contemplates that travelers have access to one-time flight insurance, of the kind offered by kiosks or machines in airport corridors and lobbies. It has no application on purely domestic flights (e.g. Chicago to New York) or on flights involving nations that are not signatories to the Convention (e.g., Vietnam). In addition, it has the effect that airlines are barred from asserting certain defenses to liability. This largely means that

During a storm on 9 May 1980, the freighter Summit Venture struck a major support of the southbound lane of the Sunshine Skyway Bridge. The main span toppled into Tampa Bay. Automobiles and a Greyhound bus plummeted into the bay 150 feet below; 35 people lost their lives. airlines are automatically liable in crashes. (This is seen as something of a compensation for the opportunity to limit the amount of their liability.) Individual employees (e.g. pilots, mechanics) are also protected. The convention does not, however, protect those who do not operate air service, but who may nevertheless be sued (e.g., the Boeings and Airbuses of the world). And as with the seagoing Limitation of Liability Act, the subsidy comes at the expense of ordinary citizens, namely the passengers who are harmed but nevertheless denied (or limited in) their injury or death recovery. A significant difference is that only passengers are so limited in the aviation scenario (pursuant to a written warning printed on their ticket), while in the maritime scenario the limitation applies to all those who are harmed, even those who are strangers to the vessel or the voyage. For example, take the case of the 1980 allision of the bulker Summit Venture with the Sunshine Skyway Bridge, across the mouth of Tampa Bay. No one was killed aboard the ship, but more than 30 people driving across the bridge fell to their deaths. They certainly had no warning of any looming limitation of liability, nor any opportunity to “make other plans,” much less any opportunity to buy special life insurance in an airport corridor. In the end, limitation was denied in that case, despite the efforts of the owners of the Summit Venture. Had a few facts been different, those owners might have been successful, and all of those deaths would have gone uncompensated (or undercompensated). Just like the Titanic. For a further comparison, we leave the field of transportation and turn to nuclear power generation. In the years following World War II, the federal government faced the problem of encouraging the development of a civilian nuclear power generation

2 This article does not attempt to analyze the 1976 international Convention on Limitation of Liability for Maritime Claims (the “LLMC Convention”). The US is not a signatory to the LLMC Convention, and therefore its vessels get no benefit from it, nor any limitation benefits anywhere outside the US. 3 Limitations of liability occur, of course, with great frequency in contracts, including those that most of us do not bother to read when asked to assent to them online. But at least these are capable of being identified by those who do bother to read them, and the consumer is at liberty to decline to concur, or to decline to do business with the entity that calls for assent to them. Other statutory limitations of liability exist as well, even when no contractual consent is required: one example exists in federal oil spill laws. These are outside the scope of this article.

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SEA HISTORY 179, SUMMER 2022


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