Unlike limitation in aviation, there is no notice given to those whose rights are limited: Airline tickets on flights subject to the limitation of liability under the Montreal Convention at least contain a written warning to the passenger, and stand-alone trip insurance is available in airport corridors, so that passengers can fill the gap. No such warning is required to be given to persons who are subject to limitation as to a marine casualty, even though the Limitation Act is likely to harm them even more than the Montreal Convention would. Indeed, even owners of cargo, who are subject to an additional form of limitation of liability under a different statute—the Carriage of Goods by Sea Act—are at least afforded the opportunity to “opt out” of the COGSA limitation. Maritime limitation sweeps too broadly: Even if the Limitation Act were amended to oblige carriers to warn their passengers of how the Act limits their rights (in parallel to the Montreal Convention), this would still be of no help to those who are harmed despite being strangers to the vessel, such as those who are harmed in incidents akin to the Sunshine Skyway Bridge disaster. The availability of modern insurance makes the Limitation Act obsolete: The nearly universal availability of marine liability insurance (known as Protection & Indemnity coverage, or “P&I”) is a major facet of today’s marine industry. Even though their policies afford them the benefit of the Limitation Act, the P&I insurers who underwrite the liability policies cannot be sure that the benefit will be available to them. After all, they must account for the risk that the incident in question will be ruled to have occurred with the “privity or knowledge” of the owner, and that limitation will thus be denied, and thus that their entire policy limits will be at risk. The risk that limitation might be denied must be taken into account in setting the P&I premiums for marine insurance policies. The additional premium (assuming that limitation was never available) cannot be of an amount that would be ruinous to ship operators. Moreover, near-universal involvement of marine insurance points to yet another unfairness of limitation. The subsidy that comes at the expense of ordinary citizens (by limiting their recovery) works mainly to the benefit of the P&I insurers—at the end of the day it is their checkbooks that are protected by the Limitation Act. Any subsidy to the US fleet should come through the “front door”: As stated above, the Limitation Act serves as a subsidy for shipowners (and their insurers), one that comes at the expense of ordinary citizens who have the bad luck to be harmed by a maritime disaster. This is profoundly unfair. The history of the Price-Anderson Act shows that the federal government is capable of “pick36
ing up the tab” when it uses a limitation-of-liability provision to subsidize an industry that it deems worthy of such protection. Since any such limitation of liability is under the control of the government, government itself should do what it takes so that ordinary citizens are not harmed by the limitation, as the current version of the Price-Anderson Act does. Indeed, as noted above, the federal government certainly knows how to enact other financial subsidies (direct or indirect) in favor of the maritime industry in the United States. To be sure, these come at the expense of the federal treasury (and eventually the taxpayers), and will therefore be subject to vigorous debate. But a subsidy in the form of limitation of liability should not escape public scrutiny or debate by “flying under the radar” of public attention—by the artifice of funding the subsidy at the expense of ordinary citizens, as the Limitation Act currently does. The bottom line is that the Limitation Act should be repealed. If Congress wants to subsidize the US-flag merchant fleet, let it do so by way of the “front door,” namely, an overt subsidy funded by the federal treasury. If Congress chooses to subsidize the industry by means of a new or different limitation of liability provision for the fleet, let it do so in the sunlight—with a provision that pays the ordinary citizens from the federal treasury for any shortfall in recovery from shipowners caused by the new limitation. There is simply no excuse to subsidize any industry at the expense of people who’ve been harmed by that industry.
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airlines and trucking companies, providing coverage for the acts of all their employees. There is no basis for the idea that the maritime industry—as compared to trucking or aviation—deserves unique protection from liability for the actions of its employees.
MV Conception on the morning after the fire Michael J. Rauworth is a maritime attorney based in Boston who maintains a Coast Guard license as Master, Sail, Steam, and Motor Vessels of any gross tons, based on more than 200,000 nautical miles as a deck officer and master of commercial and military vessels. In nearly 30 years of service with the USCG and Coast Guard Reserve, he rose to the rank of captain and served in command of one US Navy unit and five Coast Guard units. His clients include pilot organizations, ship owners, port authorities, marine insurers, shipyards, marinas, and other maritime businesses and individuals, and he taught marine insurance at Massachusetts Maritime Academy for many years. Mike is well known in the traditional sailing ship community as the board chair of Tall Ships America, a post from which he recently stepped down after almost 20 years of service. His past articles in Sea History seek to explain maritime law with respect to the Jones Act, the Law of General Average, and this article on the Limitation of Liability. He is the winner of the 2018 Rodney Houghton Award for the Best Feature Article in Sea History. SEA HISTORY 179, SUMMER 2022
