Limitation of liability in the El Faro sinking


On Oct. 30, vessel interests filed for exoneration from or limitation of liability. This means that they seek to put a cap on payments made to claimants suing them in the aftermath of the loss. This cap is computed from the post-accident value of the vessel and freights pending.

A complaint was filed in U.S. District Court in Florida to establish a figure of $15.3 million as a monetary cap on these lawsuits. The Limitation of Shipowners’ Liability Act of 1851 covers limitation actions under U.S. maritime law. This 19th century law originated at a time when the nation’s mercantile fleet was in its infancy and needed protection to encourage the growth of commerce. The intent was to give a break to shipping companies that didn’t have a great deal of control over the operation of their square-rigged cargo ships located 10,000 miles away on the other side of the globe.

If ship owners could demonstrate that they didn’t have knowledge and participation in the factors that caused a collision, sinking, grounding, or other type of maritime loss, they could limit their liability to the post-accident value of a vessel plus freights pending.

Since its enactment, the law has been applied in a number of high-profile cases. It was invoked after the Titanic sank in 1912, where the liner’s owner succeeded in limiting liability to about $92,000, the value of a string of lifeboats that survived the disaster.

More recently, the City of New York attempted to limit its liability to about $14.4 million after the 2003 Staten Island Ferry accident where 11 people died and over 60 were injured. That figure represented the post-casualty value of the ferry Andrew J. Barberi. However, the city was hurt by the National Transportation Safety Board’s determination that the accident resulted from poor oversight and failure to utilize effective safety measures.

Establishing whether an owner had control over the events surrounding a vessel’s loss can require thorough examination of physical evidence, company practices, voyage logs, employee testimony, and other relevant information.


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