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US maritime law could limit liability for Dali crash

Legal experts have said that the owner, operator and charterer of the Dali were likely to face lawsuits over its collapse and the people killed or injured, although US maritime law could limit the companies’ liability.

US laws pertaining to open-water navigation and shipping could restrict the types of lawsuits filed against the registered owner of the Singapore-flagged ship, Grace Ocean Pte, its manager Synergy Marine Group, and its time charterer Maersk, could limit the damages they would have to pay, three legal experts told Reuters.

The relevant laws are subject both to statute and precedent.

The economic damages suffered by the city of Baltimore from the closure of the port, the busiest port for car shipments in the US, or by businesses that rely on it and the now-collapsed bridge would not be recoverable through lawsuits, according to Martin Davies, director of the Maritime Law Centre at Tulane University School of Law. He said this was because US courts have interpreted a 1927 US Supreme Court ruling to mean that any purely economic damages from maritime incidents can’t be recovered from the ship’s owners and operators, Davies and other experts said.

Instead, lawsuits would be limited to injuries, death and property damage or losses, such as claims from the people harmed by the collapse or claims over the damage to the bridge itself, likely brought by government entities.

The lawsuits will probably be filed in federal court, the experts said. The plaintiffs might also ask a federal judge to “arrest” the ship, and prevent it from leaving the jurisdiction while the litigation plays out. Those with economic damages might be able to get compensation from insurance policies. Insurers could face billions of dollars in claims, analysts said, with one putting the cost at as much as $4bn, which would make the tragedy a record shipping insurance loss.

Under maritime law, a victim can sue the ship itself (in rems), and have it sold to satisfy their judgment, according to Robert Anderson, a professor at the University of Arkansas School of Law. However, a somewhat infamous 1851 law limits the shipowners’ liability to the present value of the ship. Anderson and Baltimore maritime plaintiffs’ attorney Charles Simmons Jr told Reuters that this could be “in tens of millions of dollars”. Given that the Dali was not that old and not that small, that could be an underestimate.

Davies and Simmons said they expected the shipowners to petition a federal court for that limitation of liability (it being almost a petition that is filed in every such case). Anderson said that the shipowners would probably rely on liability insurance to pay any damages.

If evidence showed that the shipowners were somehow at fault for the crash, they could lose the ability to limit their liability, the experts said. However, for the moment, there does not seem to be any indication that the shipowners had done anything that would see them placed “at fault” for the accident.

Simmons noted that questions had arisen about the Dali’s condition when it hit the pylon and problems identified during previous inspections. He said that these could come into play as a court evaluates whether to limit the damages. “If there was any indication that the ship had pre-existing issues, these guys are not going to get out on a limitation of liability,” he claimed.

That argument might be disputed, in that the most recent inspection of the vessel had found the previously detected issue to have been fixed. An argument that a past fault would eliminate liability limitation, even if the owner had fixed the fault and the ship had subsequently passed an inspection, would extend the potential elimination of liability limitation to a far greater range of ships.

There is also an unusual feature in this case. Any lawsuits filed on behalf of people injured or killed in the collapse will not be subjected to a Maryland law that caps non-economic damages in wrongful death cases to about $1.4m, because it isn’t recognized by maritime law, claimed Simmons.