President Joe Biden said the federal government should pay for the reconstruction of Baltimore’s Francis Scott Key Bridge, but any effort to recover some — or all — of the money from the company that owns the ship that carried the brought down the bridge could result in a lengthy legal battle. .
The Limitation of Liability Act of 1851, according to a law professor who spoke Fortunecould provide some protection for Singapore-based Grace Ocean, owner of the Dali, which crashed into the bridge around 1:30 a.m. ET on Tuesday, causing it to collapse in just seconds.
“I expect the shipowner will initiate proceedings in a federal U.S. district court in Maryland, under the Limitation of Liability Act of 1851, to limit its liability to the value of the ship after the accident,” said Lawrence Brennan, professor Admiralty. and International Maritime Law at Fordham.
If Grace Ocean pursues such protections, Brennan explained, the company would have to file a petition in federal court and post a bond equivalent to the company’s valuation of the ship. If the judge approves the petition, the owners of the Dali will only have to pay an amount equal to the value of the ship – calculated after the crash. Such an amount would be billions less than the actual damage.
“The statute is ancient,” Brennan continued. “It was designed for sailing ships, not steel ships. So there are a lot of problems, but there is a long history [of cases] and it is still valid law in the United States.”
That said, Brennan also believes the company will most likely seek a preliminary settlement, although Grace Ocean may face additional liabilities under federal admiralty and environmental laws related to other damage and pollution cleanup at the port. (Grace Ocean could not immediately be reached for comment.)
While most companies seek settlements in such cases, perhaps the most famous maritime catastrophe came before the courts: After the sinking of the Titanic in 1912, Oceanic Steam Navigator, the ship’s owner, sought the protection of the 1851 Act. Although the courts noted that the UK regulations were different from those of the US, the Second Circuit of the Courts of Appeals granted the protection.
Whatever legal proceedings unfold, the discovery will be especially important because this was not the first major incident involving the Dali, which crashed in the port of Antwerp in Belgium in 2016.
In addition, because Tuesday’s crash occurred after the ship lost power, there will be increased scrutiny following a June 2023 inspection by Tokyo MoU while the ship was docked in San Antonio, Chile, where deficiencies in the “propulsion and auxiliary machinery” were discovered . However, a routine investigation by the Coast Guard in September did not mention these deficiencies.
In previous incidents involving huge ships, the so-called General Average has been applied (that any losses are shared among all stakeholders, such as shippers, freight forwarders, etc.). Brennan said such a scenario is unlikely to occur with the Dali due to the ship’s apparent mechanical problems, meaning the freight carriers could push stronger claims.
“The shipowner has a duty to conduct due diligence to ensure the seaworthiness of the vessel,” Brennan added. “If they don’t, they won’t recover.”