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Limitation of Liability in Maritime Law

Within the contents of United States Maritime Law, the Limitation of Liability Act of 1851 states that the owner of a vessel may limit damage claims to the value of the vessel at the end of the voyage plus “pending freight” as long as the owner can prove it lacked knowledge of the problem beforehand. The Limitation Act was originally enacted in 1851 by Congress to promote the development of the American merchant marine and to put American shipowners on a footing equal to shipowners hailing from other commercial seafaring nations. The Limitation Act applies to all seagoing and non-seagoing vessels used to navigate the ocean as well as inland lakes and rivers. These vessels now include canal boats, barges, and lighters in addition to the larger cargo ships and other types of ships used on the high seas.

Recently, in 2005, the U.S. Supreme Court expanded the meaning of “vessel” to include— for purposes of the Limitation Act—pleasure crafts, jets skis, and houseboats.

In plain English, a victim of an injury or illness cannot sue for more than the post-accident value of the vessel on which they served, not including the “pending freight” which had yet to be offloaded (this can add significant value to a ship). 

This Act was the subject of a 2001 United States Supreme Court case in Lewis v. Lewis & Clark Marine, Inc.

Historically the statute has been invoked to limit the total liability of certain parties. For example, in the sinking of the RMS Titanic and the Deepwater Horizon oil spill; you can imagine in those cases the post-accident value of the ships were reduced to little or nothing more than salvage value. 

This means that should a ship sustain tremendous damage during a voyage and it is, for all intents and purposes, declared unseaworthy and a total financial loss, there is very little that the average seaman can do to claim consequential damages as relating to their injuries or illnesses. The limitation of liability clauses creates an enforceable limitation on the amount paid off by the ship’s owner. However, this is not set in stone. There are exceptions to the Limitation of Liability Act, which may allow a seaman to collect damages greater than would otherwise be allowed. 

For example, a vessel owner cannot file a limitation suit simply because a claim for personal injuries or wrongful death has been filed against him or her. There are at least two kinds of personal injury claims that are barred from doing so: wages owed to seamen, and maintenance and cure benefits for an injured seaman.

Further, the Limitation of Liability Act addresses the owners of the vessels; therefore, only seamen and a select few other maritime workers who are injured during the course of their employment while on a water vessel are subject to the limitations that this kind of lawsuit provides for vessel owners. All other maritime injury and wrongful death claims that arise out of accidents not on a water vessel but within the maritime industry are not impacted by the limitations this act imposes on personal injury claims.

Only owners of vessels can file these claims; owners include:

  • Persons with legal title to the vessel
  • President and sole shareholder of the vessel owning company
  • The United States as owner pro hac vice of Coast Guard auxiliary boats, which become “public vessels” when assigned to government service
  • Owners of the vessel at the time of the casualty but who sold the vessel by the time of litigation
  • Charterers who”…navigate such vessel at his own expense, or by his own procurement shall be deemed the owner of such vessel”.
  • Those who do not qualify to make a claim under the Limitation Act include those, like vessel managers, who do not exercise sufficient control over the vessel to be considered an owner pro hac vice.

If your attorney is not intimately familiar with this act and prepared to respond appropriately to it, you are unlikely to receive a just and reasonable compensation under the law for your injury. If you have been injured during your employment in the maritime industry contact Friedman, James & Buchsbaum LLP. Our extensive knowledge of the law and our ability to apply it to your case means that that progress toward our own personal injury claim is minimally affected should the defendant file a Limitation of Liability claim.