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The insurance side will be fascinating and determination of liability. The laws are also pretty unique.
Titanic Law Helps Ship Owner Limit Bridge Collapse Liability (2)
2024-03-27 12:17:51.343 GMT
By Ethan M Steinberg, Chris Dolmetsch and Matthew Griffin
(Bloomberg) -- The owner of the ship that rammed into a
Baltimore bridge could face hundreds of millions of dollars in
damage claims after the accident sent vehicles plunging into the
water and threw the eastern US transportation network into
chaos.
But legal experts said there is a path for reducing
liability under an obscure 19th-century law once invoked by the
owner of the Titanic to limit its payout for the 1912 sinking.
At the center of the legal fallout will be Singapore-based
Grace Ocean, owner of the container ship Dali that crashed
Tuesday into the Francis Scott Key Bridge at the start of a
voyage chartered by the shipping giant Maersk.
Stationary Objects
The company could face a bevy of lawsuits from multiple
directions, including from the bridge’s owner and the families
of six workers who were presumed dead after a search in the
Patapsco River.
Damages claims are likely to fall on the ship owner and not
the agency that operates the bridge, since stationary objects
aren’t typically at fault if a moving vessel hits them, said
Michael Sturley, a maritime law expert at the University of
Texas at Austin’s School of Law.
But an 1851 law could lower the exposure to tens of
millions of dollars by capping the ship owner’s liability at how
much the vessel is worth after the crash, plus any earnings it
collected from carrying the freight on board, said Martin
Davies, the director of Tulane University’s Maritime Law Center.
The law was passed initially to prevent shipping giants
from suffering steep and insurmountable losses from disasters at
sea. An eight-figure sum, while still hefty, would amount to
“considerably less” than the full claims total, Davies said.
‘Very Unusual’
“It’s a very unusual casualty in one respect, particularly
because of this footage of the whole bridge falling down,”
Davies said. “But in many ways, it’s not unusual, because ships
collide and there’s damage and there’s injury all the time.”
Lawrence B. Brennan, an adjunct professor of law at Fordham
University School of Law in New York and an expert on admiralty
and maritime law, said he assumes the Dali’s operator will
shortly begin a proceeding in the US under the 1851 law, which
was cited by the Titanic’s owner in a Supreme Court case more
than a century ago.
The ship owner’s insurance would help the company through
the legal risks. About 90% of the world’s ocean-bound cargo is
insured by an arm of the International Group of Protection and
Indemnity Clubs, which oversees the 12 major mutual insurance
associations for ship owners.
A key to determining any insurance claims will be proving
whether the accident was caused by negligence, and if so by
whom, or mechanical failure, according to Bloomberg
Intelligence. The ship is insured by the Britannia Protection
and Indemnity Club, which is a mutual insurance association
that’s owned by shipping companies. It’s one of the dozen clubs
that make up the International Group of P&I Clubs.
That gives the policies related to the Dali a total insured
limit of about $3 billion, a sizable sum but one that “would be
very manageable for the global reinsurance market,” Bloomberg
Intelligence analysts Matthew Palazola and Charles Graham said
in a note.
“We are working closely with the ship manager and relevant
authorities to establish the facts and to help ensure that this
situation is dealt with quickly and professionally,” Britannia P&I
said.
Bloomberg Intelligence also said Maersk may not be liable
as the Danish company had no crew on board and the ship was
operated by a charter company.
“Maritime insurance will likely cover some of the costs,
yet uncertainty around the total liabilities and who will pay
for them will likely weigh on Maersk’s spreads in the near
term,” said Stephane Kovatchev, a credit analyst with Bloomberg
Intelligence.
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