A massive container ship crashed into Baltimore’s Francis Scott Key Bridge a week ago, destroying the bridge and killing six people. As the cleanup operation begins, attention is turning to who will pay to fix the destruction caused by the container ship. Now, the company that owns the vessel is preparing to invoke an ancient maritime law to try and limit the damages it’s ordered to pay.
Grace Ocean Private Limited, the company that owns the enormous Dali container ship, has reportedly filed an action in federal court using the Limitation of Liability Act, reports news outlet the Lever. According to the site, the law dates back to 1851 and caps the damages a ship’s owner should pay following a disaster.
The law caps the amount of damages a shipping company must pay in relation to the weight of the vessel or the value of its cargo. It was famously used by the White Star Line, owner of the Titanic, which agreed to pay just $430 per life lost when the great ship sank in 1912 (equivalent to about $13,616 in today’s dollars.)
For Grace Ocean Private Limited, this could cap its payments at around $43 million, which equates to the remaining value of the ship and its cargo. That figure may sound like a lot, but experts estimate that the cost of repairing the bridge could spiral to “hundreds of millions of dollars.” As the Lever explains:
For decades, advocates have called to reform the Limitation of Liability Act, arguing that the law is outdated and shields powerful companies from facing accountability for devastating accidents, therefore robbing maritime victims of the damages that people hurt in land accidents can typically fight to receive.
Those calls were renewed after the company behind the deadly 2010 Deepwater Horizon oil spill tried to use the Limitation of Liability Act to severely limit the damages they were forced to pay. In response, lawmakers in Congress introduced a bill that would have ended the use of the law to limit damages in the case of serious injury or death and strengthened laws used to hold oil companies accountable.
These reforms were, however, killed in Congress as a result of extensive lobbying by Big Oil and shipping companies like Maersk, the Dutch firm that chartered the ship that hit the Baltimore bridge. In 2010, Maersk reported lobbying on “vessel liability legislation,” reports the Lever.
In its current form, the law limits the amount of compensation a shipping company must pay following a disaster like a collision. The amount the company pays is related to the size of the vessel, with the limit currently sitting around $420 per gross ton.
Now, because shipping companies have easy access to maritime insurance that would cover disasters like this one, opponents argue that the law and its cap on damages is “outdated and shields powerful companies,” argues the Lever.
Thankfully, it sounds like change could be coming to the Limitation of Liability Act. In 2022, amendments were unveiled that excluded disasters involving much smaller ships from protection under the act, and there have been renewed calls for reform in recent years.
However, huge cargo ships such as the one that caused last week’s collision remain covered by this 173 year old law.