MV Dali Ship Owner Utilizes Titanic Law To Limit Liability In Baltimore Bridge Collapse

The owner of the cargo ship that hit the Baltimore Bridge may encounter millions of dollars in damage claims after the casualty sent vehicles plunging into the water and led the eastern transportation network of the US into chaos.

However, legal specialists believe there is a way to lessen the liability of a 19th-century law that was once invoked by the Titanic’s owner, limiting the payout for the catastrophic 1912 sinking.

The centre of the legal fallout will have the Singapore-based firm Grace Ocean, owner of the MV Dali ship that crashed into the Francis Scott Key Bridge at the beginning of a journey chartered by the shipping major Maersk.

The firm could encounter a set of lawsuits from considerable directions, including from the owner of the bridge and the families of six employees who were understood to be dead following an elaborate search in the Patapsco River.

Damage claims are likely to fall on the vessel owner and not the agency that operates the bridge, as stationary objects are not generally at fault if a moving vessel hits those, explained Michael Sturley, a maritime law specialist associated with the University of Texas at Austin’s School of Law.

However, an 1851 law could reduce the exposure to millions of dollars by capping the vessel owner’s liability at the vessel’s value following the crash and the earnings it received from transporting the freight on the ship, said Martin Davies, director of Tulane University’s Maritime Law Center.

This law was passed originally to prevent shipping majors from encountering steep and unconquerable losses from tragedies at sea. While still hefty, Davies communicated that an eight-figure amount would be less than the claims total.

Davies noted that this is a highly extraordinary casualty in one respect, mainly due to the footage of the entire bridge collapsing. But it is not unusual in several ways, as ships collide, and there is always damage and injuries.

Lawrence B. Brennan, an adjunct professor teaching law at NY’s Fordham University School of Law and a specialist on admiralty as well as maritime law, said that he would assume that Dali’s operator would start a proceeding shortly in the US following the 1851 law, which was also cited by the Titanic’s owner in a Supreme Court case over a century ago.

The vessel owner’s insurance can help the firm navigate the legal risks.

Nearly 90% of the world’s ocean-bound cargo is insured by one arm of the International Group of Protection and Indemnity Clubs, which supervises 12 large mutual insurance associations for vessel owners.

A key to assessing insurance claims will be demonstrating whether this accident happened due to negligence, if so, by whom, or if it was a sheer mechanical failure, per Bloomberg Intelligence.

The Britannia Protection and Indemnity Club is known to have insured the vessel.

Bloomberg Intelligence analysts Charles Graham and Matthew Palazola said that it gives the policies related to Dali an insured limit of almost $3 billion, a sizable amount but one that would be manageable for the international reinsurance market.

Britannia P&I said collaboration and discussions are being held with the ship’s manager and other relevant authorities. They are trying to establish the facts and ensure that the situation is handled promptly and professionally.

Bloomberg Intelligence further reported that Maersk might not be liable because the Danish firm had no crew members on board and the vessel was operated by a charter firm.

Maritime insurance is likely to cover a part of the cost, yet apprehension around the total liabilities and who will pay for them will weigh on Maersk’s spreads soon, explained Stephane Kovatchev, a credit analyst associated with Bloomberg Intelligence.

Insurance claims for damages to the bridge can reach $1.2 billion. In contrast, the claims about wrongful deaths and trade interruption, in which a business pleads economic losses due to an accident, will range from approximately $350 million to $700 million per estimates shared by Barclays Plc analysts.

The amount that has been claimed in cases of wrongful death is typically tied to a victim’s age and earning potential. The families of the bridge staff, now understood to be dead, can advance claims of workers’ compensation against the employer via insurance, mentioned Charles Gilman, a personal injury lawyer based in Maryland.

Gilman said that one can expect to come across all kinds of lawsuits from all angles against each defendant that can perhaps be named. He added that the suits are expected to be filed soon, and the list of defendants will narrow as more information arises regarding who could be liable and who is less probable.

Business interruption cases generally fail owing to a law that primarily limits the award of monetary impairment to those injured, explained Sturley, the UT Austin professor.

While the federal courts have jurisdiction over maritime conflicts, any victims of the bridge strike can seek damage following a clause of the US Constitution that permits those who have been injured in accidents while at sea or have property claims to pursue lawsuits at the state court, mentioned Charles A. Patrizia, who leads an American Bar Association committee focused on marine law.

The cargo ship’s owner might want to get it out of the US. Still, Maryland’s Transportation Authority will likely seek to keep it in “arrest” as it pursues the claims—and possibly until all the damages are successfully resolved, according to Brennan, the Fordham professor.

The ship will not be going anywhere for a while, he said.

Reference: Insurance Journal

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Source: Maritime Shipping News