Quirk in US maritime law may be key to liability in Baltimore bridge disaster

Quirk in US maritime law may be key to liability in Baltimore bridge disaster

The investigation continues to determine why a container ship, the Dali, smashed into a pillar of the 2.6 km span of Baltimore’s Francis Scott Key bridge in early morning darkness on Tuesday, causing it to collapse and leaving six construction workers presumed dead.

However, establishing the precise cause of the accident will be just the first step in untangling the question of who will shoulder the financial cost of the disaster, which will be considerable.

John Neal, chief executive of the leading global insurer Lloyds of London, told British media on Thursday that the accident is “certainly going to be one of the largest marine losses in history”.

Mathilde Jakobsen, senior director of analytics at the credit rating agency AM Best, agreed, noting that “while the total cost of the bridge collapse and associated claims will not be clear for some time, it is likely to run into the billions of dollars”.

The tragedy could lead to up to $4 billion in insurance claims, Morningstar DBRS said.

Reinsurers – insurers that handle risks that are too large for insurance companies to handle alone – “will bear the bulk of the insured cost of the collapse of the Francis Scott Key Bridge in Baltimore”, according to Jakobsen.

The Dali’s insurer, Britannia P&I Club, is part of a global group of mutual insurance organisations that pool liability for the shipping industry.

Known as protection and indemnity (P&I) clubs, they provide “liability cover for most shipping vessels” and “collectively insure approximately 90% of the world’s ocean-going tonnage”, notes Jakobsen.

Insurance claims from the bridge collapse will take a long time to determine and involve the families of those who died, the injured, those suffering damage to property, cargo and the cost of the indefinite closure of the Port of Baltimore, one of the busiest on the US eastern seaboard.

Maritime law from the 19th century

But according to the maritime lawyer John Fulweiler, the Dali’s owners, Singapore-based Grace Ocean Private, will certainly try to limit their liability from lawsuits by using a 19th century US maritime law that he calls “a powerful tool that favours vessel owners”.

The law was originally meant to prevent shipping companies from having to pay overwhelming losses from accidents at sea.

The ship’s owners, Fulweiler told FRANCE by email, can petition federal court under the Limitation of Liability Act of 1851, and bring all potential claims against them “into a single courtroom before a single federal judge”.

“When the Act is triggered, the court issues an order halting all claims that might be pending in other forums,” notes Fulweiler.

“It’s an old piece of legislation” that produces “a lot of injustices,” says Fulweiler, by capping the ship owner’s liability to a sum equal to the “post-incident value of the vessel” and the earnings it collected from carrying the freight on board.

The wreckage wrought by the Dali is estimated to far exceed its current value.

According to Fulweiler, “the murky waters of the marine world give amplified lobbying power to those representing marine insurers and vessel owners”.

(FRANCE 24 with Reuters)