Editors Note: Congress has proposed changes to the Limitation Act in response to the defenses raised by Owner of the Conception. Read more HERE.

On April 15, 1912, when the RMS Titanic sank, over 1500 souls were lost in the cold waters of the Atlantic. Many lives were ruined that night, and rightfully so, the survivors and the families of the deceased filed suit against Titanic's owner, White Star Line. There were two lawusits filed, one in the United Kigdom, the other in the United States. However, in the United States litigation, White Star Line was able to limit their liability to what was left of the great ship, some lifeboats and pending freight charges. That did not leave much to the claimants. More recently, a similar casaulty occured of the coast of California, the loss of the M/V Conception, where 35 souls were lost in a fire. Again, the owner is requesting that its liability be limited to what is left of the vessel.

One of the most unusual aspects of admiralty law is that under certain circumstances shipowners and other eligible persons may limit their liability in the event of a casualty involving their vessel to the post casualty value of the vessel and pending freight (money already earned by the vessel). This is known as the Limitation of Liability Act, currently codified as 46 U.S.C. §§ 30501-30512. Further, Demise/Bareboat charterers are allowed to claim limitation, while time charterers are not. Finally, if people were injured or killed in the casualty, a commercial owner will also be required to constitute a personal injury fund equal to $420 per ton, for payment to the personal injury claimants.

To be successful, the person seeking to limit their liability must show that they neither had privity nor knowledge of a/the circumstance causing the casualty and file within a limtied time. For example, if two container ships collided, the and the owners were not aboard or in control, the owners would likely assert their right to limit liability. If the vessel is on the ocean floor, its value could well amount to $0. In other words, in a serious case, like that of the Titanic or Conception, this may save vessel owners a great deal of money.

With regard to recreational vessels, all recreational vessel owners may petition the court to limit their liability and they will never be forced to establish a personal injury fund. This includes personal watercraft, which represent a large number of accidents on US waterways. The availability of such a remedy can be a great boon to small vessel owners. To injured persons, however, it can seem to work great injustice.

Due to the implications of the Limitation Act and its effects, Courts generally frown upon limiation actions, and seek any excuse to break it. Since this protection is limited to the marine industry, only maritime counsel would be aware of all the steps necessary to effectuate a proper defense or to break limitation. There are pros and cons of filling for limitation, as well as possible defenses to a filed limitation action. For this reason, if you are a boat owner and you think that there may be a claim made against you, a vessel you own, or a vessel that you chartered, do not wait until you are sued before seeking the advice of counsel.

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