As a result of perils of the sea, natural forces, and human involvement, during over-land transport, storage, loading/unloading, and actual shipment, cargo is subject to damage, loss, and theft. Although not all, the vast majority of cargo claims involve the Carriage of Goods by Sea Act (COGSA), 46 USC §1300, et seq. COGSA was incorporated into U.S. law in 1936 and applies as follows:
[T]o all contracts for carriage of goods by sea to or from ports of the United States in foreign trade. As used in this Act the term “United States” includes its districts, territories, and possessions. . . . The term “foreign trade” means the transportation of goods between the ports of the United States and ports of foreign countries.
46 USC §1312. COGSA defines “contracts for carriage” as
[C]ontracts of carriage covered by a bill of lading or any similar document of title, insofar as such document relates to the carriage of goods by sea, including any bill of lading or any similar document as aforesaid issued under or pursuant to a charter party from the moment at which such bill of lading or similar document of title regulates the relations between a carrier and a holder of the same.
46 USC §1301(b).
Typically, it is a Bill of Lading which constitutes the “contract for carriage.” Bills of Lading also typically contain a “clause paramount” which expressly incorporates COGSA. However, even where such clause is absent, where the parties intend, as is very often the case, to have the Bill of Lading act as the “contract for carriage,” COGSA will apply.
Charter Party Formation/Disputes
A charter party is a maritime contract for the “rental” of a ship. There are three (3) basic forms of charter:
(2) Time Charter – the shipowner retains full possession and control of the vessel and the charterer directs the vessel’s trade for a specified period of time.
(3) Voyage Charter – is similar to a Time Charter, but the charterer has use of the vessel only for a single voyage or a series of pre-determined voyages.
The law governing charter parties, be they bareboat, time, or voyage charters, is federal maritime law. The Ada, 250 Fed. 194 (2nd Cir. 1918).
Limitation of Liability Actions
The Limitation of Liability Act, 46 USC §30501, et seq., enacted in 1851, allows a shipowner, domestic or foreign, to limit its liability following an incident to the “value of the vessel and pending freight” provided that the loss is “occasioned or incurred without the privity or knowledge of the owner.” The “value of the vessel” is the fair market value of the vessel or what remains of the vessel following a casualty; the “pending freight” is the compensation to be paid to the shipowner for the carriage of cargo or other service performed by the vessel. In situations where the claim(s) is/are for personal injury or death as a result of a casualty involving a “seagoing vessel,” the Act provides for an increase of the limitation fund of $420 per gross ton. The amount to which a shipowner can limit its liability is known as the “limitation fund.” If limitation of liability is allowed, the limitation fund will be shared proportionately among all claimants.
It is not uncommon for shipowners to pursue Limitation of Liability Actions following major marine casualties such as a sinking. Most recently, following the tragic loss of EL FARO during Hurricane Joaquin in October 2015, the shipowner filed a Limitation Action in the U.S. District Court for the Middle District of Florida. In addition to the obvious benefit of limiting financial exposure, Limitation Actions afford shipowners the added benefit of concursus, which involves the consolidation of all claims in federal court, traditionally considered more conservative and preferred by institutional defendants. Moreover, as a Limitation Action invokes the court’s “admiralty” jurisdiction, filing of a Limitation Action serves to deny claimants a trial by jury. Ex Parte Green, 286 U.S. 437, 52 S.Ct. 602 (1932).
In contrast to typical litigation, the burden of proof in a Limitation Action is divided among the litigants. Initially, the claimant(s) carries the burden of proving that negligence or unseaworthiness caused the casualty. Thereafter, if the claimant carries his/her burden, in order to succeed in limiting liability, the shipowner has the burden of proving that such negligence or unseaworthiness was not within its “privity or knowledge.” It is the “privity or knowledge” aspect of these actions that is most hotly contested and litigated. An experienced Cruise Line Accident Lawyer/Maritime Accident Lawyer is best positioned to defeat a shipowner’s argument of lack of privity or knowledge.
Very many times shipowners will attempt to limit liability by arguing that the “corporate office” was not involved in events leading up to the casualty. Courts generally hold that “privity or knowledge” involves the shipowner’s participation in, or knowledge of, negligence or unseaworthiness which causes a casualty. M/V Sunshine II v. Beavin, 808 F.2d 762 (11th Cir. 1987). Where the shipowner is a corporation, the company will not be able to deny “privity and knowledge” where the negligence or unseaworthiness causing the casualty was the result of the act or failure to act of an individual sufficiently high on the corporate ladder, such as a corporate officer or manager. Patton-Tully Transportation Co. v. Ratcliff, 797 F.2d 212 (5 th Cir. 1986).
Generally, where a vessel is deemed unseaworthy at commencement of the voyage and the shipowner knew or should have known of the unseaworthy condition, the shipowner will not succeed in limiting its liability. Villers Seafood Co. v. Vest, 813 F.2d 339 (11th Cir. 1987). Conversely, where a casualty is as a result of the master’s negligence, for example, an error in navigation, the shipowner may nonetheless succeed in limiting its liability. Matheny v. Tennessee Valley Authority, 557 F.3d 311 (6th Cir. 2009).
Recreational vessels, even jet skis, are generally considered “vessels” for purposes of the Limitation Act.
Marine Casualty Investigations
U.S. Coast Guard requires the reporting of marine casualties and serious marine incidents. 46 USC §6101; CFR Part 4. A “marine casualty” is defined as “any casualty or accident involving any vessel other than public vessels if such casualty or accident occurs upon navigable waters of the United States or its territories or possessions. . . .” 46 CFR 4.03-1(a). A “serious marine incident” is defined as any accident resulting in “injury to a crewmember, passenger, or other person which requires professional medical treatment beyond first aid, and, in the case of a person employed aboard a vessel in commercial service, which renders the individual unfit to perform routine vessel duties. . . .” 46 CFR 4.03-2.
Reporting of a marine casualty/serious marine incident takes two (2) forms: (1) immediate reporting to the nearest USCG Sector Office, Marine Inspection Office, or Group Office, and (2) written reporting on a USCG Form 2692 within five (5) days of the incident.
Insofar as the immediate reporting, 46 CFR 4.05-1 provides as follows: (a) Immediately after the addressing of resultant safety concerns, the owner, agent, master, operator, or person in charge, shall notify the nearest Sector Office Marine Inspection Office or Coast Guard Group Office whenever a vessel is involved in a marine casualty consisting in –
(2) An intended grounding, or an intended strike of a bridge, that creates a
(3) A loss of main propulsion, primary steering, or any associated
(4) An occurrence materially and adversely affecting the vessel’s bridge; hazard to navigation, the environment, or the safety of a vessel, or that meets any criteria of paragraphs (a) (3) through (8); component or control system that reduces the maneuverability of the vessel; seaworthiness or fitness for service or route, including but not limited to fire, flooding, or failure of or damage to fixed fire-extinguishing systems, life saving equipment, auxiliary power-generating equipment, or bilge pumping systems;
(5) A loss of life;
(6) An injury that requires professional medical treatment (treatment beyond
(7) An occurrence causing property-damage in excess of $25,000, this
(8) An occurrence involving significant harm to the environment as defined first aid) and, if the person is engaged or employed onboard a vessel in commercial service, that renders the individual unfit to perform his or her routine duties; damage including the cost of labor and material to restore the property to its condition before the occurrence, but not including the cost of salvage, cleaning, gas-freeing drydocking or demurrage; or in CFR 4.03-65.
Insofar as the written reporting on Form CG-2692,46 CFR 4.05-10 provides as follows:
(a) The owner, agent, master, operator, or person in charge shall, within five days file a written report of any marine casualty required to be reported under §4.05-1. This written report is in addition to the immediate notice required by §4.05-1. This written report must be delivered to a Coast Guard Sector Office or Marine Inspection Office. It must be provided on Form CG-2692 (Report of Marine Accident, Injury or Death), supplemented as necessary by Appended Forms CG-2692A (Barge Addendum) and CG-2692B (Report of Required Chemical Drug and Alcohol Testing Following a Serious Marine Incident).
(b) If filed without delay of the occurrence of the marine casualty, the report required by paragraph (a) of this section suffices as the notice required by §4.05-1(a).
The reporting requirements are quite far-reaching and apply to both U.S. and foreign flag vessels sailing in almost any part of the World:
(a) Foreign flag vessel:
(1) All nationals in navigable waters of U.S. [46 USC §610 l (d)(l); 4 CFR §4.03- l (a)]
(2) U.S. nationals south of 75°North latitude, west of 35° West longitude, and east of the International Date Line; or south of 60° South latitude where the vessel embarks/disembarks passengers in the U.S. or transports passengers traveling under any form of air and sea ticket package marketed in the U.S. [46 USC §6101(f)]
(3) U.S. nationals worldwide for death, serious injury, or disappearance (assuming presumption of death or serious injury), or when the U.S. otherwise qualifies as Substantially Interested State. [33 USC §6101(g)]
In addition to the foregoing, pursuant to the “Special Maritime and Territorial Jurisdiction of the United States,” 18 USC §7, incidents involving “serious violations of U.S. law” must be reported to the FBI and USCG. These “serious violations” include arson, assault with serious injury, homicide, kidnapping, missing persons (U.S. national), sexual assault, suspicious death, tampering with a vessel, and theft greater than $10,000. Under the “Special Maritime and Territorial Jurisdiction,” the U.S. has jurisdiction over crimes committed aboard ship where:
(b) The offense is by or against a U.S. national was committed outside the jurisdiction of any nation;
(c) The offense occurs in the U.S. territorial sea (within 12 miles of a coast), regardless of the nationality of the vessel, the victim, or the perpetrator; or
(d) The victim or perpetrator is a U.S. national on any vessel during a voyage that departs or returns to a U.S. port.
In the case of an incident aboard a cruise ship, following the occurrence of any covered crime, the shipowner/operator must telephonically notify the FBI Field Office or FBI Legal Attaché (Legat) closest to the vessel’s location and thereafter follow up with a written “Cruise Line Report of Serious Violation of U.S. Law” transmitted to the FBI and the USCG National Command Center.
A Cruise Line Accident Lawyer experienced in conducting these post-incident investigations knows exactly what the cruise line should have done in investigating the incident and what questions to ask in later pursing a claim on behalf of a passenger or crewmember.
Marine Property Claims
In addition to damage to vessels themselves as result of collisions, vessels may damage marine shore structures (bridges, docks, jetties, piers, ramps, terminals) as a result of contact with these structures known as allisions.
Pursuant to the Admiralty Extension Act of 1948, 46 USC §30101, “[t]he admiralty and maritime jurisdiction of the United States extends to and includes cases of injury or damage, to person or property, caused by a vessel on navigable waters, even though the injury or damage is done or consummated on land.”
Related, but not coming under admiralty jurisdiction, are cases of injury or damage occurring on marine shore structures, but not involving a vessel on navigable waters. For example, injury to a longshoreman as a result of being struck by a loader or fork-lift on a terminal or damage to loading equipment. Generally, it is state law that will apply to situations such as this.
Maritime Regulatory Law
The International Safety Management (ISM) Code refers to the International Management Code for the Safe Operation of Ships and for Pollution Prevention adopted by the International Maritime Organization (IMO) in 1993. The ISM Code became applicable to passenger ships, bulk carriers, cargo high speed ships in excess of 500 gross tons, chemical tankers, gas carriers, and oil tankers in 1998 and to all other cargo ships in 2002. The objectives of the ISM are to ensure safety at sea, prevention of human injury and loss of life, and the avoidance of environmental damage.
Pursuant to the ISM, every shipowner, operator, and manager which assumes responsibility for operation of a ship must develop and maintain a Safety Management System (SMS) consisting of the following:
(b) instructions and procedures to ensure the safe operation of ships and protection of the environment in compliance with relevant international and flag state legislation;
(c) A definition of the levels of authority and lines of communication between shore and shipboard personnel;
(d) procedures for the reporting of accidents and non-conformities with provisions of the ISM;
(e) procedures to prepare for and respond to emergency situations; and
(f) procedures for internal audits and management reviews.
The International Convention for the Safety of Life at Sea (SOLAS) came into existence in 1914 in response to the 1912 sinking of TITANIC; it addressed mainly the implementation of safety procedures, the maintenance of watches, and prescribed the number of required lifeboats and other safety equipment. Later versions were adopted in 1929, 1948, 1960, and 1974; with the most recent significant amendments having taken place in 1988. As of 2016, 162 nations are signatories to SOLAS comprising approximately 99% of the world’s merchant ships. SOLAS addresses:
Chapter II-1 – Construction – Subdivision and Stability, Machinery and Electrical Installations
Chapter II-2 – Fire Protection, Fire Detection, and Fire Extinction
Chapter III – Life-Saving Appliances and Arrangements Chapter IV – Radio Communications
Chapter V – Safety of Navigation Chapter VI – Carriage of Cargoes
Chapter VII – Carriage of Dangerous Goods Chapter VIII – Nuclear Ships
Chapter IX – Management for the Safe Operation of Ships (ISM Code)
Chapter X – Safety Measures for High-Speed Craft
Chapter XI-1 – Special Measures to Enhance Maritime Safety
Chapter XI-2 – Special Measures to Enhance Maritime Security
Chapter XII – Additional Safety Measures for Bulk Carriers
Chapter XIII – Verification of Compliance
Chapter XIV – Safety Measures for Ships Operating in Polar Waters
The International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers (STCW) was adopted by the International Maritime Organization (IMO) in 1978 and went into effect in 1984. The STCW sets qualification standards for masters, officers, and watch personnel aboard cruise ships and merchant ships and defines minimum standards relating to training, certification, and watch-keeping for seafarers.
Although still in draft, the Passenger Vessel Accessibility Guidelines (PVAG) are a series of guidelines proposed by the Architectural and Transportation Barriers Compliance Board (Access Board) for the construction and alteration of passenger vessels covered by the Americans with Disabilities Act (ADA) to ensure that the vessels are readily accessible to and usable by passengers with disabilities. The PVAG are intended to apply to passenger vessels, other than ferries and tenders, permitted to carry more than 150 passengers or more than 49 overnight passengers; ferries permitted to carry more than 99 passengers; and tenders permitted to carry more than 59 passengers. The PVAG addresses:
Chapter 2 – Scoping Requirements
Chapter 3 – Building Blocks
Chapter 4 – Accessible Routes, Accessible Means of Escape, and Accessible Passenger
Chapter 5 – General Passenger Vessel Elements
Chapter 6 – Plumbing Elements and Facilities
Chapter 7 – Communication Elements and Features
Chapter 8 – Special Rooms, Elements, and Features
Chapter 9 – Built-In Elements
Chapter 10 – Recreation Facilities and Play Areas
Chapter 11 – Tenders
Experience with and thorough knowledge of these and other maritime regulations applicable to cruise ships and merchant ships not only allow a Cruise Line Accident Lawyer to advise clients who may not be aware that a violation has occurred, but also allows the lawyer to ask the necessary questions in later pursuing a claim on behalf of a passenger or crewmember.