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Baltimore Boxship's Owner Tries to Limit Liability to $44 Million

Dali
Courtesy NTSB

Published Apr 1, 2024 7:22 PM by The Maritime Executive

As anticipated, the owner of the container ship Dali has filed a federal suit to limit liability for the allision that destroyed Baltimore's Francis Scott Key Bridge. The petition denies responsibility for the accident, and it seeks to limit any payout to a maximum of $43.7 million. This is approximately one to two percent of the disaster's gigantic estimated cost ($2-4 billion). 

The petition leans on the Limitation of Liability Act of 1851 (LOLA), which allows the shipowner to restrict the total amount of their liability to no more than the post-accident value of the vessel, plus the value of pending freight. It is a common starting point for litigation over a marine casualty in the United States, and heavily favors the shipowner by reducing liability from major accidents - and potentially removing it altogether. The owners of the dive boat Conception, which burned and sank with 34 dead in 2019, claimed a post-accident vessel value of zero to defend against wrongful-death lawsuits.  

When it was enacted in March 1851, the Limitation of Liability Act was intended to protect American shipowners and incentivize them to invest in the domestic fleet. Today, foreign vessels  outnumber U.S.-flag merchant ships in American ports, and the Act can be just as easily invoked to protect foreign shipowners - in this case, Grace Ocean, a Singaporean company. Singaporean ship manager Synergy Marine, the operator, is also party to the petition. 

Grace Ocean and Synergy denied that they or the vessel had any responsibility for hitting the Key Bridge. Alternately, if there were any faults with the vessel, they had no "privity or knowledge" of such faults beforehand, they asserted in the filing. 

The Act only protects a shipowner if the accident occurred "without the privity or knowledge of the owner." Expert admiralty lawyers say that the next few years of litigation over the Dali will likely center on whether the owner might have known about a causal factor behind the accident. If that could be proven, it would allow a judge to "break" the limitation of liability, and plaintiffs (potentially including the U.S. government) would be able to pursue far higher damage claims against the owner and insurers.

Grace Ocean's petition also proposes to consolidate all litigation in Baltimore's federal court, and to impose a September 24 filing deadline for all claims.