The US maritime industry is now grappling with future uncertainties after amendments to the Limitation of Liability (LOLA) Act were enacted in December 2022.
The legal doctrine has remained largely unchanged in the 170 years since its creation.
The Limitation of Liability Act
The Limitation of Liability Act has, for a time, presented cushion ship owners in the event of an accident or a disaster. It is a federal law that the US enacted in 1851 to provide liability coverage for ship owners.
Under this doctrine, in the event of a maritime disaster, the ship owner’s liability is limited to the value of the ship and its cargo at the end of its voyage. Hence, the ship owner’s liability is capped even if the damage exceeds this value.
However, this condition only applies when the ship owner is unaware of the reason behind the accident, whether unseaworthiness, negligence, or acts of omission.
If the ship owner knew something that could have caused the accident, then LOLA is rendered null and void. For a long time, this law has received criticism as some argue that it encourages ship owners to prioritize profits over safety.
That said, recent amendments to the law have caused a stir in the maritime industry.
Amendments to the law
Under the new changes, which took effect on December 23, 2022, vessels categorized as ‘covered small passenger vessels’ are not protected under LOLA.
The new move from the Biden administration has sparked uproar in the maritime sector as owners of these vessels can no longer limit liability to the vessel’s worth.
But what exactly are “covered small passenger vessels?”
According to the new provision, a vessel is considered a “small passenger vessel” if it is carrying “not more than 49 passengers on an overnight domestic voyage” and “not more than 150 passengers on any voyage not considered an overnight domestic voyage.”
First, you should note that the definition only applies to passenger vessels. This definition does not encompass commercial vessels like cargo ships and fishing boats. On top of that, private vessels do not fall under this scope, as they are used for recreational use and not to ferry fare-paying passengers.
So, which ships fall under this definition?
A typical example is a sightseeing boat, mainly used to ferry passengers on marine life viewing trips and scenic cruises. It is more than likely that most sightseeing boats will now fall under this category.
The owners are exposed to unlimited liability in case of an accident or other maritime disaster that results in passenger injury or loss. This means they are more vulnerable to litigation costs.
The Outcome of the New Amendment
The new change will likely have a ripple effect in the maritime sector. This is due to the fact that small passenger vessels account for a significant section of the industry.
It will likely result in increased insurance premiums, more stringent safety measures, and a meticulous oversight process. The effect? The operating costs of such vessels will likely increase, making them less appealing and profitable to the owners.
Hence, a review of marine insurance practices, especially those applying to small passenger vehicles, is necessary. Providers may have to update the existing policies to accommodate the new changes.
Conclusion
If someone is involved in a maritime accident or disaster and suffers a personal injury, they may need a personal injury lawyer to navigate the complexities of the Limitation of Liability Act and determine whether the ship owner’s liability is limited or not.
“In cases where the ship owner knew or should have known about the cause of the accident, the LOLA may not apply, and the injured party may be entitled to seek full compensation for their injuries,” says personal injury lawyer Thomas Eiler. “A hardworking attorney can help assess the circumstances of the accident, gather evidence, and determine whether the LOLA applies or not.”
