Thomas H. Belknap Jr., Emma C. Jones, and G. Evan Spencer ●
This article follows on a 2021 MAINBRACE article, “The Gateway to Federal Court: Admiralty Jurisdiction and Limitation of Liability,” which discussed the practical use of the Shipowners’ Limitation of Liability Act, 46 U.S.C. § 30501, et seq. (“Limitation Act” or the “Act”) in admiralty cases in U.S. Federal Courts. Following a recent Marine Casualty Seminar where the authors presented on this topic, this article will expand on the scope of the Limitation Act and provide more detail on the process for a limitation proceeding pursuant to the Limitation Act.
Substantive Characteristics of the Shipowner’s Limitation Act
A vessel owner may be able to limit its liability to the vessel’s post-casualty value plus then-pending freight (the “limitation fund”) if it did not have knowledge or privity of the acts of negligence or conditions of unseaworthiness that caused the incident. Whether a potential limitation petitioner is an owner able to limit its liability depends on the degree of control the putative owner exercises over the manning, operation, and navigation of a vessel. This means that entities other than the registered owner may be entitled to limit liability, including vessel managers, shareholders of a vessel-managing entity, former vessel owners, trusts holding legal title, and others. To evaluate whether a given entity may be able to limit liability, it is best to start with the question: Is this entity subject to shipowner’s liability because of its exercise of control over the vessel? If so, that entity should be a proper limitation petitioner.
Continue reading “The Limitation Act in the United States: A Deeper Look”