Limitation of Liability Act of 1851

December 19, 2016
By Rhine Law Firm, P.C.

When accidents happen at sea, they fall under a different set of rules than on land. This set of rules is referred to as “maritime” or “admiralty” law. One of the more unique aspects of admiralty or maritime law is that the owner of a sea vessel can limit their liability to the value of that vessel. A ship’s owner can do this even after their ship sinks or is destroyed. This is possible due to an act known as the Limitation of Liability Act of 1851. In order to invoke this act, a ship’s owner need only prove that the cause of the ship’s demise was beyond their “privity and knowledge” or of no fault of their own.

This limitation of liability was used by the owners of the famous RMS Titanic after its sinking in 1912. Even though the Titanic never made it to America, its owners filed a petition for limitation of liability in the New York federal court. This meant that the families of the 1,517 who went down with the ship and the 711 survivors could only receive compensation from the Titanic’s current value. Since all the was left of the legendary ship was 14 lifeboats (valued at $300) and the ship’s earnings (between $91,000 and $92,000), the plaintiffs in any class action lawsuits would have less than $100,000 to divide up. If you add the survivors and the dead, you get 2228 claims. If you divide $92,000 by 2228, Titanic plaintiffs could receive about $41, which isn’t much for being part of history.

The Rhine Law Firm has fought two limitations of liability battles in recent years. In both situations, the issue was aggressively litigated. We are thankful that the Court resolved the issue in our clients’ favors in both instances. Despite these ultimately positive experiences, we have a profound appreciation for the difficulties these issues present and the effective manner that they are prosecuted by vessel owners.

As you can see, admiralty law is quite different than the law of the land. If you or a loved one has been injured or suffered a loss at sea, you need to speak to a Wilmington maritime law attorney. The legal team at Rhine Law Firm can answer any questions you may have.

Call our team today for a free consultation at (910) 772-9960.

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