Amendments to the Limitation of Liability Act Through the Years

Before dawn on Labor Day 2019, a scuba dive boat named the Conception was anchored off the coast of Santa Cruz Island just 100 feet from shore. Its passengers were sleeping below deck after a day of diving when a fire broke out, engulfing the vessel. 34 of the 38 people on board perished. The loss of the Conception’s 33 passengers and 1 crew member marked the incident as one of the deadliest maritime disasters in U.S. history. 

Though no cause of the fire has been officially stated, a confidential report referenced in a NY Times article linked it to a plastic trash can on the main deck. A report by the National Transportation Safety Board (NTSB) concluded that the failure to post a roving patrol on the vessel contributed to high fatalities. All crew members were asleep when the fire broke out—had a night watchman been patrolling the vessel (as codified by U.S. law for nearly 150 years), there would likely have been time to fight the fire and save the passengers below deck. 

In the wake of this calamity, the owners of the vessel did what many shipowners do to mitigate their financial liability—they turned to a longstanding maritime law: the Limitation of Liability Act of 1851.

This Act, originally designed to promote the maritime industry by capping a shipowner’s liability to the vessel’s value after an incident, allowed the owners to file a limitation action in the U.S. District Court for the Central District of California. By invoking this Act, they aimed to limit their liability to the value of the vessel, which was, in this case, rendered to zero. This move, while legally permissible, sparked a heated debate and led to calls for changes in maritime law, particularly regarding the safety and accountability of small passenger vessels.

This culminated with the introduction of the Small Passenger Vessel Liability Fairness Act of 2021. After several iterations, the final language was included in H.R. 7776, which was enacted on December 23, 2022.

For just the third time in history, the Limitation of Liability Act was amended.

The Limitation of Liability Act now excludes small passenger vessels, which are defined as:

• Vessels of <100 gross tons carrying no more than 49 passengers on an overnight domestic voyage.
• Vessels of <100 gross tons carrying no more than 150 passengers on a standard domestic voyage. 
• Wooden vessels built before March 11, 1996, carrying at least 1 passenger for hire. 

Owners of these vessels are no longer allowed to limit their liability to the value of the vessel in the event of a maritime casualty. They are also prohibited from contractually limiting the time for notice of filing of personal injury or wrongful death claims, granting claimants two years to take legal action. 

Once a Cornerstone of Maritime Law, the Act Has Outlived Its Purpose

The Limitation of Liability Act has been a cornerstone of maritime law in the United States for over 170 years. When it initially passed, its primary goal was to promote the growth of the maritime industry by protecting American shipowners from being held liable for factors outside their control.

The Act encouraged investment in shipbuilding and maritime ventures by allowing vessel owners to limit their financial risk and liability in cases where damages were incurred “without the privity or knowledge of the owner.” This aspect of the Act was particularly significant because it distinguished between incidents caused by the shipowner’s negligence and those out of their hands. At a time when unpredictable weather and piracy were significant threats to maritime commerce, the Limitation of Liability Act made sense.

Over the years, the Act has outlived its purpose. 

And yet, it has only seen three major amendments.

The first amendment to the Limitation of Liability Act came in 1884, introducing two significant changes:

• First, it allowed for the apportionment of liability among multiple owners of a ship, a vital update considering many vessels had several part-owners. This ensured fair distribution of financial responsibility in line with each owner’s share in the vessel. 
• Second, the amendment notably excluded seaman’s wage claims from the Act’s limitation scope, safeguarding crew members’ compensation rights. This change marked an important shift in maritime law, emphasizing the protection of seamen’s interests and welfare.

The second amendment came in 1935, prompted by the aftermath of the SS Morro Castle disaster, which claimed 137 passengers and crew members when the cruise liner caught fire and ran aground while en route from Cuba to New York City on the morning of September 8, 1934. The owners of the Morro Castle petitioned the U.S. District Court for the Southern District of New York, attempting to limit liability to just $20,000 for all loss of life, personal injuries, and property damage related to the tragedy. 

In response to public outcry against this injustice, Congress passed the Sirovich Laws, which amended the Act “for the purpose of protecting the interests of passengers over those of the shipowners.” Another step in the right direction, the amendment mandated that a vessel owner establish a minimum liability fund based on the vessel’s gross tonnage for personal injury or death claims, regardless of the vessel’s actual value. This adjustment aimed to ensure more equitable compensation for victims and their families. 

Additionally, the amendment introduced a six-month deadline for vessel owners to invoke the Act’s protections, streamlining legal proceedings and providing a timelier resolution for claimants.

Now, the implementation of the Small Passenger Vessel Liability Fairness Act of 2021 is poised to have far-reaching implications, particularly for small passenger vessels operating in areas like the Mississippi River or the Gulf of Mexico. It also raises questions about how the amendment will interact with existing maritime laws and procedures, especially in complex situations involving multiple vessels.

The evolution of the Limitation of Liability Act reflects a changing landscape in maritime law, one that seeks to balance the interests of vessel owners and operators with greater accountability and protection for passengers and crew. Such changes are essential to maintaining the vibrancy and safety of the maritime industry.

###Arnold & Itkin is the nation’s leading maritime law firm, representing injured seamen and offshore workers in maritime injury claims since 2004. The firm has set and broken records time and again to secure life-changing recoveries on behalf of the injured. Founding attorneys Kurt Arnold and Jason Itkin have long upheld an unwavering commitment to helping those who do not have the means or experience to help themselves. The firm has assisted crew members, passengers, and families after every major maritime disaster in the past 20 years and has won more than $15 billion in verdicts and settlements.