Shipowner’s Limitation of Liability Act

Shipowner’s Limitation of Liability Act

The Shipowner’s Limitation of Liability Act (46 U.S.C. § 183 et. seq.)  (“Act”) was enacted in 1851 to support the development of America’s nascent merchant marines by “encourage[ing] shipbuilding and to induce capitalists to invest money ….” (Norwich Company v. Wright (1871)80 U.S. 104.)  The Act did so by providing limited liability for damages when harm to property or person occurred without the privity or knowledge of the shipowner.  In such cases, damages are limited to the value of the vessel at fault to include pending freight.

The most well-known case involving the Act related to the sinking of the Titanic in 1912, where Supreme Court determined that claimants from many different nationalities pursuing remedies in the United States, the foreign owner may indeed claim the limitation of liability proceeding under U.S. admiralty law, to include the Act. In 2005, the U.S. Supreme Court included pleasure craft, jets skis, and houseboats to be defined as vessels under the Act (See Stewart v. Dutra Const. Co. (2005)  543 U.S. 481, 125 S.Ct. 1118.)

There are limitations to the Act.  The Act does not cover harm resulting from vessels unseaworthy condition when the owner expressly or impliedly warrants a vessel is seaworthy.

Modernly, the Act has been criticized by some who argue the Act is no longer necessary.  In 2010, House Bill 5503 proposed the repeal of specified general limitations on a shipowner's liability for personal injury or death on seagoing vessels when the personal injury or death was caused by wrongful act or negligence.  H.R. 5503 passed the House, received in the Senate, and Read twice and referred to the Committee on Commerce, Science, and Transportation, but did pass out of the Senate.

A ship owner my claim the protection of the Act by filing an action in federal district court or claiming the Act as an affirmative defense in response to a claimant/plaintiff’s action in state or federal court.