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Cruise Lines Use Law and Contracts to Limit Liability

Posted on 19 Jan 2012

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An Italian consumer and environmental group, Codacons, has announced that it is preparing a class-action lawsuit and that more than 70 passengers who were on board the ship that ran aground late Friday off the Tuscany coast have already signed on as plaintiffs. Other suits are sure to come.

Anyone trying to sue Costa Concodia’s corporate parent, Carnival Cruise Lines, though, will find that the company is stoutly protected by international law and by a carefully worded contract that passengers accept when they buy their tickets.

For its part, the company is heaping blame on the ship’s captain, Francesco Schettino, calling the accident “human error” and contending that the captain diverted the ship from its authorized route. The company, based in Miami, did not respond to requests for comment for this article.

Such forceful criticism of the captain may be intended to help the company avoid liability under international agreements like the Convention on Limitation of Liability for Maritime Claims. The convention is referred to on the Web site of the International Maritime Organization as “a virtually unbreakable system of limiting liability” for the owners of ships after accidents.

That limitation on liability can be set aside in cases of egregious acts by the vessel’s owner, in the language of the convention, if “it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result.”

But Vincent Foley, an admiralty lawyer in New York, said the egregious acts must be the owner’s. If the captain disregarded his duties, the company could argue that it was not responsible for his behavior. Whether Captain Schettino’s actions “can be imputed to the owner to break limitation is, I think, a key issue,” Mr. Foley said.

To Jack Hickey, a maritime lawyer in Miami who is working with an Italian lawyer to represent Costa Concordia passengers, the cruise line’s responsibility is obvious. Referring to the captain, Mr. Hickey said that the company had “nobody with more authority or responsibility than him” on the ship, and that it was not as if a janitor had somehow steered the ship onto a rock formation. Besides, he noted, in an age when ships are in constant communication with their owners, the company should not be able to argue that it had no idea what was going on. “You mean you can’t track it?” he asked. “You mean if it gets that far off track, you don’t know?”

The issues in the case could be shaped by the highly restrictive terms of the contract that every passenger gets with his or her ticket, said Gerald McGill, an admiralty lawyer in Pensacola, Fla.

Cruise contracts are notoriously restrictive regarding the rights of passengers, and Costa’s 6,400-word contract is no exception. The Costa contract sharply limits the kinds of lawsuits that can be brought, where those suits can be brought and how much the company can be made to pay. All such provisions have been upheld in the courts of the United States, he said.

Costa’s contract states that the line will pay no more in cases of death, personal injury and property loss than about $71,000 per passenger. It allows no recovery for mental anguish or psychological damages. It bars class-action suits.

“If you read this cruise line ticket, and it doesn’t make your stomach turn, it should,” Mr. McGill said.

For cruises that do not involve a United States port, the contract states, any litigation must be brought in Genoa, Italy, and be governed by Italian law.

But when it comes to liability, the contract says the company can take advantage of any limits set by international treaties or the laws of the United States, which are very generous to owners of vessels. If there is a conflict among the patchwork of laws and treaties regarding liability, it says, “the Carrier shall be entitled to invoke whichever provisions provide the greatest limitations and immunities to the Carrier.”

“That’s called the ‘the terms are whatever we want them to be’ clause,” Mr. Hickey said. “It’s a contract created by lawyers under this fantasy that the everyday passenger will understand what that means.”


Paul Neilson Jan 19 2012 9:41AM Report Abuse
I guess Norwegian has a ship registered here in the US...
Paul Neilson Jan 19 2012 9:36AM Report Abuse
I commented on this the other day that most all of these cruise lines are flagged in other countries. Beyond that though the cruise line itself had sufficient knowledge that this was an ongoing issue as tracking satellites show from previous trips. The captain did in fact go off course multiple times and should be tried as stated in a number of articles, but following the rock collision from satellite tracking you can see he did a 180 to ground the ship intentionally in shallow water saving a number of lives. If he stopped out in the ocean and gave the abandon order more than 3,000 people would have perished. This still does not excuse his earlier acts and continuous lying about the facts… Good luck trying to cruise on a US flagged ship…
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