Liability framework Costa Concordia disaster - Isola del Giglio - January 13 2012 - N

With liability issues following this disaster now emanating in the press, an interesting question is whether the Italian shipowner Costa Crociere S.P.A. and their liability insurers can invoke a statutory limit of liability regarding the cost of removal and destruction of the ship, passenger claims etc.

Similar to Montreal Convention in international aviation, the 1974 /2002 Athens Convention relating to carriage of passengers and their luggage by sea aims at creating some uniform liability rules for death and personal injury, viz. damage to/loss of luggage occurred with regard to a passenger whilst on board a ship for international carriage.

However, the Athens Convention has not yet entered into force.
The shipowner may nevertheless invoke the London Convention on limitation of liability for maritime claims 1976, as amended in March 2011, which allows limitation of liability.

The total limit for passengers is connected the number of passengers the ship is authorized to carry according to the ship’s certificate, multiplied by 175.000 SDR. With 3700 pax that results in an over-all limit of appr. € 772 mio, or US $ 991 mio.

For removal cost, etc. the limit is connected to the gross tonnage of the ship, which Wikipedia says is 114.500. Applying the graduated calculation prescribed in the Convention, would result in an over-all limit of liability of SDR 33,099,100 if my calculations are correct. In USD that would be appr. 50 mio, in € appr 39,5.

Interestingly, the London Convention stipulates that no limit of liability applies in case of acts and omissions committed intentionally or with knowledge that a loss would probably result – bringing back memories to the old Warsaw/Hague system for aviation claims.
One would presume this to become an issue, given the negative publications surrounding the Captain of the ship.

Finally it should be noted that although Italy is not a party to the London Convention, the shipowner may bring about its applicability by depositing the amounts of his limited liability pursuant to that convention in a country that is a party to thereto. A guarantee, issued by a first class Insurer will usually considered sufficient security. According to the Company’ s website, the Insurer is Assicurazioni Generali SpA of Mogliano Veneto, Treviso, Italy, which in case it is also the hull insurer, may also have to cope with the cost price of this ship that according to Wikipedia amounted to € 450 mio.

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