Article by Donald C. Greenman
Limitation of a shipowner's liability as it exists today is actually a limitation on vicarious liability. The rule of respondeat superior seems as axiomatic as the proposition that the plaintiff has the burden of proof. Unblemished by corollaries or exceptions, the doctrine of respondeat superior imposes vicarious liability upon a person solely for the acts or wrongs of his servants. Yet, despite its nearly universal acceptance in modern law, the concept seems not always to have existed in its present form. Because today's rules of limitation of a shipowner's liability cannot be extricated from the policy of respondeat superior, it is helpful briefly to consider the formulation of vicarious liability and to see how limitation is related to the original concept.
In Lecture I of his classic work on the nature and philosophy of law, Oliver Wendell Holmes, Jr., traced the development of the liability of one for “harm inflicted by another person or thing.” Holmes discovered ancient rules, even of Old Testament origin, whereby an owner was forced to surrender his slave or beast that may have caused harm to another. Holmes noted that because of the “exceptional confidence” reposed in shipowners and innkeepers, they eventually became liable personally for those they employed. This development was a “startling innovation,” because it made one liable for harm done by another who was free, not a slave, and who was himself personally answerable before the law. However, Holmes noted that by the Middle Ages the maritime law provided that “the ship was not only the source, but the limit of liability.” This rule was “borrowed” by the United States Congress in the Act of 1851 whereby a shipowner was discharged from liability for the whole damage caused by the acts of his agents if he surrendered his interest in the vessel and freight.
From this brief extract from the first lecture in Holmes' classic work, we see a play of ideas come full circle: liability is limited to surrender of the offending object; then shipowners are made personally liable for the faults and acts of their servants; and, finally, such liability is somehow limited to the offending thing. Current thoughts on limitation, however, have moved away from the “offending thing” concept that is embodied in the United States' antiquated limitation law. Today the goals underlying limitation relate to fairness to claimants and fostering adequate, reasonably priced insurance for the shipowner. Reasonably high limits of liability are deemed essential to protect those injured. This concern is balanced against the historic policy of limitation: encouraging investment in shipping.
Today there is a worldwide policy of maritime law that the vicarious liability of a shipowner for major disasters should not always be unlimited. This concept, in all its variations in rationale and implementation, is designed to encourage the efficient movement of goods by sea in international trade. On a commercial basis, an ideal system would permit an investor in a ship, whether as owner, charterer or otherwise, to predict with reasonable certainty what his exposure would be for the seagoing catastrophes that inevitably occur when man challenges the sea. However, that ideal does not yet exist; it will require the creation of a universal, international agreement on limitation.
The investor who sends his ship to sea will encounter not only unique risks, but also persons and juridical entities of many nations and a variety of legal systems. Virtually all legal systems will espouse limitation in some form, and will exercise jurisdiction over him. Yet, despite international conventions and national laws, the investor is exposed to liabilities that exceed the maximum limitation any single system would provide. A significant factor in this regard is that many shipowners will be subject to jurisdiction in the United States, one of the major trading countries of the world, which is not a party to any convention on limitation and whose limitation statutes are so out of date that the judicial attitude is antagonistic toward limitation.
This article will examine some of the basic characteristics and variations of limitation of a shipowner's liability contained in international conventions, national laws and the law of the United States. Also, because any semblance of uniformity depends on conflicts of law rules and the effects of multination litigation on limitation, the article will touch on those subjects. The underlying premise is that limitation, in a variety of forms, is a universal concept that, despite criticism, is part of the maritime law and will be for the foreseeable future.
About the Author
Donald C. Greenman. L.L.B., University of Virginia School of Law. Partner, Ober, Kaler Grimes & Shriver, Baltimore, Maryland. Member of the Virginia and Maryland Bars.
Citation
57 Tul. L. Rev. 1139 (1983)