Craig H. Allen, Limitation of Liability, 31 J. Mar. L. & Com. 263 (2000), https://digitalcommons.law.uw.edu/faculty-articles/95
Journal of Maritime Law and Commerce
choice of law, International Safety Management Code
From the list of "problems" with the Limitation Act in the U.S. that are within the federal courts' power to resolve, I have elected to discuss three. Necessarily, the coverage of each problem will be brief. After a short summary of the Limitation Act's principal features, the essay examines the recurring confusion over the relevance of unseaworthiness in limitation actions. Second, it highlights the need to update the courts' choice of law doctrine for limitation issues. Finally, it turns to an issue that is only beginning to emerge, and one which the federal courts may yet save from idiosyncratic precedents that further separate the U.S. from the rest of the international community. By 2002, virtually all seagoing merchant vessels will be required to comply with the International Safety Management Code (ISM Code), a sweeping new mandate for vessel owners and mangers to implement vessel safety management and environmental compliance systems. The effect of the ISM Code regime on shipowner limitation of liability may be dramatic. Some believe that a shipowner's qualified right to limit liability under U.S. law will effectively be eliminated by the new Code. They might be right, at least if federal courts in the U.S. continue to expand the concept of shipowner "privity or knowledge" under the Limitation Act to embrace objective knowledge. The result could be that within the U.S. only recreational boat owners and others who fall outside the ISM Code regime will have any chance of limiting liability under U.S. law, while shipowners in nations that adhere to the 1976 Limitation Convention, which rejects the vague privity or knowledge standard, will continue to limit their liability, without compromising their compliance with the ISM Code.