Trade Disruption (TDI) (Purchased by owner of any vessel
impacted by the port/bridge closure; claim paid to same)
Compensation for losses due to trade disruption, subject to time element deductible.
Reimburses for additional costs incurred to complete voyage(s) via alternative means.
Strike and Delay (Purchased by owner of any vessel
impacted by port/bridge closure; claim paid to same)
Coverage available for first-party losses from delay, such as loss of income if ship is delayed, supplementary to standard Loss of Hire and/or Trade Disruption.
Business Interruption (BI) (Purchased by marine and non-
marine businesses impacted by the incident; claim paid to same)
Compensation for lost revenues resulting from port/bridge closure.
Reimbursement of additional costs incurred to maintain operations.
Cargo (Purchased by cargo owners impacted
by incident; claim paid to same)
Cover for loss, damage or spoilage of goods awaiting shipment or in transit which are delayed due to the port closure.
Supplemental coverage for additional expenses incurred, such as transshipment costs.
Protection and Indemnity
(P&I) (Third Party Liability Claims) (Purchased by owner of DALI; claims paid to third parties)
Personal injury and death related medical expenses, lost wages and other damages resulting from the incident.
Pollution clean-up costs as well as mitigation / prevention expenses.
Discretionary cover for fines and penalties levied by government authorities.
Unrecoverable General Average contributions (Cargo, H&M etc.).
Liabilities from damage or delayed delivery / non-delivery of cargo onboard the vessel.
Recovery for Economic Damages
Case law: Robbins Dry Dock At present there are two unknowns that will determine whether the DALI makes P&I history or not: first will be whether parties who have sustained purely economic losses (and their subrogated insurers), will be able to successfully recover those claims. Under existing U.S. maritime law, the answer is likely no because of the Robbins Dry Dock rule established by the U.S. Supreme Court in 1923. This case, and countless cases that have followed, have established a fundamental restraint on the recovery of economic losses in maritime law, emphasizing the need for a proprietary interest in the damaged property. This pivotal and long-established legal principle has shaped how economic damages are approached and recovered in U.S. maritime law and would likely act as a bar to recovery for pure economic loss. As such, many of the business interruption claims arising out of this incident would not give rise to a legal liability for which the DALI (and their P&I insurer) would be called upon to pay.
Limitation of Liability
Damaged cargo onboard other vessels
Delay claims from impacted third party vessels (stationary vessels awaiting transit) where there is a breach of duty of care and legal liability to indemnify for those losses.
Lost revenue resulting from port closure (potential claimants include port authority and other government agencies, private port and terminal operators, vessel operators doing business in and around the port and local businesses whose revenue has been impacted as a result of the port closure). Under U.S. law, however, a claimant must typically prove physical damage to property in order to recover lost revenue.
Lost revenue resulting from closure of the Francis Scott Key Bridge, to potentially include bridge owner’s loss of use of the bridge and others whose business
has been impacted by closure of the bridge, if the vessel owner is ultimately determined legally liable for lost revenue (i.e. claimants can demonstrate physical damage to property).
Cost of demolition and repair/rebuilding of the Francis Scott Key bridge via cover for Fixed & Floating Objects (FFO), where not recoverable under H&M.
Limitation of Liability and US
Maritime Law Principles The primary challenge in this incident is the potential third-party liability claims (covered by the DALI’s P&I insurer, Britannia P&I, a member of the International Group). Considering the whole universe of claims, including those brought by uninsured / underinsured parties and insurer subrogation, the current estimated value of damages is thought to be between $2 billion and $4 billion which, if this were to materialize, would result in the largest P&I claim in history.
The second unknown that will shape the ultimate outcome of this matter as it winds its way through the US courts is whether the DALI’s owner can successfully limit their liability. On 1 April 2024 the DALI’s owners (and her manager) filed a petition in federal court in Maryland seeking to limit their liability by availing themselves of the protections afforded them by the Limitation of Liability Act of 1851 - a long-established U.S. federal law permitting the owner of a vessel involved in a marine casualty to cap their maximum liability for damages in cases of maritime accidents. This law was enacted primarily to encourage investment in the maritime industry by limiting the financial risks associated with ship ownership and allows a shipowner to limit their liability to the value of the vessel immediately following a casualty plus pending freight (i.e. compensation paid to the vessel owner for the carriage of cargo or other service performed for the respective voyage). This limitation applies regardless of the extent of the actual damages caused by the incident.
THE REPORT | SEP 2024 | ISSUE 109 | 99
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