Maritime Law: Key Legal Issues In Fires At Sea, Cargo Damage, Salvage, And More

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Fires at sea have been one of the greatest risks to ships and cargo for over a thousand years, and they implicate some of maritime law's most unique aspects. These issues are briefly addressed below.

Cargo Damage

In the United States, cargo damage due to fire is treated differently than damage from other causes. The Carriage of Goods by Sea Act ("COGSA") and the Fire Statute contain defenses for shipowners and cargo carriers in the United States. The COGSA Fire Exemption states that "[n]either the carrier nor the ship shall be responsible for loss or damage arising from ... [f]ire, unless caused by the actual fault or privity of the carrier." Whereas the Fire Statute states: "The owner of a vessel is not liable for loss or damage to merchandise on the vessel caused by a fire on the vessel unless the fire resulted from the neglect of the owner." In practice, the legal analysis goes like this: (1) the shipper must establish its prima facie case that the cargo was damaged while in the shipowner's custody, (2) the burden then shifts to the shipowner to establish that the damage arose from a fire, (3) the burden then shifts back to the shipper to show the cause of the fire, (4) the shipper must then establish that this cause was due to the "actual fault or privity of the carrier," and (5) the burden then shifts back to the shipowner to show the extent to which any of the damage is not attributable to its negligence, however, the analysis can be somewhat different depending on the federal circuit. In maritime law, "privity" generally means the fault of the shipowner's land-based management, as opposed to the errors of the ship's crew.

Salvage & Wreck Removal

Marine salvage is the rescuing of ship at sea. There are two types of salvage, "contract salvage" and "pure salvage." Contract salvage is when the shipowner and the salvor agree in advance to the terms governing the salvage operation, including the compensation that will be paid to the salvor. Pure salvage is when there is no contract between the parties prior to the salvage operation. There are three elements to pure salvage: (1) the property being salvaged must be exposed to a marine peril, (2) the salvage service must be voluntary and the salvor must not have had a pre-existing duty to the ship, and (3) the salvage operation must be successful in whole or in part. If the salvage is successful, the salvor will be entitled to an award. Historically, the award is determined by analysis of certain "Blackwall" factors, named after the Supreme Court case that established the rules for determining salvage awards in the United States:

1. the labor expended by the salvors in rendering the salvage service;
2. the promptitude, skill, and energy displayed in rendering the service and saving the property;
3. the value of the property employed by the salvors in rendering the service and the degree of danger to which such property was exposed;
4. the risk incurred by the salvors in securing the property from the impending peril;
5. the value of the saved property; and
6. the degree of danger from which the property was rescued.

Today, the International Convention on Salvage also governs salvage. It generally aligns with the Supreme Court's Blackwall decision, with the notable addition of avoiding pollution as an additional factor to be considered with the award.

Notably, salvage is different than wreck removal. If the ship and its cargo are lost, the law often requires the shipowner to remove wreck. In the United States, The Wreck Act governs a shipowner's obligations after a ship has sunk or grounded and cannot be salvaged. The shipowner will most often contract with professional marine construction companies and professional salvors to remove the wreck and clean up any environmental damage. However, if the shipowner does not do so, the government may do the work itself or through contractors and then make a claim against the shipowner to recover the expenses. Generally, it is cheaper for the shipowner to do the work than for the government.

General Average

Like salvage, general average is one of the most unique aspects of maritime law. The concept is that everyone with an interest in a ship's voyage is "in it together" as part of a joint venture and that parties to the venture should not benefit from the losses suffered by another party to the venture. As a result, the law of general average provides a mechanism for an equitable sharing of losses and expenses that occur during a voyage in certain circumstances. The classic example is where the ship's captain faces a horrible storm and decides that some cargo must be thrown overboard to lighten the ship or lower its center of gravity, to better avoid sinking. The owners of the sacrificed cargo were damaged while the shipowner and remaining cargo benefitted in that their property survived the storm. Under the rules of general average, all parties to the venture, including the shipowner and all owners of cargo, must absorb a proportionate share of the loss suffered by the owners of the sacrificed cargo. While this is the classic example, general average is not limited to storms or overboard cargo, it also applies to extraordinary expenses for the benefit of the joint venture. To succeed in a claim for general average, one must establish (1) a marine peril, (2) a voluntary sacrifice/expense, and (3) success. The expenses of salvaging a ship on and its cargo are typically recoverable through general average, and that has occurred in many fires at sea.

Note that the shipowner and shippers are not limited to general average remedies. If the cause of the fire was due to the fault of a shipper or third party, the shipowner and other cargo owners will have a claim for damages against the wrongdoer under general maritime law tort.

Personal Injury and Death

In the United States, a seaman who is injured or killed within the course and scope of his employment has three claims against a shipowner who employs him or her: (1) maintenance and cure, (2) unseaworthiness, and (3) a Jones Act negligence claim.

An employer must provide and pay for medical care for its seamen who are injured within the course and scope of their employment. The obligation continues until the seaman reaches the point of maximum medical improvement for the injury or illness at issue. This obligation is referred to as "cure." "Maintenance" is a seaman's day-to-day living expenses that replace the benefits he or she would have received on the ship. Maintenance and cure is similar to worker's compensation in that the employer's obligation is not based on fault or negligence in causing the injury or illness.

A ship owner has a nondelegable duty to provide its seamen with a ship that is reasonably fit for its intended use, which is considered the warranty of seaworthiness. If the ship owner breaches this duty and it causes an injury, the ship owner may be liable to the seaman for damages.

Under the Jones Act, an employer may be liable for damages if its negligent act or omission injures a seaman. Jones Act negligence claims are very similar to the general tort rules in the United States, however, they are controlled by a separate body of federal common law. One of the key differences between land-based torts and Jones Act negligence is the "featherweight" causation standard rather than the normal "proximate cause" standard. Under the "featherweight" or "any part" standard, the test for causation is simply whether the employer's negligence played any part, even the slightest, in producing the injury for which damages are sought.

Limitation of Liability

In the United States, shipowners are entitled to limit their liability to the post-incident value of the ship and its pending freight (revenue for the ship's work) under the Shipowner's Limitation of Liability Act ("Limitation Act"). The shipowner may assert this statutory defense in response to a specific lawsuit, or the shipowner may take proactive measures and file its own petition for limitation of liability in federal court. A limitation petition allows a shipowner to commence a legal action to declare the shipowner is "innocent" and therefore it should be exonerated from liability, or in the alternative that its liability should be limited to the post-incident value of the ship and its pending freight. As a prerequisite to obtaining the right to bring a limitation action, the shipowner must deposit cash or other security with the court in an amount equal to the post-incident value of the ship and its pending freight. This security is referred to as the limitation fund and it must be deposited for the benefit of the potential claimants in the event that the shipowner is liable. If the shipowner deposits the limitation fund and meets the other procedural requirements of the Limitation Act and Rule F of the Federal Rules of Civil Procedure, Supplemental Rules for Certain Admiralty and Maritime Claims, the court will issue an order setting a deadline for all potential claimants to file claims in the limitation action, and barring any other lawsuits relating to the voyage. At trial, the shipowner may be exonerated if the court determines it was not at fault, or it may be entitled to limit its liability if the cause of the incident was not within the privity and knowledge of the shipowner. The "privity and knowledge" standard essentially requires the claimants to prove that the damages were caused or contributed to by managerial fault of the shipowner, not simply the fault of its crew.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.