Posted on November 4, 2024
“The resolution of this case sets a precedent in maritime law, highlighting accountability and full financial responsibility for environmental and infrastructural damages. The size of the payout may prompt maritime operators to reinforce compliance practices,” according to Robert Khachatryan, the CEO and founder of Freight Right Global Logistics, based in Los Angeles.
The first of several legal cases against the owners and operators of the MS Dali, which catastrophically collided with the Francis Scott Key Bridge in Baltimore, Maryland has been settled, according to the federal Department of Justice (DoJ).
Two Singaporean companies, Grace Ocean and Synergy Marine, agreed to pay nearly $102m to settle a civil suit launched by the DoJ to recover the money spent on the disaster response and bridge debris recovery operation.
“Nearly seven months after one of the worst transportation disasters in recent memory, which claimed six lives and caused untold damage, we have reached an important milestone with today’s settlement,” said principal deputy associate Attorney General Benjamin C. Mizer.
“Thanks to the hard work of the Justice Department attorneys since day one of this disaster, we were able to secure this early settlement of our claim, just over one month into litigation.”
Ship Technology spoke to a maritime legal expert and the CEO of a US freight forwarding company to understand the impact of the settlement on ongoing claims, and the wider shipping industry.
A fair outcome?
To gauge the sector response to the settlement, Ship Technology spoke to Robert Khachatryan, the CEO and founder of Freight Right Global Logistics, based in Los Angeles.
He said the settlement was in line with expectations, and followed the DoJ’s stated intentions to ensure US taxpayers are not left to pay the bill for industrial accidents.
“Considering the extensive damage and tragic loss of life caused by the bridge collapse, this outcome aligns with other high-profile settlements where similar violations led to substantial penalties. The DOJ’s firm stance on full compensation ensures compliance without burdening taxpayers with disaster response costs,” he explained.
José Cot at law firm McGlinchey Stafford agreed the settlement was likely a “favourable” one for the DoJ, but he said it could also benefit the shipowner and operator going forward.
“Given the significant litigation costs going forward, negotiating an early settlement was in the United States’ interest to maximize its recovery… By negotiating an early settlement, the United States secures compensation and avoids the significant costs of protracted litigation,” Cot said.
Cot said the decision to settle was likely influenced by the public nature of the Dali crash, and the efficient clean-up operation by authorities.
“The United States response in clearing the wreck and bridge debris from the navigable channel and reopening the Port of Baltimore was very efficient and is now complete, resulting in a readily ascertainable and documented claim,” he explained.
But he added that Dali’s owner and operator could have decided to settle with the DoJ to remove the federal authorities (and their lawyers) from civil action brought by other claimants (such as the State of Maryland).
“From the shipowners’ perspective, settling with the United States is also a tactical decision that removes the Department of Justice attorneys and resources from the court-designated lead counsel group for claimants.”
What about limited liability claims?
Grace Ocean and Synergy Marine filed a suit to limit their liabilities over the incident to $43.7m, to which the DoJ’s claim of more than $100m was made.
Although it would appear the settlement contradicts the intention of the claim, José Cot said the action is “still pending” because other claims against the companies are still progressing through the court system.
“The settlement is not an adjudication of the limitation action. The court will set forth litigation phases of the case, and a schedule to complete discovery and prepare the case for trial, including consideration of claimants and damages/ losses, filing of dispositive motions, etc,” Cot explained.
Will there be an impact on maritime law?
Due to the nature of the out of court settlement between the parties, the outcome will not change US case law. However, as other suits are continuing, it is very possible the full legal outcome of the Key Bridge crash will impact several areas of maritime law.
“Given the magnitude and impact of the casualty, the number and diversity of claimants and the complexity of the issues, cases such as this are always likely to have an important impact on maritime law and to provide lessons for the future,” Cot told Ship Technology.
Khachatryan said the large settlement and ongoing court cases showed a “growing scrutiny” on the maritime sector which could lead to the tightening of shipping company’s compliance.
“The resolution of this case sets a precedent in maritime law, highlighting accountability and full financial responsibility for environmental and infrastructural damages. The size of the payout may prompt maritime operators to reinforce compliance practices,” he said.
“With growing scrutiny on high-stakes maritime incidents, this case could shape future legal expectations around corporate responsibility and public safety in the U.S. market,” Khachatryan added.
Cot said two legal areas would be watched particularly closely by maritime stakeholders.
“(1) the class actions claims filed in the limitation proceeding and (2) economic loss claims.
“Courts have generally held that class actions should not be allowed in limitation proceedings as they are inconsistent with the purpose of the Limitation Act; moreover, courts have generally held that claims for economic loss are not cognizable in maritime law unless the claimant can demonstrate that it had a proprietary interest in the damaged property, i.e., the Key Bridge,” he said.
The settlement should reinforce “the principle that corporations must bear full responsibility for the economic and human costs of their operations, guiding the maritime industry toward stricter adherence to environmental and operational regulations,” Khachatryan surmised.
