What Does the Titanic Have To Do With the Francis Scott Key Bridge Collapse?

What Does the Titanic Have To Do With the Francis Scott Key Bridge Collapse?

7.10.2024

By Richard C. Reilly and Thomas F. Gleason

Approximately 10 minutes elapsed from the time MV Dali, a container ship, lost power on the night of March 26, 2024 to the moment it struck the Francis Scott Key Bridge in Baltimore. One can imagine the frantic efforts that went on during that period: to get the power on the ship restored; to slow the ship by dropping anchor; to notify authorities that the ship was adrift.¹

In the end, the collapse of the Key Bridge resulted in the tragic death of six highway workers; the destruction of public infrastructure that could cost nearly $2 billion to replace; a critical break in the Interstate 695 beltway around Baltimore that will take years to repair; and major disruptions to the Port of Baltimore – one of the busiest seaports on the East Coast.²

When it struck the bridge, the Dali is said to have been moving at less than 8 miles per hour.³ But force being mass times acceleration, even a ship travelling slowly, if it is massive enough, can exert enormous energy on an obstacle in its path. The Dali, fully laden for its voyage to Colombo, Sri Lanka, carried a cargo of 4679 containers – and weighed in at 95,128 gross metric tons.⁴

Engineers estimate that the force the Dali exerted on the Key Bridge upon impact may have exceeded 100 million newtons. By way of comparison, Saturn V rockets launched during the Apollo moon missions released approximately 35 million newtons of energy at liftoff.⁵

The secondary impacts to the tens of thousands of local residents and businesses, meanwhile, who either crossed the bridge on a regular basis or rely on others that did, are both too numerous to list and nearly impossible to quantify.

Perhaps it is not surprising then that after the collapse of the Key Bridge, attention turned so quickly to questions of liability and insurance: which parties will be held liable for the loss; what could the extent of that liability be; and will there be adequate insurance coverage in place?

What may have been more surprising, however, at least to those of us who are not steeped in admiralty and maritime law, was that a law enacted by Congress a decade before the Civil War could limit what the owners and operators of the Dali (and their insurers) have to pay as damages – to a small fraction of the losses that have actually been incurred.

Also surprising is that a law that was apparently “first intended to aid [United States] merchant marines and ensure American shipowners could compete equally with those from leading seafaring nations like Great Britain”⁶ could be used to limit the liability of a foreign domiciled shipping conglomerate for the destruction of critical public infrastructure.

The implications of the law are of particular import in New York State, with its proximity to a wide variety of navigable waters and ports and significant maritime activities.

Federal ‘Limitations of Liability’ for Maritime Activities

The law in question is the Shipowners’ Limitation of Liability Act of 1851 – known colloquially as the “Titanic Act,” after it was used by the owners of the Titanic to limit their own liability when that ship sank off the coast of Newfoundland in 1912.⁷

This act “applies to seagoing vessels and vessels used on [certain] lakes or rivers or in inland navigation. . . . ”⁸ It allows the “owner” of such a vessel – with the term “owner” including “a charterer that mans, supplies, and navigates [the] vessel” at its own expense⁹ – to “bring a civil action in a district court of the United States for limitation of liability. . . . ”¹⁰

When an owner does so, “the liability of the owner . . . for any claim, debt, or liability” – for a “loss, damage, or injury by collision, or any . . .
loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner” – is capped at the “value of the vessel and pending freight.”¹¹ Injured parties with claims are “paid in proportion to their respective losses” out of the available fund.¹² And once an owner has brought an action in district court to limit its liability, all other “claims and proceedings against the owner related to the matter in question shall cease.”¹³

Invocation of the Titanic Act effectively establishes a limited fund equal to the remaining value of the vessel and its cargo – after an incident occurs – and consolidates all potential claims before a single federal district court.¹⁴ That district court then “determines the validity of” any claims against the vessel or its owners, and distributes the available funds among the claimants.¹⁵

The Invocation of the Titanic Act by the Owners of the Dali

In this instance, the owners of the Dali – both Grace Ocean Private Limited, the registered owner, and Synergy Marine PTE Ltd., the “manager of” the ship – petitioned for “Exoneration From or Limitation of Liability” within days of the incident occurring.¹⁶

The owners submitted a sworn declaration that the value of the Dali did not exceed $90 million, its insured value.¹⁷ Deducting repair costs that were estimated to be $28 million,¹⁸ and salvage costs that were calculated to be $19.5 million,¹⁹ while adding in the value of the freight ($1.17 million),²⁰ the owners contend that the value of the Dali “and its pending freight in connection with the voyage did not exceed” $43.67 million.²¹

The owners expressly acknowledge that $43.67 million “is expected to be substantially less than the amount that has been or will be claimed for any losses or damages arising out of the Casualty.”²² Nevertheless, the owners seek, to the extent they are found liable for the incident at all, to preemptively have their liability capped at “the value of the [Dali] and its pending freight in connection with the voyage” – plus interest.²³

Limitations on the Limitations of Liability Under the Act

The protections of the Titanic Act are not without exceptions. The act does not apply, for example, if the owner had privity, knowledge or fault in relation to the act or condition that caused damage – with “privity” being construed to mean “some personal participation of the owner in the fault or negligence which caused or contributed to the loss or injury.”²⁴

“Privity or knowledge can be actual or constructive,” and courts have held that “privity or knowledge” exists where the owner itself “committed a negligent act, or knew of an unseaworthy condition but failed to remedy it, or through the exercise of reasonable diligence could have prevented the commission of the act or the onset of the condition.”²⁵

To that end, the City of Baltimore has already taken steps to oppose the Dali owners’ application and to assert a claim against the owners for the “full amount of [its] damages as may be proven at trial.”²⁶

The city alleges that the “Dali was operated in a willful, wanton, and reckless manner” and that the conduct and actions that led to the destruction of the Key Bridge “took place with the privity and knowledge of” the owners.²⁷ In particular, the city contends that the crew was improperly trained, supervised and managed, and that the ship itself was “unseaworthy,” including for the reason that it was reportedly known to have had an “inconsistent power supply” on the night it set sail.²⁸

More recently, the National Transportation Safety Board issued a report that the Dali had multiple power failures leading up to the Key Bridge incident – including at least one while the ship was still docked and being serviced.²⁹ Nevertheless, the Dali still attempted to leave port.³⁰

To the extent the city is successful with its argument that the owners of the Dali (and their insurers) were on notice of the dangerous conditions that led to the ship’s collision with the Key Bridge, the owners may not be entitled to the benefits that the Titanic Act affords.³¹

The Disparate Effect of the Titanic Act

Absent a finding that the owner and manager of the Dali had “privity or knowledge” of conditions that made the ship unseaworthy before it set sail, limitations under the Titanic Act could allow the owners of the Dali – both “corporations organized and existing under the laws of Singapore with registered office[s] in Singapore”³² – to avoid major responsibility for the losses that resulted from the incident.

In this regard, the Titanic Act would seemingly cause a major disaster such as the Key Bridge collapse to generate outcomes that are – from a liability perspective – more like what would occur with a natural disaster than with a “man-made” one.

Chubb, the insurance company that insured the Key Bridge itself, for example, is likely to pay $350 million to the State of Maryland under its insurance policy – seemingly what it would have had to pay out if the structure were destroyed by a hurricane.³³ Insurers for the owner and manager of the Dali, meanwhile, if the Titanic Act is successfully invoked, would have relatively modest exposure.

A useful contrast to the potential implications of the Titanic Act with respect to commercial shipping by sea is the outcome of the 2023 Norfolk Southern derailment in East Palestine, Ohio, which involved commercial shipping by rail. In that incident, Norfolk Southern was faced with a class action lawsuit involving “claims within a 20-mile radius from the derailment . . . as well as personal injury claims within a 10-mile radius. . . . ”³⁴ The railroad agreed to settle those claims for $600 million – in addition to paying “more than $800 million” on environmental cleanup costs.³⁵

This contrast is particularly notable because the Dali itself appears to have actually been fairly well insured. Specifically, the ship has coverage “through a specialized property and indemnity insurer, the Britannia P&I club . . . [which] is one of a dozen protection and indemnity, or P&I, clubs, which between them insure around 90% of the world’s oceangoing tonnage.”³⁶ Those P&I clubs collectively buy reinsurance – covering “up to $3.1 billion per ship.”³⁷ And that reinsurance is spread among dozens of insurers so that the payout by anyone of them is more manageable.³⁸

This clearly begs the question, is the Titanic Act still reasonable and appropriate in today’s maritime environment with massive container ships capable of causing enormous damage that are owned by large corporations and have more readily available insurance coverage?

The Initial Intent of the Act Versus Modern-Day Implications

Legal scholars have noted that the Titanic Act was initially “intended to encourage individuals with limited assets other than their vessels to invest money in development of a U.S. merchant fleet.”³⁹ The act helped to “induce the heavy financial commitments the shipping industry requires by mitigating the threat of a multitude of suits and the hazards of vast, unlimited liability as the result of a maritime disaster.”⁴⁰

Since the early twentieth century, however, “most merchant vessels [have been] owned by corporations whose shareholders [do] not bear personal liability for losses involving the vessels.”⁴¹ In addition, “corporations. . . . [now have] available to them the ability to spread the risk of a catastrophe at sea through the purchase of insurance.”⁴²

At the same time, many of the vessels that are now involved in maritime activities are of a scale – and have the potential to do damage, including to onshore infrastructure – that is far beyond what could have been contemplated when the Titanic Act was initially adopted.

The Key Bridge itself had at least some safety mechanisms in place to protect it. Circular concrete structures known as “dolphins,” for example, were “located near [the] bridge’s central supports.”⁴³ These structures were designed to cause a ship that “veer[ed] off track in the shipping lane . . . [to] strike[] the dolphins instead of the bridge’s main support structures.”⁴⁴ These structures saved the bridge once before in 1980.⁴⁵ Their number, size and location, however, do not appear to reflect current standards that were put in place after the Skyway Bridge disaster in Tampa that same year.⁴⁶

More modern bridges that are located near major shipping channels now include additional protection, located directly around their support piers.⁴⁷ In fact, the American Association of State Highway and Transportation Officials, which sets standards for the safe construction of bridges, “currently requires newer bridges to build robust collision prevention structures.”⁴⁸ Yet engineers have observed that even “protection[] systems…directly around the pier would probably not have been able to protect this particular incident because of the size of the cargo ship and the weight . . . . It was just too big.”⁴⁹

Under such circumstances, it is important that the parties with the greatest ability to avoid a tragedy to begin with – the owners of the ships (and their insurers) – be incentivized to do so.

Implications for New York

Admiralty jurisdiction and maritime law apply broadly to “navigable waters” of the United States – which encompass all waters that by themselves “or by uniting with other waters, [form] a continued highway over which commerce is or may be carried on with other States or foreign countries.”⁵⁰ And it is the “capability of use by the public for purposes of transportation and commerce [that] affords the true criterion of the navigability of a [body of water], rather than the extent and manner of that use.”⁵¹

For New York State, that means a lot of navigable waters.With the coast of Long Island; the Port of New York and New Jersey; the Hudson River to Troy; the Great Lakes to the west; the St. Lawrence Seaway and Lake Champlain to the north and northeast; and even the Susquehanna River in the Southern Tier, New York is surrounded by waters and maritime activities that are potentially subject to the Titanic Act – and its limitations of liability. It is also clear that ship owners involved in maritime accidents in New York State continue to seek to invoke the protections of the act.

The City of New York itself, for example, sought unsuccessfully to invoke the Titanic Act to limit its liability in connection with the Staten Island ferry crash in October 2003. That effort was rejected because the negligent conduct involved – the failure to enforce an “adequate [two-pilot] policy” – was determined to be “within the privity or knowledge of the City.”⁵²

Other, more recent, attempts – involving smaller ships – include 2018 litigation concerning an incident on the Great South Bay in Fire Island;⁵³ a 2019 lawsuit resulting from losses incurred by the Power Authority of the State of New York when an underwater electrical cable was damaged by a ship;⁵⁴ and a 2020 proceeding brought by the owners of a commercial sailing vessel in New York Harbor.⁵⁵

None of these incidents involved a ship the size of the Dali – or the scale of damages that resulted from the Key Bridge collapse. And in several of the cases, the respective owner’s attempts to invoke the Titanic Act were rejected by the courts. These cases make clear, however, that the act continues to be invoked as a means of attempting to limit owner liability.

Maritime experts will know best how to mitigate the risk of disasters like the Key Bridge collapse in the future: whether through redundancy in a ship’s power system (sufficient to allow for navigation); the presence of tugs until a ship has not only entered the shipping channel but is clear of any additional structures; further restricting the size of ships in certain harbors or countless other measures.

In some respects, moreover, disasters like the Key Bridge collapse are unavoidable – and uninsurable. They are too infrequent and the potential losses are simply too extensive. Fully insuring for all such potentialities would be cost prohibitive. But to the extent the Titanic Act overly restricts the liability of ship owners and their insurers – who underwrite the risk associated with these ships and may be unwilling to do so if additional safeguards are not put in place – it has the potential to act as a “moral hazard” that should be addressed.

The fate of public infrastructure like the Key Bridge should not be dependent on what the crew of a ship like the Dali can do after the safeguards and systems that ship owners and their insurers have in place have failed.

Richard C. Reilly is a principal with the firm of Gleason, Dunn, Walsh & O’Shea in Albany, where his practice primarily focuses on insurance law, municipal law and commercial litigation. Since 2014, he has maintained the McKinney’s Practice Commentaries for Articles 51–57 of New York’s Civil Practice Law and Rules.

Thomas F. Gleason is a founding principal and senior counsel with Gleason, Dunn, Walsh & O’Shea. His practice focuses on insurance law, commercial litigation and dispute resolution. He has taught insurance law for more than 20 years. He has also written Practice Commentaries for Sections 2101–2103 and Articles 50-A and 50-B of the Civil Practice Law and Rules.

The authors would like to thank Alex C. Gugie, Albany Law School, Class of 2024, for his assistance in researching this article.