Dali Allision with Francis Scott Key Bridge
The Dali (IMO No. 9697428) is a 947-foot-long, steel-hulled general cargo vessel (containership) that was built in 2015. It is propelled by a single, slow-speed, 55,626-hp diesel engine that is connected to a single, right-turning propeller. To run the main engine, one of the vessel’s four diesel generators must be operating and supplying the vessel with electrical power. The emergency generator alone cannot restart or run the main engine.
The Dali is owned by Singapore-based Grace Ocean Private Limited, which owns 55 ships—a mix of containerships, bulk carriers, and tankers. Singapore-based Synergy Marine Group was the vessel’s manager that provided the crew and operated the Dali. The vessel was classed by ClassNK, one of several nongovernmental classification societies that establish and maintain standards for the construction and operation of ships. Through construction and later periodic surveys, classification societies confirm a vessel meets the class’s technical rules.
The vessel arrived in the United States from Sri Lanka on March 19, 2024, making port calls in Newark, New Jersey, and Norfolk, Virginia, before arriving in Baltimore Harbor on March 23 and mooring at Seagirt Marine Terminal. The vessel was on time charter to Maersk Line A/S at a daily hire rate of $32,500, with a voyage estimated to take 36 days.
The National Transportation Safety Board (NTSB) reported that on March 25, approximately 10 hours before leaving Baltimore, the vessel experienced two losses of electrical power during in-port maintenance. The first in-port blackout was caused by the mechanical blocking of the online generator’s exhaust gas stack. The second blackout in port was related to insufficient fuel pressure for the online generator. The NTSB is continuing to investigate the electrical configuration following the first in-port blackout and potential impacts on the events during the incident.
The Francis Scott Key Bridge is owned and operated by the Maryland Transportation Authority (MDTA), an independent state agency; was opened to traffic on March 23, 1977; and carried Interstate 695 over the Patapsco River, running from Baltimore to Dundalk, Maryland. Data from the bridge’s most recent inspections indicated that inspectors rated the conditions of the deck, the superstructure, and the substructure as being in satisfactory condition. The Key Bridge was undergoing road maintenance at the time of the incident. A seven-person road maintenance crew contracted by the MDTA and one inspector, a subconsultant to the MDTA, were on the bridge when the vessel struck it.
In the early morning of March 26, the Dali prepared to depart from Baltimore en route to Colombo, Sri Lanka, with a cargo of 4,680 containers (56,675 metric tons of containerized cargo). A senior pilot and apprentice pilot from the Association of Maryland Pilots boarded the Dali. During the master/pilot exchange, the senior pilot asked about the vessel’s condition, and the captain reported that the ship was in good working order. The Dali was assisted by two tugboats (each of which had an over 5,000-hp engine), which at about 0036 hours, pulled the Dali away from the dock. About 0055, the aft tug cast off from the Dali. About 0107, the vessel entered the Fort McHenry Channel. Generators 3 and 4 were supplying electrical power to the vessel. All three steering pumps, which turned the ship’s single rudder, were online. About 0108, the forward tug cast off from the Dali.
About 0125, the Dali was 0.6 miles—or three ship lengths—from the Key Bridge when two electrical breakers that fed most of the vessel’s equipment and lighting unexpectedly tripped. This caused the first blackout (loss of electrical power) to all shipboard lighting and most equipment, including the main engine cooling water pumps (which controlled engine cooling water pressure) and steering gear pumps. Generators 3 and 4 continued to run and supply electrical power. However, most bridge equipment also lost power. Importantly, the loss of electrical power stopped all three steering pumps, and, therefore, the rudder was unable to be moved. At the time, the Dali had a speed over ground of 9.0 knots, with the rudder amidships.
At 0126:39, the pilots called for tug assist. One of the tugs previously assisting the Dali was three miles away and immediately answered, heading toward the ship, but did not reach the Dali before it struck the bridge. At 0127:01, the senior pilot ordered an anchor dropped, and the crew began the process to drop anchor. The pilots’ dispatcher called the MDTA police duty officer (as the Key Bridge was undergoing road maintenance) and relayed that the vessel had lost power. The pilots’ dispatcher then notified the U.S. Coast Guard about the Dali’s loss of power.
The Dali’s crew was able to restore electrical power to the vessel, but, when the vessel was 0.2 miles from the Key Bridge, a second electrical blackout occurred because the breakers that connected generators 3 and 4 tripped, causing a total loss of vessel electrical power. Having connected to the emergency bus by this time, the emergency generator provided electrical power to the emergency equipment continuously through the second electrical blackout. At 0127:25, one of the pilots made a call by very high frequency (VHF) marine radio to warn all waterborne traffic.
At 0129:10, the Dali’s starboard bow struck pier 17 of the Key Bridge at 6.5 knots. Six spans of the bridge (including three main spans) subsequently collapsed into the water and across the vessel’s bow. A Dali crew member who was on the bow at the time of the incident was reportedly releasing the brake on the port anchor but had to escape from the falling bridge before he was able to reapply the brake. As the bridge deck collapsed onto the bow of the Dali, another of the vessel’s crew members sustained a minor injury while escaping the debris. The vessel and certain cargo aboard also sustained damage.
The road maintenance inspector had been walking the length of the bridge when the ship struck it. He ran north and made it to the nearest surviving span before the rest of the bridge collapsed. The other seven workers were in their vehicles and fell with the bridge. One worker was able to free himself from his truck and was rescued by an MDTA police boat at 0155. Multiple agencies searched for survivors throughout March 26. The U.S. Coast Guard suspended the active search that evening, and efforts then transitioned to recovery. Six deceased workers were later recovered by divers.
The Port of Baltimore shipping channel was closed for over two months from the date of the incident. The reconstruction of the Francis Scott Key Bridge is set to begin in 2025, and the replacement bridge is expected to be complete by fall 2028, with an estimated cost of approximately US$1.2 billion.
Third-Party Liability Cover Through Protection and Indemnity Club
The Dali is “entered,” or insured, with Britannia Steam Ship Insurance Association Europe (Britannia), a not-for-profit mutual insurance association organized under the laws of England and Wales that provides cover to its ship-owning members against third-party liabilities arising out of the operation of ships. The predecessor of its parent entity, Britannia P&I, formed in 1855, making it the oldest P&I club in the world. In 1899, Britannia first joined with other P&I clubs in entering a pooling agreement to share claims in excess of GBP 10,000. As addressed below, Britannia remains part of an important and robust claim-sharing agreement with the other member clubs comprising the International Group of P&I Clubs (International Group).
As of February 20, 2024, Britannia had 4,217 ships entered in the club, with 248 members representing 33 countries. It is rated A (negative) by Standard and Poor’s. Britannia is a mutual insurance company, existing for the benefit of its members. Under its club rules, Britannia maintains and invests reserves, has the ability to make distributions to its members, and maintains the right to make calls upon its members for additional premium. It pays a management company a fee to manage the day-to-day business of the club.
The Dali incident will fall within the 2024/2025 policy year for Britannia. P&I cover is provided under Britannia’s 2024/2025 Class 3 Protection & Indemnity Rules. The rules set forth the terms of cover for a broad range of third-party liabilities pertaining to this incident, including property damage to fixed objects, injury and death of third parties, injuries to seafarers, cargo damage, wreck removal of the entered ship, legal costs, and sue and labor. Notably, the Dali had in place a separate hull and machinery policy providing coverage in the amount of US$90 million for damage to the vessel itself.
Britannia is one of 12 members of the International Group. The International Group clubs are members to a formal International Group Agreement. Like Britannia, each International Group club is an independent, not-for-profit mutual insurance association, providing cover for its shipowner and charterer members against third-party liabilities arising out of the use and operation of ships. Each club is owned by its shipowner and charterer members, and its operations and activities are overseen by a board of directors, or committee, elected from the membership. The International Group is organized as an unincorporated association of the 12 member clubs. The International Group clubs represent around 90% of the world’s oceangoing tonnage, covering virtually every type of vessel.
Importantly, the International Group clubs share their large losses by using a captive and by obtaining a large reinsurance program through the commercial market. Liabilities that exceed the individual club retention, which is currently set at US$10 million, are shared among all 12 clubs in accordance with the terms of their formal Pooling Agreement, which defines the risks that can be pooled, those risks that are excluded from cover, and how covered losses are to be shared among the participating clubs. The pool provides a mechanism for sharing all claims in excess of US$10 million up to, currently, approximately US$8.9 billion, thus providing the ability to cover large-scale disasters.
This claim-sharing agreement is underpinned by an extensive, annually renewed, commercial market and captive reinsurance program. The pool is structured in three layers from US$10 million to US$100 million. There is no formal reinsurance program in place for the layer of US$10 million to US$30 million, but an individual group club may make its own arrangements to reinsure its exposure to this layer. Excess of US$30 million to the ceiling of US$100 million, the pool is reinsured by the International Group captive reinsurance vehicle, Hydra Insurance Company Limited (Hydra). Hydra is a Bermuda incorporated segregated accounts company in which each of the 12 group clubs has its own segregated account (or “cell”) ring-fencing its assets and liabilities from those of the company or any of the other club cells. Hydra reinsures each club in respect of that club’s liabilities within the pool and reinsurance layers in which the club participates. The layer of US$30 million to US$50 million is referred to as the “lower pool,” and the layer of US$50 million to US$100 million is the “upper pool.” Through the participation of Hydra, the International Group reports that it can retain, within its Hydra cells, premium that would otherwise have been paid to the commercial reinsurance markets.
The annual group general excess of loss (GXL) reinsurance program, purchased through the commercial market, attaches at the pool ceiling of US$100 million, and provides up to US$2 billion of reinsurance cover in a three-layer structure: US$650 million excess of US$100 million (layer 1), US$750 million excess of US$750 million (layer 2), and US$600 million excess of US$1.5 billion (layer 3). Hydra retains a US$107.1 million annual aggregate deductible within the 75% market share in layer 1, and there are three multiyear private placements in layer 1, two of which are 10% and one at 5%.
The International Group purchases a further US$1 billion of reinsurance cover (the “collective overspill”) from the commercial market to provide protection in respect of claims exceeding the upper GXL cover limit of US$2.1 billion. The International Group reports that no claim in its history has reached the collective overspill layer. A visual representation of the reinsurance program tower can be viewed on the International Group’s website.
Interestingly, the International Group’s claim-sharing agreements were previously exempted from the European Union’s competition rules by a Commission decision of April 12, 1999. The exemption expired on February 20, 2009, and the European Commission opened a formal probe to determine “whether certain provisions of the [International Group Agreement and Pooling Agreement] may lessen competition between P&I Clubs as well as restrict, to a certain extent, the access of commercial insurers and/or other mutual P&I insurers to the relevant markets.” In August 2012, the European Commission closed its antitrust investigation into certain provisions accompanying claim-sharing and joint reinsurance agreements by the International Group clubs. Thus, the International Group Agreement and Pooling Agreement remain valid.
Dali Owner’s Action Under Limitation of Liability Act of 1851
On April 1, 2024, six days after the Dali struck the Key Bridge, its owner, Grace Ocean Private Limited, and manager, Synergy Marine Pte Ltd, filed a petition in the U.S. District Court for the District of Maryland for exoneration from or limitation of liability under the Limitation Act. The petitioners acknowledge that the Dali struck the Key Bridge, resulting in its collapse, the deaths of six workers, and damage to cargo. However, the petitioners deny that the incident was “due to any fault, neglect, or want of care on the part of Petitioners, the Vessel, or any person or entities for whose acts Petitioners may be responsible.” Alternatively, the petitioners allege that any such acts or faults “were occasioned and occurred without Petitioners’ privity or knowledge,” entitling them to limit their liability to the postincident value of the Dali.
The Limitation Act was enacted by the U.S. Congress in 1851. The purpose of the Limitation Act is to encourage shipbuilding and to induce the investment of money in the shipping industry. One noted commentator states: “Limitation of liability is accepted as necessary to serve the needs of commercial practicality as well as the shipowner. From an economic standpoint, this principle makes possible realistic insurance coverage and reasonable apportionment of the costs of a maritime disaster.” Rule F of the Federal Rules of Civil Procedure Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (Supplemental Rule F) sets forth pertinent procedural requirements for filing a limitation of liability action.
The Limitation Act creates a procedure whereby the shipowner’s liability for certain claims may be limited to the “value of the vessel”—the value at the termination of the voyage—and “pending freight”—freight monies earned by the vessel owner during the voyage. Under the Limitation Act, claims, debts, and liabilities subject to limitation are broadly interpreted, including “those arising from any embezzlement, loss, or destruction of any property, goods, or merchandise shipped or put on board the vessel, any loss, damage, or injury by collision, or any act, matter, or thing, loss, damage, or forfeiture, done, occasioned, or incurred, without the privity or knowledge of the owner.” If the negligent act is done without the “privity or knowledge” of the owner, the “liability of the owner of a vessel for any claim, debt, or liability . . . shall not exceed the value of the vessel and pending freight.” The U.S. Supreme Court has held that any shipowner, whether a U.S. citizen or foreign, may seek relief under the Limitation Act, regardless of where the incident occurred.
Venue. The owner of a vessel commences a limitation action by filing a complaint in a U.S. federal district court. Venue is proper in the district where the vessel has been arrested or sued, and if neither, where it may be found (if it is not found within any district, then the complaint may be filed in any district). Here, the Dali was still within the District of Maryland on April 1, 2024, and the petition was filed in that court.
Pleadings. As the Dali’s owner has done, a shipowner may plead not only limitation but also exoneration from liability in the alternative in a single complaint. Thus, in practice, the prayer for relief in the complaint for limitation of liability is usually joined to a similar prayer for exoneration from all liability arising out of the given casualty or voyage.
Limitation fund. When a limitation action is brought, the owner must deposit with the court, for the benefit of the claimants, an amount equal to the value of the owner’s interest in the vessel and pending freight, or approved security (“limitation fund”). Courts have held that the limitation fund equals the postaccident value of the vessel plus pending freight. The Supreme Court has defined pending freight as the “earnings of the voyage.” In doing so, it recognized that the purpose of the statute is to “limit the liability of vessel owners to their interest in the adventure.”
Here, the Dali’s owner alleges that the vessel had a prevoyage value of US$90 million. However, postincident repair costs to the Dali are estimated to be at least US$28,000,000, and salvage costs are estimated to be at least US$19,500,000. Accordingly, the owner alleges that the value of the vessel at the termination of the voyage is presently estimated to be US$42,500,000. The alleged pending freight represents the charter hire day rate of US$32,500 multiplied by the estimated voyage of 36 days, resulting in pending freight of approximately US$1,170,000. Thus, the Dali’s owner alleges a limitation fund of US$43,670,000. Notably, the amount of the limitation fund may be challenged by the claimants pursuant to motion under Supplemental Rule F(7).
As security for the limitation fund, the Dali’s owner filed with the court an interim stipulation of value issued by Britannia in the amount of US$43,671,000 (the limitation fund plus US$1,000 in costs). In doing so, Britannia stipulated that if judgment is awarded against the limitation petitioners, such judgment may be entered against both the petitioner and Britannia for the amount not exceeding the interim stipulation of value. Britannia further submitted itself to the jurisdiction of the court in connection with the stipulation and agreed to abide by all orders and decrees of the court, and to pay the amount awarded by the final judgment or decree entered by the court. These types of interim stipulations are sometimes referred to as “letters of undertaking” by insurers, and they are accepted by U.S. courts as a matter of course as proper security for a limitation fund.
Importantly, P&I insurers, such as P&I clubs, derive “indirect benefit from successful limitation by the shipowner, since the usual policy term provides that the insurer will pay up to but not beyond the assured’s legal liability. The insurer is thus liable on an indemnity theory.” Courts have repeatedly held that absent a direct action statute, there is no right by the claimants in a limitation action to proceed directly against the insurer. Even in jurisdictions where such direct action is allowed, a P&I insurer is not liable for “any amount beyond the shipowner’s judicially approved limitation of liability, where the policy of insurance by its terms limits liability to that amount.”
Limitation stay and concursus. When an action has been brought under the Limitation Act and the owner has complied with the deposit of the limitation fund, all claims and proceedings against the owner related to the matter in question cease and a concursus proceeding is formed. This is an extremely important aspect of a limitation action and a key consideration for vessel owners—the Supreme Court has held that the Limitation Act permits the shipowner, by instituting limitation of liability proceedings, to have all claims against it brought into concourse in an admiralty tribunal.
Pursuant to Supplemental Rule F(3), once all requirements of the Limitation Act and Supplemental Rule F have been followed, the court will enter an order staying all pending litigation arising out of the same casualty or voyage against which limitation is sought (“limitation stay”). The scope of the limitation stay is global in nature, and admiralty courts have the authority to issue antisuit injunctions even as to foreign proceedings.
To this end, on the same day that the petition was filed by the Dali’s owner, the U.S. District of Maryland issued its order allowing interim stipulation for value and stipulation for costs, accepting the security provided by Britannia for the limitation fund. The court then issued its restraining order and order for issuance of notice that claims be filed, ordering the petitioners to issue notice to all persons asserting claims, admonishing potential claimants to file their claims with the court by a deadline of September 24, 2024. The petitioners were required to provide notice by publication, in the Baltimore Sun, the Daily Record, and the Washington Post newspapers once a week for four consecutive weeks. The petitioners were also required to mail a copy of the notice to “every person known to have any claim against Petitioners or the M/V DALI” no later than the second publication date. The clerk of court issued notice to the claimants, containing the claims deadline of September 24, 2024, and expressly setting forth that any claimant who files a claim with the court and wishes to contest allegations in the petition must file an answer to the petition and serve it upon the petitioner’s attorneys—“failure to file claims with the Clerk and failure to serve claims upon Petitioners’ attorneys will result in default.” Thus, any claim against the petitioners must be brought in the limitation action or the potential claimant is barred from bringing the claim.
The provision of this notice by publication and mailing to known claimants is very important because they are procedural requirements under Supplemental Rule F(4). A petitioner cannot know every potential claimant for the purposes of providing actual notice, and thus the petitioner is only required to mail the notice to “known” claimants, “whereas it is sufficient to provide potential claimants with constructive notice by publication.” “Publication and the mailing of notices to all known claimants constitutes constructive notice to the world.”
Notably, with the MDTA owning the Key Bridge, courts have held that state, federal, and foreign governments are subject to filing claims within a limitation action and that the filing of a petition under the Limitation Act does not violate any arguments as to “sovereign immunity.” Thus, in accordance with the claims deadline, the State of Maryland, including the MDTA, asserted a claim seeking at least US$1.7 billion in damages for the rebuilding costs of the Key Bridge. The State of Maryland further seeks recovery of lost tax revenue as a result of the closure of the port and loss of the Key Bridge. The United States filed a claim seeking at least US$100 million for damages associated with clearing the Key Bridge debris, clearing the channel, and emergency response costs.
Once the claimants have filed their answers and claims in the limitation action, the matter proceeds under the Federal Rules of Civil Procedure. The petitioners and claimants may bring third-party demands against potential tortfeasors. Cross-claims may be brought between codefendants. Under the general maritime law, maritime torts are subject to joint and several liability—another key consideration in forming a limitation concursus action in which all claims and liability as to all defendants will be determined in one forum. The issues of liability, damages, and limitation are typically decided by the district judge, with the court conducting a bench trial under admiralty jurisdiction. However, under certain circumstances, the claimants may request a jury trial as to liability and damages. When that occurs, the issue of limitation of liability is reserved for the court as the fact finder.
Burden of proof. Determining whether a shipowner is entitled to limitation of liability employs a two-step process. “First, the court must determine what acts of negligence or conditions of unseaworthiness caused the accident. Second, the court must determine whether the shipowner had knowledge or privity of those same acts of negligence or conditions of unseaworthiness.” The claimants bear the burden of proving that a negligent act or unseaworthiness caused the accident. If the first step is proved, the petitioner bears the burden of proving it had no privity or knowledge of the negligence act or unseaworthy condition.
However, in this instance, the Dali petitioners will likely bear the burden of proof with respect to both steps of the determination. This is due to application of the so-called Oregon rule, under which it is presumed that a moving vessel, here the Dali, operating under its own power, is at fault when it allides with a stationary object. “This presumption operates to shift the burden of proof—both the burden of producing evidence and the burden of persuasion—onto the moving ship.” The moving vessel can rebut the presumption by proving, by a preponderance of the evidence, that the allision was the fault of the stationary object, that the moving vessel acted with reasonable care, or that the allision was an unavoidable accident. The Oregon rule’s “presumption derives from the common-sense observation that moving vessels do not usually collide with stationary objects unless the vessel is mishandled in some way.”
Distributing the limitation fund. If, after adjudication of the limitation action, it is determined that the shipowner is entitled to limitation and the limitation fund is insufficient to pay all claims brought within the limitation action, then all claimants are paid in proportion to their respective losses. Overall, the Limitation Act provides a single forum for determining (1) whether the vessel and its owner are liable at all, (2) whether the owner may in fact limit liability to the value of the vessel and pending freight, (3) the amount of just claims, and (4) how the fund should be distributed to the claimants. Limitation extends both in personam to the shipowner as well as in rem against the vessel.
Privity and Knowledge
The concept of “privity or knowledge” will likely be a key issue within the Dali’s limitation action. Notably, the 1976 Convention on Limitation of Liability for Maritime Claims (LLMC) came into force on December 1, 1986. The LLMC has not been accepted in the United States but has been enacted by numerous shipping nations. Unlike the U.S. Limitation Act, the LLMC limitation fund is based on a formula using the vessel’s tonnage rather than the postvoyage value of the vessel and its pending freight, and the LLMC employs a different standard for limitation. Thus, “[a] majority of the world’s shipping nations reject the core concept of the U.S. Limitation Act, allowing limitation of liability to the value of the vessel after the casualty.” On the other hand, the value of the limitation fund under the LLMC, based on tonnage of the vessel, is nearly always a higher limit, but the LLMC provides for “a virtually unbreakable system of limiting liability.” Under the LLMC, shipowners may limit their liability, except if “it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result.” The notion of “privity or knowledge” does not exist under the LLMC and is unique to the U.S. Limitation Act. Because the U.S. Limitation Act may provide for a low or valueless limitation fund (in the event of a total loss of a vessel), U.S. courts are more skeptical of granting limitation of liability in favor of a vessel owner.
To this end, “[t]he ‘privity or knowledge’ issue is the favored method claimants use to deny shipowners the benefits of the Limitation Act.” Courts have stated that “‘privity or knowledge’ implies some sort of ‘complicity in the fault that caused the accident.’” Privity requires that the owner “personally participated in the negligent conduct or brought about the unseaworthy condition.” In the context of a corporation, “privity or knowledge” means the privity or knowledge of a managing agent, officer, or supervising employee, including shoreside personnel. Thus, a shipowner is presumed to know what the company’s managing officers knew or should have known with regard to actions or conditions that caused the loss.
Privity or knowledge is deemed to exist “where the owners had the means of knowledge or . . . where knowledge would have been obtained from reasonable inspection.” Typical arguments supporting denial of limitation based on privity and knowledge are because “management failed to provide proper procedures for the maintenance of equipment, the training of the crew, or adequate checks to ensure the implementation of established maintenance and safety procedures.” However, errors in navigation by an otherwise competent crew do not provide the basis for privity or knowledge. In the case of the Dali, the issues of previous electrical blackouts, vessel maintenance, training, and reporting procedures will likely be at issue with respect to the limitation of liability and the “privity or knowledge” standard. Again, the petitioners will bear the burden of proof with respect to lack of privity or knowledge.
Pure Economic Loss Rule in Maritime Tort
With the collapse of the Key Bridge, which provided transportation on Interstate 695, and the closure of the Port of Baltimore’s shipping lane for over two months, an issue that will likely affect claimants within the limitation action is that claims for economic loss unaccompanied by physical damage to a claimant’s proprietary interest are not recoverable in maritime tort. This is commonly referred to as the “pure economic loss rule” or “Robins Dry Dock doctrine,” named after the 1927 Supreme Court decision.
Notably, the U.S. Court of Appeals for the Fourth Circuit, which encompasses the District of Maryland, has previously addressed the pure economic loss rule where the owner and bareboat charterer of a vessel that struck a bridge over the James River in Virginia were sued for various economic losses suffered by the plaintiffs as a result of the allision. Although the allision resulted in closing of the river to marine traffic for several months, a corporation that performed towage service and transported cargo on the river and a corporation that shipped stone and gravel on the river could not recover for business interruption, loss of trade, or added expenses to operations because they did not allege or show physical damage to their own property. Absent such evidence, economic losses in maritime tort could not be recovered as a matter of law. The issue of economic losses without direct physical damage to property of a claimant will likely be heavily briefed and argued with respect to the Dali incident.
Navigating the Dali Limitation Action
Although at first glance the Dali incident may appear unwieldy from an insurance and procedural standpoint, in reality the Dali is entered in a P&I club with likely more than sufficient cover for third-party liabilities arising from the incident, and the Dali’s owners have initiated a limitation of liability action that will result in a concursus of all claims within one proceeding in the U.S. District Court for the District of Maryland. Within the limitation action, privity and knowledge on the part of the owner or manager of any negligence acts or unseaworthiness conditions of the Dali will be a key issue. If the Dali’s owner is able to limit its liability, the benefits of the Limitation Act will inure to the benefit of the P&I club as well, and all claimants will share pro rata in the available limitation fund. If the claimants prove negligence and the Dali cannot carry its burden to show it was without privity and knowledge of the negligence act, the Dali’s owner will lose the right to limit its liability to the value of the fund. Further, many claims may be subject to the general maritime law’s bar on purely economic losses in tort, absent any direct physical damage to a claimant’s property or proprietary interest.
