Washington Maritime Injury Lawyer Blog

The London newspaper Guardian reported yesterday that Carnival Cruise Lines has opened talks on compensation with the survivors of last week's shipwreck.

One may assume that, in keeping with the practice of vessel owners and their underwriters in other shipwreck cases, Carnival is trying to settle quickly with claimants, before they retain lawyers to investigate the facts and make claim for the full amounts due under the maritime law.

Based upon facts which are coming to light, enormous sums will be due to compensate the families of the dead and survivors who have been traumatized by the disaster.

Eleven passengers and crew are known to have died, and 21 are still not accounted for.

Prosecutors investigating the disaster were, according to the Guardian report, anxious to explore why more than an hour had elapsed between the moment at which the liner hit a rock, and the order to abandon ship.

Investigators wanted to know whether the 68-minute period that elapsed during the course of these calls was because Schettino had underplayed or underestimated the gravity of the damage sustained by the liner, or because Costa Cruises, a subsidiary of Miami-based Carnival, had been reluctant to sanction a decision to evacuate that might cost it millions of euros in compensation, the paper said.

If the latter motive impeded Carnival's response to the shipwreck in any degree, this would seem to provide sound basis for punitive damage claims under the maritime law. These are damages awardable for callous, wilful and outrageous behavior.

The company has tried to place the entire blame for the incident on the captain. At a news conference the company's chairman said the captain had not sought permission to deviate from his route in order to skirt the shoreline of Giglio, reportedly as a tribute to a retired skipper living on the island.

But new evidence has emerged of another "salute" made by the COSTA CONCORDIA as it passed within a few hundred yards of a different Italian island.

Evidence of Costa Cruises' enthusiasm for "salutes" can be found on the firm's blog in an entry describing how, in September 2010, the Costa Concordia under Schettino's command passed close to the island of Procida in the bay of Naples.

The blog said the salute provided "great excitement not only for the islanders but also for the numerous tourists present ... [It was] doubtless a joy and a novelty for all, including the guests of the Costa Concordia, ready with their cameras on the external decks to immortalise that unique moment and celebrate and salute with flags and handkerchiefs."

Costa Cruises' chairman said the company had reviewed the COSTA CONCORDIA's intended course and that the vessel was not to pass within 500 yards of the island.

But his assertion has been called into question by the London maritime daily Lloyds List, which published a map based on Lloyds List Intelligence tracking data. This indicated that the earlier course took the Costa Concordia within 230 metres of land, close to the point at which the ship hit the rocks last Friday.

All indications are that Carnival's Italian subsidiary was at fault in several respects:

1. An incompetent captain was placed in command of the ship.

2. The practice of "saluting" (one might as well say "buzzing") islands was not only tolerated but, in fact, encouraged by the ship operator.

3. No abandon ship drill was conducted at the outset of the voyage.

4. The order to abandon ship may have been delayed on the basis of financial
considerations.

Much further investigation of each of these and other allegations of shipowner's fault will be conducted. However, any maritime lawyer viewing this disaster will recognize that Carnivel Cruise Lines' subsidiary was negligent at the very least. For punitive damages to be awarded, more than negligence will need to be shown, and it appears more than negligence may be necessary to break limitation of liability under the applicable law. (See, previous BOATLAW Blog post.) Early reports indicate that more than mere negligence may well have been involved.

To those of us who live in Puget Sound country, the Italian cruise ship tragedy calls to mind a similiar episode in our local waters. In 1983, the 2800 gross ton state ferry ELWHA grounded on a reef just off Orcas Island, in the scenic San Juans. In that case, the skipper deliberately deviated from the ferry's customary course through the center of Harney Channel to gain a better view of a house on the shore of Orcas and struck a rock. He did this to show a female passenger (who was in the wheelhouse in violation of regulations) how her house looked from the water. Severe damage to the hull of the vessel resulted, but there was no serious injury or loss of life. The incident is recalled almost whimsically in maritime lore, the female passenger referred to mythically as the "Siren of the San Juans."

The grounding of the COSTA CONCORDIA will never be recalled with anything but sadness and perhaps, when all the facts are known, a sense of outrage. Initial reports suggest malfeasance on the part of the cruise line. Although the shipowner has been quick to lay all blame on the skipper, this is a standard ploy. But upon more thorough investigation, it is likely that Carnival Cruise Lines, will be shown to have compromised marine safety in service of profit. This is a recurrent theme in cases of shipwreck.

In the Italian case, it appears cruise lines had routinely permitted the practice of "buzzing" the islands to please passengers and, presumably, prospective customers ashore. Yet when this practice resulted in grounding, as could have been anticipated by prudent shipowners, all blame was immediately heaped upon the master who breached the often tested edge of the envelope.

The early reports also raise questions about the adequacy of abandon ship drills. Once again, this sort of activity makes no contribution to and may detract from the perceived pleasure of the passengers. The overriding motive being profit, safety practices suffer.

An archaic principle of maritime law permits a ship owner to limit its liability arising from a maritime casualty to the value of the vessel and pending freight. Under U.S maritime law, this protection can be claimed if the casualty occurred without the "privity or knowledge" of the vessel owner. Historically, operational negligence of the master has often been deemed to be outside the owner's privity and knowledge -- hence Carnival's knee jerk reaction, to blame a discrete and unexpectable act of the captain.

Under international maritime law, unaltered by U.S. statute, a shipowner may limit liabilty even if he was negligent, provided it is not proven 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 a loss would probably result." Convention of Limitation of Liablity for Maritime Claims. Under this standard, breaking limitation may be a tall order.

In the first days following this tragedy, even as the death toll remains unknown, it is too early to predict the outcome of litigation. But it seems highly likely that a measure of fault will, in the end, be laid at the doorstep of Carnival Cruise Lines management. Unlike the owners of the TITANIC, the owners of the COSTA CONCORDIA permitted a vessel equipped with radar and GPS to run aground on a charted reef. This seems unimaginable in the absence of managerial negligence. One question is whether the captain's fault can be imputed to management. Another is whether the shipowner's own conduct will be shown to have reached the level of recklessness.

The Mediterranean situs of the wreck makes it difficult to resist the Odyssean metaphor invoked in the ELWHA case. For reasons as yet undetermined, the captain of the COSTA CONCORDIA seems to have been lured by sirens on Giglio. As Carnival management was no doubt aware, other skippers had been similiarly inclined. But they could have easily been chained to the mast by strictly enforced rules and computer actuated alarms. Why were they not?

More than £300m has been wiped off the paper fortune of the multibillionaire boss of the company that owned the stricken cruise liner Costa Concordia.

Micky Arison, the flamboyant chairman, chief executive and majority owner of Carnival, saw a large chunk of his $4.5bn (£2.9bn) holdings dissolve on Monday as the company's shares lost almost a fifth of their value.

The shares collapsed by as much as 23% before ending the day 17% lower at £18.65 – their biggest fall for a decade. That wiped more than £1bn off the market value of the company and £300m from Arison's 30% stake.

The fall was precipitated by fears that the shipwreck will put holidaymakers off booking cruises for this year's summer holidays and Carnival warned that it was "not possible to determine" the full cost of the wreck, which killed at least six people. Carnival said the Costa Concordia would be out of action until at least November and put initial estimates of the cost at $95m (£62m).

However, analysts said the final amount is likely to be greater. "This tragedy will be a black mark on the cruise industry and a negative headline for Carnival," said Tim Ramskill, an analyst at Credit Suisse. "If the industry didn't already face enough challenges, this unfortunate event will reverberate on the group over the near-term. While these accidents are extremely rare, the extensive media coverage will likely curtail some booking activity and pressure pricing during the critical season."

Wyn Ellis, an analyst at Numis Securities, warned that the incident will put people off booking cruises in the "key point in the booking cycle" as people begin to plan summer holidays. About a third of cruise bookings are made between January and March. "People will cancel, and others will look at alternatives," he said. "There will, justifiably, be questions about the adequacy of management and emergency operational procedures on board which may have longer term cost implications."

Arison, whose father Ted founded Carnival in 1972, said: "At this time, our priority is the safety of our passengers and crew. We are deeply saddened by this tragic event and our hearts go out to everyone affected by the grounding of the Costa Concordia, and especially to the families and loved ones of those who lost their lives. They will remain in our thoughts and prayers."

Ranked the world's 169th richest person by Forbes magazine, Arison collected $7m in pay and bonuses from Carnival in 2010. The company's board is due to publish his pay for last year later this month. His bonus, which came in at $2.25m last time, is likely to be scaled back. The company's annual report states that its compensation committee considers safety and security matters, among other factors, when determining executive compensation.

Last year Arison, who also owns NBA basketball team Miami Heat, was fined $500,000 for tweeting about the basketball league's pay negotiations with star players.

The disaster is likely to become the biggest insured loss in maritime history, with analysts putting the total payout by insurers at up to $1bn.

The ship, which cost €450m (£372m), is insured for €405m by insurers including XL, RSA and Generali, according to industry sources. Joy Ferneyhough, an analyst at Espirito Santo, said injury and other liability claims could push the total cost to insurers as high as $1bn.

"Initial comments from various insurers and underwriters over the weekend suggest that the insurance loss from the Costa Concordia will likely be $500m-$1bn," she said.

One of Carnival's biggest institutional shareholders, who did not wish to be named, said: "The statement confirming insurance cover is reassuring. The big unknown for investors now is what happens to customer confidence in the Costa brand.

"Micky Arison is well-liked in the industry – staff and investors. Unlike many children who take over businesses founded by their fathers, he has a real grasp of detail and the numbers – and works tirelessly for the company."

The boss of Carnival's Italian subsidiary again blamed the Costa Concordia's captain for the tragedy. Pier Luigi Foschi, chief executive of Costa Crociere, said at a press conference: "The company will be close to the captain and will provide him with all the necessary legal assistance, but we need to acknowledge the facts and to protect all the other 24,000 employees and we cannot, unfortunately, deny human error."

Carnival at a glance

• The world's biggest cruise operator. Brands include Cunard and P&O.

• Eleven brands operate 98 ships with 191,000 berths. Ten new ships scheduled to join the fleet by May 2014.

• Europe generated 38% of its $14.4bn revenues in 2010, with its Genoa-based Italian subsidiary, Costa Crociere, the continent's largest brand.

• Carnival bought P&O Princess Cruises in 2003, three years after it was spun off from Peninsular & Oriental Steam Navigation Co. It also operates Holland America Princess Alaska Tours, the leading tour company in Alaska and the Canadian Yukon.

• The full list of Carnival brands is: Carnival Cruise Lines, Holland America Line, Princess Cruises, Seabourn, AIDA Cruises, Costa Cruises, Cunard, Ibero Cruises, P&O Cruises (UK) and P&O Cruises (Australia).

Source: The Guardian, London.

Rescue efforts aboard the sunken Costa Concordia luxury cruise liner off the coast of Tuscany were halted Monday morning when rough seas caused the ship to shift, endangering divers and rescue workers who have been searching around the clock for survivors. Hours before operations were suspended, a male victim was found in an above-water section of the ship with his lifejacket on, bringing the number of fatalities from the Friday the 13th maritime disaster up to six. Three survivors have been rescued since the ship was evacuated in the early hours of Saturday morning.

In Genoa, Pierluigi Foschi, president of the Costa Crociere cruise line, held a press conference in which he blamed Capt. Francesco Schettino, 52, for “deviating from the authorized route” and taking matters into his own hands. He reserved judgment on the captain’s action until the company has access to the ship’s black box to study the evidence—but he conceded that “it may well be grave human error.”

Schettino faces up to 15 years in prison if he is convicted of manslaughter and abandoning ship. He is under house arrest with the ship’s first mate, Ciro Ambrosio, who is also under investigation. Schettino’s lawyer, Bruno Leporatti, told an Italian wire service that his client was the last to leave the ship—even though local media reported seeing him on the shore as lifeboats were still making landfall the night of the accident. The local Giglio newspaper reported that some crew members urged Schettino to go back to the ship at one point during the evacuation. Leporatti says Schettino’s actions showed “great nautical skills and allowed many passengers to reach safety.” A judge will make a ruling on Tuesday about whether Schettino should remain in custody during the investigation. More than 100 crew members and some passengers have been interrogated since the crash occurred.

As the investigation moves forward, there is little doubt that the ship was traveling far too close to the tiny tourist island of Giglio when it hit a reef or rocky sandbar (one rock is still visibly embedded in the ship’s crumpled hull). Residents of Giglio confirmed that it was a regular occurrence for these giant ships to “buzz” the island. Giglio’s mayor, Sergio Ortelli, said that it was a common practice for cruise-ship captains to “fly by” the island, flash their lights, and blow the ship's horn three times to greet friends of the ship’s officers. Ortelli said he didn’t know if that’s what happened Friday night, but he admitted that it seemed “probable.” Last August, Ortelli even wrote a letter of thanks to the cruise line for making the pass and delighting the tourists and residents.

For now, search and recovery efforts have been hampered by changing weather conditions. Heavy sea storms are forecast in the area for Wednesday, causing concern that this accident may turn into an environmental disaster. Italy’s environmental minister, Corrado Clini, has called a group of experts to study just how they can prevent a major fuel spill. The cruise ship was carrying some 2,400 TOE (tons of oil equivalent) of fuel, separated into 17 reinforced compartments, but some fuel has already leaked into the Mediterranean Sea. “The risk of a spill for the entire area is extremely high,” Clini said. “We’re doing everything we can to monitor the situation.”

But efforts to secure the partially sunken ship are proving to be a logistical nightmare. Maritime-salvage experts have said they will eventually try to lift the ship onto giant balloons, anchored by cranes, but it may take weeks to put that system in place. Meanwhile the ship is vulnerable and could even drift farther out into the sea, making rescue efforts even more difficult. On Monday the massive wreckage suddenly shifted nine centimeters vertically and 1.5 centimeters horizontally, causing a scraping noise that sent rescuers scrambling.

Officials on the ground say there are still 10 missing passengers and as many as six missing crewmen, according to Luca Cari, the spokesperson for the fire brigade overseeing rescue operations in Giglio and Porto Santo Stefano, but Foschi refused to confirm an exact number, calling the situation fluid. Cari speculated that perhaps the cruise line didn’t have an exact list of crew members on file and that the discrepancy is the product of careless recordkeeping. Of the 10 missing passengers, two may be Americans. The American Embassy in Rome tweeted, “The US Embassy has revised the estimated number of Americans aboard the #Costa #Concordia down to 120, of which 118 have been accounted for.” It also confirmed it has helped 100 Americans get emergency passports since Saturday morning.

On Monday afternoon, an official from the German Consulate in Rome told Ansa News Service that there were 11 Germans missing in the accident, calling into question the accuracy of the reports.

What worries authorities on Giglio is that there may actually be more than 16 people unaccounted for. Many family members have come forward to report missing relatives, bringing the number of missing higher than 16. The discrepancies have caused anger and frustration among survivors, as has, in their view, a total lack of accountability by the cruise company. Benji Smith and his newlywed wife are staying at a hotel in Rome but on Sunday had still not heard anything from the cruise company. Smith told CNN that the company has not reached out to them or reimbursed them for their lost possessions despite their efforts to reach out. “It’s as if no one is in charge,” he said.

Residents confirmed that it was a regular occurrence for these giant ships to “buzz” the island.
Costa Crociere posted some news and a letter of condolence on its website, and some survivors and family members have created a Facebook page where they are posting pictures and comments and airing frustrations with the way the aftermath of the disaster was conducted.

With stormy seas suspending rescue operations, the hopes of finding anyone alive are greatly diminished, and the mystery of why this giant ship found its way to rest on the rocky shores of Giglio may take many more months to solve.

Source: The Daily Beast

The ARICA, a factory trawl fishing vessel at a dry dock on the east side of Lake Union, began taking on water one day last week. Crews members were pumping out water from the boat when they lost power and called the Seattle Fire Department around 5:15 a.m.

Fire department crews arrived and began helping pump out water. A fire department boat, police boat and the Coast Guard also responded.

Pumps were able to bring the water level down to 15 inches. The shore power, which was lost earlier in the morning, was restored and boat crews have resumed pumping out water. Seattle Fire Department crews have left the scene.

There were no reports of injuries and all crew members were accounted for. Responders say the vessel is at no threat of sinking into the lake.

Crews at the scene believe the sea chest, a device at the base of the boat that lets in sea water into the boat, may have a leak. Crews plan to send divers to pinpoint the problem.

"They're still trying to assess what's going on inside the ship. They had a couple of explanations, so that's why that want to get divers into the water," said Seattle Fire Department spokesman Kyle Moore.

Moore said no fuel has leaked into the water on Lake Union. The water from the boat is being pumped into a sewage drainage system, so no oily water from the engine room gets into Lake Union.

The Arica has been at the dry dock the past couple of weeks. It was set to go to Alaska on a fishing expedition in January. Boat crews say they don't plan on taking the vessel anywhere until they determine what the problem is.