In the Wake of the Montreal Convention: Why Maritime Law Should Abolish Limited Liability for Personal Injury and Death Claims

Abstract

In 2002 a small inflatable boat operated by Yachting New Zealand collided with American windsurfer Kimberley Birkenfeld off the coast of Greece. Ms Birkenfeld suffered severe injuries as a result of the collision and is now a tetraplegic suffering from post-traumatic stress disorder. She brought a claim for NZD 15 million in damages in the High Court of New Zealand. Yachting New Zealand brought a separate action and successfully limited their liability to less than NZD 400 000 on application of a tonnage formula.
Given that the average first year costs alone associated with tetraplegia in California are between USD 700 000 and 1.2 million, the award to Ms Birkenfeld was consequently totally inadequate compensation for her injuries. She went from being a professional athlete to someone confined to a wheelchair for the rest of her life. The tragic nature of this accident and her failure to receive full compensation demonstrates the injustice that can result from maritime limitation of liability in a personal injury context.
Limitation of liability is the rule that allows the owner, charterer, manager or operator of a seagoing ship (hereafter referred to collectively as ‘shipowners’) to limit their liability for ‘claims in respect of loss of life or personal injury or loss of or damage to property’. Following an accident for which they are liable, the shipowner puts up a set fund in the amount of the liability limit. This can be done either by making a cash payment to the court or by presenting a letter of undertaking from a protection and indemnity (P & I) club. The funds are then distributed among claimants in proportion to their original claims (as been proved in court), so the amount of actual recovery depends on the number of claimants and the size of their respective claims. This payment constitutes full and final settlement.