On December 23, 2022, the Small Passenger Vessel Act (SPVA) was signed into law carving out small vessels from the protection of the Limitation of Liability Act of 1851 and thereby exposing them to liability for any and all losses resulting from a maritime accident.
What is a small passenger vessel?
The SPVA defines these vessels as weighing at least 100 tons and not carrying in excess of (i) 49 passengers on an overnight domestic voyage or (ii) 150 passengers on trips that are not overnight domestic voyages.
The Limitation of Liability Act of 1851
This bill, now the subject of the SPVA carveout, came into being in 1851 to shore up the shipbuilding industry, so American vessel owners would be competitive in the international arena.
Basically, it disallowed claims against boat owners to exceed the boat’s value after whatever incident had occurred.
By 1851, the limited liability rule in the maritime industry was already the standard throughout Europe.
Tragic loss of life just off Santa Cruz Island
As reported by the LA Times, on September 2, 2019, at approximately 3 a.m., a fire broke out on the boat named, “Conception,” trapping 34 people who slept in the bunk room on the bottom deck. The fire speedily raged out of control, and while five people on the top level were able to jump overboard to safety, none of the passengers on the lower level survived.
The National Transportation Safety Board has not been able to determine the exact cause of the fire.
Per the Limitation of Liability Law that applied at that time, because the vessel was worth $0 after the destruction by fire, the liability for damages the vessel owner, Truth Aquatic, Inc., faced would also be $0.
Going forward, the new legislation presents legal quandaries for the industry as to how liabilities will be sorted out if there’s an incident and there are multiple parties to it, some big, some small. Bottom line, though, the legal defenses for small vessel owners have changed dramatically.