(b) If, before the fund is constituted or distributed, the shipowner has paid in whole or in part any of the claims specified in section 3 of this Act, he shall pro tanto be placed in the same position in relation to the fund as the claimant whose claim he has paid, but only to the extent that the claimant whose claim he has paid would have had a right of recovery against him under the law of the limitation forum.

(c) If, before the fund is distributed, the shipowner establishes that he may be compelled at a later date to pay any claims specified in section 3 of this Act arising out of the same occurrence with respect to which the limitation fund has been constituted, the court may order that a sufficient amount of the fund shall be provisionally set aside to enable the shipowner at such later date to enforce his claim against the fund as provided in the preceding subsection.

(d) After payment of all established claims any balance in the fund shall be refunded to the petitioner.

SEC. 7. (a) If a shipowner is entitled to limit his liability under the principles of the international convention relating to the limitation of liability of owners of seagoing vessels, or under this Act, and his ship with respect to which he seeks to limit his liability, or another ship, or other property has been arrested, or bail or other security has been given in the United States, its territories or possessions, and if it is established that the shipowner has already constituted a limitation fund through the giving of satisfactory security in a sum equal to the full limit of his liability under the principles of such convention and that the fund so constituted is actually available for the benefit of the claimant in accordance with his rights

(1) the court shall order the release of the ship or other property, or of the security given if the limitation fund has been constituted (A) at the port where the accident giving rise to the claim occurred, or (B) at the first port of call after the accident if the accident did not occur in a port, or (C) at the port of the disembarkation or discharge if the claim is a personal claim or relates to damage to cargo;

(2) the court may order the release of the ship or other property, or of the security given if the limitation fund has been constituted at a place other than provided in paragraph (1).

(b) The provisions of this section shall likewise apply where the limitation fund constituted is in a sum less than the full limit of liability under this Act, provided that satisfactory security is given for the balance.

(c) Where the release is ordered, under either paragraph (1) or (2) above, the person on whose application it is ordered shall be deemed to have submitted to the jurisdiction of the court in personam.

SEC. 8. (a) In this Act the liability of the shipowner includes the liability of the ship involved.

(b) Subject to subsection (c) of this section, the provisions of this Act shall apply to the charterer, manager, and operator of the ship, and to the pilot, and to the master, members of the crew, and other servants of the owner, charterer, manager, or operator acting in the course of their employment, and to their respective insurers as well as to the insurers of the ship or of the owner, in the same way as they apply to an owner himself: Provided, That the total limit of liability of the owner and all such other persons in respect of personal and property claims arising on a distinct occasion shall not exceed the amount determined in accordance with section 4 of this Act.

(c) When actions are brought against the pilot, master, or members of the crew, such persons may limit their liability even if the occurrence which gives rise to the claims resulted from the actual fault or privity of one or more of such persons. If, however, the pilot, master, or member of the crew is at the same time the owner, coowner, charterer, manager, or operator of the ship, the provisions of this subsection shall only apply where the act, neglect, or default in question is an act, neglect, or default committed by the person in question in his capacity as pilot, master, or as member of the crew of the ship.

SEC. 9. Sections 4283, 4284, 4285, and 4287 of the Revised Statutes of the United States, and the Act of June 16, 1884 (23 Stat. 57; 46 U.S.C. 183, 184, 185, 187, and 189), are repealed.

SEC. 10. Sections 4283A and 4283B (46 U.S.C. 813b-c) of the Revised Statutes of the United States are reenacted without change as section 4283 of the Revised Statutes of the United States and are redesignated as subsections (a) and (b), respectively, of that section.

SEC. 11. This Act shall not apply to a nuclear ship in respect of liability for damage resulting from a nuclear incident.

SEC. 12. This Act shall become effective in respect of all petitions for limitation filed on or after the last day of the month following the month in which it is enacted.

Senator BARTLETT. Witnesses will be expected to discuss both bills in their one stay before the microphone. A majority of those listed to appear today testified at some length on similar bills at last year's hearing. We shall include the testimony then submitted for reference in connection with today's hearing, with the sincere hope that these witnesses will limit themselves to a summarization of their previous testimony, plus as brief a discussion of other relevant points as the admittedly abstruse subject permits. Two new witnesses are here to oppose the bills, and have been granted 30 minutes each.

In addition to the oral testimony presented, the subcommittee will welcome extended or brief written statements for the record.

Instead of testifying orally, Mr. Gulick, Deputy Maritime Administrator, has asked permission to file the reports outlining the Commerce Department's and the Maritime Administration's position favoring the bills, and permission has been granted. Copies of the reports on the two bills will be distributed now, together with copies of a letter from the General Counsel of the Commerce Department recommending against favorable consideration of amendments proposed last year by Senator Morse when S. 2313 and S. 2314 were scheduled to be brought up in the Senate.

(The documents referred to follow :)

GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE,

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,

U.S. Senate, Washington, D.C.

Washington, D.C., May 17, 1963.

DEAR MR. CHAIRMAN: This is in reply to your request for the views of this Department with respect to S. 555, a bill to unify apportionment of liability in cases of collision between vessels, and in other maritime casualties. The Department recommends favorable consideration of the bill. Except for the updating of its title (i.e., "Collision Liability Apportionment Act, 1963"), the text of S. 555 is the same as that of S. 2313, 87th Congress, 2d session, after its amendment by your committee which then reported favorably thereon and recommended its passage (S. Rept. 1603, 87th Cong.).

The International Convention for the Unification of Certain Rules To Govern the Liability of Vessels When Collisions Occur Between Them was signed at Brussels in 1910 by the representatives of 24 governments, including the United States. All of the convention signatories and other governments, except the United States, Cuba, and Chile, have since ratified or adhered to this convention which is now the law of all the major maritime nations, except the United States. S. 555, if enacted, would implement the convention upon formal adherence to it by the United States.

Enactment of S. 555 would change the admiralty and maritime law of the United States in three principal respects. The core of the bill and the convention, and the most important respect in which they would change the present law of the United States, is the provision that in a case of a collision between ships, or other maritime casualty, where two or more ships are to blame, the damages resulting from the collision shall be divided between the ships in proportion to the gravity of their respective faults (the proportionate fault rule). However, if it is not possible to establish the degree of the respective faults, or if it appears the faults are equal, the liability shall be equally apportioned. Under the existing U.S. law, the total damages in a both-to-blame situation are divided equally between the vessels involved, regardless of how much the fault of one ship may have exceeded that of the other (the divided damages rule).

The proportionate fault rule is considered fair and equitable, and is preferable to our present arbitrary rule of divided damages.

The concept of proportionate fault is not new in U.S. legislation; it is applicable to issues of contributory negligence in litigation under the Death on the High Seas Act (41 Stat. 537, 46 U.S.C. 766) and under the Jones Act (41 Stat. 1007, 46 U.S.C. 688), as well as under the general maritime law. Foreign courts that apply the rule of proportionate damages have not encountered any particular difficulty in administering it.

The U.S. divided damages rule (often called the half damages rule) has repeatedly been criticized by our courts who have at times used various techniques to ameliorate its harshness, such as following the major-minor fault rule under which the vessel which is guilty of gross negligence (major fault) is held liable for all the damages and the vessel which is guilty of trivial negligence (minor fault) is not held liable for any damages. The U.S. Court of Appeals, Third Circuit, in petitions of Osker Tiedemann & Co. and of the United States, 289 Fed (2d) 237, 241 (1961), involving a most serious collision between the U.S.N.S. Mission San Francisco and SS Elna II, stated:

"It seems to bad that the Elna [whose fault was slight] should be tarred with the same stick as the Mission [whose fault was grave] in this case. If we had a rule which divided responsibility in proportion to the negligence of the parties, as is the case in many other countries, we could make an equitable adjustment. But our American rule of even division of the damages makes for some hard cases and this is one. With regret, the judgment as to the Elna will be affirmed." Under the terms of the bill, liability for personal injuries and deaths resulting from collisions would be governed by the proportionate fault rule. The bill, however, retains the existing rule that the vessels in fault shall be jointly as well as severally liable to third parties in such cases. A vessel which has paid more than its proportionate fault liability would have the right of contribution from another vessel in fault for the excess amount paid.

Secondly, the bill and the convention would alter to some degree the liability of the vessels in collision to the owners of cargo carried on the vessels. When both vessels are to blame, the present U.S. law allows the cargo (owners) of either vessel to sue the other vessel for the entire cargo damage, but it does not allow the cargo to recover from its own carrying vessel if that vessel has met the statutory requirements in regard to the exercise of due diligence with respect to seaworthiness, manning, equipment, and proper stowage (Harter Act of 1893, 27 Stat. 445, 46 U.S.C. 192, and Carriage of Goods by Sea Act of 1936, 49 Stat. 1210, 46 U.S.C. 1304). Adherence to the convention will make no change in this doctrine, also observed by most of the maritime countries.

However, in a both-to-blame collision, under our admiralty law doctrine of contribution, the noncarrying vessel is then allowed to collect from the carrying vessel one-half of the damage which the former was required to pay to the cargo of that vessel, regardless of the degree of its fault (The Chattahoochee, 173 U.S. 540, 1899), thus indirectly contravening the Harter Act and the Carriage of Goods by Sea Act (COGSA) which declare that a vessel owner who uses due diligence to make his vessel seaworthy shall not be liable for loss of or damage to cargo due to an error in navigation. Under the convention and the bill, cargo which is lost or damaged in collision would recover from each vessel that percentage of its loss which corresponds to the percentage of fault of that vessel, with no cross contribution between them. There would be no joint and several liability for cargo damage. Only if the carrying vessel has not complied with the Harter Act or COGSA, will the cargo be allowed to recover that percentage of its loss corresponding to the percentage of fault of the carrying vessel.

Thirdly, S. 555 would establish a two-year statute of limitations to govern litigation arising out of maritime casualties. A 1-year statute of limitations would apply to suits for contribution in respect of damages caused by death or personal injury. At present, there is no specific time limit for the commencement of such suits under American law. There is only the rule of laches, except as to suits against Government-owned and operated vessels where a 2-year statute of limitations does apply (41 Stat. 526, 46 U.S.C. 745).

Under section 5 of the bill, liability would attach in cases where the casualty is caused by a pilot's fault, even when the carrying of a pilot is compulsory. Under our existing law, a vessel owner is not liable in personam for a compulsory pilot's acts, but the vessel itself can be held in rem for the pilot's fault.

Thus recovery is dependent upon obtaining jurisdiction of the vessel. The bill would change this rule to the international rule.

Section 12 of the bill would abolish the presumption of fault under the socalled Standby Statute (26 Stat. 425, 33 U.S.C. 367) to conform with article 6 of the convention. This statute provides that, in case of collision between two vessels, if the master of either vessel fails, without reasonable cause, to stay by the other vessel to give aid and to comply with certain other requirements, the collision shall, in the absence of proof to the contrary, be deemed to have been caused by his wrongful act, neglect, or default. However, the courts have not applied this statute in presumption of fault issues and its repeal would not substantively change our maritime law.

In 1937, President Roosevelt requested the advice and consent of the Senate to adherence to the convention. The Senate Committee on Foreign Relations (76th Cong., 1st sess.) recommended that the Senate advise and consent to the ratification of the Convention (Ex. Rep. 4, 76th Cong., 1st sess., June 15, 1939). The 76th Congress did not take action on the request for advice and consent. A factor of paramount importance, aside from the substantive merits of the bill, is the need to bring about worldwide uniformity in admiralty and maritime law, a subject of international scope and concern. Endorsement by the United States of the principle of international uniformity of maritime law is evident from the fact that it is a party to many multilateral maritime conventions. The enactment of this bill would promote this end by bringing the collision liability law of the United States into harmony with the law of the rest of the maritime world. The resultant uniformity will dispell uncertainties as to rights and liabilities, and will markedly decrease the tendency of litigants to shop around for the most favorable forum in which to bring suit.

The Bureau of the Budget advises that there is no objection to the submission of this report from the standpoint of the administration's program.

Sincerely,

(Signed) LAWRENCE JONES

(For Robert E. Giles).

GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE,

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,
U.S. Senate, Washington, D.C.

May 17, 1963.

DEAR MR. CHAIRMAN: This is in reply to your request for the views of this Department with respect to S. 556, a bill to limit the liability of shipowners, and for other purposes.

The Department recommends favorable consideration of the bill.

Except for the updating of its title ( i.e., "Shipowners' Limitation of Liability Act, 1963"), the text of S. 556 is the same as that of S. 2314, 87th Congress, 2d session, after its amendment by your Committee which then reported favorably thereon and recommended its passage (Senate Report No. 1602, 87th Congress). The Department has made a detailed study of the cited report and is in general agreement with the views expressed therein.

Enactment of this bill would repeal certain of the statutes on shipowners' limitation of liability (49 Stat. 960, 1479, 1480; 19 Stat. 251; 9 Stat. 636; 23 Stat. 57; 46 U.S.O. 183, 184, 185, 187, 189) and replace them with more progressive legislation that would be comparable to the provisions of the International Convention Relating to the Limitation of the Liability of the Owners of Seagoing Ships adopted at the 10th Diplomatic Conference on Private Maritime Law at Brussels, October 10, 1957. The United States was not a signatory to the convention nor has it since deposited an instrument of accession, although its delegation actively participated in drafting the convention. The convention has not yet come into force since the necessary number (10) of instruments of ratification have not been filed. The provisions of the bill substantially the same as those of the convention.

Under existing U.S. stuatutes, a shipowner is allowed to limit his aggregate liability arising out of a marine casualty to the value of the vessel after the occurrence plus the pending freight, subject to a minimum of $60 per ton of the vessel's tonnage insofar as claims for loss of life and personal injury are concerned (46 U.S.C. 183, et seq.). Under these statutes, "tonnage" of a sea

going steam or motor vessel is her gross tonnage without deduction on account of engineroom, and "tonnage" of a seagoing sailing vessel is her registered tonnage, excluding space occupied by the crew from the tonnage.

The proposed legislation would institute a system whereby the owner's aggregate liability, and that of his ship, would be limited to an amount equivalent to 3,100 Poincaré gold francs (about $207) per ton of the ship's tonnage. Of this fund, 2,100 francs ($140) per ton is earmarked exclusively for the payment of personal injury and death claims and, if the first portion is not sufficient to pay the personal injury and death claims in full, the unpaid balance of such claims ranks ratably with the property claims for payment against the second portion, 1,000 francs per ton ($67). "Tonnage" in the bill is defined as (1) net tonnage plus the amount deducted from gross tonnage for engineroom space in computing net tonnage, or (2) 300 tons, whichever is greater. Under the bill, as under existing U.S. law (46 U.S.C. 183), the owner would not be allowed to limit his liability, and the liability of his ship, if the casualty resulted from his actual fault or privity, such as a failure to make the ship seaworthy before the voyage began.

The legal principle that allows shipowners to limit liability is of ancient origin. It was first codified in U.S. law in 1851. The law of every maritime nation permits owners to limit liability to some extent through one system or another. This concept springs from the pragmatic need to insulate shipowners from the ruinous liability that could result from marine casualties. Also, the ship, unlike other property, normally operates in distant areas where the owner cannot personally see to its safe navigation and management. Because of this unique absentee ownership, he is relieved, in part, from the consequences of torts, such as negligence in navigation, unless the casualty giving rise to the claims resulted from his own fault or privity.

Under our present statutory formula, the limitation fund is basically the equivalent of the value of the ship after the casualty, somewhat akin to the doctrine of abandonment of the ship to the claimants. Statutory amendments in 1936 added the $60 per ton increment for the sole benefit of personal injury and death claimants. Where the ship is lost, if the court allows the owner to limit his liability, those who have suffered property damage recover nothing, except some comparatively small pro rata share of the freight pending on the current voyage. Personal injury and death claimants would recover pro rata portions of a sum based on $60 per ton of the ship's tonnage.

In comparison, the bill would establish a fund which is fixed in amount, regardless of the value or the condition of the ship after the casualty, based on $207 per ton of vessel tonnage if personal claims are involved, or $67 per ton if only property damage is involved. The Department considers this to be an equitable monetary adjustment of the existing formula. The decrease in the value of the dollar since the enactment of the 1936 amendment provides a sound justification for this change. Under the bill the amount of the fund is certain, independent of issues involving the value of the ship. Under existing law, all claims arising during the same voyage of the ship must share in a single fund, while the bill would create a separate fund for each occurrence.

It is of great importance that there be international uniformity in admiralty and maritime law. The rights and liabilities of shipowners and claimants should not vary depending upon the country in whose courts litigation is brought.

Under the bill, ships which would be included are (1) all seagoing vessels and (2) all vessels used on lakes or rivers or in inland navigation, including pleasure yachts, tugs, towboats, towing vessels, tank vessels, fishing vessels or their tenders, canal boats, scows, car floats, barges, lighters, and all nondescript self-propelled and non-self-propelled vessels. A nuclear-powered ship could not limit liability under this bill with respect to liability for damage resulting from a nuclear incident. Under existing law, the italicized types of vessels are not covered by the provisions of 46 U.S.C. 183 (b), (c), (d), and (e) and 183b, and thus do not come within the $60 per ton minimum requirements with respect to claims for loss of life or bodily injury, and related items.

The bill provides that the exclusive original jurisdiction of all proceedings for limitation of liability shall be with the district courts of the United States in admiralty. With respect to fault or privity of the petitioner for limitation of liability, the bill provides that, after a claimant has established the petitioner's liability, the petitioner shall have the burden of proving absence of actual fault or privity. These provisions would not change existing U.S. law.