What is a Limitation of Liability action?

The United States has depended on maritime commerce from its earliest days. Typically, when there is an injury or accident involving a vessel, resulting claims are directed to the vessel owner. However, such claims often exceed the value of the owner's interest in the vessel. In the early days of the republic, the size of claims for loss of cargo or even the vessel meant that money avaialble for building new vessels began to dry up as owners and investors faced liabilities far in excess of their original investments.

The Limitation of Liaibiltiy Act allows a vessel owner to limit its exposure for a claim to an amount equal to the value its interest in the vessel at the time of an accident, whether the claim is for cargo loss, property damage, or personal injury. However, the courts traditionally have been very hostile to limitation defenses, and there are strict procedural requirements which must be followed for a limitation action to survive.