Flags of Convenience: Cruise Ship Liability and Jurisdiction

Introduction and Background

Mr. and Mrs. Lowell were passengers on the Koko, a cruise ship owned by DWI and flying the Liberian flag. During the cruise, the Lowells returned to their cabin to find two of the ship's employees removing cash and jewelry from the ship-provided safe. Mr. Lowell struggled with the men but collapsed and suffered a fatal heart attack. The thieves locked Mrs. Lowell in the bathroom and escaped. When the ship docked a few hours later in Grand Cayman, the robbers left the ship with the cash and jewelry and did not return. Mrs. Lowell was rescued several hours after the ship left Grand Cayman. She identified the two employees in a photo lineup.

After returning home to Miami, Mrs. Lowell's attorney faxed DWI a demand letter for $10 million, threatening suit for negligent supervision, training, and hiring of employees; breach of contract; infliction of emotional distress; assault; battery; theft; and wrongful death. Under Liberian law, the wife is considered the property of the husband and has no standing to sue or claim damages for his injuries. Furthermore, any property possessed by a married couple is deemed to be the sole property of the husband.

To determine DWI's liability, this discussion focuses on issues of private law, public law, tort liability, respondeat superior, flags of convenience, Liberian law, jurisdiction over crimes committed in international waters, the U.S. Constitution's Thirteenth and Fourteenth Amendments, choice-of-law provisions, and the enforceability of unconscionable contracts.

Public Law Considerations and FBI Jurisdiction

One must first consider the potential liability if this incident had occurred at a DWI-owned resort on American soil. In that case, DWI would have liability for the actions of its employees. Though DWI cannot control the tortious behavior of its clientele, by establishing safety precautions for guests and providing in-room safes, DWI represents a certain level of safety. There is no question that Mrs. Lowell would be able to recover for the theft, since the company failed to protect those in-room safes. However, it is questionable whether she could recover for the other actions because they resulted from intentional torts committed by the employees. The issue of liability would hinge on DWI's knowledge of the employees' criminal tendencies, including whether DWI performed an adequate background investigation of those employees.

Regardless of the terms of the contract, U.S. law enforcement and regulatory agencies will have some jurisdiction over the cruise ship, despite the fact that it flies a Liberian flag, because the Koko came into a U.S. port. In addition, because the Lowells are U.S. citizens, the FBI has jurisdiction in the criminal investigation. As noted by the Cruise Lines International Association, "unlike most instances of shoreside crime, the FBI has the authority to investigate and prosecute alleged crimes in international waters involving Americans" (Cruise Lines International Association, "Personal Safety and Security," 2008). Therefore, from a public law standpoint, the United States can and should be involved in the criminal investigation and prosecution.

Maritime Security Legislation and Cayman Islands Law

By all means, DWI and its employees should cooperate fully with the FBI's investigation. To do otherwise may subject them to obstruction charges and would create a publicity nightmare for the company.

Other laws govern ships that come into American ports. The most commonly known is the Maritime Transportation Security Act (MTSA), 46 U.S.C.S. 701 et seq., which is similar to the international legislation known as the International Ship and Port Facility Security Code (ISPS) and the International Convention for the Safety of Life at Sea (SOLAS). While all of these codes address violence at sea, they are aimed at reducing the risk of terrorist-type activities. Specifically, the MTSA is most concerned with steps that the federal government — most notably the Coast Guard and the Department of Homeland Security — can take to ensure that ships are not carrying terrorists into American waters. Therefore, it is unlikely that the MTSA, the ISPS, or SOLAS would have any impact on the resolution of this dispute.

Furthermore, although the ship was traveling to the Cayman Islands, it is unlikely that Caymanian laws would apply to the dispute. The fact that the ship did not dock until several hours after the attack suggests that the attack occurred more than 12 miles off the coast of the Cayman Islands. However, because Grand Cayman is part of a larger island chain, there is a possibility that its laws could apply even if the attack occurred beyond Grand Cayman's own 12-mile limit. Local law enforcement agencies may therefore investigate the attack. Even so, unless the Cayman Islands prohibit choice-of-law provisions in contracts, it is unlikely that they would ultimately have jurisdiction over the dispute.

Private Law, Flags of Convenience, and Choice of Law

DWI must also consider issues of private law. The terms of the parties' contract seem relatively straightforward. "Choice of law refers to what jurisdiction's law is to be applied when there is a dispute in a transaction. Contracts often include a choice of law clause to indicate the law that will apply in the event of a dispute" (U.S. Legal, 2008).

The cruise ticket states that Liberian law will govern any dispute between the parties. America and other countries permit ships flying flags of convenience to use their ports, which implicitly validates this arrangement — even though many of these ships primarily service American customers departing from American ports. Ships typically register under flags of convenience to take advantage of the tax and employment laws of the country whose flag they fly. Flags of convenience are also used to establish the governing tort law for the vessel, meaning that Liberian law would govern the disposition of this dispute.