International Law Too Easy on Cruise Lines

Published January 24, 2012

If even half of them are true, the allegations against the captain of the Costa Concordia–the half-billion-dollar cruise ship currently half-submerged off the Italian coast–ought to boil anyone’s blood. According to charges leveled by Italian prosecutors and coast guard officials, Captain Francesco Schettino steered his ship too close to shore, let it run aground, and then left his post well before all women and children had made it to safety.

The death toll resulting from his alleged actions–11 and counting–appears to be the worst pleasure cruise disaster in at least a quarter-century. By physical size, it’s the worst passenger shipwreck in human history. In this context, it’s outrageous that an obscure international treaty appears likely to force the families of people who perished in the accident to fight long, drawn-out court battles before getting more than a pittance in compensation. It’s an obscure piece of law all nations ought to reopen at once.

The treaty in question is “The Athens Convention Relating to the Carriage of Passengers and Their Luggage by Sea.” Drafted in 1974 and last updated in 2002, it limits cruise lines’ wrongful death liability to less than $80,000 in most cases. If all the charges against Schettino are true, passengers will be able to bring suits to demand more, but because of the complexities of maritime law, many suits will probably have to be filed in locations foreign to the families of the dead and may take years to resolve. (Since the U.S. isn’t a party to the convention, injured Americans may have more choices in some cases.)

Nonetheless, this lets the cruise line off cheap by any reasonable standard. Coldhearted as it seems, economists, government regulators, and insurers all must figure out how much a human life is worth, and it’s a lot more than $80,000 by just about any measure. The Environmental Protection Agency uses figures ranging between $6.5 and $9 million when evaluating environmental regulations. Most state workers’ compensation systems offer more-or-less automatic payouts of at least a few hundred thousand dollars for the families of people who lose their lives as a result of job-related activities. Families who lost loved ones at the World Trade Center on 9/11 got payments ranging from $250,000 to $4.7 million. The families of military service members killed on active duty get $100,000 tax-free, plus lifetime financial, housing, and health insurance benefits. And so forth.

Other parts of the Athens Convention look just as questionable by any reasonable standard–various provisions appear to let cruise lines out of paying for on-board thefts by their own crews and set a very high bar of “recklessness” before passengers can collect damages above many caps. This whole set of affairs lets the cruise industry off far too easy–at least in a financial sense–even when it does things seriously wrong.

By virtue of their inherently international operations, ocean-going cruise lines are quite properly dealt with through treaties. Because their operations are obviously so easy to move from place to place, efforts to impose more direct regulations on cruises probably won’t work. And in any case, the actions Schettino is alleged to have committed violate such basic morality that no amount of regulation is likely to prevent them.

The fundamental idea of liability caps embodied in the Athens Convention probably makes a lot more sense than trying to litigate every matter in court. But when push comes to shove, the best way to make sure cruise lines behave is to make sure they have to pay an adequate price when they don’t.

A dated, poorly written international treaty now appears likely to let the owners of the Costa Concordia off too easily. That needs to be changed before the laxness it encourages leads to even more serious disasters.

Eli Lehrer ([email protected]) is vice president of Washington, DC operations for The Heartland Institute and national director of its Center on Finance, Insurance, and Real Estate.