SHIPPING: The Andrea Doria Settlement

SHIPPING

The Andrea Doria Settlement

The six months of legal wrangling between the Swedish American and Italian lines over the responsibility for the Andrea Doria’s sinking (TIME, Aug. 6) came to an abrupt halt last week. In a quiet, unpublicized meeting held under the stern eyes of their London underwriters, the owners of the Stockholm and Andrea Doria reached an out-of-court settlement that 1) ended their attempts to fix the blame on each other, and 2) made it possible to establish a fund for payment of third-party claims, e.g., claims by passengers and shippers for injury and loss of life and property.

Under the complicated maritime laws, the ships’ liability is limited to the value of the vessels after the accident, unless negligence is proved. Since no negligence has been proved, the Swedish American line will pay $4,000,000, the value of the Stockholm after the collision, into a joint liability fund. The Andrea Doria being a total loss, its owners will pay only $400,000 into the fund, the amount the ill-fated vessel earned on its last trip. If the $4,400,000 total is not enough to satisfy the passenger-cargo claims, the Andrea Doria will hike its contribution another $1,800,000. The $4,400,000-to-$6,200,000 funds looked ridiculously small beside the $85 million in third-party claims already filed, but maritime experts last week hoped that it would be enough, figuring that many of the claims overlapped or were inflated.

Biggest reason for rushing through the settlement: to take advantage of the limitation of liability doctrine under which the joint liability fund was set up. If each line went ahead in court and proved the other guilty of negligence, the liability limitation would be scrapped, making it easier for the third parties to press damage suits in any amount. The third parties can still try to prove one or the other of the ships negligent, but it now becomes a much more difficult and costly job since the two lines have dropped their mutual countercharges.

As for the ships’ own damages, each line will absorb its loss, helped along by its insurance. After the collision the underwriters paid $19 million toward the Doria’s $30 million loss, another $1,000,000 to the Stockholm for its crushed bow. Both lines also expect to collect on passenger-cargo liability insurance.