In The News

Insurers Face Huge Compensation Bill – Interview with Managing Partner Craig Simon

(filed under: In The News | January 18, 2012)

Wednesday January 18, 2012

AS COSTA Concordia’s passengers look to seek compensation, insurers could face a hefty bill if claims are taken to the US courts.

It is understood that over 70 passengers in Italy have already joined a class action suit initiated by consumer rights’ association Codacons with the objective is to get each passenger at least €10,000 ($12,835) compensation. French passengers have also started proceedings.

Two US passengers are missing, while others have spoken of their ordeal in the US press, one man claiming: “You began to realise the Costa crew wasn’t going to save you. If you were going to get off this ship, you were going to save yourself.”

Compensation claims will be paid out of Carnival’s P&I cover, after the firm has paid a deductible of $10m.

Legal sources have suggested that as the parent company, Carnival, is based in the US, lawyers working on behalf of the passengers would be trying to push for seeking compensation in the US and if this course of action was successful, then awards could be very high indeed.

Stone Chambers’ John Reeder QC, a former Lloyd’s appeal arbitrator, said that seeking compensation in the US was not beyond the realms of possibility as the ownership and responsibility for the vessel runs through a string of companies, leading ultimately to parent company, Carnival.

“It is impossible to predict at this point as it depends on a variety of factors such as who issued the ticket, what kind of jurisdictional clauses are in place and whether they are binding in another jurisdiction,” he said.

Mr Reeder’s point was echoed by US-based Berger Kahn managing principal Craig Simon, who said that anyone who said they knew how this casualty would play out would be lying.

He said that passenger compensation depended on a series of variables, one being the choice of law. He argued that, given the Italian presence in the incident, it would be more difficult for Italian passengers to gain access to US courts than it would be for US citizens.

“I definitely believe there will be some US exposure. You will see concerted efforts from US citizens to have US laws applied to this incident.”

It is difficult to know whether US cases will have any impact on the compensation cases of other passengers. Mr Simon said it would depend on the involvement of US-based entities and the consequent liabilities that arise.

“There are a series of unanswered questions: who is responsible for any design flaws that come to light? Who purchased the charts? Who designed the life boat system? As the inquiry unfolds, so much could come to light that may impact who is ultimately liable,” he said.