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174 member companies operating U.S.-flag vessels in the nation's foreign and do-
mestic shipping trades. Several of our members regularly use the Panama Canal.
The Transportation Institute believes that the current claims procedures, estab-
lished in the Panama Canal Act of 1979, are in need of amendment. The Panama
Canal Act of 1979 prohibits the Panama Canal Commission from settling negligence
claims in excess of $120,000 for injuries occurring within the Canal waters but out-
side the Canal locks. For over twenty-seven years prior to the passage of the 1979
Act, however, the Commission's predecessor, the Panama Canal Company, had satis-
factorily dealt with all negilgence claims on accidents occurring outside the locks.
In addition to the burden placed on United States and world shipping, the current
procedure for settlement of outside-the-locks claims provides no economic benefits to
the United States. Damage claims are paid from an account in the U.S. Treasury
known as the Panama Canal Commission Fund. Revenues from this fund come en-
tirely from Canal users, as the Commission is required by law to recover from users
the cost of operating and maintaining the Canal. A statutory tolls formula insures
that user tolls produce revenues sufficient to cover operating costs. Thus, the
amendments proposed by the Transportation Institute would result in no increased
costs to the United States Government or its taxpayers.
Primarily because the Canal is used by larger ships, both the number and dollar
amount of accident claims have been increasing over the past several years. Of the
claims submitted to the Commission since the effective date of the 1979 Act, fifteen
are beyond the authority of the Commission to settle. At least four of the pending
claims exceed $1,000,000. Thus, it is clear that the current maximum settlement
amount is unrealistically low.
The Commission continues to have unlimited settlement authority in connection
with claims arising inside the locks. For example, in 1981 the Commission settled a
pre-treaty (prior to October 1, 1979) inside-the-locks claim for $1,000,000. Presum-
ably a post-treaty settlement would have produced the same result. A similar out-
side-the-locks claim arising today, however, would require Congressional approval
for settlement. The Commission has demonstrated its ability efficiently to adminis-
ter inside-the-locks claims without artificial limits. Thus, there is no consistent
rational basis to saddle the Commission with an unrealistic limitation on awards for
accidents outside the locks.
In the interest of facilitating shipping and providing for consistent, expeditious
adjustment of claims, the Panama Canal Act should be amended to re-institute the
pre-1979 procedure of authorizing the Commission to settle all outside-of-the-locks
negilgence claims.
The Transportation Institute also is concerned with another aspect of the claims
procedure, the judicial review process for outside-the-locks claims.
When the Panama Canal Act of 1979 transferred operation of the Canal from the
Panama Canal Company to the new Panama Canal Commission, existing provisions
allowing judicial review for inside-the-locks claims were continued. However, the
1979 Act eliminated the judical review process for outside-the-locks claims of any
amount. Relief now must be sought from Congress to resolve disputed outside-the-
locks awards. Unfortunately, passage of a private bill often is a long and cumber-
some process. The Institute submits that Congress should not be distracted from
matters of national policy to analyze routine commercial claims which are more ef-
ficiently dealt with in the traditional forum provided by the federal courts.
In order to expedite the equitable resolution of disputed claims, and relieve the
Congress of needless work, the Transportation Institute believes that the pre-1979
procedure of allowing judicial review of claims settlements should be reinstated.
Lastly, the Institute is concerned with the present procedure for awarding the
Board of Local Inspection (BLI) detention damages. In order for a claim for accident
damages to be considered by the Commission, a vessel must remain in Canal waters
until the BLI conducts an investigation. Prior to 1979, the U.S. Court of Appeals for
the Fifth Circuit construed the Measure of Damages provision (now 22 U.S.C. S.
3773) as establishing rules for recovery of damages substantially parallel to that ac-
corded by general maritime law. Under those principles, shipowners could not only
recover for actual damages to the vessel, lost charter hire, crew wages and mainte-
nance, but also damages for loss of use of a vessel while the BLI investigation was
taking place.
The 1979 Act specifically excluded consideration of such detention damages as an
item of recovery in claims before the Commission. The ability to recover such dam-
ages is vital to shipowners who may incur substantial losses because of detainment
of a vessel in Canal waters awaiting completion of the BLI investigation. In order to
fully compensate shipowners for the damages their vessels incur, the Institute urges