97
in the locks, to bring an action in an appropriate district court of
the United States.
We think the foregoing proposals would, in effect, restore the fair
and equitable procedures that existed immediately prior to the pas-
sage of the act in 1979 and would be helpful to the American mer-
chant marine as well as others. We respectfully request these pro-
posals be given favorable consideration.
Thank you, Mr. Chairman.
[The statement of Mr. Brown follows:]
PREPARED STATEMENT OF RICHARD H. BROWN, JR., ON BEHALF OF THE AMERICAN
STEAMSHIP OWNERS MUTUAL PROTECTION AND INDEMNITY ASSOCIATION, INC.
Mr. Chairman, my name is Richard H. Brown, Jr. I am a member of the law firm
of Kirlin, Campbell & Keating of New York. The firm (and I in particular) act as
Counsel to the American Steamship Owners Mutual Protection and Indemnity Asso-
ciation, Inc. I am testifying today on behalf of that Association. On its behalf, and
my own, I wish to thank you for giving me the opportunity to appear before you
today.
The Association and its members support certain revisions to the claims proce-
dure under the Panama Canal Act of 1979. The Association currently has 34 mem-
bers shipowning companies, the great majority of which are American, owning ves-
sels aggregating over 4,500,000 gross tons. It is a mutual insurance association insur-
ing its members against risks which essentially are not covered by hull underwrit-
ers. These Protection and Indemnity (or "P and I") risks include, among other
things, members' liabilities for personal injuries, cargo damage, damage to fixed
structures, and oil pollution.
The foregoing insurance coverages are subject to deductibles, which are often sub-
stantial. To the extent of such deductibles the shipowner is uninsured. In addition, a
shipowner ordinarily does not carry insurance covering loss of use of its vessel.
Thus, in the event of a collision, if a ship were required to go out of service for colli-
sion repairs, her owner's loss of profit while she was out of service would not be
covered by insurance. Such uninsured losses can be very large.
To cover its members' liabilities the Association (like other P and I associations)
charges each member an annual renewal premium and additional assessments
during the insurance year to provide adequate reserves for payment of claims. The
premiums and assessments, of course, must be large enough to cover payment of all
claims and related costs. The larger the member's liabilities, the worse will be its
loss record and the larger will be the premiums it must pay. One very important
way of reducing liabilities and losses (and a resultant increase in premium) is to
make recoveries therefor against the party whose negligence caused the accident.
Thus, shipowners and their underwriters have a significant financial interest in
being able to make recovery against negligent parties through a fair and efficient
procedure for resolving claims.
Most importantly, it is a basic American principle of justice and sound public
policy that a party injured by the negligence of another should be entitled to obtain
compensation from the negligent party. In this century Congress has granted that
right widely, wisely and fairly with respect to claims against the United States aris-
ing from negligence-thereby largely abrogating the inequitable earlier doctrine of
sovereign immunity. See, e.g., the Federal Tort Claims Act and the Suits in Admi-
ralty Act.
Such right to just compensation from the negligent party is peculiarly necessary
with regard to claims against the Panama Canal Commission for negligence of its
pilots because (1) a Panama Canal pilot (perhaps unique among pilots) has control of
the vessel rather than merely being an advisor to the master and (2) a vessel is
liable in rem for the negligence of the persons controlling or navigating her (wheth-
er employed by the owner or not), so that the owner of a vessel can be held liable
for the negligence of a Panama Canal pilot over whom he has no control. Thus, if a
collision between Ship A and Ship B occurs in the Panama Canal and is solely due
to negligence of the Panama Canal pilot on Ship A, Ship A's owner not only would
make no recovery of damages against Ship B but would be liable to pay Ship B's
damages, unless the Panama Canal Commission were held liable for the pilot's neg-
ligence. The unfairness of such a result is obvious.
The Panama Canal Act of 1979 provides generally adequate procedures and ma-
chinery for handling claims in the locks in that the Commission has authority to