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for a change under the 1979 procedure. I would like to address that
topic.
Although it is not totally clear from the legislative history of the
present act, apparently someone believed that an appropriate
model for handling vessel accident claims by the new Commission
was the procedure followed by the old quasi-autonomous Panama
Canal Agency prior to 1951.
In 1951, the Congress created the Panama Canal Company to run
the Canal. In the earliest days when the Panama Canal Agency
made the decisions about claims handling, but the U.S. Govern-
ment was responsible for payment, there was a different procedure
for vessel accident claims occurring inside the locks from those oc-
curing outside the locks. Congress made this distinction for budget-
ary reasons.
It was assumed that claims arising from accidents occurring
inside the locks would almost always be the responsibilty of the
Agency, and accordingly, it was given full power to compromise
them. However, Congress believed that accidents occurring outside
the locks, for example a major collision between two vessels, as dis-
cussed today, was not necessarily always going to be the Panama
Canal's responsibility. For instance, a malfunction of ships equip-
ment may have caused or contributed to the occurrence.
Apparently, Congress was concerned that the Agency in such
cases might agree to settle claims for enormous amounts, creating
budgetary demands that Congress had not anticipated and about
which it had not previously been warned. This was a valid concern
since at that time, unlike the present act, there was no guarantee
that the expenditures of the Agency would stay within the budget.
What I am saying is those same concerns do not exist today be-
cause there is a procedure by which the tolls can recapture the cost
of operation, including claims.
To avoid these problems, prior to 1951 Congress limited the
Panama Canal authority to settle claims against it arising from ca-
sualties outside the locks to $60,000.
The Panama Canal Company, without the need for special legis-
lation and without any restriction as to dollar amounts, had full
authority to compromise claims arising both inside and outside the
locks during the period from 1951 to 1979. The apparent reason for
that change was not the change from an agency to a corporation,
but that the 1950 legislation gave the Canal Company power to es-
tablish tolls based on a formula designed to recapture the cost of
operation of the canal including claims. Of course, a similar ar-
rangement for a tolls recapture is present in the 1979 act.
We have heard a lot of testimony today that the recapture provi-
sion is working just fine. Equally important, under the pre-1979 ar-
rangement with the Canal Company, is the fact that aggrieved par-
ties could sue the Company on all such claims, occurring inside or
outside the locks, in the U.S. District Court for the Canal Zone.
I don't need to belabor the actual provisions of today's claims
procedure under the act. I think there was sufficient discussion
this morning. I would like to say that the Maritime Law Associ-
ation feels extremely concerned that no claim, regardless of its size,
arising outside the locks, has a forum in which claimants may sue