105
handling, but the United States Government was responsible for payment there was
a different procedure for vessel accident claims occurring inside-the-locks from those
occurring outside-the-locks.5 Congress made this distinction for budgetary reasons.
It was assumed that claims arising from accidents occurring inside-the-locks
would almost be the responsibility of the Agency, and accordingly, it was given full
power to compromise them.6 However, Congress believed that accidents occurring
outside-the-locks, for example a major collision between two vessels due to alleged
Canal pilot error, was not necessarily always going to the Panama Canal's responsi-
bility (for instance, a malfunction of ship equipment may have caused or contribut-
ed to the occurrence). Apparently, Congress was concerned that the Agency in such
cases might agree to settle claims for enormous amounts, creating budgetary de-
mands 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 1979
Act, there was no guarantee that the expenditures of the Agency would stay within
the budget.7 To avoid these problems, Congress limited the Panama Canal authority
to settle claims against it arising from casualties outside-the-locks to $60,000.8
The Panama Canal Company, without the need for special legislation and without
any restriction as to dollar amounts, had full authority to compromise claims aris-
ing both inside and outside-the-locks during the period from 1951 through 1979.9
The apparent reason for that change was that the 1950 legislation gave the Canal
Company power to establish tolls based on a formula designed to recapture the cost
of operation of the Canal including claims.10 Of course, a similar arrangement for a
tolls recapture is present in the 1979 Act.1' Equally important, under the pre-1979
arrangement with the Canal Company, aggrieved parties could sue the Company on
all such claims (occurring inside or outside-the-locks) in the United States District
Court for the Canal Zone.12
In the recent Act, the authority of the new quasi-autonomous Panama Canal
Commission to settle claims arising from casualties occurring inside-the-locks is like-
wise unfettered.13 Moreover, claimants aggrieved by their inability to conclude
what they would regard as a favorable settlement with the Commission may sue it
on inside-the-locks claims in the United States District Court for the Eastern Dis-
trict of Louisiana.14 However, the authority of the Commission to settle claims aris-
ing from casualties occurring outside-the-locks is limited to $120,000.1" For these
claims exceeding $120,000, special congressional review and approval is necessary.'6
And no claim, regardless of size, arising outside-the-locks has a forum in which
claimants may sue the Commission-not even the newly created admiralty court of
the Republic of Panama.17
The absence of a forum altogether is, by itself, a cause for much concern. More-
over, procedurally there is no basis today for distinguishing between claims arising
from casualties inside or outside-the-locks. Unlike claims against the old Panama
Canal [Agency] which were funded by the United States Treasury without regard to
tolls, claims against the new Panama Canal Commission should be and will cost for
such accidents by surcharging the frequent users of the Canal. And a change in the
claims procedure, so direly needed, will not remove this underlying equitable prem-
ise.
Congress is much too busy to be burdened with the time consuming examination
of liability testimony and damage documentation of these ongoing claims. Moreover,
judicial review of tort claims is all but basic to our democratic system. Because of
the heavy usage of the Canal by international shipping and the involvement of the
United States with the operation of the Canal until the end of the Century, the need
for a change to a more uniform procedure is obvious.
A final problem with the 1979 Act which needs legislative correction is the provi-
sion which shields the Panama Canal Commission from liability for detention of ves-
'Panama Canal Act, ch. 358, 1, 54 Stat. 387, 388 (1940) [hereinafter cited as 1940 Act].
6 Legislative History, supra at 1067-68; Panama Canal Act, ch. 390. 5, 37 Stat. 560, 563
(1912).
'Legislative History, supra at 1041; 1040 Act, supra at 388.
8 1940 Act, supra at 388.
Act, supra at 1039.
10 Legislative History, supra at 1041; 1950 Act, supra at 1042-43.
"1 22 U.S.C. 3792(b)(1979).
12 1950 Act, supra at 1040.
1 U.S.C. 3771 (1979).
14 U.S.C. 3776 (1979).
1" U.S.C. 3772 (1979).
16 U.S.C. 3775(b) (1979).
17 Panama Canal Treaty, Sept. 7, 1977, United States-Panama, Art. III, sub-para. 2.