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Manner of Disputing Amount of Security for Res

Under the Limitation of Liability Act, a ship owner can limit his liability to the value of the vessel and its freight.  After completion of proper procedures by the ship owner, the court notifies all potential claimants to file any claims against the ship owner in admiralty court within a specified period of time.[i]  The claimant can then dispute the value placed on a ship and its freight by a ship owner.  But the claimant must follow the procedures prescribed under Supplemental Admiralty Rules.  According to Supplemental Admiralty Rules, subsection F(7), the claimant can file a motion demanding that the funds deposited or the security for res given to the court by the ship owner must be increased on the ground that they are less than the value of the ship owner’s interest in the vessel and freight.[ii]  The court must then assess the value of the ship owner’s interest in the vessel and freight.  If the deposit or security given by the ship owner is insufficient or excessive, the court will order for its increase or decrease accordingly.

Similarly, the claimant can also demand the increase in deposit or security on the ground that it is insufficient to carry out the provisions of the statutes relating to claims in respect of loss of life or bodily injury.  In this respect also, a court can review the deposit or security and order for its increase or decrease accordingly.[iii]  The rule therefore clearly ignores the claimant’s right to challenge the other party’s valuation and provides a procedure whereby the claimant must exercise that right.[iv]  The supplemental admiralty rules do not prescribe a time limit for filing motion for increase of deposit or security by the other party.

If the claimant does not comply with the provisions of the supplemental admiralty rules, the court can order him/her either to comply with the provisions or to concede the value placed on the vessel and the freight by the other party.

[i] Ventura v. Barge Morania No. 400 (In re Dredging Equip.), 851 F. Supp. 172, 175 (E.D. Pa. 1994)

[ii] USCS Admiralty and Maritime Claims R F

[iii] Id.

[iv] In re Vessel Club Med, 90 F. Supp. 2d 550, 555 (D.N.J. 2000)

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