Opinion ID: 551883
Heading Depth: 2
Heading Rank: 1

Heading: Limitation Proceedings

Text: 7 A foreign shipowner may initiate a limitation action under LLA in a U.S. court by depositing with the court a limitation fund equal to the amount of the liability limit under LLA: 6 the value of the ship plus the pending freight owed. Once the shipowner files a petition under LLA, all actions against the ship or the shipowner in U.S. courts are enjoined, 7 and all parties seeking to recover from the shipowner must file their claims in the limitation proceeding. 8 At the outset, the court hearing the limitation action must determine which country's limitation law governs the liability limit. Black Diamond S.S. Corp. v. Robert Stewart & Sons, Ltd. (The Norwalk Victory), 336 U.S. 386, 397-98, 69 S.Ct. 622, 628-29, 93 L.Ed. 754 (1949). If the court determines that foreign limitation law controls the liability limit, the limitation fund filed with the court is adjusted accordingly. If the court determines that U.S. law controls the liability limit, then the limitation fund deposited under LLA stays the same. 9 The court must then compare the amount of the limitation fund with the total amount of all the claims pending in the limitation action. If the aggregate of all the claims exceeds the limitation fund, then the fund is divided proportionately among the claimants. 8 If, however, the claims do not exceed the limitation fund, then the court must dismiss the action. Lake Tankers Corp. v. Henn, 354 U.S. 147, 151-152, 77 S.Ct. 1269, 1271-1272, 1 L.Ed.2d 1246 (1957); The Norwalk Victory, 336 U.S. at 393, 69 S.Ct. at 426. This rule reflects the logical proposition that the courts need not adjudicate and apportion a limited fund among claims when the claims, paid in full, would not add up to the liability limit. 9 Each claimant is then free to pursue its claim in any appropriate forum.