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Costa Concordia Raises Issue of Passenger Rights of Recovery

During the night of January 13, 2012, the 955-foot Italian-flagged COSTA CONCORDIA struck a rock and capsized near the coast of Giglio, Italy, resulting in great loss of property and life, including two Americans presumed dead. This tragedy has renewed focus on cruise ship safety and the rights of cruise ship passengers, particularly pertaining to the matter of legal jurisdiction, especially given the number of multinational passengers. Modern cruise ships are often referred to as floating cities now due to their enormous size, carrying thousands of passengers and crew.

A cruise ship ticket is also known as a “cruise ticket contract.” What makes a contract valid are four points: offer, acceptance, free will to enter the contract relationship, and equitable consideration. Those entering a contract are assumed to be aware of and in agreement with the contract details, and a court will usually uphold a contract which has met all the legal criteria. The exchange of consideration, such as exchanging money for a cruise ticket, touches on all four points of a valid contractual agreement between parties. The cruise ticket contract wording, in what most of us would call the fine print, is said to be on the ticket and is otherwise accessible to passengers. On the Costa web site, passengers are encouraged to read their cruise ticket contract. By purchasing the ticket, a passenger has arguably entered a contract and agreed to the conditions therein, which include a series of limitations and waivers in case of dispute. It does state that Costa will be liable for its negligence. The caveat is, any negligence must be proven by the claimant in court.

Two clauses of concern on the Costa ticket address the jurisdiction and which laws apply for possible legal claims against Costa. The “forum selection” clause stipulates the specific court in which a plaintiff may file a claim against Costa. The “choice of law” clause is where Costa names which country’s laws will apply to that claim. In this instance, the forum is in Italy and the choice of law is Italian law. Time limits on legal notices and actions are stated on the contract, and there is also a clause in the Costa contract barring the filing of a class action lawsuit. The burden of proving the jurisdiction and the claim lies on the claimant.

At last report, Costa Cruises, based in Genoa, Italy, a Carnival Cruise Line subsidiary, had offered each passenger who was not physically injured on COSTA CONCORDIA 11,000 euros, which translates to roughly $14,500 U.S., to cover property loss and damage, ticket reimbursement, travel expenses, and medical bills arising from the disaster. A number of passengers have decried this figure as not even covering their property loss, stating that it also doesn’t begin to cover the mental or emotional damage inflicted. It’s been pointed out that paying the approximately 3,200 non-physically injured survivors $14,500 each would cut into about twelve days of Carnival Corporation profits for 2012. Carnival has since stated that its net income for 2012 may be reduced by as much as $175 million, although future profits are expected to normalize. Costa plans to address compensation to those with physical injuries and to the families of those who perished on an individual basis.

Despite the wording on the Costa cruise ticket contract, lawsuits, including class action suits, by U.S. citizens and citizens of other countries are being filed in Florida where Costa has its headquarters. The families of those who lost their lives fear that Italian law and courts will not adequately address their losses. It remains to be seen whether the Florida court will keep the case or uphold the forum selection clause in favor of the Italian court. Even if the Florida court finds a way to keep the case on jurisdictional grounds, it may still uphold the choice of law clause stated in the cruise ticket contract. In such a case, damages would be governed by Italian law. One thing is certain, and that is the legal stage is set for a gigantic battle on the enforceability and validity of cruise ticket contracts.

U.S. courts have consistently upheld many cruise ticket contract terms in the past. Therefore, it is possible that the U.S. courts in the COSTA CONCORDIA case will dismiss any action filed in the U.S., or, at least, follow Italian law in awarding damages. On the other hand, there are several good, creative lawyers pursuing legal actions in Florida and elsewhere. Perhaps the American courts will be persuaded to keep the case because Costa and Carnival are so closely affiliated. American courts may also be inclined to try to keep a case if it can be shown that the remedies to the families that are available in Italy are grossly inadequate. We will continue to follow this story.