Cruise Ship Accidents, Cruise Ship Law, Maritime Matter of the Week

Carnival Agrees to Reimburse Coast Guard for Cruise Ship Accident Aid


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Maritime history has been made this week. After being publicly criticized by Sen. Jay Rockefeller and dozens of other maritime industry leaders, including the cruise lawyers at our firm, it appears as though Carnival has done something it’s never done before -buckled. The “Fun Ship” liner has agreed to reimburse the U.S. government for costs incurred by the U.S. Coast Guard when the organization came to the aid of the disabled Carnival Triumph.

In his letter to Carnival CEO Micky Arison, Rockefeller addressed several issues that have been plaguing the company for years, including the overall lack of safety onboard Carnival vessels and how the company has avoided paying U.S. corporate taxes because it registers its ships in foreign ports.

However, one of the main issues that stood out in the letter was the fact that Carnival had done absolutely nothing to reimburse the Coast Guard for the dozens of cruise ship accidents the organization has helped with.

After the Triumph cruise ship fire in February disabled the ship and left it stranded in the middle of the Gulf of Mexico, the U.S. Navy and Coast Guard offered their services and responded to the scene as quickly as possible. The agencies spent $779,914 helping the Triumph, but the figure pales in comparison to the $3.4 million incurred when the organizations responded to a similar cruise ship fire onboard another Carnival ship, the Splendor, in Nov. 2010.

And who exactly gets stuck with the bill to cover cruise ship accident costs? U.S. taxpayers, of course.

Carnival previously stated in its response to Rockefeller’s letter that it had no intention of reimbursing the government for the agencies’ assistance, explaining that cruise ships come to the aid of other vessels that are in distress, at their own expense, so why should the Coast Guard or Navy have to be paid to do their job?
The cruise company claimed the agencies would be making a “profit” if they were to be reimbursed, but unfortunately, Carnival dug itself a deep grave after that comment.

Apparently, Carnival doesn’t seem to know much about maritime law – which is evident from the lack of shipboard safety fleet-wide. The law of the sea requires any vessel that is in the vicinity of a maritime distress situation to offer their aid if called upon for assistance, unless doing so would place that vessel in danger. Recouping the costs of a maritime rescue mission is hardly a “profit.” At this point, Carnival should just consider paying a salary to the Coast Guard and Navy since it seems like the line is involved in a cruise ship accident every single week.

Although the costs of implementing better safety features on its ships don’t even come close to the amount spent by both Carnival and maritime rescue organizations after an accident has occurred, the line still hasn’t made a sincere effort to improve conditions onboard its vessels for both passengers and crewmembers.

Whether the company decided to reimburse the government out of sheer goodness or because it wanted to avoid incurring some sort of fine, Carnival undoubtedly felt some pressure to do the right thing. The company issued a statement Monday saying it is in the process of “voluntarily” reimbursing the U.S. Treasury for costs associated with the Triumph and Splendor fire incidents.

“Although no agencies have requested remuneration, the company has made the decision to voluntarily provide reimbursement to the federal government,” read Carnival’s statement.

Senator Rockefeller responded to the line’s actions, saying he was glad the company finally stepped up to the plate, making a responsible decision.

“I’m glad to see that Carnival owned up to the bare minimum of corporate responsibility by reimbursing federal taxpayers for these two incidents,” said Rockefeller. “I am still committed to making sure the cruise industry as a whole pays its fair share in taxes, complies with strict safety standards, and holds the safety of its passengers above profits.”
Carnival and other cruise lines have avoided what Rockefeller calls “corporate responsibility” since the first cruise ship ever set sail. Rockefeller has urged Carnival to repeal tax provisions that allow the company to register its vessels in foreign ports, which also allows the line to avoid paying American corporate taxes.

Although it may be some time – if ever – before cruise lines stop flying foreign flags, Carnival’s actions this week have demonstrated that the industry is at least moving in the right direction.

It took several letters, media reports and criticism to get Carnival to do the right thing and reimburse tax payers for the millions of dollars that have been spent on just two cruise ship rescue missions. So what will it take for the cruise company to reimburse victims of cruise ship accidents?
That question has yet to be answered.

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