Insight: Laws leave cruise-ship victims at sea

Tue Feb 21, 2012 8:34am EST
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By Tom Hals, Andrew Longstreth and Steve Stecklow

(Reuters) - When Walter Henry Alderfer learned last month about the Costa Concordia shipwreck off Italy, it brought back bad memories.

In April 2007, he, his wife and his daughter were aboard the Sea Diamond cruise ship when it struck a reef off Greece and sank into the Aegean Sea. Screaming passengers fought over life preservers, Alderfer says, and his wife hurt her neck and later needed surgery.

Five years later, the family is still seeking redress - and its experience may be instructive for survivors of the Concordia disaster.

They turned down an offer of compensation by the owner - Cyprus-based Louis Cruises, a unit of Louis PLC - that included a free voyage. They filed a federal lawsuit in New York but settled for $2,500 - less than his wife's medical expenses and the family's lost belongings, he says - because the tickets required them to sue in Greece. An additional suit in Greece is still dragging on.

An attorney for Louis Cruises said many passengers were satisfied with the compensation offer, and Louis reached "fair and reasonable" settlements with some U.S. passengers who sought additional awards. She also said the evacuation was swift and orderly.

Most cruises proceed without mishap. But in the rare cases when passengers do suffer serious injury - at least 17 died in the wreck of the Costa Concordia on January 13 - they can face formidable obstacles in recovering significant damages, an examination by Reuters shows.

The cruise business - led by industry giant Carnival Corp. & PLC, whose Italian subsidiary owned and operated the doomed Costa Concordia - has put in place over the years a legal structure that ring-fences operators from big-money lawsuits.

The rules for seeking redress are spelled out in complex, multi-page ticket contracts that passengers may not receive until right before boarding. Victims are often required to file suits in remote jurisdictions. The wording has been the subject of decades of court battles.   Continued...

A video grabs shows the Greek-registered Sea Diamond cruiser sinking off Santorini April 6, 2007. REUTERS/ via Reuters TV