Transocean, owner of the Deepwater Horizon rig that exploded and sank killing 11 and creating a growing oil spill, today filed a request in Houston federal court to limit its liability in the lawsuits filed against it to about $27 million. U.S. District Judge Keith Ellison was assigned the case.
The Limitation of Liability Act is a maritime law that allows a vessel owner to limit liability to the value of the vessel and its freight. The law dates back to the mid 1800s when it was passed to protect U.S. vessel owners, eliminating some risk in crisis situations and aiding competition with foreign ships.
Transocean’s attempt to limit its liability will likely fail. To win, Transocean has to prove that management on shore had no knowledge of the circumstances that caused the explosion. Congressional testimony has indicated Transocean and BP knew about abnormal pressure tests before the explosion.