Congratulations! You have just been hired by Diversified Worldwide Industries (DWI), Inc., as the Vice President of Risk Management. DWI is headquartered in West Palm Beach, Florida, and has over 150 offices in 30 countries. DWI is incorporated in the State of Delaware; its ships are flagged by Liberia and the Bahamas.
The Corporation's principal activities are grouped into the following areas:
ENVIRONMENT: Water and water treatment, waste management;
OIL & ENERGY: Exploration, production, transport, refining, wholesale marketing, alternative fuels research;
COMMUNICATIONS: Telecommunications, Internet, audiovisual activities, publishing and multimedia;
LEISURE & RECREATION: Hotels, casinos, cruise ships;
REAL ESTATE: Builds homes and manages properties in active adult, age-restricted communities;
FINANCIAL: Brokerage for capital market investments in Russia, Eastern Europe, China, and emerging markets;
MANUFACTURING: Produces, distributes, markets, exports and imports spirits and wines.
Your duties as the VP for Risk Management will require that you develop knowledge and expertise in all areas of business law, consult with corporate and outside counsel on legal matters, and advise the board as to available options to reduce or minimize the risk and liability of DWI in its ongoing activities.
All ships owned by DWI are flagged in the Bahamas and Liberia. The "flag of convenience" rules have both public law and private law implications. Private law comes into play in the employer-employee, passenger contract, and cargo contract obligations of the ship. Public law also interfaces with these rules in that ships and companies pick and choose flags of convenience for individual ships based upon liability concerns such as negligence, contractual, labor, customs, immigration, and/or environmental laws.
The "flag of convenience" arrangement, also known as foreign registries, offered by the Bahamas, Liberia, Panama and other countries, permit ship owners to avoid most of the wage and labor laws of the United States. A ship is subject to liability as if it were "within" the country whose flag it flies. DWI's passenger tickets and contracts also make reference to this fact that all claims by passengers or employees must be litigated in and under the law of the country whose flag the ship in question flies.
Mr. and Mrs. Lowell were passengers on one of DWI's smaller cruise ships, The Minnow, for a weeklong journey from Miami, with stops in Nassau, Key West, and Grand Cayman. The Minnow flies the flag of Liberia. One night during the cruise, the Howells returned to their cabin and find two ship employees removing cash and Mrs. Lowell's jewelry from the ship-provided safe. Mr. Lowell struggled with the men, but he collapsed and suffered a fatal heart attack. Mrs. Lowell was locked inside the cabin restroom and the robbers escaped. A few hours later, the ship docked in Grand Cayman, and the two robbers left the ship with the cash and jewelry stolen from the Lowell's safe; the robbers did not return to the ship. Mrs. Lowell was rescued several hours after the ship left Grand Cayman and identified the two employees in a photo lineup.
The day after her return to Miami, Mrs. Lowell's attorney faxed DWI a letter threatening to sue them for negligent supervision, training, and hiring of employees; breach of contract; infliction of emotional distress; assault; battery; theft; and wrongful death unless DWI tendered the sum of $10 Million dollars within 10 business days.
Assume that under Liberian law, a wife is the property of the husband and has no standing to sue or claim damages for his injuries, and further that any property within the possession of Husband and Wife is deemed to be the sole property of the husband.
Discuss the public law and private law ramifications for DWI in this situation. How would the legalities be different if the incident happened at a DWI resort on the US mainland? What should DWI do for Mrs. Lowell, and in terms of developing policies for future criminal incidents?
A few online review for this assignment are:
Admiralty Law (http://www.legal-database.com/admiralty.htm)provides a summary of maritime and admiralty law.
International Council of Cruise Lines (http://www.iccl.org)is a trade association website and contains summaries of standards for cruise passenger safety