Here’s another post about that mythical multi-national corporation: BSSL. Today BSSL is dealing with a situation in which a crewmember of one of their cruise ships broke into a couple’s cabin, and the husband died during the struggle.
Blue Star Steamship Lines (BSSL) operates several cruise ships under the flags of the Bahamas and Liberia. These flags of convenience offer BSSL the opportunity to operate under the statutes of the aforementioned nations. Therefore the death of Mr. Lowell and the theft of the Lowell’s cash and jewelry are affected by these flag of convenience. In particular, this case happened aboard the BSSL cruise ship Minnow under the flag of Liberia. For the purpose of this case, we will assume that under Liberian law a wife is the property of her husband without the right to sue or claim damages. Additionally, any property that is owned by the couple is the sole property of the husband.
Due to its open registry, also known as a flag of convenience, Liberia has the second largest fleet after Panama. Developing countries like Liberia allow foreign vessels to register under their flag for a small registration fee. In the case of Liberia, the fee for a 30,000 ton vessel may cost as much as $13,225 in the first year and $11,500 per year thereafter. For many shipping companies, this fee is a small price to pay in order to avoid the taxes and labor costs associated with doing business under the U.S. flag. In fact, this option is so appealing that 2,511 ships are registered under the flag of Liberia, and 7,357 more are registered under the flag of Panama (International, 2007).
The importance of flags of convenience is based on Admiralty Law. According to Admiralty Law, the country of jurisdiction for a seagoing vessel is based on the flag it flies (Legal Database, n.d.). Therefore, in the case of the BSSL ship Minnow; the country of jurisdiction is Liberia. In other words, because the Minnow flies the Liberian flag, the ship is treated as if it is a part of Liberia.
The legal case for Mrs. Lowell is fairly cut and dry. Under Liberian law, Mrs. Lowell does not have the right to sue BSSL for damages in this case. Additionally, since the property that was stolen was her husband’s and not hers, BSSL has no legal obligation to compensate her for her loss. Admiralty law does allow a country to exercise its jurisdiction when an incident occurs off the country’s coast (Legal Database, n.d.). Unfortunately, for Mrs. Lowell in this case, the incident occurred while at sea and not in port. Additionally, the port in question, Grand Cayman, is not under the jurisdiction of U.S. law.
If this incident had occurred at one of the U.S. resorts operated by BSSL, the situation would be much different. In that case, BSSL would be bound U.S. law and Mrs. Lowell would have much more protection under that law. Vicarious liability is the legal liability suffered by one individual for the criminal actions of another. In the case of an employee, the criminal action must be closely related to the employee’s work. The Oxford Dictionary of Law provides the example of a driver accused of negligent driving. In this case, the criminal action is related to the nature of a driver’s work. If, on the other hand, the driver were to get out of the vehicle and assault a pedestrian, the employer could not be held responsible (Martin & Law, 2006).
If this incident had occurred under U.S. jurisdiction, Mrs. Lowell would be able to argue that BSSL is vicariously responsible for the actions of its employees and the resulting death of her husband. Although there is some question whether the actions of these BSSL employees was conducted during the course of their work, it might be reasonable to assume that the it is the duty of every crew member to safeguard the well-being of the passengers. In that case, BSSL would be responsible since the employees willfully neglected their duty and assaulted Mr. Lowell. Additionally, since property owned by a couple reverts to the surviving member of the couple, Mrs. Lowell would be entitled to compensation for the loss of her cash and jewelry.
The Cruise Lines International Association (2008) has specified a zero tolerance policy for crimes committed on board. Pursuant to this policy, BSSL should treat this prosecution of this incident as they would any other crime on U.S. soil. Incidentally, U.S. authorities have the right to investigate crimes committed against Americans while on board a ship, even if that ship is in international waters (CLIA, 2008). In this case, BSSL should work with Mrs. Lowell to contact the FBI and initiate an investigation into the theft of her property and the death of her husband. Since BSSL can not be held liable under U.S., there is no risk to the company and it is in the public interest to see the perpetrators brought to justice.
Ferrell, Fraedrich, and Ferrell (2008) illustrate the importance of ethics in relation to customer satisfaction. In order to survive, a company must to see to maintain long-term relationships with its customers. In a poll of 25,000 people from 23 countries, it was discovered that 60 percent of consumers focus on social responsibility rather than brand recognition when making purchasing decisions (Ferrell, Fraedrich, & Ferrell, 2008). Therefore, BSSL must make the ethical decision and compensate Mrs. Lowell for her loss. It is important for the image of BSSL that customers feel safe on its ships and confident that they will be compensated if their security is in any way impugned. Furthermore, BSSL must not hide behind the Liberian flag of convenience in order to save money at the expense of consumer confidence and satisfation.
Cruise Lines International Association. (2008). Personal safety and security. Retreived October 14, 2008.
Ferrell, O. C., Freadrich, J., & Ferrell, L.. (2008). Business ethics: Ethical decision making and cases (7th ed.). Boston: Houghton Mifflin.
International: Keeping the country afloat; Liberia. (2007). The Economist, 384(8543), 52. Retrieved October 14, 2008, from ABI/INFORM Global database. (Document ID: 1325019201).
Legal Database. (n.d.). Admiralty law overview. Retrieved October 14, 2008.
Martin, E. A., & Law, J. (2006). Vicarious liability. Oxford Dictionary of Law. Retrieved October 14, 2008.