Naval Architect left with the bill

A naval architect entered into an agreement in 2007 to design a jetboat. The company that built the boat did not have any insurance, although the naval architect was not aware of this fact at the time. In hindsight, they may have wished they had checked.

The vessel was delivered in 2008, but in early 2009 the engine mounts collapsed and various other problems occurred which rendered the vessel unable to operate.

In 2010 proceedings were issued against the boat builder and the architect. The principal allegation relating to design concerned the number of engine mounts installed. However, a comprehensive survey report found that the cause of the collapse was abuse of the engine by the operator rather than the mounts installed. It transpired that the total claim was for USD 700,000.

Legal proceedings were commenced against the builder and the naval architect. The builder revealed they had no insurance and that they could only contribute USD 40,000 towards the claim. To prevent a disproportionate amount of legal costs and time being incurred, ITIC offered a settlement amount on behalf of the naval architect.

The above is a good example of a very typical situation. Even though the naval architect was not negligent, as the builder had no insurance the naval architect was forced to contribute more in settlement, to avoid the prohibitive cost of further litigation in a jurisdiction where costs could not be fully recovered.