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Marine Log

May 23, 2008

NCL to pay $14.75 million in S.S. Norway case

Norwegian Cruise Line Limited is to pay more than $14.75 million after pleading guilty to negligence in connection with the May 2003 boiler explosion aboard the S. S. Norway,

Eight crew members were killed in the blast and ten others were seriously injured.

On May 21, District Court Judge Federico Moreno sentenced the corporation to pay a fine of $1 million, and ordered preliminary restitution to the victims of the offense of $13,750,000. Additionally, the Court ordered a follow-up hearing, if necessary, on June 20, 2008, to consider additional restitution issues.

Following is a press release issued by the United States Attorney for the Southern District of Florida:

R. Alexander Acosta, and Rear Admiral Robert S. Branham, Commander Seventh Coast Guard District, announced that NORWEGIAN CRUISE LINE LIMITED (NCLL) entered a guilty plea today in U.S. District Court in Miami in connection with the May 25, 2003 boiler explosion aboard the S.S. NORWAY in the Port of Miami. NCLL pled guilty to a single charge brought under federal shipping laws alleging grossly negligent operation of the S.S. NORWAY, which placed the lives and property of persons on board the vessel at risk and led to the death of at least one individual, in violation of Title 46, United States Code, Section 2302(b).

According to documents filed in the case, and statements in Court before U.S. District Court Judge Federico Moreno, who accepted the guilty plea tendered by the President of NCLL, on May 25, 2003, NCLL, a Bermuda corporation with its corporate headquarters in Miami, was the owner and operator of the S.S. NORWAY when one of the vessel’s four boilers ruptured while the vessel was moored in the Port of Miami. As a result of the failure of a part of the boiler system, eight crewmembers were killed and ten others seriously injured.

NCLL admitted through its Plea Agreement and a joint Factual Statement contained therein, that it had failed to insure that proper inspections, maintenance, and repairs of boiler components were carried out. The Factual Statement includes admissions that engineers on the vessel did not follow standard procedures in starting up and shutting down the boilers, failed to maintain correct boiler water chemistry, thereby contributing to the corrosion and deterioration of the systems, and that improper repairs were carried out on the high-pressure components. Additionally, it was noted that the boilers on the vessel had a history of cracks and corrosion dating to the 1970s.

Judge Moreno sentenced the corporation to pay a fine of $1 million, and ordered preliminary restitution to the victims of the offense of $13,750,000. Additionally, the Court ordered a follow-up hearing, if necessary, on June 20, 2008, to consider additional restitution issues.

A Complaint For Civil Injunctive Relief was also filed related to the, S.S. NORWAY incident, against NCL (Bahamas), LTD., a Bermuda corporation that assumed operational control of ships that were previously operated by NCLL. The case has been assigned to the Honorable James Lawrence King, United States District Court Judge, and is set for a hearing on May 22, 2008 at 8:00 am. The Civil Complaint references the fact that NCLL had agreed to plead guilty to the companion Criminal Information. NCL has agreed that as operator of the former NCLL vessels, it will assume legal responsibility for carrying out certain procedural and safety reviews under the auspices of an independent consultant, to ensure that NCL has in effect safe practices in vessel operations, a safe working environment, and proper safeguards against identified risks. The review will specifically include consideration of procedures related to the maintenance, operation, and inspection of all boiler systems on NCL vessels. The S.S. NORWAY, itself, has been permanently removed from maritime service and beached at Alang, in the state of Gurajat, India, where the vessel is being dismantled for scrap.

The National Transportation Safety Board’s report on the results of its investigation into the S.S. NORWAY casualty concluded that a weld on a seam of a high-pressure drum fractured, releasing almost 20 tons of high temperature water, which immediately flashed into steam and swept through the engine spaces and some adjacent crew berthing areas, resulting in the death of eight crewmembers and the injury of others. No passengers were injured. The report further noted that the failed system had a history of fatigue cracking, corrosion, and pitting. The Board Report concluded that the ultimate failure of the boiler system was failure of adequate care in the maintenance, operation, and inspection of the S.S. NORWAY’s boilers.

Mr. Acosta commended the investigative efforts of the U.S. Coast Guard Investigative Service, whose investigative efforts led to the charges in this case. The government is being represented in this matter by Assistant United States Attorney Thomas Watts-FitzGerald.


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