Is your country party to the 1976 Convention on Limitation of Liability for Maritime Claims? If not, is there equivalent domestic legislation that applies? Who can rely on such limitation of liability provisions?

Shipping

Australia Small Flag Australia

Australia is a party to the 1976 Convention on Limitation of Liability for Maritime Claims, and as amended by the 1996 Protocol and further amendments of 2012 (Limitation Convention). The Limitation Convention has force of law in Australia by operation of The Limitation of Liability for Maritime Claims Act 1989 (Cth) (Limitation Act).

Under the Limitation Act, a shipowner, charterer, manager, operator or salvor of a sea-going vessel may be entitled to limit its liability with respect to certain maritime claims including with respect to loss of life, personal injury or loss of or damage to property; or claims for delay in the carriage by sea of cargo, passengers or their luggage.

However, shipowners, charterers, managers, operators or salvors of sea-going vessels are not entitled to limit liability with respect to:

(a) claims concerning the raising, removal, destruction or the rendering harmless of a ship that is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such a vessel; and
(b) claims concerning the removal, destruction or the rendering harmless of the cargo on the vessel.

In addition, liability cannot be limited for claims for salvage, contributions to general average or claims for oil pollution damage.

A shipowner is not entitled to limit its liability where the loss resulted from the owner's personal act or omission, committed with the intent to cause such loss, or recklessly and within its knowledge that such loss would likely result. This is a difficult limitation to break as the onus is on the claimant (seeking to break the limitation) to establish that the operating mind and body of the shipowner (not just the master or crew) had the requisite intention or acted recklessly.

China Small Flag China

China has not ratified the the 1976 Convention on Limitation of Liability for Maritime Claims (“LLMC”), but the CMC largely follows the limitation regime under the LLMC. Under CMC, the law sets out a list of claims which are subject to limitation (Article 207).

According to CMC, the following parties can rely on limitation of liability.

a) Shipowners including charterers and operators of ships;
b) Salvors;
c) Persons for whose act, neglect or default the shipowners or salvors are responsible;
d) The insurer liable for the maritime claims.

Croatia Small Flag Croatia

Croatia is party to the 1976 Convention on Limitation of Liability for Maritime Claims as well as its 1996 Protocol (as further amended by way of a tacit acceptance procedure).

Colombia Small Flag Colombia

The country has not ratified the 1976 Limitation Convention. In fact, there is no provision in place at a local level that somehow emulates the parameters set forth in the Convention. Only article 1481 of the Commercial Code currently provides that the shipowner could limit his liability in certain events up to the value of the vessel, her accessories and the respective freight.

The Draft Maritime Code (which discussion is currently being promoted by the National Maritime Authority) aims to incorporate in its current version the basic provisions (i.e. limits) of the 1976 Convention (as amended by the 1996 protocol).

Cyprus Small Flag Cyprus

Cyprus is a party to the Convention on Limitation of Liability for Maritime Claims of 1976 and the Protocol of 1996 (Law no. 20(III)/2005). The persons who may rely on the Convention limitation of liability provisions are owners, charterers, managers and operators of seagoing ships.

Israel Small Flag Israel

Israel has adopted the International Convention Relating to the Limitation of Liability of Owners of Sea-Going Ships, Brussels 10 October 1957 and its amending Protocol, Brussels 1979, as part of the Shipping Act (Limitation of Liability of Sea-going Ships), 1965. The 1976 Convention is not adopted by Israeli law but might be considered as a customary law.

Owners can apply to the Maritime Court for the establishing of a Limitation Found. If the Court will be satisfied with the Owner’s application it will order the establishment of the Limitation fund and will give orders as to the Owner’s deposit and the publishing of notices to Creditors. Creditor’s claims or participation claims are to be filed by a local creditor within 30 days. If the creditor is a foreign creditor, claims must be filed within 60 days.

Italy Small Flag Italy

No, it is not. Although in 2009 the parliament had eventually authorized the ratification of the 1976 London Convention, the Convention has never in fact been ratified and this is yet today subject matter of criticism by the Italian shipping community. Conversely, it is arguable that, by Legislative Decree n. 111 of 28.06.2012, some of the provisions contained in the Convention were introduced in the Italian legal system. These may make limitation available – in the words of the legislative decree – to “the registered owner or any other person, such as the bareboat charterer, responsible for the operation of a seagoing ship”.

Japan Small Flag Japan

Japan is a party to the LLMC Convention 1976 and the LLMC Protocol 1996, both of which have been implemented into the Limitation of Liability Act. The increase in the limits of liability brought about by the amendment of the Protocol 1996 have been applied under the Act, which was amended in line with the amendment of the Protocol 1996 and came into effect on 8 June 2015.

Under the Act, an applicant for limitation of liability must be classified as a ‘Shipowner, etc.” or a “Servant, etc.” “Shipowner, etc.” is widely construed as including shipowners, voyage charterers, time charterers and slot charterers. “Servant, etc.” is defined as “the servant of a Shipowner or Salvor, or any other such person whose actions the Shipowner or Salvor is responsible for”. Such applicant must file an application with the local District Court to initiate limitation proceedings, and once the court has found the application appropriate, it will order the establishment of a limitation fund by cash equivalent to the liability limit or by guarantee made by a bank, insurance company or P&I club.

Norway Small Flag Norway

The 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the 1996 Protocol, is implemented in NMC Chapter 9 (sec. 171 et seq.). According to NMC sec. 171, the “reder”, the shipowner, the carrier and the manager can rely on these limitations. The “reder” has no precise translation into English. In legal theory it is described as the person that operates the vessel on his or her account, typically the owner or the demise charterer.

Philippines Small Flag Philippines

No, the Philippines is not a party to said convention.

Limitation of liability is based on the Code of Commerce, particularly Arts. 587, 590 and 837, that embody the idea that ‘maritime law is exclusively real and hypothecary that operates to limit such liability to the value of the vessel, or to the insurance thereon’. It is thus necessary that the vessel be abandoned for limited liability to apply.

Limitation of liability can be relied upon by the shipowner and ship agent.

According to case law, instances where the shipowner or agent may not avail of limited liability are as follows:

  • the shipowner is at fault or there is concurring negligence between the Captain and the shipowner
  • there is insurance; and,
  • claims based on Workmen’s Compensation Act.

Singapore Small Flag Singapore

The provisions of the Convention on Limitation of Liability for Maritime Claims 1976 (“LLMC 1976”) have the force of law in Singapore (other than paragraph 1(d) and 1(e) of Article 2 of the Convention). The Convention is set out in the Schedule under the Merchant Shipping Act (Cap 179). The Singapore Government has passed the Merchant Shipping (Miscellaneous Amendments) Bill (the “Bill”). One of the objectives of the Bill is to amend the Merchant Shipping Act (Cap 179) to implement the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims. It is anticipated that the amendments incorporating the 1996 Protocol will come into force by December 2019.

South Korea Small Flag South Korea

Korea is not a party to the Convention on Limitation of Liability for Maritime Claims (“LLMC”) 1976 or its 1996 Protocol. However, there is equivalent domestic legislation that applies – Part V (Maritime) Chapter One (Maritime Enterprise) Section Four of the KCA stipulates provisions on general/global limitation of liability of shipowners (Articles 769–776). The scope of the shipowners’ global limitation generally matches the 1976 LLMC levels – only the global limitation level for damages with regard to a passenger’s death and personal injury correspond to the 1996 Protocol level. In accordance with Article 776 of the KCA, the Act on the Procedure for Limiting the Liability of Shipowners, etc. has been enacted to prescribe the procedures for limitation of liability.

Article 774 of the KCA provides that the following parties as well as shipowners can rely on limitation of liability provisions in the KCA: (i) charterer, administrator of a ship, and operator of a ship; (ii) general partner of such shipowner, charterer, administrator of a ship, and operator of a ship in case of an unlimited liability company; (iii) shipmaster, crewman, pilot and other employee or agent of such shipowner, charterer, administrator of a ship, and operator of a ship, who have caused claims by his act.

Taiwan Small Flag Taiwan

Due to international politics, Taiwan is not a party to the 1976 Convention on Limitation of Liability for Maritime Claims. Taiwan has its own maritime legislation (the Maritime Act, "MA"), which contains the similar spirit in the relevant international conventions.

The liability of a ship owner (including the owner, charterer, manager and operator of the ship) is limited to an amount equal to the value of the ship, the freight and other accessories of the particular voyage in respect of the following claims:

  1. Claims in respect of loss of life, personal injury or damage to or loss of property, occurring on board or directly resulted from the operation of the ship or salvage operations;
  2. Claims arising from the operation of the ship or salvage operations; provided, however, that such claims resulting from a contractual relationship should be excluded;
  3. Claims arising from the removal of wreck or property lost overboard; provided, however, that the reward or payment made under a contractual relationship should be excluded; and
  4. Claims for the debts incurred in order to avert or minimize the liabilities set out in the above (ii) and (iii).

If the sum of limitation of liability under is less than the following, the ship owner shall be liable for the deficit:

  1. Regarding property claims, an aggregate amount of 54 special drawing rights (SDR) as defined by the International Monetary Fund for each ton of the ship’s registered gross tonnage (GT);
  2. Regarding loss of life or personal injury claims, an aggregate amount of 162 SDR for each GT;
  3. Where the claims in the above (ii) and (iii) occur concurrently, an aggregate amount of 162 SDR for each GT, of which a first portion amounting to 108 SDR for each GT shall be exclusively appropriated to the payment of personal claims in respect of loss of life or personal injury, and of which a second portion amounting to 54 SDR for each GT shall be appropriated to the payment of property claims; provided, however, that in cases where the first portion is insufficient to pay the personal claims in full, the unpaid balance of such claims shall rank, according to rate, with the property claims for payment against the second portion of the fund; and
  4. The GT of a ship weighing less than 300 tons shall be deemed to be 300 tons.

However, the limitation of liability does not apply under any of the following:

  1. Claims arising out of an intentional act or negligence of the ship owner itself;
  2. Claims arising from the employment contracts for the shipmasters, seafarers and other members of the ship crew;
  3. Claims for salvage rewards or general average contribution;
  4. Claims arising from the carriage of toxic chemical substances or from the oil pollution;
  5. Claims arising from nuclear incidents due to the carriage of nuclear substances or nuclear waste; or
  6. Claims for nuclear damage caused by a nuclear ship.

United States Small Flag United States

The U.S. is not a party to the 1976 Convention on Limitation of Liability for Maritime Claims. Instead, the U.S. continues to apply the Limitation of Liability Act (the Limitation Act), passed in 1851 to encourage investment in shipping. Under this act, vessel owners (including demise charterers) may limit liability to the value of the vessel and pending freight in certain circumstances where the loss occurred without the privity or knowledge of the owner. As a matter of procedure a vessel owner’s action for limitation must be commenced within six months of the owner being given adequate written notice of a claim, whether or not a claimant has initiated a legal proceeding. Limitation may apply to claims brought by the U.S. government. The Limitation Act may be applied to a wide variety of claims but is not generally favoured by the courts, and there are different limits in cases of personal injury and death, pollution liabilities, wage claims and others.

United Kingdom Small Flag United Kingdom

The UK is party to the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol.

Malta Small Flag Malta

Malta is a party to 1976 Convention on Limitation of Liability for Maritime Claims as amended by the 1996 Protocol (the ‘LLMC’). Malta deposited its instrument of accession on 13 February 2004, making it the tenth IMO member state to accede to the 1996 Protocol. In doing so, it also triggered the entry into force mechanism under the protocol. The provisions of the LLMC have been transposed into Maltese domestic legislation by means of the Limitation of Liability for Maritime Claims Regulations, 2003 (the ‘LLMC Regulations’).

In accordance to Regulation 5 of the LLMC Regulations, the right to limit liability shall apply in relation to any ship, whether seagoing or not. Furthermore, the term ‘ship’ in the same Regulations as including references to any structure, whether completed or in the course of completion, launched or intended for use in navigation as a ship or part of a ship, and shall apply to any barge or like vessel however propelled. The persons identified in Article 1 of the LLMC, namely ship owners and salvors, their insurers, and any person for whose act, neglect or default the shipowner or salvor is responsible, are also generally entitled to limit their liability under Maltese law.

Panama Small Flag Panama

Panama is not a party to the 1976 Convention on Limitation of Liability for Maritime Claims.
Law 8 of 1982 on Maritime Procedure (“Law 8”) has a special section dedicated to the limitation of liability for maritime claims from article 576 to 597 and in addition, articles 20 and 63 of Law 55 of 2008 (the “Law 55”).

The Limitation included in the in the aforementioned articles are applicable to the following:

  • Shipowners (Art. 576, 577 and 580 of Law 8);
  • Salvagers (Art. 576 and 578 of Law 8);
  • Charterer (Art. 577 of Law 8);
  • Naval Managers (Art. 577 of Law 8);
  • Claims against individuals subordinated to the Shipowners or the Salvagers (Art. 579 of Law 8 and Art. 20 of the Law 55);
  • The insurer with the same limitations as the insured (Art. 581 of Law 8); and
  • The Carrier (Art. 63 of the Law 55).

Brazil Small Flag Brazil

Brazil is not party of the 1976 Convention on Limitation of Liability for Maritime Claims. However, Brazil ratified the 1924 Brussels Convention (1924 International Convention for the unification of certain rules relating to the limitation of the liability of owners of seagoing vessels) and the CLC-69 (International Convention on Civil Liability for Oil Pollution Damage).

Furthermore, the Sao Paulo Court of Appeals recently recognised the applicability of the bill of lading’s limitation of liability. On that case, the contracting party had an opportunity to declare the cargo’s value, but had decided not to, possibly in order to obtain a lower freight cost. Therefore, in the absence of a declaration of the cargo’s value, the limitation clause was valid, as it had been voluntarily and consciously adhered to by the merchant.

Otherwise, if the party declares the cargo’s value on the bill of lading, the article no. 750 of the Brazilian Civil Code provides that the carrier’s liability will be restricted to the value of the cargo.

Nevertheless, it is possible under Brazilian law for the parties to limit their liability towards each other under a contract.

Updated: December 11, 2019