Shipowners Limitation of Liability – What is the Limit?

by Robert Shearer

Limitation of liability for marine claims in England and Wales is governed by the Convention on Limitation of Liability for Maritime Claims 1976 and the 1996 Protocol.

However, under the 1996 Protocol’s tacit amendment provision the 1996 Protocol limits of liability were recently raised by about 51%. These provisions were announced by the IMO as coming into force on 8th June 2015. But, depending upon the constitutional framework of a jurisdiction, nation states which have tacitly accepted the amendments to the 1996 Protocol may, nevertheless, be required to enact legislation in order to bring the amendments into force in their respective jurisdictions.

The Revised Protocol increases the limit of liability for property claims for ships not exceeding 2,000 gross tonnage to 1.51 million SDRs (up from 1 million SDRs). For larger ships, the following additional amounts will be used in calculating the limitation amount:

For each ton from 2,001 to 30,000 tons, 604 SDR’s (up from 400 SDR’s)
For each ton from 30,001 to 70,000 tons, 453 SDR’s (up from 300 SDR’s)
For each ton in excess of 70,000 tons, 302 SDR’s (up from 200 SDR’s)

For loss of life or personal injury claims the new limit for a ship not larger than 2,000 gross tonnage is 3.02 million SDRs (up from 2 million SDRs), with the following additional amounts for larger vessels:

For each ton from 2,001 to 30,000 tons, 1,208 SDR’s (up from 800 SDR’s)
For each ton from 30,001 to 70,000 tons, 906 SDR’s (up from 600 SDR’s)
For each ton in excess of 70,000 tons, 604 SDR’s (up from 400 SDR’s)

Thomas Cooper LLP has spoken with the UK’s Department of Transport and Climate Change. They inform us that no enacting legislation has been brought into force in the UK, however they took the view that under the tacit amendment procedure there was an argument that the new limits apply automatically at UK law.

Thomas Cooper LLP has been informed by the Department of Transport and Climate Change that the UK is planning on bringing in new secondary legislation, for legal certainty, to enact the amendments. The UK has said this is taking longer than expected because they are also creating an ambulatory reference provision, which would mean subsequent amendments are automatically applied. At the time of writing the consultation phase of the legislative procedure was due to start imminently and it was envisaged the secondary legislation would come into force by the end of the year (2015).

There is no legal basis for the argument advance by the Department of Transport and Climate Change, that the revised limits already apply in the UK. This is because the UK is a ‘dualist’ state. In a dualist state a treaty ratified by the Government does not alter the laws of the state unless and until it is incorporated into national law by legislation. Accordingly, in breach of the 1996 LLMC, England and Wales’ shipowner limits remain as set out in the 1996 LLMC Protocol. This is likely to be a source of much legal uncertainty in the coming months.

This article is filed under:  Industry news

About the contributor

  • Robert Shearer Solicitor

    Robert works in our Shipping Department handing both wet and dry work with a particular emphasis on admiralty law.

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