Limits of Liability for Maritime Claims Raised

Last April amendments to increase the limits of liability in the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC Convention) were adopted by IMO’s Legal Committee, at its 99th session (16-20 April 2012).

The LLMC Convention sets specified limits of liability for two types of claims against shipowners – claims for loss of life or personal injury, and property claims (such as damage to other ships, property or harbour works). Taking into account the experience of incidents, as well as inflation rates, the limits set in the 1996 Protocol have, in recent years, been seen to be inadequate to cover the costs of claims, especially those arising from incidents involving bunker fuel spills.

The new limits are expected to enter into force in June 2015, under the tacit acceptance procedure. The Convention provides for a virtually unbreakable system of limiting liability. Shipowners and salvors may limit their liability except if “it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such a loss, or  recklessly and with knowledge that such loss would probably result.”

New limits

Under the amendments to the 1996 Protocol, the limits are raised as follows:

Claims for loss of life or personal injuryThe limit of liability for  ships not exceeding 2,000 gross tonnage is 3.02 million Special Drawing Rights (SDR) (up from 2 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount:

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

Property claimsThe limit of liability for  ships not exceeding 2,000 gross tonnage is 1.51 million SDR (up from 1 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount:

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

Background

The general question of limitation of liability for maritime claims was dealt with in the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships, which was signed in Brussels in 1957, and came into force in 1968. IMO, which began operations in 1959, then adopted a new convention in 1976, which raised the limits, in some cases
by 300%. The compensation limits of the  1976 Convention were raised by means of the Protocol adopted in 1996, and now revised in 2012.

The Special Drawing Rights (SDR) is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies. For example in July 11 1 SDR was equal to 0.814 Euro. With a general SDR allocation that took effect on August 28 and a special allocation on September 9, 2009, the amount of SDRs increased from SDR 21.4 billion to around SDR 204 billion (equivalent to about $328.3 billion, converted using the rate of August 31, 2011).

Source: IMO, IMF

Comments

  1. Very interesting read. Thanks for sharing. It’s good that they raised the limits.

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