General (Global) Limitation of Liability System Department for Maritime and Transport Law | May 17, 2018 Dr. Iva Savić

introduction Specific limitations in relation to: Cargo claims Passenger claims Tort claims (damage to things, damage to environment, CLC claims, nuclear claims, ship collision…) For particular types of claims Specific regulation for each (Hague-Visby Rules; Athens Convention with 2002 Protocol, etc.) Opposite to the general fault/breach of contract principles

General limitation of liability system Maximum liability caps Encompassing all particular claims resulting from a single event – regardless of source of obligation Rationale: Insurability of risks connected to maritime venture Balancing the powers of parties involved in maritime transport services Lower insurance premiums

Origin end of 17th century – stimulating shipping French system: „Abandon” – unlimited and personal liability of a ship owner; escape from liability by abandoning the vessel and freight to those who claim rights from the venture German system: „Execution” – liability confined to vessel and freight in execution sale (no abandonment) English system: „Value Cap” – limiting libility for each particular damage event to a certain maximum cap (with all property), based on vessel’s gross tonnage

International Harmonization International Convention for the unification of certain rules concerning the limitation of the liability of the owners of sea- going ships, 1924 adopted the French system not successful International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships, and Protocol of Signature, 1957 Adopted the English system More successful (taking into consideration to changes in monetary values, inflation, clear on the issue of loss of right to limit liability)

LLMC 1976 Convention on Limitation of Liability for Maritime Claims, 1976 more people can use the right to limit their liability (CMC: brodar) Higher limitation values (in some cases up to 300% when compared to the 1957 Convention) Specific determination with regard the loss of right to limit liability - the so- called „unbreakable limitation” system 1996 Protocol, 2012 Amendments Increased limitation figures (i) the experience of incidents; (ii) the changes in monetary values, and (iii) the effect of the proposed amendment on insurance costs Tacit acceptance procedure

Relevant Persons Persons that can utilize the right to limit liability: Shipowner Charterer Ship operator* Ship manager Salvor Insurer of liability (towards third parties) + any person for whose acts, errors and omissions sihpowner is liable (master, crew) – inside their duties preventing the possibility for the claimant to sue other person than the owner/operator in order to gain bigger compensation (unlimited) salvor – including persons outiside the ship (anyone providing services of salvage or offering help) as we will see laterm the 1976 Convention incl. claims arising out of acts different than the sole ship operation and ship salvage stricto sensu insurer of liability will have the right to utililze the liability lilmitation to the same extent as his insurer – that insured his liability toward third persons

Reminder: Ship operator Legal or natural person in possession of vessel, utilizing the vessel Praesumptio iuris: ship operator is listed in the ship registry as shipowner Ship operator who is not a shipowner: charterer OR mortgage creditor dispossessing and utilizing a vessel Responsible and liable person for all claims resulting from vessel navigation and use (unless differently regulated); claims: contractual and tort

Claims subject to limitation (i) (a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbor works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom; (b) claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage; (c) claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations;

Claims subject to limitation (ii) (d) claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship; (e) claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship; (f) claims of a person other than the person liable in respect of measures taken in order to avert or minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.

Llmc 1976 Limitations Personal injury claims Other claims SDR 333,000 for ships up to 500 tonnes* (small ship) SDR 167,000 up to 500 tonnes For each tonne above 501 to 3,000 tonnes, + SDR 500 For each tonne from 501 to 30,000 tonnes, + SDR 167 For each tonne above 3,001 to 30,000 tonnes, + SDR 333 For each tonne from 30,001 to 70,000 tonnes, + SDR 125 For each tonne above 30,001 to 70,000 tonnes, + SDR 250 For each tonne in excess of 70,000 tonnes, + SDR 83 For each tonne in excess of 70,001 tonnes, + SDR 167 LLMC 1976 differentiates two types of claims, for which separate funds have to be formed >claims for loss of life or personal injury + clais for damage to property l ayers (groups) of lliability limits depending on the ship tonnage gross tonngage calculted based on the rules in Annex I to Interntionl Convention on Tonnage Measurement of ships, 1969 in regard to ship (her tonnage) relating to which the liability has risen *in salvage operations-more ships-tonnage of all involved in the operation (and liable)

Llmc 1996 Limitations Personal injury claims (except passangers) Other claims SDR 2 million up to 2,000 gross tonnes SDR 1 million up to 2,000 gross tonnes For each tonne from 2,001 to 30,000 tonnes, + SDR 800 For each tonne from 2,001 to 30,000 tonnes, + SDR 400 For each tonne from 30,001 to 70,000 tonnes, + SDR 600 For each tonne from 30,001 to 70,000 tonnes, + SDR 300 For each tonne in excess of 70,001 tonnes, + SDR 400 For each tonne in excess of 70,000 tonnes, + SDR 200 death and personal injury of passengers: 175000 SDR x number of pax the vessel is entitles to carry = 1 accident

Llmc 2012 Limitations Personal injury claims Other claims SDR 3.02 million up to 2,000 gross tonnes SDR 1.51 million up to 2,000 gross tonnes For each tonne from 2,001 to 30,000 tonnes, SDR 1,208 For each tonne from 2,001 to 30,000 tonnes, SDR 604 For each tonne from 30,001 to 70,000 tonnes, SDR 906 For each tonne from 30,001 to 70,000 tonnes, SDR 453 or each tonne in excess of 70,000 tonnes, SDR 604 For each tonne in excess of 70,000 tonnes, SDR 302

Steady increase in Limitation caps Source: Gard, www.gard.no

In figures 1976 LLMC 1996 LLMC Protocol Number of Contracting States: 54 The combined merchant fleets – approximately 55.83% of the gross tonnage of the world’s merchant fleet 1996 LLMC Protocol Number of Contracting States: 52 The combined merchant fleets – approximately 58.90% of the gross tonnage of the world’s merchant fleet

Conduct barring limitation A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result 2 conditions to be satisfied Personal act… does not include acts or omissions of persons which ship operator uses in his work; WHO is liable in front of a ship owner? >alter ego concept WHO is liable in front of ship owner – individual person/ shipping companies – legal entity >alter ego concept (higher in companie’s hierarchy)

Procedure Ex parte proceedings constituting the limitation fund Initiated by a party entitled to limit liability in the amount of limits set by the Convention (+ interest thereon) available only for the payment of claims in respect of which limitation of liability can be invoked Personal injury claims Fund / Other claims Fund / Special Fund with regard the passengers (carriage of passengers by sea contract) (HR) Any person alleged to be liable may constitute a fund with the Court or other competent authority in any State Party in which legal proceedings are instituted in respect of claims subject to limitation. interest thereon from the date of the occurrence giving rise to the liability until the date of the constitution of the fund. Constituted, either by depositing the sum, or by producing a guarantee acceptable under the legislation of the State Party where the fund is constituted and considered to be adequate by the Court or other competent authority.

Procedure (cont.’d) Claims hearings If disputable – declaratory hearings (existance + scope of claim) Decision on distribution of the fund among the claimants in proportion to their established claims against the fund Decree on payment

EU Law Directive 2009/20/EC of the European Parliament and of the Council of 23 April 2009 on the insurance of shipowners for maritime claims (Text with EEA relevance) lays down rules applicable to certain aspects of the obligations on shipowners as regards their insurance for maritime claims applying to ships of 300 gross tonnage or more Mandatory insurance – to cover claims subject to LLMC 1976 / 1996 , in the amount equal to the relevant maximum amount for the limitation of liability as laid down in the LLMC 1996 EU Flags + other MS’ vessels entering port under EU jurisdiction inspection – insurance certificates on board

Useful LINKS Comité Maritime International, The Limitation Convention (LLMC) 1976: http://www.comitemaritime.org/The-Limitation-Convention-(LLMC)- 1976/0,27104,110432,00.html International Maritime Organization, Convention on Limitation of Liability for Maritime Claims (LLMC): http://www.imo.org/en/About/conventions/listofconventions/pages/con vention-on-limitation-of-liability-for-maritime-claims-(llmc).aspx