Adoption of Amendments to Increase the Limitation Amounts in the 1996 LLMC Protocol
Published: April 01, 2015
The Club previously reported on the amendments to increase the limits of liability in the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims 1976 which were adopted by the Legal Committee of the International Maritime Organization (IMO) in April 2012.
The proposed increases were adopted under the 1996 Protocol’s tacit amendment provision, whereby amendments proposed by the IMO’s Legal Committee enter into force, unless sufficient objections to the amendment are received from a specified number of Parties within a specified period of time. In the absence of sufficient objections to the proposed increases, IMO have now confirmed that the amendments will enter into force as of 8 July 2015.
Under the amendments to the 1996 Protocol, the limits of liability are raised by 51%, as follows:
1. Claims for loss of life or personal injury on ships not exceeding 2,000 gross tonnage 02 million SDR (up from 3.02 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, 604 SDR (up from 400 SDR)
By way of example, for loss of life or personal injury an 18,000 TEU container ship of 195,000GT would see the limit of liability increased from SDR 98,398,200 to SDR 148,581,282 calculated as follows:
Tons Example SDR
2,000 3,020,000
2,001 to 30,000 27,999 tons x 1,208 33,822,792
30,001 to 70,000 39,999 tons x 906 36,239,096
70,000 plus 124,999 tons x 604 75,499,396
Total 148,581,282
Property claims for ships not exceeding 2,000 gross tonnage is 1.51 million SDR (up from 1million 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)
By way of example, for property claims, an 18,000 TEU container ship of 195,000 GT would see the limit of liability increased from SDR 49,199,100 to SDR 74,290,641 calculated as follows:
Tons Example SDR
2,000 1,510,000
2,001 to 30,000 27,999 tons x 604 16,911,396
30,001 to 70,000 39,999 tons x 453 18,119,547
70,000 plus 124,999 tons x 302 37,749,698
Total 74,290,641
It is noteworthy that the limits of liability for property claims can apply to both bunker spills1 and wreck removal2. Historically, the few claims not fully compensated by virtue of the limits imposed by the 1996 Protocol were bunker spills and the subsequent clean-up costs. With ever more elaborate wreck removal operations being contemplated due to technological innovations in the Salvage industry, the probability that future wreck removal costs will exceed the limit of a shipowners’ liability for property claims inevitably increases. However, the Convention provides for a virtually unbreakable system of limiting liability. A shipowner or salvor may limit their liability unless: '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'.
The amendments are applicable only to those states which have adopted the 1996 Protocol and will not affect those States which are party only to the 1976 Convention without adopting the 1996 Protocol, nor will it affect any State which is party to the earlier 1957 Convention on limiting liability. Furthermore, States which have tacitly accepted the amendments to the 1996 Protocol are, nevertheless, required to enact legislation in order to bring the amendments into force in their respective jurisdictions. Should a State fail to have enacting legislation in place when the amendments come into force on 8th July, then in the short term at least, there is scope for further fragmentation of the International limitation of liability regime. Long term, however, it is hoped that these significant increases in the limits of a shipowners’ liability will further cement the principle of limitation of liability for maritime claims.
Article by Dean Forrest, Syndicate Executive
1 This will depend on what other conventions may be applied in a state in which there is a bunker spill, and if that convention eg Bunker Convention applies LLMC limits.
2 LLMC provides that a contracting state has the right to exclude wreck removal claims when enacting the LLMC into domestic legislation, and where a State opts to exclude limitation for wreck removal, there may be unlimited liability, or in some cases a separate removal fund.
To have effect in the UK the Merchant Shipping Act 1995 needed to be amended. This has now been completed and the increased limits will take effect in the UK from the 30th November, 2016.
