Shipowners Liability Limits in Brazil

Introduction 

Brazil has not fully ratified the international maritime conventions dealing with shipowner liability and compensation. Its preference for legislative and judicial autonomy has led to domestic liability regimes - for both oil tankers and other shipowners or carriers - evolving largely independently of international standards.

Rather than adopting all of the international conventions to determine liability limits, Brazil selectively incorporates various IMO safety and pollution‑prevention standards into a complex civil, administrative and criminal domestic law framework, including environmental and consumer protection legislation. Compensation limits under the international contracts of carriage conventions and the 1957/1976/1996 limitation conventions are not mandatory in Brazil. While parties may, in limited circumstances, agree contractual liability limits, environmental damage remains subject to a constitutional requirement of strict liability and full reparation.

Constitutional issues (arising from the 1988 Constitution) are the reason for a reluctance to ratify – and especially to enforce - the limited liability provisions of international conventions into Brazilian domestic law, in particular when there is pollution and environmental damage. This reluctance is one reason why, despite the ratification and incorporation into Brazilian law of the1969 Civil Liability Convention (CLC 69), no tanker owner has used it to limit liability in environmental damage in Brazil.                                                                                        
The Brazilian system for determining tanker owner liabilities may be about to change. 

Concerns about the ability of tanker owners to pay for and/or obtain insurance for potentially unlimited liabilities in serious pollution cases is the motivation behind the decision of the Chamber of Deputies in the National Assembly to ratify and incorporate the 1992 Civil Liability Convention (CLC 92). Since funding is indirect by shipowners through the insurance premium they pay to their P&I Clubs (and the insurers’ payment of CLC claims up to the relevant limit), the hope is that the imposition of CLC liability limits will be a worthwhile constitutional compromise in return for the benefits of the most up-to-date funded and compulsorily insured international “polluter pays” system. 

These domestic constitutional and harmonisation issues need to be resolved for tanker owners to limit their liability in the future. Will the CLC 92 limits prevail over the way liabilities are determined under the various municipal, state and federal laws? Can legislative consistency be achieved within and between the layers of legislation in the country’s different state jurisdictions? 
Whilst there are tentative signs of impending change for tanker owner liabilities, there are no such signs for non‑tanker owners and their liability limits. Unless there is effective harmonisation across all liability regimes for all types of ships/shipowners, Brazil is likely to remain, as commentators have noted, a challenging jurisdiction in which to limit liability.

The maritime law framework in Brazil

Brazilian maritime law is based on a civil law system with Portuguese, French and German origins. It consists of codified national legislation (including ratified international conventions), supplemented by precedent from the Superior Court of Justice and the Supreme Federal Court under a partially binding case law system.

State courts have jurisdiction over most shipping disputes, including charterparties, demurrage, cargo claims, ship arrests and indemnity matters. Federal courts hear cases involving the federal government or its agencies, as well as claims arising from ratified international treaties.

Maritime matters are governed by a number of statutes, notably the 2002 Civil Code (general contractual principles), the 1850 Commercial Code (maritime trade), and the 1990 Consumer Protection Code (consumer relations). 

Environmental and oil pollution liability is regulated by Federal Law No. 6,938/1981, Law No. 9,605/1998 and Law No. 9,966/2000. These establish strict, uncapped and joint civil liability, extending to indirect polluters, with compensation covering full environmental restoration and third-party damages.

Brazil has ratified several international conventions, mainly relating to safety and environmental protection, including the 1924 Limitation Convention, CLC 1969, SOLAS 1974, MARPOL 1973 and COLREGS 1972.

Unratified conventions include the 1976 LLMC (as amended by the 1996 Protocol); the Hague, Hague-Visby, Hamburg and Rotterdam Rules; the 2001 Bunkers Convention; the 1996 HNS Convention (and 2010 Protocol); and the 2007 Nairobi Convention on the Removal of Wrecks.

Limitation of Liability

A limitation of liability regime, established by international conventions and/or domestic law, allows shipowners to cap their financial exposure for claims arising from a maritime incident. Although limitation rights may be lost in certain circumstances, compensation is generally calculated by reference to the vessel’s tonnage.

Limitation of Liability in Brazil

Brazil relies primarily on domestic legislation across administrative, civil and criminal law. As a result, it lacks a consistent system for determining shipowners’ liability in line with international conventions.

Where ship-source pollution causes environmental damage, liabilities arise independently under three separate legal spheres:

Administrative liability

Multiple Brazilian authorities may conduct parallel investigations and impose penalties, creating potential overlap between different levels of government. Sanctions may include fines, suspension or closure of activities, licence revocation and seizure of goods.

Civil liability

Civil liability is pursued independently, often through collective actions brought by entities such as the Public Prosecutor’s Office, fishermen’s associations, hotel groups or other affected parties.

Brazil applies the principle of full reparation for environmental damage. Federal Law No. 6.938/1981 imposes strict liability for oil pollution, which may prevent tanker owners from relying on liability limits under the CLC regime.

Criminal liability

Criminal liability may also arise independently of both administrative and civil proceedings.

Current position

Comprehensive international harmonisation is unlikely in the near future for these reasons:

• there is an unresolved constitutional law debate over the compatibility of the CLC’s liability limits with the 1988 Constitution;
• CLC 92 will only limit civil liability in pollution cases;
• a wider consensus in favour of international alignment will take time, even if attitudes are already shifting;
• there are no plans to adopt the international conventions limiting non-tanker shipowner or carrier liability.

Maritime Liability and Compensation Regimes

1. Personal and property damage claims

   The 1957, 1976 and 1996 limitation conventions establish uniform rules allowing shipowners to limit liability, by reference to tonnage, for personal injury, loss of life and property damage claims, including wreck removal and damage to ports and waterways. The 1976 LLMC significantly increased limits and broadened the scope of claims and entitled parties.

   Brazil has not adopted these regimes. Instead, liabilities for non-tanker shipowners are determined by stricter domestic laws. Despite indications of a more internationalised approach, shipowners and insurers should assume that Brazil continues to apply its own civil liability regime for personal and property damage.

2. Liability and compensation regime for cargo claims

   Mandatory liability limits in international carriage-by-sea conventions are designed to prevent shipowners from contractually excluding too much liability. The Hague, Hague-Visby, Hamburg and Rotterdam Rules seek to balance carrier and cargo interests by setting package and value limits on compensation.

   Brazil has not ratified any of these conventions. In a jurisdiction heavily focused on commodity exports, Hague-Visby-type limits are considered too carrier-friendly. That said, parties may contractually adopt similar liability regimes, provided they have equal bargaining power.

   Instead, a combination of municipal, state and federal laws create a consumer-protection approach that generally favours cargo interests and facilitates higher recoveries:

   1. Cargo value limitation: Carrier liability is limited to the cargo value stated on the bill of lading. Losses exceeding that amount are not recoverable. Liability limits cannot be increased through pre-printed or non-negotiated clauses, which the Federal Supreme Court considers inoperative where the parties are not on equal footing.
   2. Package limitation: Limitations resulting in negligible compensation relative to cargo value are treated as invalid non-indemnification clauses. Under the Multimodal Transport Law, package- or weight-based limits are permitted.
   3. Multimodal transport: The multimodal operator’s liability is limited to the declared cargo value. Package or weight limits apply if no value is declared, but no limitation is available where damage results from fault or deceit of the operator or its subcontractors.

3. Liability and compensation regime for oil pollution damage caused by oil tankers

   Brazil’s oil pollution compensation regime is a complex and evolving system.
   Historically, Brazil applied the 1924 Limitation Convention, which allowed shipowners to limit liability through abandonment of the vessel and freight. This mechanism is now obsolete. Brazil adopted CLC 69 in 1977 but did not adopt the 1971 Fund Convention. 

   CLC 69 introduced strict liability (with limited exceptions) and compulsory insurance, with liability limits determined by vessel tonnage (up to 14 million SDRs). Sidelined for decades, because Brazilian courts consider the CLC incompatible with the 1988 Federal Constitution and environmental legislation imposing strict and uncapped liability, the courts have generally insisted on full reparation under the Civil Code.

   As a result:

   • There is a complex and layered framework of legislation applying environmental regulations concurrently within the various state jurisdictions.
   • Compensation claims are uncapped and frequently based on presumptions of damage, even for minor spills;
   • Reparations may include clean-up, restoration and economic losses (e.g. for fisheries, tourism);
   • Although subject to a statutory maximum, administrative fines may be imposed by multiple authorities (such as IBAMA, CETESB, etc) in parallel;
   • Lengthy civil proceedings increase exposure through interest, monetary restatement and legal costs.
   • Polluters may therefore face long-term civil liability, often years after the incident.

CLC 69 limits are no longer adequate for modern environmental damage. Political action followed only after major spill incidents highlighted the need for more effective responses and higher financial coverage to pay for environmental damages, including the activation of the PNC (Plano Nacional de Contingencia - the official framework for responding to major oil spills), mobilisation of public agencies and the use of aircraft, vessel and other equipment. 

Since 1996, and now covering 97% of global tonnage, CLC 92 significantly increases liability limits and extends coverage to the EEZ. Under this framework, the claims procedure continues as a national court-based system with the international funds framework encouraging “certainty and speed”.

Once Legislative Decree Bill No. 167/2025 is approved and ratified, CLC 92 will be incorporated into Brazilian law and enter into force within 12 months. Tanker owners’ civil liability would increase to 89.77 million SDRs (up to approx. USD 123.6 million).
Brazil is also considering adoption of the 1992 Fund Convention and the 2003 Supplementary Fund Protocol, which would allow access to the International Oil Pollution Compensation Fund up to SDR 203 million (approx. USD 300 million). Given Brazil’s status as a major crude and heavy oil exporter, Fund access could provide substantial compensation at minimal cost to the domestic oil industry.

Conclusions

Brazilian legal culture prioritises full liability, consumer protection, and legislative autonomy over the liability limitation regimes of international conventions. The constitutionally-supported “full repair of damage” principle has historically prevented oil tanker owners from limiting liability for environmental damage. 

The hope is that CLC 92 will create a clean break from the past. A funded compensation strict liability system will make polluters and their insurers pay for the costs of serious oil spills. In particular, it is hoped CLC 92 will:

• provide legal certainty through a globally recognised uniform framework;
• offer financial certainty via liability caps and compulsory insurance
• facilitate integration with the CLC 92 compensation funds;
• accelerate the resolution of oil pollution claims; and
• enhance environmental protection, albeit with limits.

Worth noting is that:

• CLC 92 limits civil liability only;
• environmental claims are largely confined to reinstatement costs;
• the CLC exceptions to strict liability (act of war, exceptional natural phenomenon, intentional act of a third party, fault of authorities responsible for navigational aids) have been undermined in some jurisdictions;
• pollution on the high seas is excluded; and
• bunker oil spills remain subject to separate regimes.

While diminishing domestic opposition may permit IMO-compliant regulatory changes at municipal, state and federal levels, institutional resistance to limited liabilities based on constitutional objections could delay full CLC 92 implementation, and this may need to be challenged and resolved. 

Reform of civil liability regimes for non-tanker pollution incidents is likely to take longer, and there are currently no indications that Brazil intends to adopt any international limitation regimes in this area.