On 8 June 2015, the limits of an owners’ liability for a maritime incident under the Convention on Limitation of Liability for Maritime Claims (LLMC) 1976 will rise by 51%1 under the “tacit acceptance” procedure pursuant to Articles 8.7 and 8.8 of the 1996 Protocol to the LLMC.

Member States voted to increase the limits at the 99th session of the IMO (16-20 April 2012), driven partly by the view that the existing limits are insufficient to cover likely claims, in particular the consequences of a bunker spill. The PACIFIC ADVENTURER spill in Queensland in 2009 was specifically cited as justification for the rise. The rise was further deemed necessary to “keep pace with the real costs of compensating victims” and for “limits to be sufficient to meet demands”. Calls for a higher increase were rejected on the grounds any increase had to be reasonable to ensure affordable insurance was available. Further the concept of limitation requires some claims to exceed the limit to avoid the LLMC being rendered redundant.

No enabling domestic legislation is required to bring in the Amended 1996 Protocol limits and for incidents after 8 June 2015, the higher limits shall automatically apply in any contracting State. The limits cannot however be reviewed again until 2020, meaning there should be no further increase until 2023.

Comment

Cruise lines should keep the increased limits well in mind both when deciding on the law of the contract of carriage, in determining new routes and when managing a major maritime claim. It may also be that, when assessing potential jurisdictions for limiting one’s liability, questions of what type of claims can be limited may become more important than simply to what level.

Finally, in the context of passenger claims, one should not forget the carrier’s liability limit under the 2002 Protocol to the Athens Convention Relating to the Carriage of Passengers and their Luggage by Sea, 1974, in addition to the global tonnage limitation regime under the LLMC.

This will no doubt fuel the debate in some P&I Clubs and indeed within the International Group itself as to whether cruise ships should be allowed the benefit of mutual liability insurance.

Illustrated Examples

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US$1.39115:1SDR (26 May 2015)