Introduction

On June 8 2015 amendments to the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC) entered into force, significantly increasing the limits of shipowners' liability.

Norwegian law had previously adopted the 1996 LLMC Protocol limits into Chapter 9 of the Maritime Code. On May 12 2015 the Parliament passed legislation implementing the new limits, which also came into force on June 8 2015. From this date the increased LLMC limits apply in all cases where the limitation of liability is invoked for property claims or claims for loss of life or personal injury before a Norwegian court.

Background

Shipowners' rights to limit liability for maritime claims were first recognised internationally in 1924 in a convention which was based on the concept of abandonment. In 1957 the International Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships introduced limits related to the vessel's tonnage. In 1976 the International Maritime Organisation (IMO) adopted the LLMC, which made it more difficult to break the limitation, but which also increased the limits. The limitation amounts were again increased by the 1996 LLMC Protocol.

In recent years the limitation limits in the 1996 protocol have been considered inadequate to cover the costs of claims, mainly as a result of changes in monetary values and rising costs. In April 2012 the IMO Legal Committee announced an increase in the limitation amounts to enter into force in accordance with the tacit acceptance procedure, under which amendments enter into force unless objections are received from a certain number of state parties.

Increased limits

The LLMC sets specified limits of liability for two types of claim against shipowners:

  • claims for loss of life or personal injury; and
  • property claims.

The increased limits are as follows:

  • The limit for claims for loss of life or personal injury is 3.02 million special drawing rights (SDR) for ships not exceeding 2,000 gross tonnage (up from 2 million SDR). For larger ships, the following amounts have been added:
    • 1,208 SDR per ton from 2,001 to 30,000 tons (up from 800 SDR);
    • 906 SDR per ton from 30,001 to 70,000 tons (up from 600 SDR); and
    • 604 SDR per ton in excess of 70,000 tons (up from 400 SDR).
  • The limit for property claims is 1.51 million SDR for ships not exceeding 2,000 gross tonnage (up from 1 million SDR). For larger ships, the following amounts have been added:
    • 604 SDR per ton from 2,001 to 30,000 tons (up from 400 SDR);
    • 453 SDR per ton from 30,001 to 70,000 tons (up from 300 SDR); and
    • 302 SDR per ton in excess of 70,000 tons (up from 200 SDR).

To illustrate the new limits, for a vessel with gross tonnage of 50,000 (eg, a bulk carrier of about 100,000 deadweight ton), the limitation amount will increase from approximately $28.1 million under the 1996 limit to approximately $42.5 million under the 2015 limit.

For further information on this topic please contact Camilla Barr, Herman Steen or Gaute Gjelsten at Wikborg Rein by telephone (+47 22 82 75 00), fax (+47 22 82 75 01) or email (cba@wr.no, hst@wr.no or ggj@wr.no). The Wikborg Rein website can be accessed at www.wr.no.

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