Introduction

The owners of a Chilean tugboat constituted a limitation fund in Chile to respond to damages suffered by different parties in connection with the sinking of a towed vessel following a salvage and towage operation close to the Strait of Magellan. The owners based their request on being the owners and proprietors of the tugboat (for further details please see "Recognition of salvors' rights to limit liability").

The plaintiffs opposed the fund's constitution, arguing – among other grounds – that 'personal acts' committed by the tug's owners exempted them from the right to limit liability.

Decision

The first-instance court rejected the different opposition grounds alleged by the plaintiffs and upheld the limitation fund. With regard to the specific allegation concerning the tug owners' personal acts, Article 885 of the Commercial Code provides that:

The liability of the ship-owner for their acts or personal acts, or resulting from acts of their dependents, or that take place on land, shall not be subject to the rules of [the Code of Commerce] and will be governed by ordinary rules of law.

According to the court, if the factual assumption of the above provision occurs, neither Articles 1210 et seq of the Commercial Code relating to the establishment of a limitation fund nor the limitation of liability apply. Instead, the applicable regulatory body is the Civil Code's general rules on liability, which enshrine the principle of integral damage compensation.

In addition, the court held that where a defendant is a legal person and it commits personal acts or omissions, it must do so through its corporate bodies (ie, natural persons acting individually or jointly and authorised by law or bylaws to make decisions). This means that the party that commits personal acts or omissions must be the shipowner. Such acts or omissions cannot be attributed to the captain of a vessel.

The court found that the plaintiffs had failed to demonstrate that the shipowners, in their capacity as owners of the tugboat, had committed personal acts that led to the sinking of the assisted vessel. Accordingly, the opposition was rejected.

Both the Valparaiso Court of Appeals and the Chilean Supreme Court upheld the decision.

Comment

The above decision one of the most relevant substantive decisions confirmed by the Chilean Supreme Court and should provide future certainty regarding the interpretation and scope of shipowners' personal acts.

For further information on this topic please contact Ricardo Rozas at JJR Abogados by telephone (+56 2 580 9300) or email (rrozas@jjr.cl). The JJR Abogados website can be accessed at www.jjr.cl.

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