All questions

Shipping contracts

i Shipbuilding

The Cayman Islands does not have an active shipbuilding industry for merchant ships.

ii Contracts of carriage

Pursuant to the Carriage of Goods By Sea (Overseas Territories) Order 1982 (the COGSA Order), certain provisions of the Carriage of Goods by Sea Act 1971 and the Merchant Shipping Act 1981 were extended to the Cayman Islands. The Carriage of Goods by Sea Act 1971 gave effect to the Hague Rules, signed in Brussels on 25 August 1924 (Cmd 3806), as amended by the Hague-Visby Rules, signed in Brussels on 23 February 1968 (Cmnd 6944).

The COGSA Order also extends to the Cayman Islands the provisions of the Merchant Shipping Act 1981, which amend the Carriage of Goods by Sea Act 1971 and those other provisions of the 1981 Act that give effect to the Protocol amending the Hague-Visby Rules, signed at Brussels on 21 December 1979 (Cmnd 7969).

The following maritime liens are recognised by the Merchant Shipping Act (2021 Revision):

  1. seafarer liens: remedies for the recovery of wages;
  2. master of ship liens: for his or her remuneration, and all disbursements or liabilities properly made or incurred by him or her on account of the ship, as a seafarer has for his or her wages; and
  3. salvor liens, provided that the salvor may not enforce his or her maritime lien when reasonable security for his or her claim, including interest and costs, has been tendered or provided.
iii Cargo claims

A carrier is obliged to make the ship on which the goods are to be carried seaworthy, to properly staff, equip and supply the same and to make the holds fit and safe for the reception, carriage and preservation of cargo. Cayman Islands law will generally recognise the choice of law and forum by the parties to a contract, which would not typically be the Cayman Islands.

In addition, in accordance with the Merchant Shipping Law, all Cayman Islands vessels, wherever they may be, and all other vessels while in Cayman Islands waters, regardless of size, type and mode of operation, require third-party insurance to cover their liabilities under the Merchant Shipping Act and it is an offence not to have such insurance in place.

Section 54 of the Merchant Shipping Act provides that:

  1. every Cayman Islands ship shall carry insurance cover against risks of loss or damage to third parties, and in particular:
    • in respect of the shipowner's liabilities to a crew member under Part V; and
    • without prejudice to the relevant provisions of Part XIV, claims in respect of loss or damage caused by any cargo carried on board the ship; and
  2. every ship anchoring in or trading in or from Cayman Islands waters or entering a port in the Cayman Islands shall carry insurance cover against risks of loss or damage to third parties, and against wreck removal expenses in an amount satisfactory to the receiver of the wreck.
iv Limitation of liability

The limitation of liability for maritime claims is regulated in the Cayman Islands by the Merchant Shipping Act (2021 Revision),7 which implements the Protocol to amend the LLMC Convention 1976 (the 1996 LLMC Protocol).

All vessels of 1,000 gross tonnes and above, flagged with the Cayman Islands Shipping Registry, are additionally required to carry third-party protection and indemnity (P&I) insurance to meet their liabilities under the International Convention on Civil Liability for Bunker Oil Pollution Damage 2001 (the Bunker Convention), evidenced by a certificate issued by the Cayman Islands Shipping Registry to verify maintenance of this insurance as implemented by the Merchant Shipping Act (2021 Revision).

The limit of liability, and therefore the minimum level of insurance to be maintained, under the Bunker Convention is governed by the 1996 LLMC Protocol, which is implemented in Sections 394 to 418 of the Merchant Shipping Act (2021 Revision).

All oil tankers carrying 2,000 tonnes or more of persistent oil as cargo are required to carry third-party (P&I) insurance to meet their liabilities under the Bunker Convention, evidenced by a certificate issued by the Cayman Islands Shipping Registry to verify maintenance of this insurance as implemented by Sections 348 and 349 of the Merchant Shipping Act (2021 Revision).

The Bunker Convention was extended to the Cayman Islands by the UK government and notified to the International Maritime Organization on 12 January 2011, and the Convention entered into force for all Cayman Islands ships and yachts of 1,000 gross tonnes and above at that time.