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Web Alert: Increased limits of liability for shipowners in the UK

09 December 2016

We have previously reported that in 2012 the IMO decided to increase the limits of liability under the 1996 Protocol by 51% and that these increases are due to come into force on 8 June 2015. This was because in recent years the existing limits have been considered inadequate to cover the rising cost of claims especially in relation to pollution and clean-up costs (e.g. the Pacific Adventurer bunker spill incident off the coast of Australia in 2009).

However, the new 2015 limits requires in many countries to be given effect domestically by national legislation.

These limits are now in force in the UK with effect from 30 November 2016 pursuant to the Merchant Shipping Act 1995 (Amendment) Order 2016.

These increased limits means that the limit of liability for claims for loss of life or personal injury for ships not exceeding 2,000 GT has been increased to 3.02 million SDR (up from 2 million SDR). For larger ships, the following amounts are 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 (up from 400 SDR).

The limit of liability for property claims for ships not exceeding 2,000 gt has been increased to 1.51million SDR (up from 1 mil­lion SDR). For larger ships, the follow­ing amounts are 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).

This will increase shipowners (and salvors) exposure in respect of major maritime claims which are settled or determined according to English law. Please note these new limits will not apply retrospectively to incidents which occurred after 8 June 2015 but prior to 30 November 2016.

Member’s standard P&I cover will respond to this increased exposure.