Web alert: Shipowners right to limit liability - limits under the 1996 LLMC Protocol to increase by 51% on 8 June 2015

News & Insights 7 June 2015


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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.

Background

The Convention on Limitation of Liability for Maritime Claims (LLMC) 1976 as amended by the 1996 Protocol, allows shipowners (and salvors) to limit their liability for loss of life or personal injury and property claims based on the vessel’s gross tonnage (gt). This is calculated according to Special Drawing Rights (SDR) whose value is determined according to a basket of major currencies (as published daily on the IMF website)

Increased limits

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).

These increased limits mean that the limit of liability for claims for loss of life or personal injury for ships not exceeding 2,000gt 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 2,000gt 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 the law of a State party to the 1996 Protocol. However members' standard P&I cover will respond to this increased exposure. States which are party to the LLMC 1976 but have not adopted the 1996 Protocol will not be affected by these increased limits.

Effect on other Conventions

It will also result in increasing the limits of liability under the Bunkers Convention 2001 and the Nairobi Wreck Removal Convention 2007. These Conventions provide that the maximum amount that an insurer, such as The Standard Club, has to pay under their 'blue cards' in respect of claims brought by third party claimants shall not exceed the limits under the LLMC as amended by the 1996 Protocol. The increased limits shall be incorporated automatically into these two conventions when the new limits come into force on 8 June 2015. For further information, please visit the IMO's website.

If a member has any queries in relation to this issue, they should not hesitate to call their usual club contact, or the author of this web alert.

Category: Pollution

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