LIMITATION OF LIABILITY FOR MARITIMECLAIMS (LLMC) CONVENTION

Convention on Limitation of Liability for Maritime Claims (LLMC)

The LLMC Convention was adopted in 1976 and entered into force in 1986. The 1996 Protocol entered into force in 2004. The Convention provides for a virtually unbreakable system of limiting liability.

In the LLMC Convention, limits are specified for two types of claims –

1. Claims for loss of life or personal injury, and
2. Property claims (damage to other ships, property or harbour works).

Other claims subject to limitation are –

1. Delay in carriage of cargo, passengers or their luggage.
2. Infringement of rights, other than contractual rights.
3. During salvage operations.
4. Measures taken to avert or minimize loss.

Claims excepted from limitation i.e. claims that cannot be limited are,

1. Salvage
2. Contribution in general average
3. Pollution damage under CLC Convention
4. Nuclear damage of a nuclear ship
5. Claims by servants of ship owners or salvors (if written in their contract)

Following persons can limit their liability under this Convention;

1. Ship Owner – means Owner, charterer, manager & operator of the ship.
2. Salvor – means any person rendering services in direct connection with salvage operations.
3. Any person for whose act, neglect or default, the owner or salvor is responsible.
4. Insurer of liability
5. Any person who takes measures to avert or minimize loss.

The above mentioned persons cannot limit their liability if it is proved that,

1. the loss resulted from their personal act or omission,
2. the act is committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result”.

The limits under the 1976 Convention were set at 333,000 SDR for personal claims for ships not exceeding 500 T, plus an additional amount based on tonnage for ships exceeding 500 T.

For other claims, the limit of liability was fixed at 167,000 SDR plus additional amounts based on tonnage on ships exceeding 500 T.

Under the 1996 Protocol, the amount of compensation payable in the event of an incident was substantially increased. It also introduced a “tacit acceptance” procedure for updating these amounts.

The limit of liability for claims for loss of life or personal injury on ships not exceeding 2000 GT is 2 million SDR. For larger ships, the following additional amounts are used in calculating the limitation amount:

1. For each ton from 2,001 to 30,000 tons, 800 SDR
2. For each ton from 30,001 to 70,000 tons, 600 SDR
3. For each ton in excess of 70,000 tons, 400 SDR

The limit of liability for property claims for ships not exceeding 2,000 GT is 1 million SDR. For larger ships, the following additional amounts are used in calculating the limitation amount:

1. For each ton from 2,001 to 30,000 tons, 400 SDR
2. For each ton from 30,001 to 70,000 tons, 300 SDR
3. For each ton in excess of 70,000 tons, 200 SDR

There were 2012 amendments to the 1996 Protocol, which entered into force in 2015. Under these amendments, the limits are raised further.

The limit of liability for claims for loss of life or personal injury on ships not exceeding 2,000 GT is 3.02 million SDR (up from 2 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount:

1. For each ton from 2,001 to 30,000 tons, 1,208 SDR (up from 800 SDR)
2. For each ton from 30,001 to 70,000 tons, 906 SDR (up from 600 SDR)
3. For each ton in excess of 70,000 tons, 604 SDR (up from 400 SDR).

The limit of liability for property claims for ships not exceeding 2000 GT is 1.51 million SDR (up from 1 million SDR). For larger ships, the following additional amounts are used in calculating the limitation amount:

1. For each ton from 2,001 to 30,000 tons, 604 SDR (up from 400 SDR)
2. For each ton from 30,001 to 70,000 tons, 453 SDR (up from 300 SDR)
3. For each ton in excess of 70,000 tons, 302 SDR (up from 200 SDR).

This Convention does not apply to drilling ships, air cushion vessels and floating platforms.

(In all cases, Limits for Loss of life / injury is double that of property/other claims.) (2012 Amendments – All values in SDR are multiplied by 1.51.) (The daily conversion rates for Special Drawing Rights (SDRs) can be found on the International Monetary Fund (IMF) website)

LIMITATION FUND

Any person alleged to be liable may constitute a fund with the Court or other competent authority in any State Party in which legal proceedings are carried out with respect to the claims subject to limitation.

The fund shall comprise of the sum of the amounts that the person can limit under the LLMC Convention.

Any fund thus constituted shall be available only for the payment of claims, for which the limitation of liability can be invoked.

A fund may be constituted, either by depositing the sum, or by producing a guarantee acceptable by the State Party where the fund is constituted and considered to be adequate by the Court or other competent authority.

The fund shall be distributed among the claimants in proportion to their established claims against the fund.

If, before the fund is distributed, the person liable, or his insurer, has settled a claim against the fund, such person shall, up to the amount he has paid, acquire by subrogation, the rights which the person so compensated would have enjoyed under this Convention.