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IMO Increases Liability Limits For Shipowners

by Robin Pilgrim, LawAndTax-News.com, London

20 April 2012


The International Maritime Organization (IMO) has adopted a proposal to increase the limits of liability for maritime incidents, laid out in the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims (LLMC). The new limits are expected to enter into force on April 19, 2015.

The LLMC Convention sets specified limits of liability for two types of claims against shipowners: claims for loss of life or personal injury; and property claims (such as damage to other ships, property or harbour works).

The IMO said, having taken into account the experience of incidents, as well as inflation rates, it found the limits set in the 1996 to be inadequate to cover the potential costs of claims, especially those incidents involving bunker fuel spills.

The Convention provides that hipowners and salvors may limit their liability except if “it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such a loss, or recklessly and with knowledge that such loss would probably result".

Under the amendments to the 1996 Protocol, the limits are raised as follows:

The limit of liability for claims for loss of life or personal injury on ships not exceeding 2,000 gross tonnage is 3.02 million in Special Drawing Rights (SDRs) (USD4.45m), the denomination of currency used by the International Monetary Fund to nullify currency fluctuations, up from 2 million SDR previously. The currency value of SDRs is based on a basket of four key international currencies, and SDRs can be exchanged for freely usable currencies.

For larger ships, the following additional amounts are used in calculating the limitation amount:

  • For each ton from 2,001 to 30,000 tons, SDR1,208 (up from SDR800);
  • For each ton from 30,001 to 70,000 tons, SDR906 (up from SDR600); and,
  • For each ton in excess of 70,000, SDR604 (up from SDR400).

The limit of liability for property claims for ships not exceeding 2,000 gross tonnage is SDR1.51m, up from SDR1m previously. For larger ships, the following additional amounts are used in calculating the limitation amount:

  • For each ton from 2,001 to 30,000 tons, SDR604 (up from SDR400);
  • For each ton from 30,001 to 70,000 tons, SDR453 (up from SDR300);
  • For each ton in excess of 70,000 tons, SDR302 (up from SDR200).

TAGS: business | marine | law | currency | inflation

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