Increase in the limits under 1996 LLMC Protocol

Increase in the limits under the 1996 LLMC PROTOCOL

In London in April 2012 the Legal Committee of the International Maritime Organisation adopted amendments to increase the limits of shipowners’ liability under the 1996 LLMC Protocol.

The new, and significantly higher limits, are likely to come into force in April 2015 in accordance with the tacit acceptance procedure under the Protocol. All contracting states will then be bound by the amendment unless they denounce the Protocol.

THE LLMC CONVENTION AND PROTOCOL

The right of shipowners to limit liability for maritime claims was first recognised by the International Convention Relating
to the Limitation of the Liability of Owners of Seagoing Ships 1957, which came into force in 1968. With the advent of International Maritime Organisation (IMO), the Convention on Limitation of Liability for Maritime Claims (“LLMC”)
was adopted in 1976, as a result of which the limitation of liability amounts were increased. The limitation of liability amounts were again increased by the adoption of the 1996 Protocol. 

The LLMC enables shipowners and others to limit their liability in respect of two types of claims: loss of life or personal injury claims, and loss or damage to property claims. The right to limit is excluded where the loss resulted from the personal act or omission committed with intent to cause such a loss or recklessly and with knowledge that such loss would
probably result.

REASONS FOR THE INCREASE IN LLMC LIMITS

The increase in the limits under the 1996 Protocol were strongly promoted by Australia who were concerned that in a number of casualties the claims made against the limitation fund  exceeded the current limits by a significant margin. Australia’s main argument was that in absence of an increase, by 2015, the value of the 1996 Protocol limits would be
less than half their value in real terms in 1996.

THE NEW LIMITS

The amendments to the 1996 Protocol will increase the current limits of liability under the 1996 Protocol by about 50%. 

The limitation of liability for claims for loss of life or personal injury for ships not exceeding 2,000 GRT will increase from 2 million SDR to 3.02 million SDR. For ships over 2,000 GRT the limitation of liability will, for each ton from 2,001 to 30,000 tons, increase from 800 SDR to 1,208 SDR. For each ton from 30,001 to 70,000 tons the limit will increase
from 600 SDR to 906 SDR. For each ton in excess of 70,000 tons the limit will increase from 400 SDR to 604 SDR.

The limitation of liability for property claims will increase from 1 million SDR to 1.51 million SDR for ships not exceeding 2,000 GRT. For larger ships, the limit will increase from 400 SDR to 604 SDR for each ton from 2,001 to 30,000 tons. For each ton from 30,001 to 70,000 tons the limit will increase from 300 SDR to 453 SDR. For each ton in excess of 70,000 tons the limit will increase from 200 SDR to 302 SDR.

 By way of example the limitation fund for property claims for a capesize vessel of 88,000 GRT (about 170,000 DWT) would, prior to the 2012 amendments be 27.8 million SDR (USD 42.1 million), and after the amendments the fund will be 42 million SDR (USD 63.6 million), an increase of USD 21.5 million.