IMO Legal Committee agrees unified interpretation on limitation of liability
At its meeting held from 26 to 30 July 2021, the Legal Committee (LEG) of the International Maritime Organization (IMO) agreed on a unified interpretation of the test for breaking a shipowner’s right to limit liability under certain IMO conventions. The committee also considered several other issues relating to the abandonment of seafarers, to Maritime Autonomous Surface Ships (MASS) and to the committee’s future work programme, according to IMO's release.
The unified interpretation was agreed to recognise the importance of providing legal certainty in the interpretation and application of the IMO liability and compensation conventions, and to assist states parties to the conventions in applying them in a uniform manner.
An owner’s right to limit liability is a fundamental component of the IMO liability and compensation conventions regime. The regime includes the 1992 Civil Liability Convention, the 2010 HNS Convention, the 2001 Bunkers Convention and the 2007 Nairobi Wreck Removal Convention. It seeks to ensure that claimants receive prompt and adequate compensation for damage caused by ship source pollution. An owner’s right to limit liability is also set out in the 1996 LLMC Protocol (the Convention on Limitation of Liability for Maritime Claims, 1976, as amended by the Protocol of 1996). The conventions represent a carefully-negotiated compromise which balances strict liability of the owner, channelling of liability to the owner irrespective of fault, and compulsory insurance backed by state certification with the right to limit liability.
The unified interpretation was agreed in the form of three draft resolutions for approval at the next session of the IMO Assembly to be held in December 2021. The resolutions affirm that the test for breaking the right to limit liability is to be interpreted as virtually unbreakable, ie breakable only in very limited circumstances and based on the principle of un-breakability.
The LEG also considered the abandonment of seafarers and noted the alarming increase in the numbers reported to the joint database on abandonment of seafarers set up by the IMO and the International Labour Organization (ILO). While some cases are related to consequences of the COVID-19 pandemic, further exacerbating the crew change situation of seafarers, reports of abandonment cases concern a number of flags and jurisdictions as well as cases where there is insurance and cases where there is not.
A correspondence group was established by the LEG to develop guidelines for port and flag states’ authorities on how to deal with cases of seafarer abandonment. The intention is for the guidelines to be considered and finalised by a tripartite working group to be set up jointly by the IMO and ILO. The LEG also encouraged states to assist with the ongoing crew change crisis, to ratify and implement the Maritime Labour Convention, 2006 which requires shipowners to have compulsory insurance to cover abandonment of seafarers and to report incidents of abandonment to the IMO/ILO database.
The LEG also completed its work on the regulatory scoping exercise of conventions for the use of Maritime Autonomous Surface Ships (MASS). The exercise concluded that MASS can be accommodated within the existing regulatory framework of LEG conventions without the need for major adjustments, although some conventions may require additional interpretations or amendments relating, for example, to the roles and responsibilities of the master and remote operator.
With respect to the committee’s future work programme, the LEG agreed to add two new outputs: firstly the development of measures to transparently assess whether there is a need to amend the limits of liability in the liability and compensation conventions, and secondly the development of a claims manual providing guidance for claimants when submitting claims under the 2001 Bunkers Convention.
The next session of the LEG will take place in March 2022.
