Shipping Law

Page 425


Limitation of Liability

Limitation of Liability

Page 426

In addition to the specific package limitation given by the Hague and Hague-Visby Rules in relation to cargo claims,1 shipowners may also rely on a global limitation figure based on the vessel’s tonnage. This tonnage-based figure provides the maximum financial liability of the shipowner in respect of all claims arising out of any one incident. Tonnage limitation can be invoked in one of two ways. The first is by way of defence to an action brought by a particular claimant. The second is by the shipowner initiating limitation proceedings to set up a limitation fund in a particular jurisdiction. The advantage of this procedure is that the establishment of the fund will cap the shipowner’s liability to all claimants and not just the particular claimant who has commenced proceedings against the shipowner. By invoking limitation, the shipowner is not admitting liability in respect of the claims brought against it;2 it is merely claiming that if it is held liable, its maximum total liability in respect of all claims arising out of the incident will not exceed the amount of the applicable limitation figure.

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