Lloyd's Maritime and Commercial Law Quarterly
THE APPLICATION OF FOREIGN OVERALL LIMITATION STATUTES
The M/V Swibon
This case involves the proceedings of a Korean corporation to limit or be exonerated from liability in the aftermath of a collision involving its vessel, the M/V Swibon. On
9 September 1983, the Swibon and the M/V Pan Nova collided on the high seas of the Bering Sea near Unalaska Island, Alaska. As a result of the collision, the Pan Nova sank. The Swibon was able to continue her voyage to her scheduled port of call, Anchorage, Alaska1. Both ships were cargo vessels and both were registered in the Republic of Korea. The Swibon was owned by K.S. Line Corporation. The owners of the Pan Nova, Pan Korea Shipping Co. Ltd., and Pan Ocean Bulk Carriers Ltd., are also Korean corporations.
On 19 September 1983, K.S. Line Corp. filed a complaint for exoneration from or limitation of liability, posting a limitation bond in the amount of $252,000. This amount was determined pursuant to Korean law2. United States limitation law, based on the value of the vessel3, would create a limitation fund of approximately $9,000,000. The District Court rejected the bond for failure to comply with Supplemental Admiralty Rule F and ordered the petitioner to show cause why U.S. limitation law should not be applied. Following a hearing on the issue in which oral arguments were heard from both the petitioner and the several claimants4, the court held that Korean law would determine the amount of the limitation fund5.
The limitation of a shipowner’s liability stems from concepts originally designed to foster trade and commerce by providing certainty to shipowners engaged in profit-making activities on the high seas. The notion is found in the general maritime laws of many countries and was statutorily adopted by Congress in 18516. Limitation of liability laws allow a vessel owner or operator who believes he may be libeled to institute limitation proceedings without admitting liability to his actual or potential claimants. If he is exonerated, he owes nothing. If he is found at fault, liability will be
1 The voyage began at Ulsan, South Korea, on or about 1 September 1983, and ended at Vancouver, British Columbia, on or about 24 September 1983.
2 Limitation proceedings are governed by Supplemental Rule F, Admiralty and Maritime Claims, 28 U.S.C.A., and by local court rules.
3 46 U.S.C., s. 183(a).
4 Claims were filed by Pan Korea Shipping Co. Ltd., and Pan Ocean Bulk Carriers Ltd., owners of the M/V Pan Nova, Hyundai Pipe of America Inc., and Sammi Line Co. Ltd. Each of the claimants except Hyundai Pipe of America Inc. were Korean corporations.
5 [1985] A.M.C. 722. The limitation proceeding was initiated on 19 September 1983 and rejected on 22 September 1983, allowing petitioners 30 days in which to show cause in writing why the amount of the bond should not be determined pursuant to U.S. limitation law. Petitioner filed memorandum of law on 19 October 1983, oral arguments were heard, and the claimants were given 30 days in which to respond. The court issued its order determining the applicable law to be the Korean law on 24 September 1984. On 15 December 1984 the District Court certified the order for interlocutory appeal pursuant to 28 U.S.C., s. 1292(b). The Pan Nova owners also filed a notice of direct appeal pursuant to 28 U.S.C., s. 1292(a)(3). K.S. Line Corp. moved to dismiss the direct appeal and filed an answer in opposition to the Pan Nova owners’ petition for permission to appeal which was filed pursuant to Fed.R.App. P 5(a). The Court of Appeals for the Ninth Circuit had not at the time of writing decided whether it would accept interlocutory appeal.
6 9 STAT. 635 (1851), Limitation of Liability Act. The modern U.S. statute establishing limitation of liability is 46 U.S.C.A., ss. 181–189.
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