Lloyd's Maritime and Commercial Law Quarterly
WHERE IS A LIMITATION FUND CONSTITUTED FOR PURPOSES OF THE LIMITATION CONVENTION?
Martin Davies*
The Limitation of Liability for Maritime Claims Convention 1976 (as amended by Protocol in 1996) (LLMC 76/96) does not contain a general jurisdiction provision stating where the right of limitation must be invoked; the Convention permits a shipowner to seek to limit its liability in any Contracting State that has personal jurisdiction over the defendant.1 Article 13 of the Convention (and Protocol) does have provisions relating to the exercise of jurisdiction by Contracting States, but it does not stipulate where a limitation action must be brought. Article 13 does, however, make provision for what other Contracting States should do when a limitation action has been commenced, and a limitation fund constituted, in a Contracting State.
Article 13(2) provides that, once a limitation fund has been constituted in a Contracting State in accordance with Art.11, other countries party to the Convention or Protocol may release any ship or property arrested or attached for claims that may be raised against the fund, or any security given for those claims, but must do so if the limitation fund has been constituted: (a) at the port where the occurrence took place or, if it did not occur in port, at the first port of call thereafter; or (b) at the port of disembarkation, in the case of loss of life or personal injury claims; or (c) at the port of discharge, in the case of cargo claims; or (d) in the State where the arrest was made.2
Because Art.13(2)(a)–(c) refer, with some precision, to a limitation fund being constituted at a “port”, a literal reading would suggest that the treaty obligation on other Contracting States to release ships or other security would not arise if a fund were to be constituted somewhere other than the “port” in question—for example, in a different city in the same country. This rather literal interpretation of Art.13 would obviously produce very inconvenient results in practice. It is not possible to constitute a limitation fund in many port cities in the world, because they do not have registries for the courts of the country in which they are found. For example, Felixstowe is the UK’s biggest and busiest container port, so it might well turn out to be the first British port of call for a ship after a casualty at sea that could give rise to limitation proceedings, but it would not be possible to constitute a limitation fund in the port of Felixstowe, as there is no High Court registry in that town.
If a limitation fund were to be constituted at the most convenient court registry near to the port in question, the literal reading of Art.13(2) would mean that other countries party
* DCL; Niels F Johnsen Professor of Maritime Law, Tulane University Law School, New Orleans. I am grateful to Emeritus Professor Nick Gaskell of the University of Queensland for his helpful comments on an earlier version of this brief Comment.
1. Seismic Shipping Inc v Total E&P UK Plc (The Western Regent) [2005] EWCA Civ 985; [2005] 2 Lloyd's Rep 359, [15] (Clarke LJ).
2. Article 13(2) is unchanged in the Protocol of 1996, but countries (such as the UK) that are party to the Protocol but have denounced the original Convention owe treaty obligations only to other Contracting States to the Protocol and not to countries that have adopted the Convention but not the Protocol: see Protocol, Art.9(2) and ICL Shipping Ltd v Chin Tai Steel Enterprise Co Ltd (The ICL Vikraman) [2003] EWHC 2320 (Comm); [2004] 1 Lloyd's Rep 21. Conversely, countries that have not adopted the Protocol do not owe treaty obligations under Art.13(2) to countries that are party only to the Protocol. Countries party to both the Convention and the Protocol owe Art.13(2) obligations to Contracting States of both instruments.
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