SHIPOWNER’S RIGHT TO LIMIT LIABILITY AND BREAKING THE LIMITATION UNDER THE 1976 LONDON CONVENTION
Attorney at Law Barış Erkan Çelebi
PREAMBLE
Limiting the liability of shipowners in maritime commerce has always been the subject of hot debates. On one hand, shipowners make considerable investments, due to the value of their ships, and therefore seek to obtain some kind of assurance that their investments will return profit. It is only fair that shipowners demand protection against the perils of sea in the form of limited liability. london convention
On the other hand, injured parties and claimants expect the compensation of their losses arising from the acts or omissions of shipowners and/or their servants and agents. Limiting the liability of shipowners too low might result in unfairly unsatisfactory indemnities for justified claims of non-faulty parties.
It is difficult to strike a balance between the competing interests of claimants and shipowners. What is even more difficult is to stabilize this balance against the changing factors of the market and inflation over time.
1976 London Convention is aimed at finding this balance by adjusting the liability limits as high as shipowners could cover by insurance at a reasonable cost while making the limit exceptionally difficult to break.
The scope of this study covers the justifications for limiting the liability of a shipowner, conditions for breaking this limit and finally the precedence of breaking the limit.
I. HISTORICAL BACKGROUND London Convention.
A. Development of Limitation Of Liability In Maritime Law
1. Justifications for Limiting the Liability of Shipowners
The debate on limiting the liability of shipowners goes as far back as the maritime commerce itself[1]. Due to the considerable worth of the vessels and the sizable cost of their upkeep maritime commerce has always demanded major investments and the courage to do so[2]. Therefore shipowners (and their investors, since from the founding of limited liability companies) have always sought protection against the perils of the sea and the risks of the business.
Up until the 20th century sea transport was the only alternative to the road transport which often proved to be time-intensive, impractical and even outright impossible over long distances. Therefore sea transport and the investments therein needed to be encouraged by the states and their lawmakers. In this respect the most important incentive came in the form of limitation of liability.
Although the limitation of liability of shipowners at first seems contradictory to the right of merchants to be compensated for losses and therefore a fundamental breach of the basic principles of Civil Law[3], when taken at face value it is simply an allocation of the risks of sea transport[4]. If the shipowners had not had the right to avail themselves of limitation of liability, the freight rates would undoubtedly be a lot higher due to the fact that either shipowners or their insurers would have had to bear the risk of unlimited loss and therefore adjust the freight rates or premiums accordingly[5]. Therefore merchants are considered to forfeit the right to be compensated beyond a certain limit in exchange for reduced freight rates[6] and thus the risk of transport at sea is allocated between the merchants and the shipowners. Besides, since the foundation of insurance companies, merchants have always been free to obtain insurance for the cargo value which exceeds this limit and use the savings from the reduced freights to pay the premiums[7]. While the liability of the insurer is also subject to a limit, the coverage, it raises the question: If insurers are entitled to limit their liability, why should shipowners be deprived of the same right?
2. First Instances of the Limitation of Liability in National Laws
The exact date of the foundation of limited liability is difficult to deduce since it evolved into many forms before becoming the modern notion of strict limitation which we are familiar with. However, its roots can be traced back to Ancient Rome and to “noxae deditio” principle under Roman law[8]. As per this principle, the owner of a property could satisfy a claim by surrendering the property (be it a slave or an animal etc.) which caused the loss[9]. The first instances of limited liability in sea transport was through the application of this principle to the property of the shipowners, the ships.
In 11th century in Italy, shipowners created a common fund system, Amalphitan Table, under which the claimants could claim their losses not against the shipowners but the portion of the common fund contributed to that specific voyage[10].
In 13th century in Spain, El Consolat de Mar de Barcelona[11] allowed the shipowners to limit their liability to their share in the ships.
Thereafter the idea that the liability of the shipowner should be limited to the value of the ship spread throughout Europe. Germany and Sweden in 17th century, The Netherlands, England and France in 18th century and finally United States in 19th century all adopted[12] several regulations which limited the liability of the shipowner to his ship and allowed the shipowners to be released from all claims by abandoning their ships (sometimes freight or goods on board the vessels were included to the limited liability).
The earlier forms of limited liability did not include all kinds of claims but only claims arising from specific kinds of disputes. For instance, in 18th century during a sea transport, the master of an English ship stole the Portuguese gold carried on board and the shipowner was ordered to compensate the entire loss of the shipper[13]. Troubled by this judgment, shipowners petitioned the English Parliament which as a result passed the Responsibility of Shipowners Act of 1734, limiting the liability of shipowners in cases of theft by the crew or the master[14]. Soon after this act, more demands for limitation of liability were raised over cases where huge losses were suffered for reasons other than theft or when theft was committed by third parties due to the acts or omissions of the crew or the master[15]. In order to include such cases in the limitation, the Parliament passed the Responsibility of Shipowners Act of 1786[16] which limited the liability of shipowners in cases where the loss occurred by the act or omission by the master or crew without the “privity of the shipowner”. In other words, a shipowner’s liability was only limited for the acts or omissions of the crew or the master of the ship; shipowners continued being unlimitedly liable for their own acts and omissions.
3. Conventions of 1924 and 1957
In 1924, the first attempt for a uniform law on the limitation of liability of shipowners was made by the International Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Vessels, 1924, also known as the 1924 Limitation Convention[17]. Under this convention, only the shipowners were entitled to limit their liability. However, similar to the Responsibility of Shipowners Act of 1786, limited liability was denied if the occurrence giving rise to the claim resulted from the actual fault or privity of the owner[18].
At that time period, the limitation liability of shipowners mainly varied between the civil law system and the common law system[19]. In continental Europe liability of shipowners was usually limited to the value of their ships (sometimes including the freight, if any) and the shipowners could satisfy all claims by abandoning their ships to the claimants whereas in Anglo-Saxon system their the limitation of shipowners’ liability was calculated by the tonnage of their ship[20].
The 1924 Limitation Convention attempted to merge these two limitation systems and to base the extent of a shipowner’s liability on the specific type of claim. For example, in respect of the claims enumerated from 1 to 5 in Article 1 (compensation due for loss or damage caused by the master and crew, damage to the cargo, obligations arising out of bills of lading and removal of wrecks) the liability of shipowners was limited to the value of the vessel plus the freight and the accessories of the vessel but in no case was it to exceed an aggregate sum equal to 8 pounds sterling per ton of the vessel’s tonnage. Shipowners were deprived of the right to this limit when the loss arose out of their own acts or faults.
The 1924 Limitation Convention failed[21] to achieve a uniform law on the limitation of liability of shipowners and was only adapted by a small number of civil law countries[22].
In 1957, International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships (1957 Brussels Convention) was convened in order to replace the 1924 Limitation Convention. One of the changes that were brought by the 1957 Brussels Convention was that, as opposed to 1924 Limitation Convention, other persons were entitled to limit their liability such as charterer, manager and operator of the ship, the master, members of the crew and other servants (Article 6). This way claimants could no longer circumvent the limitation system by simply suing a servant or agent of the owner[23]. Also under Article 3, the extent of limitation was set as 1,000 francs for each ton of the ship’s tonnage for property claims and 3,100 francs per ton for personal claims. Similar to the 1924 Limitation Convention, the shipowners were deprived of their right to limit their liability if the occurrence giving rise to the claim resulted from their actual fault or privity, although the word “actual” was added[24] in order to emphasize that the fault ought to be committed directly by the shipowner himself and not by his servants(Article 6).
Just like its predecessor, the 1957 Brussels Convention was not very successful either, due to the reasons that monetary limits set out in both conventions were outdated by the inflation[25]. Another concern that was raised by claimants was that, whereas the extent of shipowners’ liability used to be too large before 1924, it was now unfairly low and favored the shipowners too much[26]. These concerns would later be result in the making of 1976 London Convention.
4. Convention of 1976 and Protocol of 1996
In 1976, London, the International Maritime Organization (IMO) held the International Conference on the Limitation of Liability for Maritime Claims. The purpose of the conference was to strike a balance between the competing requirements of claimant and defendant by adjusting the liability limits as high as shipowners could cover by insurance at a reasonable cost while making it virtually impossible to break the liability limit[27]. In this respect, the 1976 London Convention is considered as a compromise between claimant and shipowner in the sense that the liability limits were increased to satisfy a much larger portion of claims in exchange for a much more difficult limit to break[28]. Under the Convention, the extent of the limit of liability depends on the tonnage of the ship and the type of claim.
According to Article 4[29] of the Convention, the limitation of liability does not apply to a person if the loss resulted from his personal act or omission which is committed with the intent to cause such loss, or committed recklessly with knowledge that such loss would probably result. The term “intent or reckless act, with the knowledge that such loss will probably result” is shortly described as “willful misconduct”.
The Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims of 19 November 1976 (1996 London Protocol) increased the liability limits even further by amending Article 6 and 7. Under these two conventions, the limitation amounts are now calculated by Special Drawing Rights (SDR) so that the limits can adapt to the inflation and other factors of the market.
1996 London Protocol did not amend the definition of willful misconduct in Article 4. Therefore, it can be said that the notion of willful misconduct in maritime law is defined in the Article 4 of the 1976 London Convention.
B. Development Of Breaking The Limit
The notion of breaking the limit of liability of shipowner was first introduced as uniform law via Article 2 of the 1924 Limitation Convention. According to Article 2, The limitation of liability did not apply to “obligations arising out of acts or faults of the owner of the vessel”.
In Article 1 of the 1957 Brussels Convention, the definition was changed by adding the word “actual” before “fault” in order to prevent confusions and contradicting court orders on the application of the limit on shipowners. As per Article 1, shipowners could limit their liability “unless the occurrence giving rise to the claim resulted from the actual fault or privity of the owner”.
However within the application of the 1957 Brussels Convention, courts often leaned towards breaking the limitation of shipowner’s liability for any negligence or fault on shipowner’s part[30]. This gave way to so much litigation for unlimited liability that limitation of liability became an exception rather than a rule[31].
The solution came when CMI (Comite Maritime International) prepared a draft for an international convention and IMO (International Maritime Organizaiton) submitted this draft in 1976 London Convention. The most important purpose of this draft was to render the breaking of the limit of liability of shipowner extremely difficult to break in exchange in exchange for increasing the limit of liability high enough to satisfy most claims[32].
In Article 4 of the 1976 London Convention, the term “actual fault or privity” was transformed into “personal act or omission” and another condition of “committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result” was added. The final form of the term of willful misconduct is as follows: “A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”
II. BREAKING THE LIMITATION OF LIABILITY
A. Conditions for Breaking the Limit
The Article 4 of 1976 London Convention represents a radical change from the conditions for breaking the limit under the 1957 Brussels Convention[33]. As explained above, the deviation from the definitions in 1924-1957 Conventions was made for the purpose of rendering the breaking of the limit virtually impossible to break. For this purpose, to break the limit a shipowner now not only must commit actual fault (which now corresponds to “personal act or omission”) but must also commit said fault either intentionally or recklessly AND with “knowledge that such loss would probably result”. This definition, upon first look, corresponds to a much higher degree of fault for the breaking of the limit, as intended by the 1976 London Convention[34].
The most radical change under the 1976 London Convention was the subjective awareness of probable loss. The result of this condition is that under the 1976 London Convention only extraordinary circumstances give rise to a loss of the right to limit liability[35].
As per the wording of the Article 4, the conditions for breaking the limit can be grouped into 2:
1. Personal Act or Omission
The phrase “personal act or omission” stipulates that, in order to break the limit of liability, the first condition is that the act or omission which causes the loss must be the shipowner’s own act or own omission. This phrase consequently dictates that reckless or intentional acts of the servants, employees or agents of shipowner acting within or outside the course of their duty do not result in shipowner’s loss of the right to limit liability. This rule is also in alignment with the notions of willful misconduct or reckless behavior in the Athens Convention, Hague-Visby Rules, Hamburg Rules and the 1957 Brussels Convention[36].
2. Committed with the Intent to Cause Such Loss, or Committed Recklessly With Knowledge that Such Loss Would Probably Result
In order for the limit to be successfully broken, the act must be committed either intentionally or recklessly.
a) Intent to Cause Such Loss
A shipowner’s intentional act to cause loss unsurprisingly deprives him of the right to limit his liability since “intentional” wrongdoing fulfills all three criteria for the breaking of the limit. A very recent case called “The Atlantik Confidence”[37] case is a good example of breaking the limit due to the intent of the owner. In the “Atlantik Confidence” case, the shipowner deliberately sunk his vessel for insurance indemnity and was therefore deprived of the right to limit his liability as well as insurance coverage.
b) Recklessness With Knowledge that Such Loss Would Probably Result
“Recklessness” is a legal term that is unique for degree of fault and is exclusive to the common law system; its equivalent in civil law does not exist[38]. Therefore the word should be examined under common law.
The word “recklessly”, as defined by the courts in the United Kingdom, means either carelessness or utter heedlessness of consequence[39]. However, the word “recklessly” must be examined in the same context with the phrase “With Knowledge that Such Loss Would Probably Result”[40]. The reason for this is that the word “reckless” indicates a general disregard of any consequence.
In this context, the word “knowledge” corresponds to subjective awareness, meaning that the person who wishes to avail himself of the limitation must be actually conscious of the fact that the loss will probably occur[41]. This rule is the direct opposite of “objective awareness”[42], meaning that it is sufficient to break the limit if a reasonable person would have seen the risk, even if the wrongdoer did not see it.
In this respect, it can be concluded that a shipowner is entitled to limit his liability if, at the time of his reckless act, he did not have the actual knowledge that the loss would probably occur, regardless of whether or not a reasonable person could have predicted the loss.
3. Burden of Proof
As it is clearly stated in the wording of Article 4 as “A person liable shall not be entitled to limit his liability if it is proved that…” the principle is that a shipowner is entitled to limit his liability and the exception is IF it can be proved [by the alleging party, which is the claimant] that the loss resulted from the reckless acts of the shipowner.[43] Therefore, the burden of proving that “the loss resulted from [the owner’s] personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result” lies upon the claimant who strives to break the limit.
B. Precedence For Breaking The Limitation Of Liability Under National Laws
1. Precedence Under UK Law
Taking into consideration how the limit can be broken only under very strict conditions and the fact that the English legal system has adapted the doctrine of precedent, the few cases in which the limit of liability was successfully broken under the 1976 London Convention are of vital importance for understanding the breaking point of the limit not only under UK law but also in many other legal system that have adapted the principles set out in these precedence. Apart from the “Atlantik Confidence” case in which the limit was broken due to the intentional sinking of the ship by the owner, the limitation of liability has been broken under the 1976 London Convention only a handful of times.
The most well-known and perhaps the most significant of one of these cases is the “Marion” case[44].The accident occurred when Vessel “The Marion” disturbed a submerged oil pipeline while dropping anchor near Hartlepool. The accident occurred because the assistant of the master mistakenly brought him an old chart which did not mark the pipeline when there in fact in the chart room there were up-to-date charts which did mark the pipeline. As it turned out, the shipowner’s agent had delegated the matter of updating the charts to the master, but had not established a system to ensure that the charts were continuously updated. As a result, the court denied the owners the right to limit their liability because vessel was unseaworthy due to lack of up-to-date charts and the owners did not have an effective supervision of updating the charts: “My Lords, in the result I conclude that there were two actual faults of the appellants: first, in Mr. Downard’s failure to have a proper system of supervision in relation to charts; and, secondly, in failing, when he departed to Greece, to give to Mr. Lowry and Mr. Graham instructions with regard to the matters about which he required to be kept informed which were sufficiently clear, precise and comprehensive. There remains only the question of causation, which presents little difficulty, especially having regard to the incidence of the burden of proof. The appellants could not, and did not, prove that, if F.M.S.L. had had a proper system of supervision in relation to charts, Captain Potenza would still in March 1977 have been navigating with a hopelessly obsolete chart, even though a modern one showing the pipeline was on board and available to him. Equally the appellants could not, and did not, prove that, if Mr. Downard had been informed promptly about the Liberian report and its contents, the same events would still have taken place.”
Another well-known case on breaking the limit is the “Saint Jacques II” Case[45]. The fishing vessel, “Saint Jacques II”, while it was heading against the flow of traffic, collided with the motor tanker “Gudermes”. As it turned out, one of the owners had left the navigation of the vessel under the control of a 17-year old skipper. The facts also pointed out that Saint Jacques II routinely navigated against the flow of traffic and the court held that the owner was not entitled to the right to limit his liability: “It has already been noted that the claimants are the owners of the Saint Jacques II. The first claimant was, in addition, her skipper. He was on board on the night in question. It was the first claimant who determined the course to be steered by the Saint Jacques II after she left Boulogne-Sur-Mer. Some time after the departure, the first claimant apparently left the wheelhouse and went below. By this time, with one exception, the remaining crew were resting in their quarters. The single exception, left alone in the wheelhouse, was a 17-year old deckhand. He was not qualified as a skipper but held some certification and had been working on board for some two years; he had been keeping watches alone in the wheelhouse for about the previous six months. He did not speak English. It is said by the first claimant that he had instructed the deckhand verbally to follow the track on the video plotter and to call him if any radar echoes entered within the VRM (which had been set to one mile) or were likely to pose a problem; the first claimant had previously made all watchkeeping crew aware of the need to call him if they were in the slightest doubt. The first claimant had gone to sleep; he had not been in the wheelhouse at the time of the collision; he was then below and was awoken by the collision.”
In the “Norman” case[46] House of Lords denied the owners the right to limit their liability because they failed to pass on to the skipper important information about rocks in uncharted waters: “In the face of Mr. Hellyer’s failure to communicate to the skipper the contents and effect of the two circulars, and in particular the information contained in the second circular concerning the rock on which the Normanactually struck on Oct. 4, 1952, were the appellant owners in a position to discharge the onus which lay upon them of proving that the loss of the Norman occurred without their actual fault or privity? In my judgment, they could only do so by showing either that Mr. Hellyer’s failure to pass on to the skipper the contents or effect of the two circulars did not amount to a fault on his part, or, if such failure did amount to a fault on his part, that his fault in this respect was immaterial, inasmuch as it did not in any way contribute to the stranding of the Norman, which would have happened just the same even if Mr. Hellyer had duly passed on to the skipper the information in question. It appears to me that the appellants have failed to make good either of these alternatives.” Although this case was governed not by the 1976 Convention but rather by 1957 Convention, it paved the way to interpreting the notion of reckless act today.
In “Star Sea” case[47] Queen’s Bench Division denied the owners the right to limit their liability because they navigated the vessel despite being aware of its unseaworthy condition: “Underwriters have established that Star Sea was sent to sea in an unseaworthy state with the privity of the plaintiffs with the result that the plaintiffs’ claim for a constructive total loss fails, as does their claim for indemnity against the claim for salvage.”
In consideration of the above-quoted decisions it can be concluded that the limit of liability of shipowners can be broken under UK Law but only under strict conditions, due to a combination of several reckless acts or omissions which have been committed personally by the owners and despite being aware that the loss will probably occur.
2. Precedence Under French Law
Despite the fact that Article 4 has been adopted by both United Kingdom and by France without reservations, the French Courts have a different approach when it comes to the application thereof. France’s reluctance with regards to the wording of the article 4 goes as far back as the Conference itself in1976. During the Conference, the French delegation proposed to change Article 4 in the draft, suggesting that so that the person liable should lose the benefit of limitation of liability also when the loss resulted from the act or omission of his servants acting in the exercise of their duties[48]. Even though this proposal was rejected, it is well documented the French Courts do not lay much emphasis on the distinction between shipowners and their servants[49].
Another difference in approach is that the French Courts apply objective test rather than subjective test[50]. In other words, if a reasonable person should have predicted that the loss would occur, a shipowner is not entitled to limit his liability regardless of whether he had actual knowledge that the loss would occur. As a result, the French Courts are more inclined to rule on the limitless liability of shipowners and in favor of injured parties.
One of the precedence for breaking the limit under the French Law is the “Stellaprima” [51] case. On 1st July 1998, during the discharge of a heavy crane, the upper portion of the crane pivoted, thereby causing the crane to fall on the port installations. Cour de Cassation ruled that the owner could not benefit the limitation fund because “A conduct barring limitation is likely to have occurred when the owner has not made proper arrangements for the testing of a crane prior to the discharge from his ship of a heavy piece of machinery.”.
Another precedence for breaking the limit under the French Law is the “Johanna Hendrika”[52]. On 9 May 1991 the dredger Johanna Hendrika rested on the bottom by securing its position by means of a spud poal. During the low tide the dredger slipped slowly towards the quay and damaged small vessels moored alongside the quay. Cour de Cassation held that “The owner of the dredger has committed a “inexcusable fault” entailing the loss of the right to limit its liability, by having allowed the operation of a dredger whose anchorage system was insufficient in order to prevent the movement of the dredger.”
Another case that might constitute precedence is the case of Erika[53] under the 1992 Protocol to the International Convention on Civil Liability for Oil Pollution Damage (CLC 92), which stipulates the same conditions[54] for breaking the limit as the 1976 London Convention. In that specific incident, the owner navigated the vessel despite the fact that the vessel was determined to be unfit for the transport of the polluting products which it was carrying. Finally the vessel, ERIKA, broke in two during a storm off the west coast of France and 10,000 tons of fuel oil spread to, and severely polluted, the French coastline. Cour de Cassation held that the owner, Total, “would probably result, only by saying that it can not be asserted that the representative of Total was aware that, by chartering the Erika without respecting the rules that Total had put in place to avoid the risk of chartering a ship unfit for the transport of polluting products, it would result in pollution, without investigating whether, as a professional , Total had to be aware that such damage is likely to result from the evidence in the case file that, prior to Total’s chartering of the Erika, several oil companies had excluded that ship from their transport activities in view of its age, its poor condition and the risks it presented, and that Total had, despite its knowledge of the risks related to the age of the vessel, deliberately chose to charter it without even complying with its own safety rules” and therefore did not allow the owner to benefit from limitation of liability.
In consideration of the above-quoted decisions it can be concluded that the limit of liability of shipowners can be broken under the French Law not only due to the reckless acts or omissions by the shipowners but also by their servants whose supervision have been neglected by the shipowners themselves. The French Courts, in short, apply an objective test of awareness of probable loss and tend to focus more on the degree of fault. london convention
3. Precedence Under Turkish Law
Articles 1328-1343 of Turkish Commercial Code refers to the 1976 London Convention for the limitation of liability of shipowner and the breaking thereof. Therefore, Article 4 of the 1976 London Convention prevails for the limitation of liability of shipowner under Turkish Law. london convention
The term “recklessly” does not correspond to any legal degree of fault in the Turkish doctrine. Therefore it is up to the interpretation of the doctrine to determine what constitutes “recklessness”. In the Turkish doctrine it is widely accepted that the term “reckless” corresponds to somewhere between “intentional” and “gross negligence” but closer to the “intentional”[55]. “Reckless” is interpreted as “negligence which is close to intent”.london convention
As of the date of this article there is no precedence in Turkish Law in which the limitation of liability of a shipowner has been broken. The closest precedence to the breaking of the limit is a 1984 decision of the Court of Cassation in which the 11th Civil Chamber affirmed the decision of the court of first instance which ruled on the unlimited liability of Turkish Airlines under the 1929 Warsaw Convention[56]. The dispute in subject is about a landing accident which resulted in the total loss of the airplane and several dead. During the incident the pilots proceeded with the landing despite the harsh weather conditions. The court ruled that the pilots initiated the landing recklessly, unnecessarily risking the lives of the passengers.
The said decision does not completely constitute as a precedent due to the reason that Article 25[57] of the Warsaw Convention allows the limit to be broken by not only the willful misconduct of the carrier but also by the willful misconduct of the servants and agents[58]. This could explain, or at least justify, why the reckless act of the pilots was directly attributed to the airlines. However, this court judgment is a fitting precedence for the notion of the term “reckless act” in Turkish Law.
III. CONCLUSION
Due to the perils of sea in maritime commerce and requirements for considerable investments and the courage to do so, an allocation of risk between the merchants and the shipowners has always been required.
The 1976 London Convention is considered to be successful in striking a balance between the competing interests of claimant and defendant by adjusting the liability limits as high as shipowners could cover by insurance at a reasonable cost while making it virtually impossible to break the liability limit. In this respect, merchants are considered to forfeit the right to be compensated beyond a certain limit in exchange for reduced freight rates and thus the risk of transport at sea is allocated between the merchants and the shipowners
Under the 1976 London Convention, a shipowner is entitled to limit his liability for losses to an extent based on the tonnage of the ship and the type of claim, unless it can be proved by the claimant that “the loss resulted from [the shipowner’s] personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”.london convention
The phrase “personal act or omission” dictates that reckless or intentional acts of the servants, employees or agents of shipowner acting within or outside the course of their duty do not result in shipowner’s loss of the right to limit liability, that the reckless or intentional acts must be committed directly by the shipowner.
The word “reckless” indicates a general disregard of any consequence and therefore corresponds to subjective awareness, meaning that the person who wishes to avail himself of the limitation must be actually conscious of the fact that the loss will probably occur.
The limit of liability of shipowners can be broken under UK Law but only under strict conditions, due to a combination of several reckless acts or omissions which have been committed personally by the owners and despite being aware that the loss will probably occur.
On the other hand, the French Courts break the limit not only due to the reckless acts or omissions by the shipowners but also by their servants whose supervision have been neglected by the shipowners themselves.
While there is no precedence of the Turkish Courts breaking the limit under the 1976 London Convention, a 1984 Supreme Court decision under the Warsaw Convention can be considered precedence for the notion of the term “reckless act” in Turkish Law.
BIBLIOGRAPHY
DAMAR, Duygu, Wilful Misconduct in International Transport Law, Max-Planck-Institut für ausländisches und internationales Privatrecht, Hamburg 2011
GRIGGS, Patrick / WILLIAMS, Richard / FARR, Jeremy, Limitation of Liability for Maritime Claims, Fourth Edition, London 2005
BERLINGIERI, Francesco, International Maritime Conventions, V.2, New York 2015
MILDE, Michael,, The Problems of Liabilities in International Carriage by Air, Praha 1963
YETİŞ ŞAMLI, Kübra, Uluslararası Kara, Hava Ve Deniz Yolu İle Eşya Taşımalarında Taşıyıcının / Taşıyanın Sınırlı Sorumluluktan Yararlanma Hakkının Kaybı, İstanbul Üniversitesi Sosyal Bilimler Enstitüsü Yüksek Lisans Tezi
YAZICIOĞLU, Emine, Deniz Ticareti Hukuku Temel Bilgiler, İstanbul 2014, V.1,
[1] DAMAR, Duygu, Wilful Misconduct in International Transport Law, Max-Planck-Institut für ausländisches und internationales Privatrecht, Hamburg 2011, p.7
[2] DAMAR, p.9
[3] DAMAR, p.5; MILDE, Michael,, The Problems of Liabilities in International Carriage by
Air, Praha 1963, p.42
[4] GRIGGS, Patrick / WILLIAMS, Richard / FARR, Jeremy, Limitation of Liability for Maritime Claims, Fourth Edition, London 2005, p.3
[5] DAMAR, p.16-19
[6] GRIGGS/WILLIAMS/FARR, p.3
[7] DAMAR, p.16-17
[8] DAMAR, p.7
[9] DAMAR, p.7
[10] DAMAR, p.8
[11] DAMAR, p.8
[12] DAMAR, p.9; GRIGGS/WILLIAMS/FARR, p.3-4
[13] DAMAR, p.10
[14] DAMAR, p.10
[15] DAMAR, p.10
[16] DAMAR, p.10-11
[17] DAMAR, p.162; BERLINGIERI, Francesco, International Maritime Conventions, V.2, New York 2015, p.332; YETİŞ ŞAMLI, Kübra, Uluslararası Kara, Hava Ve Deniz Yolu İle Eşya Taşımalarında Taşıyıcının / Taşıyanın Sınırlı Sorumluluktan Yararlanma Hakkının Kaybı, İstanbul Üniversitesi Sosyal Bilimler Enstitüsü Yüksek Lisans Tezi, s.1
[18] See ARTICLE 2 of the 1924 Limitation Convention
[19] BERLINGIERI, p.332
[20] BERLINGIERI, p.332
[21] BERLINGIERI, p.332
[22] The Convention was only ratified or acceded to by Belgium, Brazil, Denmark, Dominican Republic, Finland, France, Hungary, Madagascar, Monaco, Norway, Poland, Portugal, Spain, Sweden and Turkey.
[23] DAMAR, p.162
[24] See ARTICLE 1 of the 1957 Brussels Convention
[25] GRIGGS/WILLIAMS/FARR, p.3
[26] GRIGGS/WILLIAMS/FARR, p.3
[27] GRIGGS/WILLIAMS/FARR, p.3; DAMAR, p.165
[28] GRIGGS/WILLIAMS/FARR, p.3
[29] “A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.”
[30] DAMAR, p.165
[31] DAMAR, p.165-167
[32] DAMAR, p.168
[33] GRIGGS/WILLIAMS/FARR, p.31
[34] DAMAR, p.166-169
[35] DAMAR, p.167
[36] GRIGGS/WILLIAMS/FARR, p.33-34
[37] Lloyd’s Law Reports, 2016, V.2, p.525
[38] DAMAR, p.53; YETİŞ ŞAMLI, p.84
[39] GRIGGS/WILLIAMS/FARR, p.37
[40] GRIGGS/WILLIAMS/FARR, p.38
[41] DAMAR, p.272-273; GRIGGS/WILLIAMS/FARR, p.38
[42] DAMAR, p.273
[43] BERLINGIERI, p.369
[44] Grand Champion Tankers Ltd., v. Norpipe AIS (House of Lords, 1984), Lloyd’s Law Reports, 1982, V.2, p. 52;
[45] Loic Ludovic Margolle and another v Delta Maritime Company Limited and others (English Admiralty Court: Gross J.: 28 November 2002) on 23 April 2001), Lloyd’s Law Reports, 2003, V.1, p. 203
[46] Lloyd’s Law Reports, 1960, V.1, p.1
[47] Lloyd’s Law Reports, 1995, V.1, p. 651
[48] For details see IMCO 1976 International Conference on Limitation of Liability for Maritime Claims, 1-19 November 1976 Records; also see DAMAR, p.167, footnote 529.
[49] Lloyd’s Law Report, 1997, v.1, p. 131:“The Court of Appeal set out the terms of art. 58 of the French law of Jan. 3, 1967 which was in the same terms as art. 4 of the 1976 Convention so that the relevant requirement (that the owners’ own act or omission should have been committed recklessly in the knowledge that such damage would probably result) was present to the mind of the Court. It must have been with that provision in mind and with the decision at first instance in front of them that the Court held that the fault of the shipowner, in a case where no elementary safety precautions had been taken either to carry out the relevant manœuvre or to ensure the safe-keeping of the dredger, prevented the owner from invoking any limitation of liability…Even if it is right to say on the above evidence that the French Courts do not, to English eyes, give sufficient weight to the subjective requirement that the shipowner should personally have had knowledge that the loss would be likely to result, that is no more than a difference of approach to the true construction of the Convention…”
[50] Lloyd’s Law Reports, 1989, V.1, p.330
[51] Cour d’Appel of Montpellier 7 December 1999, Jumbo Navigation N.V. v. Mague Equipamentos de Movimentaçao and Others ([2000] DMF 813), For the summary of the decision in English please see: http://www.comitemaritime.org/The-Limitation-Convention-%28LLMC%29-1976/0,27104,110432,00.html (access date: 08.05.2018)
[52]Cour de Cassation 20 February 2001, Groupe des Assurances Nationales – GAN and Others v. Nautiloc and Others – The “Moheli” (2002 DMF 144), For the summary of the decision in English please see: http://www.comitemaritime.org/The-Limitation-Convention-%28LLMC%29-1976/0,27104,110432,00.html (access date 08.05.2018)
[53] For the summary of the decision in English please see: http://www.gard.no/web/updates/content/20735233/the-erika-the-cour-de-cassation-decision
[54] See Article V-2 of the CLC 92
[55] YAZICIOĞLU, Emine, Deniz Ticareti Hukuku Temel Bilgiler, İstanbul 2014, V.1, p.123; YETİŞ ŞAMLI, p.143
[56] Yarg. 11.H.D. 28.11.1984, E.1984/5161, K.1984/5886
[57] See Article 25 of the Warsaw Convention
[58] GRIGGS/WILLIAMS/FARR, p.33-34
