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The bunkers convention and limitation of liability

Abstract

Limitation of liability is a traditional rule applicable to all areas of shipowners’ liability. This rule is also acknowledged in the Bunkers Convention, which came into force in 2008. However, the extent of limitation under the Bunkers Convention is vague or uncertain, as it leaves the liability to be limited “under any applicable national or international regime”. This article therefore focuses on a discussion of the limitation of liability rule under the Bunkers Convention. It is a matter of concern as to whether the limitation of liability rule in conjunction with the whole Bunkers Convention will protect and balance the interests of all parties involved; and whether it will, in the long run, contribute to the further development of international shipping.

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Notes

  1. 1.

    Information is available at: http://www.imo.org, last visited 6 Oct 2010.

  2. 2.

    The Bunkers Convention, Article 2.

  3. 3.

    The phrase “earlier international civil liability conventions” refers to the 1969 CLC and its 1992 Protocol, which are established for tanker oil pollution liability. A bunker spill from a laden tanker could be covered by the 1969 CLC. The CLC Protocol 1992 enlarged the scope of application; it applies to spills of bunker oil from unladen tankers in certain circumstances. But it is clear that neither the 1969 CLC nor the 1992 Protocol applies to spills of bunker oil from ships other than oil tankers.

  4. 4.

    The Bunkers Convention, Article 1(3).

  5. 5.

    See IMO LEG 80/4/1.

  6. 6.

    The International Group of P&I Clubs agreed to continue providing insurance coverage to satisfy the compulsory insurance requirement under the Bunkers Convention: IMO LEG/CONF. 12/9.

  7. 7.

    The Bunkers Convention, Article 7(1).

  8. 8.

    The Bunkers Convention, Article 6.

  9. 9.

    This refers to the 1976 LLMC and the 1996 Protocol to 1976 LLMC.

  10. 10.

    Information is available at: http://www.imo.org, last visited 06 October 2010. Its LLMC Protocol 1996 holds 43.19% of the world tonnage with currently 38 Contracting States.

  11. 11.

    The first international convention relating to the limitation of liability for maritime claims was adopted in 1924. The 1924 Limitation Convention was abrogated by the 1957 Convention relating to the Limitation of the Liability of Owners of Seagoing Ships (the 1957 Convention).

  12. 12.

    The Bunkers Convention, Articles 6 & 7(1).

  13. 13.

    “…Not only does this afford parties liable for similar damage very different ceilings of limitation, but it also leaves them unable to evaluate the various financial risks they face from jurisdiction to jurisdiction as a result of bunker spills. Their insurers are left in an equally difficult position in view of the disparity and uncertainty of the amounts of limitation.”

  14. 14.

    The 1969 CLC is being replaced by its 1992 Protocol, so it is not considered here.

  15. 15.

    The 2000 Amendments was adopted on 18 October 2000 and entered into force in November 2003. It raised the compensation limits by 50% compared to the limits set in the 1992 Protocol to CLC.

  16. 16.

    SDR stands for Special Drawing Right. The daily conversion rates for SDR can be found on the International Fund website at http://www.imf.org/.

  17. 17.

    See IMO LEG 82/3/3.

  18. 18.

    The Bunkers Convention, Arts 6 & 7(1).

  19. 19.

    “…However, the wording of the same Clause 14 in the 1976 Rulebook contains a significant change; paragraph (iv) thereof specifically states: The Association’s liability for claims arising from legal liabilities for oil pollution shall be limited to such a sum as the Director’s may from time determine…”

  20. 20.

    See 33 USC section 2701 et seq.

  21. 21.

    The OPA 90, section 2704.

  22. 22.

    The Bunkers Convention, Article 7(1).

  23. 23.

    The Bunkers Convention, Article 9.

  24. 24.

    Chao Wu, Liability and Compensation for Bunker Pollution, 33 Journal of Maritime Law and Commerce 553, at 562: “…It leaves them unable to evaluate the various financial risks they face from jurisdiction to jurisdiction as a result of bunker spills…”.

  25. 25.

    The LLMC, Article 2(1)(c): “…claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connexion with the operation of the ship or salvage operation;…”. In addition, the primary question in the case would be whether such losses in earnings can be proven at all and whether there is sufficient evidence for these losses being caused by a bunker oil pollution incident (and not other reasons such as a general change of preferences of tourists). Only after liability of the shipowner has been established, will the limitation issue arise.

  26. 26.

    More detailed discussion of other aspects relevant to the right to limit liability is contained in Zhu L (2007), pp. 152–161.

  27. 27.

    Document CMI 1968-III, Report submitted by International Sub-committee, at 146.

  28. 28.

    See IMO LEG 76/WP.3.

  29. 29.

    Ibid.

  30. 30.

    Wu, Chao, supra, note 24, at 564: “If the Bunkers Convention has instead provided for a dedicated limitation fund, it would have created an additional burden to shipowners/insurers, because, for many cases, at least two limitation funds would have to be established in the event of a bunker spill (76 LLMC fund, BC fund). And if the spill comes from a vessel carrying HNS cargo, then three funds would have to be created (HNS fund, 76 fund, BC fund).”

  31. 31.

    Wu, Chao, ibid.

  32. 32.

    See IMO LEG 77/11.WPD: “There was general agreement in the Committee that the limits of liability in the draft bunkers instrument should be tied to those in the LLMC, and accordingly no separate limits of liability would be established.”

References

  1. Colin D (2009) Bunker spill risk, Ince & Co Shipping E-brief, p 16

  2. Gauci G (1997) Oil pollution at sea: civil liability and compensation for damage, pp 210–212

  3. Hutchinson JA (1992) Financial responsibility provisions: are they sinking the US maritime trade? 24 Law Policy Int Bus 223, pp 237–238

  4. Wu C (1996) Pollution from the carriage of oil by sea: liability and compensation, p 241

  5. Wu C (2009) Liability and compensation for bunker pollution. 33 J Marit Law Commerce, pp 553–562

  6. Zhu L (2007) Compulsory insurance and compensation for bunker oil pollution damage, pp 152–161

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Correspondence to Ling Zhu.

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The writing of this paper is supported in part by a research grant from the Departmental General Research Funds (G-U460). The author is grateful to Professor Dr. Dr. h.c. Jürgen Basedow, Director of the Max Planck Institute for Comparative and International Private Law, Hamburg, Germany, who supervised her PhD research on compulsory insurance and compensation for bunker oil pollution damage. The idea of this paper is partly originated from her PhD research result (published by Springer Publisher, Germany, 2007, ISBN: 9783540459002). The author also wants to thank the anonymous reviewers for the valuable comments and shall remain solely responsible for any errors in the paper.

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Zhu, L. The bunkers convention and limitation of liability. Aegean Rev Law Sea 1, 181–190 (2011). https://doi.org/10.1007/s12180-010-0016-0

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Keywords

  • Financial Security
  • Limitation Fund
  • Limitation Regime
  • International Regime
  • Liability Rule