APPROFONDIMENTI

The maritime industry faces complex risks, ranging from accidents at sea to environmental disasters. In response, international conventions like the Limitation of Liability for Maritime Claims (LLMC) Convention provide shipowners, charterer, manager, operator of a seagoing ship and salvors the right to limit their liability in the event of significant maritime claims.

This article explores how the LLMC convention allows to mitigate financial exposure, particularly in the context of incidents like the recent sinking of the yacht Bayesian.

1. The Purpose of the LLMC Convention

The LLMC Convention was established to balance the interests of claimants with the need to protect the shipping industry from the financial consequences of the perils that can be faced at sea. The convention limits the amount a shipowner must pay in damages following certain maritime incidents, such as personal injury, property damage, and environmental harm.

It acknowledges that, while shipowners must be accountable for accidents and negligence, they should also have a predictable cap on their liabilities.

2. Applicability of the LLMC to Yacht Owners

Many believe that the LLMC convention only applies to large commercial vessels, but in reality it also covers smaller craft, including yachts like the Bayesian. Generally speaking, under the LLMC the shipowner of a yacht may be entitled to limit his liability for claims arising from the yacht’s sinking, including compensation for damage to cargo, third-party property, costs for removing the wreck and personal injury.

This limitation of liability is especially pertinent when incidents involve significant financial claims, that could exceed the value of the vessel itself or the owner’s ability to pay.

3. Conditions for limiting liability

To limit liability, the shipowner must satisfy certain conditions, such as:

• no "personal act or omission": the shipowner must not have engaged in a personal act or omission with the intent to cause damage, or with reckless knowledge that such damage was likely. If such actions can be proven, the right to limit liability under the LLMC may be forfeited;
• proper management of the vessel: ensuring the yacht was seaworthy and adequately maintained at the time of the incident is another condition to limit liability.

4. Present limits under the 1996 LLMC Protocol and their applicability to the Bayesian

The 1996 LLMC Protocol, which amended the original 1976 convention, significantly increased the limits of liability. At present, the limits of liability granted by the LLMC convention are:

• for claims related to loss of life or personal injury (of persons not passengers of the ship), the maximum liability for a ship of up to 2,000 gross tonnage is 3.02 milion Special Drawing Rights (SDR), which equates to approximately 3.7 million €.
• for other types of claims (e.g., property damage), the liability limit is 1 million SDR, approximately 1.2 million €.

For passenger claims, article 7 of the convention provides a limitation per person of 175,000 SDR.

However, it shall be noted that under UK law, the 1998 Order provides special rules on the passenger claims. In particular, passenger claim limits do not apply at all to seagoing ships. So, shipowners are only entitled to limit liability per passenger in accordance with the Athens Convention, if the carriage is made under a conctract. The Athens Convention per capita limit is at present 46,666 SDR, except that in its application to a carrier whose principal place of business is in the UK it is 300,000 SDR.

In the case of the Bayesian, the yacht was flying the UK flag, but apparently passengers were simple guest, i.e. not carried under a contract of transport.

This may imply that the owner of the Bayesian may not be entitled to limit his liability for the passenger claims before a UK Court. This circumstance could be relevant in the case of the sinking of the Bayesian, since passengers who lost their lives on the yacht were important enterpreneurs, manager and professionals, and their relatives may seek compensation from the ship owner.

5. Conclusion: LLMC a critical protection in Maritime Law, but with some caveats

The LLMC convention remains a vital tool for managing risk in the maritime industry. By limiting the liability of shipowners and other subject operating ships and yachts, it protects both commercial and private vessel operators from disproportionate financial burdens while ensuring victims receive fair compensation. For yacht owners, the LLMC offers a critical line of defense against financial ruin following unforeseen maritime incidents.

However, the ability to limit liability is not guaranteed. Legal proceedings following such incidents will likely scrutinize the facts surrounding the sinking, the yacht’s maintenance, and the owner’s conduct, making legal expertise crucial for successfully invoking this right.

Moreover, special provisions may apply, such as in the case of the Bayesian in case actions are brought before UK Courts, where passenger claims limit are not applicable.

Simone Moretti