Introduction

The Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Amendment of Schedule 2) Order 2017 came into operation on 4 December 2017.  The amendment serves to give effect to the latest revision in limits of liability for maritime incidents in accordance with the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims, 1976 (“Convention”).  The amendment also reflects the latest limits adopted by the International Maritime Organisation by resolution Leg. 5(99) concerning the liability for claims for loss of life or personal injury and other claims such as claims for property damage. 

Revised Limits

Old Limits

Prior to the amendment of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (the “Ordinance”), the limits of the claims for property damage are as follows:

1.       In relation to loss of life or personal injury claims:

a.       For ships with a tonnage not exceeding 2,000 tons, the limit was 2,000,000 SDRs;

b.       For ships with the following tonnage in excess:

i.         for each ton from 2,001 to 30,000 tons, the limit was 800 SDRs;

ii.       for each ton from 30,001 to 70,000 tons, the limit was 600 SDRs; and

iii.      for each ton in excess of 70,000 tons, the limit was 400 SDRs.

 

2.       In relation to other claims such as property damage claims:

a.       For ships with a tonnage not exceeding 2,000 tons, the limit was 1,000,000 SDRs;

b.       For ships with the following tonnage in excess:

i.         for each ton from 2,001 to 30,000 tons, the limit was 400 SDRs;

ii.       for each ton from 30,001 to 70,000 tons, the limit was 300 SDRs; and

iii.      for each ton in excess of 70,000 tons, the limit was 200 SDRs.

New Limits

After the amendment of the Ordinance, higher limits are now applicable:

3.       In relation to loss of life or personal injury claims:

a.       For ships with a tonnage not exceeding 2,000 tons, the revised limit is 3,020,000 SDRs;

b.       For ships with the following tonnage in excess:

i.         for each ton from 2,001 to 30,000 tons, the revised limit is 1,208 SDRs;

ii.       for each ton from 30,001 to 70,000 tons, the revised limit is 906 SDRs; and

iii.      for each ton in excess of 70,000 tons, the revised limit is 604 SDRs.

 

4.       In relation to other claims such as property damage claims:

a.       For ships with a tonnage not exceeding 2,000 tons, the revised limit is 1,510,000 SDRs;

b.       For ships with the following tonnage in excess:

i.         for each ton from 2,001 to 30,000 tons, the revised limit is 604 SDRs;

ii.       for each ton from 30,001 to 70,000 tons, the revised limit is 453 SDRs; and

iii.      for each ton in excess of 70,000 tons, the revised limit is 302 SDRs.

 

A comparison table showing the difference between the old and revised limits is set out below:

Loss of life or personal injury claims
	Old limit (SDRs)	Revised limit (SDRs)	Increased by (approx. USD)
Under 2,000 tons	2,000,000	3,020,000	1,445,783
+2,001 to 30,000 tons	800 per ton	1,208 per ton	578 per ton
+30,001 to 70,000 tons	600 per ton	906 per ton	434 per ton
+Over 70,000 tons	400 per ton	604 per ton	289 per ton

 

Other claims such as property damage claims
	Old limit (SDRs)	Revised limit (SDRs)	Increased by (approx. USD)
Under 2,000 tons	1,000,000	1,510,000	722,892
+2,001 to 30,000 tons	400 per ton	604 per ton	289 per ton
+30,001 to 70,000 tons	300 per ton	453 per ton	217 per ton
+Over 70,000 tons	200 per ton	302 per ton	145 per ton

 

Under Article 8 of Schedule 2 to the Ordinance, the unit of account used for the limits under Article 6 is the Special Drawing Right (“SDR”) as defined by the International Monetary Fund.  As of the date of writing, the conversion rate for SDR is 1 SDR : USD 1.42.

 

Implications

Schedule 2 to the Ordinance applies to shipowners and salvors which allow them to limit their liability in accordance with the abovementioned rates. The effect of the revision is that shipowners will subject to higher liability limits for claims for loss of life or personal injury and other claims such as property damage claims.

As the revised limits are significantly higher, some noted that a trend of forum shopping is foreseeable as other Asia countries like Singapore and the Mainland China have substantially lower liability limits than the revised limits in Hong Kong. Whilst this is a trend yet to be noticeable, what is clear now is that shipowners will likely be facing higher liability in a casualty dispute case or maritime claim in Hong Kong.  

While the increase limits of liability has already came into force on 4 December 2017, readers should take note that the old limits may still be applicable to any rights and liabilities arising from the maritime accidents that had happened before this date.

 

For enquiries, please contact our Litigation & Dispute Resolution Department:

E: shipping@onc.hk                                                           T: (852) 2810 1212 W: www.onc.hk                                                                    F: (852) 2804 6311 19th Floor, Three Exchange Square, 8 Connaught Place, Central, Hong Kong

Important: The law and procedure on this subject are very specialised and complicated. This article is just a very general outline for reference and cannot be relied upon as legal advice in any individual case. If any advice or assistance is needed, please contact our solicitors.

Published by ONC Lawyers © 2017