‘TERNATIONAL MARITIME ee ORCANIZATION LEG/CONF.10/6(by/2 6 February 1996 Ww Original: ENGLISH TS IMO INTERNATIONAL CONFERENCE ON HAZARDOUS AND NOXIOUS A SUBSTANCES AND LIMITATION OF NOT TO BE REMOVE! LIABILITY, 1996 \ FROM Agenda item 6(b) THE IMO LIBRARY CONSIDERATION OF A DRAFT PROTOCOL OF 1996 TO AMEND ‘THE CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS, 1976 Note by the International Chamber of Shipping INTRODUCTION ICS has participated in the discussions in the Legal Committee on the revision of the Convention ‘on Limitation of Liability for Maritime Claims 1976 and broadly supports the proposed new draft Protocol. ICS offers the following comments on certain specific provisions of the draft Protocol (1996 LMC). LIMITS OF LIABILITY - THE GENERAL LIMITS - ARTICLE 3 Article 3 of the 1996 LLMC would amend the limits of liability contained in Article 6 paragraph I of the 1976 LLMC, the new limits being for decision by the Conference. One proposal for determining the revised figures is that they should be based primarily on a statistical analysis of the effect of inflation on the real value of the 1976 Convention limits, However, ICS does not believe that the rate of inflation presents a full picture. In reaching its decision on the general limitation figures, the Conference will also need to take into account both the historic claims record and, importantly, whether limitation proceedings under the HNS Convention will be linked with proceedings under the 1996 LLMC. ICS strongly favours "linkage". However, if the Conference decides that there will be no "linkage" HINS claims will be removed from the ambit of the 1996 LLMC and the scope of the general limitation regime will be considerably reduced. In that event the remaining claims would obtain higher compensation and there would be no need to increase the general limits, Furthermore, apart from personal injury claims most non-HNS claims today relate to damage to property owned by maritime interests and therefore generally insured in the marine market. If, on the other hand, there is linkage between HNS and general limitation, more insurance capacity will be available enabling additional compensation for HNS claims through the supplementary shipowner fund and the HNS Fund. ICS fully endorses the views of the Intemational Group of P&I Clubs set forth in their submission document (LEG/CONF.10/6(a)/5) including their recommendation that with linkage, a 50% increase in the 1976 LLMC figures would be sustainable. IACONFLEG\10\6(B) For reasons of economy, this document is printed ina limited number, Delegates are kindly askee to bring thelr copias to meetings and not to request additional copiesLEG/CONF.10/6(b)/2 LIMITS OF LIABILITY - PASSENGER CLAIMS - ARTICLE 4 Article 4 of the 1996 LLMC would amend Article 7, paragraph 1 of the 1976 LLMC in two respects, First the shipowner's limit of liability for claims arising on any distinct occasion for loss of life oF personal injury to passengers of a ship would be increased from 46,666 SDR to [175,000] SDR multiplied by the number of passengers which the ship is authorised to carry according to the ship's certificate. Secondly, the cap (currently 25 million SDR) on the amount of the shipowners liability for such claims would be removed. ICS accepts the proposed figure of 175,000 SDR, believing it to be a realistic figure consistent with public expectations. As regards the removal of the cap, the industry acknowledges that an overall ceiling is a sensitive issue. However, the Conference will wish to consider the fact that a large passenger ship, certificated to carry perhaps 2000 passengers, would face a potential liability of 350 million SDR (assuming a per capita figure of 175,000 SDR). Whether such a figure is insurable in the long term must be questionable. SCOPE OF APPLICATION - ARTICLE 6 Article 6 of the 1996 LLMC would amend Article 15 of the 1976 LLMC by adding a new paragraph 3bis which would provide that “a State Party may regulate by specific provisions of national law the system of liability to be applied to claims for loss of life or personal injury to passengers of a ship, provided that the limit of lability is not lower than that prescribed in paragraph 1 of Article 7." ICS recognises that the Legal Committee decided that this amendment should be submitted to the Conference but would point out that it will have the effect of seriously undermining one of the ‘main purposes of the Convention: uniform limits of lability in States Parties. RESERVATIONS - ARTICLE 7 Article 7 of the 1996 LLMC would amend Article 18 of the 1976 LLMC by allowing States Parties to reserve the right to apply to claims subject to the HNS Convention the limits of liability set out under that Convention. This proposal should be reviewed following the final decision in respect of "linkage". COMPULSORY DENUNCIATION - ARTICLE 10 PARAGRAPH 4 Article 10 paragraph 4 of the 1996 LLMC would compulsorily require States Parties to denounce the 1976 LLMC. The decision on this proposal will affect Article 9 paragraph 4 which has accordingly been placed in square brackets. ICS is strongly opposed to compulsory denunciation of the 1976 LLMC, believing that it will undermine the general global limitation system. The 1976 LLMC creates a system of international procedural law which is applicable only between member states. The benefit of this system will be lost if States Parties to the 1996 LLMC must denounce the 1976 LLMC. In addition there is the possibility that the old and the new regimes will cover too few States to have any significant effect on international procedural law. A transitional period for phasing out the old regime is therefore vital IACONFLEGAO\5(B)-2285 LEG/CONF .10/6(b)/2 In practical terms compulsory denunciation will mean that a limitation fund constituted in a 1976 LLMC State will not be recognised in a 1996 LLMC State and vice versa. In a number of cases, therefore, two global limitation funds will have to be established from the ground up which will result in an inefficient use of insurance and greater costs. Forum shopping will also be encouraged because the same incident will not be dealt with in the same way in States Parties to the 1996 LLMC as in States Parties to the 1976 LLMC. By creating a completely independent new Convention, intemational uniformity will be undermined, whereas by maintaining the traditional treaty relationship between the old and the revised LLMC regionalism will be avoided. IACONFLEGUO\6(B)-2