CMI International Sub-Committee on Limitation of Liability in Maritime Law

CMI International Sub-Committee on Limitation of Liability in Maritime Law REPORT ON THE FIRST MEETING London 25-26 March 2010 Following the 39 th CMI Conference in Athens, the International Sub-Committee on Limitation of Liability in Maritime Law held its first meeting under its new name and mandate in London on 25 th and 26 th March 2010. The meeting was attended by participants from Germany, Greece, Japan, Sweden and the United Kingdom. (A list of participants is attached.) Dr. Gregory Timagenis (Greece) chaired the meeting. The meeting prepared a list of questions and issues relating to the limitation of liability in maritime law for circulation and further consideration by the members of the I-SC and NMLAs. Gregory Timagenis Chairman of the International Sub-Committee on Limitation of Liability in Maritime Law

CMI International Sub-Committee on Limitation of Liability in Maritime Law List of Issues for circulation and further consideration prepared at the meeting of the I-SC in London 25-26 March 2010 ----------------------------- 1. Consequences of non participation to the Limitation Fund What are the consequences of not participating to the limitation fund? More specifically, in case of non-participation, can the claims be exercised against other assets of the owner? If the participation to the fund is optional and in case of no participation the claims against other assets are possible, what is the purpose/value of limitation of liability by the shipowner or any other person entitled to limit its liability? Comments LLMC In connection with LLMC, see Articles 13 (1), (2), (3) - Art. 13 (1) provides that "any person having made a claim against the fund shall be barred from exercising any right in respect of such claim against any other assets of a person by or on behalf of whom the fund has been constituted". - Art. 13 (2) provides that any other ship or other property of such person may or must be released (depending on the place where the fund was established). - Art. 13 (3) provides that paragraphs (1) and (2) "shall apply only if the claimant may bring a claim against the limitation fund before the court administering that fund". CLC In connection with CLC, see Articles 6(1), (2) and 3(4) - Art. 6 (1) provides that if a fund has been constituted, and the owners is entitled to limit liability, then (a) a claim for pollution damage may not be exercised against any other assets of the owner and (b) any ship or other property of the owner which has been arrested is released. - Art. 6 (2) provides that the foregoing applies "if the claimant has access to the court administering the fund". - Art. 3 (4) provides that no claim for pollution damage may be made against the owner otherwise than in accordance with this convention. HNSC In connection with HNSC see Articles 10 and 7 (4) These provisions are identical to the corresponding CLC provisions. National Legislation The same questions arise in any national legislation, even if no convention has been ratified.

2 Guidelines In this connection guidelines 12 and 13 of the "Guidelines in respect of Procedural Rules Relating to Limitation of Liability in Maritime Law" adopted at the 39th CMI Conference in Athens, Greece in October 2008 should be taken into account. 2. Time Limit for Filing Claims with the Limitation Fund None of the conventions provides any time limits for filing claims in the limitation proceedings. Guideline 12 provides that some time limit should exist for submitting claims in the Limitation Proceedings. In this connection the question arises whether it would be appropriate to co-ordinate the time limit for filing claims with time bar of the claims subject to limitation or may/should the time limit for participation to the limitation proceedings be shorter? Comments The reply to this question may extensively depend on the reply to Question no. 1. In order to reply to this question, the interest of limitation and expeditious termination of the limitation proceedings should be balanced with the claimants interests. If the reply is that claims which did not participate to limitation proceedings, can not be exercised otherwise, what other protection could be envisaged for claimants (e.g. a broader publication of proceedings commenced)? - CLC and HNSC provide for a two-tier time bar of three and six years under (Art. VIII of CLC) and ten years under Art. 37 (1) and (3) of HNSC. - LLMC does not have a time bar for the claims subject to limitation (the time bar of each claim is subject to the governing law of the respective claim). - Even the time bars established by CLC and HNSC are not fixed time limits because they may be extended by e.g. commencing proceedings. - In this connection Guideline 12 provides that: "(a) States should set in their national law a time limit, or give their courts the power to set such time limit, for the following actions by Claimants:... (iii) submitting Claims in the Limitation Proceedings. (b) In setting these time limits special attention should be paid to the relevant provisions of international conventions, including in particular the CLC, the HNS Convention and the Bunker Convention or any other applicable convention. In making interim and final distributions, due consideration shall be given to the possibility of damage arising after such distribution." 3. Limitation of Liability and Bankruptcy (a) What are the effects of bankruptcy on limitation of liability, if bankruptcy is declared [a] after the limitation or [b] before the limitation? Comments - After or before limitation means after of before the establishment of the fund (see Guideline 6(c) which provides that the Limitation of Liability becomes provisionally effective at the time of establishment of the Fund). - The preliminary view was that (a)if bankruptcy becomes effective prior to limitation, there is no room for limitation of liability and (b)if the bankruptcy becomes effective

3 after the limitation, the limitation fund is not affected (but relevant provisions should be explored). (b) Does the bankruptcy of one of the persons entitled to limitation for a particular incident affect the position of the others? (c) If the owner becomes bankrupt, is its liability insurer (e.g. P&I Club, especially if it becomes directly liable) entitled to limit liability? Comment: This seems to be the case under Art. 1 (6) LLMC, Art. V (11) CLC and Art. 9 [11] HNSC (d) Is a claimant entitled to participate in both the limitation fund and bankruptcy proceedings or not? 4. Limitation of Liability and Maritime Liens (a) Do maritime liens survive after limitation? Comment: Liens in several jurisdictions survive bankruptcy; do they also survive limitation of liability? (b) Do actions in rem, i.e. against the vessel, fall under Art. 1 and 2 of LLMC? (c) Is there a possibility of maritime liens in relation to pollution damage claims and, if the reply is positive, such liens survive limitation of liability? 5. Other issues (a) Should interim payments out of the limitation fund be permitted? if so, against a security or without security? This issue relates to the Questions 1 and 2. (b) Conflict of Conventions issues (see Art. XII and XIIbis CLC, Art. 42 HNSC, Art. 6 Bunker Convention) (c) Conflict of law issues (see Arts. 14 and 15 LLMC and Art. 15 of Rome II) (d) Jurisdiction, recognition and enforcement issues (in particular, see the ECJ decision Maersk Olje). (e) The rate at which interest on the limitation amount should accrue before and/or after the fund is established (see Arts. 14 and 11 LLMC). (f) Ships not measured under the 1969 Tonnage Convention. (g) The shipowner s right to limit liability vis-à-vis other persons (in particular charterers ).

4 6. Issues concerning LLMC only (a) Time and place where limitation proceedings can be initiated and the fund established [See LLMC Arts. 11(1) and 13(2)]. (b) Ships with dual passenger capacity. 7. Issues concerning CLC and HNSC only Claimants right to challenge (in the context of limitation proceedings) claims of other claimants adjudicated in proceedings to which the challenging claimants did not participate under the CLC and HNSC (Art. X CLC and Art. 40 HNSC). Comment: The issue to be resolved is the extent of recognition provided in Art. X of the CLC and Art. 40 of the HNSC i.e. whether it binds claimants which did not participate in the proceedings or only claimants, who participated in the proceedings. Guideline 15 does not solve this problem because the issue in question is the extent of recognition provided in Arts X CLC and 40 HNSC.

List of Participants to the First Meeting of the CMI International Sub-Committee on Limitation of Liability in Maritime Law (London 25-26 March 2010) ----------------- Fujita, Tomotaka (Japan) Hartenstein, Olaf (Germany) Jacobsson, Mans (Sweden) Ramming, Klaus (Germany) Taylor, Andrew (United Kingdom) Timagenis, Gregory (Greece)