ABSTRACT.
The paper talks about the limitation of liability of a shipowner when a claim is issued against him. There are many rights provided to shipowners given by various laws. The shipowner’s good faith or legitimate action supports the right to restrict liability. Consequently, the restriction is a rebuttable presumption that needs to be disproven. The shipowner may also benefit financially from this limitation of liability since it will lower the claim’s potential value. Under certain conditions and with certain exceptions, the shipowner is given the right to limit liability under the merchant shipping act of 1958 and the Limitation of Liability for maritime claims, 1976. In a recent ruling, the Bombay High Court attempted to change the law by stating that the shipowners’ right to limit liability is unqualified and absolute.
Research question
Whether all claims issued against the shipowner are subjected to limitation of liability?
Merchant Shipping Act,1958
Part X provides a detailed explanation of the shipowner’s liability constraints.
The term claim has been defined under the act as (a) “claim” means a personal claim or property claim[1] . The claim against the shipowner is liable to a certain limit of liability granted by, section 325B i.e. claims involving the loss of life, personal injury, or loss or damage to property occurring on board, relating to the operation of the ship, or involving salvage work following a significant loss.
The person charged with each of these claims may apply to the high court for the initiation of a limitation fund for the total amount equaling the amounts specified in the convention or the rules adopted in this regard.
If the Fund is actually available for the benefit of the claimant, no person with a claim against it after it has been established shall have the right to exercise any right against any other assets of the owner.
The scope of application of this provision – is given under section 352E The provisions of this Part shall apply whenever any person referred to in sub-section (1) of section 352A seeks to limit his liability before the Court or seeks to procure the release of a ship or other property or the discharge of any guarantee given within the Indian jurisdiction but any person referred to in sub-section (1) of section 352A who at the time when the provisions under this Part are invoked before any Court in India does not have his habitual residence in India or does not have his principal place of business in India or any ship in relation to which the right of limitation is invoked or whose release is sought and which does not at the time specified above fly the flag of the State, which is a party to the Convention, is wholly excluded from the provisions of this Part[2]
Part XB provides for civil liability for damage caused by oil pollution. It contains provisions for the owner’s liability being limited, for the creation of a limitation fund, for the consolidation of claims and the distribution of funds among claimants, for the requirement of insurance or another form of financial guarantee, and for rule-making authority.
India is a signatory to the 1989 International Convention on Salvage. According to Section 402 of the MSA, the owner is responsible for compensating the salvor for services rendered in assisting a vessel, saving a cargo or piece of equipment from a vessel, or saving a wreck that is stranded, wrecked, or in distress at any location within the
India has ratified the Nairobi International Convention on the Removal of Wrecks, which was established in 2007. Therefore, the liability granted to a shipowner under Part XIII is comparable to that under the convention. In addition to the receiver’s fees, the owner is required to cover the costs incurred for the recovery, preservation, or safety of the wreck.
Removal of wrecks within port boundaries: Section 14 of the Indian Ports Act of 1908 holds the owner of any vessel liable for paying the costs associated with raising or removing a ship that has sunk, stranded, or been wrecked within port boundaries and is obstructing navigation.
With a few exceptions, Part XA of the MSA adopts the 1976 Convention on Limitation of Liability for Maritime Claims. In the case of the following claims, the shipowner may restrict his liability:
The summary of the recent judgment’s findings regarding shipowner liability is as follows, according to the provisions stated:
M.V. Nordlake GmBH vs. Union of India and Anr.
FACTS OF THE CASE
On January 30, 2011, as the Indian naval ship INS Vindhyagiri was departing the Mumbai Port, the Cypriot vessel M.V. Nordlake (the “Vessel”) collided with it.By filing an admiralty lawsuit in the Bombay High Court for a claim of INR 34 Crores (approximately) on account of damage to the naval vessel, the Union of India (“Navy”) sought and received an order for the arrest of the vessel. By depositing and securing the Navy’s claim for the full sum of INR 34 Crores in the Bombay High Court, the shipowners of the M.V. Nordlake (“Shipowner”) released themselves from the arrest.The Shipowner then started legal action to limit its liability. The Shipowner sought to limit its financial responsibility for the Navy’s claim to approximately INR 20 crores.Regardless of any conduct precluding limitation, the Bombay High Court upheld a shipowner’s absolute and unrestricted right to limit liability under the Limitation of Liability for Maritime Claims 1976 (“LLMC 76”). In India, the LLMC 76 has been formally adopted, though with significant changes and omissions.
ANALYSIS
Three legal issues have been clarified by this ruling.
- Regardless of any wrongdoing or negligence on the part of the shipowner, the Indian Merchant Shipping Act gives shipowners an absolute right to limit liability;
- A court may rule on the shipowner’s ability to limit liability and the creation of a limitation fund at the interlocutory stage without requiring a trial; and
- Whether the limits under LLMC 76 apply or the enhanced limits under the 1996 Protocol apply, the applicable regime for determining the limits of liability, or the amount of the limitation fund, is to be determined on the basis of the law in effect at the time the claim against the shipowner arose.
[3] The court has also concluded that the concept of conduct of barring limitation is not applicable in India. As well, According to the Court, all that needed to be considered when deciding the issue of liability limitation was whether the claim the Shipowner wanted to limit fell under Section 352A of the Merchant Shipping Act and the applicable system for calculating the amount of limitation.
The Court decided that rather than using the date on which the Shipowner may decide to file a lawsuit for creating a limitation fund, the relevant date for determining the applicable regime should be the date on which the claim against the Shipowner arose. This judgment has relied on the previous ruling Bombay High Court in Murmansk Shipping vs. Adani Power.
CONCLUSION
According to the provisions and rulings of the Bombay High Court. Given the exceptions of the law, it is observed that our country’s admiralty jurisdiction is vast, and the execution of the judiciary is precise and on point in consideration of both parties. The winner’s liability is unqualified and absolute.
[1] https://www.dgshipping.gov.in/WriteReadData/userfiles/file/MS%20Act,%201958%20-%20With%20Hyperlinks.pdf
[2] https://www.dgshipping.gov.in/WriteReadData/userfiles/file/MS%20Act,%201958%20-%20With%20Hyperlinks.pdf
[3] https://zba.co.in/knowhow/shipowners-right-to-limit-liability-is-absolute-and-unqualified/#
Written By – Steffi Desousa
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