The Convention on Limitation of Liability for Maritime Claims (LLMC Convention) allows shipowners to limit their liability to pay compensation for general ship-sourced damage. The LLMC Convention applies to claims for loss of life and personal injury, as well as loss of or damage to property. It also applies to pollution damage where no other Convention applies. Currently the only other relevant Conventions which apply in Australia are:
- the International Convention on Civil Liability for Oil Pollution Damage and the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage which together establish a comprehensive liability and compensation regime applying to pollution damage resulting from the escape or discharge of oil from oil tankers; and
- the International Convention on Civil Liability for Bunker Oil Pollution Damage which establishes a liability and compensation regime applying to pollution damage resulting from the escape or discharge of bunker (or fuel) oil from ships other than oil tankers.
The LLMC Convention generally also applies to claims relating to wreck removal. However, along with nine other countries, Australia has lodged a reservation excluding the application of that part of the LLMC Convention. The effect of the reservation in Australia is that a shipowner is liable for all expenses associated with the removal of a wreck.
The LLMC Convention does not impose strict liability to pay compensation for damage on the shipowner. The amount of compensation that a court is able to award is limited by the LLMC Convention.
Under the LLMC Convention, the shipowner's liability limit is calculated based on the size of the ship. The liability limits set out in the LLMC Convention in respect of claims for property damage are as follows:
- one million Special Drawing Rights (SDR) for a ship with a gross tonnage not exceeding 2,000;
- for a ship with a gross tonnage in excess of 2,000, the following additional amount:
- for each ton from 2,001 to 30,000 tons, 400 SDR;
- for each ton from 30,001 to 70,000 tons, 300 SDR; and
- for each ton in excess of 70,000 tons, 200 SDR.
The liability limits in respect of claims for loss of life or personal injury are twice the limits that apply in respect of property claims.
There is a separate liability limit applying in respect of claims for loss of life or personal injury to passengers of a ship. In this case, the liability limit is 175,000 SDR multiplied by the number of passengers which the ship is authorised to carry.
There is no requirement for shipowners to gain and maintain insurance in the LLMC Convention. However, in Australia, Part IIIA of the Protection of the Sea (Civil Liability) Act 1981, requires ships entering or leaving Australian ports to be insured up to the limits in the LLMC Convention to cover the liability of the shipowner for pollution damage caused in Australia. Part IIIA does not apply where insurance is required by the International Convention on Civil Liability for Oil Pollution Damage or by the International Convention on Civil Liability for Bunker Oil Pollution Damage.
The LLMC Convention is implemented in Australian domestic legislation by the Limitation of Liability for Maritime Claims Act 1989.