Unified Interpretation on the test for breaking the owner's right to limit liability under the IMO conventions

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A unified interpretation on the test for breaking the owner's right to limit liability under the IMO liability conventions was developed by the IMO Legal Committee to reflect consistent themes and principles highlighting the virtually unbreakable nature of the test.

At the 32nd regular session of the Assembly in December 2021, the respective States Parties to the Convention on Limitation of Liability for Maritime Claims, 1976 and to the Protocol of 1996 to amend the Convention on Limitation of Liability for Maritime Claims, 1976 adopted resolutions A.1163(32) and A.1164(32) on Interpretation of Article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976 and the States Parties to the Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969 adopted resolution A.1165(32) on Interpretation of Article 6 of the Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969 amending Article v(2) of the International Convention on Civil Liability for Oil Pollution Damage, 1969.

Background

A proposal for a Unified interpretation on the test for breaking the owner's right to limit liability under the IMO conventions was submitted to the 106th session of the Legal Committee (document LEG 106/13) to reaffirm the principles underlying the IMO liability and compensation Conventions, particularly with respect to the shipowner's right to limit liability, given (a) the fundamental importance of this right, which underpins the Conventions, and (b) that the long-term sustainability of the liability and compensation system depends upon uniform implementation, consistent with the intention of the Conventions.

The document recalled that the Legal Committee had developed, over time, a comprehensive framework of liability and compensation conventions for ship-source pollution damage and other maritime claims: the 1992 CLC Protocol and IOPC Fund Convention, on which subsequent conventions have been modelled; the 2001 Bunkers Convention; the 2007 Nairobi WRC; the 2010 HNS Protocol; and, in terms of limitation of liability, the 1996 LLMC Protocol. The document also noted that inconsistent application or interpretation, either through domestic implementing legislation or by decisions taken by national courts that differed in scope from the intention of the Conventions, could result in confusion and uncertainty as to the amounts payable under the Conventions and to an unequal treatment of claims. The document therefore proposed that the Committee considered a new work output for the development of unified interpretation on the test for breaking the owner's right to limit liability to ensure consistency among States Parties while continuing to recognize that the courts in States Parties would ultimately be the final arbiters.

Work was undertaken intersessionally before the 107th session of the Legal Committee to review the Travaux Préparatoires of the IMO liability and compensation conventions as well as other related historical papers and documents which identified consistent themes and principles fundamental to the operation of these conventions. The 107th session of the Legal Committee agreed that the following policy principles should be captured in the unified interpretation to reflect the virtually unbreakable nature of the test (document LEG 107/9):

  1. the wording was based on the principle of "unbreakability";
  2. the wording was intended to comprise a virtually unbreakable test;
  3. it was presented and adopted as part of a package that was coupled with higher limits of liability (than the 1957 LLMC Convention);
  4. it was linked to the insurability of the risk at reasonable cost and it was designed to link to the conduct of the shipowner under his insurance policy ("wilful misconduct") that would deprive him of the right to be indemnified  under the insurance policy;
  5. it did not constitute a threshold of "gross negligence", since that concept had been rejected for inclusion by States at the international conference; and
  6. proposals discussed at the diplomatic conference to extend the test to include servants of the carrier, the master or other crew members were rejected and, as a result, the behaviour of such parties was not considered to be relevant for the purposes of applying the test.

The Legal Committee also discussed the possible mechanisms for the adoption of a Unified Interpretation on the test, based on paragraphs 3(a) and (b) of article 31 of the Vienna Convention on the Law of Treaties, 1969, as well as on the work of the International Law Commission on subsequent agreements and subsequent practice in relation to the interpretation of treaties. Based on these conclusions, the Legal Committee noted that an interpretative resolution by the Parties, clearly expressing the agreement in substance among them, or their common understanding, regarding the interpretation of the test would constitute a subsequent agreement or subsequent practice under paragraph 3 of article 31 of the Vienna Convention (document LEG 107/18/2).

At its 108th session, a majority of the Legal Committee agreed that the Assembly was the forum for the adoption of the resolutions on the Unified Interpretation by States Parties to the IMO conventions. The Committee also decided that, as there were different States Parties to the different conventions in force, separate resolutions, one for each convention, would need to be adopted. The Committee further agreed that the wording of the resolutions should clearly reflect that the Unified Interpretation was an agreement of the States Parties to the relevant convention, present in the Assembly.

Consequently, the Committee approved three draft resolutions on Interpretation of article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976 and on Interpretation of article 6 of the Protocol of 1992 to Amend the International Convention on Civil Liability for Oil Pollution Damage, 1969, amending article V(2) of the International Convention on Civil Liability for Oil Pollution Damage, 1969 (document LEG 108/16/1).

At the 32nd regular session of the Assembly, the States Parties to the Convention on Limitation of Liability for Maritime Claims, 1976, present at that session of the Assembly adopted resolution A.1163(32) on Interpretation of article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976. The States Parties to the Protocol of 1996 to Amend the Convention on Limitation of Liability for Maritime Claims, 1976, present at that session of the Assembly adopted resolution A.1164(32) on Interpretation of article 4 of the Convention on Limitation of Liability for Maritime Claims, 1976. The States Parties to the Protocol of 1992 to Amend the International Convention on Civil Liability for Oil Pollution Damage, 1969, present at that session of the Assembly adopted resolution A.1165(32) on Interpretation of article 6 of the Protocol of 1992 to Amend the International Convention on Civil Liability for Oil Pollution Damage, 1969 amending article V(2) of the International Convention on Civil Liability for Oil Pollution Damage, 1969.