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Limitation of liability in Hong Kong: Breaking News, October 2017

On 4 December 2017, Hong Kong will apply the International Maritime Organisation's latest amendment to the limits of liability under the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims, 1976 (the 1976 Convention). These amendments will significantly increase the limits of liability from those currently applicable under Hong Kong law.

The provisions of the 1976 Convention set out in Schedule 2 of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap.434) have the force of law in Hong Kong and under section 28 of the Ordinance, the Chief Executive in Council has the power to amend Schedule 2 in accordance with any revision to the 1976 Convention or to any protocol to the 1976 Convention which applies in Hong Kong from time to time.

Following a public consultation, the amendments were published in the Gazette on 6 October 2017 and, on 4 December 2017, the following revised limits will apply:

In respect of loss of life or personal injury claims, for ships with a tonnage not exceeding 2,000 tons the new limit will be 3.02 million SDRs (up from 2 million SDRs) plus the following additional amounts for larger vessels:

  • For each ton from 2,001 to 30,000 tons, 1,208 SDRs (up from 800 SDRs)
  • For each ton from 30,001 to 70,000 tons, 906 SDRs (up from 600 SDRs)
  • For each ton in excess of 70,000 tons, 604 SDRs (up from 400 SDRs).

In respect of any other claims, for ships with a tonnage not exceeding 2,000 tons the new limit will be 1.51 million SDRs (up from 1 million SDRs) plus the following additional amounts for larger vessels

  • For each ton from 2,001 to 30,000 tons, 604 SDRs (up from 400 SDRs)
  • For each ton from 30,001 to 70,000 tons, 453 SDRs (up from 300 SDRs)
  • For each ton in excess of 70,000 tons, 302 SDRs (up from 200 SDRs).

We set out below a comparison of the original 1976 Convention limits, the original 1996 Protocol limits and the revised 1996 Protocol limits based on a handysize vessel with gross tonnage of 32,000:

LIMIT OF LIABILITY FOR LOSS OF LIFE/PERSONAL INJURY LIMIT OF LIABILITY FOR OTHER CLAIMS
1976 Convention 1996 Protocol 1996 Protocol (revised) 1976 Convention 1996 Protocol 1996 Protocol (revised)
USD15,606,588 USD36,078,080 USD54,477,900 USD7,530,595 USD18,039,040 USD27,238,950

* Using SDR Rate on 18 October 2017 of USD 1.4093 : 1 SDR

What does this mean for Hong Kong?

The adoption of the amended 1996 Protocol limits will bring Hong Kong in line with the limits in force in the United Kingdom. The amended limits will be significantly higher than those in force in Singapore (which still applies the original 1976 Convention limits) and mainland China (which, although not a party to the 1976 Convention, has incorporated into its domestic law the original 1976 limitation of liability computation).

Shipowners and their insurers (as well as charterers, managers, operators and salvors) should all be aware of the opportunities that exist to limit their liability for maritime claims in these different jurisdictions.

Unlike in the United Kingdom, where section 185(2)(c) of the Merchant Shipping Act 1995 expressly provides that the revised limits would not apply to rights or liabilities arising out of an occurrence which took place before the day on which the revised limits came into force, the Hong Kong legislation is silent on the point.

For more information, please contact the authors of this briefing:

George Lamplough
Partner, Hong Kong
T +852 3983 7776
E george.lamplough @hfw.com

Thomas Morgan
Registered Foreign Lawyer, Hong Kong
T +852 3983 7657
E thomas.morgan@hfw.com

Research conducted by Ed Brown-Humes, Trainee Solicitor.

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