Maritime transport is important for both economic and commercial aspects of our lives today, as it is one of the main types of transportation method adopted worldwide. Despite the progress of air transport and the amount of goods transported by air, maritime transport still has the superiority in the field of transportation due to the large tonnage of ships, efficiency and the low cost of transportation as compared to transportation by air.
Ever since the Middle Ages, the shipping community have agreed on the importance of maritime transport and the principle of limitation of the ship-owners’ liability for the damages that may occur during the transportation period. With the improvement of the maritime transportation sector, increase of awareness in the field and the development of legislations and international treaties, more countries have adopted the principle of ship-owners’ limitation of liability.
The prominent limitation of shipowner’s liability is the limitation granted by law for the damages sustained to the cargo shipped according to the Marine Contract of Carriage. Whereas, there is another limitation that has been granted to the shipowners for the Maritime claims that may have taken place during the transportation period.
Consequently, we will explain hereunder the shipowner’s limits of liability for Maritime Claims pursuant to the Egyptian Maritime Law No. 8 for the year 1990 (EML 1990).
What is the Limitation of liability For Maritime Claims:
According to EML 1990 the shipowner shall be civilly liable for the acts of the master, seamen, pilot and any other person serving on the ship when such act is committed in the course, or because, of their duties. Article No. 81 of the said law allows the shipowner to limit their liability, even if the debt is in favour of the state or public sector, and if the damage arise from any of the following causes:
- The damages caused by the ship to the Harbour’s installation, dockyards, water courses, or navigational aids.
- Physical or material damages occurring on board the ship, or those connected directly with maritime navigation or the operation of the ship.
However, Article No. 82 of the said Maritime Law specifies six occasions, where limitation of liability shall not be applied, namely:
- Floating a sunken or stranded or deserted ship, lifting wrecks, cargo, and objects found on it.
- Salvaging the ship
- Participating in General Average
- Nuclear damage
- The rights of the ship’s master, crew and all other subordinates to the shipowner working on the ship or whose job is related to serving the ship. Such right is also determined for the successors and heirs of the said persons
- Damage resulting from oil pollution and contamination by other materials
Meanwhile, in the event that damages have occurred as a result of one of the aforementioned causes, the shipowner will be liable to compensate the injured party for the said damages which will be determined by the competent court without taking into consideration the shipowner’s limitation.
How to calculate the limitation according to EML 1990
The calculation of the ship-owner limitation of liability has been clarified in Article No. 83 from the aforesaid law as following:
- EGP 600,000 for the damage resulting from physical damages, in case the total tonnage of the vessel does not exceed 500 tons. However, if the total tonnage exceeds the said figure, the liability shall be increased by EGP 350 per ton in addition to the stipulated EGP. 600,000.
- EGP 300,000 for any other damages occurring for reasons other than physical damages, in case the total tonnage of the vessel does not exceed 500 tons. However, if the total tonnage of the vessel exceeds the said figure, the liability shall be increased by EGP 150 per ton in addition to the stipulated EGP. 300,000.
Who can benefit from the limitation
The shipowners are not the only party who has the right to limit their liability. Pursuant to the provisions of EML 1990, the limitation of liability can also be applied in respect of the ship’s operator, who is not the owner, charterer, manager, master or seaman in addition to other subordinates of the owner, operator, charterer or manager, as regards to the performance of their duties and according to the same conditions as those applicable to the owner, provided the liability of the owner, as well as that of the foregoing persons shall not exceed the limits set down in Article 83 with regard to the same accident.
The law also grants the right to apply limitation to the master or the seaman in case the proceedings are brought against them. As the master or the seamen may insist on applying the limitation, even when the accident resulting in damages was due to their personal fault.
The liability action against the shipowners and all interests shall lapse with the expiry of two years as of the date the act establishing the liability occurred (the date of incident).
Overview on the Carrier’s Legal Liability:
Most of the legal systems in the Middle East have adopted the concept that the carrier’s liability remains in force during the transportation period of the cargos and hence any damage that may occur in that period shall be the responsibility of the carrier without the need to prove the occurrence of damage on its part unless the carrier proves that the sustained damages has occurred as a result of a foreign reason such as the nature of the cargo, force majeure, a sudden accident or the shipper’s / the consignee’s fault or that the damage occurred prior to the loading operations or following the discharge bearing in the mind the carrier’s granted limitation of liability according to the Marine Contract of Carriage. Moreover, the local laws grant the carriers the right to limit their liability for the damages caused by the ship unless the accident has occurred due to the carrier’s personal fault, which should be proven by the claimant.
Finally, it is worth mentioning that Egypt has ratified the London Convention on Limitation of Liability for Maritime Claims (LLMC 1976), where the said convention has come into force in Egypt as of the first day of July, 1988.
Therefore, in case a claim is brought before the Egyptian Courts and involves an of the persons defined in the LLMC 1976 as parties to the convention, then the said person shall be entitled to seek the application of the provisions of the limitation of liability stipulated in the convention.