Fazlina Sapuan: Increased limits of liability in Singapore effective 29 December 2019

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Singapore has recently implemented the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976).  As a result, with effect from 29 December 2019, Members can expect increased limits of liability for maritime claims.

The New Limits

The applicable limitation amount is typically calculated based on:

  • the gross tonnage of the vessel that is involved;
  • the applicable daily conversion rates for Special Drawing Rights (SDR). SDR is not a currency in itself but is a recognised monetary unit. The daily conversion rates for SDRs can be found on the International Monetary Fund (IMF) website.

Following on from Malaysia’s adoption of the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims of 1976 (as amended in 2012 and effective from 2015) (1996 Protocol) in 2014, Singapore  became a comparatively more popular jurisdiction to anchor a shipowners’ defence following a collision or an allision, due to the lower applicable limits of the LLMC 1976.

The Singapore Government has now announced that the 1996 Protocol came into law on the 29 December 2019, 12:01 AM. While the entry into force of the 1996 Protocol does not change Members’ right to limit their financial liabilities as per the usual course, Members can expect increased limits of liability for maritime claims going forward. The implementation of the 1996 Protocol does not apply in relation to any liability arising out of an occurrence which took place prior to 29 December 2019.

To illustrate the effect of the increased limits of liability, take the scenario of a crew death or personal injury claim involving a tug with a gross tonnage of 266 tons. Under the LLMC 1976, a shipowner can expect to be entitled to limit its liability to 333,000 SDR (or approx. US$ 458,403 / S$ 621,136*). Following the increase in limits under the 1996 Protocol, a shipowner’s liability would be 3,020,000 SDR (or approx. US$ 4,157,282 / S$ 5,632,286*). This is nearly a ten-fold increase.

If the same tug were to damage a buoy or hit a jetty, the LLMC 1976 limit would be 167,000 SDR (or approx. US$ 229,890 / S$ 311,455*) whereas the limit under the 1996 Protocol would be 1,510,000 SDR (or approx. US$ 2,078,642 / S$ 2,816,145*). Again, this is nearly a ten-fold increase.

Please click here to view a complete table comparing the old and new limits.

Exceptions

Members are advised that separate limits apply to harbour craft and port limit passenger vessels (i.e. crafts that are licensed to carry 12 passengers). As of the date of this publication, the applicable limits of liability for vessels registered as harbour craft remain unchanged and would still be as per the declared or insured value of hull and machinery (whichever is higher). The is subject to a minimum of S$ 200,000 in any one marine incident, plus additional coverage of S$ 500 per ton for every ton or part thereof above 300 GT.

Different limits may also apply for registered Port Limit Passenger Vessels licensed to carry more than 12 passengers, Port Limit Tankers and Oil Barges (in cases where there has been potential or actual oil pollution resulting from the discharge or escape of oil).

While the increased limits put Singapore on a par with other signatories of the 1996 Protocol, Members now face significantly more financial exposure arising out of maritime incidents. Members can be reassured by the fact that the limitation regime remains practically unbreakable and that the right to limit is almost a certainty in most cases.

Please contact the Club for further information concerning the limits of liability for your vessels.

 

*Exchange rate as at 24 December 2019