maritime codes such as the Rôles d’Oleron and the Consolato del Mare and became
entrenched in national legislation of the European Continent such as the Swedish
Maritime Code of 1667 and a French Ordinance of 1681.
5 In 1733, English shipowner’s made a petition to Parliament which resulted in the enactment of the first
legislation in that jurisdiction on limitation of liability.
6 In contemporary times, the
notion of limitation of liability has been entrenched in international convention law
and given effect through national legislation of state parties.
3 Basic Characteristics of Limitation of Liability
Among several other facets to this phenomenon originally peculiar to shipping is that
it has characteristically been treated not as a legal right but rather as a privilege
emanating from a consideration of public policy. An oft-quoted dictum of the
inimitable Lord Denning M.R. stated in The Bramley Moore
7 is that “there is not
much justice in this rule; but limitation of liability is not a matter of justice, it is a rule
of public policy which has its origin in history and its justification in convenience”.
In The Amalia,
8 the great English Admiralty judge Dr. Lushington expressed a
similar view regarding limitation of liability, that it was driven by the needs of
public policy. An outcrop of this observation is that limitation of liability is an
exception to the general rule of restitutio in integrum under which a liable party is
required to pay restitution in full to the party who has suffered loss, damage or
injury.
9
A related observation is that since the inception of this phenomenon, a shipowner’s limitation of liability was based on the value of his ship which served as a
natural limitation. In other words, a shipowner could not be liable for any amount
greater than the value of his ship. In bygone times, size dictated value and size was
denoted by the ship’s tonnage. Even to this day, the standard for computation of the
maximum amount for which the shipowner can be liable is the tonnage of his ship.
But it is fallacious to conclude that size dictates value anymore. There are relatively
smaller vessels like luxury yachts which could quite conceivably command a higher
value than a conventional merchant ship. Aside from tonnage as a parameter, in
appropriate circumstances, there are such phenomena as package limitation relating
to cargo found in carriage of goods conventions. Limitation of liability in respect of
carriage of passengers is treated differently as is limitation with respect to shipsource pollution and nuclear damage through their respective conventions. As
mentioned above, all manner of limitations not falling under these specific subject
5 Meeson and Kimbell (2011), supra note 3, p. 284.
6 Responsibility of Shipowners’ Act, 7 Geo II, c. 15.
7 [1963 ] 2 Lloyd’s Rep. 429.
8 (1863), Br. & Lush151; 176 E.R. 323.
9 Mukherjee (2009), supra, note 1, p. 42.
Liability Insurer’s Right to Limit Liability for Maritime Claims:. . .
659
entrenched in national legislation of the European Continent such as the Swedish
Maritime Code of 1667 and a French Ordinance of 1681.
5 In 1733, English shipowner’s made a petition to Parliament which resulted in the enactment of the first
legislation in that jurisdiction on limitation of liability.
6 In contemporary times, the
notion of limitation of liability has been entrenched in international convention law
and given effect through national legislation of state parties.
3 Basic Characteristics of Limitation of Liability
Among several other facets to this phenomenon originally peculiar to shipping is that
it has characteristically been treated not as a legal right but rather as a privilege
emanating from a consideration of public policy. An oft-quoted dictum of the
inimitable Lord Denning M.R. stated in The Bramley Moore
7 is that “there is not
much justice in this rule; but limitation of liability is not a matter of justice, it is a rule
of public policy which has its origin in history and its justification in convenience”.
In The Amalia,
8 the great English Admiralty judge Dr. Lushington expressed a
similar view regarding limitation of liability, that it was driven by the needs of
public policy. An outcrop of this observation is that limitation of liability is an
exception to the general rule of restitutio in integrum under which a liable party is
required to pay restitution in full to the party who has suffered loss, damage or
injury.
9
A related observation is that since the inception of this phenomenon, a shipowner’s limitation of liability was based on the value of his ship which served as a
natural limitation. In other words, a shipowner could not be liable for any amount
greater than the value of his ship. In bygone times, size dictated value and size was
denoted by the ship’s tonnage. Even to this day, the standard for computation of the
maximum amount for which the shipowner can be liable is the tonnage of his ship.
But it is fallacious to conclude that size dictates value anymore. There are relatively
smaller vessels like luxury yachts which could quite conceivably command a higher
value than a conventional merchant ship. Aside from tonnage as a parameter, in
appropriate circumstances, there are such phenomena as package limitation relating
to cargo found in carriage of goods conventions. Limitation of liability in respect of
carriage of passengers is treated differently as is limitation with respect to shipsource pollution and nuclear damage through their respective conventions. As
mentioned above, all manner of limitations not falling under these specific subject
5 Meeson and Kimbell (2011), supra note 3, p. 284.
6 Responsibility of Shipowners’ Act, 7 Geo II, c. 15.
7 [1963 ] 2 Lloyd’s Rep. 429.
8 (1863), Br. & Lush151; 176 E.R. 323.
9 Mukherjee (2009), supra, note 1, p. 42.
Liability Insurer’s Right to Limit Liability for Maritime Claims:. . .
659