MarIus

4.1 The LLMC’s wording and the policy considerations behind the LLMC art. 18 no. 1

The wording of the LLMC art. 2 no. 1 letters (a) and (d)-(e) has already been set out in section 1.1 above. When comparing this with the English translation of the NMC section 172 and section 172a,^{(1) Cf. section 3.3 above.} we see that the wording of these provisions is formulated in almost exactly the same way. It should come as no surprise therefore that these provisions should, in my opinion, be interpreted in the same way. Accordingly, in the collision scenario, B is entitled to declare his liability towards A limited under the LLMC art. 2 no. 1 letter (a), regardless of whether or not A’s claim for damages also includes wreck removal and other clean-up costs. Similarly as under the NMC, B’s liability towards A is based on the same causative event under the LLMC. There is no need to repeat my reasoning here, and I therefore to a large extent refer to the discussion in section 3.3 above. However, since the English version of the LLMC is the official version of the convention, our analysis of the wording should be more careful and detailed than the interpretation of the unofficial English version of the NMC.

Admittedly, the wording of the LLMC art. 2 no. 1 seemingly provides support for the “type of loss” approach, by referring to “(c)laims in respect of loss …” in letters (a)^{(2) Note that “loss” here also can refer to physically lost, cf. Berlingieri p. 60.}-(c), “… consequential loss resulting therefrom” in letter (a), and “… minimize loss for which the person liable may limit his liability” in letter (f). The reference to “loss”, when read together with “whatever the basis of liability” and art. 2 no. 2 from which it follows that “(c)laims set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for indemnity …” can be said to indicate that it is A’s type of loss that is decisive and not A’s type of claim. Consequently, when A makes his claim for damages against B for A’s wreck removal and clean-up costs, the losses are still of the same type, even though the legal basis is different. At first glance, the wording of the LLMC seemingly supports a construction where all costs and expenses related to wreck removal and clean-up fall under letter (d) and (e).

On the other hand, letters (d) and (e) do not speak of “loss” in relation to wreck removal and clean-up measures but “(c)laims in respect of …”. It is interesting to note that in the two provisions from which reservations can be made, the focus seems to be more on the “type of claim” than on the “type of loss”. This difference is, in my opinion, important. As we have seen above in section 3.3, when public authorities and other third party claimants (e.g. private owners of quays or basins) make a claim against A, this claim is based on the fact that vessel A is a wreck and/or has caused pollution, not on the preceding facts that caused vessel A to become a wreck. These claims can be made against A regardless of whether vessel A grounded due to navigational errors or a collision with B. Furthermore, this does not change depending on the legal basis for the third parties’ claims against A. A’s liability for wreck removal will typically be strict liability based on statute, but it is conceivable that claimants other than public authorities will need to base their claim on, for instance, negligence by A.^{(3) In Norway, both public authorities and private individuals are protected by the strict liability set out in the NPA.} A’s later claim against B, however, can only, as a consequence of the Brussels Collision Convention 1910, be based on “fault-based” liability.^{(4) Under Norwegian law: the NMC section 161.}

In addition to the text of the LLMC art. 2 no. 1 letter (d) and (e) referring to “claims” and not “losses”, we should not forget that the heading of art. 2 speaks of “Claims Subject to Limitation”.

Although the language of the convention is admittedly not entirely clear, in my opinion the language favours the “type of claim”-approach.

This view is in my opinion supported by the preparatory works to the LLMC. It should first be noted that the travaux préparatoires do not specifically deal with the issue at hand. Accordingly, little direct support for either view can be derived from the text of the preparatory works. However, what is clear from the preparatory works is that the member states wanted to avoid situations where a member state’s public authorities and/or other third parties end up footing the bill for wreck removal and clean-up measures, by letting the “polluting” shipowner limit his liability.^{(5) This is supported by the discussions related to the LLMC art. 6 no. 3, cf. Berlingieri pp. 203ff.} The perception that this public policy consideration was the motivating factor for letting member states make reservations against the LLMC art. 2 no. 1 letters (d) and (e) should be uncontroversial.^{(6) Cf. i.a. Griggs et. al. 2005 pp. 22ff, Williams 2007 pp. 294ff and Gutirrez 2011 pp. 101–102.} That we clearly know the underlying rationale, and therefore also the core cases falling under the LLMC art. 2 no. 1 letter (d) and (e), is of some significance when deciding whether A’s claim against B falls under these two provisions, or instead under the LLMC art. 2 no. 1 letter (a). Shipowners have a right to limit their liability under the LLMC. This system is, as we have seen, based on economic efficiency and the “general fairness”^{(7)I.e. not fairness in the individual case where liability is limited, but fairness in the sense that the likelihood of claimants having their losses covered in full is higher.} that is achieved by making shipowners’ liability insurable. When shipowners have this right, and the P&I insurance market is based on shipowners having this right, courts should in general be careful with expansive interpretations for situations that are not core cases. An expansive interpretation of the LLMC art. 2 no. 1 letters (d) and (e) obviously restricts shipowners’ right to limit their liability correspondingly, in accordance with the LLMC art. 2 no. 1 letter (a). The fact that we know the purpose behind letting member states make reservations against the LLMC art. 2 no. 1 letters (d) and (e), but strictly speaking, there is nothing on the issue at hand in the preparatory works, is in my opinion an argument in favour of an interpretation that supports the purpose behind the limitation system as such, rather than a conceived purpose of the LLMC art. 18 no 1. This should especially be the case when the aim of avoiding public authorities and other third parties footing the bill for wreck removal and clean-up measures is achieved through this interpretation.

From this brief review of the text of the convention and the preparatory works, it is understandable that various courts construct the convention differently. Neither the convention text, nor the preparatory works, clearly “dictate” the “type of claim” approach argued for in this article. As we shall see in section 4.2 below, three final appeal decisions from jurisdictions other than Norway, favour the “type of loss” approach. When I argue, however, that these should not be followed in the future, this view is based on the following points. First, the convention text distinguishes between claims. It is claims that shall be categorised, and that the legal basis for the claim (e.g. statute, tort or contract) is “irrelevant”, does not affect this. Although the convention text is not entirely clear, the language of letters (d) and (e), when read in isolation, supports this view. Secondly, the interpretation of the text should not undermine the purpose behind the limitation system. It is not evident that the purpose behind the LLMC art. 18 no. 1 is to allow A a separate wreck removal claim with the higher limits^{(8) Or unlimited, depending on the national legislation.} against B in our scenario 2. However, what is evident is that the purpose is to allow public authorities and other third parties affected by A’s “pollution” to have their full loss covered when making a claim for this against A. When this aim is achieved even where A’s claim against B “only” falls under the LLMC art. 2 no. 1 letter (a), this construction should be chosen, since it respects B’s right to limit his liability for the consequences of his operation of the ship.