LLMC Increases - ICS Supports IMO Agreement

The International Chamber of Shipping (ICS), which represents all sectors and trades and over 80% of the global shipping industry, and leads shipowner representation at the International Maritime Organization (IMO) Legal Committee, has expressed strong support for the agreement reached by IMO this week to increase the limits of liability under the Limitation of Liability for Maritime Claims Convention 1996 (LLMC), by 51%.

In addition to general maritime claims, the new LLMC limits, which will come into effect in three years’ time, will apply to claims under IMO Conventions governing liabilities for bunker spills (other than claims covered by the Civil Liability Convention) and wreck removal once the Nairobi Convention enters into force.

ICS Secretary General, Peter Hinchliffe remarked: “Throughout the debate at IMO over the past two years ICS has observed that the industry was open to a discussion of increases, but that these had to be based on agreed criteria, namely claims history, inflation, and the effect on the cost of insurance. In the event, the final increases agreed by IMO seem to be a reasonable outcome.”

He added: “It remains to be seen what economic impact the new limits will have on the industry after they come into effect in 2015. However, we hope that the increases will help ensure that the principle of limitation of liability will be maintained, which is vital if shipowners are to continue to have access to affordable insurance. It is also hoped that the new limits will not deter less developed nations from subscribing to the LLMC.”

ICS originally had questions as to whether any increases were justified in view of statistics compiled by the International Group of P&I Clubs which showed that only a small number of claims had not been compensated fully under the present LLMC limits. However, following the ‘Pacific Adventurer’ bunker oil spill in Queensland in 2009, where the clean-up costs were thought to have exceeded the applicable limitation amount, ICS accepted that the large number of governments that had requested IMO to review the limits meant that some level of increase was never in doubt.