Oil

Article 2 of the 1976 Convention sets out the types of claims for which limitation may be sought. The previous pre-condition that they must be ‘acts, neglects or defaults in the navigation or management of the ship’ has been replaced by the 1976 Convention and now is ‘loss or damage occurring on board or in direct connection with the operation of the ship…’ Claims in respect of wreck removal are included [Article 2 (d)] and destruction or rendering harmless of the cargo [Article 2 (e)]. Article 3 sets out the claims which are excluded from limitations under the 1976 Convention: Claims for salvage award or General Average contribution. Oil pollution claims (these being dealt with by CLC – see Lesson Six). Nuclear damage. Claims by servants of the shipowner or salvor whose duties are connected with the ship or salvage operations. The first sub-paragraph of Article 3 is illustrated by The Breydon Merchant (1992). The vessel Breydon Merchant suffered a serious fire in her engine room and salvors were engaged. The shipowners sought a decree limiting their liability under the 1976 Convention. Cargo-owners argued that the vessel was unseaworthy and their claim for damages, including a salvage contribution, was not subject to limitation because salvage claims were excluded by Article 3. Held: that cargo-owners’ claim was not one for salvage but for damages for breach of contract. One element in the assessment of damages would be cargo’s contribution to salvage. Article 2 of the Convention provides that shipowners can limit their liability for various claims, including loss of or damage to property occurring on board, and consequential loss ‘whatever the basis of liability may be’. It did not matter whether shipowners’ liability arose in contract, tort or by statute. The shipowners could limit liability for the claim by cargo-owners arising from their breach of contract.