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Court of Final Appeal determines the scope of limitations of liability under the Convention on Limitation of Liability for Maritime Claims 1976

24 Aug 2023

In Perusahaan Perseroan v. Trevaskis and Ors (“The Star Centurion”) [2023] HKCFA 20, the Hong Kong Court of Final Appeal (“CFA”) considered the scope of the limitations of liability under Article 2 of the Convention on Limitation of Liability for Maritime Claims 1976 (“Convention”). The decision provides crucial guidance, both on the interpretation of the Convention, and more generally on the relevance of the relationship between general and specific provisions when interpreting an instrument as a coherent whole.

The proceedings arose out of a collision between the Appellant’s ship and the Respondents’ ship while the latter was anchored in Indonesian waters, resulting in the sinking and total loss of the Respondents’ ship. The Indonesian Ministry of Transportation issued a wreck removal order requiring the Respondents to raise and remove the wreck. It was undisputed that the Appellant was wholly responsible for the collision.

The Appellant then started these proceedings in Hong Kong against the Respondents under the Convention, seeking to limit its liability for – among other things – the costs of removing the wreck in Indonesia (“Wreck Removal Claims”). Article 2(1)(d) of the Convention provided that claims in respect of wreck removal were subject to limitation. Disapplication of Article 2(1)(d) was expressly permitted by Article 18(1) of the Convention. In Hong Kong, Article 2(1)(d) was disapplied by Section 15 of the Merchant Shipping (Limitation of Shipowners Liability) Ordinance (Cap. 434) (“Ordinance”), which incorporated the Convention into Hong Kong law.

The Appellant argued that its liability for the Wreck Removal Claims should be limited as those were claims for “consequential loss resulting” from “damage to property” within Article 2(1)(a). Conversely, the Respondents argued that those claims are not limitable by reason of the disapplication of Article 2(1)(d). The CFA had to decide if limitation was available given the two competing provisions.

Construing the Convention, the CFA unanimously held that no limitation not available for Wreck Removal Claims.

First, the Convention was to be interpreted as a coherent whole, to give full effect to the ordinary meaning of the words used in their context and in light of its evident object and purpose. Article 2(1) sets out a range of categories for which limitation is available, based on the kind of loss suffered rather than the basis on which a particular claim is brought.

Within these categories, Article 2(1)(a) provides a general limitation – among others – for consequential losses arising out of damage to property. Article 2(1)(d), on the other hand, was expressly and specifically limited to a particular kind of loss: that arising from claims for wreck removal expenses. That Article 18 permitted the disapplication of the more specific losses covered by Article 2(1)(d), but not the more general losses covered by Article 2(1)(a), meant that it would be incoherent for the Article 2(1)(a) limitation to apply to wreck removal claims covered by Article 2(1)(d).

Second, the CFA rejected the Appellant’s alternative argument that Article 2(1)(d) applied only to claims by harbour authorities, and their contention that there was no overlap with Article 2(1)(a). It held that there was no basis for reading that qualification into Article 2(1)(d), which was expressed in comprehensive language. This was particularly so as the framework in Article 2(1), which was not concerned with the identity of a claimant or the basis on which a claim is brought.

Of more general significance, the CFA judgment in the Star Centurion illustrates the relationship between general and more specific provisions of an instrument. The maxim that general provisions do not overrule specific provisions (generalia specialibus non derogant) is essential to the process of construing an instrument as a coherent whole, and will likely operate whether or not the specific provision is expressed as an exception to the general provision.

Memebrs acted for the successful Respondents in the Court of Final Appeal and below
Members acted for the Appellant
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