As from 30 November 2016, the limits of liability for maritime claims under Section 185 of the Merchant Shipping Act 1995 increased by 51%. Statutory Instrument 2016 No. 1061 enacted an agreement reached by the IMO in April 2012 to amend the limits applicable under the 1996 Protocol to the Convention on Limitation of Liability for Maritime Claims 1976. The increase applies under English law to all merchant vessels, save for those with a gross tonnage less than 300GT.

The increase applies only to incidents occurring after 30 November 2016 (Section 185(2)(e) MSA 1995), but may lead to an increased exposure, in particular for collision liability underwriters. In real terms, using the example of a kamsarmax (82,000DWT / 45,000 GT), the change in the law has the following impact:

 

Physical Damage Fund (old limits):          US$22,626,496.00

Physical Damage Fund (new limits):        US$34,166,008.96 (basis IMF SDR rates on 17/02/2017)

 

Conversely, for those property underwriters who suffer losses as a result of a fire, collision, grounding or similar maritime incidents, the increase offers them the opportunity to make a more substantial recovery of their losses from those parties at fault. 

Any further increase will be automatic, and will no longer require enabling domestic legislation, although any increase will not be discussed at IMO level until 2020 at the earliest. However, those involved in such incidents should note that there remains a wide divergence of limitation regimes across the globe, and that opportunities remain for those involved in marine casualties and claims to seize jurisdiction in a favourable State to minimise their exposure or maximise their recovery, provided they take swift proactive steps to do so.

For further background and discussion of this increase, please see: http://www.hfw.com/UK-Government-to-enact-Order-increasing-the-limits-of-liability-November-2016