2013-2014-2015

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

HOUSE OF REPRESENTATIVES

LIMITATION OF LIABILITY FOR MARITIME CLAIMS AMENDMENT BILL 2015

EXPLANATORY MEMORANDUM

(Circulated by authority of the Minister for Infrastructure and Regional Development

the Hon Warren Truss MP)

LIMITATION OF LIABILITY FOR MARITIME CLAIMS AMENDMENT BILL 2015

OUTLINE

The purpose of the Bill is to amend the Limitation of Liability for Maritime Claims Act 1989 (the LLMC Act) to implement amendments to the Protocol of 1996 to the Convention on Limitation of Liability for Maritime Claims, 1976 (1996 LLMC Protocol).   The Bill will increase the liability limits for ship owners and salvors for maritime claims relating to ship-sourced damage to more adequately reflect the costs of such incidents.    

Financial impact statement

Any increase in costs for shipping companies will be manageable because liability limits support the commercial availability of insurance to cover their risks.  Insurance for the global shipping industry is organised through insurance pools, whereby premiums respond to calls on those insurance pools, rather than fluctuating as a direct result of increases in liability limits. Premiums will increase in the aftermath of a significant incident, but shipping companies advise that channelling liability through a global, capped scheme supports the availability of insurance and the polluter pays principle.

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Limitation of Liability for Maritime Claims Amendment Bill 2015

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

The Bill will implement amendments to the Protocol of 1996 to the Convention on Limitation of Liability for Maritime Claims, 1976 (‘1996 LLMC Protocol’) which will increase the liability limits for ship owners and salvors for maritime claims relating to ship-sourced damage.  The amendments to the 1996 LLMC Protocol will enter into force automatically on 8 June 2015.

Australia is a party to the 1996 LLMC Protocol, and is also bound by the Convention on Limitation of Liability for Maritime Claims 1976 (‘LLMC Convention’) as amended by the Protocol, which allows a shipowner (including the charterer, manager and operator of the ship) or salvor to limit the total amount they can be required to pay for damage caused by the ship, the shipowner or the salvor. Limits are specified for two types of claims: those for loss of life or personal injury; and those for other claims, such as damage to ships, property or harbour works. The limits are based on the gross tonnage of the ship, with larger ships having higher limits. It is administered by the International Maritime Organization (IMO), a specialised agency of the United Nations.

Australia has implemented the 1996 LLMC Protocol domestically through the Limitation of Liability for Maritime Claims Act 1989 (Cth)(‘LLMC Act’).

Ensuring the LLMC liability limits are raised in Australia as soon as they enter into force will reduce the risk of having to seek an increase to the Protection of the Sea Levy in the event that the shipowner’s liability and/or insurance for an incident is insufficient or absent.

Human rights implications

This Bill does not engage any of the applicable rights or freedoms.

Conclusion

This Bill is compatible with human rights as it does not raise any human rights issues.

Minister for Infrastructure and Regional Development, the Hon Warren Truss MP

NOTES ON CLAUSES

Clause 1: Short Title

1.      Clause 1 is a formal provision specifying the title of the proposed Act.

Clause 2: Commencement

2.      Clause 2 provides that Schedule 1 of the Act will commence on the later of either the day this Act receives the Royal Assent and 8 June 2015.

SCHEDULE 1 – Amendments

Limitation of Liability for Maritime Claims Act 1989

Item 1-

3.      Item 1 substitutes the previous definition of Convention with revised wording to reflect current drafting practice.

Item 2 -

4.      Item 2 inserts in subsection 3(1) a definition for the 1996 Protocol as adopted by Resolution LEG.5 (99).

Item 3 -

5.      Item 3 of Schedule 1 inserts a proposed Schedule 2 into the LLMC Act to give effect to the amendments contained in Resolution LEG.5 (99) to the 1996 Protocol to amend the Convention on Limitation of Liability for Maritime Claims, 1976.  The amendments to the 1996 Protocol, which will increase the limitation amounts set out in Article 3 of the 1996 Protocol, were adopted by the IMO’s Legal Committee on 19 April 2012.  The liability limits are expressed in terms of units of account which are based on the Special Drawing Rights of the International Monetary Fund. 

6.      The financial liability for a medium sized vessel (50,000 Gross Tonnes) “in respect of claims for loss of life or personal injury” amounts to an increase of approximately $AUD 33,600,000.  A claim made “in regard to any other claims” amounts to an increase of approximately $AUD 16,800,000.  Please note, these figures have been prepared using conversion rates as at 5 February 2015. This increase is equivalent to approximately 50 per cent.  This provides a level of compensation in the case of an accident involving a ship while not making the limits so high that shipowners will not be able to obtain or afford insurance cover.