An unusual, and often misunderstood, feature of maritime
law - arising under international convention and adopted into
Australian law - is the ability of shipowning and operating
interests to limit their liability in certain
situations.
The underlying policy is said to be to protect shipowners from
the sometimes disproportionate liability risks they face, and also
to provide a distinct limit that makes potentially spectacular
losses insurable.
The size of the limitation fund is calculated by reference to
the tonnage of the ship involved or, in relation to passenger
claims, to the number of passengers the ship is licensed to carry.
If claims made exceed the limitation fund, they are paid on a
proportionate basis. Most claims for injury and loss of life,
infringements of rights and damage to property are limitable.
Common claims that are not limitable include those for salvage, and
wreck removal.
