Significant Decision On Limitation Of Liability

The recent case of Qenos Pty Limited v Ship 'APL Sydney' [2009] FCA 1090 throws light on the issues of consequential loss claims for pure economic loss and the meaning of 'infringement of rights' under the Convention on Limitation of Liability for Maritime Claims 1976.

Background

The Convention on Limitation of Liability for Maritime Claims 1976 (1976 Convention) is enshrined in Australian law through the Limitation of Liability for Maritime Claims Act 1989 (Cth).

The 1976 Convention allows shipowners (which includes charterers, managers and operators) and salvors to limit their liability for major losses to an overall amount which is calculated by reference to the ship's tonnage. A shipowner is entitled to seek a declaration from a court limiting liability, and can then establish a limitation fund, which is administered in much the same way as are the remaining assets of a company in liquidation. Thus, if a limitation fund is established at say AU$10,000,000,