Article by Arthur M. Boal
Limitation of the liability of the shipowner is a very old principle. It has been in use in one form or another in practically every maritime country. It was adopted by the courts of Europe in the Middle Ages as a principle based on the usage and custom of the industry. It was based upon the theory that every voyage was a venture and the master of the ship was in control of that venture. He purchased supplies, he made contracts for transportation, he issued bills of lading and, because of the slowness of communications, he had very little contact with the vessel's owners. At the end of the voyage the owner was liable for all contracts made by the master within the scope of his authority and for all torts committed by him in the exercise of his duties as master. The owner could limit his liabilities to his interest in the venture and could stand clear by surrendering his interest in the vessel and her freights. If the vessel was a total loss his liabilities were extinguished by that loss. This was somewhat like making the voyage the operation of a single corporation.
The courts of England and of the United States did not adopt this principle as a matter of law. Judge Ware stated in The Rebecca:
It is objected that this is a case of the first impression, and that the reports furnish us with no decision in point. The reason has already been given, why the English reports furnish no case. The common law courts cannot give the remedy, and they will not allow the court of admiralty to take cognizance of the case.
Judge Ware reviewed the history of limitation of liability and his opinion has been referred to by the Supreme Court of the United States in a number of cases, always with approval. InThe Scotland, Mr. Justice Bradley said:
In the case of Norwich Company v. Wright, . . . we had occasion to state that the general maritime law of Europe only charges innocent owners to the extent of their interest in the ship for the acts of the master and crew, and that if the ship is lost their liability is at an end. This rule is laid down in several places in the ancient code called the Consolato del Mare, and in many other authorities which are quoted and commented upon by Judge Ware in the case of The Rebecca . . .; and it is specifically formulated in various national ordinances and codes, amongst others, in the Marine Ordinance of Louis XIV., adopted in 1681. Emerigon, in his treatise of Contracts "a la Grosse," says: "The owners of the ship are bound in solidum by everything which the captain does in the course of the voyage for the promotion of the voyage. . . . But this action in solidum does not exist against the owners farther than according to the interest which they have in the body of the ship; hence, if the ship perish, or if they abandon their interest, they are no longer liable for anything. It is thus that the maritime laws of the Middle Age have directed; such is the law which is observed in the North; and such is the regulation of our own ordinance": and he refers to the Consolato and other authorities. The text of the French ordinance, which is regarded as merely formulating the old customary law, is as follows: "The owners of ships are responsible for the acts of the master, but they become discharged therefrom by abandoning the ship and freight."
But whilst this is the rule of the general maritime law of Europe, it was not received as law in England, nor in this country, until made so by statute. The English statutes, indeed, have not yet adopted, to its full extent, the maritime law on this subject. They make the owners responsible to the value of ship and freight at the time of the injury (that is, immediately before the injury), although the ship be destroyed, or injured by the same act, or afterwards in the same voyage; whilst our law adopts the maritime rule of graduating the liability by the value of the ship after the injury, as she comes back into port, and the freight actually earned; and enables the owners to avoid all responsibility by giving up ship and freight, if still in existence, in whatever condition the ship may be; and, without such surrender, subjects them only to a responsibility equivalent to the value of the ship and freight as rescued from the disaster.
The Comite Maritime International (CMI), after its organization in 1898, began the work of developing international conventions in an effort to bring about as much uniformity as possible in the field of maritime law. The CMI appointed a committee of very able lawyers to review the law on limitation of shipowners' liability. That committee had a number of meetings over a period of years and prepared a draft for consideration by a diplomatic conference. That committee considered the law as it existed on the continent of Europe and in England at that time as follows:
1. English law does not take any account of the differences of value between the various classes of ships. The limit of liability is ne varietur fixed as £ 8 (or £ 15 in the case of personal injury) per gross ton. The continental system is based upon the actual value of the ship, including the pending freight:
2. English law settles the questions of liability per accident—whereas the continental legislation does so per voyage:
3. English law fixed a lump sum, due in all cases, whatever may be the fate of the ship;—whereas the continental system takes into account the sea-damage. This opposition of the two systems has been expressed by the alternative of the value AFTER the acccident and the value BEFORE the accident.
4. With regard to the claims subject to the limited liability, English law confines them to damage caused by default or negligence in the navigation or management of the ship. The continental system includes the contracts entered into by the shipowner whenever the carrying out of such contracts comes within the legal capacities of the master.
The committee came up with a draft of a convention in 1913. Nothing was done in reference to it until the plenary session of the CMI in 1921. It was thereafter submitted to the Diplomatic Conference held in Brussels in 1922 and 1924. A Convention was adopted in 1924, another in 1957, and a third in 1976. None of the three have been ratified by the United States. These three Conventions will be reviewed and compared subject by subject.
About the Author
Arthur M. Boal. J.D., Harvard University Law School. Member of the firm of Boal, Doti & Larsen, New York. Former President of the Maritime Law Association of the United States (1958-1960). Member, Bureau Permanent of the Comite Maritime International; Vice President of the Comite Maritime International.
Citation
53 Tul. L. Rev. 1277 (1979)