Full Federal Court confirms shipowners cannot limit liability for expenses associated with wreck removal
The Full Federal Court in Tasmanian Ports Corporation Pty Ltd v CSL Australia Pty Ltd (The Goliath) [2025] FCAFC 53 has recently shed light on the proper construction of Articles 2 and 18 of the Convention on Limitation of Liability for Maritime Claims 1976 (Convention), which is given force of law in Australia pursuant to the Limitation of Liability for Maritime Claims Act 1989 (Cth) (Maritime Limitation Act). The decision is of significance for the maritime industry because it affirms that, under Australian law, shipowners cannot limit their liability for costs associated with wreck removal.
The litigation initially arose following a collision between a vessel owned by CSL Australia Pty Ltd (CSL) with a wharf and two tugs owned by Tasmanian Ports Corporation Pty Ltd (Tasmanian Ports). The tugs sank and oil was spilt into the harbour. Tasmanian Ports commenced proceedings against CSL for breach of contract, negligence and public nuisance. CSL then commenced a limitation proceeding in which it sought a declaration that it was entitled to limit its liability under Article 2 of the Convention. Tasmanian Ports cross-claimed and sought to recover the costs associated with (inter alia) the removal of the wreck.
Article 2 of the Convention lists the types of claims which are subject to a limitation of liability, which relevantly include:
(a) claims in respect of … damage to property … occurring on broad or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom …
… (d) claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned.
Article 18 entitles state parties to the Convention to exclude the operation of (inter alia) subparagraph (d) of Article 2. Australia has relevantly excluded the operation of that subparagraph.
A key issue for the Full Federal Court was whether the claim by Tasmanian Ports for the costs associated with the removal of the wreck, which clearly falls within subparagraph (d) of Article 2, and which therefore cannot be made subject to a limitation of liability in Australia, can otherwise be made subject a limitation of liability on the basis that it falls within the scope of subparagraph (a) of Article 2.
The Court at first instance answered that question in the affirmative; it held that CSL could limit its liability under subparagraph (a), notwithstanding that the claim also fell within the scope of subparagraph (d). On appeal, the Full Federal Court reversed the decision of the primary judge, and held that claims which fall within the scope of one of the subparagraphs of Article 2 cannot be reframed or recharacterised to fit within another, as this would frustrate the object and purpose of Article 18.
The Full Court’s decision removes any doubt that shipowners and their insurers remain exposed to uncapped liability for expenses associated with wreck removal.
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