There are two distinct ways by which vessel owners can limit their liability for loss and damage caused through their act, default or default of their servants. The first is by package limitation under Hague Rules (see Carriage of Goods section) and the second is by limiting their liability on the basis of the tonnage of the ship. For limitation on ship’s tonnage, two regimes apply - one applicable in West Malaysia and the other in East Malaysia (the states of Sabah and Sarawak).
The 1976 Limitation Convention in West Malaysia
The International Convention on Limitation of Liability for Maritime Claims 1976 as amended by the Protocol of 1996 (The 1976 Limitation Convention) enacted through the Merchant Shipping (Amendment and Extension) Act 2011 applies in West Malaysia. The right of limitation under the 1976 Convention is also available to the charterer, manager and operator of a seagoing ship. Compensation is provided on a sliding scale, getting less in proportion to the greater amount of tonnage of the vessel, calculated on the basis of the Special drawing rights (SDRs). Liability can be limited in almost all cases unless a claimant can prove that the loss resulted from a personal act or omission of the owner committed with the intent to cause such loss or committed recklessly and with knowledge that such loss would probably result, which requires a very high burden of proof.
The limits of liability in respect of claims for loss of life or personal injury are 2 million SDRs for a ship not exceeding 2000 tons; for a ship in excess of this tonnage in addition (a) 800 SDRs, for each ton from 2,001 to 30,000 tons (b) 600 SDRs, for each ton from 30,001 to 70,000 tons, and (c) 400 SDRs, for each ton in excess of 70,000 tons.
The limits of liability for any other claims for a ship with tonnage not exceeding 2000 tons is are 1 million SDRs; for a ship in excess of this tonnage, in addition the following amount (a) 400 SDRs, for each ton from 2,001 to 30,000 (b) 300 units SDRs, for each ton from 30,001 to 70,000 and (c) 200 SDRs, for each ton in excess of 70,000 tons.
The 1957 Limitation Convention in Sabah and Sarawak
Sabah and Sarawak continue to apply the earlier International Convention relating to the Limitation of Liability of Sea Going Ships 1957 (The 1957 Limitation Convention) in their respective merchant shipping legislation. In order to avail itself of the defence of limitation of liability under the 1957 Convention the vessel owner must establish that the incident causing the loss and damage occurred without his actual fault or privity.
The information herein is for general guidance only, may have been superseded, circumstances may have changed and should not be relied upon for action. This does not in any way represent or replace professional legal advice which in each and every case must be obtained.