Convention On Limitation Of Liability For Maritime Claims 1976

Consequential loss claims for pure economic loss are subject to a fund established under the Convention on Limitation of Liability for Maritime Claims 1976

Qenos Pty Limited v Ship "APL Sydney" [2009] FCA 1090

Federal Court of Australia1 In Brief

Consequential loss claims in contract are covered by Article 2.1(a) of the 1976 Convention, even though the claimant has not suffered any direct "loss of or damage to property". They are therefore subject to a limitation fund established under the 1976 Convention. "Infringement of rights other than contractual rights" in Article 2.1(c) of the 1976 Convention extends beyond statutory or proprietary rights and includes claims in tort for pure economic loss, which are therefore also subject to a limitation fund. Background

On 13 December 2008, the ship "APL Sydney" was anchored in Port Phillip Bay waiting for a berth to become available in the Port of Melbourne. The ship drifted and dragged her anchor, which struck a submarine pipeline used to transport ethane gas. The supply of ethane gas through the pipeline was cut off and a number of businesses suffered loss as a result.

On 23 January 2009, the ship owner established a limitation fund under the Convention on Limitation of Liability for Maritime Claims 1976 (1976 Convention) in the sum of A$32,112,540. The 1976 Convention has the force of law in Australia by operation of the Limitation of Liability Maritime Claims Act 1989 (Cth).

By this time, four plaintiffs had commenced actions against the ship in negligence, seeking damages arising from the cutting off of the supply of ethane. It was clear that the aggregate of the claims (if proved) would significantly exceed the amount of the fund.

Two of the plaintiffs sought an order to the effect that their claims fell outside the 1976 Convention. Their claims were non-contractual claims for "pure economic loss" arising from the cutting off of the supply of ethane gas, which in turn led to interruption of production at their factories, the need to purchase alternate supplies of ethane and alternative materials, higher operating costs, loss of business, and miscellaneous expenses.

The plaintiffs contended that their claims did not fall within either Article 2.1(a) or 2.1(c) of the 1976 Convention.

Interpretation of the 1976 Convention Article 2.1 relevantly provides:

"1. Subject to articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

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