Comité Maritime International
International Sub-Committee on the Procedural Rules relating to Limitation of Liability in Maritime Law
February 26th, 2008
To
1. The Presidents of NMLAs
2. The Members of the I-SC on Procedural Rules
relating to Limitation of Liability
Chairman’s Report on Additional Issues
Introduction
During the Paris meeting of the I-SC it was decided to address to NMLAs certain additional questions [see Draft Guidelines (Draft February 2008), Section 6, commentary paragraph (c) and Section 14, commentary para (c)].
In addition a difference of opinion arose in connection with Sections 11, 12, 14 and 15 not in their entirety but only in relation to CLC and HNS Convention. The Revised Draft prepared by the Chairman (following consultation with the Paris meeting participants) attempted to use language neutral and not prejudicial to the interpretation of CLC and HNS especially in view of the mandate of the I-SC to deal only with procedural (and not substantive issues) and to avoid as far as possible interpretation of international conventions.
However this was not considered satisfactory by some participants as leaving ambiguities to the Guidelines and the problem should be faced (rather than avoided) and in clear language. For this reason although it was decided to circulate the Revised Draft Guidelines (Draft February 2008) it was also agreed to circulate additional material setting the issues not resolved in Paris. This material inevitably re-opens the issue of the mandate of the I-SC as well.
A. Stay of Limitation Procedure
[Draft Guideline Section 6, Guideline paras (c) and (g) and commentary para (c)]
The issues arising in connection with this matter are set in Section 6 of the Draft Guidelines and briefly it may be noted that:
1. The purpose of limitation of liability is not only to limit the liability of the person liable but also to allow expeditious release of arrested assets (e.g. vessel).
2. Claimants may challenge the right of the person liable to limit its liability and they may be ultimately successful.
3. In the meantime, however, the arrested assets have been released and the claimants may not find other assets to enforce their claims (while the question what happens to the fund is a separate issue dealt with in Section 7).
4. The question then raised is: Whether a stay is advisable to be granted to the limitation procedure (and to the release of assets) pending the challenge, if “there is no reasonable basis” for allowing limitation.
5. The question to NMLAs is:
(a)Does your national law provide for the possibility of stay under certain circumstances?
(b)Would you support a Guideline along the lines of Guideline 6 para(d)?
Note: The second question in Section 14 commentary para (c) relates to the issues dealt under C.
B. Time Limit for Claimants to Participate to Limitation Proceedings and consequences of late participation (Sections 11 and 12)
(Relation with CLC and HNS Convention)
1. The issue arising in connection with Sections 11 and 12 is whether States should set in their national legislation a time limit for Claimants to participate to the limitation proceedings (and the distribution of the fund) and if yes what are the consequences of late participation.
2. It seems that there was a general consensus that a time limit for participation should exist.
3. The issue which was not resolved was whether this time limit may be shorter than the time bar for the relevant claim.
4. This question is particularly relevant to CLC and HNS which set time limits (time bar) for the extinction of claims (a two tier time bar of three and six years under Article VIII of CLC and three and ten years under Article 37(1) and (3) of HNS Convention).
5. An analysis relating to this issue appears in Sections 11 and 12 of the draft Guidelines and below under D.
C.Claimants’ right to challenge (in the context of Limitation Proceedings) claims of other Claimants’ adjudicated in proceedings to which the Challenging Claimants did not participate (Sections 14 and 15)
(Relation with CLC and HNS Convention)
The relevant issues are set in Sections 14 and 15 of the Draft Guidelines.The outstanding questions relate to the CLC and the HNS Convention which have separate provisions on the jurisdiction of the Courts trying the merits of claims and for the recognition of judgments (CLC Article X and HNS Convention Article 38.2).
D.Discussion on Sections 11, 12, 14 and 15 in relation to CLC and HNS Convention
1. Sections 11 and 12 time bar under CLC and HNS and time limit to participate to limitation proceedings and consequences.
(a) The one view in this connection was that the time limit for participation to the Limitation Proceedings (and the distribution of the limitation fund) should/ can not be shorter than the time limit for the extinction of claims (time bar) provided for in CLC and HNS Convention (and/or in any event the loss of such time limit for participation to the limitation proceedings should not result in the loss of the right of the delayed claimant to participate to the distribution of the fund).
(b)Mr. Mans Jacobsson was kind to present this view in more detail in his attached memorandum.
(c)The opposite view expressedargued that if all known Claimants have presented their Claims and the Fund is ready for distribution, it is not reasonable to wait for six or ten years or even three years just in case some other Claimant may appear. On the basis of this view, the time limits (time bar) set in the Convention or in national legislation for the extinction of claims apply when no limitation has become effective. When a Fund is established an additional time limit comes into operation (i.e. the time limit for participation of the Claimants in the Limitation Proceedings) and although it is different from the time bar it may end up in effect (practically) to the limitation of actions i.e. to their extinction prior to their normal time bar. The situation is similar to bankruptcy in the context of which claims are extinguished prior to their usual time bar, if the Claimants do not participate to the bankruptcy proceedings timely.
2. Challenge of Claimants’ claims (in particular by other claimants who had not participated to the proceedings of the merits between a particular Claimant and the person liable).
(a) On the basis of one view once the CLC and the HNS Convention have specific provisions for the jurisdiction of the Courts and special provisions on the recognition of judgments, it is not correct/ allowed to reopen (in the context of limitation proceedings) issues on the merits of claims determined by Courts having jurisdiction.
(b) Mr. Mans Jacobsson was kind to present this view in more detail in the Memorandum attached.
(c) The opposite view was supporting that the other Claimants, who did not have the chance to participate to the proceedings between the Claimant and the person liable cannot be deprived of their right to have a judicial recourse against the Claim of another Claimant, which affects their own rights, i.e. the quantum of their Claims. This view was relying on the relative nature of res judicata (as between the parties) and interpreted Article IX of CLC and Article 38(2) of HNS as referring to recognition within the limits of res judicata. This view drew additional arguments from Article X of CLC and 40 of HNS which provide that a judgment is not recognized in other state parties, if obtained by fraud or without reasonable notice. The argument was that once even these conventions provide for certain -limited- grounds for the non recognition of the judgment, it is necessary to provide in the context of limitation proceedings a procedure for raising the objections on these grounds.
E.The scope of the Guidelines
1. The above issues relate to interpretation of the CLC and the HNS Convention and raised an additional issue as to the scope of the Guidelines.
2. There is no doubt that the scope of these Guidelines is to deal with the Procedural Rules Relating to Limitation of Liability and not to substantive issues of limitation of liability.
3. There are also decisions of the Executive Council of CMI directing the I-SC not to deal with Interpretation of International Conventions.
4. For this reason the position of the Chairman of the I-SC was that although barriers between procedural rules and substantive issues as well as between abstract Guidelines and interpretation of Conventions are not always clear and unambiguous, the I-SC had to avoid as far as possible substantive issues and interpretation of conventions issues and these Guidelines are subject and without prejudice to the provisions of any conventions, as clearly spelled out in the (general) Introduction of the Guidelines (especially in para 10 a, b and c).
5. However, special attention was drawn to conventions and especially CLC and HNS in Guidelines 11(b), 12, 14(a) and 15 without entering actual interpretation of conventions or the issue of time bar which in some countries is deemed to be a substantive issue.
6. Notwithstanding, the issue of the scope of the Guidelines may be revisited both by the Executive Council, NMLAs or the Conference.
7. However, the view of the Chairman is that the opening of these issues should not result in delay in the preparation of the Guidelines which have been envisaged as a project to be carried and finalized by CMI as the result of CMI work without the involvement of other international bodies (which may be affected by the interpretation of Conventions) which in the past did not give the chance to CMI to present a final product.
8. Further this project of Guidelines has been envisaged as an on going project which may be supplemented and expanded subsequently with additional guidelines even dealing with interpretation of Conventions.
9. Finally, the target is to finalize these Guidelines and vote (at least those which are ready) at the CMI Conference in Athens 2008.
F.Questions to the NMLAs
In view of the above the following questions should be answered by the NMLAs: (An effort is made to present the questions in a form permitting brief replies):
1. Should the Guidelines remain within their present scope i.e. only procedural and general (abstract) without reference (as far as possible) to substantive issues or interpretation of international conventions or their scope should be broaden?
(Reply: Yes or No).
2. If the answer to Question 1 is positive, should we delay the adoption of the Guidelines in their present form (i.e. abstract and only procedural without interpretation of Conventions) until the additional broader (substantive and/or interpretation issues) issues (e.g. those relating to CLC and HNS) are resolved or we should proceed with finalizing the Guidelines in their present form and then discuss the additional issues (and if agree incorporate them to the Guidelines)?
(Reply: proceed in the present form or broaden the scope now).
3. If the reply is broaden now, should the scope be broaden only in connection with the two issues of CLC and HNS set under B and C above or to other issues as well?
(Reply: to the two issues only or to other issues as well).
4. If the reply is to other issues as well, should such other issues relate only to interpretation of Conventions on procedural matters or we should expand to substantive limitation issues as well?
(Reply: interpretation on procedural issues only or substantive issues as well).
5. Regardless of your reply on the questions of procedure above what are your views on the two issues relating to CLC and HNS Convention, i.e.:
(a)Should/ may/ can the time limit for participation to the limitation proceedings and the distribution of the CLC and HNS Convention funds be shorter than the time limit for the extinction of claims set by these conventions?
(b)If the reply is positive (i.e. shorter time limit), should/ may/ can the consequence of late participation result in loss of its claim by the delayed Claimant?
(c)Are the Claimants entitled to challenge the claims of other Claimants in the context of the CLC and HNS limitation proceedings even if such claims have been adjudicated in proceedings between the other Claimants and the person liable before courts having jurisdiction pursuant to these (CLC and HNS) Conventions, as long as and to the extent that the challenging Claimants had not participated nor summoned to the proceedings between the other Claimant and the person liable?
G.The view of the Chairman of the I-SC
The views of the Chairman on the above questions are:
(a) Proceed with the Guidelines within their present scope (i.e. only procedural and general without entering interpretation of Conventions).
(b) Not expand the scope of our work now but discuss the two outstanding issues of CLC and HNS in parallel up to the Athens Conference.
(c) Discuss the same issues during the Athens Conference, but (due to time constrains) after completing the work on the Guidelines within their present scope, in order to avoid delay.
(d) Any decision on the two CLC and HNS issues to be incorporated in the Guidelines clarifying that this is the situation under CLC and HNS.
(e) Immediately after the Athens Conference expand the scope of the work and consider other/ additional procedural issues, including procedural issues arising from the interpretation of International Conventions.
(f) Not enter substantive issues of limitation of liability in the near future because this may upset and/or require amendments of International Conventions.
Needless to say that although I expressed my opinion on the above procedural matter (exactly because I deal with these issues for a considerable period of time and I have the main responsibility for bringing results), I am entirely open to the view which will prevail in the course of the pre-conference consultations and during the Conference.
Finally, from the above analysis it may be appreciated why these issues have been dealt separately from the main report. Members of the I-SC may also express their views but it should be appreciated that in this context those views will be taken into account which reflect the views of their respective NMLAs.
Looking forward to hearing from you.
Gr. J. Timagenis
1