About 70 to 80% of the goods we buy and use as Canadians are brought to us by ship. We depend on marine shipping for our economy and way of life. When you take into account the amount of goods that are carried by water, it becomes easy to understand the role that limiting shipowner liability plays in supporting maritime trade and our economy.
- Why protect maritime trade?
- Why limit liability?
- Who can limit their liability?
- What is a maritime claim?
- What are the limits of liability?
- What if a ship is damaged?
Why protect maritime trade?
Marine shipping contributes around $30 billion to Canada’s economy every year. Canadian businesses need access to world markets and they need marine shipping to get their products to other countries. About 80% of Canada’s marine trade is with countries outside of North America. Marine transportation is also often the only way to supply remote Canadian communities that rely on vessels for essential goods.
Why limit liability?
“Liable” means responsible by law. Here, liability refers to how much money a shipowner could be responsible to pay if they’re involved in an incident at sea.
Limiting the liability of shipowners lets them maintain insurance coverage and helps make their costs more predictable. It also helps people affected by of a marine incident by making sure that shipowners have money available to compensate for losses and damages. It can help speed up the process, without forcing those affected to go through a long court case.
To be compensated for losses or damages, people affected by a marine incident in Canadian waters have 1 to 3 years from the date of the incident, depending on the type of incident, to submit a claim against the shipowner.
In Canada, the International Maritime Organization’s 1996 protocol to the 1976 Convention on Limitation of Liability for Maritime Claims is part of Canada’s Marine Liability Act. It provides a legal system for limiting shipowner liability.
If a vessel has an incident in Canadian waters, the owner can seek to limit their liability under the Convention, whether a claim is for:
- death
- personal injury
- property damage
Both the Marine Liability Act and Convention apply to ships in Canadian waters up to 200 nautical miles offshore.
Who can limit their liability?
Under the Convention, shipowners and salvors can limit their liability from a maritime claim.
‘Shipowner’ includes the:
- owner
- charterer
- manager, or
- operator of a seagoing ship
A salvor is any person that provides services connected with salvage operations, like:
- raising a ship
- removing a ship
- destroying a ship, or
- rendering a ship harmless
If it’s proven that loss or damage resulted from a shipowner or salvor’s actions, or omission, committed recklessly, with intent to cause a loss, or with knowledge that the loss was likely, then their right to limit their liability could be broken.
What is a maritime claim?
Claims for compensation under the Convention are known as maritime claims. These include claims for:
- death or personal injury of passengers, not covered by Part 4 of Marine Liability Act, including people:
- on board a pleasure craft
- participating in adventure tourism
- on manually propelled vessels and
- training to sail
- loss or damage to property and infrastructure
Related claims could include claims for:
- a loss of rights (other than contractual rights)
- damage caused by removing, destroying, or securing cargo on a ship
- steps taken by someone who isn’t liable to avoid or reduce losses
- losses caused by actions taken to limit losses or damage
- anything that is or has been on board a ship
Claims that are not limited
The Convention does not limit claims that are:
- for oil pollution damageFootnote 1
- for nuclear damage
- made by ‘servants’, heirs and dependents, whose duties relate to the ship or the salvage operations
- against the shipowner and relate to raising, removing, destroying or rendering harmless a ship which is:
- sunk
- wrecked
- stranded or abandonedFootnote 2
What are the limits of liability?
Shipowners can limit their liability based on the size of their ship.
Limit of liability for property damage
Limit of liability for property damage
Shipowners can limit their liability based on the size of their ship.
| Gross Tonnage of Vessel | Amount of Insurance Needed* |
|---|---|
| Ships less than 300 | $500,000 |
| Ships between 300 and 2,000 | $2.72 million |
| Ships between 2,000 and 30,000 | +$1,086 more per tonne |
| Ships between 30,000 and 70,000 | +$815 more per tonne |
| Ships above 70,000 | +$543 more per tonne |
*These values are in Canadian dollars. They were calculated based on Special Drawing Rights, which is a unit of account created by the International Monetary Fund, as of January 2, 2020. The actual amount of compensation available will change depending on conversion rates calculated from the date of an accident.
Limit of liability for loss of life or personal injury
Limit of liability for loss of life or personal injury
Shipowners can limit their liability based on the size of their ship.
| Gross Tonnage of Vessel | Amount of Insurance Needed* |
|---|---|
| Ships less than 300 | $1 million |
| Ships between 300 and 2,000 | $5.43 million |
| Ships between 2,000 and 30,000 | +$2,172 more per tonne |
| Ships between 30,000 and 70,000 | +$1,629 more per tonne |
| Ships above 70,000 | +$1,086 more per tonne |
*These values are in Canadian dollars. They were calculated based on Special Drawing Rights, which is a unit of account created by the International Monetary Fund, as of January 2, 2020. The actual amount of compensation available will change depending on conversion rates calculated from the date of an accident.
The Marine Liability Act also sets out limits of liability for ships under 300 gross tonnes. Their limit of liability depends on the type of claim. The limits of liability for vessels under 300 gross tonnes are explained in more detail in section 28 and 29 of the Act.
What if a ship is damaged?
Under the Convention, owners of docks, canals, and ports can limit their liability for damage caused to a ship, cargo, or other property on board. The maximum liability is the higher amount, either:
- $2,000,000, or
- the amount of money calculated by multiplying $1,000 by the gross tonnage of the largest ship within the area of the dock, canal or port where the owner had control or management at the time of the accident, or within five years of the accident
If you need more information or have any questions, please email us: MarineLiability-ResponsabiliteMaritime@tc.gc.ca