Hong Kong’s Court of Final Appeal has determined that under LLMC 1976, where a State has opted to dis-apply the wreck removal (WR) head of limitation, shipowners may not limit liability for such expenses in any case, including where the claim is brought by the owner of another (wrecked) ship by way of recourse. Clifford Smith SC and Edward Alder, instructed by Reed Smith Richards Butler, acted for the limiting shipowner in The Star Centurion c/w The Antea [2023] HKCFA 20.

Hong Kong is a party to the LLMC 1976 Convention, as is the UK, Australia and other leading maritime jurisdictions. Mainland China has similar domestic legislation. Because no consensus could be reached at the time, LLMC permits States to dis-apply the WR head (but only that head) so States may give effect to local policy considerations regarding who should pay for and recover WR expenses. Hong Kong has dis-applied WR, albeit under a provision that, on its face, only concerns direct WR claims by governmental authorities.

The limiting shipowner argued that where it has caused another ship to be wrecked and the owner has raised the wreck and claims against the limiting ship for the loss of its wrecked ship and its WR costs, that is by nature a claim for property and consequential loss and limitable under head (a), including as to the WR costs, whether or not the WR head is in force. The position, it argued, is otherwise where a governmental agency or private waterway landlord has removed a wreck but suffered no property damage, where the limiting shipowner clearly cannot limit the WR claim if the WR head has been dis-applied.

The CFA disagreed, applying the maxim “generalia specialibus non derogant”. The CFA held that such a construction of the LLMC would fail to give full effect to the provision in Article 18 that permits States to dis-apply the WR head.

The position in the prevailing legal literature on the point was mixed, with some academics favouring limiting under head (a) in such situation, and some not. The Supreme Court of the Netherlands determined the point the other way in a 2018 case, but there was no ruling of a common law apex court until this decision.