“shipowners”, salvors, persons for whose acts the shipowner or the salvor are responsible and the insurers of particular liabilities have the right to limit their liability. The registered owner, the charterer, the manager and the operator of a seagoing ship are deemed to be within the definition of a shipowner are also entitled to limit their liability.
Demise charterers also enjoy the right to limit liability. The term “charterer” include a time charterer and voyage as well as slot charterers.
The ship’s managers and operators are also entitled to limit their liability. The ordinary meaning of the words would certainly include the managing owners but it is uncertain whether managers and operators of a part of the shipping activity, for example, recruitment, would be covered. The management contract should be valid and not frustrated or repudiated in order for the right of limitation to be available. Where the management of the ship is taken over by a bank or other creditor under a mortgage agreement there could also be difficulties as the mortgagee in possession is not the owner of the ship, but may be considered as the operator of the ship. An alternative route is to suggest that the mortgage agreement provides the consent of the owner for the mortgagee to act as the manager, entitling it to limit liability.
Persons for whose act, neglect or default the shipowner or the salvor are responsible are also entitled to limited liability. The purpose of this provision is to avoid circumvention of the right to limit by claimants suing the individual wrongdoer rather than the shipowner. The extension of the right to limit to persons for whom the shipowner is responsible clearly covers the master and the crew members when they act within the scope of their employment. However, anyone who can show that s/he is linked with the shipowner in a way that makes the shipowner responsible would also be entitled to limit liability. Pilots may be subject to this provision because under English law their negligence makes the owner liable.
Independent contractors as well as others involved in the shipping business are arguably not included in the definition. Thus, ship’s agents, stevedores and classification societies are probably not entitled to limit their liability.
Salvors are also expressly entitled to limit their liability. When salvors operate from a ship they are considered to be shipowners and therefore are entitled to limit their liability. However, when they do not operate from a ship they will not fall under the definition of a shipowner.
Liability insurers of shipowners in respect of claims subject to limitation are also given the right to limit liability “to the same extent” as the insured.
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