We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
06 September 2017
The Dutch Transport Law Association has introduced a new standard form to be used for the constitution of a limitation fund in proceedings before the Dutch courts for the limitation of liability in seagoing or inland shipping.
The Netherlands is a party to:
The conventions regulate the limitation of liability of shipowners, salvors and liability insurers in connection with a shipping incident involving loss or damage. They provide that liability may be limited by constituting a limitation fund and that such a fund may be established by:
In the past, guarantees in limitation proceedings were offered on the basis of widely diverging texts, which often led to disagreement between the interested parties and the need for court rulings on the adequacy of the guarantee. The Maritime Chamber of the Rotterdam Court suggested that the Dutch Transport Law Association draft a standard text in order to reduce future litigation on this matter.
A committee of Rotterdam advocates and a Maritime Chamber judge prepared a draft text, which was posted on the website of the Dutch Transport Law Association, soliciting further comments and suggestions. The standard form was finalised at the end of 2016 and published for general use on the association's website on January 1 2017.
The form contains a first-demand guarantee for the joint benefit of the judge commissary or supervisory judge and the liquidator of the fund. These parties are appointed by the court upon the prima facie granting of the application for limitation of liability and either one can jointly make a demand under the guarantee and for part payments.
The judge commissary or supervisory judge and the liquidator of the fund can make a demand under the guarantee for payment to a bank account in their joint names in the event that this is deemed to be just and proper. They may, among other things, make a demand under the guarantee in the event that the person that wants to limit liability and has arranged for the constitution of the fund is not entitled to do so as it is proved that the loss:
Dutch procedural law provides that, when this decision is no longer subject to appeal, the security provided will lapse and a deposited amount will be paid out to whichever party made the deposit, but not earlier than one month after the judgment has become final and the liquidator of the fund has given notice of the day when this payment will take place.
According to the legislative history of the particular statutory provision, this arrangement with regard to a deposited amount was enacted to enable the creditors to attach the deposited funds before they are refunded. The standard guarantee form neutralises the difference between constituting a fund by making a bank deposit and by providing a guarantee. Under the guarantee, the guarantor can be obligated to pay out the amount of the fund into a bank account in the joint names of the judge commissary or supervisory judge and the liquidator of the fund, whereupon the creditors may effect an attachment on the fund deposited for the recovery of their claims.
The new Rotterdam Guarantee Form Limitation 2017 has been used on a number of occasions since its introduction and the wording does not seem to have been challenged. However, issues that appear to remain are whether the courts:
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.