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12 May 2021
The concept of limitation of a shipowner's liability is well known in maritime law and is generally the same across many maritime jurisdictions. It is based on the theory that liability in respect of actions and obligations arising from a sea venture should be limited to a separate asset, historically this limitation has been calculated as:
The government's failure to ratify the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 76/99) and its Protocol of 1996, coupled with an unclear amendment to the regime set out by the Code of Navigation, suggests that Italy may have forgotten the importance of the limitation regime.
Italy is not a party to the LLMC 76/96. In 2009 Parliament authorised the government to implement the LLMC 76/96 but the authorisation's validity expired without the government having finalised the implementation procedure.
According to Article 7 of the preliminary rules of the Code of Navigation, shipowners' limitation of liability is governed by the law of the vessel's flag. Consequently, the Italian regime applies only to vessels flying the Italian flag.
Until 2012, the limitation of liability under the Code of Navigation was set out in Article 275, according to which shipowners could limit their liability to a sum equal to the insured value of the vessel plus the value of the freight and other earnings of the voyage. According to the former Article 275 of the Code of Navigation, all kinds of claims were subject to limitation, provided that they derived from the necessities of the voyage or from facts or acts which occurred during the voyage, excluding obligations arising from wilful misconduct or gross fault. Italian legislation adopted the criterion that claims that arose in the course of a specific voyage were subject to limitation. The opposing criterion (adopted by the LLMC 76/96) is that claims arising from a specific event are subject to limitation.
Further, the limitation regime was available only to a vessel's 'armatore' (ie, registered owner or bareboat charterer) and not to:
This regime may have been outdated but at least it was clear.
Legislative Decree 111 dated 28 June 2012 (Decree 111/2012) amended the aforementioned pre-existing limitation regime. Decree 111/2012 was adopted in order to implement EU Directive 2009/20/EC on the insurance of shipowners for maritime claims in the Italian legal system. However, the legislature did not consider the fact that Italy had not yet ratified the LLMC 76/96 and that EU Directive 2009/20/EC was to be adopted in recognition of the importance of applying the LLMC 79/96, making express references to concepts and monetary limits thereof.
Decree 111/2012 confined the application of Article 275 of the Code of Navigation to vessels below 300 gross tonnage (GT). As regards vessels over 300 GT, the decree did not introduce a limitation mechanism expressly applicable to the responsibility of shipowners. Instead, it introduced limitation figures as a prerequisite of compulsory insurance of maritime claims, as foreseen by EU Directive 2009/20/EC.
The result of this is an extremely unsatisfactory legal system which gives rise to numerous discrepancies between the regime of insurance of claims adopted through Decree 111/2012 and the LLMC 76/96 regime incorporated therein, but not yet ratified by the government.
The rules introduced by Decree 111/2012 have caused great uncertainty in Italy and given rise to conflicting interpretations on the actual limitation regime available for vessels over 300 GT. The positions expressed can be summarised as follows:
However, the above reasoning clashes with the fact that Article 275 of the Code of Navigation was modified by Decree 111/2012, which expressly excludes its application to vessels over 300 GT.
It is impossible to predict which position the courts will take in deciding whether a right to limit liability exists for vessels over 300 GT which fly the Italian flag and, if so, what the limits of the shipowner's liability will be.
In any case, it is apparent that the Italian legal system on limitation as it presently stands is a potential source of litigation. The only solution available is to ratify of the LLMC 76/96. To this end, the Italian Maritime Law Association is carrying out a strenuous lobbying campaign with the competent institutions to urge them to complete said ratification process. Hopefully, such work will prove successful.
For further information on this topic please contact Marco Manzone at Dardani Studio Legale by telephone (+39 010 576 1816) or email (email@example.com). The Dardani Studio Legale website can be accessed at www.dardani.it.
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