Taiwanese Limitation of Ship owners' Liability

The limitation of shipowners’ liability under Taiwanese law is in fact quite a straightforward topic.    

The statutory provisions in Taiwan with regards shipowners limitation is in Article 21 and 22 of the Taiwan Maritime Code which states the following:


Article 21

The liability of the shipowner is limited to an amount equal to the value of the ship, the freight and other accessories of the particular voyage in respect of the following:

  1. claims in respect of the loss of life, personal injury or loss of or damage to property, occurring on board or with the operation of the ship or salvage operations directly resulting therefrom.
  2. claims in respect of losses resulting from infringement of interests or rights occurring during the operation of the ship or salvage operations; but the damages resulted from any contractual relationship shall be excluded.
  3. claims in respect of the removal or destruction of a sunk ship or property lost overboard; but any reward or payment made under a contractual obligation shall be excluded.
  4. claims for the obligations incurred for taking any measures to avert or minimize the liabilities set out in the preceding 2 sub-paragraphs.


The term “Shipowner” referred to in the preceding paragraph 1 shall mean the registered owner, charterer, manager and operator of the ship.

The term “this particular voyage” referred to in the preceding paragraph 1 shall mean the voyage covered by the ship from one port to the next port; the term “freight” shall not include such freight or ticket fares not collectible under the relevant laws or regulation or contract; the term “other accessories” shall refer to compensation made to the loss or damage to ships, but not including payments on insurance policies.

If the sum of limitation of liability under the preceding paragraph 1 is less than the following, the shipowner shall be liable for the deficit:

  1. where the occurrence has given rise to property claims, an aggregate amount of 54 Special Drawing Rights(SDR) as defined by the International Monetary Fund for each ton of the ship's registered gross tonnage(GRT).
  2. where the occurrence has given rise to loss of life or personal injury claims, an aggregate amount of 162 SDR for each GRT.
  3. Where the occurrence has given rise both claims in the preceding two paragraphs, an aggregate amount of 162 SDR for each GRT, of which a first portion amounting to 108 SDR for each GRT shall be exclusively appropriated to the payment of personal claims in respect of loss of life or personal injury, and of which a second portion amounting to 54 SDR for each GRT shall be appropriated to the payment of property claims: Provided however that in cases where the first portion is insufficient to pay the personal claims in full, the unpaid balance of such claims shall rank rateably with the property claims for payment against the second portion of the fund.
  4. The GRT of a ship of less than 300 tons shall be deemed to be 300 tons.

 

Article 22

The limitation of liability set forth in the forgoing Article does not apply to:

  1. obligations arising out of an intentional act or negligence of the shipowner.
  2. obligations arising from the contract of employment with the shipmaster, seafarers or any other personal serving on board the ship.
  3. reward for salvage or contribution in general average.
  4. damages arising out of carrying toxic chemical substances or oil pollution.
  5. damages arising out of nuclear incidents caused by nuclear substances or nuclear waste being carried on ships.
  6. claims for unclear damages caused by unclear ships.

Shipowners can limit liability for claims described in Article 21 (1) of the Taiwan Maritime Code as long as the situation does not fall under Article 22 of the same Code. 


Shipowners can limit liability for claims described in Article 21 (1) of the Taiwan Maritime Code as long as the situation does not fall under Article 22 of the same Code. 

The calculations of the limitation under Article 21 adopts the ship’s actual value and not the insured value. In the absence of any materials we can use the vessel’s insured as a guideline only.

The case of Supreme Court Case No. 458 of Year 91 demonstrates the application of Maritime Code Article 21 on limitation of shipowners’ liabilty. This case involved the “Wen Jing No.10” who lost power while navigating inside Kaohsiung Harbour and collided with the “Tong Hai No.6” who was at that time berthed alongside. The appellants to the appeal who were shipowners of the “Wen Jing No.10” sought to rely on Article 21 to limit liability based on the value of their vessel. The courts did not say that they were not entitled to seek limitation but refused the appeal on the grounds of Article 22(1) which states that shipowers cannot rely on limitation where damage was caused intentionally or as a matter of the shipowners’ own negligence. In this case the court found evidence attributing loss of engine power to ruptured engine oil lines as a result of corrosion due to lack of maintenance and finally linking this to mismanagement of the vessel by shipowners and therefore found the vessel to be unseaworthy. Therefore limitation can be broken under Article 22 due to Shipowners’ negligence where mismanagement of the vessel can be one of the reasons. 

Taiwanese law does not provide for the establishment of a limitation fund in court. There are no legal provisions facilitating the pre-emptive filing of monies into court or elsewhere in relation to issues concerning shipowners’ limitation of liability.  What will usually happen is whereupon the pleading of the full claim for liquidated damages in court by opponents, shipowners will simply argue the right to limit liability before the Judge as if putting up a defence. Everything (i.e. the claim, the defence, the counter arguments and the plea on liability limitation) will happen (i.e. raised, argued and decided) within the same trial setting.   

PLEASE CONTACT the writer in the event of you are contemplating a possible case in Taiwan and have certain questions in mind before proceeding further. 


Writer's information: 

DARYL LAI

Email: daryl@jtjb-taipei.com
Telephone: 886-2-27720567