By Maurice Lynch, Partner and Madu Dhinakar, Paralegal

The High Court recently handed down its decision in CSL Australia Pty Ltd v Tasmanian Ports Corporation Pty Ltd [2026] HCA 15, closing the door on shipowners’ ability to limit their liability for wreck removal costs under the Convention on Limitation of Liability for Maritime Claims 1976.

Background

On 28 January, the MV Goliath collided with the wharf at the Port of Devonport in Tasmania, causing two moored tugboats to sink and emit fuel and other hydrocarbons into the Mersey River. The tugs, owned by Tasmanian Ports Corporation, were required to be removed from the river as wrecks.

Proceedings

The owner of MV Goliath, CSL, commenced a limitation proceeding in the Federal Court of Australia, arguing that it was entitled under the Limitation of Liability for Maritime Claims Act 1989 (Cth) to limit its liability for all claims arising out of the allision. In response, Tasmanian Ports Corporation cross-claimed, seeking approximately $17.2 million which included expenses associated with wreck containment, removal, and environmental remediation.

The Full Federal Court held that because Australia has reserved the right not to apply Article 2(1)(d) of the Convention, liability for claims falling within that article cannot be limited, even where they also fall within another article of the Convention that would otherwise allow limitation of liability. In effect, the Court confirmed that once a claim is caught by Article 2(1)(d), the limitation regime is unavailable, irrespective of whether the same facts could support a limitable claim under another article of the Convention.

Issue

The case concerned Articles 2 and 18 of the Convention:

• Article 2 identifies the types of claims where liability may be limited, including:
  • Article 2(1)(d) – claims for the “raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned”; and
  • Article 2(1)(a) – claims for “loss of or damage to property”, which includes consequential loss resulting directly from the operation of the ship.

• Article 18 allows States party to the Convention to make reservations to exclude Article 2(1)(d) from applying under their domestic law. Australia exercised a reservation under Article 18 to exclude Article 2(1)(d)’s operation in Australia.

On appeal to the High Court, the issue was, where a State Party does not apply Article 2(1)(d) into national law, whether Article 18(1)(a) has the effect of excluding any claim falling within the scope of Article 2(1)(d) from the Convention’s limitation of liability regime in its entirety, or allowing such claims to remain limitable if they can fall within the scope of any other subparagraphs in Article 2(1).

Decision

The Court unanimously dismissed CSL’s appeal and held that its liability cannot be limited in Tasmanian Ports Corporation’s claim for wreck removal costs, despite the claim’s dual characterisation as both a claim for the loss of or damage to property under Article 2(1)(a) and in respect of the removal of a wrecked ship under Article 2(1)(d).

Adopting approach of the Hong Kong Court of Final Appeal in Perusahaan Perseroan (Persero) PT Pertamina v Trevaskis Ltd [2023] HKCFA 20; [2024] 2 Lloyd’s Rep 435 (The Star Centurion), the Court read Articles 18(1) and 2(1)(d) to their ordinary meaning and together with the Convention as a coherent whole. Accordingly, it found that Article 2(1)(d) has the effect of subjecting wreck removal claims to the Convention’s limitation of liability regime, such that Article 18(1) permits States to disallow Article 2(1)(d) which has the effect of preventing liability in wreck removal claims to be limited in its entirety even if the claim could fall under another article in Article 2 which the State Party to the convention had not expressed a right of reservation.

The Court contrasted Article 18(1) with Article 15(1), which expressly allows partial exclusions, finding that the absence of similar language in Article 18(1) made it textually incoherent to treat the reservation power as permitting only some Article 2(1)(d) claims to be excluded from the Convention’s limitation regime, and not others.

The Court also emphasised the importance of comity in maritime law, holding that the Convention should be interpreted consistently across State Parties and align with the Hong Kong Court of Final Appeal in The Star Centurion and the Supreme Court of the Netherlands on the same issue.

Implications

The decision reinforces the importance of comity in international conventions, that is, making sure they are interpreted consistently across all jurisdictions where they apply. This aligns the Australian position with overseas authority, the decision allows shipowners, insurers, port authorities and commercial parties to assess their risks and liabilities with greater confidence promoting predictability in and efficiency in maritime law.

Commercially, this decision implies that shipowners will be exposed to higher costs after a wreck incident, ultimately influencing premiums, underwriting, deductibles and insurance assessments of vessels operating in Australian waters. However, the increased financial risk provides an incentive for shipowners to prevent wrecks, maintain safety standards and respond quickly to wrecks.

Conversely, port authorities and other innocent claimants are placed in a stronger position to remediate wrecks and marine environments without the apprehension that all costs cannot be recovered. The decision therefore shifts a major category of maritime casualty risk back onto the party responsible for the casualty and its insurers.