By Maurice Lynch, Partner and Rose Seone, Paralegal

The Full Federal Court recently handed down its decision in Tasmanian Ports Corporation Pty Ltd v CSL Australia Pty Ltd [2025] FCAFC 53 clarifying a critical issue under the Convention on Limitation of Liability for Maritime Claims 1976 : can a shipowner limit its liability for wreck removal expenses in Australia?

The short answer in Australia is no, a shipowner cannot limit its liability for wreck removal claims under the convention.

Background

Facts

On 28 January 2022, the MV Goliath collided with the wharf at the Port of Devonport and two moored tugs. The two tugs sank, emitting fuel and other hydrocarbons into the Mersey River and needed to be removed from the river as wrecks.

Proceedings

Following the incident, Tasmanian Ports Corporation commenced proceedings in the Federal Court of Australia against CSL for negligence, breach of contract, and public nuisance. In response, CSL commenced a limitation proceeding under the Limitation of Liability for Maritime Claims Act 1989 (Cth), arguing that its liability should be capped pursuant to the 1976 Convention. Tasmanian Ports Corporation cross-claimed and sought approximately $17.25 million in costs associated with containment, wreck removal, and environmental remediation.

Issue

The case primarily concerned the interpretation of Articles 2 and 18 of the 1976 Convention:

• Article 2 identifies the types of claims that are ordinarily subject to limitation of liability. These include:
  – under 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
  – under Article 2(1)(a) clams 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 the application of wreck removal limitation in Article 2(1)(d) from their domestic law. Australia exercised a reservation under Article 18 to exclude claims falling under Article 2(1)(d) from being subject to limitation.

The issue was whether the wreck removal claims although failing within Article 2(1)(d) and being claims Australia excluded from being limitable under Australian law, were otherwise limitable because they also fell within the scope of Article 2(1)(a) being a claim that is limitable under Australian law.

Decision

The Full Federal Court reversed the primary judge’s decision and held that wreck removal claims in Australia are not limitable because Australia has exercised its right to exclude claims for wreck removal from being limitable in Australia.

In coming to this decision, the Full Federal Court endorsedthe 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) and held that claims falling under one of the identifiable limitable heads of claim in Article 2 of the Convention cannot be reclassified under other heads of claim. So, a reservation under Article 18(1) excludes the entirety of Article 2(1)(d), regardless of how a claim is framed.

Additionally, the Court held that the purpose of Article 18(1) can only be achieved if a reservation excludes all wreck removal claims under Article 2(1)(d), even those that might also fall within Article 2(1)(a). The reservation would be undermined by allowing limitation through recharacterisation.

The Court disagreed with the primary judge’s conclusion that the underlying rationale of the interaction between Articles 2(1)(d) and 18 was to exclude claims of harbour authorities from being limitable in order to prevent public entities footing the bill for the removal of wrecks.

Implications

The Court noted that superior courts in other jurisdictions, including in the Star Centurion in Hong Kong and the Supreme Court of the Netherlands decision in Scheepvaartbedrijf MS Amasus BV v ELG Haniel Trading GmbH ECLI:NL:HR:2018:140 (The Wisdom), held that reservations under Article 18 effectively exclude claims under Article 2(1)(d) in full.  This provides a consistent interpretation across a number of countries allowing Courts of other jurisdictions to apply reservations under Article 18 in the same manner.

The Full Court’s decision has significant commercial implications for shipowners, port authorities, and marine insurers.

By confirming that Australia’s reservation under Article 18(1) excludes the operation of Article 2(1)(d), the Court made clear that liable shipowners cannot limit their liability for wreck removal expenses, regardless of whether those claims fall also under Article 2(1)(a).

The decision exposes liable shipowners and their insurers to uncapped liability for wreck removal expenses.  Conversely, the decision provides welcome clarity and reassurance for port authorities, and innocent shipowners and their insurers, confirming that Australia’s reservation under Article 18 will be enforced strictly.