Limitation of Liability

Limitation of Liability is a long-established principle of maritime law that entitles a shipowner (and certain others, such as charterers and salvors) to limit their total liability for most maritime claims arising from an incident to a defined maximum amount, calculated largely by reference to the ship's tonnage. Even if the actual claims far exceed that figure, the claimants share the limited fund rather than recovering in full.

The modern framework is the international Convention on Limitation of Liability for Maritime Claims (LLMC), widely adopted. Limitation covers claims such as loss of life and injury, cargo and property damage, and consequential losses (though some, like salvage and certain pollution claims, are governed by separate regimes). The right can be lost where the loss resulted from the owner's own reckless or intentional conduct. This principle exists to make maritime commerce and its insurance viable in the face of potentially catastrophic risks — without it, a single major casualty could bankrupt an owner. Limitation is distinct from the per-package limits of the Hague-Visby Rules (which cap individual cargo claims); it caps the owner's overall exposure. It is a foundational, if sometimes controversial, feature of maritime law and insurance.