BACK ON COURSE – EXCLUDING THE RIGHT TO LIMIT LIABILITY UNDER THE 1976 CONVENTION: Bahamas Oil Refining Company International Ltd v The Owners of the Cape Bari Tankschiffahrts GMBH & Co KG (‘The Cape Bari’) [2016] UKPC 20

Abstract

The decision of the Privy Council earlier this year in Bahamas Oil Refining Company International Ltd v The Owners of the Cape Bari Tankschiffahrts GMBH & Co KG (“The Cape Bari”), allowing an appeal from the Court of Appeal of the Commonwealth of the Bahamas, provides clarification on whether a shipowner can waive its right to limit liability under the Convention on Limitation of Liability for Maritime Claims 1976 (“Convention”) and on how a contract purporting to exclude the right to limit should be construed. The case represents the first consideration of this question under the Convention and since the 19th century by a final appellate court. Ultimately, the Privy Council confirmed that the Convention can be contracted out of, and that whether a contract excludes the Convention is to be determined through construction of the relevant contract.

This note discusses the differing approaches of the Court of Appeal and Privy Council, the latter’s focus on contractual construction in the resolution of these issues and the implications for parties seeking to exclude a shipowner’s right to limit liability.