In West Malaysia, the limitation periods and limitation of liability for maritime claims are governed by specific legal frameworks, derived from international conventions and domestic legislation.  These frameworks aim to balance the interests of maritime stakeholders while ensuring fair compensation and legal certainty in maritime disputes.
 
Limitation Periods — Carriage of Goods By Sea
 
Limitation periods in maritime claims are a crucial consideration that dominates maritime actions.  It defines the timeframe in which a claim must be initiated in court or arbitration, failing which may result in the loss of legal rights and remedies. 
 
Limitation periods vary in length, depending on the nature of the maritime claim.  They can be statutory in nature or contractually stipulated.  This article will discuss two distinct categories of maritime claims, namely:

1. the claim for loss or damage to goods carried by sea; and
2. the claim for loss or damage to a vessel caused by another vessel. 

 
The most common category of claims in maritime disputes is probably for loss or damage to goods or cargo carried on board a vessel.  In Malaysia, such claims would generally be governed by the Carriage of Goods by Sea Act 1950 (Act 527) (“COGSA”).  Prior to July 2021, COGSA adopted what is commonly referred to as the Hague Rules (International Convention for the Unification of Certain Rules of Law relating to Bills of Lading 1924).  However, the Convention was amended by the 1968 Protocols, referred to as the Hague-Visby Rules, and subsequently again in 1979.
 
There are several obstacles under the Hague Rules, principally that it only applies to the carriage of goods under a bill of lading or similar document of title, and the levels of compensation (limits of liability) thereunder are not standardised and/or reflective of the increased value of goods carried by sea in international trade.  Nevertheless, there are a substantial number of countries which continue to adopt the Hague Rules.
 
Malaysia also adopted the Hague Rules until July 2021 when the Hague-Visby Rules, which cover a wider range of protection for maritime claims, were incorporated in West Malaysia through the Carriage of Goods by Sea (Amendment) Act 2020 (Act(A1613)) and Carriage of Goods by Sea (Amendment of First Schedule) Order 2021 (P.U.(A) 305/2021); P.U.(B) 363 (“Amended COGSA”).  Currently, claims under any “sea carriage documents”, such as bills of lading, consignment notes, sea waybills, ship’s delivery orders or a contract of carriage of goods by sea, would fall under the Hague-Visby Rules and the limits of liability are higher and at a standardised value.
 
The principal time bar under the Hague Rules or the Hague-Visby Rules is the same for the limitation of time.  However, the Hague-Visby Rules introduce a special provision for indemnity claims. 
 
COGSA, by adopting the Hague Rules, established a limitation period of one (1) year from the date of delivery (or when the goods or cargo ought to have been delivered) for claims relating to loss or damage to goods or cargo carried by sea.  This one year time bar is similarly adopted in the Amended COGSA through the Hague-Visby Rules; but in contrast, the Hague-Visby Rules expressly recognise that the time limit may be extended by agreement of the parties after the cause of action has arisen. 

FIRST SCHEDULE of Amended COGSA   [Article III paragraph 6 of the Hague-Visby Rules]   Subject to paragraph 6bis, the carrier and the ship shall in any event be discharged from all liability whatsoever in respect of the goods, unless suit is brought within one year of their delivery or of the date when they should have been delivered.  This period may, however, be extended if the parties so agree after the cause of action has arisen.   6bis An action for indemnity against a third person may be brought even after the expiration of the year provided for in the preceding paragraph if brought within the time allowed by the law of the court seized of the case.  However, the time allowed shall not be less than 3 months, commencing from the day the person bringing such action for indemnity has settled the claim or has been served with process in the action against himself.

 
Paragraph 6bis, at first sight, can be confusing but when considered carefully, the wording clearly provides that an indemnity claim can be brought against a third party after the expiration of the one year time limit.  This is subject to the limits set by domestic law. 
 
 In the case of China Ocean Shipping Co (Owners of Xingcheng) v Andros (Owners the Andros) [1987] 1 WLR 1213, the Privy Council, in dealing with the limits set by domestic law under paragraph 6bis, determined:
“…that the three-month period referred to in paragraph 6bis was the minimum, not the maximum, time to be allowed for bringing a claim; and that, accordingly, since a second recourse action could still be commenced by the plaintiffs within the six-year limitation period applicable, it was wrong to dismiss the original action for want of prosecution despite the plaintiff’s inordinate and inexcusable delay in serving a statement of claim.”
 
Limitation Periods — Collisions at Sea
On claims for loss or damage to a vessel, her cargo, freight or property on board caused by another vessel, for example, when there has been a collision at sea; section 517 of the Merchant Shipping Ordinance 1952 sets out the limitation period for such actions.       

SECTION 517 OF THE MERCHANT SHIPPING ORDINANCE 1952   No action shall be maintainable to enforce any claim or lien against a vessel or her owners in respect of any damage or loss to another vessel, her cargo or freight, or any property on board her, or damages for loss of life or personal injuries suffered by any person on board her, caused by the fault of the former vessel, whether such vessel be wholly or partly in fault, or in respect of any salvage services, unless proceedings therein are commenced within two years from the date when the damage or loss or injury was caused or the salvage services were rendered…

The two year time limit has its origins from the Brussels Convention on Collisions between Vessels 1910 and is similarly adopted in many other countries.  However, it is important for practitioners to check with local lawyers on the exact time limits that apply and in what applicable circumstances as there can be variances, especially in non-Commonwealth jurisdictions. 
 
In short, limitation of time plays an integral part in governing maritime disputes on an international level.  One of the key underlying reasons for such shorter time limits is to give the defending party an opportunity to access and preserve evidence which may be quickly lost due to the international nature and risk of trading on the high seas.  Establishing clear and short limitation periods promotes efficiency, fairness, and legal certainty in the resolution of maritime disputes.
 
Limitation of Liability — Carriage of Goods by Sea
 
Package Limitation
 
Shipowners and carriers may also rely on the limits of liability by reference to the number of units or the weight of cargo which is carried on board a vessel, and which has suffered loss or damage during the carriage of such goods at sea.  Such limits of liability are provided in the Hague and Hague-Visby Rules, although as highlighted earlier, the latter provides a more uniform approach. 

HAGUE RULES   Article IV Paragraph 5   Neither the carrier nor the ship shall in any event be or become liable for any loss in connection with goods in an amount exceeding £100 per package or unit, or the equivalent of the sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading.   Article IX The monetary units mentioned in these Rules are to be taken in gold value.

 

HAGUE-VISBY RULES   [enacted in the Article IV paragraph 5(a), Schedule 1 of the COGSA via the Amended COGSA]   Unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the sea carriage document, neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the goods in an amount exceeding 666.67 units of account per package or unit or 2 units of account per kilogramme of gross weight of the goods lost or damaged, whichever is the higher.    Article IV paragraph 5(d) The unit of account mentioned in this Article is the Special Drawing Right as defined by the International Monetary Fund.  The amounts mentioned in subparagraph (a) shall be converted into national currency on the basis of the value of that currency on a date to be determined by the law of the court seized of the case.  The value of the national currency, in terms of the Special Drawing Right, of a State which is a member of the International Monetary Fund, shall be calculated in accordance with the method of valuation applied by the International Monetary Fund in effect at the date in question for its operations and transactions.

          
The monetary limit under the Hague Rules is expressed as the gold value of £100 which gives rise to many valuation problems.  The fact is that with rising values and currency fluctuations, £100 in gold valued in 1924 is not the same as now.  Some countries have legislated a fixed value in local currency but many did not — this includes Malaysia.  The gold value method used in the Hague Rules has created uncertainties in ascertaining the monetary value at which the carrier is entitled to limit liability.
 
The new limitation regime under the Hague-Visby Rules, however, has resolved this issue by setting the limits of liability by reference to Special Drawing Rights (“SDR”).  The International Monetary Fund (“IMF”) defines SDR as equivalent to the value of a basket of world currencies, and while the SDR itself is not a currency, it is an asset that holders can exchange for currency when needed.  The IMF reviews the SDR basket every five years, or earlier if warranted, to ensure that it reflects the relative importance of currencies in global trading and financial systems.  The spot exchange rates of SDR to the basket currencies can be found on its website. 
 
The limits of liability under the Hague-Visby Rules, can however, be “broken” if it is proved that the damage resulted from an act or omission of the carrier done with intent to cause damage, or recklessly and with knowledge that damage would probably result.
 
Limitation of Liability — Tonnage
 
In tandem, Malaysia is also a signatory to the International Convention Relating to the Limitation of Liability of Owners of Seagoing Ships 1957 (“1957 Convention”) and the more recent Convention on Limitation of Liability for Maritime Claims 1976 (“LLMC 1976”), which provides a framework for shipowners to limit their liability by reference to the tonnage of the vessel involved in the dispute.  Malaysia adopted the 1957 Convention under the Merchant Shipping Ordinance 1952 (“MSO 1952”) until it was amended by the Merchant Shipping (Amendment and Extension) Act 2011, which adopted the LLMC 1976 and its 1996 Protocol, coming into force on 1 Mar 2014.
 
These conventions establish limits on the maximum amount of compensation that can be claimed, and serve to protect shipowners from the potential financial consequences arising from specified claims detailed in Article 2 of the 16^th Schedule MSO 1952.
 

16TH SCHEDULE OF MERCHANT SHIPPING ORDINANCE 1952   Article 2 Claims subject to limitation   Subject to articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability: claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connection with the operation of the ship or with salvage operations, and consequential loss resulting therefrom; claims in respect of loss resulting from delay in the carriage by sea of cargo, passengers or their luggage; claims in respect of other loss resulting from infringement of rights other than contractual rights, occurring in direct connection with the operation of the ship or salvage operations; claims in respect of the raising, removal, destruction or rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship; claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship; claims of a person other than the person liable in respect of measures taken in order to avert a minimize loss for which the person liable may limit his liability in accordance with this Convention, and further loss caused by such measures.

 
Under Article 6 of the 16^th Schedule MSO 1952, the limits of liability are fixed as follows (again by reference to SDR):
 
Property claims

Tonnage of Ships	Limitation Amount (SDR)
Not exceeding 2,000 gross tonnes	1,000,000
2,001 to 30,000 tonnes	400 per tonne
30,001 to 70,000 tonnes	300 per tonne
Exceeds 70,000 tonnes	200 per tonne

 
 
Claims for Personal Injury and Death

Tonnage of Ships	Limitation Amount (SDR)
Not exceeding 2,000 gross tonnes	2,000,000
2,001 to 30,000 tonnes	800 per tonne
30,001 to 70,000 tonnes	600 per tonne
Exceeds 70,000 tonnes	400 per tonne

 
There has been an amendment to the 1996 Protocol providing for higher limits of liability but as of now, this has not been adopted in Malaysia. 
 
These limits of liability, however, can be “broken” if it can be proved that the loss resulted from one’s personal act or omission committed intentionally to cause such loss, or recklessly with knowledge that such loss would likely occur pursuant to Article 4 of the 16^th Schedule MSO 1952.  Similarly to package limitation, the standard to break tonnage limitation is very high and the burden of proof is on the claimant.
 
Conclusion
 
There are sound reasons for providing limitations of time and liability in the maritime industry.  International shipping is responsible for the carriage of approximately 90% of world trade.  It is the lifeblood of global economies but is a high risk and high cost venture with potential exposure to enormous liabilities.   The industry will halter if such limits are not in place and global trade as we know it will grind to a halt. 
 
This article has touched upon some of the limits applicable in the maritime industry, but there is a broader spectrum of similar provisions which apply to different aspects such as oil pollution and wreck removal.  Practitioners have to be aware that maritime law, whilst international in nature, is also subject to local variances and caution has to be adopted in every case. 
 
The forthcoming second part of this article will explore some of the applicable limits which are equally afforded to the aviation industry.