Limitation of liability in maritime law is an ancient legal concept intended to protect shipowners from bearing excessive consequence of monetary damages arising from the navigation of their ships on the part of their servants or agents that may cripple the shipowner’s businesses. The history of this concept can be traced back to 1674 in England in Morse v. Slue where Lord Denning said that “a shipowner was not to be held liable for any loss or damage occasioned by the master or mariners ‘without the privity and knowledge’ of the owner to an amount greater than the value of the ship”.
Originating from said concept, the Convention Relating to the Limitation of the Liability of Owners of Seagoing Ships was signed in Brussels in 1957 and came into force in 1968. Later in 1976, the convention was replaced by the Convention on Limitation of Liability for Maritime Claims (LLMC). Under the LMCC, the limits were set at 333,000 SDR for personal claims for ships not exceeding 500 tons plus an additional amount based on tonnage. For other claims, the limit of liability was fixed at 167,000 SDR plus additional amounts based on tonnage on ships exceeding 500 tons.
Indonesia is not a contracting state to LLMC but the concept of limitation of liability is recognized under Indonesian law which regulated under the Commercial Code (Wetboek van Koophandel voor Indonesië). However, since the Commercial Code was promulgated during the Dutch colonial period, the monetary amount is generally seen no longer fit the present time economy. As such, the limitation of liability under the Commercial Code is reluctantly applied in practice.
The limits of liability under the Commercial Code can be found in the link below.Back to Insights