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Limitation of liability & forum shopping

Cap on liability can vary considerably depending on where proceedings are commenced. In collision cases where the damage to one of the vessels is substantial, owners of both vessels may therefore look towards different states. Questions then arise as to which is a more appropriate forum for eg. in Jag Ladki [2018], the fight was between UK & UAE, in The Sanchi [2019] it was HK or Shanghai; and recently in The Koorale [2020] – NZ or US.

Two tuna fishing boats, Koorale (K) & American Eagle (AE), collided on high seas. Both were flying US flag. K called a port in NZ for repairs where AE’s owners commenced in rem proceedings. NZ is a LLMC state and the liability of owners would have been capped at $2m. K’s loss was $10m. Her owners commenced proceedings in US, where the limitation works in a different way (it is based on vessel's market value & freight).


K’s owner argued that US being a proper forum is supported by the ownership of the vessels, their registration, crew's place of residence and incident investigation by US authorities.


As per the NZ court, US was a more appropriate jurisdiction as the dispute was more closely connected to it and there was also an advantage in terms of convenience for both owners. Difference in limitation amounts was a neutral factor.



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