What is the difference between third-party and contractual liability, when may a shipowner limit liability, and who may limit and for which claims?

flowchart TD
  A{"Maritime claim subject to limitation? (art 2)"} -->|No| X["No limitation"]
  A -->|Yes| B{"Excepted claim? (art 3)"}
  B -->|Yes| X
  B -->|No| C{"Loss from the owner's own personal act, with intent or recklessly?"}
  C -->|Yes| L["Right to limit is lost"]
  C -->|No| D["Limit to a tonnage-based amount: limitation fund, or as a defence (s.169)"]

• Many casualties give rise to both: a collision creates third-party liability to the other ship and contractual liability to the ship’s own cargo interests.
• When: for a maritime claim subject to limitation under the LLMC (MS Act 2025), whatever the basis of liability, up to a tonnage-based amount.
• Lost only if the loss resulted from the owner’s own personal act or omission, with intent or recklessly and with knowledge it would probably result. This is a very high bar.
• Who may limit (art 1): the shipowner (owner, charterer, manager, operator), the salvor, persons for whom they are responsible (master and crew), and the liability insurer.
• Claims (art 2, s.163): loss of life or personal injury, property damage, delay, infringement of rights, wreck removal, and measures to avert loss.
• Excepted (art 3): salvage or general average, CLC oil pollution, nuclear damage, and claims by the owner’s own crew where their contract precludes limitation.