Limitation Has Its Limits: The High Court Of Australia Confirms Wreck-Removal Claims Are Not Limitable In Australia

The High Court of Australia has handed down judgment in the much-anticipated decision of CSL Australia Pty Ltd v Tasmanian Ports Corporation Pty Ltd [2026] HCA 15 (The Goliath).

It has unanimously dismissed CSL Australia Pty Ltd’s appeal. As such, under Australian law, a shipowner cannot limit its liability for wreck removal expenses under the Convention on Limitation of Liability for Maritime Claims 1976.

Background

In January 2022, whilst manoeuvring to berth in the Port of Devonport, Tasmania, a cement carrier, the MV Goliath, owned and operated by CSL, allided with two tugs – the York Cove and the Campbell Cove (Tugs) - and a wharf, which were owned and operated by Tasmanian Ports Corporation Pty Ltd (TasPorts). The Tugs sank and leaked diesel fuel and other hydrocarbons into the Mersey River. 

TasPorts commenced proceedings in the Federal Court of Australia against CSL for breach of contract, negligence, and public nuisance, claiming damages in excess of AU$22m.  Viva Energy Australia P/L also brought a claim for approximately AU$2.5m for business interruption losses caused by the allision.

The loss claimed by TasPorts comprises, loss of the Tugs and the cost of chartering replacement ones, damage to the wharf, loss of the hydrocarbons (which it’s important to note was not cargo; but rather bunker fuel and lubricants for the operation of the tugs), and, relevantly, the cost of containing, removing and disposing of the hydrocarbons, and the Tugs (wreck removal and clean-up costs). These costs are the largest part of the claim, at approximately AU$17m.

CSL commenced limitation proceedings under which it sought declarations that it was entitled to limit its liability, if any, for all claims arising out of the allision within the meaning of Article 2 of the Convention on Limitation of Liability for Maritime Claims 1976, (Convention).¹ 

The Convention is given force of law in Australia by the Limitation of Liability for Maritime Claims Act 1989 (Cth) (Act). CSL also sought to establish a limitation fund in the amount of SDR² 7,401,416 to cap its liability, based on the gross tonnage of the Goliath. This amounts to approximately AU$16m, and therefore AU$6m less than TasPorts’ claims and around AU$8.5m less than the known claims against the Goliath.

In its defence against limitation, TasPorts pleaded that its claims for wreck removal and clean-up costs (wreck removal claims), were not subject to limitation under the Convention because they are claims within Art 2(1)(d) which is not given the force of law in Australia. 

TasPorts filed a cross-claim in the limitation proceedings which sought a declaration that CSL was not entitled to limit its liability pursuant to the Convention for the wreck removal claims.

TasPorts also pleaded that a clause in its standard terms and conditions governing access and use of its port (STCs) had the effect of excluding the application of the Convention altogether, such that none of its claims were limitable under the Convention. 

The legal framework

Article 2 of the Convention lists the claims which may be the subject of limitation. The basis of any claim is irrelevant so that, for example, claims in the nature of an indemnity under a contract, for breach of a statutory duty, or for contribution under a proportionate liability statute can all be the subject of limitation.

The claims are limitable, provided that the basis for the particular claim is not exempt under Article 3. 

Also, they are limitable provided that the claim has not arisen due to conduct barring limitation within the meaning of Article 4, i.e. loss resulting from a personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

The liability limits in respect of claims for loss of life or personal injury are twice the limits that apply in respect of property claims. 

The Australian Maritime Safety Authority (AMSA) provides a helpful calculator here.

Article 7 contains separate liability limit applying in respect of claims for loss of life or personal injury to passengers of a ship. The liability limit for passenger claims is currently 175,000 SDRs multiplied by the number of passengers which the ship is authorised to carry. 

Article 18(1) (the Reservation) provides, among other things, that a Contracting State to the Convention may reserve the right to exclude the application of Articles 2(1)(d) and (e).

In becoming a State Party to the Convention, Australia exercised the right of Reservation under Article 18(1), which was expressed in section 6 of the Act.

In July 2024, the trial judge found that TasPorts’ wreck removal claims were subject to limitation under Article 2(1)(a) of the Convention and were not excluded by Australia’s exercise of the Reservation not to implement Articles 2(1)(d) and (e). 

For brevity, the subparagraphs of Article 2(1) will be hereafter be referred to simply as (a) to (f), unless the context otherwise requires. 

To the extent that TasPorts’ non-contractual claims (negligence and nuisance), not arising from damage to property did not fall within (a), they could also come within a literal reading of (c), because they were claims for losses resulting from the infringement of rights other than contractual rights. The spilt hydrocarbons were not carried as cargo on the Tugs, so (e) did not engage.

The judgment departed from judgment of the Hong Kong Court of Final Appeal in The Star Centurion.⁴ 

The Federal Court found that (d) covered unique ground pertaining to statutory strict liability (i.e no-fault) claims of public authorities from the exercise of a statutory right or power in respect of wreck removal (i.e. claims by harbour authorities) (authority claims), and therefore the intention of the Reservation could be achieved without (d) disturbing the interpretation of (a). Accordingly, the primary judge found that the fact that Australia had exercised the Reservation did not preclude TasPorts’ wreck removal claims from being limitable (wreck removal claims finding). 

In the alternative, TasPorts argued Clause 26.1 of STCs excluded the application of the Convention altogether. It was common ground that the Convention could be contractually excluded (The Cape Bari)⁵.  

While finding that the STCs were incorporated into the contract for services under which the Goliath entered the port, the Court otherwise found against TasPorts. It noted that for a party to be held to have abandoned or contracted out of valuable rights arising by operation of law, the provision relied upon must make it clear that this is what is intended. Clear and unequivocal words must be used. The Court agreed with CSL, concluding, that the Clause reads only as saying that to the fullest extent permitted by law, all rights, remedies or other terms that would otherwise arise from the contract that are not set out in the STCs are expressly excluded; rights and remedies that arise outside of the scope the contract, such as the Convention, were not excluded by the Clause (contracting out finding).

TasPorts appealed the wreck removal claims finding only. 

Appeal

The Full Federal Court allowed TasPorts’ appeal, holding that CSL could not limit liability for the wreck removal costs.

The Court applied orthodox treaty interpretation principles, requiring Article 2(1) to be construed uniformly across all States, according to its text, context and purpose. CSL’s argument that only claims falling within (d) were excluded was rejected. The Court emphasised that limitation applies “whatever the basis of liability”, preventing distinctions based on legal characterisation.

Relying on The Star Centurion and other international authority, the Court held that (d) is specific and comprehensive, capturing all wreck removal claims. Permitting such claims to be recast under (a) or (c) would create inconsistency and incoherence, particularly where outcomes would turn on who brings the claim.

Extrinsic materials supported this construction, indicating that wreck removal was deliberately placed in a separate provision and that the Reservation was intended to exclude those claims entirely. Accordingly, where a State has exercised the Reservation, all wreck removal claims fall outside the limitation regime.

The Full Court rejected CSL’s notice of contention that (d), which contains the indefinite article “a” ship was used inadvertently (noting (a), (c) and (e) each refer to definite article “the” ship), and so it ought to apply only to wreck removal of the limiting ship (e.g. if the Goliath had been wrecked). 

Key Issue for the High Court

The central issue before the High Court was whether Australia’s exercise of the Reservation operated to exclude all claims falling within (d) from limitation, even where those same claims could also be characterised as falling under (a).

Put differently, the question was whether the Reservation operated to exclude such claims on an “all or nothing” basis, or only where those claims fell exclusively within Article (d).

Key Arguments 

CSL’s arguments

CSL argued that the Reservation did not permit Contracting States to the Convention, such as Australia, to remove entire categories of claims from limitation where those claims could independently fall within another provision of Article 2(1). The effect of the Reservation was only to allow a Contracting State, when implementing the Convention, to not enact or implement (d) (as relevant to this case), such that claims falling exclusively within (d) would not attract limitation. 

Because TasPorts’ wreck claims fell within the scope of (a), CSL contended they remained limitable notwithstanding their dual characterisation as wreck-removal claims under Article (d). To construe otherwise, would effectively expand the scope of the Reservation by reading limitations into the (a) that did not appear in its text, and which would be contrary to the text of the Reservation as it provides that “[n]o other reservations shall be admissible to the substantive provisions of this Convention”.⁶ 

CSL’s construction effectively treated the Convention as if (d) could be “severed”, such that overlapping claims remained capable of limitation under (a).

TasPorts’ arguments

TasPorts accepted that claims were capable of dual characterisation falling within one or more sub-paragraphs of Article 2(1) of the Convention, and with this, accepted that the wreck removal claims fell within the scope of both (a) and (d).

It argued, however, that the consequence of the Reservation was that a claim falling within (d), was excluded from the operation of the limitation regime notwithstanding any dual characterisation under another subparagraph in Article 2(1). The effect of this was not to “read down” (a) or subject it to a “gloss” not apparent from the text of the Article, nor was it inconsistent with the text of the Reservation as contended by CSL.⁷ Rather, it operated to give effect to the intention of the Reservation, which was to give each State Party the right to exclude the application of (d) (and (e) claims, such that they were excluded in their entirety and not, as CSL would have it, in part only. TasPorts contended there was no textual or other support for reading such a limitation into the text of the Reservation. 

This reflected a construction whereby the Reservation operates at the level of claims described by (d), rather than at the level of individual sub‑paragraphs.

Court’s Decision and Reasoning

The High Court of Australia (Gaegler CJ, Gleeson J, Jagot J, Gordon K and Edelman J) held that Australia’s exercise of the Reservation operates at the level of claims described by (d), rather than by reference to individual sub‑paragraphs of Article 2(1). The Court held that the Reservation operates on an “all or nothing basis”, such that any claim falling within Article (d) is excluded from limitation in its entirety, irrespective of any dual characterisation under another sub‑paragraph.

In coming to this decision, the High Court emphasised that the Reservation formed part of the Convention’s overall structure. It was not merely procedural, but a substantive mechanism permitting Contracting States to exclude defined categories of claims from the limitation regime. Construing the Reservation as CSL proposed would substantially diminish its practical utility because wreck removal claims would be capable of being re-characterised as (for example) property damage claims under Article 2(1)(a). 

The Court also placed considerable weight on the international consistency in the interpretation of maritime conventions, referring to the reasoning adopted in The Flaminia⁸ and The Star Centurion and recognising the importance of maintaining uniformity with the decisions of superior courts of other Contracting States. In particular, the Court considered that The Star Centurion supported a construction whereby the Reservation must be given full effect and not rendered ineffective by overlapping characterisations. The Court also noted that The Flaminia did not address the effect of an exercise of the Reservation and was therefore not determinative of the present issue.

Conclusion and Practical Implications

The High Court’s decision represents an important development in Australian maritime law and provides authoritative guidance on the operation of Australia’s Reservation under Article 18. More broadly, it reinforces a judicial preference for coherent and internationally consistent interpretation of the Convention.

From a practical perspective, the decision is likely to be of particular significance in large casualty events where wreck removal and environmental response costs frequently represent a substantial portion of overall losses. This materially changes the risk landscape including notably for:

• Shipowners and Operators: Shipowners involved in casualty events creating substantial wreck removal or pollution response costs may face materially greater exposure in Australia where limitation funds can no longer be assumed to cap liability where such claims fall within Article 2(1)(d).
• P&I Clubs and liability insurers: Reserving practices, risk assessments and policy responses may require reconsideration in the aftermath of the decision. Increased exposure may affect claims strategy, settlement approaches and underwriting considerations where Australian risks are involved.
• Hull Insurers and subrogated recoveries: Hull insurers funding remediation or wreck removal costs may have stronger recovery prospects because such claims may not be constrained by statutory limitation funds.
• Port authorities and other infrastructure owners: Port authorities and similar claimants may have greater recovery prospects where substantial casualty responses are required.

[Kennedys acts for the hull and machinery insurers of the Tugs]

Footnotes