Convention on Limitation of Liability for Maritime Claims (LLMC), Constituting Limitation Funds in Greece (2026)

The Convention on Limitation of Liability for Maritime Claims (LLMC 1976), as amended by its 1996 Protocol, remains the cornerstone treaty governing the maximum exposure of shipowners, salvors and their insurers following maritime incidents. Greece ratified both the Convention and the 1996 Protocol, and its 2023 reform of the Code of Private Maritime Law (CPML) has refined the domestic procedure for constituting limitation funds, selecting acceptable security, and allocating claims among competing creditors. This guide provides a step-by-step compliance framework for practitioners who need to constitute or challenge a limitation fund in Greek courts, covering SDR calculations, P&I Club Letters of Undertaking, bank guarantees, cash deposits, and the interaction between fund constitution and ship arrest under Greek procedural rules.

Executive Summary and Quick Checklist

Before engaging with the full analysis below, practitioners should keep the following five-point checklist in view at every stage of a limitation-fund matter in Greece.

• Assess eligibility early. Confirm that the claim falls within Article 2 of the LLMC and that the party seeking to limit qualifies under Article 1 (shipowner, charterer, manager, operator, salvor or their insurer). Delay can compromise procedural advantage.
• Calculate the applicable limit. Use the 1996 Protocol SDR bands and the IMF’s published SDR-to-EUR exchange rate on the date of fund constitution. Convert tonnage into the correct bracket and add interest from the date of the incident as required under Article 11 of the Convention.
• Choose the right security format. Greek courts accept cash deposits, bank guarantees and, in established practice, P&I Club Letters of Undertaking (LOUs). Each format carries different lead-time, cost and enforcement profiles, select accordingly.
• File promptly and notify all known claimants. Constitute the fund before (or simultaneously with) any arrest application where possible. Serve notice on all identified claimants to trigger the limitation proceedings and stay competing individual actions.
• Engage Greek-qualified maritime counsel. Procedural requirements under the Greek Code of Private Maritime Law and the General Part of the Maritime Law Code (GPMLC), particularly Article 237, demand local expertise. Find a Greek maritime lawyer through the Global Law Experts directory.

What Is the LLMC (1976) and the 1996 Protocol?

The Convention on Limitation of Liability for Maritime Claims was adopted under the auspices of the International Maritime Organization (IMO) on 19 November 1976 in London. It replaced the earlier 1957 Brussels Convention and established a virtually unbreakable right to limit liability for defined categories of maritime claims. The regime was designed to balance the interests of shipowners, who face catastrophic exposure from a single casualty, against the rights of claimants to recover meaningful compensation.

The 1996 Protocol to the LLMC substantially increased the monetary limits of liability, introduced a simplified tacit-acceptance amendment procedure for future limit adjustments, and tightened the conditions under which a person may lose the right to limit. Under the 1996 Protocol, limitation can only be broken where the loss resulted from a personal act or omission of the person seeking to limit, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result. Greece incorporated the 1996 Protocol limits into its domestic maritime limitation of liability framework, making the higher SDR thresholds applicable in Greek proceedings.

Key Articles to Know: Articles 1, 2 and 4

Article 1 defines persons entitled to limit: shipowners (including owners, charterers, managers and operators of seagoing vessels), salvors, and any person for whose act the shipowner or salvor is responsible. Liability insurers may invoke limitation to the same extent. Article 2 lists covered maritime claims, claims for loss of life, personal injury, property damage, wreck removal, and claims arising from measures taken to avert or minimise loss. Article 4 sets out the conduct barring limitation, a provision significantly tightened by the 1996 Protocol to require proof of intent or subjective recklessness. Practitioners should note that the burden of breaking limitation rests on the claimant.

Which Maritime Claims Are Covered and How Limits Are Calculated

The convention on limitation of liability distinguishes between two broad categories of claims for the purpose of calculating limits. Claims for loss of life or personal injury attract a separate, higher ceiling than claims for damage to property (including harbour works, navigable waterways, and infrastructure). Where personal-injury claims exceed their dedicated limit, the uncompensated balance ranks pari passu with property claims against the property fund. Claims excluded from limitation include salvage claims, oil-pollution claims governed by the CLC/Fund Conventions, nuclear-damage claims, and claims by servants of the shipowner whose duties relate to ship operations.

Under the 1996 Protocol, limits are expressed in Special Drawing Rights (SDR), the IMF’s composite currency unit widely used in shipping for standardising international monetary obligations. The limits are calculated by reference to the vessel’s gross tonnage in bands. The table below summarises the 1996 Protocol limits for non-passenger claims.

Worked Example: 10,000 GT Vessel, SDR to EUR Conversion

Consider a property-damage claim arising from a collision involving a 10,000 GT bulk carrier. The property-claim limit under the 1996 Protocol is calculated as follows:

• Base amount (first 2,000 GT): 1,000,000 SDR
• Incremental amount (8,000 GT × 400 SDR): 3,200,000 SDR
• Total limit: 4,200,000 SDR

The SDR in shipping is converted to the applicable local currency on the date the fund is constituted or, if earlier, the date of payment. Practitioners should use the IMF’s daily published SDR valuation. The total fund amount must also include interest accruing from the date of the incident to the date of fund constitution, as required by Article 11(1) of the Convention. This interest obligation can add materially to the security amount, particularly where fund constitution is delayed by months.

Greek Procedure for Constituting a Limitation Fund

Constituting a limitation fund in Greece requires navigating both the LLMC treaty framework and the domestic procedural rules codified in the Greek Code of Private Maritime Law (CPML), as reformed in 2023, and the provisions of the General Part of the Maritime Law Code (GPMLC). The procedure involves several sequential steps, and practitioners must be attentive to local requirements that go beyond the Convention text.

Step-by-Step Procedure

• Step 1, Identify the competent court. Under Greek law, the Single-Member or Multi-Member Court of First Instance at the port where the incident occurred, or where the vessel has been arrested, has jurisdiction to receive the application for constitution of a limitation fund.
• Step 2, File the limitation application. The shipowner (or other person entitled to limit under Article 1) files an application for constitution of the fund, specifying the incident, the vessel’s tonnage, the calculated SDR limit, and the form of security offered. Article 237 of the GPMLC governs aspects of the procedural framework for limitation proceedings, including the court’s power to accept or reject the proposed security and to administer the distribution of the fund.
• Step 3, Deposit the security. The applicant must deposit the calculated amount, or provide equivalent security in the form of a bank guarantee, P&I Club Letter of Undertaking, or cash, with the court or as directed by the court. The security must cover the full limitation amount plus interest.
• Step 4, Notify all known claimants. The applicant must serve notice of the fund constitution on all identified claimants. In Greek practice, this typically involves formal service through a court bailiff, supplemented by publication where the identity of all claimants is not yet known.
• Step 5, Court examination and acceptance. The court examines whether the applicant is entitled to limit, whether the amount deposited is correct, and whether the form of security is acceptable. If satisfied, the court issues a decree constituting the fund.

The Role of the 2023 CPML Reform

Greece’s 2023 reform of the Code of Private Maritime Law modernised several aspects of limitation-fund procedure. The reform clarified the documentary requirements for fund applications, streamlined the notice provisions, and aligned the domestic framework more closely with the 1996 Protocol’s intent. Industry observers expect the practical effect of the reform to be faster processing of fund applications, greater certainty for foreign shipowners unfamiliar with Greek procedure, and a clearer basis for Greek courts to accept P&I Club LOUs as constituting adequate security, a practice that had developed informally in the years preceding the reform.

Documents Typically Required by Greek Courts

• Certified copy of the vessel’s International Tonnage Certificate
• Evidence of the incident giving rise to claims (protest, survey reports)
• Calculation of the limitation amount in SDR with EUR conversion
• The proposed security instrument (LOU, bank guarantee, or proof of cash deposit)
• List of identified claimants with details of their claims
• Power of attorney for Greek legal representation

Acceptable Forms of Security in Greece, P&I LOUs, Bank Guarantees, Cash

One of the most frequently asked practical questions when constituting a limitation fund in Greece concerns the type of security that courts will accept. The LLMC itself, at Article 11(2), provides that a fund may be constituted by depositing the sum or by producing a guarantee “acceptable in the legislation of the State Party where the fund is constituted and considered to be adequate by the Court.” Greek practice recognises three primary instruments.

P&I Club Letter of Undertaking (LOU)

A P&I Club Letter of Undertaking is, in practice, the most commonly offered form of security in Greek limitation proceedings. LOUs issued by International Group P&I Clubs are widely recognised by Greek courts, provided the wording is sufficiently explicit and unconditional. A typical LOU undertakes to pay the stated sum upon presentation of an enforceable court judgment or arbitral award, without preconditions. Industry observers note that Greek courts have generally accepted such LOUs where the issuing club is a member of the International Group and the undertaking language is clear and irrevocable.

Bank Guarantee

A limitation fund bank guarantee, whether issued by a Greek or international bank, offers high enforceability. Greek courts treat bank guarantees as near-equivalent to cash. The drawback is speed and cost: obtaining a bank guarantee typically requires credit-line approval, documentary compliance, and often takes one to five business days. For owners without pre-arranged credit facilities, this delay can be critical during urgent arrest proceedings.

Cash Deposit

A direct cash deposit into a court-designated account carries the lowest enforcement risk but imposes a significant liquidity burden on the shipowner. In practice, cash deposits are rare for large limitation funds and are more commonly used for smaller claims or interim security pending arrangement of a bank guarantee or LOU.

Practitioner note: Where there is any doubt about court acceptance of a P&I LOU, for instance, if the issuing club is not a member of the International Group, or if the wording contains conditionalities, practitioners should consider providing a bank guarantee as an alternative or supplementary security. All security wording should be reviewed by Greek-qualified counsel before submission.

Interaction with Arrest, Claims Allocation and Enforcement

The constitution of a limitation fund has direct consequences for the arrest of the vessel and the distribution of recoveries among competing claimants. Under Article 13 of the LLMC, once a fund has been constituted in accordance with the Convention, any claimant who has a claim against the fund is barred from exercising rights against any other assets of the person by whom or on whose behalf the fund was constituted, meaning that an existing arrest must be lifted, and no new arrest can be obtained in respect of those claims.

Greek courts apply this release-from-arrest principle rigorously. Early indications from post-2023 practice suggest that courts are increasingly willing to lift arrests swiftly upon confirmation that an adequate fund has been constituted, provided all procedural requirements have been met. Claims are distributed from the fund on a pro-rata basis within each category (personal injury, property), giving no priority to the order in which claims were filed.

Arrest to Protect Claims and Limitation Periods

Claimants who have not yet obtained a judgment or award may arrest the vessel to secure their maritime claims before or during limitation proceedings. The statute of limitations for maritime claims in Greece varies by claim type: tort-based claims are generally subject to a five-year period, while contractual claims may be subject to shorter periods depending on the applicable code provisions. Claimants must be mindful that the constitution of a fund does not toll or extend these limitation periods, claims must still be filed within the applicable time limits to participate in the fund distribution.

Practical Issues and Traps for Practitioners in Greece

Even experienced maritime practitioners can encounter difficulties when constituting or challenging a limitation fund in Greek courts. The following issues deserve particular attention.

• LOU wording objections. Courts have occasionally questioned P&I LOUs that contain conditions precedent, reference to club rules as a qualification, or that limit payment to “ascertained” rather than “adjudicated” claims. Practitioners should ensure LOU language tracks a clean, unconditional undertaking to pay upon final judgment or award.
• SDR conversion timing and currency risk. The SDR-to-EUR conversion rate fluctuates daily. The convention on limitation of liability requires the conversion to be made at the date of fund constitution. A delay of even a few weeks between the incident and fund constitution can produce a materially different EUR amount. Practitioners should lock the rate on the filing date and document the IMF rate used.
• Multi-jurisdictional claims. Where claims arise from an incident involving vessels of different flags or multiple claimant jurisdictions, competing limitation proceedings may be initiated in different states. Greek courts will generally recognise a fund constituted in Greece as barring arrest within Greek jurisdiction, but practitioners must monitor parallel proceedings abroad and assess whether the Greek fund provides adequate protection.
• Deposit versus LOU disputes. Claimants may challenge the adequacy of a P&I LOU and seek a court order requiring substitution with cash or a bank guarantee. Practitioners for the shipowner should be prepared to argue the established practice of acceptance and, if necessary, to provide supplementary security to avoid delay.
• Timeline awareness. From initial arrest notification to fund acceptance, the typical timeline in Greek courts is two to six weeks, depending on the complexity of the claims and the form of security offered. Practitioners should factor in time for document preparation, court scheduling, and service on all known claimants.

Recommendations, What Shipowners, P&I Clubs and Claimants Should Do

• Shipowners: Upon notification of a maritime incident, immediately instruct Greek-qualified counsel to assess whether limitation applies. Begin SDR calculations and engage your P&I Club to prepare an LOU without delay.
• P&I Clubs: Prepare LOU wording that is unconditional, irrevocable, and compliant with Greek court expectations. Maintain template LOUs pre-approved by Greek counsel to accelerate fund constitution.
• Claimants: Act promptly to arrest the vessel if a limitation fund has not yet been constituted. File claims within the applicable limitation period and challenge the adequacy of any security that contains unusual conditions.
• All parties: Preserve documentary evidence from the outset, survey reports, voyage data, crew statements and protest documents. Evidence preservation is critical both for proving or defending against limitation-breaking conduct and for substantiating claims within the fund.
• Seek specialist counsel. The interplay between the LLMC, the Greek CPML, and Article 237 of the GPMLC demands practitioners with deep admiralty litigation experience. Find a Greek maritime lawyer to guide your limitation strategy.

Sources

1. International Maritime Organization, Convention on Limitation of Liability for Maritime Claims (LLMC)
2. United Nations Treaty Collection, LLMC Full Text (Volume 1456, I-24635)
3. European Maritime Safety Agency (EMSA), LLMC Resources
4. Steamship Mutual, P&I Club Practice Notes on Limitation Funds
5. Skuld P&I Club, Limitation of Liability Guidance
6. International Monetary Fund, SDR Valuation
7. ICLG, Shipping Law Comparative Guide (LLMC Chapter)