ABSTRACT
The basic idea behind the right to limit liability was that every encouragement should be given to shipowners to carry on their business. Going to sea in ships was an adventurous pursuit to be encouraged rather than discouraged in the interests of the promotion and flourishing of international trade and if those who were prepared to gamble what capital they did have knew that they were faced with exposure to unlimited liability and often in situations over which they might have no personal control, their keen adventurous spirit might have been stifled before it had had time to blossom. Centuries ago a serious maritime disaster would very likely have resulted in the instant bankruptcy of the shipowner. The chances were that he might abandon the ship and her freight into the hands of those third parties with valid claims against him. This in itself produced in practical terms a form of limitation of liability. Recognition of the inescapable economic fact that aggrieved third-party claimants would not recover their losses where the shipowners’ adjudged liability far exceeded his assets was the essence of the pro-limitation argument. Looking at it from a creditor’s viewpoint, it is surely preferable to live in the certainty of obtaining a substantial percentage of the compensation due rather than face the uncertainty of not knowing whether or not they would ever receive the much larger sums to which they had a right.
