Limitation of liability in a ship management contract subject to Italian law and jurisdiction

Our ref: 0108

15 November 2008

To: Ship management members of ITIC in Italy, Monaco and Switzerland and their brokers

Limitation of liability in a ship management contract subject to Italian law and jurisdiction

Under Italian law and pursuant to art. 1341 of the Civil Code, the contractual conditions imposing limitation of liability in favour of one of the parties have no effect if they have not been specifically approved in writing by the other party.

In order to satisfy the above requirement, the Italian contracts contain a paragraph, usually after the parties’ signatures, providing that some specific clauses (those with particular conditions in favour of one of the parties, like a limitation of liability) are approved in writing and the signature of both parties, or at least of the party suffering that clause, must be placed again under such paragraph.

If the contractual liability is limited also in case of “gross negligence”, the Italian law is even stricter, since pursuant to art. 1229 of the Civil Code, any clause excluding or limiting the contractual liability for gross negligence or wilful misconduct is null and void.

According to the above, it is recommended that any clause limiting the managers’ liability in a ship management contract subject to Italian law should not include “gross negligence” and should be specifically approved in writing by the shipowners (by means of a second signature at the bottom of the contract, under the words “clause no. … is specifically approved”).

The Managers would like to thank Michele Mordiglia of Studio Legale Mordiglia, Genoa for the information contained in this circular.

Yours sincerely,

ITIM Co. Limited, Managers