The UK Court of Appeal on 1st of September 2023 handed-down judgment in case of MSC Flaminia, upholding the decision of judge Andrew Baker albeit on different grounds.
In accordance with the judgement, charterers cannot limit an owner´s claim for its own losses, as reported by Essex Court Chambers.
“For the reasons which I have given, I would dismiss the appeal. MSC is not entitled to limit its liability,” said the judgement.
The case arises from a casualty on board the MSC Flaminia on 14th July 2012 while the ship was in mid-Atlantic en route from Charleston, South Carolina, to Antwerp.
An explosion occurred in the no. 4 cargo hold which led to a large fire on board. Hundreds of containers were destroyed and extensive damage was caused to the ship.
Three crew members lost their lives.
The explosion was caused by the auto-polymerisation of the contents of one or more of three tank containers laden with a chemical known as DVB which had been shipped at New Orleans on 1st July 2012.
The ship was eventually salved and repaired.
The time charter between Conti and MSC contained an arbitration clause. Conti brought claims in arbitration to recover hire throughout the period while the ship was out of service under the charter and to recover its losses as a result of the casualty.
The arbitrators determined that the ship remained on hire throughout and that MSC was liable to Conti in respect of the casualty. By an award dated 30th July 2021 and corrected on 1st September 2021, they awarded damages of approximately US $200 million.
MSC then sought to limit its liability for claims arising from the casualty pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the Amending Protocol of 1996 and now given the force of law in the United Kingdom by section 185 of the Merchant Shipping Act 1995.
“The trial of the limitation action came before judge Andrew Baker J, who had previously held that MSC was not entitled to an anti-suit injunction to prevent Conti from seeking to enforce its arbitration award elsewhere,” Essex Court Chambers stated.
The judge held that MSC was not entitled to limit its liability because Conti’s claims were not within the scope of any of the paragraphs of article 2 of the Convention.
However, in so-holding, the judge rejected Conti’s submission that tonnage limitation under article 2(1) only applies to claims in respect of losses suffered in the first instance by someone who is not within the extended definition of “shipowner” in article 1(2) of the 1976 Convention.
In the judgment of Andrew Baker it is stated that Conti filed a respondent’s notice advancing a narrower submission than the one made to the judge, namely that a charterer is only entitled to limit in respect of claims originating with an “outsider” and is not entitled to limit in respect of claims for losses originally suffered by the owner itself.
