March 11 2009
Facts
In January 2007 the MSC Napoli suffered damage in heavy weather conditions and was
beached on the south coast of the United Kingdom. The casualty gave rise to claims against the owners of the vessel in excess of £100 million. On February 27 2007 the owners constituted a limitation fund under the Convention on Limitation of Liability for Maritime Claims in the sum of £14.71 million and on July 31 the court made a general limitation decree. Hapag-Lloyd AG (HPL) and H Stinnes Linien GmbH were slot charterers of the vessel from Mediterranean
Shipping Company (MSC).
HPL and Stinnes had issued their own bills of lading to cargo interests and had various
claims notified against them by the holders of those bills. Both claimed to be entitled to limit their liability under the convention, and that the fund should be deemed to have been constituted by them. No party had sought to challenge this right, but the Stinnes and HPL bills of lading were subject to German law and jurisdiction, and the German courts would be asked to direct
enforcement of any claims to the fund.
Issues
The decision[1] concerned two preliminary issues: (i) whether HPL and Stinnes, as slot charterers of the vessel from MSC, were 'ship owners' for the purposes of Article 1 of the convention, and were entitled to limit their liability under the convention and the Merchant Shipping Act 1995; and (ii) whether the limitation fund constituted by the owners was deemed to be constituted by HPL and Stinnes under the convention.
Judgment
Justice Teare decided the first issue in favour of HPL and Stinnes. Article 1(1) of the convention provides that "ship owners…as hereinafter defined" may limit their liability under the convention and Article 1(2) defines the term 'ship owner' to mean "the owner, charterer, manager or operator of a sea going ship".
The judge held that the ordinary meaning of the word 'charterer' in Article 1(2) of the convention is apt to include any type of charterer, whether demise, time or voyage charterer. There was no reason why the word should not also include a slot charterer.
In arriving at his conclusion the judge considered the object or purpose of the convention, which is to encourage the provision of international trade by way of sea carriage by limiting the liabilities which arise on a distinct occasion. Such liabilities obviously include cargo claims. The inclusion of charterers within the definition of 'ship owner' ensures that cargo claimants cannot avoid
the limit on the ship owners' liability by directing claims at the charterers. If slot charterers did not fall within the definition of a 'charterer' in Article 1(2), then slot chartering - which is an established and efficient way of organizing the carriage of goods - might fall into disuse. A slot charterer's inability to limit liability would not encourage the object and purpose of the convention.
The judge further considered the suggestion that it could not have been intended that a slot charterer could limit liability by reference to the whole of the ship, when it had not contracted to have the whole of the ship available to it. He did not consider this compelling, given that the limit is in respect of the aggregate of liabilities of those within the definition of a 'ship owner' on a
distinct occasion. Thus, there might be several persons seeking the benefit of the single limit - for example, the registered owner, time charterer and several slot charterers. Nor did he consider compelling the argument that Article 1(2) referred to the "charterer of a … ship".
The judge also answered the second issue in favour of the slot charterers. Article 11(3) provides that a fund constituted by one of the persons mentioned in Article 9 should be deemed to be constituted by all such persons. Article 9 provides that the limits of liability should apply to the aggregate of all claims which arise on any distinct occasion against the persons mentioned in Article 1(2).
The fund was constituted by the owners of the ship, who were persons mentioned in Article 1(2) and therefore persons mentioned in Article 9. Following the judge's decision on the first issue, HPL and Stinnes, as charterers, were also mentioned in Article 1(2) and therefore in Article 9. Accordingly, under Article 11(3), the fund constituted by the owners was deemed to be constituted by HPL and Stinnes.
The judge left open the question of whether the person who had put up the fund was entitled to any form of contribution from those who took the benefit of the fund as 'ship owners'. He commented that whether there was any right to contribution or restitution may have to depend on the general law.
Endnotes