CMA CGM SA v Classica Shipping Company Ltd (The CMA Djakarta)
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice David Steel,Mr Justice David Steel |
| Judgment Date | 27 March 2003 |
| Neutral Citation | [2003] EWHC 641 (Comm) |
| Docket Number | Case No: 2002/Folio 146,562 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 27 March 2003 |
[2003] EWHC 641 (Comm)
The Honourable Mr Justice David Steel
Case No: 2002/Folio 146,562
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London WC2A 2LL
Christopher Hancock QC and Henry Byam-Cook (instructed by Ince & Co) for the appellants
lain Milligan QC and Michael Coburn (instructed by Holman Fenwick & Willan) for the respondents
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
Introduction
By a charterparty on an amended NYPE form, dated Puteaux 9 April 1999, the respondent owners chartered their container vessel CMA Djakarta to the appellant charterers. The vessel was to be traded in the charterers' liner network.
During the currency of the charterparty, on 10 July 1999, there was an explosion and fire on the vessel, leading to her abandonment. Salvage services were rendered to ship and cargo, following which, after discharge of the containers, both damaged and undamaged, the vessel underwent substantial repairs.
The owners claimed against the charterers damages in the sum of $26,638,032, together with an indemnity in respect of their exposure to cargo claims and general average contributions. The basis for this claim was the contention that the explosion and the fire was attributable to the shipment of two containers containing bleaching powder, that shipment being in breach, it was alleged, of the express terms of the charterparty relating to dangerous cargo.
This dispute was referred to arbitration under the relevant provisions of the charterparty. The arbitrators, Michael Baker-Harber, Mark Hamsher and Christopher Moss, published their first interim final award on l5 January 2002. They found in favour of the owners on their claim.
The appeal
In the arbitration, the charterers had pleaded an entitlement to limit their liability in the following terms:
"25. Further or in the further alternative the respondents are entitled to limit their liability pursuant to the provisions of the 1976 Convention on the Limitation of Liability for Maritime Claims. In this regard, the respondents will rely:
(i) on the fund established in proceedings in the Tribunal de Commerce of Marseilles France and/or
(ii) on the right to limit by way of defence herein."
The arbitrators' reasons record a concession by the charterers that the arbitrators were bound by the decision of Thomas J in The Aegean Sea [1998] 2 Lloyd's Rep 39 to the effect that, on the facts of that case, voyage charterers were not entitled to limit their liability for claims brought by owners in respect of the nomination of an unsafe port. It was, in effect, accepted that the decision was not distinguishable.
Having "reserved their right" to argue that the decision was not correct, the charterers sought leave to appeal pursuant to section 69 of the Arbitration Act 1996. Leave was granted by Moore-Bick J on 28 May 2002.
The question of law on which leave was granted was as follows:
"Whether the charterers are entitled to limit their liability arising out of the first, second and third interim awards as against the owners pursuant to the Merchant Shipping Act 1995 and the Convention on Limitation of Liability for Maritime Claims 1976."
The charterers, of course, recognise that, in urging an affirmative answer to that question, it is implicitly contended that the decision in The Aegean Sea, supra, was wrong.
As appears from the form of the question, the arbitrators made two further interim awards, the first on 9 May and the second on 23 August 2002. These dealt with issues of costs. Leave to appeal against those awards was granted by Morrison J and Colman J respectively. All three appeals have been consolidated. However, no separate issue arises as regards the additional awards and I make no further reference to them.
The 1976 Convention
Section 185 of the Merchant Shipping Act 1995 (the "1995 Act") provides that the Convention on Limitation of Liability for Maritime Claims 1976 (the "1976 Convention") as set out in a schedule to the Act should have the force of law in the United Kingdom (subject to an exception which is not relevant to the present claim).
As a treaty. the 1976 Convention falls to be interpreted in accordance with the principles codified in the 1969 Vienna Convention on the Law of Treaties (the "Vienna Convention"): see Fothergill v Monarch Airlines [198l] AC 251 at p 282. Article 31 of' the Vienna Convention reads:
"A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in light of its object and purpose."
With a view to identifying the context, together with the object and purpose of the 1976 Convention, it seems to me appropriate (and in this respect I share the approach contemplated by paragraph 12 of the charterers' arbitration application) to have regard to the historical development of limitation of liability and, in particular, the provisions of the immediate precursor to the 1976 Convention namely the 1957 Convention for the Unification of Certain Rules relating to the Limitation of the Liability of Owners of Seagoing Ships (the "1957 Convention").
History of limitation
The first statutory grant of rights of limitation is to be found in the Responsibility of Shipowners Act 1733 which allowed a shipowner to limit his liability in respect of theft by a master or crew up to the value of the ship and freight. The preamble to that Act recorded that it was "of the greatest consequence and importance to this kingdom to promote the increase of the number of ships and vessels, to prevent any discouragement to merchants which will necessarily tend to the prejudice of this kingdom".
In 1786, this was extended to cover the consequences of any act on the part of the master and crew occurring without the privity of the owners. The next development of substance was the Merchant Shipping Act 1854 whereby a minimum value was calculated by reference to the tonnage of the ship. This was taken a stage further in the Merchant Shipping Acts, &c, Amendment Act 1862 whereby arbitrary figures for a rate per ton were prescribed for all circumstances regardless of the actual value of the vessel.
The principal shipping statute of the nineteenth century was the Merchant Shipping Act 1894 (the "1894 Act") which consolidated the earlier legislation. Section 503 furnished a limit to an owner's liability in respect of certain categories of occurrence:
"503(l) The owners of a ship, British or foreign, shall not, where all or any of the following occurrences take place without their actual fault or privity; (that is to say,)
(b)… Where any damage or loss is caused to any goods, merchandise, or other things whatsoever on board the ship;…
(d) Where any loss or damage is caused to any other vessel, or to any goods, merchandise, or other things whatsoever on board any other vessel, by reason of the improper navigation of the ship;…
be liable to damages beyond the following amounts…"
The Merchant Shipping Act 1906 provided that the expression "owner" should be "deemed to include any charterer to whom the ship is demised": see s 71. In fact, "owner" was construed, even prior to the Act, as being inclusive of a demise charterer: see The Hopper No 66 [1908] AC 127.
The first attempts at international harmonisation of the principles of limitation of liability led to the 1924 Convention for the Unification of Certain Rules relating to the Limitation of Liability of Owners of Seagoing Vessels (the "1924 Convention"). Under Article 1, the 1924 Convention afforded a limit in respect of:
"(1) Compensation due to third parties by reason of' damage caused. whether on land or water, by the acts or faults of the master, crew, pilot, or any other person in the service of the vessel;
(2) Compensation due by reason of damage caused either to cargo delivered to the master to be transported, or to any goods or property on board;…"
As regards the extent of liability, the 1924 Convention adopted a further variation on the theme in the form of a limit equalling the value of the vessel but with a cap based on a rate per ton. Article 10 is also worthy of note:
"Article 10. Where a person who operates the vessel without owning it or the principal charterer is liable under one of the heads enumerated in article 1, the provisions of this convention are applicable to him."
Although the 1924 Convention was signed by the British government, no amendment to the UK legislation was made to give effect to it.
The 1957 Convention attracted greater support, not least from the UK. Furthermore it replaced the 1924 Convention as between states which ratified the later one. The right of limitation was still afforded to owners for certain occurrences but the categories of occurrence were enlarged:
"Article 1(1).
(a) …loss of, or damage to, any property on board the ship;
(b) …loss of, or damage to any other property or infringement of any rights caused by the act, neglect or default of' an) person on board the ship for whose act, neglect of default the owner is responsible or any person not on board the ship for whose act, neglect or default the owner is responsible: provided however that in regard to the act, neglect or default of this last class of person. the owner shall only be entitled to limit his liability when the act, neglect or default is one which occurs in the navigation or the management of the ship or in the loading, carriage or discharge of its cargo…"
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