CMA CGM SA v Classica Shipping Company Ltd
| Jurisdiction | England & Wales |
| Judge | David Steel J,Waller,Longmore,Neuberger L JJ |
| Judgment Date | 12 February 2004 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 February 2004 |
Court of Appeal (Civil Division).
David Steel J; Waller, Longmore and Neuberger L JJ.
Christopher Hancock QC and Henry Byam-Cook (instructed by Ince & Co) for the appellants.
A Iain Milligan QC and Michael Coburn (instructed by Holman Fenwick & Willan) for the respondents.
The following cases were referred to in the judgments:
Aegean Sea, The[1998] CLC 1090.
Bureau Wijsmuller NV v Owners of the Tojo Maru (The Tojo Maru) (No. 2)ELR [1972] AC 242.
Erkowit (Cargo owners) v Eschersheim (Owners) (The Eschersheim)UNK [1976] 2 Ll Rep 1.
Evpo Agnic, The[1988] 2 Ll Rep 411.
Fothergill v Monarch Airlines LtdELR [1981] AC 251.
Giacinto Motta, The[1977] 2 Ll Rep 221.
James Buchanan & Co Ltd v Babco Forwarding & Shipping (UK) LtdELR [1978] AC 141.
Morris v KLM Royal Dutch Airlines [2002] CLC 820; [2002] 2 AC 628.
MSC Mediterranean Shipping Co SA v Owners of the ship Tychy (The Tychy) [1999] CLC 1046.
Schiffahrtsgesellschaft MS Merkur Sky mbH & Co KG v MS Leerort Nth Schiffahrts GmbH & Co KG (The Leerort)UNK [2001] EWCA Civ 1055; [2001] 2 Ll Rep 291.
Sir John Jackson Ltd v Owners of the Steamship Blanche (The Hopper No. 66) [1908] AC 126.
Span TerzaUNK [1982] 1 Ll Rep 225.
Stag Line Ltd v Foscolo, Mango & Co LtdELR [1932] AC 328.
Zenatia (Owners) v Putbus (Owners) (The Putbus)ELR [1969] P 136.
Shipping — Limitation of liability — Time charter — Charterer's right to limit — Explosion on board attributable to dangerous cargo carried in breach of charter — Shipowner claimed cost of repair to vessel and salvage costs and indemnity for cargo claims — Extent if any to which charterer entitled to limit liability in respect of claims by shipowner — Convention on the Limitation of Liability for Maritime Claims 1976, art. 1, 2, 3 — Merchant Shipping Act 1995, s. 185, Sch. 7, Pt. I.
This was an appeal raising the question of the extent to which charterers might (if at all), pursuant to the Merchant Shipping Act 1995, limit their liability in proceedings brought against them by shipowners.
In July 1999 the container ship CMADJAKARTA(ex CLASSICA) suffered an explosion and her voyage had to be abandoned; the explosion was attributable to two containers containing bleaching powder. The shipowners asserted (and arbitrators held) that the shipment of the containers constituted a breach of lines 45–47 of a time charterparty on the New York Produce Exchange form of 9 April 1999 which provided that the vessel was to be employed in carrying lawful containerised merchandise “excluding any goods of a dangerous injurious flammable or corrosive nature”. The arbitrators decided that the charterers were liable to the owners in damages for the cost of repair to the vessel in the sum of US $26,624,022; they also made consequential declaratory awards.
On appeal from the arbitration award David Steel J held that a charterer could only limit his liability to the extent that he was acting as (or “qua”) shipowner which he defined as undertaking an activity “usually associated with ownership” and further defined as “to the extent that he operates or manages the vessel”. In so holding he, like the arbitrators, followed the decision of Thomas J in The Aegean Sea [1998] CLC 1090. The charterers appealed. The main part of the owner's claim was the cost of repair of the ship. It was that claim which resulted in the award of $26,624,032.00; it included $4,702,441.80 paid for salvage services rendered to the ship. There were, however, other claims made by the shipowners; these were claims to be indemnified in respect of (1) their liability to contribute to general average and (2) their liability to the cargo owners for loss or damage to cargo. A limitation fund had been established by the charterers in France. The question, therefore, was whether the shipowners, together with other claimants, were obliged to look only compensation.
Held, dismissing the appeal:
1. Limitation under the Merchant Shipping Act was governed by an international convention and the task of the court was to construe the convention as it stood without any English law preconceptions. The interpretation of international conventions was not to be controlled by domestic principles. The duty of the court was to ascertain the ordinary meaning of the words used, not just in their context but also in the light of the evident object and purpose of the convention.
2. The word “shipowner” in art. 1 of the 1976 convention expressly included “charterer”. The ordinary meaning of the word “charterer” connoted a charterer acting in his capacity as such not a charterer acting in some other capacity. To say that a charterer must be acting qua owner or as if he were owner was not only to impose a gloss upon the wording of the convention and accord it a meaning other than its ordinary meaning, it was also to impose a requirement the ambit of which would often be difficult to ascertain. It was conceded that a charterer could limit his liability when sued by a cargo-owner for loss of or damage to cargo and if the word “charterer” was not to be construed as meaning qua shipowner in an action brought by a cargo-owner, it could not be so construed merely because the claimant was not the cargo-owner but the shipowner.
3. It was still necessary to ascertain whether a claim for damage to the ship by reference to which a charterer sought to limit his liability was a claim which fell within art. 2 and whether the charterers could limit their liability for any of the other claims brought by the shipowners. The judge was right that the ordinary meaning of art. 2(1)(a) did not extend the right to limit to a claim for damage to the vessel by reference to the tonnage of which limitation was to be calculated.
4. If a claim for loss of or damage to the ship was not itself a claim within art. 2(1)(a), a claim for amounts paid to salve the ship could not be within art. 2(1)(a) since it was not a claim in respect of loss or damage to property within the article. A claim to recover the cost incurred of salving a vessel might best be understood as a claim for consequential loss resulting from the damage to the ship; but a claim for that consequential loss was still a claim in respect of damage to the ship and it could not be brought within art. 2(1)(a) or 2(1)(f).
5. The same principle applied to the shipowners' claim to be indemnified against their liability to contribute in general average. Any contribution made by the shipowners would be made as a result of the damage to the vessel and did not, therefore, fall within art. 2(1)(a).
6. The arbitrators had awarded an indemnity in respect of any cargo claims for which owners were liable. Some cargo-owners had sued the shipowners in tort and it was that liability, if established, which the shipowners wished to pass on to charterers to the extent that such tortious claims were brought in (or governed by the law of) countries which had not ratified the 1976 convention. Such claims were the result of “loss of or damage to property…occurring…on board the ship” and therefore fell within art. 2(1)(a) and the charterer was able to limit his liability for such claims even though they were being passed on via the shipowner.
7. Therefore charterers' appeal failed except to the extent that they would be entitled to limit their liability to indemnify the shipowners for the shipowners' own liability for cargo claims, to the extent that that liability was discharged by shipowners in a sum exceeding the appropriate limit.
(27 March 2003)
David Steel J:
1. By a charterparty on an amended NYPE form, dated Puteaux 9th 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.
2. During the currency of the charterparty, on the 10th 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.
3. 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.
4. This dispute was referred to arbitration under the relevant provisions of the charterparty. The arbitrators, Messrs Michael Baker-Harber, Mark Hamsher and Christopher Moss, published their first interim final award on the 15th January 2002. They found in favour of the owners on their claim.
5. 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.”
6. 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] CLC 1090 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.
7. Having “reserved their right” to argue that the decision was not correct, the...
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