Cosmotrade SA v Kairos Shipping Ltd and Others [QBD (Comm)]
| Jurisdiction | England & Wales |
| Judge | Simon J. |
| Judgment Date | 21 June 2013 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 21 June 2013 |
Queen's Bench Division (Commercial Court).
Simon J.
M Jones (instructed by Jackson Parton) appeared on behalf of Cosmotrade SA.
T Macey-Dare (instructed by Clyde & Co) appeared on behalf of Kairos Shipping Ltd.
N Jacobs QC (instructed by Holman, Fenwick & Willan) appeared on behalf of Enka and Bechtel.
M Collett QC (instructed by Ben Macfarlane & Co) appeared on behalf of Al-Rashed and others.
The following cases were referred to in the judgment:
Barde AS v ABB Power Systems (The Barde Team)[1995] FCA 1602.
Congentra AG v Sixteen Thirteen Marine SA (The Nicholas M)[2008] 2 CLC 51.
Garnier Shipping Co v Mediterranean Shipping SA (The Rena)[2012] Folio 225.
Mediterranean Feeders LA v Burnt Maering Schiffahrts (5 June 1997, CA)
Shipping Loss of vessel Limitation fund Freezing injunctions Shipowner not entitled to constitute limitation fund by provision of P & I club guarantee No domestic legislative provision making guarantee acceptable Fund could only be constituted by payment into court Freezing injunctions continued in respect of arbitration claims against owners Merchant Shipping Act 1995, s. 185, Sch. 7, Pt. 1 Convention on Limitation of Liability for Maritime Claims 1976, art. 11(2), 14 Civil Procedure Rules 1998, r. 61.11.
These were applications by shipowners for an interim declaration that they were entitled to constitute a limitation fund by the provision of a P&I Club guarantee, and to determine whether ex parte freezing injunctions should be continued or discharged.
The applications arose from the loss of a bulk carrier, Atlantic Confidence. The vessel sank with its cargo of steel in deep water following an engine room fire. Three sets of cargo interests had obtained freezing injunctions in support of arbitration claims against the owners. The owners issued a claim form seeking to limit their liability in respect of loss and damage under the Merchant Shipping Act 1995 and the 1976 Limitation Convention to the sum of 6,595,767 plus interest until the limitation fund was constituted. They applied for an interim declaration that they were entitled to constitute a limitation fund by the provision of a P&I Club guarantee for the purposes of CPR Part 61 and art. 11(2) of the Convention.
The first issue was whether a guarantee from the owners' Club was effective to constitute a limitation fund. The second was whether the ex parte freezing injunctions should be continued as the cargo interests maintained or discharged as the owners argued.
Held, ruling accordingly:
1. Under art. 11(2) the fund could be constituted either by deposit or by the production of a guarantee acceptable under the legislation of the State Party. There was no such legislation in force in England. Article 11(2) was clearly looking at legislation which applied specifically to guarantees. The CPR contemplated a payment into court and did not enable the court to direct that the fund could be constituted other than by payment into court. There was nothing in the 1995 Act or CPR Part 61 to justify reversing the previous well established practice. Without a specific statutory provision that a guarantee was acceptable the rule remained that a fund could only be constituted by making a payment into court.
2. In the circumstances the injunctions were continued but in reduced amounts.
Simon J:
1. These applications relate to claims made as a result of the loss of the bulk carrier ATLANTIC CONFIDENCE built in July 1995 and registered in Valetta, Malta. The facts as they appear at this stage are these. On the 30 March 2013, while the vessel was in a position off Masirah Island, Oman, a fire broke out in the engine room which the crew were unable to control. The master ordered the crew to abandon ship and, despite the endeavours of the salvors, the vessel sank with its cargo of steel in deep water on the 3 April. It appears that the likely cause of the loss was the ignition of a leak of oil from a hot exhaust from a generator causing subsequent thermal stresses to the plating or damage to the sea water pipes in the engine room. All these matters will be investigated in due course in arbitrations.
2. All parties before the court properly describe themselves as claimants and it is convenient to describe the parties as the owners, who are represented by Mr Macey-Dare, instructed by Clyde & Co, the three sets of cargo interests, first the Enka and Bechtel interests represented by Mr Nigel Jacobs QC, instructed by Holman Fenwick, who claim under bills of lading issued by or on behalf of the master for the owners; secondly the Al-Rashed interests, represented by Mr Collett QC, instructed by Ben Macfarlane & Co, who claim under a further set of bills of lading, and, thirdly, Cosmotrade SA, represented by Mr Mark Jones, instructed by Jackson Parton, who claim as charterers under a time-trip charter from Gemlik in Turkey to Oman.
3. On the 23 April the Enka and Bechtel interests were granted a worldwide freezing injunction in support of an arbitration claim against the owners from Hamblen J in the sum of $10,108,424, plus interest and costs, an overall sum of $11.5 million. The former figure represented the vessel's tonnage limitation under the 1996 Protocol to the 1976 Limitation Convention. The claim was said to be worth more than that but these cargo interests accepted that the sum frozen in respect of the principal amount of their claim should be confined to the limitation figure. The owners' assets were identified as the proceeds of the Hull and Machinery insurance.
4. On the 8 May the Al-Rashed interests made a similar application to Popplewell J in support of their arbitration claim. He granted relief in the sum of $18.5 million which was calculated by adding the Al-Rashed interests claim of $7 million to the sum enjoined by the prior order of Hamblen J. Popplewell J accepted the argument that the amount frozen did not need to be limited by reference to the vessel's tonnage unless and until the owners either established a Limitation Fund or raised limitation as a defence.
5. On the 10...
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Kairos Shipping Ltd and Another v Enka & Company LLC and Others MV Atlantik Confidence
...1976 — Merchant Shipping Act 1995 — Civil Procedure Rules 1998, Pt. 61. This was an appeal by shipowners (Kairos) from a decision ([2013] 2 CLC 82) that it was not possible to constitute a limitation fund under the International Convention on Limitation of Liability for Maritime Claims 1976......