MSC Mediterranean Shipping Company S.A. v Stolt Tank Containers B.v
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 12 April 2022 |
| Neutral Citation | [2022] EWHC 835 (Admlty) |
| Docket Number | Case No: AD-2020-000089 |
| Court | Queen's Bench Division (Admiralty) |
[2022] EWHC 835 (Admlty)
Mr Justice Andrew Baker
Case No: AD-2020-000089
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
QUEEN'S BENCH DIVISION
ADMIRALTY COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Julian Kenny QC and Michal Hain (instructed by Mills & Co LLP) for the Claimant
Christopher Smith QC and David Walsh (instructed by HFW LLP) for the Fourth Defendant
The First to Third Defendants did not appear and were not represented
Hearing dates: 30, 31 March 2022
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
On 14 July 2012, the containership MSC Flaminia was in the middle of the Atlantic Ocean en route from Charleston, Louisiana, to Antwerp when an explosion occurred in her no.4 cargo hold leading to a large fire on board. Three of her crew lost their lives: one was never found, the other two were grievously injured and died of their injuries shortly afterwards. Hundreds of containers were destroyed and extensive damage was caused to the ship. As the arbitrators to whom I refer below have observed, this was on any view an horrific tragedy.
The explosion was caused by auto-polymerisation of the contents of one or more of three tank containers laden with 80% divinylbenzene (‘DVB’). Those tank containers had been shipped at New Orleans on 1 July 2012.
In July 2012, MSC Flaminia was operating under a period time charter dated 3 November 2000 between the claimant (‘MSC’) as time charterer and her registered owner, the fourth defendant (‘Conti’).
The time charter provided for London arbitration. An arbitration was started by Conti in 2012 but it was actively prosecuted only much later, after the US proceedings to which I refer below had been commenced. There have been three awards so far, issued by an arbitral tribunal comprising Stephen Hofmeyr QC, Sir David Steel and Julia Dias QC, namely:
(i) A first award dated 8 February 2021 (‘Award 1’) dealing with clause 62 of the time charter. The arbitrators dismissed finally a claim by MSC that clause 62 was an indemnity in its favour covering the casualty. One of Conti's lines of defence to that claim was that if clause 62 was by nature an indemnity in favour of MSC capable of covering the casualty, nonetheless it did not apply if the casualty resulted from negligence on the part of MSC. The indemnity claim failed on the prior point that clause 62 did not provide for an indemnity in favour of MSC at all.
(ii) A second award dated 30 March 2021 (‘Award 2’) dealing finally with all other liability issues. MSC was held liable to Conti in respect of the casualty. I consider more closely in the next two sections of this judgment what was determined by Award 2.
(iii) A third award dated 30 July 2021 and corrected on 1 September 2021 (‘Award 3’), by which Conti was awarded damages of c.US$200 million on a quantification by the arbitrators of its recoverable losses.
MSC sought to appeal against Award 1 pursuant to s.69 of the Arbitration Act 1996, but leave to appeal was refused, and so that Arbitration Claim was dismissed, by Order of Butcher J dated 19 April 2021. The Claim Form was issued on 8 March 2021 and was served promptly. The application for leave to appeal against Award 1 was pending, therefore, when Award 2 was issued at the end of March.
By this Admiralty limitation claim, commenced by MSC by Claim Form dated 21 July 2020, MSC claims to limit its liability, if any, for claims arising out of the casualty pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims as amended by the Amending Protocol of 1996 and enacted under English law by the Merchant Shipping Act 1995 (‘the Amended 1976 Convention’). The scope of the Amended 1976 Convention is stated in these terms by Article 15.1, namely:
“ This Convention shall apply whenever any person referred to in Article 1 [i.e. a shipowner or salvor, but where ‘shipowner’ includes charterer: see Article 1.2] seeks to limit his liability before the Court of a State Party or seeks to procure the release of a ship or other property or the discharge of any security given within the jurisdiction of any such State.”
This case does not concern the release or discharge of property or security in this jurisdiction. So the pertinent scope of the Convention is MSC's claim to limit its liability before this court.
In that regard, MSC claims a general limitation decree and such directions as may be necessary and proper for a limitation fund and the distribution thereof. A limitation fund has been established pursuant to an Order dated 5 October 2021 by way of a Letter of Undertaking from the Standard Club UK Ltd. The tonnage limitation amount is 25,318,000 SDRs (c.£26.5 million).
MSC has not named as defendants all parties that might have or might have had a claim against it arising out of the casualty, but only:
(i) two Stolt companies (the first and second defendants), Stolt having been the road carrier of the DVB tank containers to New Orleans, and vis-à-vis MSC the shippers of those containers onto MSC Flaminia;
(ii) the claimants in Claim No. CL-2017-000540 (who are, collectively, named as third defendant), a Commercial Court claim brought by cargo claimants whose bill of lading claims against MSC were subject to English law and jurisdiction; and
(iii) Conti.
Other cargo claimants sued MSC, Conti, the New Orleans Terminal, Stolt and the DVB manufacturer, Deltech, in the US District Court for the Southern District of New York. Those proceedings were tried by US Federal District Judge Katherine B Forrest. In a Phase 1 Judgment dated 17 November 2017, Judge Forrest found that the auto-polymerisation that resulted in the explosion on board was caused by:
(i) the decision to ship the DVB from New Orleans, which necessitated a longer voyage than a shipment from a port in the Northeastern US and exposed the DVB to undesirable conditions (essentially, warm ambient temperatures for a prolonged period);
(ii) the fact that the DVB was left on the dock in New Orleans for 10 hot days in the sun, next to a number of tank containers of heated diphenylamine (‘ DPA’);
(iii) the stowage of the DVB tank containers in no.4 hold next to tank containers of heated DPA and near the ship's heated bunker tanks; and
(iv) a lack of ventilation in no.4 hold leading to hotter than normal ambient hold temperatures.
Judge Forrest found in addition that the DVB was adequately oxygenated and chilled when it left Deltech and did not auto-ignite. Ignition, she found, came by a spark caused by the opening of an access hatch to no.4 hold during the laden voyage.
While it is not said that Judge Forrest's conclusions create any issue estoppel here between MSC and Conti, I did not understand there to be any dispute over the accuracy of her findings summarised above (at all events for present purposes).
By her Phase II Judgment dated 10 September 2018, Judge Forrest concluded that all claims against inter alia Conti, MSC and the New Orleans Terminal failed. None of those, in Judge Forrest's opinion, was shown to have been at fault. By contrast, she held Deltech and Stolt to be at fault in various respects and liable as a result on various bases. She held further inter alia that MSC, and Conti as its sub-contractor, was entitled to a full indemnity from Stolt and Deltech in respect of the shipment of the dangerous DVB cargo; and that responsibility was to be apportioned inter se 55% to Deltech and 45% to Stolt.
Conti defends MSC's limitation claim on the merits, disputing that MSC has any limitation right under the Amended 1976 Convention in respect of Conti's recoverable losses, now quantified by Award 3, on the basis that either:
(i) Conti's loss “ resulted from [MSC's] personal act or omission, committed … recklessly and with knowledge that such loss would probably result” within the meaning of Article 4 of the Amended 1976 Convention (‘the Article 4 defence’), or
(ii) Conti's claims do not fall within the scope of Article 2 of the Amended 1976 Convention (‘the Article 2 defence’).
The Article 2 defence is listed for trial in October 2022. It is presently listed for 8 days, plus 2 days of pre-reading, but Mr Kenny QC indicated that his estimate was that only 2–3 days of hearing time should be necessary. I asked the parties to liaise and notify the Commercial Court Listing Office as soon as possible of any agreed revised time estimate.
The Article 4 defence is due for trial, if required, in 2023, although no trial date has yet been fixed. However, MSC says that no such trial is required. By Application Notice dated 16 July 2021, MSC applies for summary judgment dismissing the Article 4 defence, alternatively an order striking it out.
MSC further applies, by Application Notice dated 30 November 2021, for an anti-suit injunction restraining Conti from taking any step to enforce Award 3 anywhere in the world prior to the conclusion of the limitation claim in this court.
Finally by way of introduction, by Application Notice dated 10 December 2021 Conti cross-applies for declarations that:
(i) Award 3 is binding on MSC and Conti;
(ii) this pending limitation claim does not act to set aside or suspend Award 3;
(iii) any limitation decree in due course granted will not operate to set aside or suspend Award 3.
Award 2
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MSC Mediterranean Shipping Company S.A. v Stolt Tank Containers B.v
...Mr Justice Andrew Baker Introduction 1 On 12 April 2022, I handed down a judgment dealing with a number of issues in this Claim: [2022] EWHC 835 (Admlty). One of those issues was whether the fourth defendant, Conti, the registered owner of the container ship MSC Flaminia, had a viable defe......