MSC Mediterranean Shipping Company S.A. v Stolt Tank Containers B.v
| Jurisdiction | England & Wales |
| Judge | Mr Justice Andrew Baker |
| Judgment Date | 02 November 2022 |
| Neutral Citation | [2022] EWHC 2746 (Admlty) |
| Docket Number | Case No: AD-2020-000089 |
| Court | Queen's Bench Division (Admiralty) |
[2022] EWHC 2746 (Admlty)
Mr Justice Andrew Baker
Case No: AD-2020-000089
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
ADMIRALTY COURT
Royal Courts of Justice
Rolls Building, Fetter Lane, London EC4A 1NL
Julian Kenny KC and Michal Hain (instructed by Mills & Co Solicitors Ltd) for the Claimant
Christopher Smith KC 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: 10, 11, 12, 13 October 2022
Approved Judgment
This is a reserved judgment to which CPR PD 40E has applied. Copies of this version as handed down may be treated as authentic.
Introduction
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 defence under Article 4 of the Amended 1976 Convention to this limitation claim brought by the claimant time charterer, MSC. That is to say, did Conti have a proper basis for alleging that the loss it suffered, and in respect of which it has pursued MSC in arbitration, resulted from MSC's personal act or omission committed recklessly with knowledge that such loss would probably result, so that MSC could not have a right to limit under the Convention in respect of Conti's claim.
I concluded that Conti had no viable Article 4 defence, (a) because it had been finally determined in the arbitration, so as to bind Conti as against MSC, that MSC was not even negligent in respect of the events giving rise to Conti's loss, and (b) because in any event Conti had neither pleaded nor shown there to be a realistic prospect of pleading any arguable case that anything was done by MSC with knowledge that a casualty would probably result: see at [68] and [77]–[78].
I noted (at [13]–[14]) that Conti also defended the limitation claim on the basis that its claim against MSC does not fall within the scope of Article 2 of the Convention, with a trial of that defence listed for October 2022. This is my judgment following that trial. Parts of this Introduction repeat what I said in the equivalent section of my April judgment.
On 14 July 2012, MSC Flaminia was in the middle of the Atlantic Ocean en route from Charleston, South Carolina, 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 in the reference between Conti and MSC 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 MSC as charterer and Conti as owner.
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 had been three awards by the time of my April judgment, namely:
(i) A first award dated 8 February 2021 (‘Award 1’) dealing with clause 62 of the time charter. The arbitrators dismissed a claim by MSC that clause 62 provided an indemnity in its favour.
(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.
(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.
There has now been a fourth award dated 8 June 2022 dealing with certain issues as to costs in the arbitration.
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.
By this Admiralty limitation claim, commenced by MSC by Claim Form dated 21 July 2020, MSC claims to limit its liability 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. The limitation claim does not concern claims in respect of loss of life or personal injury, although sadly there were fatalities as I have mentioned. The value of all fatality and personal injury claims in this case was within the separate limit provided for such claims under the Amended 1976 Convention.
Because of the extended meaning given to “ shipowner” by Article 1.2 of the Amended 1976 Convention, I shall avoid that word and use ‘owner’ when I mean to refer to the owner of a ship as opposed to, for example, a charterer or operator. By Article 1.4, if a claim of a type that is limitable under Article 2 is brought against a person for whose act, neglect or default a “ shipowner”, as defined by Article 1.2, is responsible, that person is also entitled to avail themselves of tonnage limitation under the Convention. It will be convenient shorthand for considering some of the points that arise to refer to a “ shipowner” or person for whose act, neglect or default a “ shipowner” is responsible as an ‘insider’; and to refer to any other person as an ‘outsider’.
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 (equivalent today to c.£28.2 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’), 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 (other than Stolt) in Claim No. CL-2017-000540 (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. In that claim, Stolt appear to be the only effective claimants, as they are assignees of the bill of lading holders' claims against MSC pursuant to a settlement by Stolt of those bill of lading holders' claims against them; 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 Deltch 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.
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...
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MSC Mediterranean Shipping Company S.A. v Stolt Tank Containers B.v
...COURT OF JUSTICE BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES KING'S BENCH DIVISION ADMIRALTY COURT Mr Justice Andrew Baker [2022] EWHC 2746 (Admlty) Royal Courts of Justice Strand, London, WC2A 2LL Julian Kenny KC & Michal Hain (instructed by Mills & Co Solicitors Ltd) for the Christo......