MSC Mediterranean Shipping Company S.A. v Stolt Tank Containers B.v
| Jurisdiction | England & Wales |
| Judge | Lord Justice Males,Lady Justice Falk,Sir Launcelot Henderson |
| Judgment Date | 01 September 2023 |
| Neutral Citation | [2023] EWCA Civ 1007 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-002293 |
[2023] EWCA Civ 1007
Lord Justice Males
Lady Justice Falk
and
Sir Launcelot Henderson
Case No: CA-2022-002293
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
KING'S BENCH DIVISION
ADMIRALTY COURT
Mr Justice Andrew Baker
Royal Courts of Justice
Strand, London, WC2A 2LL
Julian Kenny KC & Michal Hain (instructed by Mills & Co Solicitors Ltd) for the Appellant
Christopher Smith KC & David Walsh (instructed by HFW LLP) for the Fourth Respondent
The First to Third Defendants did not appear and were not represented
Hearing dates: 11 & 12 July 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on Friday 1 September 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
This is a case about tonnage limitation under the 1976 Convention on Limitation of Liability for Maritime Claims. The claimant/appellant (“MSC”), the time charterer of the ship “MSC Flaminia”, seeks an order that it is entitled to limit its liability to the 4 th defendant/respondent (“Conti”), the owner of the ship, arising out of an explosion that took place in July 2012.
The Admiralty judge, Mr Justice Andrew Baker, held that MSC was not entitled to limit its liability because Conti's claims are not within the scope of Article 2 of the Convention. MSC appeals, but only in relation to some of Conti's claims. Conti supports the judge's reasoning, but contends in addition, by a respondent's notice, that a charterer (who falls within the extended definition of “shipowner” in Article 1 of the Convention) cannot limit its liability to the actual owner in respect of losses suffered by (and only by) the actual owner.
Background
The “MSC Flaminia” is a container ship. MSC is a large container transportation business which was the time charterer of the ship. Conti, the owner of the ship, is a one ship special purpose vehicle. MSC had chartered the ship from Conti under a time charter initially made in November 2000 and subsequently extended several times.
On 14 th July 2012, while the ship was in mid-Atlantic en route from Charleston, South Carolina, to Antwerp, an explosion occurred in the no. 4 cargo hold which led to a large fire on board. Hundreds of containers were destroyed and extensive damage was caused to the ship. Three crew members lost their lives. The explosion was caused by the auto-polymerisation of the contents of one or more of three tank containers laden with a chemical known as DVB which had been shipped at New Orleans on 1 st July 2012.
Conti engaged salvors, Smit Salvage BV, to bring the fire under control and to salvage the ship and cargo. The salvors did this by spraying seawater into the ship, one result of which was that about 30,000 mt of firefighting water, contaminated with dangerous and toxic residues, remained in the holds after the fire was brought under control. The salvors then towed the ship through the English Channel to Wilhelmshaven in Germany, which was the only available port of refuge, arriving on 9 th September 2012. This passage required Conti to make payments totalling about €1.9 million to public authorities in the United Kingdom, France, Belgium and Germany to pay for the cost of measures taken to guard against the risk of pollution from bunkers leaking from the ship.
Because the ship was unable to complete the voyage to Antwerp, Conti arranged to discharge the cargo at Wilhelmshaven. This involved the discharge and decontamination of undamaged and salvageable cargo and the destruction of unsalvageable cargo. The discharge at Wilhelmshaven was completed on 18 th December 2012, but the processes of decontaminating the cargo, releasing sound cargo to the cargo interests and destroying unsound cargo continued during and even after 2013. Conti paid for these operations, the total cost of which was about €38 million. Also at Wilhelmshaven, Conti engaged contractors to decontaminate and remove the firefighting water from the ship's holds. By 28 th February 2013 about 30,000 mt had been removed into barges, from where it was taken to Denmark and destroyed. The cost of removing this firefighting water was about €7.1 million.
After the discharge of the majority of the firefighting water, there remained on board the ship approximately 30,500 mt of waste material, consisting of approximately 14,800 mt of fire-damaged solid cargo (i.e. the contents of the containers), 7,800 mt of contaminated water, and 5,400 mt of steel scrap. Most of this steel scrap consisted of damaged cargo containers, but there was also fire-damaged structural steel from the ship. All of this waste material was contaminated by dangerous and toxic residues which needed to be removed before repairs to the ship could be carried out. Conti arranged for this waste to be removed at facilities in Romania. On 15 th March 2013 the ship left Wilhelmshaven, arriving on 30 th March 2013 but only berthing on 17 th May. Even then, discharge did not begin until 27 th July. Between then and 16 th October 2013 a total of 2,155 mt of steel scrap was removed from the ship, but progress was slow and unsatisfactory, as a result of which Conti decided that the ship should proceed to Denmark for the discharge of the remaining waste material. The ship arrived at Aarhus in Denmark on 22 nd November 2013 and a total of approximately 28,400 mt of waste material was removed there and subsequently at Odense. This work was completed on 1 st February 2014. The total cost of these operations was about €24.8 million.
After the waste removal was completed, the ship left Odense for Mangalia in Romania where repairs were carried out between 17 th February and 12 th July 2014 at a cost of approximately US $21 million. The ship then returned to service under the time charter.
In addition Conti incurred various miscellaneous expenses while dealing with the consequences of the casualty, which totalled about €23 million.
The casualty gave rise to a number of cargo claims brought in the United States District Court for the Southern District of New York against MSC (the bills of lading being charterer's bills), Conti and others, including Stolt-Nielsen USA Inc and Stolt Tank Containers BV (together “Stolt”), the shippers of the DVB, and Deltech Corp, its manufacturer. The District Court found that Stolt and Deltech alone were liable to the cargo claimants, that the claims against MSC and Conti failed, and that MSC and Conti were entitled to a full indemnity from Stolt and Deltech against any other claims by cargo claimants. An appeal by Stolt and Deltech was dismissed by the Court of Appeals for the Second Circuit in a judgment handed down on 30 th June 2023.
The time charter between Conti and MSC contained an arbitration clause. Conti brought claims in arbitration to recover hire throughout the period while the ship was out of service under the charter and to recover its losses as a result of the casualty. The arbitrators determined that the ship remained on hire throughout and that MSC was liable to Conti in respect of the casualty. By an award dated 30 th July 2021 and corrected on 1 st September 2021, they awarded damages of approximately US $200 million.
The limitation proceedings
By this limitation claim, MSC seeks to limit its liability for claims arising from the casualty pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the Amending Protocol of 1996 and now given the force of law in the United Kingdom by section 185 of the Merchant Shipping Act 1995. This limitation action is not concerned with claims for loss of life or personal injury, which are subject to a separate limit, although in the event those claims were within the limit for which the Convention provides. The principal claims for which MSC seeks to limit its liability, and perhaps the only claims as a result of the dismissal of the cargo claims in the United States proceedings, are the claims by Conti to recover the sums awarded against MSC in the arbitration. The applicable tonnage limitation figure, if MSC is entitled to limit its liability, is 25,318,000 SDRs 1, equivalent at the date of the judgment to about £28.2 million.
Conti accepts that there are some claims or potential claims in respect of which MSC is or would be entitled to limit its liability. For example, if Conti had been held liable to cargo claimants in the United States proceedings, Conti accepts that its claims to be indemnified against such liability by MSC would be subject to limitation. Conversely, MSC now accepts that there are some claims by Conti in respect of which it is not entitled to limit its liability, as to which there is no appeal from the judge's decision – for example, the cost of repairing the ship. The only claims with which we are now concerned are Conti's claims for (a) the costs of discharging and decontaminating the cargo at Wilhelmshaven, (b) the costs of removing firefighting water from the ship's holds; (c) the payments made to national authorities; and (d) the cost of removing the burnt waste material from the ship.
The 1976 Limitation Convention
We are concerned with the 1976 Limitation Convention, but in order to put this Convention in its context it is necessary to trace something of the history of limitation, which became tonnage limitation in 1862. For a detailed exposition of this history, from 1733 to the present day, I can do no...
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