This case is about tonnage limitation under the 1976 Convention of Limitation of Liability for Maritime Claims.

MSC was the time charterer of the vessel MSC Flamina and was the appellant from an order of the Admiralty Judge that it was not entitled to limit its liability as against a claim by the 4th respondent, Conti 11. Container Schiffahrts GmbH, the owner of the ship.

The sums were eye wateringly large.

There had been an explosion on the ship and in subsequent arbitration proceedings, the tribunal determined that Conti was entitled to damages of about US $200 million. 

The applicable tonnage limitation figure, if MSC had been entitled to limit liability, was SDRs 25,318,000.  This was equivalent to roughly £28.2 million. 

The Court of Appeal accepted the following submission by Conti:-

“If a charterer is entitled to limit its liability for a claim made by an owner to recover losses which the owner itself had suffered, as distinct from the owner passing on to the charterer a liability incurred to a third party, the consequences would be remarkable.  It would mean that an owners’ own claim may have to be paid out of a fund constituted by the owner itself.  That would be by itself a surprising result, but it would also mean that the fund would be diminished to the prejudice of third- party claimants (“outsiders”) for whose benefit the fund is primarily constituted.  This cannot be what was intended by the parties to the Convention”.

Therefore, the court found that claims referred to in article 2 of the Convention must be interpreted to exclude claims by an owner against a charterer to recover losses suffered by the owner itself.

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