Sea Consortium Pte Ltd & Ors v Bengal Tiger Line Pte Ltd & Ors (The “X-Press Pearl”)

DMC/SandT/25/01

England

Sea Consortium Pte Ltd & Ors v Bengal Tiger Line Pte Ltd & Ors (The “X-Press Pearl”)

English Admiralty Court: Andrew Baker J: [2024] EWHC 3174 (Admlty): 12 December 2024

Judgment Available on BAILII @ https://www.bailii.org/ew/cases/EWHC/Admlty/2024/3174.html

Simon Rainey KC, Natalie Moore, Andrew Leung and Joseph Gourgey (instructed by Campbell Johnston Clark Ltd) for registered owners, bareboat charterers and time charterers (Owners)

Benjamin Coffer (instructed by Mays Brown Solicitors) for slot charterer Bengal Tiger Line “BTL” (Charterers)

Ralph Morley (instructed by Mills & Co Solicitors Ltd) for slot charterer Mediterranean Shipping Company “MSC” (Charterers)

Tom Bird (instructed by Stephens Harwood LLP) for slot charterer Maersk A/S “Maersk” (Charterers)

TONNAGE LIMITATION: CASUALTY LEADING TO TOTAL LOSS OF VESSEL AND CARGO: OWNERS’ P&I CLUB CONSTITUTED LIMITATION FUND IN COURT: WHETHER TERMS OF A “FIXED SLOTS CONTRACT”, A “CONNECTING CARRIERS AGREEMENT” AND AN “AGREEMENT FOR TRANSPORT SERVICES” MADE BTL, MSC AND MAERSK EACH A ‘CHARTERER’, AND SO A ‘SHIPOWNER’ WITHIN THE MEANING OF THAT TERM IN ARTICLE 1(2) OF THE CONVENTION ON LIMITATION OF LIABILITY FOR MARITIME CLAIMS 1976, AS LATER AMENDED, (“CONVENTION”) FOR LIMITATION PURPOSES

DMC Classification: Confirmed

Summary

The Admiralty Court, having reviewed the terms of the relevant contracts and taken into account the judgment in The “MSC Napoli,” concluded that BTL, MSC and Maersk, respectively, were each a ‘shipowner’ of the vessel within the meaning of that term in Article 1(2) of the Convention.  Accordingly, each was entitled to rely on the Limitation Fund of about USD20m established by Owners for tonnage limitation purposes, in relation to claims connected to the total loss of the vessel and her cargo.

Case note contributed by Jim Leighton, LLM (Maritime Law), LLB (Hons), BSc (Hons), Solicitor Advocate of England & Wales, IMI Qualified Mediator, LMAA Supporting Member and Deputy Editor of DMC’s CaseNotes

Background

A fire that started on the container ship “X-Press Pearl” on 20 May 2021 culminated in the sinking and total loss of the vessel and her cargo off Colombo, Sri Lanka on 2 June 2021.  The vessel was carrying containerised cargoes at the time pursuant to various agreements made between Owners and Charterers.

On 21 February 2022, the Admiralty Court in England granted Owners permission to constitute a Limitation Fund under the Convention, by way of a letter of undertaking provided by their P&I Club, for claims arising from the casualty in the limitation amount calculated to be about USD20m.

The government of Sri Lanka had separately commenced proceedings in Singapore for alleged damage and loss caused by the casualty and further sought to challenge Owners’ right to limit their liability for cargo claims.

BTL, MSC and Maersk each sought orders and declaratory relief from the English Admiralty Court by applications under Article 1 of the Convention that they were (i) a ‘shipowner’ under Article 1(2) of the Convention, and (ii) entitled to limit liability in respect of the “X-Press Pearl” casualty under the Convention.

Judgment

The Judge noted that, despite no active opposition to the Article 1 applications, it was appropriate to require each applicant to establish to the Court’s satisfaction that it fell within the Article 1(2) definition of ‘shipowner’ (fn.1).

With reference to the judgment of Teare J in The “MSC Napoli” (fn.2), the Judge noted that Teare J had concluded that there was no reason to say that ‘charterer’ in Article 1(2) did not include a slot charterer, and that treating a slot charterer as outside that definition would discourage the use of slot chartering, which had become a well-established and efficient way to organise the carriage of goods.

The Judge accepted, based on that authority, that it should normally be sufficient for a party to be considered an Article 1(2) ‘charterer’ if its relevant contract obliged an owner or disponent owner to make part of the carrying capacity of a vessel available to that party for the carriage of goods which that party would have contracted, or would be obliged to contract, to undertake as a carrier.

The Judge also accepted, without having to express a final view, that this may mean a business that would describe itself as a NVOCC (non-vessel operating common carrier), rather than as a (slot or any other kind of) charterer, would also be a Article 1(2) ‘charterer’, subject always to reviewing the precise terms of their contractual arrangements with the vessels whose services they used.

Turning to BTL’s “Fixed Slots Contract”, and having considered its substance, the Judge concluded that it was materially identical to the slot charters considered in The “MSC Napoli”.

Turning to MSC’s “Connecting Carrier Agreement”, and having considered its substance, the Judge noted that the only difference between that agreement and that in The “MSC Napoli” was the lack of obligation to pay for unused slots.  This did not take the agreement outside Article 1(2) of the Convention, because it could still properly be described as a slot charter of the relevant type.

Turning to Maersk’s “Agreement for Transport Services”, and having considered its substance, the Judge accepted that, taken as a whole, it was a contract to make cargo carrying space available to Maersk for its effective use in order to perform its contractual commitments as carrier.

Accordingly, on the above basis, the Judge concluded that BTL, MSC and Maersk were each a ‘charterer’ within the Article 1(2) definition of ‘shipowner’, and so made the orders and declarations sought.

Comment

This judgment provides a useful confirmation and application of the principles laid down by Teare J in The “MSC Napoli” to agreements with different names and terms but which, ultimately, have the same substance, in that each of the slot charterers were, as against the vessel, her owners and the cargo interests, to be contractually responsible as carriers of the containerised cargo carried.

As such, the policy of the Convention, to enable those who take upon themselves the liability of a contractual carrier of cargo to limit liability, is maintained.  The result is that those who do not charter an entire vessel are not discouraged from so doing by the risk of being unable to limit liability against cargo interests but facing the prospect of owners up the chain, from whom they might claim indemnity, being able so to limit.

Footnote  1:

“Article 1. Persons entitled to limit liability…

2. The term “shipowner” shall include the owner, charterer, manager and operator of any seagoing ship.”

Footnote 2: [2008] EWHC 3002 (Admlty), [2009] 1 Lloyd’s Rep 246