'''Background'''

In summary, the issue on this appeal was whether, on 20 November 2016, Stema UK was "the manager or operator" of “STEMA BARGE II” ("the barge") within the meaning of article 1(2) of the Convention for the Limitation of Maritime Claims 1976 (the “Limitation Convention” – fn.1). Early that morning, whilst off Dover, the barge's anchor dragged during a storm and damaged an underwater cable owned by the RTE. The issue arose because Stema UK was the receiver of the cargo on the unmanned barge and did not have any formal role in respect of the barge's management or operation, but its personnel did operate the machinery of the barge whilst off Dover and were involved in monitoring the weather and in the decision to leave the barge at anchor during the storm.

It was agreed between the parties that if Stema UK was the manager or operator of the barge (and therefore fell within the definition of the term "shipowner" in article 1(2) of the Limitation Convention) then RTE's claim for the damage to the cable was subject to limitation under article 2 of the Limitation Convention, being "in respect of ... damage to property … occurring … in direct connection with the operation of the ship …".

The judgment of the Court of Appeal was given by Phillips LJ, who allowed the appeal for the following reasons.

The judge found difficulty in accepting that either aspect supported a finding that Stema UK had management or control of the vessel in any sense. As to the operation of the machinery of the vessel by crew supplied by Stema UK:

(i) It was clear that the crew were following Check Lists prepared and supplied by Stema A/S.

(ii) It was also clear that Stema A/S were exercising an ongoing and direct supervisory role throughout the time the vessel was at Dover. Mr Grunfeld of Stema A/S (the “operator” with responsibility for the barge) expressly stated that “We would discuss operational matters with the local personnel by telephone”.

(iii) Although the superintendent, Mr Upcraft, was engaged by Stema UK, it was clear that he was acting under instructions from Stema A/S, Mr Johansen (the Managing Director of Stema UK) stating that “under instructions given by Stig Olsen (of Stema A/S) the superintendent put in place a roster for the Barge Masters and crewmembers”.

(iv) All of Stema UK’s witnesses stated that the superintendent, Barge Masters and crewmembers were physically operating the barge on behalf of Splitt as owner.

(v) Mr Boisen of Stema A/S confirmed that Splitt remained responsible for the barge. Mr Johansen made it even clearer, stating that a distinction was made between the vessels involved in terms of responsibility, Stema UK being responsible for “CHARLIE ROCK” and “AFON GOCH”, whereas Splitt was responsible for the barge.

Accordingly, in the judge’s view, it was clear from the above that Stema UK’s actions were for, on behalf of, and supervised by, Splitt (as owner) and Stema A/S (as operator). To the extent that any of them amounted to operating the barge, the judge considered that those actions were plainly by way of assistance to Stema A/S in its role as operator, not by way of becoming a second or alternative operator or manager.

As a result, the judge held that Stema UK was, at most, assisting Stema A/S in the operation of the barge, as a result of which the Court of Appeal allowed RTE’s appeal.

This judgment has sought to give effect to the underlying intention of the Limitation Convention by requiring more than the provision of personnel to operate the machinery of a vessel to qualify as “the operator”.

The Court of Appeal recognised, as did the High Court, that it may be unfortunate if the limitation afforded to a group of companies which comprised the owner, charterer and operator of a vessel was effectively lost because an associated company provided crew for certain mechanical operations of the vessel, as had happened in this case.

However, the Court of Appeal pointed out that such a group can take steps to bring all its associates within the umbrella of the protection by ensuring that crew are seconded to the owner or operator and/or by ensuring that the owner or operator is responsible for the actions of the associate.

The approach of the High Court would have effectively extended the protection given under article 1(4) to “associated companies” providing services to the vessel, even if the owner is not responsible for their actions.

Whilst that might be seen to be a fair or reasonable result, the Court of Appeal pointed out that it is not what the Limitation Convention currently provides and a revision to so provide is a matter for the contracting parties, not the courts.

Accordingly, given the importance of limitation of liability to the viability of the overall enterprise, ensuring such protection would seem to be an important business consideration for those engaged in international trade by sea and one which they would be well advised to arrange with care to benefit from the right to limit.

Footnote 3: Article 1(4) of the Limitation Convention reads:

If any claims set out in Article 2 are made against any person for whose act, neglect or default the shipowner or salvor is responsible, such person shall be entitled to avail himself of the limitation of liability provided for in this Convention.