Marine Brief: latest decisions February 2023

This article was co-authored by Sam Butler, Trainee Solicitor, London.

In this briefing, we consider some recent decisions covering limitation for economic damage to cargo under the Hague Visby Rules, the use of anti-suit injunctions to overturn a non-English court judgment, and limitation of liability under the Convention on Limitation of Liability for Maritime Claims 1976.

The “THORCO LINEAGE” provides clarification of limitation under the Hague Visby Rules

Trafigura PTE Ltd v TKK Shipping Ltd (The “THORCO LINEAGE”) [13.01.23]

This claim arose out of the grounding of the THORCO LINEAGE in June 2018 whilst carrying 10,287.07 MT of a bulk cargo of zine calcine owned by the claimant. The vessel suffered extensive damage and salvors were engaged to re-float and tow the vessel for repairs.

If the defendant’s liability under the Hague Visby Rules was limited to the physically damaged cargo, the claimant’s claim would be limited to 1,528,140 SDR (approx. US$2.05 million). Alternatively, if liability was limited to both physically and economically damaged cargo, the claim would be limited to 20,574,140 SDR (approx. US$27.5 million).

The Commercial Court found in the claimant’s favour, accepting that goods carried by sea may be damaged physically and economically and that, in this case, the value of the salved goods had diminished on arrival due to the salvage charges and on-shipment charges incurred as a result of the defendant’s breach. The claimant’s claim for both its liability to salvors and on-shipment costs could therefore be limited by reference to the weight of the whole cargo.

Related item: The “THORCO LINEAGE” provides clarification of limitation under the Hague Visby Rules

Contact: Ingrid Hu

Commercial Court refuses to grant anti-suit injunction to reverse judgment of foreign court

E-Star Shipping and Trading Company Ltd v Delta Corp Shipping Ltd [15.12.22] 

In this case, hire was not paid up the charterparty chain resulting in disputes, which in turn resulted in a settlement agreement. The settlement agreement was subject to English law and contained an arbitration clause expressed to be effective only upon signature by all parties.

The defendant obtained an order from a court in Benin, West Africa that the cargo should be discharged into the custody of the court. The Benin court held that the claimants must pay the monies owed, or the cargo would be sold. The claimant applied to the English court seeking an anti-suit injunction to reverse the orders made by the Benin court and for an order under section 44 of the Arbitration Act 1996 to preserve any funds so paid into court. The court refused both applications.

The anti-suit application failed to establish the required high degree of probability that there was a binding arbitration clause covering the dispute in question insofar as the claimant could not demonstrate that the agreement had been signed by all parties. Furthermore, the application was held, in substance, to be not for an anti-suit injunction but rather for an anti-enforcement injunction, such that it failed on grounds of international comity.  

The section 44 application failed because the claimant failed to produce evidence of an arbitration agreement to the "satisfactory standard" required, the court’s discretion again yielding to considerations of comity.

Contacts: Andrew Purssell; Mukut Bhattacharya

MSC Flaminia provides helpful guidance on the right of a carrier to limit liability 

MSC Mediterranean Shipping Co SA v Stolt Tank Containers BV [02.11.22] 

The Admiralty Court was asked to consider whether a charterer was entitled to limit its liability pursuant to Article 2 of the Amended Convention on Limitation of Liability for Maritime Claims (LLMC) 1976. Conti was the owner of a containership which had been time chartered to MSC. During the voyage, the ship and cargo were damaged by an explosion in the cargo hold leading to a fire on board the vessel in the middle of the Atlantic Ocean on 14 July 2012. An arbitrator held MSC liable to Conti and awarded damages of around US$200 million.

It was held that the claim by Conti against MSC in respect of damage to the ship caused by the explosion was not consequential loss resulting from damage to property that was limitable under Article 2.1 of the LLMC, but was a claim in respect of damage to the ship to which the tonnage limitation in Article 2.1 did not apply. Had MSC been successful in limiting their liability under Article 2.1 of the LLMC, Conti’s claim would have been limited to around US$33.5 million based on the tonnage of the vessel.

Related item: MSC Flaminia provides helpful guidance on the right of a carrier to limit liability

Contacts: Mark Lloyd, Sam Butler

Read other items in Marine Brief - March 2023