STEMA BARGE II: Court of Appeal provides clarification as to who is the ‘operator’ of a vessel
Splitt Chartering Aps & others v Saga Shipholding Norway AS & others (the “STEMA BARGE II”) [15.12.21]
On 15 December 2021 the Court of Appeal overturned the first instance decision.
The Court of Appeal held that ‘operator’ should be interpreted to mean more than mere physical operation, and that it requires management or control of the vessel. The first instance decision was, therefore, reversed and Stema UK was not entitled to limit its liability under the 1976 Convention.
Under the Limitation Convention 1976, shipowners (and salvors) are entitled to limit their liability for specified claims. The term ‘shipowners’ is defined as "the owner, charterer, manager or operator of a seagoing ship", but what constitutes an ‘operator’ has been open to interpretation. In this case, the Admiralty Court provides helpful clarification as to who should be considered an ‘operator’ for the purposes of limitation.
The claimant, Stema UK, sought a declaration before the English Admiralty Court on a discrete point of law, namely whether it was entitled to limit its liability for damage caused to an underwater electricity cable by a barge, on the basis Stema UK was “the operator” of the barge at the time of damage. The key question before the court was whether Stema UK was the operator of the barge and therefore within the class of persons entitled to limit their alleged liability pursuant to Article 1 (2) of the Limitation Convention 1976 and section 185 of the Merchant Shipping Act 1995.
Stema UK averred that it was the operator of the barge in view of the factual matrix giving rise to the claim. The actions taken by Stema UK included placing their employees on the barge (the only persons on board at the time) to drop the anchor and to carry out other necessary work on the barge prior to the damage to the underwater cable.
The court provided helpful guidance on the meaning of “operator of a seagoing ship” under Article 1 of the Limitation Convention as follows:
- The ordinary meaning of "the operator of a ship" included the "the manager of a ship", but it also extended to include Stema UK who, with the permission of the owner, directed its employees to board the barge and operate her in the ordinary course of business.
- The ordinary meaning of "the manager of the ship" was the person entrusted by the owner with carrying out the tasks involved in ensuring that a vessel was safely operated, properly manned, properly maintained and profitably employed.
- In ordinary usage, the terms manager and operator were interchangeable. Mr Justice Teare expressed the view that “any attempt to draw a bright line between management and operation would be fraught with difficulty”.
The nature of Stema’s conduct in the operation of the barge was such that the court considered it could be described as the “operator”, bringing Stema UK within the regime under the Limitation Convention meaning, therefore, it was entitled to limit its alleged liability accordingly.
Whilst in each case the operation of a vessel must necessarily turn on its own facts, the English Court has warned against an exercise in semantics on differentiating between managers and operators of vessels.
Looked at in the round, the nature of the instructions and operations between various interested parties in the management, operation and commercial enterprise of a vessel may entitle an entity who directs its employees to take sole control or otherwise operate the vessel, at the request of owners/charterers, to be described as the 'operator' of the ship under the relevant legislative framework.