In the maritime world, shipowners, charterers, as well as professional operators and managers of vessels can limit their liability under the 1976 London Convention on Limitation of Liability for Maritime Claims (“the Convention”). In the case at hand, The English Admiralty Court ruled that the Convention applies not only to professional managers and operators of the ship but also to an entity which, with the owner’s permission, directs its employees to board the ship and operate her in the ordinary course of the ship’s business.
1976 Limitation Convention
Article 1(1) of the Convention envisages the followings:
“Shipowners and salvors, as hereinafter defined, may limit their liability in accordance with the rules of this Convention for claims set out in Article 2”
Article 1(2) provides for the explanation of the term “shipowner” as follows:
“The term “shipowner” shall mean the owner, charterer, manager and operator of a seagoing ship” ds
The crux of the case
A UK based company (“Purchaser”) purchased a rock armour from its Danish associated company (“Supplier”). To transport the rock armour from a quarry in Norway to the Purchaser, the Supplier chartered a barge, owned by a Danish company (“Shipowner”).
Purchaser’s personal was also involved in the removing of the rock armour to the beach. During this operation, a submarine electricity cable was damaged by the barge’s anchor due to poor weather conditions. As a result, the owners of the cable (“Cable’s owner”) filed a claim to Danish court in the amount of EUR 55 million.
Purchaser, Supplier and Shipowner sought before the English Admiralty Court limitation of their liability under the Convention to about GBP 5.5 million. Cable’s owner accepted that Shipowner as the barge owners and Supplier as charterers were persons entitled to limit their liability under the Convention. However, Cable’s owner challenged Purchaser’s right to limit its liability on the ground that it had no direct responsibility for the management and control of the commercial, technical or crewing operations of the ship and was not, therefore, a person entitled to limitation in the sense of article 1(2) of the Convetntion. Purchaser sought to argue that it was also entitled to limit its liability because, at the time of the incident, it was the operator/manager of the barge.
The Admiralty Court’s findings
First of all, the Court concluded that the “operator of a ship” and the “manager of a ship” were very closely related and connected functions. Further, the Court defined the “manager of a ship” as person entrusted by the owner with a sufficient number of tasks related to ensuring that a vessel was safely operated, properly manned, properly maintained and profitably employed. Finally, the Court found that the role of “operator” was “one which has a notion of management and control over the operation of the ship”.
On the facts, the Court held that Purchaser can be described as the operator of the barge because it was involved in choosing and surveying the anchorage area and sending their barge master and crew on board to anchor the barge and thereafter setting up the barge to be left unmanned. Further, during the discharge operations, those same crew operated the barge’s machinery to ensure that it remained safely ballasted. Purchaser was, therefore, entitled to limit its alleged liability for the damage to the cable.
This decision provides entitles to limitation of liability not only of the persons who were routinely managing or operating the vessel, but also of the parties who were involved in one off assisting in off shore or on shore activities.
*Splitt Chartering APS, Stema Shipping A/S, Maibau Baustoffhandel GmbH, Stema Shipping (UK) Limited v. Saga Shipholding Norway AS, RTE Reseau De Transport D’Electricitie SA and others  EWHC 1294 (Admlty)