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Atlantik Confidence: a landmark case on breaking the limits under the Limitation Convention 1976

In an unprecedented judgment, the Admiralty Court decided that a person was barred from relying on the limits provided by the Limitation Convention 1976 (as amended in 1996).

Following the fire and sinking of the Atlantik Confidence off the coast of Oman in April 2013, the Owners successfully set up a limitation fund under the Convention.  You may recall that the Court of Appeal in this matter held in May 2014 that a limitation fund could be constituted by way of a P&I Club Letter of undertaking, as opposed to making a payment into court.

Before the Admiralty Court in 2016, the cargo underwriters were seeking to break the Owners’ right to limit, whereas the Owners and their P&I Club sought to maintain the limits under the Convention.  After a lengthy trial, Mr Justice Teare concluded that he vessel was deliberately sunk by the master and chief engineer at the request of Mr. Agaoglu, the sole shareholder and director, the alter ego of the Owners.  In those circumstances the loss of the cargo, the natural consequence of this act, resulted from his personal act committed with the intent to cause such loss.  Accordingly, article 4 of the Convention applied and it followed that the Owners’ claim for a limitation decree was dismissed.  It is noteworthy that the cargo insurers successfully discharged a burden of proof previously described as a ‘very heavy burden’ or ‘a high hurdle to jump’.

The full citation of the judgment is The Atlantik Confidence [2016] EWHC 2412 (Admiralty).

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