The Court of Appeal has put an end to MSC’s hopes of limiting their liability for the losses sustained in the 2012 fire on their chartered vessel, MSC Flaminia. For those who don’t know, the MSC Flaminia was en route from Charleston to Antwerp when there was an explosion on board which led to a tragic fire in which three crew members were killed. The ship sustained heavy damage. Much of the container cargo was destroyed and needed to be offloaded. We addressed the consequences of dealing with fire damaged boxes in our 2019 blog here after we faced this same issue in relation to the fire on the APL Vancouver.
In the MSC Flaminia the fire was caused by polymerisation of a dangerous cargo known as DVB shipped at New Orleans. That spawned separate proceedings in the US by the ship owners against Stolt and Deltech, the shippers of the containers which contained the dangerous cargo. After a long battle in the US ending in the US Appeals Court, it was determined that Stolt were 45% and Deltech 55% to blame for the incident. Those interested in those proceedings can find the judgment here. It is not yet clear if Stolt will seek to appeal in the US.
Notwithstanding the above, the English Court of Appeal has now upheld last year’s decision by Admiralty Judge Mr Justice Andrew Baker who dealt with the limitation action brought by MSC. It follows that the position is that a charterer (in this case MSC) cannot limit its liability for losses incurred by a ship owner (in this case Conti Lines) due to the damage to the vessel or related claims for dealing with fire damaged cargoes and containers. A charterer can limit for recourse claims brought by an owner against a charterer if the substance of the recourse claim is limitable, for example an indemnity for a cargo claim settled by an owner which would of itself be subject to limitation.
This brings to an end MSC’s attempts to find a way around the Court of Appeal decision in the CMA Djakarta. That case remains definitive on damage to the vessel and its consequences being outside the limitation regime. In fact the Court of Appeal re-stated the position in an arguably simpler way than was addressed hitherto, namely that Article 2 of the 1976 Limitation Convention excludes claims by any owner against a charterer to recover losses suffered by the owner itself unless those claims are brought by way of recourse and the substance of those claims is limitable.
For those interested a link to the Court of Appeal judgment can be found here.
BDM has a long track record when it comes to handling container fire cases and on limitation issues. Our senior partner was involved for CMA CGM in the CMA Djakarta fire which was central to the limitation arguments advanced in the MSC Flaminia. He went on to handle the “Hyundai Fortune” and more recently the “CCNI Arauco” fire cases. Other partners have handled a wide range of fire cases including fires on the “Grande America”, “APL Austria” and “APL Vancouver”.
Nick Burgess
Partner
