Some of you may remember the collision between the giant MSC Opera and a small river cruiser, the River Countess, in Venice back in June 2019. For those who missed it, a clip can be found here.
It was agreed by all concerned that the River Countess’ claims would be subject to Italian law. It was also agreed that MSC Opera was 100% to blame. The disputes that followed were about to what extent the River Countess could recover damages. Alongside contesting quantum, MSC questioned the ability of the tour operator to sue for lost revenue on 14 river cruises that had to be cancelled after the collision whilst the River Countess was being repaired. There was also a disputed claim for loss of goodwill and future anticipated revenue after repairs because, it was said, the River Countess had been tarnished by the publicity associated with the collision.
The tour operator, Uniworld, had chartered the River Countess and, following the decision in The Mineral Transporter  AC 1, they were unable to bring a claim in tort against MSC Opera under English law. The question was whether they could recover under Italian law. This point was recently decided by the Admiralty Judge, Andrew Baker, as a preliminary issue. The full case report can be found here.
It was held that Uniworld did have title to sue for non-physical losses but this was limited to losses caused as a direct and immediate consequence of the casualty and provided that there was no prospect of bringing in a replacement vessel to undertake future cruises. The claim for loss of future anticipated revenue after repairs was held not to be recoverable in principle. The claim for loss of goodwill was said to be recoverable in principle provided that it could be proved that was a direct and immediate consequence of the casualty.
The lesson from this case is that governing law is extremely important. Here there was no question that Italian law applied because of Article 4 of the Rome II Regulation and the fact that the physical damage was done in Italy. However, in many cases the damage occurs at sea and the position is not straightforward. There are many other jurisdictions where the law adopts a different approach to damages for pure economic loss. Decisions are often made soon after the collision on law and jurisdiction and it’s important to understand the nature of the claims that may arise and their recoverability before making those decisions.
Constantin von Hirsch