On 9 April 2025, the Supreme Court handed down judgment in The MSC Flaminia case.
The dispute arose from a casualty on board the MSC Flaminia on 14 July 2012 while the ship was in mid-Atlantic en route from Charleston, South Carolina, to Antwerp. An explosion occurred in the no. 4 cargo hold which led to a large fire on board. Hundreds of containers were damaged or destroyed and extensive damage was caused to the ship. Three crew members lost their lives. The explosion was caused by the auto-polymerisation of the contents of one or more of three tank containers laden with a chemical known as DVB which had been shipped at New Orleans on 1 July 2012.
The ship was eventually salved and repaired at enormous cost to her owners, Conti. Conti brought claims in arbitration against the charterers of the vessel, MSC, to recover hire throughout the period while the ship was out of service under the charter and to recover its losses as a result of the casualty. The arbitrators determined that the ship remained on hire throughout and that MSC was liable to Conti in respect of the casualty. By an award dated 30 July 2021, they awarded damages of approximately US $200 million.
MSC then sought to limit its liability for claims arising from the casualty to about £28m pursuant to the 1976 Convention on Limitation of Liability for Maritime Claims, as amended by the Amending Protocol of 1996 and now given the force of law in the United Kingdom by section 185 of the Merchant Shipping Act 1995.
The trial of the limitation action came before Andrew Baker J, who had previously held that MSC was not entitled to an anti-suit injunction to prevent Conti from seeking to enforce its arbitration award elsewhere (see The MSC Flaminia (No. 1) [2022] 2 Lloyd’s Rep 341). The Admiralty Judge held that MSC was not entitled to limit its liability because Conti’s claims were not within the scope of any of the paragraphs of Article 2 of the Convention and there was a single claim in respect of the damage to the ship and consequential loss thereon. In so-holding, the judge rejected Conti’s submission that that tonnage limitation under Article 2(1) only applies to claims in respect of losses suffered in the first instance by someone who is not within the extended definition of “shipowner” in Article 1(2) of the 1976 Convention, referred to by the judge as an “outsider” (“insiders” being those within the extended definition of “shipowner” in Article 1(2)).
MSC appealed and Conti filed a respondent’s notice advancing a narrower submission than the one made to the judge; on appeal Conti contended that the claims referred to in Article 2 must be interpreted to exclude claims by an owner against a charterer to recover losses suffered by the owner itself. This narrower submission was accepted by the Court of Appeal, with the appeal dismissed by reference to the respondent’s notice: see [2023] EWCA Civ 1007. The Court of Appeal also concluded that even if it was wrong in its primary conclusion then, with the exception of the claims for discharging sound and damaged cargo, and of decontaminating that cargo, none of Conti’s claims were limitable under Article 2(1) any event.
MSC was granted permission to appeal by the Supreme Court but between the Court of Appeal and the Supreme Court, the parties entered into a settlement agreement. The Supreme Court nevertheless allowed the appeal to proceed on the basis of its importance to the marine market. Lord Hamblen JSC (with whom the other JSCs agreed) gave judgment, allowing MSC’s appeal on the Court of Appeal’s primary conclusion that a charterer can never limit its liability for claims by an owner in respect of losses originally suffered by the owner itself. However, the Supreme Court also dismissed MSC’s (and Conti’s) appeals against the Court of Appeal’s alternative conclusions. In consequence, MSC was not entitled to limit in respect of any of Conti’s claims, except those for discharging sound and damaged cargo, and of decontaminating that cargo, which were limitable under Article 2(1)(e).
A link to the full judgment can be found here.
Christopher Smith KC and David Walsh KC acted for Conti, instructed by Chris Garley and Vivienne Pitroff of HFW LLP.
Freddie Onslow also acted with David Walsh KC in the arbitration proceedings.
