DMC Category Rating: Developed

This case note is based on an Article in the August 2004 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers, DLA. DLA is an International Contributor to this website

Background
On 20 November 1995, the Darfur collided with the Happy Fellow while proceeding along the River Seine. The collision caused damage to both vessels and injured crewmembers of the Happy Fellow. It also caused damage to, or late delivery of, the Darfur's cargo. In December 1995, the owners and charterers of the Happy Fellow began proceedings in France against the owners of the Darfur. In June 1997, the owners of the Darfur admitted liability.

In March 1996, Baco-Liner, the time charterer of the Darfur, issued a writ in England against the owners, Blue Nile, seeking damages for breach of charterparty and/or breach of duty of care and declarations of its right to be indemnified against various claims and expenses. The charterparty was subject to an exclusive jurisdiction clause in favour of the English court. Darfur's owners admitted liability in December 2001, but the action was stayed pending the outcome of proceedings first issued by Blue Nile in March 1996 under the Convention on Limitation of Liability for Maritime Claims 1976.

The issue before the court was a simple one - were the time charterer's claims against the owners limitable under the Convention? The claims in issue related to stevedoring expenses at the port to which the damaged Darfur deviated, additional insurance costs in respect of the deviation and while the vessel was off-hire, the costs of a transhipment of part of the cargo to mitigate liability, the costs involved in chartering a substitute vessel, loss of profit and the cost of management time.

The time charterers relied on the recent Court of Appeal decision in CMA CGM SA v Classica Shipping Co Limited [2004] 1 Lloyd's Rep 460 to argue that the owners could not seek to limit their liability for losses consequential on damage to their own vessel.

Judgment
The court agreed. It did not matter that, in this case, it the owners who were seeking to limit against claims brought by charterers, rather than the other way round as in CMA. The issue turned on the scope of the claims subject to limitation, not the class of persons entitled to limit. Insofar as the claims were consequential upon damage to the Darfur, the owners were not entitled to limit their liability.