The plaintiffs applied to the Lisbon Maritime Court to establish a limitation of liability fund in the amount of EUR 8,267.41, intending to limit their liability to that amount in respect of claims for damages resulting from a collision between the fishing vessels named the Meireles Novo and the Paz da Vida off the Portuguese coast. This application was granted and a limitation fund constituted by deposit into court.

The defendants and other parties intervened, arguing that the owner of the Meireles Novo was barred from limiting its liability because of the master's conduct in ramming the other vessel. The court of first instance held that the owner of the Meireles Novo was liable for the damage caused by the collision. However, this did not equate to personal fault on the shipowner's part, as the fault was solely attributable to the crew, even if the shipowner was responsible for them. The owner of the Meireles Novo therefore had the right to limit its liability in respect of damage claims, as already decided at the preliminary stage of the action: art 1.1 of the International Convention on Limitation of Liability for Owners of Sea-going Vessels, signed at Brussels, 10 October 1957 (LLMC 1957).

The defendants appealed. The Lisbon Court of Appeal dismissed their appeal. They filed an appeal in cassation to the Supreme Court of Justice.

Held: Appeal denied; judgment under appeal confirmed.

The judgment under appeal found that the LLMC 1957 was in force in Portugal. The defendants take the opposite view. They argue that the validity of the Convention depends on art 11.1, which stipulates that the 'Convention shall come into force six months after the date of deposit of at least ten instruments of ratification, of which at least five shall have been deposited by States that have each a tonnage equal or superior to one million gross tons of tonnage', a condition that would not be fulfilled in any notice or publication in Diário da República. This argument is incorrect. The aforementioned Brussels Convention was approved for ratification by Decree Law 48.036 of 14 November 1967, introduced into Portuguese domestic law by Decree Law 49.028 of 26 May 1969, as amended by the Protocol of 21 December 1979, approved for ratification by Decree Law 6/82 of 21.01.

Art 11.2 provides that for 'each signatory State which ratifies the Convention after the date of deposit of the instrument of ratification determining the coming into force such as is stipulated in paragraph (1) of this Article, this Convention shall come into force six months after the deposit of their instrument of ratification'. And finally, art 12 states that the Convention 'shall come into force in respect of the acceding State six months after the date of the deposit of the instrument of accession of that State, but not before the date of entry into force of the Convention as established by Article 11(1)'.

Contrary to the defendants' assertion, the notice concerning the entry into force of the Brussels Convention in the international order was published, stating that the conditions were met, from 1968. Further, such Convention came into force in the Portuguese internal order by virtue of Decree Law 49.028, cited above. This was reaffirmed in art 12 of Decree Law 202/98 of 10.07. In Decree 49.029, also of 26 May 1969, the Rules of Procedure for the Execution of the aforementioned Convention were established. On 21 December 1979 a Protocol was signed in Brussels amending the Brussels Convention. This Protocol was approved for ratification by Decree Law 6/82, of 21.01, and was ratified on April 30, 1982, according to a Notice published in the Diário da República, 1st series, no 166, of 82.07.21 and came into force on October 6, 1984, as per a Notice published in the Diário da República, 1st series, No 294, of 84.12.21.

The defendants further argue that the Brussels Convention, as well as the provisions of Decree Law 49.028, cited above, do not apply to the present case by the very nature of the vessels involved, which are both coastal vessels involved in fishing activities. They argue that the Convention only provided for its application to deep-sea vessels and that the Decree Law did not provide for its application to fishing vessels or other vessels not carrying passengers. This is also incorrect.

The Brussels Convention has perfected a legal regime governed by previous Conventions, whereby the owner of a vessel may set up a liability limitation fund to pay almost all property and non-property losses arising therefrom. This is a benefit to the owner of the ship and, at the same time, a guarantee to creditors for compensation for bodily injury and material damage. Thus, there is no reason to make any distinction in the Convention between deep-sea and coastal vessels, fishing vessels and passenger ships. In any event, and as stated in the judgment of the Lisbon Court of Appeal of 92.04.02, European Court Reports 1992 II 159, the Convention does not make a clear distinction between 'classes of vessels' which would be covered by it. In art 8 the contracting parties are allowed to determine which other classes of ships would be treated as 'seagoing ships' - 'navires de mer' in the original French text of the Convention. However, this translation does not seem appropriate. In French 'navires de mer' can mean either 'seagoing ships' or simply 'ships'. In view of the fact that the latter translation is based on the wording of the original version of the Convention, there is no justification for the distinction proposed by the defendants.

The interest of shipowners in limiting their liability and the interest of their creditors in setting up the fund exists regardless of whether ships are classified as 'high seas' vessels. There is no evidence to conclude that the contracting parties to the Convention wished to exclude inshore fishing vessels from it and merely wished to include offshore vessels. What the national legislature has done is merely to lay down the rules governing vessels of less than 300 tonnes of tonnage under the reservation contained in the Signature Protocol and not to limit the 'ship' concept to passenger ships. The legislator does not speak of 'passenger ships', but only of 'vessels of less than 300t of tonnage which are not allowed to carry more than twelve passengers', which is quite different. The classification of a ship as a 'sea-going ship' is of interest only for the purpose of excluding limitation of the owner's liability from applying to non-navigable river vessels or non-sea-going craft. Finally, it must be said that since the law makes no distinction between the various classifications of ships, the interpreter must not make that distinction.

The defendants submit that, pursuant to the final part of art 1.1 of the Convention which provides that limitation of liability is unavailable where 'the occurrence giving rise to the claim resulted from the actual fault or privity of the owner', this includes the fault of the captain, who represents the shipowner on the ship and is responsible for its nautical management. This is also incorrect. That rule excludes the possibility of the shipowner being able to limit its liability if the reason for the request was the result of the owner's personal fault. As stated in the lower court's ruling on the causes of the collision, it was the fault of the crew of the Meireles Novo, not the personal fault of the owner, which would only occur, for example, in situations of lack of seaworthiness of the ship or, more generally, when the owner had contributed to the occurrence of the accident. Mismanagement of a ship by the master is not part of the concept of personal fault of the owner, since when the owner gives his direction to a professional, any culpa in eligendo cannot be considered as personal fault.

The defendants argue that the damages for which compensation is sought in the present action - loss of property and loss of profit - are not included in the limitation of liability regime provided for in the Brussels Convention, which restricts it only to death and personal injury and property which is on board. This is incorrect. As can easily be seen from the wording of art 1.1.b of the Convention, one of the causes of the owner's liability which may be relied upon for its limitation is the existence of 'loss of or damage to any other property'. The defendants seek compensation either for loss or damage to 'goods on board the ship' or for 'other property' or 'infringement of any rights' such as lost profits and shares and catches lost. Their claims are therefore included in art 1.1.b of the Convention and refer exclusively to property claims, as opposed to personal claims for loss of life and personal injury, which are considered in art 1.2 of the Convention.

Finally, an application of the LLMC 1957 is neither unconstitutional nor amounts to an abuse of rights. Maritime law has long privileged the shipowner to limit the amount of its liability for damage resulting from the conduct of the ship, whether negligent or not. This old and common rule in countries with a maritime tradition has, above all, been aimed at promoting the development of maritime transport. Indeed, it has long been held that a shipowner does not have to fully compensate those who suffer damage following a collision, and the tonnage of the ship is the limiting criterion of liability. We may, of course, wonder about the appropriateness of maintaining such a privilege - which, moreover, is not exclusive to the shipowner - especially in a context of great economic liberalism, where competition is intensified. But this conservation is crucial for the insurance industry, as setting an upper limit of liability allows the insurer to more accurately assess the extent of the risk to be insured. And it is also crucial for shipowners, since if this limitation were not possible, they would be in danger of being ruined whenever any marine disaster struck.

The origin of the institution lies in the initial limitation of the liability of the owner of a ship to its value and that of its cargo by abandoning it to its creditors. This limitation system was gradually abandoned due to changes in commercial structures, such as the emergence of mortgage guarantees, the multiplicity and continuity of voyages of ships, the multiplication of accidents with the same ship etc. And it was replaced by a system whereby the owner could release its liability by constituting a limitation fund calculated in cash.