The vessel British Skill, owned by BP Shipping Ltd (BP), collided with a jetty in Singapore waters in 1994, causing considerable damage. BP commenced limitation proceedings in Singapore and admitted liability there. Three companies registered and based in Singapore which owned, operated, used, and administered the jetty (the Caltex Group) brought an action in the UK against BP. The limit of BP's liability under the law of Singapore, which was then a party to the LLMC 1957, was lower than its limit of liability under the law of the UK, which was then a party to the LLMC 1976.

BP applied for a stay of proceedings on the basis that Caltex Group's claims should be determined in Singapore. BP submitted that there was no relevant advantage to the plaintiffs' proceeding in England because the Singapore limit would be applied in any event as part of the substantive lex loci delicti. Furthermore, Caltex Group's taking advantage of the fact that BP's limit of liability was much higher in the UK was not to seek a legitimate juridical advantage, because what is advantageous to one party is correspondingly disadvantageous to the other, and because the underlying basis of the Singapore limit, namely the LLMC 1957, remains that recognised by many States, notwithstanding the LLMC 1976. Furthermore, Caltex Group would not be deprived of any advantage because their claim was likely to end up at a figure much below the sum claimed, and probably less than the Singapore limit.

Caltex Group contended that if they had to claim in Singapore, they would be unable to recover the difference between their claim of USD 10.5 million and the Singapore limit of about USD 5.8 million. They argued that they would be deprived of a substantial legitimate juridical advantage in that event. Caltex Group argued that the English Court should not apply the Singapore limit because English law characterised the limitation provisions of Singapore law as procedural. It was sufficient for the plaintiffs to establish that the act or omission complained of was actionable or tortious by the lex loci delicti. The court must apply the English limit and not the Singapore limit because the relevant part of the LLMC 1976 has the force of law in England.

Held: The most appropriate solution is to stay the action temporarily in order to enable the issues of quantum to be determined in Singapore, leaving the question whether there should be a final stay to be determined thereafter.

Section 272 of the Singapore Merchant Shipping Act (based on arts 1, 2, and 3 of LLMC 1957) provides:

(1) The owners of a ship shall not, where all or any of the following occurrences take place without their actual fault or privity: ... (d) where any loss or damage is caused to any property be liable in damages beyond the following amounts: … (ii) in respect of such loss, damage or infringement as is mentioned in paragraphs (b) and (d), whether there is additional loss of life or personal injury or not, an aggregate amount not exceeding in the currency of Singapore the equivalent of 1,000 gold francs for each ton of the ship's tonnage…

(4) The limits set by this section to the liabilities mentioned therein shall apply to the aggregate of such liabilities which are incurred on any distinct occasion without regard to any liability incurred on another occasion.

Section 273 of the Singapore Merchant Shipping Act (based on arts 3 and 4 of LLMC 1957) provides:

(1) where any liability is alleged to have been incurred by the owner of a ship in respect of any occurrence in respect of which his liability is limited under section 272, and several claims are made or apprehended in respect of that liability, then the owner may apply to the High Court, and that Court may determine the amount of the Owner's liability and may distribute that amount rateably among the several claimants, and may stay any proceedings pending in any other court in relation to the same matter, and may proceed in such manner and subject to such regulations as to making persons interested parties to the proceedings, and as to the exclusion of any claimants who do not come in within a certain time, and as to requiring security from the owner, and as to payment of any costs as the Court thinks just.

(2) In making any distribution in accordance with subsection (1) the Court may, if it thinks fit, postpone the distribution of such part of the amount to be distributed as it considers appropriate having regard to any claims that may later be established before a court of any country outside Singapore.

(3) No lien or other right in respect of any ship or property shall affect the proportions in which any amount is distributed among several claimants under this section.

It was common ground that s 273 is procedural. The Court found that the defence conferred by s 272 was not a part of Singapore's substantive law, for the following reasons. The right to limit in a case of multiple claimants must be procedural because it cannot be relied upon in an action to establish the shipowner's liability. The measure or quantification of damages is a matter for the lex fori. The right to limit either qualifies or attaches to the claimant's right, or qualifies the shipowner's obligations. In an ordinary multi-claim case, the plaintiff obtains a judgment in full against the shipowner, leaving the shipowner subsequently to seek a decree limiting that liability. The same is true of the right to limit conferred by the LLMC 1976; eg art 12 of the LLMC 1976 provides that the fund shall be distributed among the claimants in proportion to their established claims against the fund. Thus, each claimant is entitled to prove the full amount of their claim. The effect of s 273 is not to qualify the substantive right of the claimant against the shipowner, but to limit the extent to which that right can be enforced against the limitation fund. If the right conferred by s 272 is in a part of the substantive law, in a typical case of claims arising out of an incident which causes damage to many parcels of cargo carried under contract of carriage, each of which is governed by a different law, a court might have to apply different tonnage limitation as part of the substantive laws, which would be impossible or nearly so. Therefore, if the plaintiffs' claim was litigated in the UK, an English court would not apply the Singapore limit.

An English court would apply the provisions of the LLMC 1976 as part of the law of the forum because tonnage limitation had never been properly characterised as substantive according to English conflict of laws principles, not because of the expression 'shall have the force of law' in s 17 of the Merchant Shipping Act (UK). The effect of s 17 was to give the LLMC 1976 direct effect in the UK. What that effect is, depends upon the meaning of the LLMC 1976. Clarke J indicated that he did not think that the drafters of the LLMC 1976 contemplated that it would be possible for a shipowner to rely upon two different regimes of tonnage limitation, one under a foreign relevant law and one under the LLMC 1976. The purpose of the LLMC 1976 was to introduce a new and different limitation regime regardless of where the casualty occurred. If necessary, the LLMC 1976 should be construed as excluding the right of either party to rely upon the LLMC 1957.

The Judge concluded that Singapore was clearly and distinctly more appropriate for the trial of the action than England. However, the ends of justice would best be served if the Caltex Group were permitted to proceed in the UK if they established by evidence that the difference between their arguable claim and the Singapore limit was such that it would be unjust to stay the action permanently. It was true that many countries had not ratified the LLMC 1976, but it was desirable that as many countries as possible should apply the same standards. The IMO policy is that States should ratify the LLMC 1976, which represents a balance between the interested parties and is a widely accepted development from the regime which existed under the LLMC 1957. Furthermore, where possible, it is objectively desirable to apply the LLMC 1976, because it is a part of English public policy.