On 29 October 1981, there was a collision between the Stena Freighter, which was proceeding from Miami to Panama, and the Seiryu, which was proceeding from the Panama Canal to Houston, Texas. The Seiryu sank with substantial loss of property but no loss of life. The subsequent litigation proceeded in stages, the first of which concluded that art 4 of the Collision Convention 1910 would govern certain issues as to liability in the proceedings because the collision took place on the high seas.

Held: The Seiryu as the give-way vessel failed to alter its course and speed to avoid collision with the Stena Freighter. This was a violation of the Collision Regulations and a substantial contributing factor to the collision. The Stena Freighter also violated the Collision Regulations by failing to maintain a proper lookout prior to the collision.

Article 4 of the Collision Convention 1910 provides:

If two or more vessels are in fault the liability of each vessel shall be in proportion to the degree of the faults respectively committed. Provided that if, having regard to the circumstances, it is not possible to establish the degree of the respective faults, or if it appears that the faults are equal, the liability shall be apportioned equally.

The United Kingdom, one of the countries that either has ratified or adheres to the Collision Convention1910, assesses comparative fault by 'look[ing] to both the relative culpability, or "blameworthiness", of the parties' faults and the relative "causative effect" of each party's acts'. While the Stena Freighter maintains that it should bear no liability for the collision, the Seiryu's position is that the two vessels should bear equal liability because either the faults were in fact equal or it is not possible to fairly establish the appropriate percentages.

While mathematical allocation is not an easy task, the circumstances of the case do not preclude a fair assessment of liability. The Stena Freighter's actions do not warrant its exoneration from all liability. However, greater fault must lie with the Seiryu in terms of culpability and causation because of its status as give-way vessel and, more importantly, its inexplicable last minute course alteration. This ultimate manoeuvre guaranteed that the two vessels would collide - therefore, a fair allocation of liability is 60% to the Seiryu and 40% to the Stena.

The Seiryu cargo claimants seek recovery from the Stena Freighter for damages in proportion to its contributory negligence pursuant to the Collision Convention 1910. Since the Court has allocated 40% of liability to the Stena Freighter, the cargo claimants are entitled to 40% of their damages resulting from the collision.

The Stena Freighter declared general average and the Stena Freighter cargo claimants sought recovery for their general average contributions against the Seiryu, its owners and bareboat charterer. Under art 4 of the Collision Convention 1910, their claim is limited to the degree of fault attributed to the Seiryu. As the owners of the Stena Freighter exercised due diligence in making the Stena Freighter seaworthy, they are entitled to general average contributions. The Stena Freighter cargo claimants can recover 60% of those contributions from the Seiryu.