On 27 October 2020, the container ship ML, registered in Madeira, Portugal, owned by a shipping company based in Hamburg, Germany, collided with the Greek Navy minesweeper Kallisto south of Psytalleia Island. As a result, part of the minesweeper's stern was sheered off, and it sank. Two of its crew members were slightly injured, and minor marine pollution was caused.

The Greek State attributed the collision to the sole fault of the ML's master. The Greek State initiated legal proceedings against ML's shipowning, chartering, managing, and shipping agent companies, as well as the master of the ML. On 30 October 2020, a Judge of the Court of First Instance issued an interim order prohibiting the sailing of the ML from Piraeus and changing its legal and factual status. The shipowning and managing companies submitted a letter of guarantee in the sum of EUR 40 million to lift the interim order. On 28 December 2020, in the interim measures proceedings, the Court of First Instance ordered the arrest of the ML for claims up to EUR 70 million.

On 8 January 2021, the shipowner submitted a declaration to the Court of First Instance to constitute a limitation fund for all claims arising from the collision, except those related to loss of life and personal injury, and submitted a cash deposit of EUR 33,250,000. It asked the Court to decide the exact amount of the limitation fund and to order the remaining balance to be returned to it. It also applied for the lifting of the ML's arrest pursuant to arts 11 and 13 of the LLMC 1996.

On 22 January 2021, the Court of First Instance issued Decision 234/2021, in which it: a) accepted the declaration of limitation, b) defined the limitation fund sum to be EUR 33,221,039.49, c) rejected the application regarding the remaining amount of the deposit to be returned to the shipowner and to be used to cover the expenses of the liquidation procedure of the fund because the applicant lacked locus standi, d) refused to order the returning of the letter of guarantee for EUR 40 million in the absence of the conditions of arts 13.2.b and 13.2.d of the LLMC 1996 for the mandatory release of security.

Both parties appealed the decision.

Held: The appeals are dismissed.

The Court of Appeal reviewed arts 1, 1.2, 1.4, 1.5, 1.7, 2, 2.1.a, 4, 6, 6.1.b, 7, 8, 8.1, 8.2, 8.3, 9, 11, 11.1, 11.2, 11.3, 12.1, 13, 13.1, 13.2, 13.2.a, 13.2.d, and 14 of the LLMC 1996 and concluded:

The shipowner’s liability is lawfully limited, pursuant to art 6.1.b in conjunction with art 8 of the LLMC 1996, to the amount of 27.815.408,00 SDRs plus interest, pursuant to art 11 and in accordance with the applicable national interest rate to 402,342.20 SDRs, as was correctly held in the first instance. This is because SDRs are not a carrier of value and a means of payment but merely a value calculation measure, based on the explicit characterisation as a 'Unit of Account' in art 8.1. This opinion is also in line with the fact that, on the basis of arts 8.1 and 11.1, the conversion of SDRs into the national currency of the State in which the limitation is sought (in this case, EUR) is calculated in accordance with the value of that currency on the date of constitution of the limitation fund under the law of the State, and followed by the calculation of interest on the amount already converted into national currency from the date of the event giving rise to the liability until the constitution of the fund. Therefore, the total amount of the fund constituted under art 11 is EUR 33,221,039.49, including interest provided for by the lex fori.

The shipowner is entitled under arts 1.1, 1.2, and 1.5, without the need for the Court’s intervention, lawfully to constitute a fund to limit its liability under art 11 for claims limited under art 2 and for the amount provided for in art 6. Claims subject to limitation of liability include those asserted by the Greek State's claim under art 2.1.a which relates to the damage to property occurring on board the ship or in direct connection with its operation in the technical sense of the term.

The subsequent Deed of Assignment, dated 14 January 2021, between the shipowner, as assignor, and the UK P&I Club NV, as assignee, in terms of which the former transferred all its rights and all its claims up to the amount of EUR 33,250,000, has no legal effect on the legitimacy of the constitution of the fund by the shipowner. This is because the fund constituted from the moment of its establishment constitutes a separate property for the benefit of third parties, which is distributed only for the satisfaction of claims for which liability may be limited if they arise from the same event.

The above assignment only has legal significance in relation to the requests submitted by the shipowner for reimbursement of the excess amount of the amount deposited, amounting to EUR 28,960.60, as well as for the reimbursement of the costs of the liquidation procedure from this amount. The assignor lacks standing. The assignee is the only party entitled to receive the above amounts.

The fault of the master or crew during the commanding or navigation of the vessel is not to be imputed to the debtor eligible for limitation. Given the fact that the appellant is legal person, only the acts and omissions of the bodies representing it are attributable to it. In the present case, the imposing of fines on the master by the Central Port Authority of Piraeus for non-compliance with the ISM Code and the joint and several liability of the appellant, and the managing and shipping agent companies does not lead the Court to a different conclusion. Even if the alleged culpable breaches by the master referred to in the above decisions are true, they do not constitute personal fault on the part of the appellant under art 4 which would deprive it of the right to limit its liability, nor do the joint and several liability for the fines make it a perpetrator of the infringements in question. It was not proven that at the time of the accident the appellant was aware of the master’s unfitness for service, and no infringement was attributed to, nor any fine was imposed directly on, the appellant. It cannot be presumed that the appellant, through its legal representatives, deliberately intended to cause the collision, ie that it sought to cause it or that it was indifferent and aware of its possible happening and of the damage to be suffered by the defendant. Therefore the statutory requirements for barring the benefit of the limitation of liability, of which it made use by constituting the fund, in accordance with the foregoing, are not fulfilled.

Article 11 does not presuppose the existence of more than one creditor, since there is no provision in the LLMC 1996 or in the national law introducing such a restriction or condition, and it can not reasonably be seen in the wording of arts 11 ff. Furthermore, it cannot be clarified how many claimants there are prior to the constitution of a limitation fund and the expiry of the time limit for the notification of claims to the liquidator. Moreover, without the establishment of a fund, even if there is only one claimant, the consequences of the cessation of proceedings and the release of the ship or other assets and securities under art 13, as well as the cessation of interest accruing on the claims for which the fund has been established, cannot occur.

The Court cannot intervene in a corrective manner and rule that the limitation fund should be at least EUR 70 million, ie what was presumed to be the damage due to the complete destruction of the Kallisto, due to the disproportion between the amount of damage already suffered and anticipated with certainty to be suffered by the property of the respondent, and the amount to which the appellant seeks to limit its liability. Here, the exact amount of the limitation fund which the shipowner wishing to exercise its right under the LLMC 1996 to limit its liability for claims subject to limitation wants to constitute, is provided by the Convention itself, which contains in detail all the elements for its objective determination, which follows as a result of mathematical calculations. Furthermore, the rights of the appellant are not abusively exercised, because its right to limit its liability derives from an international Convention.

As the appellant claims, arts 11, 13.2.a, and 13.2.d do apply because: a) the collision happened in the port of Piraeus, b) Piraeus was also the first port of call of the ship after the collision, and c) the vessel was arrested in Piraeus, in accordance with the true meaning of art 13.2.d, ie its departure was prohibited by an interim judicial order. Therefore, the prerequisites of the mandatory release of the ship and the securities provided by the appellant are met. However, on the basis of the national law, the contested decision is not subject to appeal. Thus, there is no substantive jurisdiction to hear this application for the removal of interim measures, namely the lifting of the arrest and the returning of the letter of guarantee.