The plaintiff insurer claimed that on 1 November 2012, the defendant's yacht anchored in a fishing port caught fire as a result of short-circuiting of the cables connected to the battery and energy system in the engine room. This fire quickly spread to the plaintiff's insured's yacht, which was completely burned up. The plaintiff paid TRY 233,670,00, corresponding to EUR 100,000, to its insured. The plaintiff then sought to recover this amount from the defendant shipowner and its insurer, limited to the amount that they were obligated to pay pursuant to art 1472 of the Turkish Commercial Code (TCC).

The defendant shipowner argued that it did not have any responsibility for the outbreak of the fire. The limited liability principle was applicable in international maritime law, and the shipowner and ship's crew did not have any fault in the incident. There were criminal proceedings pending, which should be decided first.

The defendant insurer argued that its liability was limited to the insurance policy limit, and it had paid out TRY 17,000,00 in this regard. Therefore, the lawsuit against it should be dismissed.

The Court of first instance found that the liability of the shipowner for the fire would be determined not only by these civil proceedings, but also by the criminal case. The crew of the yacht stayed and cooked on the yacht. Electricity was used from the electric cable running from the port. The fire broke out due to a short-circuiting of the battery and energy system cables in the engine room. The ship's crew was at fault in the incident. The liability of the defendant shipowner arose under art 1062 of the TCC, and its liability was limited to 83,500 SDRs in total under art 6 of the LLMC 1976. The Court partially upheld the plaintiff's claim. The defendant shipowner had made a partial payment to the plaintiff insurer, since it made preliminary payments as a result of the incident to 18 different boats. There was no need to render a judgment in respect of the defendant insurer since it had already made a payment of TRY 17,000,00 corresponding to the share of the insured on 22 February 2013 in the lawsuit initiated against the defendant insurer.

Both parties appealed to the Supreme Court of Appeal.

Held:The appeal is admissible. The decision of the Court below is reversed.

This lawsuit relates to a recourse claim based on a yacht insurance policy. It is indisputable that a fire broke out on 1 November 2012 when the yacht belonging to the defendant was anchored at port, and that this fire spread to 22 other boats anchored nearby, causing damage.

The Court below correctly held that the provisions of the TCC numbered 6102, which entered into force on 1 July 2012, would be applicable, since the fire occurred on 1 November 2012. Correspondingly, once the provisions of arts 1328 and 1329 of the TCC numbered 6102 were taken into consideration: ‘The right of the shipowner to limit its liability arising out of the Conventions regarding the limitation of liability to which the Republic of Türkiye is a party is reserved.'

Under art 1062.2 of the TCC numbered 6102, the provisions of the LLMC 1976, which provide for the shipowner's limitation of liability, should be applied to the incident. It was stated in the expert report dated 26 December 2014, and the legal opinion which was taken as a basis by the Court, that, as provided by art 2 of the Convention:

1. Subject to Articles 3 and 4 the following claims, whatever the basis of liability may be, shall be subject to limitation of liability:

(a) claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom; ...

2. Claims set out in paragraph 1 shall be subject to limitation of liability even if brought by way of recourse or for indemnity under a contract or otherwise. However, claims set out under paragraph 1(d), (e) and (f) shall not be subject to limitation of liability to the extent that they relate to remuneration under a contract with the person liable.

The liability of the shipowner and the maritime claims in this case are also within the scope of limited liability pursuant to the Convention. In the event that more than one maritime claim arises due to the same event and pursuant to art 6 of the LLMC 1976, limitation shall be applied to 'all' maritime claims on a pro-rata basis (art 9 of the LLMC 1976). Therefore, even if limited liability is asserted before the establishment of a limitation fund, limited liability can be asserted against all the creditors by the application of art 12 of the Convention. Pursuant to art 10.2 of the Convention, art 12 regarding the allocation of the fund shall be taken as the basis for limitation on a pro-rata basis, as stated in art 9 of the Convention. Accordingly, it would have been appropriate to consolidate the relevant proceedings to distribute the funds and execute the claims, since in these proceedings, the cause of the maritime claims was the damage to the goods on the boats, and all of these claims arose out of art 6 of the Convention. While determining the SDR limit of the limitation fund in art 1332 of the TCC, the Court was also required to determine 'all' payments of the defendants arising out of the same fire. Partial payments were made by the defendants. However, without consolidating the lawsuit files and without determining all of the payments, it would be unfounded to set the limit for each maritime claim. The Court held that it was possible to determine the liability limit by taking into account the amount of receivables and payments from the three lawsuit files provided to the experts. On that basis, the pro-rata limit that would apply to a claim for TRY 216,670 would be SDR 45,958. However, the defendant objected to this method of calculation in the expert report.

In such circumstances, it was inappropriate to render a judgment in writing determining the amount of damages and payments made regarding all the boats damaged in the fire, and by consolidating the lawsuit files when necessary in order to make such a determination, without resolving the deficiencies stated in the expert report and without taking into account the fictitious calculation made on the basis of the average of the figures stated in only three lawsuit files of which the experts were informed. Therefore the reversal of the decision is required.

[See also E:2015/7603 K:2016/4854 (CMI1840).]