In April 1991, an explosion followed by fire occurred on board the Haven, which sank off the coast of Arenzano, Italy. The cargo of crude oil partially spilled from the ship, polluting the sea and the beach. In May 1991, the shipowner, Venha Maritime Ltd (VM), commenced proceedings in the Tribunal of Genoa for limitation of liability under art 5 of the Civil Liability Convention 1969 (the CLC 1969), by way of a bank guarantee corresponding to the amount of the limitation sum, calculated based on art 5 CLC 1969 and art 2 of the 1976 Protocol. The municipality of Arenzano sued VM in the Tribunal of Genoa, asking for compensation for the damage suffered. VM and The United Kingdom Mutual Steamship Assurance Association (Bermuda) Ltd (the P&I Club) applied for a decree of limitation of liability, and the Tribunal of Genoa opened the related procedure, considering the bank guarantee suitable.

The International Oil Pollution Compensation Fund (the IOPCF) intervened in the process, declaring that its contribution under the Fund Convention 1971 was to be determined based on the conversion of the limit of 900 million Franc Poincaré in SDRs, calculated on a 15:1 relationship.

The claimants contested VM's limitation of liability, arguing that it should have included interest, and the method of conversion of the compensation due by the IOPCF, stressing that it was to be fixed in Franc Poincaré to be converted based on the market value of gold.

In March 1992, during the proceedings before the Tribunal of Genoa, the Designated Judge (the DJ) decided that the limitation amount limit provided by VM and the P&I Club should include the interest that the IOPCF had to contribute, converting the limit of 900 million Franc Poincaré based on the market value of gold.

The IOPCF opposed this decision. In July 1993, the Tribunal of Genoa dismissed the opposition. The IOPCF, VM, and the P&I Club appealed to the Court of Appeal of Genoa. In particular, the IOPCF argued that the measure adopted by the DJ was not legitimate, as it concerned personal rights, which should be decided only by the Collegial Judge. Moreover, the Italian norms implementing the CLC 1969 and the Fund Convention 1971 refer to the procedure of limitation of liability only as regards shipowner limitation under art 5 CLC 1969 and art 2 Fund Convention 1971. The DJ’s decision would also violate arts 4.5-18.7 of the Fund Convention 1971.

Moreover, VM and the P&I Club argued that interest was not to be included in the limitation of liability amount, as the fluctuation of interest rates within the different contracting States would contradict the philosophy of the process of limitation of liability and the general principles of the Preamble of the CLC 1969.

Held: The appeal is dismissed.

The Court noted that the CLC 1969 and the Fund Convention 1971 channel civil liability for damages towards the shipowner, the P&I Clubs, and the IOPCF (supported by oil cargo interests) and that the procedure for limitation of liability implies a restriction of the area of the damage that can be compensated, so as to balance the wrongdoer's quasi-strict liability.

The Court stressed that the administrative/liquidator aspect of the Fund is of primary significance, as it constitutes a 'separate patrimony' addressed exclusively to the compensation of injured parties, and that the shipowner, in order to take advantage of the procedure of limitation of liability, must immediately pay under art 5 CLC 1969, to avoid the postponement of its legal obligations towards injured parties.

Moreover, the Court emphasised that among the actions the injured party is entitled to under art 9 CLC 1969, where the IPOCF may be involved, there is also a procedure for limitation of liability, the first phase of which is the payment of an amount as a guarantee by the shipowner. The Court referred to arts 5.3, 5.4, 6.1, and 6.2 CLC 1969. The Court also highlighted art 7.6 of the Fund Convention 1971.

Furthermore, the Court recalled that the guarantee paid by the shipowner and the limitation amount constitutes a 'separate patrimony' addressed exclusively to claimants for pollution damage, and that there is a prohibition on individual executive actions and ship arrests under art 6 CLC 1969. The Court also stressed that this fund is not managed by the shipowner but by the Tribunal administering the fund under art 6.2 CLC 1969.

Concerning SDRs, the Court noted that taking into account the value's variability, in other systems of limited liability, such as art 33 of the Hamburg Rules and art 21 LLMC 1976, an abbreviated procedural mechanism has been provided, not only for the revision of the amount of the litigation, but also for the substitution of SDRs with other units of account in case of significant change in their actual value.

The Court also pointed out that the systems of compensation of the shipowner and the IOPCF are supplementary, and that the aim to ensure prompt and total compensation to the victims of oil pollution is paramount to the distribution of risk among parties involved in the carriage of oil by sea.

Concerning the decision of the DJ, the Court found it lawful, as the DJ achieved the decision through objective procedural mechanisms, and the IOPCF’s initiative also induced the decision.

In conclusion, concerning the claim by VM and the P&I Club, the Court decided that interest was to be included in the limitation of liability amount. The Court observed that there is no tension with the Preamble of the CLC 1969, which highlights the danger caused by oil pollution from maritime transport on a global scale, the need to ensure adequate compensation to the victims of oil pollution, and the desire to adopt uniform rules and procedures to decide questions of liability always to provide adequate compensation in such cases. For these reasons, the Court could not adopt interpretations of the CLC 1969 which do not aim to ensure adequate compensation to the victims of oil pollution.