The State-owned icebreaker Sisu, commanded by Captain A, received instructions from port authorities to sail to Hamina. The M/S Finnboard, owned by Gutzeit Osakeyhtiö, was ready to depart for Spain, and required the services of the Sisu to break the solid ice. However, the ice channel opened by the Sisu relied in part on incorrect radar observations, and ended up to one side of the fairway and over a shoal. The Finnboard ran aground on the shallow ground and suffered severe hull damage.

The insurers of the Finnboard claimed that both A and the State were liable for the damages. The State was liable both as the owner of the Sisu and for incorrectly installing a navigational light on Kuorsalo, which had a significant effect on the damage. A and the State argued that their liability should be limited under the provisions of Ch 2 of the Maritime Act (the Act), and that the Finnboard was also to blame for running aground by sailing at too high a speed, with the consequence that it could not reduce speed in time to mitigate the consequences of the inevitable running aground.

In the Turku Court of Appeal, the claim against A was abandoned and the claims against the State pursued. The Court of Appeal largely upheld the Court of first instance decision, finding that the Finnboard itself had to be held partly responsible for its grounding, and that the State, as the owner of the icebreaker, was not entitled to limitation of liability under ss 9 and 13 of the Act. The parties appealed to the Supreme Court.

Held (by a majority): The State is liable for half the damage caused due to the poor seafaring skills of the master of the Sisu. The State is, however, entitled under s 13(1)(2) of the Act to limit its liability in this regard under s 14 of the Act (which provisions give domestic effect to the LLMC 1957). The decisions of the Courts below are amended accordingly. The State must also pay compensation for one-sixth of the damage due to the lack of visibility of the navigation light maintained by the State.

The Finnboard's grounding was affected by: 1) the incorrect positioning of the Kuorsalo navigation light; 2) the icebreaker Sisu's navigation, which was contrary to good seafaring skills; and 3) the negligence of persons working under the Finnboard's responsibility. The extent to which the various contributing factors contributed to the grounding and the damage caused by it is inevitably left to the Court's ultimate discretion. The effect of the lack of visibility of the navigation light remained relatively small, and was also smaller than the effect of either of the other factors. The Sisu's master's poor seafaring skills took precedence over the mistakes and omissions made on the Finnboard. It was therefore justified to conclude that the Finnboard's own contribution was less than the effect of the Sisu's master's conduct. Accordingly, the Court estimates the effect of the lack of the visibility of the light as one-sixth, the effect of Sisu's master's poor seafaring procedure as three-sixths, and Finnboard's own contribution as two-sixths of the total damage. The State is responsible for the effect of the lack of visibility of the light as its maintainer. As the owner of the icebreaker Sisu, the State is also responsible for the mistakes and omissions of the master of its ship.

The Finnish Maritime Administration invoked the State's limited liability in so far as the State was responsible for the grounding as the owner of the icebreaker Sisu. The LLMC was signed in Brussels in 1957. It was signed and ratified on behalf of Finland and provided for, by a decree of 26 January 1968, to enter into force on 31 May 1968. At the time of signing the Convention, a reservation was made on behalf of Finland to give effect to the Convention either by giving it legal force or incorporating its provisions into national law. Under the Government's proposal No 26/1964 vp, the Act was amended to bring its provisions on limitation of liability of shipowners into line with the LLMC 1957.

The provisions of the Act concerning the limitation of liability did not place State vessels or icebreakers in an exceptional position. However, s 9 of the Act stated that the provisions of the Act applied to a ship which was not used for merchant shipping only if they were applicable to such a ship at any given time. Merchant shipping was previously defined in s 2(2) of the Act to mean not only the carriage of goods and persons, but also towing, icebreaking, fishing, rescue and other activities carried out on board a ship for gain or otherwise. This section was repealed by Act 26/5 of 1967. The main justification for the omission of the definition in the relevant government proposal was that the concept of merchant shipping was no longer intended to be restricted on the basis of whether the activity was for gain or otherwise.

It has to be decided whether the provisions on limitation of liability in Ch 2 of the Act can apply to State vessels. The LLMC 1957 does not exempt State-owned vessels. Consequently, the provisions of Ch 2 of the Act have to be interpreted, in the absence of any other indication, as applying to State vessels. The decisive question is therefore whether the damage in this case is covered by the provisions defining the shipowner's limitation of liability. According to s 202 of the Act, cases in which a vessel, as a result of steering or otherwise, causes damage to another ship or to a person or cargo on board, is covered, even if the ships do not collide. Reading that provision with s 13(1)(2) of the Act, it is clear that the damage caused by the conduct of the master of the Sisu in this case is covered. Accordingly, the State, as the owner of the icebreaker Sisu, is entitled, under s 13(1)(2) of the Act, to limit its liability under s 14 of the Act.

Leivonen (dissenting): The issue of limitation of liability must be resolved on the basis of ss 9 and 13(1) of the Act and the general principles concerning the purpose of the LLMC 1957. This Convention is based on the aim of limiting the higher-than-usual liability for damage related to the special circumstances of shipping compared to other industries, and was originally aimed at safeguarding the interests of merchant shipping. Limitation of liability does not apply to damage caused by ships in the performance of a task for a special purpose in such a way that that the risk and liability involved are substantially different from the risk and liability associated with normal commercial shipping. Given that the risk of damage related to a fault or neglect in the maintenance of the fairway differs substantially from the risk of damage related to other shipping, the State, as the owner of the icebreaker Sisu and the fairway operator, should not be entitled to limit its liability

In view of the above, the State should pay compensation due to the lack of visibility of the navigation light (one-sixth), and as the shipowner of the icebreaker Sisu (three-sixth), or a total of four-sixths of the damage.