On 9 May 1990 the ship combination of the pusher M/S Finn and the barge Board collided with the state-of-the-art Tröskeln Östra navigation aid. The pusher M/S Finn of the vessel combination was owned by Laivanisännistöyhtiö Puskija (LP) and the barge Board was owned by Laivanisännistöyhtiö Proomu II (LP II). The repair cost caused by the damage to the radar device was FIM 2,900,000. The State's compensation claims were secured by liens over the two vessels belonging to the ship combination.

The State argued that, in addition to the fact that liability for the collision was determined under Ch 2 of the Maritime Act, the shipowners were liable for damage under Ch 1, s 25 of the Water Transport Act, regardless of fault. The State contended that the ship combination was a fixed synchronised entity formed by two units that acted as one vessel. The parts of the vessel combination did not move independently, such as a tug and towed vessel could. The barge went where the pusher went, and the combination reacted to natural conditions in the same way that a traditional ship the size of the combination would. The decisive factor should be the size of the operating unit, and not what each shipowner owned. When a combination of units causes damage to third parties, the third party should not be placed in a worse position than if the damage had been caused by a conventional ship of a similar size. Therefore, the State demanded that both LP and LP II be ordered to pay the full costs of FIM 2,900,000.

The shipowners argued that the barge was uncrewed at the time of the incident, and was completely under the control and supervision of the M/S Finn. LP II could therefore not be found to have acted negligently. In the event that the shipowners were held liable, only LP was liable as regards the M/S Finn. In that case, LP's liability had to be limited to a maximum of 344,354 SDRs pursuant to ss 12, 13 and 16 of the Maritime Act, calculated on the tonnage of the M/S Finn only.

The Hanko Court of Appeal held that the collision of the barge of the ship combination with the radar device had been caused by a navigation error made by M/S Finn's chief mate and thus by his negligence. The Maritime Act applied to vessels used in merchant shipping with the exceptions mentioned in s 9 of the Act. The compensation provisions for shipowners in s 11 of the Maritime Act were based on the principle of fault. The Maritime Act was, in the special regulatory situations mentioned therein, a special law which excluded Ch 1, s 25 of the Water Transport Act from its scope. In the present case, the strict liability provided for in the Water Transport Act would have rendered s 11 of the Maritime Act redundant. The Court referred to an earlier majority ruling by the Supreme Court (1983 II 40), which held that a shipowner's liability for damage caused to a bridge when the vessel collided with it was determined by the Maritime Act and not by the Water Transport Act. The Court also referred to academic literature which suggested that the issue had not been finally resolved by the precedents.

The system of limitation of liability developed as a system based on international agreements on the basis of long-standing and well-established case law. The basic principle underlying the liability limitation system had been to limit financial risk-taking. Over time, the scope of the limitation of liability had expanded to include situations in which the same person had ownership of both the tug and the vessel being towed. This legal principle had been accepted in foreign case law. Finland had adopted the LLMC 1976 on 1 April 1985. This Convention had been developed on the basis of previous agreements, on the basis of which case law had been developed. The agreement in force was not inconsistent with the line taken in the case law. The Court of Appeal therefore held that, although the ship combination differed from the traditional towing combination in terms of its technical implementation, there were two different vessels.

The application of limitation of liability was supported by factors such as the fact that the pusher and the barge were registered, surveyed, and insured as separate vessels, the pusher and the barge had different owners, and the pusher and the barge each had the ability to perform maritime tasks independently. No sufficiently serious reasons had been presented on behalf of the State to deviate from established case law, which is why the conditions for the right to limit liability in respect of the M/S Finn had been met.

The Court ordered LP to pay 344,354 SDRs to the State, in accordance with ss 16 (4) and 279a of the Maritime Act. The claim against LP II was dismissed.

The State appealed to the Supreme Court.

Held: Appeal upheld. The Court of Appeal judgment is amended as follows: LP and LP II are ordered to pay FIM 2,900,000 in damages to the State. The amount to be paid is limited to 344,354 SDRs for LP and 1,597,522 SDRs for LP II, provided that the amount of compensation thus calculated is less than FIM 2,900,000.

The question is whether Ch 1, s 25(1) of the Water Transport Act applies in this case to compensation for damage caused by the use of a ship at sea. The main objection to its application is that, in accordance with the principles generally applicable in maritime law, liability for damage caused by a ship is based on negligence on its part. However, the applicability of the liability provision of Ch 1, s 25(1) of the Water Transport Act also to damage caused by a ship at sea referred to in the Act is not restricted elsewhere in the Act. There is also no provision in the Maritime Act according to which the liability of a shipowner for damage to property caused by a collision of a ship at sea should be considered differently from the provisions of the Water Transport Act. On the contrary, s 11(1) of the Maritime Act is secondary, because the provision does not apply to the shipowner if the law provides for liability elsewhere. It cannot be assumed that the provisions establishing liability in the Maritime Act supersede the compensation provision in the Water Transport Act, nor can it be inferred from the international agreements on which the Maritime Act is based (the LLMC 1957, SopS 4/68, and the LLMC 1976, SopS 82/86). Accordingly, the shipowner's liability for damage caused by a ship collision is determined in accordance with Ch 1, s 25(1) of the Water Transport Act.

The immediate cause of the damage to the radar device was the collision of the barge, towed by the pusher, with the radar device. A fixed radar device is an installation that is referred to in Ch 1, s 25(1) of the Water Transport Act. Taking into account the manner in which the damage occurred, the shipowners are obliged to reimburse the State for the costs of repairing the radar device pursuant to this provision.

The damage has been caused by direct contact with the use of vessels within the meaning of s 13(1)(1) (295/84) of the Maritime Act. Therefore, the shipowners are entitled to the limitation of liability provided for in s 16(1)(3) (295/84) and s 279a (270/81) of the Maritime Act. The pusher M/S Finn and the barge Board are registered as different vessels. The owners of both vessels are responsible for compensating the damage caused to the radar device. Consequently, the maximum amount of liability of each shipowner must be calculated solely on the basis of the tonnage of each owner's own vessel.