The cargo owners brought actions to recover for cargo lost when the MSC Carla broke in half during a storm en route from Le Havre, France, to the US. The shipowner, Rationis Enterprises Inc (Rationis), and the bareboat charterer, Mediterranean Shipping Co Geneva SA (MSC) filed an action for limitation of liability under the US Limitation Act.

The cargo interests' claims for cargo damage against the vessel's slot charterers, POL-Atlantic (POL) and Atlantic Container Line (ACL), were subject to US COGSA. However, the Vessel Sharing Agreement (VSA) required POL/ACL to defend (on behalf of MSC) all cargo claims. The cargo interests sued POL/ACL outside the MSC/Rationis limitation proceeding (because ACL/POL as slot charterers/non-owners were not entitled to pursue limitation of liability under the US Limitation Act).

POL/ACL filed third-party indemnity claims against MSC as the bareboat charterer, asserting MSC's fault in causing the casualty. Specifically, POL/ACL asserted third-party claims against MSC and tendered MSC as a direct defendant to the cargo claimants (under US Procedural Rule 14(c)). The cargo damage actions/third-party claims/tenders were consolidated with the MSC limitation action.

MSC moved to stay the POL/ACL tendered claims in favour of London arbitration (applying English law), as required under the VSA, between MSC, POL and ACL. MSC's motion to stay in favour of London arbitration was denied by the lower Court.

MSC appealed the District Court's denial of a motion to stay the slot charterers’ indemnity claims and compel arbitration, which, given the VSA's requirement for the application of English law, would apply the LLMC 1976 in lieu of the US Limitation Act (with the LLMC 1976 providing a larger limitation fund and requiring a greater showing of owner intent or recklessness to break limitation, creating virtually unbreakable limitation).

Held: POL/ACL's claims asserted under the VSA were claims arising out of MSC's personal contract (ie the VSA), and were therefore exempt from the concursus requirement of the US Limitation Act (pursuant to the 'personal contract' doctrine under US maritime law under the Limitation Act). Therefore, the District Court's denial of MSC's motion to stay POL/ACL's VSA-based indemnity claims was reversed and remanded for further proceedings, with the expected outcome that London arbitration applying the LLMC 1976 would be allowed to proceed.