Miguel Garcés (the plaintiff) filed an in rem action against the MV Don Francesco, a vessel registered in Venezuela. The defendant filed several defences, including lack of jurisdiction to decide the merits of the claim and a subsidiary petition to stay the case. Atunven CA (the shipowner) later constituted a fund for limitation of liability in the same court, based on the law of the ship's flag. The limitation of liability regimes of Venezuela and Panama are based on the provisions of the Convention on Limitation of Liability for Maritime Claims 1976 (LLMC 1976). The First Maritime Court admitted the constitution of the limitation fund and ordered the incorporation of the in rem action into the limitation process. Therefore, the defences presented by the ship were declared irrelevant and the court abstained from ruling on them. The defendant appealed the decision.

Counsel for the ship argued in the appeal that the laws of maritime commerce of Venezuela do not establish that the right of the shipowner to limit its liability excludes or prohibits the ship from filing its defences. Therefore, the decision violated art 15 of the Law of Maritime Commerce of Venezuela, which is interpreted as establishing the theory of personification of the ship.

Held: The Supreme Court of Justice (SCJ), acting as Court of Maritime Appeals, affirmed the decision. The SCJ held that art 14 of LLMC 1976 establishes that the rules of procedure in a limitation of liability process shall be governed by the law of the State in which the fund is constituted. Article 524 of the Maritime Procedure Code establishes that all actions against the shipowner’s assets shall be suspended after the decree declaring the opening of the limitation proceedings is published in a newspaper.

The SCJ stated that in a limitation of liability process there is no real separation between the assets of the shipowner and the ship. The constitution of the limitation fund has a direct impact on the maritime lien claimed by the plaintiff as the fund replaces the ship, resulting in the interruption or suspension of the plaintiff’s actions against the ship or any other assets of the debtor. At the same time, the limitation fund attracts all other claims and ongoing proceedings, whatever their nature and their procedural stage, which must be incorporated into the limitation proceedings (art 13.1 of LLMC 1976). Any single case related to the fund loses its individuality and becomes part of a procedure of universal effect. Therefore, the in rem action is extinguished once it is incorporated into the limitation process, making it unnecessary to decide the defences of lack of jurisdiction and the petition to stay the claim.