This claim arose from an explosion and fire on 14 July 2012 on the container ship MSC Flaminia in the middle of the Atlantic Ocean en route from Charleston, Louisiana, to Antwerp. The explosion was caused by auto-polymerisation of the contents of tank containers laden with 80% divinylbenzene (DVB). The vessel was operating under a period time charter between the claimant, MSC Mediterranean Shipping Co SA (MSC), as time charterer, and the registered owner, Conti 11 Container Schiffahrts-GMBH & Co KG MSC 'Flaminia' (Conti), the fourth defendant.

The time charter provided for London arbitration. Arbitration was commenced by Conti in 2012 but only actively prosecuted much later. This resulted in three awards: (i) Award 1 dealt with cl 62 of the time charter. The arbitrators dismissed a claim by MSC that cl 62 was an indemnity in its favour covering the casualty. (ii) Award 2 dealt with all other liability issues. MSC was held liable to Conti in respect of the casualty. (iii) Award 3 awarded Conti damages of around USD 200 million.

MSC now seeks to limit its liability for claims arising out of the casualty pursuant to the LLMC 1996. The scope of the Convention is stated in art 15.1:

This Convention shall apply whenever any person referred to in Article 1 [ie a shipowner or salvor, but where 'shipowner' includes charterer: see Article 1.2] seeks to limit his liability before the Court of a State Party or seeks to procure the release of a ship or other property or the discharge of any security given within the jurisdiction of any such State.

Conti disputes that MSC has any limitation right under the LLMC 1996 in respect of Conti's losses on the basis that either: (i) Conti's loss 'resulted from [MSC’s] personal act or omission, committed … recklessly and with knowledge that such loss would probably result' within the meaning of art 4 of the LLMC 1996; or (ii) Conti’s claims do not fall within the scope of art 2 of the LLMC 1996. MSC applies for a summary judgment dismissing the art 4 defence, alternatively an order striking it out. MSC also applies for an anti-suit injunction restraining Conti from taking any step to enforce Award 3 anywhere in the world prior to the conclusion of the limitation claim in the English Court.

Held: The art 4 defence is dismissed by way of summary judgment. The application for an anti-suit injunction is denied.

MSC argues for a summary dismissal of the art 4 defence on the basis of an issue estoppel between MSC and Conti created by para (c) of Award 2, which stated: 'WE FIND HOLD AND DECLARE (by a majority) THAT MSC was not negligent in so shipping the Cargo.' Award 2 further found that MSC’s breaches of the time charter were an effective cause of the explosion (para (d)); in one respect Conti had breached art 3.1 of the Hague Rules to exercise due diligence to provide a seaworthy ship (paras (e) and (f)); Conti’s failure to provide a seaworthy ship had no causative impact in relation to the explosion or the crew’s response (para (g)); and Conti did not fail properly and carefully to carry, keep, or care for the DVB in breach of art 3.2 of the Hague Rules (para (h)). MSC contended that as it had been determined by arbitration that it was not even negligent in shipping the dangerous DVB cargo, it was not open to Conti to allege that the casualty resulted from a reckless act or omission on the part of MSC knowing that loss would probably result. The art 4 defence was bound to fail. Conti claimed that the statement in para (c) amounted to no more than an obiter dictum.

Paragraph (c) of the Award is a determinative declaration granted as one element of final relief in the reference. This is reinforced by the fact that Conti had referred a claim for damages for negligence, further to its claims for breach of contract, and not merely in the alternative. Though taking the form of a concise, final declaration that MSC was not negligent rather than a dismissal of the claim, para (c) of the Award is the final relief in the reference disposing of the negligence claim referred by Conti. The final rejection of the negligence claim, alongside the final upholding of the claims for breach of cl 78 and art 4.6 of the Hague Rules (paras (a) and (b)), served to define the parameters for the final phase of determining what monetary award should be granted to Conti. The Award thus finally determined between MSC and Conti that MSC was not negligent in shipping the DVB as it did, in contravention of the IMDG Code, and without giving Conti full information as to the danger it presented. Conti is estopped thereby from contending otherwise before this Court, and cannot maintain that the art 4 defence under the LLMC 1996 might be viable.

MSC further applies for an anti-suit injunction restraining Conti from seeking to enforce Award 3 anywhere in the world prior to the conclusion of this limitation claim. MSC commenced this claim only in July 2020, eight years after the casualty. MSC’s difficulty is that Conti now has a final monetary award, prima facie enforceable anywhere in the world where MSC may be amenable to enforcement. Any general limitation decree from this Court is still some months away. That is a difficulty of MSC’s own making by leaving it until July 2020 before pursuing its asserted limitation rights under the LLMC 1996. Though the art 4 defence is dismissed, that does not mean MSC can apply immediately or summarily for a general limitation decree. To establish its right to limit under the LLMC 1996 will require MSC to prove that its liability to Conti, now fixed by Award 3, is a liability in respect of which the right to limit arises under art 2. That will be determined by trial listed for October 2022. If it is clear that the limitation claimant would obtain a general limitation decree, subject to an art 2 point that may be available to particular limitation defendants only, the limitation claimant and those defendants might choose to agree to deal with matters by creating by side agreement a qualification amongst themselves on the apparently unqualified language of the decree. Absent agreement, it would be inadvisable for a limitation defendant with an art 2 point to consent to a general limitation decree rather than defend the limitation action, as Conti has done here.

If MSC obtains the general limitation decree it seeks and Conti claims on the fund, under art 13(1) of the LLMC 1996, MSC will have a statutory right that Conti be 'barred from exercising any right in respect of [its] claim against any other assets of [MSC]'. There is no evidence that Conti has any intention to claim against the fund. Instead, there is evidence indicating that unless restrained by injunction from doing so, Conti intends to enforce Award 3 elsewhere, possibly in the US [for earlier US proceedings, see eg In re M/V MSC FLaminia 2018 AMC 2113 (CMI220)]. Article 13(2) of the LLMC 1996 will apply in all jurisdictions that are party to the Convention, under which there will be a discretion, but not an obligation (since none of art 13(2)(a)-(d) applies on the present facts), to release any arrest or attachment of MSC property, if Conti’s claim could be made against the limitation fund (ie if its art 2 point is not well-founded). MSC’s application did not provide any reason why this Court should prejudge the exercise of that discretion in another jurisdiction.

If enforcement by Conti is attempted in a jurisdiction not party to the LLMC 1996, the question may arise there whether a general limitation decree obtained here, in a limitation action in which Conti has participated, would have any impact. This application is premature. If enforcement action is taken, MSC will be in a position to make concrete any grounds, if there are any, for complaining to this Court that Conti ought not to be allowed to pursue that action pending the conclusion of the limitation claim here.

MSC further argued that it would be oppressive conduct on Conti’s part to seek to enforce Award 3, having submitted to and participated in the limitation claim. However, Conti, served by MSC as a defendant to its limitation claim, has a legitimate interest in defending that claim, on its contention that its claims against MSC do not fall within art 2 of the LLMC 1996, and would have had a legitimate interest in defending that claim by reference to art 4 had it been able properly to plead a case under art 4 that was not defeated by issue estoppel, irrespective of whether it has any intention of enforcing against the fund. The same would have been true if Conti had an argument that MSC was not a person entitled to limit at all (ie was not a shipowner or salvor within the purview of art 1 of the Convention). The very interest, itself legitimate, that MSC has in relying in response to any enforcement action elsewhere upon any limitation decree it obtains here (if and to the extent that such a decree would assist it before the courts seized of the enforcement action), renders it legitimate, not vexatious or oppressive, for Conti to resist the grant of any such decree on properly arguable grounds.

By submitting to the jurisdiction and participating, Conti has eschewed any argument as to the appropriateness of this forum for determining as between itself and MSC those Convention questions. In these circumstances it might be possible to characterise Conti’s conduct as vexatious and oppressive were it threatening to relitigate those questions, in defiance of a determination of them in favour of MSC by this Court (if that is the outcome of these proceedings), so as to prevent MSC from taking advantage of the Convention in a jurisdiction in which the right to limit thereunder would in principle operate to MSC’s benefit. Even that may not be a straightforward argument, because it still may come down to an attempt to police by anti-suit injunction the principles applicable abroad to the recognition or enforcement of judgments of the English court. MSC is not in a position at this stage to propose that Conti is threatening or intending any such thing. Conti is not seeking to frustrate MSC’s limitation right under the LLMC 1996 by disputing on properly arguable grounds the proposition that MSC has any such right.

[See further MSC Mediterranean Shipping Co SA v Stolt Tank Containers BV [2022] EWHC 2746 (Admlty) (CMI2028).]