On 4 November 1996, a Greek-flagged passenger ferry S rammed a Greek Navy missile boat TPKK. The warship sank, and four members of its crew died. The Greek State brought an action before the Court of First Instance of Piraeus against the shipowner of the S, two operators, the manager, the master, and the chief officer of the passenger ship. It asked for EUR 1,468,321.24 that it had paid to relatives of the diseased, and also claimed a right of recourse against the defendants, alleging that their ship was solely responsible and vicariously contributed to 95% of the accident.

The first defendant, the shipowner, also brought an action against the Greek State. It claimed that: a) the negligence of the crew members of the warship caused the accident and their contribution was 95%; b) it had set up a fund to limit its liability for the claims of the deceased crew members' dependents and had settled and paid them EUR 1,115,657.98; and c) after paying the victims' relatives it became an assignee and sued the Greek State for 95% of the amount it had paid.

The Court heard both cases jointly. It dismissed the claim of the Greek State because the establishment of a limitation fund deprived the Greek State, as a creditor with a claim against the defendants, as (co-)obligees to pay compensation to the victims' families, from taking action against them.

The Court accepted the objection raised by the Greek State as the defendant that the right of the shipowner to bring an action was time-barred and rejected it as inadmissible.

The Greek State appealed against all the defendants, and the first defendant counter-appealed the decision to the extent of the Greek State's appeal.

Held: The Court of Appeal jointly judged appeals A and B. Both appeals are dismissed.

The Greek State claimed that the Court of First Instance erred in applying the LLMC 1976. The Court had held that its action was governed by the LLMC 1976, whereas the action of the first defendant was governed by the CPML (Appeal A).

The shipowner claimed that the Court should have applied the Civil Code and not the CPML for the limitation period for its legal action (Appeal B).

The Court of Appeal reviewed both appeals in the light of the Collision Convention 1910, the LLMC 1976, and national law, and concluded the following.

When a collision between ships occurs within Greek territorial waters and is determined under national law, if no other law applies, under the Collision Convention of 1911 [sic: Collision Convention 1910] (ratified by Law GOPST(3886)/1911), the liability and the obligation to compensate depend on the degree of fault of each ship. In particular, according to art 236 of the CPML [similar to arts 3 and 4 of the Collision Convention 1910]: a) if the collision occurred due to the fault of one of the ships, the damages shall be borne by the ship at fault; b) if there is joint fault, each ship shall be liable for compensation in proportion to the degree of fault borne by it; and c) if the proportion cannot be determined, or in the case of equal fault, liability shall be apportioned equally.

The LLMC 1976, ratified by Law 1923/1991, entered into force in Greece on 1 January 1991, and is an integral part of domestic law which prevails over any other contrary provision of law according to art 28.1 of the Constitution. According to art 15.1 of the LLMC 1976, the rules of the Convention are applicable as the law of the forum for the court of the Member State in which the limitation of liability is sought, irrespective of the governing law of the claim subject to limitation. Greece did not make any reservations to art 15. Therefore, when limitation of liability is invoked by persons entitled to it under art 1, including the shipowner, the provisions of the LLMC 1976 apply, irrespective of whether the persons invoking the limitation are Greek or foreign nationals, or whether the ship is flying the Greek or foreign flag.

The Convention follows the English system of limiting liability to a certain amount, and the liable persons may limit their initially unlimited liability to the amounts of arts 6 and 7 or set up a liability fund for these amounts (art 11). It follows from the above that the Convention itself contains in detail all the elements for the objective determination of the amount of the fund which the claimant intends to establish, so that the amount of the fund is the result of mathematical calculations, without the need for any intervention by the Court for provisional or definitive determination.

Under art 14 of the Convention, the law of the forum of the Member State in which the fund is established applies to the constitution and distribution of the fund and the relevant procedure. In Greece, such special provisions have been adopted in implementing, eg, the CLC 1969 (Presidential Decree 666/1982), but there is no such special provision for the LLMC 1976. It is systematically more consistent to fill this gap by applying arts 90-104 of the CPML, insofar as they are adapted to the limitation of liability system followed by the Convention. This is because the provisions of the Convention supplement or modify the liability regime of the CPML. The fund's establishment has the effect of suspending all forms of proceedings brought by the creditors for whom it was established. Consequently, the creditor from the specific incident is not allowed to exercise other rights regarding that claim on other assets of a person by or on whose behalf the fund was established (art 13.7 [sic: art 13.1] of the LLMC 1976).

As per art 15.1 of the LLMC 1976, read in conjunction with art 28 of the Constitution, the LLMC 1976 applies independently of: a) the law governing the substance of the claim subject to limitation; b) whether the person exercising the right of limitation has a domicile or place of business in a State Party; or c) whether or not the ship related to the limitation flies the flag of a State Party. The consequence is that in cases where the LLMC 1976 applies, the corresponding provisions of the CPML no longer apply, while the provisions of art 77.6.a of the Law 1892/1990 have been implicitly repealed.

Finally, it should be noted that the fund's establishment has serious consequences, since it entails the prohibition and possibly the extinction of claims directly against the debtor by or for whom the fund was established to limit liability. This is because the establishment of the fund by a debtor who is entitled to limit its liability applies to all debtors of claims arising from the same incident since they too have the right to limit their liability (see Supreme Court Decision 2263/2013 (CMI338), Supreme Court Decision 1189/2007 (CMI2384)).

The Court of First Instance correctly interpreted and applied the law, accepting that the claim of the shipowner of the S against the defendant Greek State, as the owner of the co-responsible warship TPKK, to pay the amount corresponding to the percentage of its contributory negligence, is governed by the special provisions of the CPML, and not by the general tort provisions. In particular, the Court of First Instance accepted the statute of limitations objection on the basis of the CPML, and that the shipowner's claim was subject to a one-year time limit and was therefore time-barred when the action was brought.

Regarding the claim of the Greek State, its establishment and the time limit for its exercise is governed by the special provisions of the CPML, but its satisfaction is governed by the provisions of the LLMC 1976, which prevails over the CPML. This is because the shipowner limited its liability by setting up a fund in accordance with the provisions of the Convention. However, the claimant Greek State's claim did not mention the evolution of the fund set up and any waiver or substitution by the defendant of the rights of those who submitted their claims to the fund - eg, if a payment was made from the fund by its distribution and there is a balance, or if the shipowner paid out before its distribution and subrogated itself to the rights of the creditors who announced their claims to the fund, as the defendant is entitled to do under art 12.2 of the LLMC 1976. These facts concerning the valid creation of fund and its (non)distribution, and affect creditors' rights and claims against the defendant, including those of the claimant Greek State, and therefore the admissibility of its legal action. This is because creditors are deprived of individual proceedings for their own claims not only against the defendant shipowner, but also against the other defendants on whose behalf the fund is deemed to have been established (art 9 of the LLMC 1976). In view of the above, by correctly interpreting and applying the law, the Court of First Instance dismissed the claim of the Greek State as indefinite, applying the aforementioned provisions of the CPML and the LLMC 1976.

[Note: This decision is related to Decision 116/2023 (CMI2325).]