This was an appeal from a decision of the Court of Appeal dismissing an appeal from an interlocutory judgment of the High Court refusing the appellant charterer's application that it was entitled to limit its liability by reference to the limitation fund constituted by the first respondent (the original plaintiff) as the owner of the MV Southern Phoenix, a vessel that capsized in the port of Suva: for the earlier proceedings, see CMI1613, CMI1785 and CMI2300.

Held: Leave to appeal against the ruling of the Court of Appeal granted. Appeal upheld.

Fiji acceded to the LLMC 1957 but not the LLMC 1976. Despite that, the relevant Fiji legislation, Pt 5 of the Maritime Transport Act 2013 (Fiji) (the Act), incorporated elements from the LLMC 1976. This created some complexity in interpreting Pt 5.

Part 5 did not explicitly incorporate art 11.3 of the LLMC 1976. Article 11.3 of the LLMC 1976 makes it clear that a fund constituted by one of the parties within the definition of 'shipowner' is deemed to be constituted by all those within that category. This is reinforced by art 9, which provides for the aggregation of claims, and by art 13, which extends the protection of limitation not only to the party who constituted the fund but to all parties 'on behalf of whom the fund has been constituted' (which would include those falling within the 'deeming' provision).

The charterer argued that the absence of a similar provision in the LLMC 1957 and in Pt 5 of the Act was not significant because art 11.3 of the LLMC 1976 simply made explicit what the position was (and remained) under the LLMC 1957. Moreover, the terms of Pt 5 produced the same outcome. Accordingly, the charterer was not required to constitute a separate limitation fund.

Neither the High Court nor the Court of Appeal accepted the charterer's argument. Jameel JA characterised the charterer's argument as being that 'the court should interpret a statute on the basis of policy, rather than on the basis of the words used in the legislation' and rejected the approach. The Judge considered that the meaning of the language in Pt 5 of the Act was plain and meant that the charterer had to constitute its own fund.

To resolve this appeal, it is necessary to consider the provisions of the Marine Act 1986 and its successor, the Act, as well as the LLMC 1957 and the LLMC 1976. This consideration must be undertaken against the background that limitation of liability was intended to protect the financial position of shipowners (and others within the defined class) even though its effect was, at least in some cases, to prevent those who suffered loss from obtaining full, or even substantial, compensation. This protective approach was justified as being in the public interest in order to sustain the viability of sea transport.

Article 31.1 of the Vienna Convention on the Law of Treaties 1969 requires that the ordinary meaning of words in a treaty be determined in their context and in light of the object and purpose of the treaty. In other words, it required an approach which was different from that articulated in the Court of Appeal. Article 32 of the Vienna Convention provides that preparatory materials and other aids may be referred to in order to confirm an interpretation resulting from the application of art 31, or to determine the meaning where interpretation in accordance with art 31 results in an ambiguous or obscure meaning or produces a manifestly unreasonable or absurd result. Again, this was different from the approach articulated by the Court of Appeal. These principles apply even where a treaty is indirectly implemented in domestic law, although in that situation the particular language chosen by the domestic legislature will have to be carefully considered. That is because, although the legislation will be intended to implement the treaty, its terms may differ from the terms of the treaty in ways that are significant. Additionally, courts must be conscious of the international jurisprudence when seeking to interpret and apply treaties in a local setting.

Despite the lack of an equivalent to art 11.3 of the LLMC 1976 in the LLMC 1957 and in Pt 5 of the Act, it was clear that the same position applies under both the LLMC 1957 and the Act for three reasons. First, arts 2.1 and 6.2 of the LLMC 1957 are powerful indicators that the intention of the LLMC 1957 framers was that there would be a single limitation fund for those entitled to claim limitation arising out of a distinct occasion rather than a number of individual funds constituted by each allegedly liable person. These articles point to there being a single limitation fund for all those within the description 'owner' who are entitled to limitation on a distinct occasion. Article 2.1 is particularly telling because it refers simply to the aggregate of claims arising on a distinct occasion, but does not require that there be claims against the same person.

Second, those involved in the preparatory works to the LLMC 1976 considered that the LLMC 1957 contemplated aggregation of 'all claims arising on one distinct occasion against the owner, charterer and operator of the ship and all persons for whom they are responsible'. Academic commentators have made the same point.

Third, the Court of Appeal was critical of the charterer for urging the Court to have regard to the purpose of Pt 5 of the Act, viewed in light of the purpose of the LLMC 1957, which was also reflected in the LLMC 1976. That criticism was misplaced. Given that: (i) Fiji had acceded to the LLMC 1957; (ii) the LLMC 1957 was, at least until the passage of the Act, explicitly part of Fijian law; and (iii) the LLMC 1957 was annexed to the Act, it remained relevant to understanding Pt 5 of the Act.

The effect of the LLMC 1957 was to aggregate claims against different persons within the definition of 'owner' where they arose out of a distinct occurrence, so that a single limitation figure applied to all the claims taken together. Apart from reflecting the language used, this view is consistent with the purpose of the LLMC 1957 to protect owners (broadly defined) from the crippling effects of full liability.

Even if there was any doubt, it was removed by s 81 of the Act. That section enacted the aggregation clause from the LLMC 1976, ie art 9.1.a. Given that art 9.1 of the LLMC 1976 and s 81(1)(a)(i) of the Act were essentially identical, they must have the same effect. Their language contemplated a grouping together of relevant claims against those 'owners' facing liability under one liability figure. Furthermore, the definition of 'limitation of liability' in s 77 of the Act as meaning 'the aggregate amount of liability of any one or more persons in accordance with this Part' also contemplated a grouping together of those facing liability under one liability figure.

A factor that influenced the Court of Appeal was the absence of any mechanism in the Act for the sharing of costs where a charterer seeks to take the benefit of a limitation fund established by an owner. In Metvale Ltd v Monsanto International Sarl [2008] EWHC (Admlty) 3002 (CMI800), Teare J did not regard the absence of a cost-sharing mechanism in the LLMC 1976 or the relevant English legislation as indicating that slot charterers would have to constitute their own limitation funds. Rather, that issue would have to be dealt with under the general law.