As a result of instability caused by overloading in Antwerp (Belgium) the Pioner Onegi, owned by NSC, developed a list, capsized, and was beached on the banks of the Western Scheldt (Netherlands). The Dutch State invoked the Wreck Act, and the ship and cargo were salved at the instructions of the State. The amounts of limited liability were set by the court at SDR 980,290 (property fund) and SDR 1,883,710 (wreck fund). Having put up security for the amount of the wreck fund, NSC demanded the release of the Pioner Onegi, which the State refused. The parties then entered into a settlement agreement in terms of which the State waived its right to enforce its claim against the ship on the basis of the Wreck Act and released the ship in return for a payment of USD 1,550,000 by NSC. The State submitted the remainder of its claim to the wreck fund. In the verification proceedings the Dutch State demanded a declaratory judgment that NSC is liable for current and future losses, and that NSC is not entitled to limit its liability. NSC counterclaimed for repayment of the USD 1,550,000 and for damages in the amount of NLG 396,000 on the basis that the State acted contrary to reasonableness and fairness (good faith) by refusing to release the Pioner Onegi except against payment of the USD 1,550,000, when the court had already allowed NSC's application for limitation of liability and the wreck fund had already been constituted.

Held: It is natural when interpreting the words 'recklessly and with knowledge that such loss would probably result' in the relevant provisions (art 4 of the LLMC 1976 and art 8:754 of the Dutch Civil Code) to follow the interpretation given by the Hoge Raad in the judgments handed down on 5 January 2001 (NJ 2001, 391 and 392, S&S 2001, 61 and 62), because those judgments concern the same words in the same context, being the breaking of limitation of liability in carriage by sea and road respectively. The more so because that interpretation is consistent with the aim of art 4 of the LLMC 1976 and art 8:754 of the Dutch Civil Code as is apparent from their legislative history, ie to create 'unbreakable limits' of liability of the ship.

Applying that test, it cannot be said that the master acted recklessly and with knowledge within the meaning of those provisions. Even the State takes the position that the master did not consciously realise that the odds that the ship would capsize were substantially greater than that it would not. Nor has it been alleged or become apparent that the person at the NSC office who instructed or even pressured the master to take all the containers on board acted recklessly in the described manner.

With regard to the question whether, as a consequence of the reservation of art 18.1 of the LLMC 1976 made by the Netherlands when acceding to the Convention, the State may enforce its claim for salvage and costs of removal of the Pioner Onegi against that ship on the basis of the Wreck Act, it should first be noted that the reservation gives the Netherlands the freedom to introduce or leave in place regulations regarding the limitation of liability for costs of wreck removal that derogate from the regulation in the Convention. That freedom was exercised, amongst others, in the provisions about the wreck fund in art 8:755 of the Dutch Civil Code. NSC's argument that the Netherlands has not made use of the reservation because it has incorporated arts 6.d and 6.e [sic - arts 2.1.d and 2.1.e] of the Convention into art 740c of the Dutch Code of Commerce (currently art 8:752, paras 1(d) and (e) of the Dutch Civil Code) fails, because the limit of liability with regard to the wreck fund derogates from (is higher than) the limitation amounts of the Convention.

The legislature has wanted to leave in place the possibility for enforcement under the Wreck Act, also for enforcement against property belonging to a person entitled to limit liability. The fact that the liability of the shipowner for costs of wreck removal etc on the basis of art 8:752, para 1 of the Dutch Civil Code (the wreck fund) - on the one hand - and the right of the State to enforce its claim for those costs against the salved ship and cargo on the basis of the Wreck Act - on the other hand - co-exist is correct and also fitting within the freedom created by the reservation. It appears sufficiently clear from the legislative history that pursuant to the Wreck Act the costs for salvage etc may be recovered by the waterway authority from the proceeds of the ship and that 'for the remainder', ie in so far as the proceeds are insufficient to cover the costs, the authority has a claim against the liable person who may limit its liability (art 10 of the Wreck Act).

In view of these considerations regarding the relationship between the Wreck Act and the wreck fund, the State had not acted contrary to reasonableness and fairness by not releasing the Pioner Onegi, despite limitation of liability having been allowed and the wreck fund having been constituted.