These proceedings arose from damage to two pairs of high voltage electricity cables connecting England and France owned by the claimant, Réseau de Transport d'Électricité (RTE), allegedly as a result of an anchor dragging over them. The two vessels in the area at the time were the Stema Barge II, a dumb barge, and the Saga Sky, a general cargo vessel. These two vessels also collided with each other.

This incident gave rise to several legal proceedings in Denmark, France, and England. Stema (UK) Ltd (Stema), one of the related Stema interests involved in owning and operating the Stema Barge II, now sought to argue limitation of its liability under art 1.4 of the LLMC 1976. Stema essentially wished to put forward the argument that if its role was limited to providing services 'in direct connection with the operation' of the barge or 'in direct connection with the navigation and management of the barge', RTE would presumably argue that Splitt Chartering APS and/or Stema Shipping A/S (the remaining Stema interests) were liable as the 'shipowner' under art 1.1, read with art 1.2 of the LLMC 1976. Stema would then be entitled to limit its liability under art 1.4 as a 'person for whose act, neglect or default the shipowner ... is responsible'. Stema would also argue that art 1.4 covered only situations of vicarious liability.

The applicants, Réseau de Transport d'Électricité, Costain Ltd, and Network Rail Infrastructure Ltd, argued that this amounted to an abuse of process because Stema could, and should, have argued the art 1.4 point at the trial of the earlier limitation proceedings which was heard by Teare J in May 2020 (CMI781). The applicants argued that not only did Stema fail to plead or argue the art 1.4 point at the limitation trial, but Stema also attempted to argue it, and then withdrew that argument in the Court of Appeal (CMI1650). The applicants thus submitted, among other things, that the matter was res judicata or caught by cause of action estoppel, and sought for the pleadings in respect of art 1.4 to be struck out.

Held: Stema should not be permitted to advance its art 1.4 case in these proceedings. The relevant paragraphs of the pleadings should be struck out.

Although the res judicata argument at first blush has an unattractive formalism about it, it is correct. The Court of Appeal's order was very clear. It follows the form of the declaration sought in the limitation proceedings, which was drafted broadly, by reference to s 185 of the Merchant Shipping Act 1995 (UK) (the Act) and to the entirety of loss referable to the incident. It is also cast in terms of a general, rather than a restricted limitation decree - ie one good against all the world. The cases emphasise the conclusiveness of a clear order of the court.

The authorities are clear that where a court order is unambiguous, there is no room for construction; and this is a case where the order was not remotely ambiguous. The fact that the Court of Appeal held (at [6]) that the art 1.4 argument 'was withdrawn (for the purposes of these proceedings) during oral argument' is not relevant. The order which it made was the order requested. It was broad, it was clear, it covered the whole of s 185 of the Act, and declared the extent to which a general limitation decree was, and was not, available. The Court of Appeal declared that Stema 'is not entitled to limit its liability (if any) in respect of the [damage to the cables], and is not entitled to a general limitation decree in the form ADM19 or at all'. Those words mean what they say. Stema would by this attempt to revive limitation seek to 'interpret' this order to mean that Stema 'is entitled to limit'. That is not interpretation or construction but contradiction.

Stema submitted in the alternative that a limitation decree is a declaration as to the availability of a procedural defence to a liability claim, and a procedural defence to a liability claim is not in itself a cause of action for the purposes of cause of action estoppel. Although there is a logic to the submission, it is not persuasive. A limitation claim is not simply a procedural device. The authorities suggest that there is no bar to regarding a limitation claim as a substantive claim for the purposes of cause of action estoppel.

Stema then contended that even if cause of action estoppel were available in this context, it was not applicable in this case because on the authorities the required task is to identify the points 'which had to be and were decided in order to establish the existence or non-existence of a cause of action'. Stema argued that the cause of action dismissed by the Court of Appeal was limitation under art 1.1 in respect of which the only point which had to be, and was decided was whether Stema was a 'shipowner' within the meaning of art 1.2. The points which were essential to the existence or non-existence of limitation under art 1.1, which were not decided because they were not raised, were whether the barge was a 'ship' within the meaning of the LLMC 1976 and the Act, and conduct barring limitation. Stema contended that art 1.4 limitation was not decided and was not relevant (or essential) to the existence, or non-existence, of the right to limitation under art 1.1. Stema also suggested that the Court of Appeal's statement at [6] that the art 1.4 argument 'was withdrawn (for the purposes of these proceedings) during oral argument' was a deliberate acknowledgement by the Court that the argument was not abandoned for all time.

This argument looks beyond the cause of action to the elements of the arguments run in Court. Stema claimed to have a cause of action entitling it to limit its liability (against the world) for the damage to the cables 'pursuant to section 185 of the Merchant Shipping Act 1995'. The Court of Appeal held that Stema had no such cause of action, and instead declared that Stema 'is not entitled to limit its liability'. It follows that Stema is now debarred by cause of action estoppel from trying again. That would be clear regardless of what had happened on appeal. But on the facts of this case, the matter becomes even clearer. Stema did formally claim a right to limit under art 1.4 before both the Court of Appeal and the Supreme Court (when seeking permission to appeal). Thus a claim on that ground was also advanced, and dismissed.

While the art 1.4 claim involved an extra issue, and to achieve finality there would ultimately have to be a complex factual enquiry, it was certainly possible for Stema to have included it in the limitation proceedings. Stema could have pleaded that art 1.4 was engaged, as an alternative to its claim under art 1.2 (as it did in the Court of Appeal). It was not necessary for liability to be fought out in full at this point to result in a declaration for art 1.4 purposes. Stema only had to indicate the potential engagement of the relevant parts of art 1.4. In practice that meant that Stema needed to be able to say that it had been notified of claims, and for it to identify a route to attribution of liability which it said made the shipowner potentially liable. This is what has now been sought to be done, with Stema pleading in the alternative common law and the Danish Merchant Shipping Act. That would have been adequate to put the issues into play.

There are always two stages in limitation proceedings: the first is where there is a determination as to whether, and in respect of what a party is entitled to a decree. The second is the determination of which claims fall within that decree - which is often done at the liability stage. This case is not unique in requiring a two-stage process - and if the point had been raised earlier, issues as to the ambit of the declarations which trigger access to the limitation fund could have been determined in the limitation proceedings (eg as to independent contractors). Stema's submission, that a bifurcated approach not just to precise routes to liability, but also to the availability of limitation would have been taken in this case, is not accepted.

In the first place, there is logic and the natural structure of the relevant provisions. Article 1.4 is within art 1; it is an alternative method by which Stema might claim to be entitled to the protection of the Convention. It is thus an issue which naturally presents itself as one which 'belongs' in the limitation proceedings. This is evident from Stema's approach. In opting for the pro-active approach of seeking to constitute a fund and obtain a limitation declaration, particularly one in unrestricted terms, the Stema interests approached limitation broadly. As to the drafting, art 1.4 is within the section of the Act which Stema invoked in framing its declaration, and the claim details given were also apt to cover both arts 1.2 and 1.4. The legally clean approach would be to define the ambit of limitation in those proceedings, with suitably drafted declarations - if that were possible.

The practicalities also support the view that this clean approach was possible. It is clear that a good part of the factual evidence underpinning both legal bases is the same or would require the same witnesses. It is also clear that (because of that overlap) declarations which would limit the scope of further factual evidence could have been reached at the limitation trial.