This civil action was brought by third-party defendants, Clary Shipping Pte Ltd, MST Mineralien Schiffahrt Spedition & Transport GmbH, and Mineral Shipping Co Private Ltd (the Clary interests) on a motion in limine and a motion to dismiss an in rem claim against them.

On 14 December 2002, the Kariba, the Tricolor, and the Clary were navigating in dense fog in the international waters of the Dover Straits in the English Channel. As the Tricolor overtook the Kariba, the two ships collided, sustaining damages. The Tricolor subsequently sank with the loss of its cargo.

On 20 December 2002, Otal Investments Ltd (Otal), which was the owner of the Kariba, brought an action against the Clary for its alleged involvement in the collision. In connection with that action, Otal attached the Clary in Rotterdam. A limitation of liability fund was established and the Rotterdam Court released the Clary from the attachment without providing Otal any direct security for its claim. Otal filed a claim against the limitation of liability fund, as did other parties, and the total claims exceeded the amount of the fund.

On 12 June 2003, Otal filed a complaint in District Court for the Southern District of New York for exoneration or limitation of liability regarding the claims that arose from the collision. Originally Otal sought contribution from the Tricolor and the Clary for any amounts it might be required to pay for loss or damages, or for lost income suffered by the Kariba as a result of the collision. Those claims were later filed against the Clary in the Southern District of Georgia in October 2004.

In January 2004, Otal filed a motion seeking partial summary judgment and asked for a ruling that if any fault on the part of the Kariba caused or contributed to the collision with the Tricolor, the rule of proportionate fault in art 4 of the Collision Convention 1910 applied. The Court endorsed a stipulation between the parties which stated that art 4 of the Collision Convention 1910 applied to the action.

In October 2004, Otal filed a complaint in the District Court for the Southern District of Georgia asserting claims for collision damage to the Kariba and lost income against the Clary. To avoid the arrest of the Clary, its P&I Club provided Otal with a letter of undertaking (LOU) as security for Otal’s in rem claim in the amount of USD 1.65 million. The LOU provided for jurisdiction over Otal’s in rem claim in District Court for the Southern District of New York. As a consequence, Otal dismissed its claim in Georgia and the District Court for the Southern District of New York granted Otal leave to amend its third-party complaint against the Clary interests in personam, and the Clary in rem.

The Clary interests sought to dismiss the in rem claim as duplicative of the claim filed in Rotterdam, and also sought a declaratory judgment with respect to whether only art 4 of the Collision Convention 1910 applied.

Held: Motions denied.

Generally, United States courts will apply the Collision Convention 1910 when a collision occurs in international waters between vessels that fly flags of signatory States. The Clary interests claim that the intent of the parties was to apply the entire Collision Convention 1910 (in particular art 6, which abolishes legal presumptions of fault), whereas Otal and the other claimants argue that the intent of the parties was to agree that only art 4 (the rule of proportionate fault) of the Collision Convention was to apply. The only article of the Collision Convention 1910 which the parties stipulated is art 4. This Court is not in a position to rule on whether art 6 of the Collision Convention 1910 applies.

The Clary interests filed a limitation proceeding in the Netherlands pursuant to the LLMC 1976. Article 13.1 of the LLMC 1976 states that where a limitation fund has been constituted in accordance with art 11, any person having made a claim against the fund shall be barred from exercising any right in respect of such claim against any other assets of a person by or on behalf of whom the fund has been constituted. The limitation fund prevents reattachment but does not prevent additional claims, especially in a country like the United States which is not a signatory to the LLMC 1976. The Clary interests argue that as a matter of comity, the Court should recognise and give effect to art 13.1 despite the fact the LLMC 1976 is not binding on the United States. Otal argued correctly that its in rem claim is not duplicative of the limitation of liability proceeding because the Netherlands has no similar cause of action. Otal has a valid maritime collision lien against the Clary in rem pursuant to United States law. Comity will not be invoked since the United States has chosen not to adopt the LLMC 1976, but rather to enact its own statute.

[For subsequent proceedings, see CMI1431, CMI351, CMI350.]