This was an application by the owner of the vessel Sv Apostol Andrey to constitute a limitation fund under the LLMC 1996 in the amount of RUB 87,612,150 and interest from the date of the incident to the date of the constitution of the fund. The fund would be constituted by the provision of a letter of undertaking (LOU) from The Shipowners' Mutual P&I Association (Luxembourg).

On 6 March 2006, in the course of a voyage from the Sea Port of Saint Petersburg in an ice caravan with the icebreaker Kapitan Sorokin, the Sv Apostol Andrey collided with the Runner-4. On the same day, the Runner-4 was wercked. On 25 April 2006, the owners of the Runner-4 made a claim against the owners of the Sv Apostol Andrey, for compensation of EUR 27,062,500 for damage caused by the collision.

Held: The limitation fund is constituted.

Under art 1 of the LLMC 1996, a shipowner (which means registered owners, charterers, owners, and operators of a ship) may limit its liability for claims indicated in the Convention. The LLMC 1996 covers claims in respect of damage to the property occurring in direct connection with the operation of the ship (art 2.1.a).

Under art 11 of the LLMC 1996 and art 363(1) of the Merchant Shipping Code of Russia (the MSC RF), a person alleged to be liable may constitute the limitation liability fund with the court or the commercial court competent to consider the relevant claim.

The sum of the fund is determined based on the limitation levels. The limitation levels are based on the gross tonnage of the vessel established according to the measuring rules under Annex 1 to the International Convention on Tonnage Measurement of the Ships of 1969.

According to the International Tonnage Certificate of the Sv Apostol Andrey, the gross tonnage of the vessel was 4,974 tons. The limitation of liability for all the claims arising out of the incident was calculated under art 9 of the LLMC 1996: 1,000,000 SDR + (4974 – 2000) x 400 SDR = SDR 2,189,600 (art 6.1.b of the LLMC 1996). The currency of the SDR in relation to RUB was determined at the date of application, 11 May 2006. Therefore, the Court concluded that the limitation level was calculated correctly. Also, the Court added interest of 12% from the date of the incident to the date of the fund constitution, which was RUB 35,156.

To constitute the fund, the shipowners provided the documents issued by the mutual insurance club, the Shipowners' Mutual P&I Association (Luxembourg), which was an appropriate entity to secure the payment of the debt from the fund. The court accepted the Club's LOU and found that the Club is a first-class insurer of shipowners' liability with the 'highest international ranking of credit rating of Standard and Poors (A positive)' with sufficient available funds to cover the claim.

The procedure to constitute a limitation fund is not stipulated by the Commercial Procedure Code of Russia (the CPC RF). However, the Court stated that, under art 3.3 of the CPC RF, if an international treaty of Russia sets out rules that differ from those in the national legislation, the rules of the international treaty should prevail. Therefore, in the present case, the provisions of the LLMC 1996 and the MSC RF prevail.

On the basis of the above, the Court granted the application of the shipowner and constituted the fund with the provision of the P&I Club LOU.