On 2 October 2004, the Western Regent was operating in the North Sea while towing six streamers. Two of the streamers collided with a marker buoy. As a result, the buoy was dragged from its position, and the wellhead installation attached to the buoy was damaged. In this action, Seismic Shipping Inc (the plaintiff) and WesternGeco Ltd were the owner and demise charterer of the Western Regent respectively. They accepted that the collision and any resulting damage was caused by the negligence of the demise charterer and its servants or agents on board the vessel and accordingly admitted liability to Total E&P UK Plc (the defendant), which was the owner of the installation. This action was brought in order to obtain a decree limiting the liability of the plaintiff under the Merchant Shipping Act 1995 (UK) (the 1995 Act). Mr Julian Flaux QC, sitting as a Deputy High Court Judge in the Admiralty Court, granted the limitation decree sought. In the same order, the Judge refused the plaintiff's application for an injunction restraining the defendant from continuing proceedings which it had begun against the plaintiff in Texas. Both of the parties appealed.

The defendant submitted that the Court had no subject-matter jurisdiction over the current dispute. The defendant's case was that the only circumstances in which a party in the position of a shipowner or demise charterer could launch limitation proceedings were when underlying legal proceedings or arbitration proceedings had been instituted in this jurisdiction. The defendant further submitted that the LLMC 1976 is a jurisdictional Convention which confers jurisdiction to commence a limitation claim only in circumstances where the claimant can constitute a limitation fund under art 11.1 of the LLMC 1976. Since art 11.1 contemplates the setting up of a fund only in a State in which legal proceedings have been instituted in respect of the claim which was the subject of limitation (ie one of the claims enumerated in art 2 of the LLMC 1976) and since no such proceedings have been instituted in this jurisdiction by the defendant, it followed that the plaintiff could not bring a limitation claim under the LLMC 1976.

The plaintiff's case, which was accepted by the Judge, was based on art 10 of the LLMC 1976 and ran as follows. Chapter 1 of the LLMC 1976 confers a right on shipowners to limit their liability in a case of this kind. That is not in dispute. Article 10.1 of the LLMC 1976 gives shipowners rights to invoke limitation of liability without constituting a limitation fund. Article 10.3 provides that questions of procedure should be decided in accordance with the lex fori, which in this case is English law. In this case, the plaintiff has brought proceedings in England in accordance with the provisions of the Supreme Court Act 1981 (UK) (the 1981 Act) and Civil Procedure Rules (UK) (CPR) Pt 61. The plaintiff submitted that there could be no doubt that the Court had jurisdiction in respect of the subject matter of its claim.

Held: The defendant's appeal is dismissed.

The answer to the question depends upon the true construction of the LLMC 1976 which has the force of law in the United Kingdom under s 185(1) of the 1995 Act.

It is common ground that before the LLMC 1976 became part of English law, the relevant law was the International Convention Relating to the Limitation of the Liability of Owners of Sea-going Ships 1957 (LLMC 1957). According to the LLMC 1957 and s 503 of the Merchant Shipping Act 1894 (UK), a shipowner could commence limitation proceedings in England without any liability proceedings having been commenced against it or its ship in England. The plaintiff submits that, in the absence of clear words, we should not readily infer that either the parties to the LLMC 1976 or the drafter of the 1995 Act intended any change in the position. However, the regime of the LLMC 1976 is in some ways very different from that of the LLMC 1957.

The language of the LLMC 1976 supports the plaintiff's submissions and the conclusions of the Judge. Articles 1 and 2 of the LLMC 1976 identify the persons entitled to limit liability and identify the claims which are subject to limitation. It is those articles which confer the right to limit on the plaintiff in this case. That right can be invoked in two ways, either without constituting a limitation fund under art 10 of the LLMC 1976 or after constituting such a fund under art 11. The LLMC 1976 distinguishes between those two different means of invoking limitation and treats them differently. Thus, for example, it is only where a limitation fund has been constituted that art 13 of the LLMC 1976 applies to bar actions in the courts of other Contracting States.

There is no general jurisdiction provision in the LLMC 1976 stating where the right of limitation must be invoked. In principle the LLMC 1976 permits a party to seek to limit its liability in any Contracting State which has personal jurisdiction over the defendant. Since there is no express restriction in the LLMC 1976 restricting the invocation of the right to limit in any way, if there is such a restriction, it must be implied in the LLMC 1976. Nothing in the LLMC 1976 leads to the implication of such a restriction. Neither art 10 nor art 11 contains such a restriction. Article 10 of the LLMC 1976 contains a clear statement that limitation of liability may be invoked notwithstanding the fact that a limitation fund has not been constituted. It thus appears on the face of the LLMC 1976 that the plaintiff's right to limit is stated in art 1.1 and that, by art 10.1, the right to invoke that right to limit does not depend upon the constitution of a limitation fund. This seems entirely unsurprising because there may only be one claim arising out of a particular casualty.

The plaintiff further relies upon the second sentence of art 10.1 as it appears in the LLMC 1976 but not in the 1995 Act. The first sentence provides that limitation may be invoked notwithstanding the fact that a limitation fund has not been constituted under art 11 and adds: 'However, a State Party may provide in its national law that where an action is brought in its Courts to enforce a claim subject to limitation, a person liable may only invoke the right to limit liability if a limitation fund has been constituted in accordance with the provisions of this Convention or is constituted when the right to limit liability is invoked.' The United Kingdom has not introduced such a provision and has accordingly not included that sentence from art 10.1 into the 1995 Act. The plaintiff submits that it is clear from that sentence that where, as in the United Kingdom, a State Party does not so provide, limitation may be invoked even where an action has not been brought by a claimant to enforce a claim subject to limitation. The Court agrees with this submission. The second sentence of art 10.1 is entirely consistent with the express provision in the first sentence that limitation may be invoked without the constitution of a fund and with the conclusion that a limitation action may be brought in such a case in the absence of an action to enforce a claim subject to limitation.

It was suggested in the course of the argument that the reference to the national law of the State Party in which action is brought in art 10.3 of the LLMC 1976 should be construed as if it read 'such action is brought' and as a reference back to the second sentence of art 10.1 so that it refers to the place where an action was brought to enforce a claim and thus in effect provides that a limitation action can be brought only in the courts of a State in which a claimant had brought an action. That is an ingenious suggestion, but the Court does not accept it. Moreover, if 'action is brought' in art 10.3 is a reference back to the second sentence of art 10.1, it only applies in cases where the relevant State provides that, where such an action is brought, a person liable may only invoke the right to limit liability if a limitation fund is constituted. It can have no application to the current situation where the relevant State, here the United Kingdom, has not so provided.

The defendant relies upon art 11 of the LLMC 1976. But art 11 simply confers a right upon a party invoking limitation to constitute the fund if it wishes. There is no requirement for the party to do so. It is true that art 11 envisages a party who wishes to constitute a limitation fund doing so in a court or other competent authority 'in any State Party in which legal proceedings are instituted in respect of claims subject to limitation'. Regarding this issue, the defendant submits the following points. First, this sentence from art 11.1 refers to a court in which legal proceedings have been instituted by a claimant and does not include limitation proceedings. Second, a limitation fund can be constituted only in such a court. The defendant's first point does seem a more natural construction than a construction which includes limitation proceedings in the expression 'legal proceedings ... in respect of claims subject to limitation'. In contrast, the plaintiff submits that the expression should be construed as including any legal proceedings (and thus limitation proceedings) because it is a wider expression than the expression 'action to enforce a claim subject to limitation' used by the drafter in the second sentence of art 10.1. The Court finds the plaintiff's submission preferable. As for the defendant's second point, it may be noted that art 11.1 is framed in permissive terms, and does not include the word 'only'. Even if the defendant's construction is correct, it simply means that a fund can be constituted only in a jurisdiction in which a claimant against the limiting party has commenced proceedings. It does not follow that limitation cannot be invoked in any other Contracting State where no fund has been constituted. The right to invoke limitation of liability in such a case is expressly conferred by art 10.1 of the LLMC 1976 without any limitation or restriction and, by art 10.3 of the LLMC 1976, questions of procedure shall be decided by the lex fori. Section 20 of the 1981 Act and CPR r 61.11 permit a limitation action to be brought and served on a person within the jurisdiction in such a case.

There is nothing in the LLMC 1976 which can lead to the conclusion that the Court does not have jurisdiction on the facts of this case. As the plaintiff submits, what is required for the defendant's argument to succeed is that the Court is prohibited by the LLMC 1976 from determining the plaintiff's claim to limit its liability to the defendant under the LLMC 1976 in circumstances where the Court has personal jurisdiction over the defendant. There is nothing in the language of the LLMC 1976, or indeed of the 1981 Act or the CPR, which requires a party who wishes to limit its liability to wait until a claimant has started proceedings in England before invoking its right to limit.

ICL Shipping Ltd v Chin Tai Steel Enterprise Co Ltd [2003] EWHC 2320 (Comm) (CMI778) could, to some extent, be said to provide some support for the defendant's submission that the LLMC 1976 does not permit the plaintiff to make a pre-emptive limitation strike in a jurisdiction of its choice. However, based on a consideration of the terms of the LLMC 1976, the reasoning in that case is not sufficient to lead to a different conclusion from that reached by this Court.

The Admiralty Court was correct to hold that English courts have jurisdiction to entertain the plaintiff's claim.