An undersea cable for the transmission of high-voltage direct electrical current between Trelleborg, Sweden, and Lübeck, Germany, was damaged by the Delfborg, which anchored while awaiting the arrival of spare parts and technicians due to an engine failure.

The owner of the undersea cable, Baltic Cable Aktiebolag (BCA), brought an action in the District Court against the vessel's registered owner, SS, and against two Dutch companies, CV ms Delfborg and Wagenborg Shipping BV SS. BCA requested that the defendants be ordered jointly and severally to pay damages. BCA argued that the defendants were liable because they had caused the damage by gross negligence and with knowledge that such damage would probably result. Alternatively, they were liable as the operator of the ship, 'redare' in Swedish, because the master and crew of the vessel had caused the damage through fault or neglect in the performance of their duties. The defendants argued that they had not caused the damage by gross negligence and with knowledge that such damage would probably result and that the redare, at the time the damage occurred, was a company wholly owned by SS, Rederij S Smith BV.

Following BCA's action before the District Court, the defendants commenced limitation of liability proceedings before a Dutch court and established a limitation fund. BCA made its claim to the administrator of the fund (BCA AB v Wagenborg Shipping BV (CMI107)).

The District Court found that the master and crew had caused the damage through fault or neglect in the performance of their duties by eg anchoring in violation of the prohibition against anchoring, and that SS, as redare, was responsible for their fault or neglect in the performance of their duties. The Court, therefore, ordered SS to pay EUR 10,873,844.50 plus interest to BCA. The Court of Appeal upheld the District Court's judgment.

In the Supreme Court, the defendants accepted the Court of Appeal's finding that the Delfborg's anchor caused the damage to the cable, that the captain and the crew of the vessel caused the damage to the cable through fault or dereliction of duty, and that BCA's damage amounted to the amount claimed. SS requested that the Supreme Court dismiss BCA's action. BCA requested that the Supreme Court order CV ms Delfborg and Wagenborg Shipping BV to pay the damages jointly and severally with SS.

Held: The appeals are rejected.

There were two questions before the Supreme Court. The first question was who shall be considered as the redare and thus become liable according to the rule in Ch 7, s 1 of the Swedish Maritime Code (1994:1009) (the Code). The Supreme Court found that a redare normally refers to a person who commences the operation of a particular vessel, manages its operation, and bears the financial risk. In modern shipping, the decision-making functions are often divided among several actors. In order to determine who is to be considered the redare, an overall assessment of the circumstances of the specific case must be made. The redare is the person on whom the majority of the typical functions of a redare rest. It was concluded that in this case the SS was the redare. It was, therefore, solely liable for the damage caused to the cable by the Delfborg through fault or neglect in the performance of duties aboard the vessel.

The second issue was whether the defendants were barred from the right to limit their liability under Ch 9, s 4 of the Code. This section is based on art 4 of the LLMC 1976 (conduct barring limitation):

A person liable shall not be entitled to limit his liability if it is proved that the loss resulted from his personal act or omission, committed with the intent to cause such loss, or recklessly and with knowledge that such loss would probably result.

Instead of 'recklessly and with knowledge that such loss would probably result', the Code uses the expression 'by gross negligence and with knowledge that such loss would probably result'.

The Supreme Court, relying on the International Maritime Organisation Resolution A 1163(32), dated 15 December 2021, held that art 4 of the LLMC 1976 must be interpreted as 'virtually unbreakable in nature' and breakable only in very limited circumstances. A level higher than the concept of gross negligence is required to break the limit, since that concept was rejected by the international conference that preceded the LLMC 1976.

BCA argued that a standard paper nautical chart should have been used, as the cable would then have been detected. BCA also claimed that the officers and crew aboard the vessel had access to a shore-based organisation operated by the defendants. The defendants thus knew that the anchor was stuck, and nevertheless gave instructions to free the anchor by force.

It was found that the Delfborg was equipped with electronic nautical charts in the form of an approved ECDIS system with a duplicate. In such cases, it was normally not required that paper nautical charts be kept aboard. Consequently, a failure to equip the vessel with a paper chart cannot be considered as gross negligence. Nor has been proven that the defendants were aware of any shortcomings in the crew's use of digital nautical charts.

Even if it could be shown that SS and, through it, CV ms Delfborg, had knowledge of the vessel's location at the time of engine failure, it was not established that they had any knowledge of the prevailing conditions at the site of anchoring. Nor did the facts in the case demonstrate the existence of any land-based organisation maintained by the defendants.

Thus, the allegation that the defendants acted with gross negligence and with knowledge that damage would probably result was not proven.