This limitation claim arose from a fire on the X-Press Pearl, which culminated in the sinking of the ship and her cargo on 2 June 2021 off Colombo, Sri Lanka. The claimants (who include the vessel’s registered owners, bareboat charterers, and disponent owners) applied for and obtained a limitation decree limiting their liability in respect of any loss or damage arising out of or in connection with the casualty pursuant to Article 6 of the Convention on Limitation of Liability for Maritime Claims 1976 (as amended). Those parties also constituted a limitation fund.

At the time of the casualty, the ship was carrying containers under a variety of contractual arrangements on behalf of Maersk, Bengal Tiger Line, and MSC. The question before the Court was whether these parties (each of which described itself as “slot charterer”) were also entitled to limit their liability. This turned on whether the parties qualified as “shipowners” within the meaning of the Convention.

Article 1(1) of the Convention provides that shipowners and salvors may limit their liability. The term “shipowner” is defined, in Article 1(2), as “the owner, charterer, manager or operator of a sea-going ship”. 

In The MSC Napoli [2009] 1 Lloyd’s Rep. 246 Teare J held that the slot charterers in that case fell within the Article 1(2) definition and were therefore entitled to limit their liability. Those slot charterers had contracts with the shipowner (as slot provider or vessel provider) by which it allocated a number of TEU container slots per voyage on a defined container service route to the slot charterers. The relevant slot charters provided for containers carried under them to be covered by bills of lading issued by the slot charterers. The consideration payable to the shipowner was described as “slot charter hire” and was payable for the slot allocation, used or unused.

The issue in this case was whether the reasoning in The MSC Napoli extended and applied to each of the parties claiming to be entitled to limit. Andrew Baker J found that all three parties qualified as “charterers” within Article 1(2), holding that:

• It was not essential to Teare J’s reasoning in The MSC Napoli that the charter slot hire in that case was given that title or that it was payable for the allocated slots, “used or not used” [18].
   
• The particular contractual arrangements under which a putative Article 1(2) “charterer” enjoyed the services of the ship in question will always need to be examined before a decision can be reached on whether they are indeed within that definition [18].
   
• It will normally be sufficient for a party to be considered an Article 1(2) “charterer” that its relevant contract obliges an owner or disponent owner to make part of the carrying capacity of a ship available to that party for the carriage of goods which that party will have contracted, or will be obliged to contact, to undertake as carrier. A party to whom space on a ship is contracted for the performance by it, delegated to the ship, of its contractual obligations as carrier, will generally be an Article 1(2) “charterer”, given the ordinary connotation of that word and the purpose of the Convention [19].

As the judge noted, this may mean that businesses that would describe themselves, in the modern jargon, as NVOCCs (non-vessel operating common carriers) rather than as (slot or any other kind of) charterers, will also be Article 1(2) “charterers”, subject always to reviewing the precise terms of the contractual arrangements with the ships whose services they used. However, he added at [20] that he did not need to express any final view about that to determine the applications before him.

This decision provides welcome clarification on the scope of Article 1(2) and the proper approach for determining whether or not a party falls within the definition. It is apparent that the Court will look to the substance of the contractual arrangements (rather than the labels that the parties have ascribed to them) in seeking to give effect to the language and purpose of the Convention.

Simon Rainey KC, Natalie Moore, Andrew Leung, and Joseph Gourgey, instructed by Campbell Johnston Clark, acted for the claimants; Benjamin Coffer, instructed by Mays Brown Solicitors, acted for Bengal Tiger Line Pte Ltd; and Tom Bird, instructed by Stephenson Harwood LLP, acted for Maersk A/S.