Facts

A Danish contracting carrier (T) undertook to perform the sea carriage of containers of garments from Vietnam to Denmark.

T subcontracted the transport to T1, domiciled in Hong Kong, which further subcontracted the transport to Mitsui OSK Lines. The containers were to be transported by the vessel Mol Comfort. The Mol Comfort departed from Singapore for Jeddah in Saudi Arabia on June 11 2013. As far as is known, the vessel broke into two on June 17 2013 and drifted in the Indian Ocean before sinking (for further information please see "First Danish judgment on carrier liability regarding Mol Comfort incident").

Immediately following the loss of the vessel, its owners and operators constituted a global limitation fund under the 1996 Protocol to Amend the Convention on Limitation of Liability for Maritime Claims 1976 before the Tokyo District Court. The court stated that claims arising from the loss of the vessel should be reported to the fund no later than November 15 2013. In its decision to constitute the fund, the court named the known entities that were entitled to limit liability pursuant to the limitation regime. The list did not include T or T1.

Following the loss of the containers, the container owner's cargo insurers began legal proceedings against T and T1 before the Danish Maritime and Commercial Court and submitted a claim that the mentioned parties were liable under the Hague-Visby Rules and the Merchant Shipping Act. The container owners argued that Mol Comfort had not been seaworthy when the voyage commenced and that neither T nor T1 had proven that the vessel's unseaworthiness could not have been avoided, had due diligence been exercised by all parties for which T and T1 were responsible. T and T1 argued that the constitution of the limitation fund before the Tokyo District Court implied that legal proceedings against them could not continue before the Maritime and Commercial Court; rather, claims had to be reported to the fund. T and T1 further argued that they were not liable for the loss of the vessel and its containers.

Decision

The court decided that the constitution of the limitation fund did not mean that legal proceedings could not continue against T and T1 before the Danish court. It reasoned as follows:

"Following the loss of MOL Comfort in the Indian Ocean on 17 June 2013, the vessel's operator on 16 July 2013 filed a petition to the District court of Tokyo for the decision to constitute a limitation fund pursuant to the 1976-limitation conventions as amended in 1996. The constitution of the fund in another convention state does not, under the Convention or the Danish Merchant Shipping act, bar a party from initiating legal proceedings in Denmark following the loss. Against this background, the Maritime and Commercial Court must under these proceedings decide on the claim brought by the cargo insurers against T and T1 as contracting carriers."

The court further decided that T and T1 were jointly and severally liable under the Merchant Shipping Act.

Comment

The court decided that the constitution of a global limitation fund does not bar legal proceedings regarding whether liability can be imposed for the loss that resulted in the constitution of the fund. The legal effect of the constitution of the fund in Japan does not come into force until enforcement of the judgment is sought. The court decision did not decide whether the judgment regarding T and T1 could be enforced in Denmark.

For further information on this topic please contact Jesper Windahl at Windahl Sandroos & Co by telephone (+45 7733 7733) or email (jw@wsco.dk). The Windahl Sandroos & Co website can be accessed at www.wsco.dk.

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