Two recent decisions from the Court of Appeal of The Hague have highlighted the issue of which claims fall under Articles 2(d) and (e) of the Convention on Limitation of Liability for Maritime Claims (LLMC).
The first incident before the court of appeal stemmed from a collision between the inland container barge Margreta and the seagoing chemical tanker Sichem Anne in the Hollandsch Diep, an estuary of the Rhine and Meuse rivers. After the Sichem Anne hit the Margreta amidships, the container barge nearly sank due to water ingressing through a large gash in its hull. Extensive salvage operations followed, with water being pumped out of the Margreta and tugs pushing the ship off the fairway to set it aground. Cranes were also employed to lift a number of containers off the vessel. The barge owner lodged extensive damages claims – including claims for the salvage costs – against the owners of the Sichem Anne, which set up a property fund under the LLMC.
The second incident was the subject of an earlier decision from the Rotterdam court dealing with a dispute following a collision between the seagoing cargo vessel Wisdom and the barge Riad at the Oude Maas near Rotterdam. The Riad sank and the interested parties attached the Wisdom for various claims, including claims relating to salvaging the cargo from the wreck. The owner of the Wisdom also constituted a property fund under the LLMC.
Articles 2 and 18 of the LLMC are relevant to these disputes.
The pertinent sections of Article 2 provide as follows:
"Claims subject to limitation... The following claims, whatever the basis of liability may be, shall be subject to limitation of liability:
(a) Claims in respect of loss of life or personal injury or loss of or damage to property (including damage to harbour works, basins and waterways and aids to navigation), occurring on board or in direct connexion with the operation of the ship or with salvage operations, and consequential loss resulting therefrom...
(d ) Claims in respect of the raising, removal, destruction or the rendering harmless of a ship which is sunk, wrecked, stranded or abandoned, including anything that is or has been on board such ship;
(e) Claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship".
Article 18, meanwhile, provides in relevant part as follows:
"Reservations. Any State may, at the time of signature, ratification, acceptance, approval or accession, or at any time thereafter, reserve the right:
(a) To exclude the application of Article 2, paragraphs 1(d) and (e)."
The Netherlands made the reservation under Article 18 of the LLMC. Domestic law in turn provides for the possibility to establish a separate fund – commonly referred to as a 'wreck fund' – to limit liability for claims falling under Articles 2(d) and (e) of the LLMC.
In both cases, the barge and cargo owners claimed the costs associated with salvaging the barge and cargo against the owners of the seagoing vessels, which sought to limit their liability under the LLMC. They maintained that since there was still a positive value in the property, the claims against them were in respect of salvaging efforts and therefore did not qualify as costs for wreck or cargo removal; as such, the claims did not fall under Articles 2(d) and (e) of the LLMC, but rather under Article 2(a). For obvious reasons, the owners wanted to establish only one property fund under the LLMC, under which all claims would fall, rather than also having to establish a wreck fund under domestic law.
The court of appeal disagreed, holding that the costs of salvaging the barge and cargo fell under Articles 2(d) and (e) of the LLMC, despite the fact that the property still had a positive value. The court reviewed the preparatory works of the LLMC and referred to the wording of Article 2(d), which covers all claims "in respect of the raising… of a ship which is… sunk [or] stranded…, including anything that is or has been on board such ship". It subsequently held that the remaining value of the ship or property being raised was irrelevant – only the actual activities involved were relevant. The owners therefore had to establish a separate wreck fund under Netherlands law in order to limit liability for the claims.
The court of appeal also held that Article 3 of the LLMC did not apply, as this exclusion deals only with direct claims made by salvors and not to recourse claims for salvage.
For further information on this topic please contact Haco van der Houven van Oordtat AKD by telephone (+31 88 253 50 00) or email ([email protected]). The AKD website can be accessed at www.akd.nl.