Rotterdam Court judgment
The Rotterdam Court recently held that claims for the removal of an oil cargo from a tanker barge involved in a collision with a vessel should be paid for from a property fund within the scope of the Convention on Limitation of Liability for Maritime Claims(LLMC), and that a separate wreck fund need not be constituted. The decision contrasts with the court's 2008 decision in the Wisdom case, resulting in a lack of clarity on this issue.
The dispute which led to this ruling had its origins in a January 2011 collision between the coaster Kevin Sand the tanker barge Vlieland. As a result, one of the Vlieland's tanks was heavily damaged, leading to the escape of part of its oil cargo and the subsequent pollution of the Noordzeekanaal in Amsterdam. In order to avoid the threat of further pollution, the Dutch authorities ordered that the balance of the Vlieland'soil cargo be removed once the vessel had been safely moored. The operation costs were recovered from VT Minerals BV, the Vlieland's owner.
The Kevin S's owner, Kevin S GmbH & Co KG, issued a bank guarantee which provided "for any and all costs and damages, nothing excluded, resulting directly and indirectly from the collision on 3 January 2011 with the Kevin S". VT Minerals sought recourse against Kevin S with regard to claims for the removal of the discharged oil.
Kevin S initiated limitation proceedings and constituted a property fund with the court. It applied for an order to return the bank guarantee pursuant to Article 13(2) of the LLMC 1976.
Kevin S and VT Minerals disagreed as to whether the removal of the oil from the Vlieland should be paid out of a property fund. VT Minerals argued that Kevin S should also constitute a wreck fund, and that the claims of VT Minerals should be considered as claims as defined in Article 2(1) (e) of the LLMC.
The LLMC has direct effect in the Netherlands pursuant to the Dutch Constitution. However, Articles 2(d) and 2(e) of the LLMC and its 1996 protocol do not apply in the Netherlands. As a result, VT Minerals argued, Kevin S was obliged to constitute a separate wreck fund in accordance with Dutch law. VT Minerals further argued that if the recourse claims were not to be paid from the property fund, it was not obliged to return the issued bank guarantee for these claims.
The Rotterdam Court ruled that under Article 2 of the LLMC, reference to 'the ship' as one of the parties entitled to limit liability means the ship with regard to which the limitation is requested – in this case, the Kevin S. This also applies to claims pursuant to Article 2(1) (e). The court further noted that, contrary to Article 2(1)(e), Article 2(1)(d) refers to 'a ship' and 'such ship' (rather than 'the ship'). So Article 2(1)(d) relates not solely to the ship with regard to which the limitation is requested, but also to any other ship which should be removed.
However, the dispute in this case involved the removal of cargo from the Vlieland, and thus not the ship itself for which limitation was sought. The court found that VT Mineral's recourse claims fell not within the scope of Article 2(1)(d) or (e), but rather within Article 2(1)(a) or (c). The Rotterdam Court held that the property fund was appropriate for such claims, and that a separate wreck fund was not required.
The decision of the Rotterdam Court appears to contrast with a December 2008 judgment of the same court, in a dispute dealing with a collision between the Wisdom and tanker barge Riad at the Oude Maas near Barendrecht, outside Rotterdam. The Riad sank and the interested parties arrested the Wisdom for claims relating to the removal of the cargo. The owner of the Wisdom initiated proceedings to have the arrest of the vessel lifted. It had constituted a property fund and further provided a guarantee with regard to claims falling within the scope of a wreck fund.
In this case the Rotterdam Court held that although the owner of the Wisdom did not constitute a wreck fund, the guarantee that was provided was sufficient. The decision in Riad appears to be contrary to that in Kevin S. Under the reasoning adopted in Kevin S, the owner of the Wisdom would not be obliged to constitute a separate wreck fund or provide a guarantee, since the Riad was not the ship for which the request for limitation of liability was requested; rather, it was the Wisdom.
The decisions in these two cases appear to conflict as to whether owners should be obliged to constitute a wreck fund or provide security with regard to claims in respect of the removal of cargo from another ship. The Vlieland decision extends the opportunities for owners to bring up for discussion the obligation to constitute a wreck fund or separate security alongside a property fund.
For further information on this topic please contact Robert Hoepel at AKD by telephone (+31 88 253 50 00), fax (+31 88 253 54 00) or email ([email protected]).