CMA CGM S.A. v Classica Shipping Company Ltd.

Under the 1976 Convention, the term “shipowner” includes a charterer only where the charterer is exposed to liability in a capacity analogous to ownership, such as operating or managing the vessel. A voyage or time charterer cannot invoke limitation merely because the claim concerns the operation of the ship or falls within a listed category of claim. The Convention’s single-fund machinery and historical context support that construction. Damage to the chartered vessel itself is not damage to property occurring in direct connection with the operation of the ship for the purposes of Article 2(1)(a). A charterer therefore cannot limit a shipowner’s direct claim for losses caused by the charterer’s breach, although the judgment left open whether a time charterer acting qua owner might limit liability in an appropriate cargo claim.

The owners chartered the container vessel CMA Djakarta to the charterers under an amended NYPE time charter. Following an explosion and fire attributed to the shipment of dangerous bleaching powder, the owners claimed substantial damages and an indemnity for cargo claims and general average contributions.

The dispute was referred to arbitration. The arbitrators found for the owners. The charterers had pleaded an entitlement to limit liability under the 1976 Convention and sought leave to appeal under section 69 of the Arbitration Act 1996. The appeal concerned whether time charterers could limit liability against owners under the Merchant Shipping Act 1995 and the Convention. The court also consolidated appeals concerning two costs awards.

1. The appeal was dismissed. The charterers could not limit their liability for the owners’ direct claims arising from the shipment of dangerous goods.
2. Section 185 of the Merchant Shipping Act 1995 gives the 1976 Convention the force of law in the United Kingdom. As a treaty, it had to be interpreted in accordance with Articles 31 and 32 of the Vienna Convention on the Law of Treaties: the ordinary meaning of the words in context and in light of the Convention’s object and purpose, with preparatory materials available where appropriate.
3. The Convention’s reference to “shipowners” as a category including owners, charterers, managers and operators indicates a connection with ownership, possession, management or operation of the vessel. A demise charterer is an owner pro hac vice. A voyage charterer, who merely pays freight for carriage, has no such role. A time charterer ordinarily controls employment orders, while management and operation remain with the owner. The term does not therefore extend to every charterer in every capacity.
4. The conclusion was reinforced by the Convention’s history and its single-fund machinery. The fund is intended to address claims arising from the operation of the ship and to protect those responsible for that operation. It was not intended to limit direct claims by owners against charterers, particularly where the claim concerns loss of the ship or recourse for cargo liabilities.
5. Article 2(1)(a) did not assist the charterers. The ship could not simultaneously be the property damaged and the operation causing the damage. The phrase “whatever the basis of liability” addressed the legal cause of action, not the capacity in which the defendant was sued.
6. The court respectfully agreed with the reasoning of Thomas J in The Aegean Sea and rejected the charterers’ wider construction. It left open whether a time charterer acting qua owner might invoke limitation against a cargo-owner claim. That issue did not arise directly.

The judgment itself states that the charterers obtained leave to appeal from the arbitrators’ award under section 69 of the Arbitration Act 1996. The High Court (Commercial Court) dismissed the consolidated appeals.