Metvale Ltd v Monsanto International Sarl & Ors

Under the 1976 Limitation Convention, the ordinary meaning of “charterer”, read in context and in light of the Convention’s purpose, includes a slot charterer. A purposive construction is appropriate where a literal reading would undermine the Convention’s object of facilitating international carriage by sea. The limitation is calculated by reference to the vessel’s tonnage even though several shipowners or charterers may benefit from the same aggregate limit. A fund constituted by one person within Article 9 is deemed constituted by all persons within the relevant Article 9 category under Article 11(3).

The claim arose from the casualty involving the MSC NAPOLI, following which the vessel’s owners constituted a limitation fund under the 1976 Limitation Convention. Hapag-Lloyd AG and Stinnes Linien GmbH were slot charterers and had issued bills of lading for cargo carried in their allocated slots. They lodged claims against the fund for indemnities and related losses.

The court determined two preliminary issues: whether slot charterers were “shipowners” within Article 1(2) of the Convention and entitled to limit liability, and whether the fund constituted by the vessel’s owners was deemed constituted by Hapag-Lloyd and Stinnes.

1. Slot charterers entitled to limit. The court answered the first preliminary issue affirmatively. Article 1(2) defines “shipowner” to include a charterer. Applying the interpretive approach stated in CMA CGM v Classica Shipping [2004] 1 Lloyd’s Rep. 460, the ordinary meaning of the word must be considered in context and in light of the Convention’s evident object and purpose.

2. The Convention seeks to encourage international trade by sea carriage by limiting liabilities arising on a distinct occasion. Cargo claimants should not be able to avoid the limitation merely because the carrier issuing the bill of lading is a charterer rather than the registered owner. “Charterer” is apt to include different forms of charter, including a slot charter. The slot charter agreements had features of time and voyage charters, although the charterers did not direct the vessel’s navigation.

3. The fact that the limit is calculated by reference to the vessel’s whole tonnage was not absurd. A single limit may apply to the aggregate liabilities of the registered owner, time charterer and several slot charterers. Nor did a literal reading of “charterer of a ship” require a different result. A purposive construction prevailed. The reasoning was reinforced by The Tychy [1999] 2 Lloyd’s Rep. 11, where a charterer of part of a ship was treated as the charterer of the ship for the purposes of the Supreme Court Act 1981.

4. Deemed constitution of the fund. The fund was constituted by the vessel’s owner, a person within Article 9. Hapag-Lloyd and Stinnes, as charterers, were also persons within Article 1(2) and Article 9. Under Article 11(3), the fund was therefore deemed constituted by them. The Convention did not expressly resolve whether the person providing the fund could obtain contribution or restitution from those benefiting from it; that question was left to the general law.

5. Both preliminary questions were answered yes.