May 09 2017
Over the years, the Dutch courts have demonstrated a willingness to adopt a clear and singular approach to the global limitation of liability issues arising from maritime casualties. In the process, the courts have become a forum of choice for several interests involved in worldwide shipping. The Hague Appeal Court recently added to the body of rulings in this respect.
The dispute had its origins in a 2010 collision in Turkish waters between two containerships, the Odessa Star – owned by Sand Duke Marine Co, Malta – and the CMA CGM Verlaine, which had been chartered to French operator CMA CGM by its German owner. Neither the parties to the dispute nor the ships involved in the collision had any direct connection to the Netherlands, but the owners of both vessels had signed a jurisdiction agreement to have the liability dispute heard in the Rotterdam court.
At the time of the collision, the Netherlands, in direct contrast to many other countries, applied the lower limitation of liability levels applicable under the Convention on Limitation of Liability for Maritime Claims 1976, as opposed to the increased levels adopted under the Protocol 1996.
Article 11 of the convention provides that a limitation fund may be established with the court or other competent authority in a state in which legal proceedings have been instituted in respect of claims subject to limitation.
The Supreme Court had already ruled in the matter regarding the Sherbro that such 'legal proceedings' encompass not only liability and recovery proceedings (including arbitration proceedings), but also applications for the appointment of a court expert and the hearing of witnesses.
In this case, the CMA CGM Verlaine's owners initiated proceedings in Rotterdam against the Odessa Star's owners following the signing of the jurisdiction agreement. The Odessa Star's owners subsequently applied for the establishment of a limitation fund in Rotterdam invoking the lower limits.
The charterers objected to the limitation application and argued that the owners should not be permitted to access to the lower limitation levels available in Rotterdam on the basis of the jurisdiction agreement entered into with the CMA CGM Verlaine's owners, as that would effectively disregard Article 11 of the convention.
However, the Rotterdam court disagreed with the charterers and held that the agreement to have the dispute over liability heard in the Netherlands was a lawful procedure allowing the Odessa Star's owners to establish a limitation fund in Rotterdam. The Hague Appeal Court recently upheld this ruling following a strict application of Article 11's wording.
The Hague Appeal Court's decision provides further guidance as to the proper interpretation of Article 11 of the Convention on Limitation of Liability for Maritime Claims and shows that proceedings initiated on the basis of a post-event jurisdiction agreement also qualify as 'legal proceedings' under Article 11 of the convention in the Netherlands.
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