Limitation of liability - vessel damaged when cargo exploded - owners claiming cost of repair from charterers - claim against owners by cargo owners - charterer able to limit liability only in relation to claim of cargo owners

Classica Shipping Co Ltd v CMA CGM SA: CA (Lords Justice Waller, Longmore and Neuberger): 12 February 2004

The defendants were charterers of a vessel owned by the claimants which was damaged when containers of bleach exploded on board.

The claimants were awarded damages for repair of the vessel.

The charterers sought a ruling on a point of law whether they could limit liability in the damages claim.

The judge held that before a charterer could limit liability he must be acting as owner or qua owner.

The charterers appealed.

Christopher Hancock QC (instructed by Ince & Co) for the charterers; Iain Milligan QC and Michael Coburn (instructed by Holman Fenwick & Willan) for the owners.

Held, dismissing the appeal, that a charterer did not have to be acting as owner or qua owner in order to be entitled to limit liability under the Merchant Shipping Act 1995; that a charterer's ability to limit liability thus depended on the type of claim brought against him rather than the capacity in which he was acting when his liability was incurred; that a claim for loss or damage to the vessel by reference to which a charterer sough to limit his liability was not one for which under the 1995 Act liability could be limited; that, accordingly, the charterer could not limit liability in such circumstances but could do so in respect of claims brought by the cargo owners against the shipowner which, if liability were established, would be passed on to the charterers.