Major Shipping Win for ParrisWhittaker in The Cape Bari

Clause 4 of the Conditions of Use in one of the agreements signed provided:

“If in connection with, or by reason of, the use or intended use by any vessel of the terminal facilities or any part thereof, any damage is caused to the terminal facilities or any part thereof from whatsoever cause such damage may arise, and irrespective of weather [sic] or not such damage has been caused or contributed to by the negligence of BORCO or its servants, and irrespective of whether there has been any neglect or default on the part of the vessel or the Owner, in any such event the vessel and the Owner shall hold BORCO harmless from and indemnified against all and any loss, damages, costs and expenses incurred by BORCO in connection therewith.”

Kenra argued, on behalf of the Owners, that they could limit their liability for the damage (to approximately US$16.9 million plus interest) under the Merchant Shipping (Maritime Claims Limitation of Liability) Act 1989 (Bahamas), which incorporated into Bahamian law the Convention on Limitation of Liability for Maritime Claims 1976.  For its part, BORCO said the owners had contracted out of this by their signed agreement.

BORCO won at the first hurdle, but Kenra’s appeal on behalf of the Owners was successful.  BORCO then launched a further appeal to the Privy Council in the UK (the highest court in the Bahamian judicial system).

What were the issues?

At issue for the Privy Council was:

• whether it was permissible for the owners of a vessel to contract out of, or waive their statutory right of limitation under the 1989 Act and the 1976 Convention; and
• on the true construction of the agreement contained in or evidenced by the Conditions of Use, did the owners and BORCO agree to exclude the owners’ right to limit their liability under the 1989 Act and the 1976 Convention?

The Privy Council agreed with the Court of Appeal, dismissing BORCO’s appeal.  It held that whilst the signed agreement did not contract out of the right of limitation, it was, permissible for a shipowner to contract out of the right of limitation.  It said that: “Viewed objectively, it seems to the Board [of the Privy Council] to be inconceivable that the owners intended to waive their right to limit.”  Furthermore, if BORCO has wanted to, it could reasonably have been expected for BORCO to include such a clause in the Conditions of Use.

How can we help?

For expert, incisive legal advice on all matters relating to maritime and shipping law, including regarding claims for damages and limitation of damages, call the experienced shipping lawyers at ParrisWhittaker. Whatever your circumstances and however complex your case, we are ready to act on your behalf.

_{1The Cape Bari [2016] UKPC 20}

A copy of the Ruling can be downloaded here: – Bahamas Oil Refining Company International Limited (Appellant) v The Owners of the Cape Bari Tankschiffahrts GMBH & Co KG (Respondents) (Bahamas) [2016] UKPC 20