MSC Losses Appeal to Limit $200M Liability from 2012 MSC Flaminia Casualty
More than a decade after the casualty aboard the MSC Flaminia, the legal battles continue to set precedent likely to shape future litigation for shipowners, shippers, and their insurers. A U.K. Court of Appeal has rejected a claim from MSC Mediterranean Shipping Company seeking to limit the carrier’s liability to aspects of the casualty streaming for the salvage and repair of the vessel.
The case involved a detailed review and interpretation of limitations built into the 1976 Convention on Limitation of Liability for Maritime Claims. In 2021, nine years after the casualty, an admiralty judge ruled in favor of the ship’s owner, Conti, saying that in these specific claims, MSC was not entitled to limitations of its liability and awarded damages of approximately $200 million.
MSC appealed to the UK court. While both sides in the case admit that in some circumstances there are limitations under the convention, this case was focused on Conti’s claims for the cost of discharging and decontaminating the cargo, the cost of removing firefighting water that was also contaminated, the cost of removing other burnt material from the ship, and payments Conti made to national authorities.
The MSC Flaminia caught fire mid-Atlantic on July 14, 2012, and the fire and explosions claimed the lives of three crewmembers. Hundreds of containers were damaged or destroyed as well as extensive damage to the ship. Conti detailed costs of €32 million related to costs for the decontamination, removing cargo, and removing the contaminated water from the hold between September 2012 when the vessel was towed into Wilhelmshaven, Germany, and completion of the operation in February 2014. Repairs to the ship cost an additional $21 million. Conti reported it incurred an additional €23 million in various expenses and €1.9 million paid to the authorities in the UK, France, Belgium, and Germany for measures to guard against pollution from the heavily damaged vessel.
Under the terms of the charter agreement between MSC and Conti, the dispute was subject to arbitration. Conti’s claims sought to recover the sums MSC was to have paid under the charter while the ship was out of service and the expenses incurred in those aspects of the salvage operation. There are separate claims regarding the loss of life and liability claims related to the cargo. Norwegian shipping and logistics company Stolt-Nielsen lost a separate appeal in July 2023 trying to limit its liability as the company that contracted for the shipment. MSC and Conti have prevailed in claims against Stolt-Nielsen as the freight forwarder and Deltech, the manufacturer and shipper of three tank containers carrying the dangerous chemical that was blamed for the fire.
The first judge in this case made some important factual findings related to the aftermath of the fire and the salvage operation. He ultimately found that MSC was not entitled to the limitation of liability to which MSC appealed citing specific language about the definition of “shipowner” and elements of the convention that deal with a single claim versus a group of claims.
“The judge’s principal reason for concluding that MSC was not entitled to limit its liability was that Conti’s claim against MSC was, and had to be, a single claim for breach of the charterparty causing damage to the ship,” concludes the Court of Appeal. While not entirely accepting the judge’s reasoning, the three-member appeals panel still accepts that Conti made a claim for a single breach of charter, and therefore MSC is not entitled to a limitation of its liability for these specific claims. The appeal was dismissed in a 29-page judgment.
Essex Court Chambers, barristers who interpreted the significance of the case write, “The decision is likely to be of interest to all engaged in shipping litigation and their insurers.”
MSC Flaminia is likely to continue to shape future legal issues related to casualties. Eleven years later, the court cases continue. Stolt-Nielsen in July 2023 reported after it lost the latest decision in its liability case that it was continuing to explore further appeals. MSC has not commented on the decision of the UK Court of Appeal.