Key to the Convention on Limitation of Liability for Damage to Interconnecting Cables
In the case of Enemalta Plc (C 65836) c. Vessel CHEM P (IMO Nr. 6806444) and its owner the foreign company RV International DMCC incorporated in the UAEthe first civil court presided over by judge Grazio Mercieca issued a rather interesting decision on 14e from July 2022.
Regarding a plea made by Enemalta Plc, on 28e of March 2022, a preventive arrest warrant (425/22) against the ocean-going vessel CHEM P, for an amount of thirty million euros (€30,000,000), after it allegedly struck and caused serious damage to the interconnect. Pursuant to Section 836(1) of the Code of Organization and Civil Procedure (“COCP”) (Chapter 12 of the Laws of Malta), CHEM P and its owner company filed a counter-warrant requesting, among other things, to the Court declare that:
- The amount claimed under the above is not justified due to an alternative guarantee already available covering the value of the vessel;
- Under Article 836(1)(e) of the COCP, the guarantee offered in the total amount of $7,100,000 (€6,614,140.11) would suffice to revoke the conservatory document; and
- In the event that the precautionary act is not revoked, in whole or in part, to impose in its place, an amount sufficient for the payment of penalties, damages and interest.
Enemalta Plc responded by arguing that the warrant was issued for far less than the actual damage suffered, which now stands at €48,697,749. The ship’s insurers seemed to have abandoned it, as they did not entertain the idea of an alternative form of guarantee. Furthermore, the ship did not offer satisfactory security under the Convention on Limitation of Liability for Maritime Claims 1976 as amended by the 1996 Protocol which has been brought into Maltese law under subsidiary legislation. 234.16.
By request of 27e of June 2022, CHEM P and RV International referred to the exception of limitation of liability and submitted that, based on their calculation under the terms of the aforementioned Convention, the possibility of maximum liability of the vessel is 17,927 616.37 US dollars, or €17,306,319.50. Finally, it was also argued that, in accordance with Article 10(2) of the Convention, it was not necessary to constitute a limitation fund in order to invoke such a limitation of liability. In view of the foregoing, the defendants therefore asked the Court to revise the value guaranteed by the warrant to €17,306,319.50.
Enemalta considered that, while agreeing with the defendants’ calculation, it stated that, in accordance with various case law on the matter, the mandate should also cover the legal costs, which, according to the annexes of the COCP, are amount to €1,207,071.91, and the Court accepted.
Therefore, the Court estimated that the amount of the warrant should be reduced to €18,513,319.41, i.e. €17,306,319.50 (maximum liability within the meaning of the Convention) + €1,207,071.91 (legal costs ). The Court also ordered that all litigation costs be borne by CHEM P and RV International DMCC.
The Court’s approach to this case triggers a certain way of thinking that seems to have been lacking in similar cases of this nature. While the court accepted the shipowner’s request to reduce the amount stated in the relevant warrant of arrest in accordance with the Convention, it did so before the commencement of the hearing of the proceedings on the merits. Generally, in similar cases, i.e. among others Alexander Agius (240356M) c. Vessel NS Koralle (IMO Nr. 8415201) and its owner Cora Navigation SA, such a request would only be taken into consideration during the examination of the related pleas in the context of the proceedings on the merits. This forward-thinking approach will certainly be seen as a step forward in the local sphere of maritime litigation ensuring that these delicate situations are dealt with appropriately and in a timely manner.