MSC Mediterranean Shipping Company SA v Conti 11. Container Schiffarts-GmbH & Co KG Msc “Flaminia” (2024), is a significant decision from the UK Supreme Court concerning the right of a charterer to limit its liability under the 1976 Convention on Limitation of Liability for Maritime Claims (the “1976 Convention”). It is, admittedly, a relatively old decision having been delivered on the 9th of April, 2025, but the principles contained therein are of significant interest.
Background Facts
An explosion and fire occurred on the container ship MSC Flaminia in the Atlantic Ocean, caused by dangerous cargo (divinylbenzene or DVB). The incident resulted in the death of three crew members, extensive damage to the vessel, and loss of cargo.
The Respondent, Conti, was the shipowner. The Appellant, MSC, was the time charterer.
Conti incurred enormous costs (approx. $200 million) as a result of the casualty, including salvage, towage, port fees, cargo handling, decontamination, waste removal, and repairs. Conti successfully claimed these costs from MSC in arbitration, arguing MSC had breached the charterparty by shipping dangerous goods.
MSC sought to limit its liability to a much lower amount under the 1976 Convention.
The Key Legal Issues
The Supreme Court addressed two principal issues:
The “Insider/Outsider” Issue: Whether a charterer can limit its liability for claims brought by the shipowner (another “insider”) for losses originally suffered by the owner itself.
The Scope of Limitable Claims: Whether the specific types of costs claimed by Conti (e.g., cargo removal, waste disposal) were “claims subject to limitation” under Article 2 of the 1976 Convention, and if so, whether the fact that these costs were incurred to repair the ship meant that limitation was nevertheless unavailable.
The Supreme Court addressed the issues as follows:-
Issue 1: The “Insider/Outsider” Issue
The Court found that charterer can limit its liability for claims brought by the shipowner (another “insider”) for losses originally suffered by the owner itself and rejected the “insider/outsider” distinction argued by Conti and accepted by the Court of Appeal.
Conti’s Argument: A charterer, who is an “insider” (within the definition of “shipowner” in Article 1.2 of the 1976 Convention), cannot limit liability for claims by the actual shipowner (another “insider”) for losses originally suffered by that owner. Limitation was only intended for claims from “outsiders” (e.g., cargo owners).
Supreme Court’s Reasoning:
The text of the 1976 Convention contains no such qualification. The word “claims” in Articles 1.1 and 2.1 of the 1976 Convention refers to the types of claims listed, without distinguishing between the claimant’s identity.
Reading in such a qualification would be an impermissible “gloss” on the Convention’s clear wording.
It would create illogical asymmetry. For example, a charterer could limit liability for damage to its own containers on board, but an owner could not limit liability for damage to its containers if they were on board a chartered ship.
The concerns about an owner claiming against a fund it contributed to (raised in earlier cases) were adequately addressed by the established principle that claims for damage to the limiting ship itself are not limitable under Article 2.1(a) of the 1976 Convention.
Conclusion on Issue 1: A charterer can limit its liability for claims by a shipowner, including for losses originally suffered by the owner.
Issue 2: The Scope of Limitable Claims
The Court then examined whether Conti’s specific claims fell within the categories of limitable claims in Article 2.1 of the 1976 Convention.
General Principle Reaffirmed: The Court reaffirmed the established rule from The CMA Djakarta and The Ocean Victory: a claim for loss of or damage to the ship itself (the “limiting ship”) and consequential loss resulting therefrom is not a limitable claim under Article 2.1(a) of the 1976 Convention. The cost of repairing the ship is the prime example of such a non-limitable claim.
Application to the Specific Claims:
Payments to National Authorities & Costs of Removing Firefighting Water: These were held to be part of the cost of dealing with the damaged vessel to enable its repair. They were therefore claims in respect of damage to the ship and not limitable under any part of Article 2.1 of the 1976 Convention.
Costs of Removing Waste from the Vessel: This was also characterised as part of the repair process and therefore a non-limitable claim for damage to the ship.
Costs of Discharging and Decontaminating Cargo (Article 2.1(e) of the 1976 Convention): This was the crucial claim. The Court held that these costs fell squarely within the ordinary meaning of Article 2.1(e) of the 1976 Convention: “Claims in respect of the removal, destruction or the rendering harmless of the cargo of the ship.”
The Court rejected the argument that because these costs were incurred to facilitate the ship’s repair (a non-limitable claim), they themselves became non-limitable.
The focus of Article 2.1(e) of the 1976 Convention is on the nature of the claim (cargo removal), not the underlying reason or purpose for it.
A claim can have a “dual character”. The fact that it is consequential to ship damage does not prevent it from being a limitable claim under a specific sub-paragraph like Article 2.1(e), which is distinct from Article 2.1(a) of the 1976 Convention.
Conclusion on Issue 2: MSC was entitled to limit its liability only in respect of the claim for the costs of discharging and decontaminating the cargo under Article 2.1(e) of the 1976 Conventionof the 1976 Convention. Its appeal to limit liability for the other categories of cost was dismissed.
Overall Outcome
MSC’s appeal was partly allowed. The Supreme Court established the broader principle that a charterer can limit liability against a shipowner (rejecting the “insider/outsider” rule), but on the facts, this only benefited MSC in relation to one category of the claimed costs.
My Comments
This judgment provides important clarity on the 1976 Convention.
- It confirms that the right to limit is not restricted by the status of the claimant as an “insider” or “outsider”.
- It reinforces the core principle that claims for damage to the limiting ship are not limitable under Article 2.1(a) of the 1976 Convention.
- However, it establishes that if a claim can be characterised under another specific category in Article 2.1 of the 1976 Convention (e.g., cargo removal under Article 2.1(e) of the 1976 Convention), it may be limitable even if it is also a consequence of damage to the ship. This prevents the non-limitation principle for ship damage from creating an unstated general exception to the entire Convention.
This decision is of significance to countries, like Kenya, that have become State parties to the 1976 Convention and/or its 1996 Protocol.
The decision is available here.
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