Mr Justice Teare decides who falls within the definition of an ‘operator’ entitled to limit liability under the 1976 Limitation of Liability for Maritime Claims Convention.

““The operator of the ship”…embraces not only the manager of the ship but also the entity which, with the permission of the owner, direct its employees to board the ship and operate her in the ordinary course of the ship’s business.”

In a judgment handed down on 22 May 2020, Mr Justice Teare, sitting in the Admiralty Court, explores the characteristics required of an entity to fall within the definition of “operator” under the 1976 version of the Convention on Limitation of Liability of Maritime Claims (LLMC).

The relevant underlying facts were that in November 2016, the ‘Stema Barge II’ (SBII) drifted in heavy weather. A French telecommunications company, RTE, alleges that the SBII’s anchor tripped one of its undersea cables. The Saga Sky was also drifting in the area and a collision occurred between her and the SBII. RTE allege that another of its undersea cables also registered a tripping. The damage to the two cables allegedly resulted in significant direct and consequential losses to RTE, with substantive claims for such losses being pursued outside the UK.

The LLMC provides that certain ‘persons’ are entitled to cap their liability in accordance with a specific formula, based on gross tonnage, irrespective of the actual loss suffered by the claimant.  The general purpose as set out in earlier authorities, in particular the CMA Djakarta [2004] is to “encourage the provision of international trade by way of sea-carriage”.

The SBII interests sought to limit liability for any claims advanced against them, under the LLMC. Questions that arose but that fell away included whether an unmanned barge constituted a “ship” and therefore could limit its liability under the LLMC, the applicable rules governing the calculation of limitation at the time of the incident, namely the 1996 Protocol to the LLMC Convention (the 2012 Protocol having come into force in the UK on 30 November 2016, two weeks after the incident) whether there was one or two relevant incidents for the purposes of limiting liability.

As to who of the various SBII interests was entitled to limit liability, by the time of the hearing there was no issue that the registered Owners and Charterer of the Vessel could limit.  There was also no dispute that an operator and manager can limit liability – this being clearly set out at Article 1(2) of the Convention: “The term “shipowner” shall mean the owner, charterer, manager or operator of a seagoing ship ”.  The question that arose was whether, Stema UK’s involvement with the barge at the time of the incident brought it within the definition of an “operator” entitled to limit liability under the LLMC 1976 Convention. 

Mr Justice Teare considered (and Counsel for both parties agreed) that there is an overlap between an ‘operator’ and a ‘manager’ for the purposes of the LLMC and it is difficult to discuss the concept of operator without an understanding of that of manager.  Until this judgment, there were no relevant judicial authorities on the meaning of manager or operator. 

The Manager:

Mr Justice Teare’s view is “that the manager of a vessel is typically a person entrusted by the owner with the duty of devising and maintaining an SMS to ensure the safe operation of the vessel and the prevention of pollution, crewing the vessel with appropriately qualified and trained personnel, maintaining the vessel, finding employment for her and preparing her for trading”­ – namely – safety, manning, technical and commercial tasks.  These tasks may be entrusted, wholly or partly, to senior personnel within the shipowners’ company, to a completely separate company or to a company within the same group of companies.  For the purposes of the LLMC and to be entitled to limit, a ‘person’ must be entrusted by the owner with sufficient tasks and not just one limited task which would constitute assisting in the management of the ship, rather than being the manager.

The Operator: 

Mr Justice Teare dismissed the notion of separating completely the concept of manager from that of operator, such as restricting management to standards, procedures and monitoring systems to ensure safe operation and operation to the actual day to day working of the ship. 

The ordinary meaning of operator encompasses manager – and in relation to conventional merchant ships, may be limited to that.  In the case of a non-conventional ship, a dumb barge, can the ‘operator” include those who physically operate the machinery of the ship and those who cause the machinery of the ship to be physically operated?  Mr Justice Teare dismissed a suggestion that a navigating officer involved in a collision was the ‘operator’ for the purposes of the LLMC because he was operating the ship at the relevant time – this being dealt with by another article in the LLMC ((Art 1(4)).  The ‘operator’ is not intended to cover those on board physically operating the vessel’s machinery.  It is “used at a higher level of abstraction one which has a notion of management and control over the operation of the ship”. 

However, those who cause an unmanned ship to be physically operated have some management and control over the ship.  If, with permission of the owner, they send their employees on board with instructions to operate the machinery in the ordinary course of the ship’s business they qualify as an ‘operator’ even though they may not also be the ‘manager’.  In the context of a dumb barge, it would not be in the spirit of the Convention if the owner could limit liability but an associated company that operates the barge’s equipment and machinery to anchor and secure the barge could not. 

The fact that despite the overlap between manager and operator, it is not necessary for the operator to also be the manager can be deduced from the inclusion of both terms in Art 1(2).  Mr Justice Teare also dismissed an argument that there could only be one ‘operator’ as a matter of construction of Art 1(2).

Having considered the facts in detail, the structure of the particular operation and the specific roles played by the various entities at different stages of the operation, Mr Justice Teare concluded that Stema UK could be appropriately described as the operator of the barge whilst off Dover, and therefore entitled to limit any alleged liability.

Special thanks to John Passmore QC of Quadrant Chambers for an excellent job dealing with various complex issues throughout the matter and during trial.  Thanks also to Stewart Buckingham QC of Quadrant Chambers who, although was not involved in the limitation aspect of the case, has been involved since day one with the collision claim.

The CJC team representing Stema Barge II interests

Alistair Johnston, Christopher Chane, Danyel White, Debo Fletcher, Maria Borg Barthet

Maria Borg Barthet​

Director, Campbell Johnston Clark