This case arose from an incident in 2023 where the RV Petrel, owned by the first defender, the United States of America (the US), was in the Imperial Dock in Leith, Scotland, undergoing works by the pursuer, Dales Marine Services Ltd (Dales). The dry dock shoring gave way and the Petrel toppled onto its starboard side, resulting in damage to the vessel, items on board, and the dock. The MRV Scotia, which was in the dry dock behind the Petrel, was trapped and could not be moved until the dock was reflooded.

Dales argued that it was working on the Petrel, and that the dock was under its management and control. It was thus entitled to limit its liability under s 191 of the Merchant Shipping Act 1995 (UK) (the MSA), a domestic statutory provision extending the LLMC limitation regime in arts 6.1.b, 11, and 12 to harbour authorities, conservancy authorities, and the 'owners of any dock or canal'. Dales submitted that the reference to art 11 of the LLMC in s 191(6) MSA indicated an intention that a dock owner should be able to constitute a limitation fund. It ought thus to be possible to obtain a declarator of its limit of liability. As this was the intention of Parliament, it was necessary to find a procedural means by which it could be achieved.

The defenders pleaded no jurisdiction and relevancy of the action.

Held: The defenders' pleas as to the relevancy of the action ­are upheld. Dales' claim is dismissed.

The third defenders (the Scottish Ministers, the owners of the Scotia) have no place in this action to constitute a limitation fund. No claims they might have on the basis of the pursuer's averments are subject to the same limitation of liability as those that might be made by the first defender and second defender. Any claims by the third defender arising from late redelivery of the Scotia would be in reparation for breach of contract. As such, they would not fall under s 191(2) MSA, and could not therefore be the subject of limitation of liability.

The claims for spoiled foodstuffs, and for damage to batteries arising from the discontinuation of the power supply to the Petrel, and the decision to do this, was made some time after the vessel toppled. Section 191(3) MSA states that limitation applies to 'the whole of any losses and damages which may arise on any one distinct occasion'. Losses arising from the cessation of power arose on a different occasion from the damage to the Petrel, and could also not be the subject of limitation along with the losses caused by the toppling itself.

The second defender (Oceaneering International Inc, who had contracted with the pursuer to carry out works on the Petrel) argued that the action was irrelevant, as Dales did not aver facts necessary for it to be entitled to constitute a limitation fund under art 11 LLMC. Article 12 LLMC addresses distribution of the fund. There is no averment of the existence of any proceedings referred to in art 11.

The issue is whether such proceedings are a necessary prerequisite for an action to constitute a limitation fund. The second defender submitted that the position in England is that they are, referring to ICL Shipping Ltd v Chin Tai Steel Enterprise Co Ltd (The ICL Vikraman) [2004] 1 WLR 2254 [43-57] (CMI778); Seismic Shipping Inc v Total E&P UK plc (The Western Regent) [2005] EWCA Civ 985, [2005] 2 All ER (Comm) 515, [2005] EWHC 460 (Admlty), [2005] 2 All ER (Comm) 51) (CMI883). The ICL Vikraman was distinguished in Vessel SA v CP Ships Ltd (The Denise) [2004] EWHC 3305 (Admlty), [2005] 2 All ER (Comm) 47 (CMI2650), but only as regards art 10, and not art 11 LLMC.

Whereas limitation of shipowners' liability arises from an international Convention, the ability of dock owners to limit their liability does not. It arises from agreement between shipowners and dock owners as to how their liabilities should be addressed. The history is set out in the decision of Teare J in Holyhead Marina Ltd v Farrer [2021] 2 Lloyd's Rep 221 [12] (CMI870),­ a passage that was quoted in the subsequent decision of the Court of Appeal ([2022] 1 Lloyd's Rep 463 [8]) (CMI1616). When considering shipowners' liability, therefore, the States Parties can readily be understood as referring to the signatories to the Convention, but it cannot have that meaning in relation to dock owners' liability. In Holyhead Marina [para 11], Teare J noted that s 191 MSA must be construed in a manner consistent with its object or purpose.

The entitlement under art 11 LLMC arises when any proceedings have been raised. A further issue might arise as to whether the proceedings need to have been raised in the UK, but that issue does not arise here, as it is apparent that no proceedings have been raised at all.

The pursuer responded to this ground of challenge by arguing that the terms of art 11 are permissive, in that it does not say that a party may only constitute a fund in the specified circumstances. While the inclusion of 'may' in the opening words - 'A person alleged to be liable may constitute a fund' - is permissive, the Court does not consider that this, taken with the absence of 'only', means that there is no requirement for prior proceedings. There is no obligation on dock owners to set up such a fund, and they are entitled simply to invoke their right to limit liability in response to a claim against them. It is therefore unsurprising that art 11 LLMC is expressed in permissive terms. Read naturally, however, what is permitted is to constitute a fund where legal proceedings have been commenced, and it contains no wording entitling a dock owner to constitute a fund without proceedings having been commenced. For the avoidance of doubt, it should be noted, however, that this applies only to the entitlement to constitute a fund, and that the entitlement to limit is not so restricted (The Western Regent, first instance, [20], Court of Appeal [21] (CMI833)).