On 4 November 1996, a Greek-flagged passenger ferry S rammed a Greek Navy missile boat, TPKK, leading to its sinking and four of its crew members drowning. The families of the victims initiated proceedings in the Civil Court against the shipowner and in the Administrative Court against the Greek State, claiming compensation for damages (loss of income) and pain and suffering.

The owner of the passenger ferry constituted two funds, one for limitation of liability for loss of life and bodily injury, and a second fund for other claims. The claims against the first fund were finalised in 2003. The TPKK crew members who had already lodged their claims for moral damages against the first fund now lodged their claims for loss of their personal belongings against the second fund. The Greek State announced its claim and requested preferential compensation. Following objections by the parties and decisions of the Court of First Instance and the Court of Appeal, the claim of the Greek State was verified. Subsequently, the Greek state received EUR 998,019.33 out of the total amount of the limitation fund of EUR 998,393.59.

Following the administrative proceedings, the Greek State was ordered to pay the families of the victims EUR 1,468,321.24 with interest.

The Greek State then filed civil proceedings against the ferry's owner, operator, general agent, captain, and bridge guard officer. The Greek State claimed that it was entitled to recourse against these defendants because the ferry was responsible for the collision and the deaths of the crew members. The Multimember Court of First Instance of Piraeus rejected the claim of the Greek State and dismissed the civil proceedings as unfounded. The Greek State submitted an appeal against all the defendants except the bridge guard officer who had died.

Held: The appeal is dismissed.

The Greek State raised six grounds of appeal:

1. Articles 13.1 and 13.2 of the LLMC 1976 (which was ratified by Greece in Law 1923/1991) applies only to those claimants who have lodged their claims against the limitation fund, and the barring of individual proceedings does not extend to claimants who have not notified the fund of their claims. Moreover, the Greek State could not apply art 12.4 and ask for the preservation of an adequate sum for its compensation because it was not a liable person or insurer within the terms of art 12.2, nor any other person under art 12.3 because its claims did not exist at the time of the fund's distribution;
2. The Greek State's claim was not by way of recourse and was not subject to the restrictions of arts 2.2 and 6.1;
3. The first instance Court had misinterpreted the Greek Civil Procedural Code and arts 2, 6, and 11 of the LLMC 1976 by refusing to accept the Greek State's allegation of the inability of the shipowner to constitute a limitation fund due to the application of art 4; and that this issue is not res judicata;
4. The Greek State's claim is not extinguished because the distribution of the limitation fund was not legally concluded;
5. The shipowner waived its rights to limit liability when it signed private contracts with the claimants;
6. The constitution of the limitation fund for loss of life and personal injury had no legal consequences for the Greek State because it was not notified of the declaration of the relevant limitation of liability.

The Court of Appeal examined the provisions of the LLMC 1976 and replied to the grounds of appeal as follows:

1. The bar in art 13.1 comes into effect by force of law and without court intervention whenever a limitation fund is constituted under art 11. The bar also applies to claimants who did not lodge their claims against the fund, like the appellant. A simple limitation of liability without the establishment of a fund does not bar the commencement or continuation of existing individual proceedings. Furthermore, arts 12.1, 12.2, 12.3, and 12.4 introduce the principles of proportional compensation and subrogation. The appellant's right of subrogation derives from the joint liability of the shipowner and the appellant towards the victims of the collision. Civil proceedings by recourse are allowed before the payment of claims. Moreover, the claims of the relatives of the diseased crew members were notified to the Greek State on 31 December 1997 and 7 October 1998. Therefore, its recourse claims existed before the shipowner's settlement with the relatives of the victims, and were not only incurred after 2007. The appellant could have notified the liquidator of the claims it was made aware of, and could have executed its right of subrogation under art 12.4, but since it did not do so, it may not assert any claim after the fund has been distributed.
2. The Greek State's claim is a recourse claim, and in the case of a collision, the passengers' claims are governed by art 6.1.a and not art 7, which regulates non-passengers' claims. As a result, the Greek State’s claim falls within the declaration of limitation for claims other than loss of life and personal injury. Thus, it was material loss or damage to the appellant, it was not included in the claims under arts 2.1.d, 2.1.e, or 2.1.f, and it was subject to limitation.
3. The correct interpretation of art 4 requires the personal misconduct of the person who has the right to limit liability under art 1, and if it is a legal person, of the persons and the organs which represent it. Consequently, the shipowner can limit its liability according to the Convention when the damage is caused by the misdemeanours of the captain or the crew. In this case, however, the Supreme Court conclusively held that the conditions of art 4 were not met by the actions of the captain and the relevant officer.
4. The place and the time of completion of limitation proceedings are not specifically regulated by the Convention or the Code of Private Maritime Law of Greece (CPML). For this reason, the Court of Appeal found that under art 100 of the CPML, the final distribution by the liquidator and the return of the unused balance of the limitation fund to the shipowner constitute the final acts of distribution, since the reason for the constitution of the fund is the compensation of notified creditors. In this case, after the payment of all the claimants, the nominated judge rapporteur approved the settlement and ordered the return of the letter of guarantee to the shipowner. After the payment of the liquidator, the balance remaining in the fund was returned to the shipowner. The non-submission of the report to the Court was merely a procedural omission and did not affect the finality of the distribution of the limitation fund.
5. The right to limitation can only be waived expressly by contract, and there is no silent or partial waiver of this right. In the given situation, the appellant lodged its claim and was paid from the fund for material damage, and thus a part of its claim was compensated for the loss of its missile boat. The art 12.2 right of subrogation was not employed by the shipowner after it concluded private contracts with the claimants and paid them the compensation they notified to the fund, because the shipowner was the party who established the fund, and it would thus be subrogated against itself.
6. Limitation of liability is applicable against the Greek State when it has a maritime claim that is subject to limitation, even if it is by way of recourse. The constitution of the fund also affects claimants who did not lodge their claims. Moreover, the liquidator of the fund for the loss of life and personal injury had published the court decision which accepted the declaration of the shipowner regarding the limitation of its liability in two Greek newspapers, so all the claimants were informed and could submit their claims.

The Court of Appeal also noted, referring to arts 1 and 15 of the LLMC 1976, that the Convention does not exclude State warships from the scope of its application, nor does it provide for a Member State’s discretion to exclude such ships. Therefore, limitation of liability also applies to the State when it brings a maritime claim subject to limitation, since the justification for the limitation of liability applies to the claim, irrespective of who is the holder of that claim.