On 5 November 2008, a tugboat arrived at Elefsina to carry out a bollard pull test pursuant to an agreement between the claimant and defendants. During the process of unhooking the anchor in order to sail to the area where the test was to take place, the tugboat accelerated uncontrollably towards the pier and crashed into it. The impact caused extensive damage to the pier, and sections of fuel pipes and cables on the pier were destroyed. The claimant initiated legal action against the defendants for EUR 1,567,498.61.

The current dispute arose from an application by the defendants to the First Instance Court and the Court of Appeal in Piraeus in respect of interim measures to which the claimant was an intervening party. The Court of Appeal decided that there was no basis for barring limitation of liability under art 4 of the LLMC 1976. The claimant appealed this decision to the Supreme Court.

Held: The decision of the One-Member Court of Appeal of Piraeus is annulled. The case is remitted for further hearing to the same Court, composed of a different Judge from the one who issued the annulled decision.

The Supreme Court reviewed the case in the light of arts 1, 1.1, 1.2, 1.4, 2, 2.1.a, 4, and 14 of the LLMC 1976 and concluded the following:

The term 'operation of the ship' in art 2.1.a of the LLMC 1976 includes the technical as well as the economic/commercial operation of the ship. As a consequence, claims for damage caused when the ship is en route but is at the stage of repairs or trials is also subject to limitation, since these are undoubtedly also directly related to the 'operation of the ship' within the meaning of the above provision. Therefore, the ground of appeal that the appealed decision erred in accepting limitation of liability in respect of damage that was caused to the claimant's port facilities by the tugboat during the bollard pull test carried out in the course of repairs is dismissed as unfounded, 'despite the fact that the damage is not directly related to the economic and commercial operation of the vessel, since the bollard pull test (being a repair work) does not constitute an act directly related to that operation'.

Furthermore, art 4 of LLMC 1976 introduces a form of culpability in the order of misconduct and gross negligence, which is proved by the person invoking it, ie the claimant whose claim is covered by the defendant's limitation of liability. Within the meaning of that provision, the loss of the right to limit liability presupposes misconduct (whether actual or potential) or gross negligence on the part of the beneficiary of limitation of liability, ie, the defendant, and, if it is a legal person, its representative organs as per art 71 CC. The term 'recklessly' in the above provision does not mean acceptance of the probable occurrence of the damage, so that, in conjunction with the term 'knowledge', the condition in art 4 is to be included within the concept of potential misconduct. Rather, it refers more narrowly to conduct of the liable person which falls within gross negligence, which occurs when that person is aware of the possible occurrence of the damage in respect of which the limitation provided for in art 2 of the Convention is sought, and in spite of that, the person acts out of ignorance, but without accepting the consequences of that action (since that would then constitute potential misconduct).

The Court of Appeal accepted that the claimant's claim is one of those for which liability may be limited in accordance with the LLMC 1976 since it is subject to the provisions of art 2.1.a, namely that it arises from damage to port facilities which occurred during the operation of the ship. The defendants are among the persons entitled to limitation: the first as the owner of the tugboat which caused the damage; the second as its manager (arts 1.1 and 1.2); and the third as the person for whose acts the owner is liable (art 1.4 of the LLMC 1976 in conjunction with art 71 CC).

Moreover, the Court of Appeal accepted that the allision was caused by the fault of the employees of the governing bodies of the first and second defendants and of the third defendant himself, who, due to negligence and, in particular, due to lack of the attention which they ought and could have shown, did not care about the poor state of the engine room and the electrical equipment of the tugboat, which was undergoing repairs that had not yet been completed. Although everyone was aware of this, they proceeded with the above manoeuvre within the claimant's port facilities without taking any measures to prevent the allision. However, the Court of Appeal decided that art 4 of the LLMC 1976 was not satisfied.

In so holding, the Court of Appeal erred in its interpretation and application of art 4 of the LLMC 1976. The Court of Appeal presumed that the above conduct did not (as it should) establish gross negligence of the kind required by art 4 of the LLMC 1976 for barring limitation of liability. This is since the abovementioned circumstances, accepted by the judgment under appeal, do not preclude but, on the contrary, justify the presumption of both the defendants' knowledge of the possibility of the occurrence and of the specific damage, ie, the allision to the pier of the claimant's port facilities, and the demonstration of indifference to its occurrence, which is thus accepted as a successful ground for this appeal.